Amplify Energy Corp (Form: 10-Q, Received: 08/05/2019 16:07:57)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10–Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-35364

AMPLIFY ENERGY CORP.

(Exact name of registrant as specified in its charter)

Delaware		82-1326219
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

500 Dallas Street, Suite 1700, Houston, TX		77002
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (713) 490-8900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☑
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes ☐ No ☑

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☑ Yes ☐ No

Securities Registered Pursuant to Section 12(b):


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

As of July 31, 2019, the registrant had 22,334,010 outstanding shares of common stock, $0.0001 par value outstanding.

AMPLIFY ENERGY CORP.

Table of Contents

		Page


	Glossary of Oil and Natural Gas Terms	1
	Names of Entities	3
	Cautionary Note Regarding Forward-Looking Statements	4

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018	7
	Unaudited Condensed Statements of Consolidated Operations for the Three and Six Months Ended June 30, 2019 and 2018	8
	Unaudited Condensed Statements of Consolidated Cash Flows for the Six Months Ended June 30, 2019 and 2018	9
	Unaudited Condensed Statements of Consolidated Equity for the Three and Six Months Ended June 30, 2019 and 2018	10
	Notes to Unaudited Condensed Consolidated Financial Statements
	Note 1 – Organization and Basis of Presentation	11
	Note 2 – Summary of Significant Accounting Policies	11
	Note 3 – Revenue	12
	Note 4 – Acquisitions and Divestitures	13
	Note 5 – Fair Value Measurements of Financial Instruments	14
	Note 6 – Risk Management and Derivative Instruments	15
	Note 7 – Asset Retirement Obligations	18
	Note 8 – Long-term Debt	18
	Note 9 – Equity (Deficit)	19
	Note 10 – Earnings per Share	20
	Note 11 – Long-Term Incentive Plans	20
	Note 12 – Leases	23
	Note 13 -Supplemental Disclosures to the Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Statements of Consolidated Cash Flows	24
	Note 14 – Related Party Transactions	25
	Note 15 – Commitments and Contingencies	25
	Note 16 – Income Taxes	25
	Note 17 – Subsequent Events	25

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35

PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38

Signatures		40

G LOSSARY OF OIL AND NATURAL GAS TERMS

Analogous Reservoir : Analogous reservoirs, as used in resource assessments, have similar rock and fluid properties, reservoir conditions (depth, temperature and pressure) and drive mechanisms, but are typically at a more advanced stage of development than the reservoir of interest and thus may provide concepts to assist in the interpretation of more limited data and estimation of recovery. When used to support proved reserves, analogous reservoir refers to a reservoir that shares all of the following characteristics with the reservoir of interest: (i) the same geological formation (but not necessarily in pressure communication with the reservoir of interest); (ii) the same environment of deposition; (iii) similar geologic structure; and (iv) the same drive mechanism.

Bbl : One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.

Bbl/d: One Bbl per day.

Bcfe : One billion cubic feet of natural gas equivalent.

Boe: One barrel of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil.

MBoe/d: One million Boe per day.

BOEM: Bureau of Ocean Energy Management.

Btu : One British thermal unit, the quantity of heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit.

Development Project : A development project is the means by which petroleum resources are brought to the status of economically producible. As examples, the development of a single reservoir or field, an incremental development in a producing field or the integrated development of a group of several fields and associated facilities with a common ownership may constitute a development project.

Dry Hole or Dry Well : A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production would exceed production expenses and taxes.

Economically Producible : The term economically producible, as it relates to a resource, means a resource which generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation. For this determination, the value of the products that generate revenue are determined at the terminal point of oil and natural gas producing activities.

Exploitation : A development or other project which may target proven or unproven reserves (such as probable or possible reserves), but which generally has a lower risk than that associated with exploration projects.

Field : An area consisting of a single reservoir or multiple reservoirs, all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.

Gross Acres or Gross Wells : The total acres or wells, as the case may be, in which we have a working interest.

ICE : Inter-Continental Exchange.

MBbl : One thousand Bbls.

MBbls/d: One thousand Bbls per day.

Mcf : One thousand cubic feet of natural gas.

Mcf/d : One Mcf per day.

MMBtu : One million Btu.

MMcf : One million cubic feet of natural gas.

MMcfe : One million cubic feet of natural gas equivalent.

MMcfe/d : One MMcfe per day.

Net Production : Production that is owned by us less royalties and production due to others.

NGLs : The combination of ethane, propane, butane and natural gasolines that, when removed from natural gas, become liquid under various levels of higher pressure and lower temperature.

NYMEX : New York Mercantile Exchange.

Oil : Oil and condensate.

Operator : The individual or company responsible for the exploration and/or production of an oil or natural gas well or lease.

OPIS: Oil Price Information Service.

Plugging and abandonment: Refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another stratum or to the surface. Regulations of all states require plugging of abandoned wells.

Probabilistic Estimate : The method of estimation of reserves or resources is called probabilistic when the full range of values that could reasonably occur for each unknown parameter (from the geoscience and engineering data) is used to generate a full range of possible outcomes and their associated probabilities of occurrence.

Proved Developed Reserves : Proved reserves that can be expected to be recovered from existing wells with existing equipment and operating methods.

Proved Reserves : Those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible, from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced, or the operator must be reasonably certain that it will commence the project, within a reasonable time. The area of the reservoir considered as proved includes (i) the area identified by drilling and limited by fluid contacts, if any, and (ii) adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or natural gas on the basis of available geoscience and engineering data. In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons, as seen in a well penetration, unless geoscience, engineering or performance data and reliable technology establishes a lower contact with reasonable certainty. Where direct observation from well penetrations has defined a highest known oil elevation and the potential exists for an associated natural gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty. Reserves which can be produced economically through application of improved recovery techniques (including fluid injection) are included in the proved classification when (i) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir, or an analogous reservoir or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (ii) the project has been approved for development by all necessary parties and entities, including governmental entities. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price used is the average price during the twelve-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

Realized Price : The cash market price less all expected quality, transportation and demand adjustments.

Reliable Technology : Reliable technology is a grouping of one or more technologies (including computational methods) that has been field tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

Reserves : Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to market and all permits and financing required to implement the project. Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

Reservoir : A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reserves.

Resources : Resources are quantities of oil and natural gas estimated to exist in naturally occurring accumulations. A portion of the resources may be estimated to be recoverable and another portion may be considered unrecoverable. Resources include both discovered and undiscovered accumulations.

Working Interest : An interest in an oil and natural gas lease that gives the owner of the interest the right to drill for and produce oil and natural gas on the leased acreage and requires the owner to pay a share of the costs of drilling and production operations.

Workover : Operations on a producing well to restore or increase production.

WTI : West Texas Intermediate.

N AMES OF ENTITIES

As used in this Form 10-Q, unless we indicate otherwise:

•	“Amplify Energy” refers to Amplify Energy Corp., the successor reporting company of Memorial Production Partners LP, individually and collectively with its subsidiaries, as the context requires;

•	“Company,” “we,” “our,” “us” or like terms refer to Memorial Production Partners LP for the period prior to emergence from bankruptcy and to Amplify Energy for the period after emergence from bankruptcy; and

•	“OLLC” refers to Amplify Energy Operating LLC, our wholly owned subsidiary through which we operate our properties.

C AUTIONARY NOTE REGARDING FORWARD–LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, that are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about our:

•

business strategies;

•

acquisition and disposition strategy;

•

cash flows and liquidity;

•

financial strategy;

•

ability to replace the reserves we produce through drilling;

•

drilling locations;

•

oil and natural gas reserves;

•

technology;

•

realized oil, natural gas and NGL prices;

•

production volumes;

•

lease operating expense;

•

gathering, processing, and transportation;

•

general and administrative expense;

•

future operating results;

•

ability to procure drilling and production equipment;

•

ability to procure oil field labor;

•

planned capital expenditures and the availability of capital resources to fund capital expenditures;

•

ability to access capital markets;

•

marketing of oil, natural gas and NGLs;

•

acts of God, fires, earthquakes, storms, floods, other adverse weather conditions, war, acts of terrorism, military operations, or national emergency;

•

expectations regarding general economic conditions;

•

competition in the oil and natural gas industry;

•

effectiveness of risk management activities;

•

environmental liabilities;

•

counterparty credit risk;

•

expectations regarding governmental regulation and taxation;

•

expectations regarding developments in oil-producing and natural-gas producing countries; and

•

plans, objectives, expectations and intentions.

All statements, other than statements of historical fact included in this report, are forward-looking statements. In some cases, you can identify forward-looking stat ements by terminology such as “may,” “will,” “would,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “outlook,” “continue,” the negative of such terms or other comparable te rminology. These statements address activities, events or developments that we expect or anticipate will or may occur in the future, including things such as projections of results of operations, plans for growth, goals, future capital expenditures, compet itive strengths, references to future intentions and other such references. These forward-looking statements involve risks and uncertainties. Important factors that could cause our actual results or financial condition to differ materially from those expre ssed or implied by forward-looking statements include, but are not limited to, the following risks and uncertainties:

•

our results of evaluation and implementation of strategic alternatives;

•

risks related to a redetermination of the borrowing base under our senior secured reserve-based revolving credit facility;

•

our ability to access funds on acceptable terms, if at all, because of the terms and conditions governing our indebtedness, including financial covenants;

•

our ability to satisfy debt obligations;

•

volatility in the prices for oil, natural gas, and NGLs, including further or sustained declines in commodity prices;

•

the potential for additional impairments due to continuing or future declines in oil, natural gas and NGL prices;

•

the uncertainty inherent in estimating quantities of oil, natural gas and NGLs reserves;

•

our substantial future capital requirements, which may be subject to limited availability of financing;

•

the uncertainty inherent in the development and production of oil and natural gas;

•

our need to make accretive acquisitions or substantial capital expenditures to maintain our declining asset base;

•

the existence of unanticipated liabilities or problems relating to acquired or divested businesses or properties;

•

potential acquisitions, including our ability to make acquisitions on favorable terms or to integrate acquired properties;

•

the uncertainty of whether and when we will be able to complete our announced merger with Midstates Petroleum Company, Inc. (“Midstates”) due to the conditions that must be satisfied or waived prior to the completion of the merger;

•

the consequences of changes we have made, or may make from time to time in the future, to our capital expenditure budget, including the impact of those changes on our production levels, reserves, results of operations and liquidity;

•

potential shortages of, or increased costs for, drilling and production equipment and supply materials for production, such as CO ₂ ;

•

potential difficulties in the marketing of oil and natural gas;

•

changes to the financial condition of counterparties;

•

uncertainties surrounding the success of our secondary and tertiary recovery efforts;

•

competition in the oil and natural gas industry;

•

general political and economic conditions, globally and in the jurisdictions in which we operate;

•

the impact of legislation and governmental regulations, including those related to climate change and hydraulic fracturing;

•

the risk that our hedging strategy may be ineffective or may reduce our income;

•

the cost and availability of insurance as well as operating risks that may not be covered by an effective indemnity or insurance; and

•

actions of third-party co-owners of interests in properties in which we also own an interest.

The forward-looking statements contained in this report are large ly based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and ass umptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. All readers are cautioned that the f orward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or that the events or circumstances described in any forward-looking statement will occur. Ac tual results may differ materially from those anticipated or implied in the forward-looking statements due to factors described in “Part I—Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on M arch 6, 2019 (“2018 Form 10-K”), “Risk Factors” in our definitive proxy statement filed on June 28, 2019 and “Part II—Item 1A. Risk Factors” appearing within this report and elsewhere in this report. All forward-looking statements speak only as of the date of this report. We do not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

PART I—FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

AMPLIFY ENERGY CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except outstanding shares)

	June 30,			December 31,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	18,702		$	49,704
Restricted cash		325			325
Accounts receivable		22,836			29,514
Short-term derivative instruments		5,919			18,813
Prepaid expenses and other current assets		9,304			7,241
Total current assets		57,086			105,597
Property and equipment, at cost:
Oil and natural gas properties, successful efforts method		619,748			598,331
Support equipment and facilities		125,721			108,760
Other		6,831			6,625
Accumulated depreciation, depletion and impairment		(109,614	)		(85,535	)
Property and equipment, net		642,686			628,181
Long-term derivative instruments		7,485			2,469
Restricted investments		4,606			94,467
Operating lease - long term right-of-use asset		5,096			—
Other long-term assets		5,725			6,129
Total assets	$	722,684		$	836,843

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	6,933		$	2,345
Revenues payable		22,386			24,779
Accrued liabilities (see Note 13)		31,360			23,155
Short-term derivative instruments		151			139
Total current liabilities		60,830			50,418
Long-term debt (see Note 8)		175,000			294,000
Asset retirement obligations		78,417			75,867
Long-term derivative instruments		275			—
Operating lease liability		2,986			—
Other long-term liabilities		89			—
Total liabilities		317,597			420,285
Commitments and contingencies (see Note 15)
Stockholders' equity:
Preferred stock, $0.0001 par value: 45,000,000 shares authorized; no shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		—			—
Warrants, 2,173,913 warrants issued and outstanding at June 30, 2019 and December 31, 2018, respectively		4,788			4,788
Common stock, $0.0001 par value: 300,000,000 shares authorized; 22,305,256 and 22,181,881 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		3			3
Additional paid-in capital		357,237			355,872
Accumulated earnings		43,059			55,895
Total stockholders' equity		405,087			416,558
Total liabilities and equity	$	722,684		$	836,843

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMPLIFY ENERGY CORP.

UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS

(In thousands, except per share amounts)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Revenues:
Oil and natural gas sales	$	59,485		$	90,894		$	124,552		$	178,741
Other revenues		47			94			135			179
Total revenues		59,532			90,988			124,687			178,920

Costs and expenses:
Lease operating expense		26,292			27,500			55,202			57,070
Gathering, processing and transportation		4,391			5,975			9,048			11,575
Exploration		6			2,988			21			3,022
Taxes other than income		3,464			5,535			7,873			10,572
Depreciation, depletion and amortization		12,913			13,619			24,079			26,577
General and administrative expense		10,566			16,863			19,874			27,520
Accretion of asset retirement obligations		1,332			1,429			2,643			3,147
(Gain) loss on commodity derivative instruments		(22,993	)		35,652			9,494			46,108
(Gain) loss on sale of properties		—			(227	)		—			2,146
Other, net		34			(120	)		177			(120	)
Total costs and expenses		36,005			109,214			128,411			187,617
Operating income (loss)		23,527			(18,226	)		(3,724	)		(8,697	)
Other income (expense):
Interest expense, net		(4,422	)		(6,287	)		(8,511	)		(12,059	)
Other income (expense)		—			2			—			2
Total other income (expense)		(4,422	)		(6,285	)		(8,511	)		(12,057	)
Income (loss) before reorganization items, net and income taxes		19,105			(24,511	)		(12,235	)		(20,754	)
Reorganization items, net		(464	)		(768	)		(651	)		(1,286	)
Income tax benefit (expense)		—			—			50			—
Net income (loss)		18,641			(25,279	)		(12,836	)		(22,040	)
Net (income) loss allocated to participating restricted stockholders		(728	)		—			—			—
Net income (loss) attributable to common stockholders	$	17,913		$	(25,279	)	$	(12,836	)	$	(22,040	)

Earnings per share: (See Note 10)
Basic and diluted earnings per share	$	0.80		$	(1.01	)	$	(0.58	)	$	(0.88	)
Weighted average common shares outstanding:
Basic and diluted		22,267			25,038			22,223			25,019

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMPLIFY ENERGY CORP.

UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(In thousands)

	For the Six Months Ended
	June 30,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	(12,836	)	$	(22,040	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		24,079			26,577
(Gain) loss on derivative instruments		10,028			46,108
Cash settlements (paid) received on expired derivative instruments		(1,863	)		6,903
Bad debt expense		101			—
Amortization of deferred financing costs		574			1,752
Accretion of asset retirement obligations		2,643			3,147
(Gain) loss on sale of properties		—			2,146
Share-based compensation (see Note 11)		2,922			1,512
Settlement of asset retirement obligations		(205	)		(380	)
Changes in operating assets and liabilities:
Accounts receivable		6,576			2,165
Prepaid expenses and other assets		(2,630	)		3,120
Payables and accrued liabilities		3,823			13,265
Other		87			—
Net cash provided by operating activities		33,299			84,275
Cash flows from investing activities:
Additions to oil and gas properties		(33,232	)		(38,847	)
Additions to other property and equipment		(205	)		(187	)
Additions to restricted investments		(138	)		(281	)
Withdrawals of restricted investments		90,000			—
Proceeds from the sale of oil and natural gas properties, net of cash and cash equivalents sold		—			18,565
Other		—			503
Net cash provided by (used in) investing activities		56,425			(20,247	)
Cash flows from financing activities:
Advances on revolving credit facilities		—			10,000
Payments on revolving credit facilities		(119,000	)		(72,000	)
Deferred financing costs		(169	)		—
Costs incurred in conjunction with tender offer		(107	)		—
Common stock repurchased and retired under the share repurchase program		(1,251	)		—
Restricted units returned to plan		(199	)		(509	)
Other		—			—
Net cash used in financing activities		(120,726	)		(62,509	)
Net change in cash, cash equivalents and restricted cash		(31,002	)		1,519
Cash, cash equivalents and restricted cash, beginning of period		50,029			6,392
Cash, cash equivalents and restricted cash, end of period	$	19,027		$	7,911

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMPLIFY ENERGY CORP.

UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EQUITY

(In thousands)

	Stockholders' Equity
	Common Stock		Warrants		Additional Paid-in Capital			Accumulated Earnings (Deficit)			Total
Balance at December 31, 2018	$	3	$	4,788	$	355,872		$	55,895		$	416,558
Net income (loss)		—		—		—			(31,477	)		(31,477	)
Costs incurred in conjunction with tender offer		—		—		(107	)		—			(107	)
Share-based compensation expense		—		—		1,443			—			1,443
Common stock repurchased and retired under the share repurchase program		—		—		(920	)		—			(920	)
Balance at March 31, 2019	$	3	$	4,788	$	356,288		$	24,418		$	385,497
Net income (loss)		—		—		—			18,641			18,641
Share-based compensation expense		—		—		1,479			—			1,479
Common stock repurchased and retired under the share repurchase program		—		—		(331	)		—			(331	)
Restricted shares repurchased		—		—		(199	)		—			(199	)
Balance at June 30, 2019	$	3	$	4,788	$	357,237		$	43,059		$	405,087

	Stockholders' Equity
	Common Stock		Warrants		Additional Paid-in Capital			Accumulated Earnings (Deficit)			Total
Balance at December 31, 2017	$	3	$	4,788	$	387,856		$	1,286		$	393,933
Net income (loss)		—		—		—			3,239			3,239
Share-based compensation expense		—		—		1,176			—			1,176
Restricted shares repurchased		—		—		(208	)		—			(208	)
Balance at March 31, 2018	$	3	$	4,788	$	388,824		$	4,525		$	398,140
Net income (loss)		—		—		—			(25,279	)		(25,279	)
Share-based compensation expense		—		—		336			—			336
Restricted shares repurchased		—		—		(301	)		—			(301	)
Balance at June 30, 2018	$	3	$	4,788	$	388,859		$	(20,754	)	$	372,896

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

N ote 1. O rganization and Basis of Presentation

General

When referring to Amplify Energy Corp. (“Amplify Energy,” or the “Company”), the intent is to refer to Amplify Energy, a newly formed Delaware corporation, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made. Amplify Energy is the successor reporting company of Memorial Production Partners LP pursuant to Rule 15d-5 of the Securities Exchange Act of 1934, as amended.

We operate in one reportable segment engaged in the acquisition, development, exploitation and production of oil and natural gas properties. Our management evaluates performance based on one reportable business segment as the economic environments are not different within the operation of our oil and natural gas properties. Our assets consist primarily of producing oil and natural gas properties and are located in the Rockies, federal waters offshore Southern California, East Texas / North Louisiana and South Texas. Most of our oil and natural gas properties are located in large, mature oil and natural gas reservoirs. The Company’s properties consist primarily of operated and non-operated working interests in producing and undeveloped leasehold acreage and working interests in identified producing wells.

Basis of Presentation

Our Unaudited Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and guidelines of the Securities and Exchange Commission (the “SEC”). The results reported in these Unaudited Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. In our opinion, the accompanying Unaudited Condensed Consolidated Financial Statements include all adjustments of a normal recurring nature necessary for fair presentation. Although we believe the disclosures in these financial statements are adequate, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC.

The Unaudited Condensed Consolidated Financial Statements have been prepared as if the Company is a going concern and reflect the application of Accounting Standards Codification 852 “Reorganizations” (“ASC 852”). ASC 852 requires that the financial statements, for periods subsequent to the Chapter 11 filing, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that were realized or incurred in the bankruptcy proceedings are recorded in “reorganization items, net” on the Company’s Unaudited Condensed Statements of Consolidated Operations.

All material intercompany transactions and balances have been eliminated in preparation of our consolidated financial statements.

Beginning in 2019, the Company has elected to change its reporting convention from natural gas equivalent (Mcfe) to barrels of oil equivalent (Boe). The change in presentation reflects our liquids-weighted production and reserve profile with a balanced approach to development of our oil and natural gas asset portfolio. The Company’s proved reserves as of year-end 2018 were 50% crude oil, 15% natural gas liquids and 35% natural gas.

Use of Estimates

The preparation of the accompanying Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates include, but are not limited to, oil and natural gas reserves; depreciation, depletion, and amortization of proved oil and natural gas properties; future cash flows from oil and natural gas properties; impairment of long-lived assets; fair value of derivatives; fair value of equity compensation; fair values of assets acquired and liabilities assumed in business combinations and asset retirement obligations.

Note 2. Summary of Significant Accounting Policies

A discussion of our significant accounting policies and estimates is included in our 2018 Form 10-K.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reorganization Items, Net

The Company has incurred significant costs associated with the reorganization. Reorganization items, net, which are expensed as incurred, represent costs and income directly associated with the Chapter 11 proceedings since January 16, 2017, the petition date.

The following table summarizes the components of reorganization items, net included in the accompanying Unaudited Condensed Statements of Consolidated Operations (in thousands):

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Professional fees		(319	)		(210	)		(345	)		(625	)
Other		(145	)		(558	)		(306	)		(661	)
Reorganization items, net	$	(464	)	$	(768	)	$	(651	)	$	(1,286	)

Lease Recognition

In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance regarding the accounting for leases. The FASB retained a dual model, requiring leases to be classified as either direct financing or operating leases. The classification will be based on criteria that are similar to the current lease accounting treatment. The Company is the lessee under various agreements for office space, compressors, equipment, vehicles and surface rentals (right of use assets) that are currently accounted for as operating leases.

The Company applied the revised lease rules for our interim and annual reporting periods starting January 1, 2019 using the modified retrospective approach with a cumulative impact to retained earnings in that period, and including several optional practical expedients relating to leases commenced before the effective date. The practical expedients the Company adopted are: (1) the original correct assessment of a contract containing a lease will be accepted without further review on all existing or expired contracts; (2) the original lease classification as an operating lease will convert as an operating lease under the new guidance; (3) initial direct costs for any existing leases will not be reassessed; (4) existing land easements or right of use agreements will continue under current accounting policy and only new agreements will be evaluated in the future; and (5) short-term leases for twelve months or less will not be evaluated under the guidance.

See Note 12 for additional information regarding the adoption of the leases standard.

New Accounting Pronouncements

Financial Instruments — Credit Losses . In May 2019 the FASB issued an accounting standards update to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for certain financial assets upon the adoption. The fair value option election does not apply to held-to-maturity debt securities. The new guidance is effective for annual period beginning after December 15, 2019, and interim periods within those annual period. The Company notes that the impact of this guidance will not be material to the Company’s financial statements and related disclosures.

Other accounting standards that have been issued by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations and cash flows.

Note 3. Revenue

Revenue from contracts with customers

The Company adopted Accounting Standard Update (ASU) No. 2014-09, revenue from contracts with customers (ASC 606), on January 1, 2018 using the modified retrospective method of adoption. Adoption of the ASU did not require an adjustment to the opening balance of equity and did not materially change the Company's amount and timing of revenues. The Company applied the ASU only to contracts that were not completed as of January 1, 2018.

The reclassification of certain fees between oil and natural gas sales and gathering, processing and transportation is the result of the Company’s assessment of the point in time at which its performance obligations under its commodity sales contracts are satisfied and control of the commodity is transferred to the customer. 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. Control is transferred at the delivery location, at which point the performance obligation has been satisfied and revenue is recognized. Fees included in the contract that are incurred prior to control transfer are classified as gathering, processing and transportation and fees incurred after control transfers are included as a reduction to the transaction price. The transaction price at which revenue is recognized consists entirely of variable consideration based on quoted market prices less various fees and the quantity of volumes delivered.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Oil and natural gas revenues are recorded using the sales method. Under this method, revenues are recognized based on actual volumes of oil and natural gas sold to purchasers, regardless of whether the sales are proportionate to our ownership in the property. An asset or a liability is recognized to the extent there is an imbalance in excess of the proportionate share of the remaining recoverable reserves on the underlying prope rties. No significant imbalances existed at June 30, 2019.

Disaggregation of Revenue

We have identified three material revenue streams in our business: oil, natural gas and NGLs. The following table present our revenues disaggregated by revenue stream.

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(in thousands)
Revenues
Oil	$	41,685	$	58,540	$	81,742	$	113,267
NGLs		5,336		10,931		11,201		21,877
Natural gas		12,464		21,423		31,609		43,597
Oil and natural gas sales	$	59,485	$	90,894	$	124,552	$	178,741

Contract Balances

Under our sales contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities. Accounts receivable attributable to our revenue contracts with customers was $21.2 million at June 30, 2019 and $25.0 million at December 31, 2018.

Transaction Price Allocated to Remaining Performance Obligations

For our contracts that have a contract term greater than one year, we have utilized the practical expedient in ASC 606, which states that a company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under our contracts, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. For our contracts that have a contract term of one year or less, we have utilized the practical expedient in ASC 606, which states that a company is not required to disclose the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

N ote 4. Acquisitions and Divestitures

Acquisition and Divestiture Related Expenses

Acquisition and divestiture related expenses for both related party and third party transactions are included in general and administrative expense in the accompanying Unaudited Condensed Statements of Consolidated Operations for the periods indicated below (in thousands):

For the Three Months Ended				For the Six Months Ended
June 30,				June 30,
2019		2018		2019		2018
$	3,458	$	679	$	3,822	$	887

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Proposed Midstates Merger

On May 5, 2019, the Company, Midstates Petroleum Company, Inc. (“Midstates”) and Midstates Holdings, Inc., a direct, wholly owned subsidiary of Midstates (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, in an all-stock transaction, Merger Sub will merge with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Midstates (the “Merger”). At the effective time of the Merger, each share of Amplify Energy common stock issued and outstanding immediately prior to the effective time (other than excluded shares) will be cancelled and converted into the right to receive 0.933 shares of Midstates common stock, par value $0.01 per share. Following the closing of the Merger, current Amplify Energy and Midstates stockholders will each own approximately 50% of the outstanding stock of the combined company.

Completion of the Merger is subject to the terms and conditions set forth in the Merger Agreement, including holders of a majority of votes cast by Midstates stockholders at the special meeting voting in favor of the issuance of shares of Midstates common stock to stockholders of Amplify Energy, holders of a majority of the issued and outstanding shares of Amplify common stock voting in favor of the Merger Agreement, effectiveness of the registration statement on Form S-4 filed by Midstates having been declared by the SEC, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, authorization for listing of shares of Midstates common stock to be issued in the Merger on the New York Stock Exchange. Subject to the terms and conditions set forth in the Merger Agreement, the Merger is expected to close on August 6, 2019.

The foregoing description of the Merger Agreement is qualified in its entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to the Company’s current report on Form 8-K filed on May 6, 2019.

Divestitures

On May 30, 2018, we closed a transaction to divest certain of our non-core assets located in South Texas (the “South Texas Divestiture”) for total proceeds of approximately $17.1 million, including final post-closing adjustments. This disposition did not qualify as a discontinued operation.

Note 5. Fair Value Measurements of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a specified measurement date. Fair value estimates are based on either (i) actual market data or (ii) assumptions that other market participants would use in pricing an asset or liability, including estimates of risk. A three-tier hierarchy has been established that classifies fair value amounts recognized or disclosed in the financial statements. The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3). All of the derivative instruments reflected on the accompanying Unaudited Condensed Consolidated Balance Sheets were considered Level 2.

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 June 30, 2019 and December 31, 2018. The fair value estimates are based upon observable market data and are classified within Level 2 of the fair value hierarchy. These assets and liabilities are not presented in the following tables.

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 June 30, 2019 and December 31, 2018 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.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the gross derivative assets and liabilities that are measured at fair value on a recurring basis at June 30, 2019 and December 31, 2018 for each of the fair value hierarchy levels:

	Fair Value Measurements at June 30, 2019 Using
	Quoted Prices in		Significant Other		Significant
	Active Market		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Fair Value
	(In thousands)
Assets:
Commodity derivatives	$	—	$	21,045	$	—	$	21,045
Interest rate derivatives		—		13		—		13
Total assets	$	—	$	21,058	$	—	$	21,058

Liabilities:
Commodity derivatives	$	—	$	7,488	$	—	$	7,488
Interest rate derivatives		—		592		—		592
Total liabilities	$	—	$	8,080	$	—	$	8,080

	Fair Value Measurements at December 31, 2018 Using
	Quoted Prices in		Significant Other		Significant
	Active Market		Observable Inputs		Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Fair Value
	(In thousands)
Assets:
Commodity derivatives	$	—	$	25,515	$	—	$	25,515

Liabilities:
Commodity derivatives	$	—	$	4,372	$	—	$	4,372

See Note 6 for additional information regarding our derivative instruments.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are reported at fair value on a nonrecurring basis as reflected on the accompanying Unaudited Condensed Consolidated Balance Sheets. The following methods and assumptions are used to estimate the fair values:

•

The fair value of asset retirement obligations (“AROs”) is based on discounted cash flow projections using numerous estimates, assumptions and judgments regarding factors such as the existence of a legal obligation for an ARO; amounts and timing of settlements; the credit-adjusted risk-free rate; and inflation rates. The initial fair value estimates are based on unobservable market data and are classified within Level 3 of the fair value hierarchy. See Note 7 for a summary of changes in AROs.

•

Proved oil and natural gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying value of such properties. The factors 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.

•

Unproved oil and natural gas properties are reviewed for impairment based on time or geologic factors. Information such as drilling results, reservoir performance, seismic interpretation or future plans to develop acreage is also considered.

•

No impairments were recognized during the three or six months ended June 30, 2019 and 2018, respectively.

Note 6. Risk Management and Derivative Instruments

Derivative instruments are utilized to manage exposure to commodity price fluctuations and achieve a more predictable cash flow in connection with natural gas and oil sales from production and borrowing related activities. These instruments limit exposure to declines in prices, but also limit the benefits that would be realized if prices increase.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Certain inherent business risks are associated with commodity derivative contracts, including market risk and credit risk. Market risk is the risk that the price of natural gas or oil will change, either favorably or unfavorably, in response to changing market conditions. Credit risk is the risk of loss from nonperformance by the counterparty to a contract. It is our policy to enter into derivative contracts, only with creditworthy counterparties, which generally are financial institutions, deemed by management as competent and competitive market makers. Some of the lenders, or certain of their affiliates, under our previous and current credit agreements are counte rparties to our derivative contracts. While collateral is generally not required to be posted by counterparties, credit risk associated with derivative instruments is minimized by limiting exposure to any single counterparty and entering into derivative in struments only with creditworthy counterparties that are generally large financial institutions. Additionally, master netting agreements are used to mitigate risk of loss due to default with counterparties on derivative instruments. We have also entered in to International Swaps and Derivatives Association Master Agreements (“ISDA Agreements”) with each of our counterparties. The terms of the ISDA Agreements provide us and each of our counterparties with rights of set-off upon the occurrence of defined acts of default by either us or our 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. At June 30, 2019, after taking in to effect netting arrangements, we had no counterparty exposure related to our derivative instruments. As a result, had all counterparties failed completely to perform according to the terms of the existing contracts, we would have had the right to offset $13.0 million against amounts outstanding under our New Revolving Credit Facility (as defined below) at June 30, 2019. See Note 8 for additional information regarding our Emergence Credit Facility and our New Revolving Credit Facility (as defined below).

Commodity Derivatives

We 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. We recognize all derivative instruments at fair value.

We enter into natural gas derivative contracts that are indexed to NYMEX-Henry Hub. We also enter into oil derivative contracts indexed to either NYMEX-WTI or ICE Brent. Our NGL derivative contracts are primarily indexed to OPIS Mont Belvieu.

At June 30, 2019, we had the following open commodity positions:

	Remaining
	2019		2020		2021		2022
Natural Gas Derivative Contracts:
Fixed price swap contracts:
Average monthly volume (MMBtu)		1,490,000		150,000		187,500		—
Weighted-average fixed price	$	2.85	$	2.65	$	2.56	$	—

Collar contracts:
Average monthly volume (MMBtu)		—		520,000		162,500		—
Weighted-average floor price		—	$	2.64	$	2.58		—
Weighted-average ceiling price	$	—	$	2.96	$	2.84	$	—

Crude Oil Derivative Contracts:
Fixed price swap contracts:
Average monthly volume (Bbls)		135,000		153,050		116,250		30,000
Weighted-average fixed price	$	53.49	$	57.54	$	56.05	$	55.32

Collar contracts:
Average monthly volume (Bbls)		76,000		14,300		—		—
Weighted-average floor price	$	55.00	$	55.00	$	—	$	—
Weighted-average ceiling price	$	63.85	$	62.10	$	—	$	—

NGL Derivative Contracts:
Fixed price swap contracts:
Average monthly volume (Bbls)		72,000		65,425		22,800		—
Weighted-average fixed price	$	29.96	$	28.84	$	27.48	$	—

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Interest Rate Swaps

Periodically, we enter into interest rate swaps to mitigate exposure to market rate fluctuations by converting variable interest rates such as those in our credit agreement to fixed interest rates. At June 30, 2019, we had the following interest rate swap open positions:

	Remaining
	2019			2020			2021
Average Monthly Notional (in thousands)	$	50,000		$	50,000		$	50,000
Weighted-average fixed rate		2.109	%		2.109	%		2.109	%
Floating rate	1 Month LIBOR			1 Month LIBOR			1 Month LIBOR

Balance Sheet Presentation

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 June 30, 2019 and December 31, 2018. There was no cash collateral received or pledged associated with our derivative instruments since most of the counterparties, or certain of their affiliates, to our derivative contracts are lenders under our credit agreement.

		Asset Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
		June 30,			June 30,			December 31,			December 31,
Type	Balance Sheet Location	2019			2019			2018			2018
		(In thousands)
Commodity contracts	Short-term derivative instruments	$	12,317		$	6,415		$	21,217		$	2,543
Interest rate swaps	Short-term derivative instruments		13			147			—			—
Gross fair value			12,330			6,562			21,217			2,543
Netting arrangements			(6,411	)		(6,411	)		(2,404	)		(2,404	)
Net recorded fair value	Short-term derivative instruments	$	5,919		$	151		$	18,813		$	139

Commodity contracts	Long-term derivative instruments	$	8,728		$	1,073		$	4,298		$	1,829
Interest rate swaps	Long-term derivative instruments		—			445			—			—
Gross fair value			8,728			1,518			4,298			1,829
Netting arrangements			(1,243	)		(1,243	)		(1,829	)		(1,829	)
Net recorded fair value	Long-term derivative instruments	$	7,485		$	275		$	2,469		$	—

(Gains) Losses on Derivatives

We do not designate derivative instruments as hedging instruments for accounting and financial reporting purposes. Accordingly, all gains and losses, including changes in the derivative instruments’ fair values, have been recorded in the accompanying Unaudited Condensed Statements of Consolidated Operations. The following table details the gains and losses related to derivative instruments for the periods indicated (in thousands):

		For the Three Months Ended					For the Six Months Ended
	Statements of	June 30,					June 30,
	Operations Location	2019			2018		2019		2018
Commodity derivative contracts	(Gain) loss on commodity derivatives	$	(22,993	)	$	35,652	$	9,494	$	46,108
Interest rate derivatives	Interest expense, net		627			—		534		—

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

N ote 7. Asset Retirement Obligations

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 six months ended June 30, 2019 (in thousands):

Asset retirement obligations at beginning of period	$	76,344
Liabilities added from acquisition or drilling		37
Liabilities settled		(205	)
Accretion expense		2,643
Revision of estimates		75
Asset retirement obligation at end of period		78,894
Less: Current portion		(477	)
Asset retirement obligations - long-term portion	$	78,417

Note 8. Long-Term Debt

The following table presents our consolidated debt obligations at the dates indicated:

	June 30,		December 31,
	2019		2018
	(In thousands)
$425.0 million New Revolving Credit Facility, variable-rate, due November 2023 (1)	$	175,000	$	294,000
Long-term debt	$	175,000	$	294,000

(1)	The carrying amount of our New Revolving Credit Facility approximates fair value because the interest rates are variable and reflective of market rates.

New Revolving Credit Facility

Amplify Energy Operating LLC, our wholly owned subsidiary (“OLLC”), is a party to a reserve-based revolving credit facility (the “New Revolving Credit Facility”), subject to a borrowing base of $425.0 million as of June 30, 2019, which is guaranteed by us and all of our current subsidiaries.

On June 24, 2019, as discussed in Note 15, the Company received the release of $90.0 million from the Beta decommissioning trust account and used the proceeds to reduce amounts outstanding under our New Revolving Credit Facility.

Our borrowing base under our New Revolving Credit Facility is subject to redetermination on at least a semi-annual basis primarily based on a reserve engineering report with respect to our estimated natural gas, oil and NGL reserves, which takes into account the prevailing natural gas, oil and NGL prices at such time, as adjusted for the impact of our commodity derivative contracts.

First Amendment to New Revolving Credit Facility

On May 5, 2019, OLLC entered into the First Amendment to Credit Agreement, among OLLC, Amplify Acquisitionco Inc., Amplify Energy, the guarantors party thereto, the lenders party thereto and Bank of Montreal, as administrative agent (the “First Amendment”).

The First Amendment amends the New Revolving Credit Facility to, among other things, (i) modify certain defined terms in connection with the completion of the transactions contemplated by the Merger Agreement, including the Merger; (ii) allow certain structural changes for tax planning activities; and (iii) modify certain covenants in the New Revolving Credit Facility that restrict Amplify Energy’s ability to take certain actions or engage in certain business such that, once the First Amendment is effective, the occurrence of such actions or business in connection with the Merger Agreement or completion of the transactions contemplated thereby, including the Merger, will not be so restricted.

Certain of the modifications to the New Revolving Credit Facility, including those permitting pre-Merger tax restrictions, became effective upon the signing of the First Amendment. The remaining modifications become effective concurrently with the consummation of the Merger, subject to certain closing conditions.

The First Amendment also contains customary representations, warranties and agreements of OLLC and the guarantors. All other material terms and conditions of the New Revolving Credit Facility were unchanged by the First Amendment.

The foregoing description of the First Amendment is qualified in its entirety by reference to the First Amendment, which is attached as Exhibit 10.1 to the Company’s current report on Form 8-K filed on May 6, 2019.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events . On July 16, 2019, OLLC entered into the Second Amendment to Credit Agreement (the “Second Amendment”), among OLLC, Amplify Acquisitionco Inc., Amplify Energy, the guarantors party thereto, the lenders party thereto and Bank of Montreal, as administrative agent (the “Administrative Agent”).

The Second Amendment amends the New Revolving Credit Facility in connection with the completion of the Merger, following which Midstates may contribute, through a series of transactions, the equity interests it holds in Midstates Petroleum Company, LLC, a Delaware limited liability company, to the Borrower (the “Contribution”), to, among other things, (i) provide that if the Merger and the Contribution are not consummated on or prior to August 31, 2019, the Administrative Agent and the lenders have the right (but not the obligation) to redetermine the borrowing base on or after September 1, 2019 and (ii) amend certain other provisions of the New Revolving Credit Facility.

Emergence Credit Facility

At June 30, 2018, OLLC, was a party to a $1.0 billion revolving credit facility (our “Emergence Credit Facility”) which was guaranteed by us and all of our current subsidiaries.

On November 2, 2018, in connection with entry into our New Revolving Credit Facility, the Emergence Credit Facility was terminated and repaid in full.

Weighted-Average Interest Rates

The following table presents the weighted-average interest rates paid, excluding commitment fees, on our consolidated variable-rate debt obligations for the periods presented:

	For the Three Months Ended		For the Six Months Ended
	June 30,		June 30,
	2019	2018	2019	2018
New Revolving Credit Facility	5.00%	n/a	5.04%	n/a
Emergence Credit Facility	n/a	5.80%	n/a	5.64%

Letters of Credit

At June 30, 2019, we had $1.7 million of letters of credit outstanding, primarily related to operations at our Wyoming properties.

Unamortized Deferred Financing Costs

Unamortized deferred financing costs associated with our New Revolving Credit Facility was $4.6 million at June 30, 2019. At June 30, 2019, the unamortized deferred financing costs are amortized over the remaining life of our New Revolving Credit Facility.

Note 9. Equity (Deficit)

Common Stock

The Company’s authorized capital stock includes 300,000,000 shares of common stock, $0.0001 par value per share. The following is a summary of the changes in our common stock issued for the six months ended June 30, 2019:

	Common
	Shares
Balance, December 31, 2018		22,181,881
Issuance of common stock		—
Restricted stock units vested		412,938
Repurchase of common shares		(120,163	)
Common stock repurchased and retired under share repurchase program		(169,400	)
Balance, June 30, 2019		22,305,256

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrants

On the May 4, 2017 (the “Effective Date”), the Company entered into a warrant agreement with American Stock Transfer & Trust Company, LLC, as warrant agent, pursuant to which the Company issued warrants to purchase up to 2,173,913 shares of the Company’s common stock (representing 8% of the Company’s outstanding common stock as of the Effective Date including shares of the Company’s common stock issuable upon full exercise of the warrants, but excluding any common stock issuable under the Management Incentive Plan (the “MIP”)), exercisable for a five-year period commencing on the Effective Date at an exercise price of $42.60 per share.

Share Repurchase Program

On December 21, 2018, the Company’s board of directors authorized the repurchase of up to $25.0 million of the Company’s outstanding shares of common stock, with repurchases beginning on January 9, 2019. During the six months ended June 30, 2019, the Company repurchased 169,400 shares of common stock at an average price of $7.35 for a total cost of approximately $1.3 million. On April 18, 2019, in anticipation of the Merger, the Company terminated the repurchase program.

Note 10. Earnings per Share

The following sets forth the calculation of earnings (loss) per share, or EPS, for the periods indicated (in thousands, except per share amounts):

	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
Net income (loss)	$	18,641	$	(25,279	)	$	(12,836	)	$	(22,040	)
Less: Net income allocated to participating restricted stockholders		728		—			—			—
Basic and diluted earnings available to common stockholders	$	17,913	$	(25,279	)	$	(12,836	)	$	(22,040	)

Common shares/units:
Common shares outstanding — basic		22,267		25,038			22,223			25,019
Dilutive effect of potential common shares		—		—			—			—
Common shares outstanding — diluted		22,267		25,038			22,223			25,019

Net earnings per share:
Basic	$	0.80	$	(1.01	)	$	(0.58	)	$	(0.88	)
Diluted	$	0.80	$	(1.01	)	$	(0.58	)	$	(0.88	)
Antidilutive stock options (1)		—		135			—			135
Antidilutive warrants (2)		2,174		2,174			2,174			2,174

(1)

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

(2)

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

Note 11. Long-Term Incentive Plans

In May 2017, the Company implemented the Management Incentive Plan (the “MIP”). At June 30, 2019, an aggregate of 2,322,404 shares of the Company’s common stock are reserved for issuance under the MIP.

Restricted Stock Units

Restricted Stock Units with Service Vesting Condition

The restricted stock units with service vesting conditions (“TSUs”) are accounted for as equity-classified awards. 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. Compensation costs are recorded as general and administrative expense. The unrecognized cost associated with the TSUs was $4.1 million at June 30, 2019. We expect to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 1.8 years.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes informati on regarding the TSUs granted under the MIP for the period presented:

				Weighted-
				Average Grant
	Number of			Date Fair Value
	Units			per Unit (1)
TSUs outstanding at December 31, 2018		598,024		$	11.35
Granted (2)		281,085		$	6.92
Forfeited		(38,151	)	$	11.13
Vested		(391,321	)	$	8.66
TSUs outstanding at June 30, 2019		449,637		$	10.94

(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 six months ended June 30, 2019 was $1.9 million based on a grant date market price ranging from $6.90 to $8.70 per share.

Restricted Stock Units with Market and Service Vesting Conditions

The restricted stock units with market and service vesting conditions (“PSUs”) are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a graded-vesting basis. As such, the Company recognizes compensation cost over the requisite service period for each separately vesting tranche of the award as though the award were, in substance, multiple awards. The Company accounts for forfeitures as they occur. Compensation costs are recorded as general and administrative expense. The unrecognized cost related to the PSUs was $0.9 million at June 30, 2019. We expect to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 1.3 years.

The PSUs will vest based on the satisfaction of service and market vesting conditions with market vesting based on the Company’s achievement of certain share price targets. The PSUs are subject to service-based vesting such that 50% of the PSUs service vest on the applicable market vesting date and an additional 25% of the PSUs service vest on each of the first and second anniversaries of the applicable market vesting date.

In the event of a qualifying termination, subject to certain conditions, (i) all PSUs that have satisfied the market vesting conditions will fully service vest, upon such termination, and (ii) if the termination occurs between the second and third anniversaries of the grant date, then PSUs that have not market vested as of the termination will market vest to the extent that the share targets (in each case, reduced by $0.25) are achieved as of such termination. Subject to the foregoing, any unvested PSUs will be forfeited upon termination of employment.

A Monte Carlo simulation was used in order to determine the fair value of these awards at the grant date.

The assumptions used to estimate the fair value of the PSUs are as follows:

Share price targets	$	12.50		$	15.00		$	17.50

Risk-free interest rate:
Awards Issued on January 1, 2019		2.44	%		2.44	%		2.44	%
Awards Issued on April 1, 2019		2.28	%		2.28	%		2.28	%

Dividend yield		—			—			—

Expected volatility:
Awards Issued on January 1, 2019		54.0	%		54.0	%		54.0	%
Awards Issued on April 1, 2019		50.0	%		50.0	%		50.0	%

Calculated fair value per PSU:
Awards Issued on January 1, 2019	$	6.76		$	5.86		$	5.11
Awards Issued on April 1, 2019	$	4.22		$	3.43		$	2.80

The following table summarizes information regarding the PSUs granted under the MIP for the period presented:

				Weighted-
				Average Grant
	Number of			Date Fair Value
	Units			per Unit (1)
PSUs outstanding at December 31, 2018		393,500		$	8.14
Granted (2)		11,500		$	5.12
Forfeited		(22,750	)	$	7.59
Vested		—		$	—
PSUs outstanding at June 30, 2019		382,250		$	8.08

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 six months ended June 30, 2019 was less than $0.1 million based on a calculated fair value price ranging from $2.80 to $6.76 per share.

2017 Non-Employee Directors Compensation Plan

In June 2017, the Company implemented the 2017 Non-Employee Directors Compensation Plan (“Directors Compensation Plan”) to attract and retain services of experienced non-employee directors of the Company or its subsidiaries. An aggregate of 200,000 shares of the Company’s common stock are reserved for issuance under the Directors Compensation Plan.

The restricted stock units with a service vesting condition (“Board RSUs”) are accounted for as equity-classified awards. 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. Compensation costs are recorded as general and administrative expense. The unrecognized cost associated with restricted stock unit awards was $0.5 million at June 30, 2019. We expect to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 2.3 years.

The following table summarizes information regarding the Board RSUs granted under the Directors Compensation Plan for the period presented:

				Weighted-
				Average Grant
	Number of			Date Fair Value
	Units			per Unit (1)
Board RSUs outstanding at December 31, 2018		39,604		$	11.36
Granted (2)		42,933		$	6.95
Forfeited		—		$	—
Vested		(21,617	)	$	11.57
Board RSUs outstanding at June 30, 2019		60,920		$	8.18

(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 Board RSUs issued for the six months ended June 30, 2019 was $0.3 million based on grant date market price of $6.95 per share.

Compensation Expense

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

	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2019		2018			2019		2018
Equity classified awards
TSUs	$	532	$	(837	)	$	1,202	$	111
PSUs		309		251			705		251
Board RSUs		50		35			162		54
Restricted stock options		—		(134	)		—		75
	$	891	$	(685	)	$	2,069	$	491

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 12. Leases

As discussed in Note 2, the Company adopted ASU 842, leases, on January 1, 2019 using the modified retrospective approach with a cumulative impact to retained earnings. The adoption of this standard has resulted in an increase in the assets and liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheet. The Company has completed the review and evaluation of current and potential leases which resulted primarily in our corporate office lease and some minor equipment and vehicle leases qualifying under the new guidance. Based upon this analysis, the impact of the new guidance established a liability and the corresponding asset of $5.4 million at January 1, 2019.

For the quarter ended June 30, 2019, our leases qualify as operating leases and we did not have any existing or new leases qualifying as financing leases. We have leases for office space and equipment in our corporate office and operating regions as well as vehicles, compressors and surface rentals related to our business operations. In addition, we have offshore Southern California pipeline right-of-way use agreements. Most of our leases, other than our corporate office lease, have an initial term and may be extended on a month-to-month basis after expiration of the initial term. Most of our leases can be terminated with 30-day prior written notice. The majority of our month-to-month leases are not included as a lease liability in our balance sheet under ASC 842 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.

Our corporate office lease does not provide an implicit rate. To determine the present value of the lease payments, we use our incremental borrowing rate based on the information available at the inception date. To determine the incremental borrowing rate, we apply a portfolio approach based on the applicable lease terms and the current economic environment. We use a reasonable market interest rate for our office equipment and vehicle leases.

The following table presents the Company’s right-of-use assets and lease liabilities as of June 30, 2019.

	June 30,
	2019
	(In thousands)
Right-of-use asset	$	5,096

Lease liabilities:
Current lease liability		2,126
Long-term lease liability		2,986
Total lease liability	$	5,112

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):

	Office lease		Leased vehicles and office equipment		Total
Remaining 2019	$	1,540	$	586	$	2,126
2020		1,567		536		2,103
2021		924		283		1,207
2022 and thereafter		—		—		—
Total lease payments	$	4,031	$	1,405	$	5,436
Less: interest	$	260	$	64	$	324
Present value of lease liabilities	$	3,771	$	1,341	$	5,112

The following is a schedule of the Company’s future contractual payment for operating leases prepared in accordance with accounting standards prior to the adoption of ASC 842, as of December 31, 2018 (in thousands):

			Payment or Settlement Due by Period
Operating leases	Total		2019		2020		2021		2022		2023		Thereafter
Operating leases	$	11,846	$	5,893	$	2,072	$	2,109	$	337	$	205	$	1,230

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The weighted average remaining lease terms and discount rate for all of our operating leases were as follow as of June 30, 2019:

	June 30,
	2019
Weighted average remaining lease term (years):
Corporate office	1.91
Vehicles		0.49
Office equipment		0.10
Weighted average discount rate:
Corporate office		3.72	%
Vehicles		0.77	%
Office equipment		0.19	%

We have instituted internal controls going forward to monitor and evaluate new leases for appropriate accounting under the new guidance.

Note 13. Supplemental Disclosures to the Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Consolidated Statements of Cash Flows

Accrued Liabilities

Current accrued liabilities consisted of the following at the dates indicated (in thousands):

	June 30,		December 31,
	2019		2018
Accrued lease operating expense	$	9,831	$	10,469
Accrued capital expenditures		8,816		4,349
Accrued general and administrative expense		4,972		4,393
Accrued interest payable		3,435		2,476
Operating lease liability		2,126		—
Accrued ad valorem tax		1,682		729
Asset retirement obligations		477		477
Other		21		262
Accrued liabilities	$	31,360	$	23,155

Cash and Cash Equivalents Reconciliation

The following table provides a reconciliation of cash and cash equivalents on the Unaudited Condensed Consolidated Balance Sheet to cash, cash equivalents and restricted cash on the Unaudited Condensed Statements of Consolidated Cash Flows (in thousands):

	June 30,		December 31,
	2019		2018
Cash and cash equivalents	$	18,702	$	49,704
Restricted cash		325		325
Total cash, cash equivalents and restricted cash	$	19,027	$	50,029

Supplemental Cash Flows

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

	For the Six Months Ended
	June 30,
	2019			2018
Supplemental cash flows:
Cash paid for interest, net of amounts capitalized	$	5,861		$	10,815
Cash paid for reorganization items, net		650			1,522
Noncash investing and financing activities:
Increase (decrease) in capital expenditures in payables and accrued liabilities		(5,034	)		(446	)
(Increase) decrease in accounts receivable/payable related to divestiture		—			(206	)

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

N ote 14. Related Party Transactions

Related Party Agreements

There have been no transactions in excess of $120,000 between us 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, 2019 and 2018, respectively.

Note 15. Commitments and Contingencies

Litigation and Environmental

As part of our normal business activities, we may be named as defendants in litigation and legal proceedings, including those arising from regulatory and environmental matters. On January 13, 2017, the Company received a letter from the Environmental Protection Agency (“EPA”) concerning potential violations of the Clean Air Act (“CAA”) section 112(r) associated with our Bairoil complex in Wyoming. The Company met with the EPA on February 16, 2017 to present relevant information related to the allegations. On March 12, 2017, the EPA filed an Administrative Compliance Order on Consent for which the Company was required to bring all outstanding issues to closure no later than June 30, 2018. On June 14, 2018, we sent the EPA a letter informing the EPA that we had completed all remedial action items related to the Administrative Compliance Order on Consent. In September 2018, we came to an agreement regarding the potential violations, noting no material impact on the Company’s financial position, results of operations or cash flows. Other than the Chapter 11 proceedings and the alleged CAA violations discussed herein, based on facts currently available, we are not aware of any litigation, pending or threatened, that we believe will have a material adverse effect on our financial position, results of operations or cash flows; however, cash flow could be significantly impacted in the reporting periods in which such matters are resolved.

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

At June 30, 2019 and December 31, 2018, we had no environmental reserves recorded on our Unaudited Condensed Consolidated Balance Sheet.

Supplemental Bond for Decommissioning Liabilities Trust Agreement

Beta Operating Company, LLC (“Beta”), has an obligation with the BOEM in connection with its 2009 acquisition of our properties in federal waters offshore Southern California. The Company had previously supported this obligation with $71.3 million of A-rated surety bonds and $90.2 million of cash, but $90.0 million of cash was released to the Company on June 24, 2019. Following the release, Beta’s decommissioning obligations remain fully supported by $161.3 million in A-rated surety bonds and $0.3 million in cash.

Note 16. Income Taxes

The Company had no income tax benefit/(expense) for the three months ended June 30, 2019 and had less than $0.1 million income tax benefit/(expense) for the six months ended June 30, 2019, and no income tax benefit/(expense) for the three and six months ended June 30, 2018. The Company’s effective tax rate was 0.0% and 0.4% for the three and six months ended June 30, 2019, respectively, and 0.0% for the three and six months ended June 30, 2018, respectively. The effective tax rates for the three and six months ended June 30, 2019 and 2018 are different from the statutory U.S. federal income tax rate primarily due to our recorded valuation allowances.

Note 17. Subsequent Events

Second Amendment to New Revolving Credit Facility

See Note 8 for additional information regarding the Second Amendment to New Revolving Credit Facility.

ITEM 2. M ANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and accompanying notes in “Item 1. Financial Statements” contained herein and our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 6, 2019 (“2018 Form 10-K”). The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” in the front of this report.

References

When referring to Amplify Energy Corp. (also referred to as “Amplify Energy,” or the “Company”), the intent is to refer to Amplify Energy, a Delaware corporation, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made. Amplify Energy is the successor reporting company of Memorial Production Partners LP pursuant to Rule 15d-5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Overview

We operate in one reportable segment engaged in the acquisition, development, exploitation and production of oil and natural gas properties. Our management evaluates performance based on the reportable business segment as the economic environments are not different within the operation of our oil and natural gas properties. Our business activities are conducted through Amplify Energy Operating LLC (“OLLC”), our wholly owned subsidiary, and its wholly owned subsidiaries. Our assets consist primarily of producing oil and natural gas properties and are located in the Rockies, in federal waters offshore Southern California, East Texas / North Louisiana and South Texas. Most of our oil and natural gas properties are located in large, mature oil and natural gas reservoirs. The Company’s properties consist primarily of operated and non-operated working interests in producing and undeveloped leasehold acreage and working interests in identified producing wells. As of December 31, 2018:

•

Our total estimated proved reserves were approximately 841.1 Bcfe, of which approximately 65% were liquids and 79% were classified as proved developed reserves;

•

We produced from 2,068 gross (1,125 net) producing wells across our properties, with an average working interest of 54% and the Company is the operator of record of the properties containing 92% of our total estimated proved reserves; and

•

Our average net production for the three months ended December 31, 2018 was 142.5 MMcfe/d, implying a reserve-to-production ratio of approximately 16 years.

Recent Developments

Second Amendment to New Revolving Credit Facility

On July 16, 2019, Amplify Energy Operating LLC (“OLLC”) entered into the Second Amendment to Credit Agreement (the “Second Amendment”), among OLLC, Amplify Acquisitionco Inc., Amplify Energy, the guarantors party thereto, the lenders party thereto and Bank of Montreal, as administrative agent (the “Administrative Agent”).

The Second Amendment amends the parties’ existing Credit Agreement, dated as of November 2, 2018 (the “New Revolving Credit Facility”) in connection with the completion of the Merger, following which Midstates may contribute, through a series of transactions, the equity interests it holds in Midstates Petroleum Company, LLC, a Delaware limited liability company, to the Borrower (the “Contribution”), to, among other things, (i) provide that if the Merger and the Contribution are not consummated on or prior to August 31, 2019, the Administrative Agent and the lenders have the right (but not the obligation) to redetermine the borrowing base on or after September 1, 2019 and (ii) amend certain other provisions of the New Revolving Credit Facility.

Beta Decommissioning Trust Account

On June 24, 2019, the Company received the release of $90.0 million from the Beta decommissioning trust account. Following the release Beta’s decommissioning obligations remain fully supported by A-rated surety bonds.

Proposed Midstates Merger

On May 5, 2019, the Company, Midstates Petroleum Company, Inc. (“Midstates”) and Midstates Holdings, Inc., a direct, wholly owned subsidiary of Midstates (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, in an all-stock transaction, Merger Sub will merge with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Midstates (the “Merger”). At the effective time of the Merger, each share of Amplify Energy common stock issued and outstanding immediately prior to the effective time (other than excluded shares) will be cancelled and converted into the right to receive 0.933 shares of Midstates common stock, par value $0.01 per share. Following the closing of the Merger, current Amplify Energy and Midstates stockholders will each own approximately 50% of the outstanding stock of the combined company and the combined company will continue to operate under the Amplify brand.

Business Environment and Operational Focus

We use a variety of financial and operational metrics to assess the performance of our oil and natural gas operations, including: (i) production volumes; (ii) realized prices on the sale of our production; (iii) cash settlements on our commodity derivatives; (iv) lease operating expense; (v) gathering, processing and transportation; (vi) general and administrative expense; and (vii) Adjusted EBITDA (defined below).

Sources of Revenues

Our revenues are derived from the sale of natural gas and oil production, as well as the sale of NGLs that are extracted from natural gas during processing. Production revenues are derived entirely from the continental United States. Natural gas, NGL and oil prices are inherently volatile and are influenced by many factors outside our control. In order to reduce the impact of fluctuations in natural gas and oil prices on revenues, we intend to periodically enter into derivative contracts that fix the future prices received. At the end of each period the fair value of these commodity derivative instruments are estimated and because hedge accounting is not elected, the changes in the fair value of unsettled commodity derivative instruments are recognized in earnings at the end of each accounting period.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates is included in our 2018 Form 10-K. Significant estimates include, but are not limited to, oil and natural gas reserves; depreciation, depletion and amortization of proved oil and natural gas properties; future cash flows from oil and natural gas properties; impairment of long-lived assets; fair value of derivatives; fair value of equity compensation; fair values of assets acquired and liabilities assumed in business combinations and asset retirement obligations. These estimates, in our opinion, are subjective in nature, require the use of professional judgment and involve complex analysis.

When used in the preparation of our consolidated financial statements, such estimates are based on our current knowledge and understanding of the underlying facts and circumstances and may be revised as a result of actions we take in the future. Changes in these estimates will occur as a result of the passage of time and the occurrence of future events. Subsequent changes in these estimates may have a significant impact on our consolidated financial position, results of operations and cash flows.

Results of Operations

Beginning in 2019, the Company elected to change its reporting convention from natural gas equivalent (Mcfe) to barrels of oil equivalent (Boe). The change in presentation reflects our liquids-weighted production and reserve profile with a balanced approach to development of our oil and natural gas asset portfolio. The Company’s proved reserves as of year-end 2018 were 50% crude oil, 15% natural gas liquids and 35% natural gas.

The results of operations for the three and six months ended June 30, 2019 and 2018 have been derived from our consolidated financial statements.

The following table summari zes certain of the results of operations for the periods indicated.

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	($ In thousands)
Oil and natural gas sales	$	59,485		$	90,894		$	124,552		$	178,741
Lease operating expense		26,292			27,500			55,202			57,070
Gathering, processing and transportation		4,391			5,975			9,048			11,575
Exploration expense		6			2,988			21			3,022
Taxes other than income		3,464			5,535			7,873			10,572
Depreciation, depletion and amortization		12,913			13,619			24,079			26,577
General and administrative expense		10,566			16,863			19,874			27,520
Accretion of asset retirement obligations		1,332			1,429			2,643			3,147
(Gain) loss on commodity derivative instruments		(22,993	)		35,652			9,494			46,108
(Gain) loss on sale of properties		—			(227	)		—			2,146
Interest expense, net		(4,422	)		(6,287	)		(8,511	)		(12,059	)
Reorganization items, net		(464	)		(768	)		(651	)		(1,286	)
Income tax benefit (expense)		—			—			50			—
Net income (loss)		18,641			(25,279	)		(12,836	)		(22,040	)

Oil and natural gas revenue:
Oil sales	$	41,685		$	58,540		$	81,742		$	113,267
NGL sales		5,336			10,931			11,201			21,877
Natural gas sales		12,464			21,423			31,609			43,597
Total oil and natural gas revenue	$	59,485		$	90,894		$	124,552		$	178,741

Production volumes:
Oil (MBbls)		696			892			1,448			1,795
NGLs (MBbls)		258			391			524			803
Natural gas (MMcf)		5,803			7,665			11,293			15,441
Total (MBoe)		1,921			2,561			3,854			5,172
Average net production (MBoe/d)		21.1			28.1			21.3			28.6

Average sales price:
Oil (per Bbl)	$	59.85		$	65.57		$	56.44		$	63.10
NGL (per Bbl)		20.65			27.95			21.38			27.24
Natural gas (per Mcf)		2.15			2.79			2.80			2.82
Total (per Boe)	$	30.95		$	35.50		$	32.32		$	34.56

Average unit costs per Boe:
Lease operating expense	$	13.69		$	10.74		$	14.32		$	11.04
Gathering, processing and transportation		2.29			2.33			2.35			2.24
Taxes other than income		1.80			2.16			2.04			2.04
General and administrative expense		5.50			6.59			5.16			5.32
Depletion, depreciation and amortization		6.72			5.32			6.25			5.14

For the three months ended June 30, 2019 compared to the three months ended June 30, 2018

Net income of $18.6 million and net loss of $25.3 million were recorded for the three months ended June 30, 2019 and 2018, respectively.

Oil, natural gas and NGL revenues were $59.5 million and $90.9 million for the three months ended June 30, 2019 and 2018, respectively. Average net production volumes were approximately 21.1 MBoe/d and 28.1 MBoe/d for the three months ended June 30, 2019 and 2018, respectively. The change in production volumes was primarily due to the natural decline of wells, decreased drilling activity and the divestiture of certain non-core assets located in South Texas (the “South Texas Divestiture”). The average realized sales price was $30.95 per Boe and $35.50 per Boe for the three months ended June 30, 2019 and 2018, respectively.

Lease operating expense was $26.3 million and $27.5 million for the three months ended June 30, 2019 and 2018, respectively. The change in lease operating expense was primarily related to lower production. On a per Boe basis, lease operating expense was $13.69 and $10.74 for the three months ended June 30, 2019 and 2018, respectively.

Gathering, processing and transportation was $4.4 million and $6.0 million for the three months ended June 30, 2019 and 2018, respectively. The change in gathering, processing and transportation was primarily the result of lower production. On a per Boe basis, gathering, processing and transportation was $2.29 and $2.33 for the three months ended June 30, 2019 and 2018, respectively.

Exploration expense was less than $0.1 million and $3.0 million for the three months ended June 30, 2019 and 2018, respectively. The change in exploration expense was primarily due to a $2.9 million expense associated with the early termination of a rig contract in East Texas during 2018.

Taxes other than income was $3.5 million and $5.5 million for the three months ended June 30, 2019 and 2018, respectively. On a per Boe basis, taxes other than income were $1.80 and $2.16 for the three months ended June 30, 2019 and 2018, respectively. The change in taxes other than income on a per MBoe basis was primarily due to a decrease in commodity prices.

DD&A expense was $12.9 million and $13.6 million for the three months ended June 30, 2019 and 2018, respectively. The change in DD&A expense was primarily due to a decrease in production volumes and the South Texas Divestiture, which closed on May 30, 2018. The South Texas Divestiture assets were accounted for as assets held for sale for the period from June 30, 2018 through the closing date.

General and administrative expense was $10.6 million and $16.9 million for the three months ended June 30, 2019 and 2018, respectively. General and administrative expense for the three months ended June 30, 2019 included $3.5 million of acquisition costs. General and administrative expense for the three months ended June 30, 2018, included $7.7 million in severance payments to certain departing executives. Non-cash share-based compensation expense was $1.4 million and $0.3 million for the three months ended June 30, 2019 and 2018, respectively. The three-month period ended June 30, 2018, included $1.7 million reduction in non-cash share-based compensation related to the impact of management separation and retirement agreements for certain departing executives.

Net gains on commodity derivative instruments of $23.0 million were recognized for the three months ended June 30, 2019, consisting of $23.6 million increase in the fair value of open positions and offset by $0.6 million of cash settlements paid on expired positions. Net losses on commodity derivative instruments of $35.7 million were recognized for the three months ended June 30, 2018, consisting of $2.0 million of cash settlement receipts on expired positions offset by a $37.7 million decrease in the fair value of open positions.

Given the volatility of commodity prices, it is not possible to predict future reported mark-to-market net gains or losses and the actual net gains or losses that will ultimately be realized upon settlement of the hedge positions in future years. If commodity prices at settlement are lower than the prices of the hedge positions, the hedges are expected to partially mitigate the otherwise negative effect on earnings of lower oil, natural gas and NGL prices. However, if commodity prices at settlement are higher than the prices of the hedge positions, the hedges are expected to dampen the otherwise positive effect on earnings of higher oil, natural gas and NGL prices and will, in this context, be viewed as having resulted in an opportunity cost.

Interest expense, net was $4.4 million and $6.3 million for the three months ended June 30, 2019 and 2018, respectively. The change in interest expense is primarily due to a $1.5 million reduction in interest expense due to lower outstanding borrowings for the three months ended June 30, 2019. In addition we had gains of interest rate swaps of approximately $0.6 million and net change of $0.9 million in the amortization and write-off of deferred financing fees.

Average outstanding borrowings under our New Revolving Credit Facility were $259.3 million for the three months ended June 30, 2019. Average outstanding borrowings under our Emergence Credit Facility were $334.2 million for the three months ended June 30, 2018.

Reorganization items, net represents costs and income directly associated with the Company’s Chapter 11 proceedings since January 16, 2017, the petition date, such as advisor and professional fees. The Company incurred $0.5 million and $0.8 million for the three months ended June 30, 2019 and 2018, respectively. See Note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements under “Item 1. Financial Statements” of this quarterly report for additional information.

For the six months ended June 30, 2019 compared to the six months ended June 30, 2018

Net losses of $12.8 million and $22.0 million were recorded for the six months ended June 30, 2019 and 2018, respectively.

Oil, natural gas and NGL revenues were $124.6 million and $178.7 million for the six months ended June 30, 2019 and 2018, respectively. Average net production volumes were approximately 21.3 MBoe/d and 28.6 MBoe/d for the six months ended June 30, 2019 and 2018, respectively. The change in production volumes was primarily due to the natural decline of wells, decreased drilling activity and the divestiture of certain non-core assets located in South Texas (the “South Texas Divestiture”). The average realized sales price was $32.32 per Boe and $34.56 per Boe for the six months ended June 30, 2019 and 2018, respectively.

Lease operating expense was $55.2 million and $57.1 million for the six months ended June 30, 2019 and 2018, respectively. The change in lease operating expense was primarily related to lower production. On a per Boe basis, lease operating expense was $14.32 and $11.04 for the six months ended June 30, 2019 and 2018, respectively.

Gathering, processing and transportation was $9.0 million and $11.6 million for the six months ended June 30, 2019 and 2018, respectively. The change in gathering, processing and transportation was primarily the result of lower production. On a per Boe basis, gathering, processing and transportation was $2.35 and $2.24 for the six months ended June 30, 2019 and 2018, respectively.

Exploration expense was less than $0.1 million and $3.0 millio n for the six months ended June 30, 2019 and 2018, respectively. The change in exploration expense was primarily due to a $2.9 million expense associated with the early termination of a rig contract in East Texas during 2018.

Taxes other than income was $7.9 million and $10.6 million for the six months ended June 30, 2019 and 2018, respectively. On a per Boe basis, taxes other than income were $2.04 for the six months ended June 30, 2019 and 2018, respectively.

DD&A expense was $24.1 million and $26.6 million for the six months ended June 30, 2019 and 2018, respectively. The change in DD&A expense was primarily due to a decrease in production volumes and the South Texas Divestiture, which closed on May 30, 2018. The South Texas Divestiture assets were accounted for as assets held for sale for the period from June 30, 2018 through the closing date.

General and administrative expense was $19.9 million and $27.5 million for the six months ended June 30, 2019 and 2018, respectively. General and administrative expense for the six months ended June 30, 2019 included $3.8 million of acquisition cost. Non-cash share-based compensation expense was $3.3 million and $1.5 million for the six months ended June 30, 2019 and 2018, respectively. General and administrative expense includes $7.7 million in severance payments to departing executives during the six months ended June 30, 2018.

Net losses on commodity derivative instruments of $9.5 million were recognized for the six months ended June 30, 2019, consisting of $7.6 million decrease in the fair value of open positions and $1.9 million of cash settlements paid on expired positions. Net losses on commodity derivative instruments of $46.1 million were recognized for the six months ended June 30, 2018, consisting of $6.9 million of cash settlement receipts on expired positions offset by a $53.0 million decrease in the fair value of open positions.

Interest expense, net was $8.5 million and $12.1 million for the six months ended June 30, 2019 and 2018, respectively. The change in interest expense is primarily due to a $2.8 million reduction in interest expense due to lower outstanding borrowings for the six months ended June 30, 2019. In addition we had gains of interest rate swaps of approximately $0.5 million and net change of $1.2 million in the amortization and write-off of deferred financing fees.

Average outstanding borrowings under our New Revolving Credit Facility were $268.6 million for the six months ended June 30, 2019. Average outstanding borrowings under our Emergence Credit Facility were $349.1 million for the six months ended June 30, 2018.

Reorganization items, net represents costs and income directly associated with the Company’s Chapter 11 proceedings since January 16, 2017, the petition date, such as advisor and professional fees. The Company incurred $0.7 million and $1.3 million for the six months ended June 30, 2019 and 2018, respectively. See Note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements under “Item 1. Financial Statements” of this quarterly report for additional information.

Adjusted EBITDA

We include in this report the non-GAAP financial measure Adjusted EBITDA and provide our reconciliation of Adjusted EBITDA to net income and net cash flows from operating activities, our most directly comparable financial measures calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss):

Plus:

•

Interest expense;

•

Income tax expense;

•

Depreciation, depletion and amortization (“DD&A”);

•

Impairment of goodwill and long-lived assets (including oil and natural gas properties);

•

Accretion of asset retirement obligations (“AROs”);

•

Loss on commodity derivative instruments;

•

Cash settlements received on expired commodity derivative instruments;

•

Losses on sale of assets;

•

Share/unit-based compensation expenses;

•

Exploration costs;

•

Acquisition and divestiture related expenses;

•

Restructuring related costs;

•

Reorganization items, net;

•

Severance payments; and

•

Other non-routine items that we deem appropriate.

Less:

•

Interest income;

•

Income tax benefit;

•

Gain on commodity derivative instruments;

•

Cash settlements paid on expired commodity derivative instruments;

•

Gains on sale of assets and other, net; and

•

Other non-routine items that we deem appropriate.

We believe that Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure.

Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income or cash flows from operating activities as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. We believe that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet debt service requirements.

In addition, management uses Adjusted EBITDA to evaluate actual cash flow available to develop existing reserves or acquire additional oil and natural gas properties.

The following tables present our reconciliation of Adjusted EBITDA to net income and net cash flows from operating activities, our most directly comparable GAAP financial measures, for each of the periods indicated.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Net income (loss)	$	18,641		$	(25,279	)	$	(12,836	)	$	(22,040	)
Interest expense, net		4,422			6,287			8,511			12,059
Income tax expense (benefit)		—			—			(50	)		—
DD&A		12,913			13,619			24,079			26,577
Accretion of AROs		1,332			1,429			2,643			3,147
(Gains) losses on commodity derivative instruments		(22,993	)		35,652			9,494			46,108
Cash settlements received (paid) on expired commodity derivative instruments		(631	)		2,027			(1,908	)		6,903
(Gain) loss on sale of properties		—			(227	)		—			2,146
Acquisition and divestiture related expenses		3,458			679			3,822			887
Share-based compensation expense		1,375			336			3,311			1,512
Exploration costs		6			2,988			21			3,022
(Gain) loss on settlement of AROs		34			(110	)		177			(110	)
Bad debt expense		—			—			101			—
Reorganization items, net		464			768			651			1,286
Severance payments		50			7,709			89			7,709
Other		—			(105	)		—			(105	)
Adjusted EBITDA	$	19,071		$	45,773		$	38,105		$	89,101

Reconciliation of Adjusted EBITDA to Net Cash from Operating Activities

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Net cash provided by (used in) operating activities	$	22,499		$	42,128		$	33,299		$	84,275
Changes in working capital		(10,862	)		(13,740	)		(7,856	)		(18,550	)
Interest expense, net		4,422			6,287			8,511			12,059
Gain (loss) on interest rate swaps		(578	)		—			(484	)		—
Cash settlements paid (received) on interest rate swaps		(45	)		—			(45	)		—
Amortization and write-off of deferred financing fees		(266	)		(1,211	)		(574	)		(1,752	)
Acquisition and divestiture related expenses		3,458			679			3,822			887
Income tax expense (benefit) - current portion		—			—			(50	)		—
Exploration costs		6			2,988			21			3,022
Plugging and abandonment cost		77			270			382			270
Reorganization items, net		464			768			651			1,286
Severance payments		50			7,709			89			7,709
Other		(154	)		(105	)		339			(105	)
Adjusted EBITDA	$	19,071		$	45,773		$	38,105		$	89,101

Liquidity and Capital Resources

Overview. Our ability to finance our operations, including funding capital expenditures and acquisitions, meet our indebtedness obligations, refinance our indebtedness or meet our collateral requirements will depend on our ability to generate cash in the future. Our primary sources of liquidity and capital resources have historically been cash flows generated by operating activities, borrowings under our revolving credit facility and equity and debt capital markets. For the remainder of 2019, we expect our primary funding sources to be cash flows generated by operating activities and available borrowing capacity under our New Revolving Credit Facility.

Capital Markets. We do not currently anticipate any near-term capital markets activity, but we will continue to evaluate the availability of public debt and equity for funding potential future growth projects and acquisition activity.

Hedging. Commodity hedging has been and remains an important part of our strategy to reduce cash flow volatility. Our hedging activities are intended to support oil, NGL, and natural gas prices at targeted levels and to manage our exposure to commodity price fluctuations. We intend to enter into commodity derivative contracts at times and on terms desired to maintain a portfolio of commodity derivative contracts covering at least 25% - 50% of our estimated production from total proved developed producing reserves over a one-to-three year period at any given point of time to satisfy the hedging covenants in our New Revolving Credit Facility and pursuant to our internal policies. We may, however, from time to time, hedge more or less than this approximate amount. Additionally, we may take advantage of opportunities to modify our commodity derivative portfolio to change the percentage of our hedged production volumes when circumstances suggest that it is prudent to do so. The current market conditions may also impact our ability to enter into future commodity derivative contracts. For additional information regarding the volumes of our production covered by commodity derivative contracts and the average prices at which production is hedged as of June 30, 2019, see “Item 3. Quantitative and Qualitative Disclosures About Market Risk — Counterparty and Customer Credit Risk.”

We evaluate counterparty risks related to our commodity derivative contracts and trade credit. Should any of these financial counterparties not perform, we may not realize the benefit of some of our hedges under lower commodity prices. We sell our oil and natural gas to a variety of purchasers. Non-performance by a customer could also result in losses.

Capital Expenditures. Our total capital expenditures were approximately $38.4 million for the six months ended June 30, 2019, which were primarily related to accelerated capital cost for the Bairoil plant expansion, drilling, capital workovers and facilities located in the Rockies and South Texas.

Government Trust Account . In 2015, the Bureau of Safety and Environmental Enforcement issued a preliminary report that indicated the estimated cost of decommissioning the offshore production facilities associated with our properties in federal waters offshore Southern California may further increase. The implementation of this increase is currently on hold and we do not expect resolution of a negotiated decommissioning estimate until later in 2019. The Company had previously supported the Beta decommissioning obligation with $71.3 million of A – rated surety bonds and $90.2 million of cash, but $90.0 million of cash was released to the Company on June 24, 2019. Following the release, Beat’s decommissioning obligations remain fully supported by $161.3 million in A – rated surety bonds and $0.3 million in cash.

Working Capital. We expect to fund our working capital needs primarily with operating cash flows. We also plan to reinvest a sufficient amount of our operating cash flow to fund our expected capital expenditures. Our debt service requirements are expected to be funded by operating cash flows. See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1. Financial Statements” and “— Overview” of this quarterly report for additional information.

As of June 30, 2019, we had working capital deficit of $3.7 million primarily due to the timing of accruals, which included accrued liabilities of $31.4 million and revenues payable of $22.4 million offset by a cash balance of $18.7 million, accounts receivable of $22.8 million and prepaid expenses of $9.3 million.

Debt Agreements

New Revolving Credit Facility. On November 2, 2018, OLLC as borrower, entered into the New Revolving Credit Facility (as amended and supplemented to date) with Bank of Montreal, as administrative agent. At June 30, 2019, our borrowing base under our New Revolving Credit Facility was subject to redetermination on at least a semi-annual basis primarily based on a reserve engineering report with respect to our estimated natural gas, oil and NGL reserves, which takes into account the prevailing natural gas, oil and NGL prices at such time, as adjusted for the impact of our commodity derivative contracts. The borrowing base as of June 30, 2019, was approximately $425.0 million.

As of June 30, 2019, we were in compliance with all the financial (current ratio and total leverage ratio) and other covenants associated with our New Revolving Credit Facility.

As of June 30, 2019, we had approximately $248.4 million of available borrowings under our New Revolving Credit Facility, net of $1.7 million in letters of credit. See Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1. Financial Statements” of this quarterly report for additional information regarding our New Revolving Credit Facility.

Cash Flows from Operating, Investing and Financing Activities

The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated. The cash flows for the six months ended June 30, 2019 and 2018, have been derived from our Unaudited Condensed Consolidated Financial Statements. For information regarding the individual components of our cash flow amounts, see the Unaudited Condensed Statements of Consolidated Cash Flows included under “Item 1. Financial Statements” of this quarterly report.

	For the Six Months Ended
	June 30,
	2019			2018
	(In thousands)
Net cash provided by operating activities	$	33,299		$	84,275
Net cash used in investing activities		56,425			(20,247	)
Net cash used in financing activities		(120,726	)		(62,509	)

Operating Activities. Key drivers of net operating cash flows are commodity prices, production volumes and operating costs. Net cash provided by operating activities was $33.3 million and $84.3 million for the six months ended June 30, 2019 and 2018, respectively. Production volumes were approximately 21.3 MBoe/d and 28.6 M Boe/d for the six months ended June 30, 2019 and 2018, respectively. The average realized sales price was $32.32 per Boe and $34.56 per Boe for the six months ended June 30, 2019 and 2018, respectively. Lease operating expenses were $55.2 million and $57.1 million for the six months ended June 30, 2019 and 2018, respectively. Gathering, processing and transportation was $9.0 million and $11.6 million for the six months ended June 30, 2019 and 2018, respectively.

Investing Activities. Net cash used in investing activities for the six months ended June 30, 2019 was $56.4 million, of which $33.2 million was used for additions to oil and natural gas properties. Withdrawal of restricted investments was $90.0 million, which related to the Company receiving $90.0 million from the Beta decommissioning trust account. See Note 15 of the Notes to Unaudited Condensed Consolidated Financial Statements under “Item 1. Financial Statements” of this quarterly report for additional information. Net cash used in investing activities for the six months ended June 30, 2018 was $20.2 million, of which $38.8 million was used for additions to oil and natural gas properties and partially offset by $18.6 million in proceeds from the sale of oil and natural gas properties related to the South Texas Divestiture.

Financing Activities . The Company had net repayments of $119.0 million related to our New Revolving Credit Facility and $62.0 million under the Emergence Credit Facility for the six months ended June 30, 2019 and 2018, respectively.

During the six months ended June 30, 2019, the Company repurchased 169,400 shares of common stock at an average price of $7.35 for a total cost of approximately $1.3 million.

Contractual Obligations

During the six months ended June 30, 2019, there were no significant changes in our consolidated contractual obligations from those reported in our 2018 Form 10-K except for the New Revolving Credit Facility borrowings and repayments.

Off–Balance Sheet Arrangements

As of June 30, 2019, we had no off–balance sheet arrangements.

Recently Issued Accounting Pronouncements

For a discussion of recent accounting pronouncements that will affect us, see Note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1. Financial Statements” of this quarterly report for additional information.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

In the normal course of our business operations, we are exposed to certain risks, including commodity prices. We may enter into derivative instruments to manage or reduce market risk, but do not enter into derivative agreements for speculative purposes. We do not designate these or plan to designate future derivative instruments as hedges for accounting purposes. Accordingly, the changes in the fair value of these instruments are recognized currently in earnings. We believe that our exposures to market risk have not changed materially since those reported under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in our 2018 Form 10-K.

Commodity Price Risk

Our major market risk exposure is in the prices that we receive for our oil, natural gas and NGL production. To reduce the impact of fluctuations in commodity prices on our revenues, we periodically enter into derivative contracts with respect to a portion of our projected production through various transactions that fix the future prices we receive. It has been our practice to enter into fixed price swaps and costless collars only with lenders and their affiliates under our Emergence Credit Facility and our New Revolving Credit Facility.

For additional information regarding the volumes of our production covered by commodity derivative contracts and the average prices at which production is hedged as of June 30, 2019, see Note 6 of the Notes to Unaudited Condensed Consolidated Financial Statements included “Item 1. Financial Statements” of this quarterly report.

Interest Rate Risk

Our risk management policy provides for the use of interest rate swaps to reduce the exposure to market rate fluctuations by converting variable interest rates to fixed interest rates. Conditions sometimes arise where actual borrowings are less than notional amounts hedged which has and could result in over-hedged amounts from an economic perspective. From time to time we enter into offsetting positions to avoid being economically over-hedged. See Note 6 of the Notes to Unaudited Condensed Consolidated Financial Statements included under Part I, Item 1 of this quarterly report for interest rate swap arrangements that were outstanding at June 30, 2019.

Counterparty and Customer Credit Risk

We are also subject to credit risk due to the concentration of our oil and natural gas receivables with several significant customers. In addition, our derivative contracts may expose us to credit risk in the event of nonperformance by counterparties. Some of the lenders, or certain of their affiliates, under our previous and current credit agreements are counterparties to our derivative contracts. While collateral is generally not required to be posted by counterparties, credit risk associated with derivative instruments is minimized by limiting exposure to any single counterparty and entering into derivative instruments only with counterparties that are large financial institutions. Additionally, master netting agreements are used to mitigate risk of loss due to default with counterparties on derivative instruments. These agreements allow us to offset our asset position with our liability position in the event of default by the counterparty. We have also entered into International Swaps and Derivatives Association Master Agreements (“ISDA Agreements”) with each of our counterparties. The terms of the ISDA Agreements provide us and each of our counterparties with rights of set-off upon the occurrence of defined acts of default by either us or our 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. At June 30, 2019, after taking into effect netting arrangements, we had no counterparty exposure related to our derivative instruments. As a result, had all counterparties failed completely to perform according to the terms of the existing contracts, we would have had the right to offset $13.0 million against amounts outstanding under our New Revolving Credit Facility at June 30, 2019.

ITEM 4.

C ONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) and under the Exchange Act) as of the end of the period covered by this quarterly report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, the principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2019.

Change in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting occurred during the quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as Exhibits 31.1 and 31.2, respectively, to this quarterly report.

P ART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

For information regarding legal proceedings, see Part I, “Item 1. Financial Statements,” Note 15, “Commitments and Contingencies — Litigation and Environmental” of the Notes to Unaudited Condensed Consolidated Financial Statements included in this quarterly report, which is incorporated herein by reference.

ITEM 1A.

RISK FACTORS.

Our business faces many risks. Any of the risks discussed elsewhere in this quarterly report and our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. In addition to the risk factors disclosed in our 2018 Form 10-K, we face risk factors relating to the Merger, including the following:

We may fail to complete the Merger in the anticipated time frame or at all. Our failure to complete the Merger could adversely affect the market price of our common stock and otherwise adversely affect our business, results of operations and financial condition.

The completion of the Merger is not assured and is subject to a number of conditions and risks, including conditions and risks that are outside of our control. The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Merger. There can be no assurance that all of the conditions to the completion of the Merger will be so satisfied or waived. If any of the conditions set forth in the Merger Agreement are not satisfied or waived, we will be unable to complete the Merger.

If we fail to complete the Merger, our ongoing business may be adversely affected and we will not realize any of the anticipated benefits of the Merger. For example, our failure to complete the Merger may result in negative publicity or a negative impression of us in the investment community, which may adversely affect the market price of our common stock, and may affect our relationships with our customers, suppliers, employees and other business partners. In addition, even if we fail to complete the Merger, we will still incur certain significant costs associated with the Merger, primarily consisting of legal fees, accounting fees, financial advisory, financial printing and other related costs. Furthermore, pursuant to the Merger Agreement, if the Merger is not completed, in certain specified circumstances, we may be required to pay Midstates a termination fee in the amount of $4.5 million. Accordingly, if the Merger is not completed, or if there are significant delays in completing the Merger, the trading price of our common stock and our business, results of operations and financial condition could be adversely affected.

We are subject to business uncertainties while the Merger is pending, which could adversely affect our business, results of operations and financial condition.

While the Merger is pending, our customers, suppliers, employees and other business partners may delay or defer certain business decisions with respect to us or seek to terminate, change or renegotiate their relationships with us as a result of the Merger. Any of these developments could adversely affect our business, results of operations and financial condition, as well as the market price of our common stock, regardless of whether the Merger is completed.

In addition, under the terms of the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to the completion of the Merger, which may adversely affect our ability to execute certain of our business strategies, including our ability to enter into contracts, acquire or dispose of assets or incur indebtedness or capital expenditures. These contractual restrictions could negatively affect our business, results of operations and financial condition while the Merger is pending.

Our stockholders will be diluted by the Merger.

Pursuant to the Merger Agreement, our stockholders will receive 0.933 shares of Midstates common stock for each share of Amplify Energy common stock that they hold. Accordingly, the Merger will dilute the ownership position of our current stockholders in the combined company. We currently estimate that our current stockholders will own approximately 50 percent of the issued and outstanding shares of Midstates immediately following the completion of the Merger.

Because the exchange ratio pursuant to the Merger Agreement is fixed, our stockholders cannot be certain of the market value of the shares of Midstates common stock that they will receive in connection with the Merger relative to the value of the shares of Amplify Energy common stock that they currently hold.

Pursuant to the Merger Agreement, our stockholders will receive 0.933 shares of Midstates common stock for each share of Amplify Energy common stock that they hold. There is no mechanism in the Merger Agreement that would adjust the number of shares of Midstates common stock that our stockholders will receive based on any decreases or increases in the trading price of shares of Midstates common stock. Accordingly, the market value of the consideration that our stockholders will receive in connection with the Merger will depend on the respective market prices of our common stock and Midstates’ common stock at the closing of the Merger.

The respective market prices of our common stock and Midstates’ common stock may be highly volatile and could fluctuate significantly for various reasons, including:

• changes in market assessments of the likelihood that the Merger will be completed;

• the natu re and content of our or Midstates’ respective earnings releases, announcements or events that impact our or Midstates’ respective products, customers, competitors or markets; and

• business conditions in our markets and the general state of the securities markets and the market for energy-related stocks, as well as general economic and market conditions.

Furthermore, while the Merger is pending, the market price of our common stock could be negatively affected by risks and conditions that apply to Midstates, which may be different from the risks and conditions currently applicable to our business.

Even if the Merger is completed, the integration of our business with that of Midstates may be more difficult, costly or time consuming than we expect and we may fail to realize the anticipated benefits of the Merger fully or at all.

The success of the Merger will depend on our and Midstates’ ability to successfully combine and integrate our respective businesses. Even if the Merger is completed, there can be no assurance that we and Midstates will be able to successfully combine and integrate our respective businesses or otherwise realize the anticipated benefits of the Merger. The combined company may perform differently than we expect. Potential difficulties that we and Midstates may face in the integration process include: the inability to successfully integrate our respective businesses in a manner that permits the combined company to achieve the full revenue and cost savings anticipated from the transaction; complexities associated with managing a larger and more complex business; challenges integrating personnel from the two companies and the loss of key employees; potential unknown liabilities and unforeseen expenses, delays or regulatory conditions in connection with the Merger or the integration process; difficulties integrating relationships with customers, suppliers, employees and other business partners; and poorer performance at one or both of the companies as a result of the diversion of our or Midstates’ respective management’s attention in connection with the Merger or the integration process. If we experience any of these difficulties or other problems in connection the integration process, we and Midstates may fail to realize the anticipated benefits of the Merger fully or at all.

We expect to incur significant costs in connection with the Merger.

We and Midstates have incurred and we expect to continue to incur significant non-recurring transaction-related costs associated with completing the Merger, combining the operations of the two companies and achieving desired synergies. Transaction costs include legal fees, accounting fees, financial advisory, financial printing and other related costs. These costs may be substantial and, in many cases, will be borne by us whether or not the Merger is completed. We will also incur costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and other employment-related costs. Even if the Merger is completed, the benefits of the Merger may not offset transaction costs or allow the combined company to achieve a net benefit in the near term, or at all.

We or Midstates may become the target of securities class action or derivative lawsuits that could result in substantial costs and may delay or prevent the Merger from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements. Defending against these claims can result in substantial costs and divert management time and resources, even if the lawsuits are without merit. An adverse judgment could result in monetary damages, which could have a negative impact on our and Midstates’ respective businesses, results of operations and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, the injunction may delay or prevent the Merger from being completed, which may adversely affect our and Midstates’ respective businesses, results of operations and financial condition.

ITEM 2.

U NREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table summarizes our repurchase activity during the three months ended June 30, 2019:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
							(In thousands)
Common Shares Repurchased (1)
April 1, 2019 - April 30, 2019		278	$	6.90		—	n/a
May 1, 2019 - May 31, 2019		26,559	$	7.18		—	n/a
June 1, 2019 - June 30, 2019		4,818	$	6.10		—	n/a

(1)

Common shares are generally net-settled by shareholders to cover the required withholding tax upon vesting. The Company repurchased the remaining vesting shares on the vesting date at current market price. See Note 9 of the Notes to the Unaudited Condensed Consolidated Financial Statements included under “Item 1. Financial Statements” of this quarterly report for additional information.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

Exhibit Number		Description
2.1	—	Agreement and Plan of Merger, dated May 5, 2019, by and among Amplify Energy Corp., Midstates Petroleum Company, Inc. and Midstates Holdings, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K (File No. 001-35364) filed on May 6, 2019).

3.1	—	Amended and Restated Certificate of Incorporation of Amplify Energy Corp. (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-8 (File No. 333-217674) filed on May 4, 2017).

3.2	—	Amended and Restated Bylaws of Amplify Energy Corp. (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-8 (File No. 333-217674) filed on May 4, 2017).

10.1	—	Employment Agreement, dated May 3, 2019, by and between Amplify Energy Corp. and Martyn Willsher (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q (File No. 333-217674) filed on May 9, 2019).

10.2	—	Employment Agreement, dated May 3, 2019, by and between Amplify Energy Corp. and Richard P. Smiley (incorporated by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q (File No. 333-217674) filed on May 9, 2019).

10.3	—	Employment Agreement, dated May 3, 2019, by and between Amplify Energy Corp. and Eric M. Willis (incorporated by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q (File No. 333-217674) filed on May 9, 2019).

Exhibit Number		Description
10.4	—	First Amendment to Credit Agreement, dated May 5, 2019, by and among Amplify Energy Operating LLC, Amplify Acquisitionco Inc., Amplify Energy Corp., the guarantors party thereto, lenders party thereto and Bank of Montreal, as administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 001-35364) filed on May 6, 2019).

10.5	—	Second Amendment to Credit Agreement, dated July 16, 2019, by and among Amplify Energy Operating LLC, Amplify Acquisitionco Inc., Amplify Energy Corp., the guarantors party thereto, lenders party thereto and Bank of Montreal, as administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 001-35364) filed on July 17, 2019).

10.6	—	Form of Waiver of Accelerated Vesting of RSUs (incorporated by reference to Exhibit 10.8 of Midstates Petroleum Company, Inc.’ s Registration on Form S-4 (File No. 333-231999) filed on June 7, 2019).

31.1*	—	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

31.2*	—	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

32.1**	—	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.CAL*	—	XBRL Calculation Linkbase Document

101.DEF*	—	XBRL Definition Linkbase Document

101.INS*	—	XBRL Instance Document

101.LAB*	—	XBRL Labels Linkbase Document

101.PRE*	—	XBRL Presentation Linkbase Document

101.SCH*	—	XBRL Schema Document

*	Filed as an exhibit to this Quarterly Report on Form 10-Q.

**	Furnished as an exhibit to this Quarterly Report on Form 10-Q.

S IGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Amplify Energy Corp.
	(Registrant)


Date: August 5, 2019	By:	/s/ Martyn Willsher
	Name:	Martyn Willsher
	Title:	Senior Vice President and Chief Financial Officer


Date: August 5, 2019	By:	/s/ Denise DuBard
	Name:	Denise DuBard
	Title:	Vice President and Chief Accounting Officer

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Kenneth Mariani, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Amplify Energy Corp. (the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2019	/s/ Kenneth Mariani
	Kenneth Mariani
	President and Chief Executive Officer
	Amplify Energy Corp.

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Martyn Willsher, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Amplify Energy Corp. (the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2019	/s/ Martyn Willsher
	Martyn Willsher
	Senior Vice President and Chief Financial Officer
	Amplify Energy Corp.

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Amplify Energy Corp. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Kenneth Mariani, President and Chief Executive Officer of Amplify Energy Corp., and Martyn Willsher, Senior Vice President and Chief Financial Officer of Amplify Energy Corp., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge:

	(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
	(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 5, 2019			/s/ Kenneth Mariani
			Kenneth Mariani
			President and Chief Executive Officer
			Amplify Energy Corp.


Date: August 5, 2019			/s/ Martyn Willsher
			Martyn Willsher
			Senior Vice President and Chief Financial Officer
			Amplify Energy Corp.

The foregoing certifications are being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, are not being filed as part of the Report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.