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Organization and Basis of Presentation
12 Months Ended
Dec. 31, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization and Basis of Presentation

Note 1. Organization and Basis of Presentation

General

On August 6, 2019, Midstates Petroleum Company, Inc., a Delaware corporation (“Midstates”), completed its business combination (the “Merger”) with Amplify Energy Corp. (“Legacy Amplify”), in accordance with the terms of that certain Agreement and Plan of Merger, dated May 5, 2019 (the “Merger Agreement”), by and among Midstates, Legacy Amplify and Midstates Holdings, Inc., a Delaware corporation and direct, wholly owned subsidiary of Midstates (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Legacy Amplify, with Legacy Amplify surviving the Merger as a wholly owned subsidiary of Midstates, and immediately following the Merger, Legacy Amplify merged with and into Alpha Mike Holdings LLC, a Delaware limited liability company and wholly owned subsidiary of Midstates (“LLC Sub”), with LLC Sub surviving as a wholly owned subsidiary of Midstates. On the effective date of the Merger, Midstates changed its name to “Amplify Energy Corp.” (the “Company”) and LLC Sub changed its name to “Amplify Energy Holdings LLC.”

For financial reporting purposes, the Merger represented a “reverse merger” and Legacy Amplify was deemed to be the accounting acquirer in the transaction. Legacy Amplify’s historical results of operations replaced Midstates’ historical results of operations for all periods prior to the Merger and, for all periods following the Merger, the Company’s financial statements reflect the results of operations of the combined company. Accordingly, the financial statements for the Company included in this annual report for periods prior to the Merger are not the same as Midstates prior reported filings with the SEC, which were derived from the operations of Midstates.

When referring to Legacy Amplify, the intent is to refer to Amplify Energy Corp. prior to the Merger, and its consolidated subsidiaries as a whole or on an individual basis, depending on the context in which the statements are made.

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 there are not different economic environments within the operation of our oil and natural gas properties. Our assets consist primarily of producing oil and natural gas properties located in Oklahoma, the Rockies, federal waters offshore Southern California, East Texas/North Louisiana and the Eagle Ford. 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

Material intercompany transactions and balances have been eliminated in preparation of our Consolidated Financial Statements. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The 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”).

Risk and Uncertainties

In March 2020, the World Health Organization declared a global pandemic related to the proliferation of COVID-19. The impact of COVID-19 and efforts to mitigate its spread have caused significant volatility in U.S. and international markets and a substantial reduction in global and domestic demand for oil and natural gas. Actions by governmental authorities to mitigate the spread of COVID-19, such as imposing mandatory closures of all non-essential business facilities, seeking voluntary closures of business facilities, and imposing restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions, have further exacerbated the economic impact of the pandemic.

As a result of the pandemic, there has also been a sharp reduction in the demand for oil and natural gas and a precipitous decline in commodity prices, which were further impacted by disputes over production levels among oil-producing countries, the significant increase in production levels by such countries and limited storage capacity for natural gas, oil and refined products. The reductions in commodity prices have resulted in lower levels of cash flow from operating activities. In addition, the borrowing base under our Revolving Credit Facility (as defined below) is subject to redetermination on at least a semi-annual basis primarily based on an engineering report with respect to our estimated oil and natural gas reserves, which takes into account the prevailing oil and natural gas prices at such time, as adjusted for the impact of our commodity derivative contracts. Severely reduced commodity prices contributed to a reduction in our borrowing base during the Spring 2020 redetermination process, and continued low prices may adversely impact subsequent redeterminations. The reduction in commodity prices has directly led to an impairment of our oil and natural gas properties. There may be further impairments in future periods if commodity prices do not fully recover.

Despite the gradual recovery in commodity prices in the second half of 2020, the expectation of a successful phased rollout of a vaccine in 2021, and the successful realization and execution of our liquidity enhancing initiatives and disciplined hedging program, there remains significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company is unable to determine the extent of the impact caused by the COVID-19 pandemic to the Company’s operations.