Amplify Energy (AMPY) Q3 2026 earnings review
Amplify Energy cuts Wyoming field costs, but California expenses rise
Amplify Energy is pumping more oil and cutting costs in Wyoming while fighting rising expenses and price discounts in California. The oil producer grew output at its two remaining fields by 11% from last quarter, and a pause in offshore drilling turned free cash flow positive at $2 million. Chief executive Dan Furbee kept the full-year operating profit outlook unchanged, and by our math the plan points to daily production rising another 7% in the fourth quarter.
| Oil production from retained fields | 7.4 MBopd +7.1% from a year ago (by our math) |
|---|---|
| Adjusted EBITDA (operating cash profit) | $10.8M +25.7% from last quarter |
| Bairoil field operating costs | $7.8M -27.5% from last quarter |
| Full-year Adjusted EBITDA outlook | Unchanged middle of the range: $35.0M |
⚖️ Verdict: 🟢 Bullish
The story got better because structural tax rebates and royalty cuts improved the long-term cash economics of both oilfields. Carbon injection tax credits doubled expected annual savings at Bairoil to over $20 million, while permanent royalty relief at Beta cut the government's share of oil in half to 12.4% and lifted the price cap to $92 per barrel. One caution: a 24% jump in Beta operating costs and $10 million in hedge losses absorbed Bairoil's savings this quarter.
The question now is whether third-quarter cost pressure at Beta was temporary maintenance or permanent inflation that offsets Bairoil's carbon rebates. If Beta workover costs fade, total field expenses will drop toward the $17.5 million fourth-quarter level implied by the full-year plan; if they stick, Amplify will miss its cost target. Fourth-quarter lease operating expenses in the full-year report will settle it.
🐂 Bull Case
Carbon Rebates Cut Bairoil Field Costs
Amplify operates Bairoil, an older Wyoming oilfield where it injects carbon dioxide underground to push up crude oil. In June, the oil producer amended its carbon dioxide purchase contract to earn federal tax credits on larger injection volumes, which directly reduce lease operating expenses, the daily costs of running its oilfields.
In the third quarter, the company injected 58 million cubic feet of gas per day, about 80% above its contract minimum. Chief executive Dan Furbee said that "due to increased CO 2 deliveries above the contract minimum, our estimated annualized savings are forecasted to be greater than $20 million compared to the prior year".
That doubles management's previous $10 million annual savings estimate because higher gas volumes trigger bigger rebates per ton. Bairoil's operating costs dropped 27.5% from last quarter to $7.8 million, the lowest since Amplify bought the field in 2014, while field oil production rose 8.5%.
What to watch: fourth-quarter Bairoil operating expenses and daily injection volumes in the full-year report. Sustaining injections near 58 million cubic feet per day would confirm that the $7.8 million quarterly cost run-rate is permanent.
New Wells and Royalty Relief Lift Beta
After selling its onshore gas fields late last year, Amplify relies on Beta, its offshore Southern California oilfield, for growth. Furbee said a new November agreement called Special Case Royalty Relief "further enhances future development economics and supports extension of the field’s economic life".
Beta oil production climbed 12.5% from last quarter and 16.0% from a year ago by our math, reaching 414,000 barrels. Two new wells completed in June and July, C29 and C16, averaged 380 and 360 barrels per day, and the new November relief cuts the royalty rate on all Beta output to 12.4% while lifting the price cap where relief pauses from $80 to $92 per barrel.
This matters because the prior May relief penalized extra production as output grew, whereas the new agreement lets Amplify keep a fixed 87.6% share of oil from future wells. Both new wells are now set to pay back their drilling costs in 10 months, five months faster than management projected in August.
What to watch: fourth-quarter Beta production and the 2027 drilling schedule in the next release. The full-year outlook implies total daily production will reach about 7.9 thousand barrels per day in the fourth quarter by our math.
Lower Drilling Spend Turns Cash Flow Positive
Amplify spent heavily in the first half of 2026 to drill offshore wells at Beta, which caused cash outflows of $18.1 million in the first quarter and $12.9 million in the second. Following the July completion of the C16 well, management paused offshore drilling to generate cash and buy back stock.
Capital spending dropped from $20.7 million in the second quarter to $8.0 million in the third, flipping free cash flow to a positive $2.0 million. The oil producer used its cash to buy back 1.6 million shares, or 4.0% of its total shares, for $6.9 million through early November.
What to watch: fourth-quarter capital spending and share repurchases. By our math, the full-year capital plan leaves only $2.8 million of spending for the fourth quarter, which should lift free cash flow.
🐻 Bear Case
Hedge Losses and Beta Costs Offset Savings
"Our third-quarter results demonstrate tangible progress in unlocking the value of Amplify’s asset base, with growing production across both assets and significantly lower costs at Bairoil," Furbee said. While Bairoil costs fell, rising offshore expenses and price hedges kept total company costs from dropping.
- Beta lease operating expense: $14.7 million, up 23.9% from last quarter by our math
- Total lease operating expense: $22.7 million, or 44.1% of revenue, up 1.1 percentage points from last quarter
- Realized derivative losses: $9.7 million, or $14.28 per barrel of oil sold
Bairoil's $3.0 million cost reduction was wiped out because Beta's operating expenses rose by $2.8 million as the company worked to restore water injection pressure. In addition, price hedges locked in during earlier periods forced Amplify to pay out $9.7 million, leaving it with $60.91 per barrel when benchmark West Texas Intermediate (WTI) oil averaged $85.79.
What to watch: Beta quarterly operating expenses in the fourth quarter. By our math, the full-year cost plan implies total fourth-quarter lease operating expenses must fall to $17.5 million, down $5.2 million from the third quarter.
California Refinery Closures Widen Price Discounts
Amplify sells its Beta crude oil into the local California market. The company noted that "refining capacity in California has declined, reducing the number of available outlets for locally produced crude oil and placing pressure on realized pricing".
Before hedging, Amplify's realized oil price fell from $85.41 per barrel in the second quarter to $75.19 in the third. By our math, the discount against the WTI benchmark widened from $7.38 per barrel in the second quarter to $10.60 in the third, and management trimmed the top end of its full-year production plan from 7.5 to 7.3 thousand barrels per day.
To find new buyers, the oil producer is evaluating "offshore buoys, new pipeline connections and trucking options", though each option requires time or transport spending. Management said fourth-quarter price discounts have narrowed and improved its full-year differential outlook by $1.00 per barrel.
What to watch: fourth-quarter unhedged oil price realizations against WTI. A narrower gap would confirm that local refinery closures are no longer worsening Amplify's pricing.
👓 Other Themes
New 2027 and 2028 Oil Price Hedges
To protect future cash flow against oil price swings, Amplify added derivative contracts covering 2027 and 2028 output. It locked in 2027 costless collars — contracts that set a price floor and ceiling — with floors of $75.00 per barrel for WTI and $78.59 for Brent, and ceilings of $87.50 and $93.99. It also hedged 20% to 25% of expected 2028 production from existing wells using Brent swaps at $75.50.
💲 Other KPIs
Operating profit before interest, taxes, depreciation and one-offs rose 25.7% from $8.6 million in the second quarter and nearly tripled from $3.8 million in the first quarter. As a share of revenue, it expanded to 21.1% from 16.4% last quarter, driven by higher oil volumes and Bairoil cost rebates.
Cash on hand fell 53.1% from $21.2 million at the end of June and $41.5 million in March, as the company funded working capital shifts, $8.0 million of capital projects, and share buybacks. Amplify still carries zero debt on its credit facility and holds $25.0 million in total liquidity.
Money owed by customers for oil sales grew 12.4% from $19.5 million last quarter, even though total revenue before hedges dipped 2.4% to $51.4 million. Across the broader balance sheet, working capital changes tied up $7.3 million of cash in the third quarter, limiting operating cash flow to $3.1 million.
🔮 Guidance
Cut at the top end. The middle of the full-year range moved down by 100 barrels per day to 7.15 thousand barrels per day. By our math, that still implies fourth-quarter output of about 7.9 thousand barrels per day, up 7.3% from the third quarter. It is the second consecutive trim to the midpoint: -50 barrels per day in August, and -100 in November.
Raised. Management narrowed its expected full-year price discount against WTI by $1.00 per barrel, putting the middle of the range at a $9.00 discount. In August, the oil producer had widened this discount from a prior range of $6.00 to $9.00 because of California refinery closures, but fourth-quarter pricing has improved.
Improved. Amplify lowered the top end of its full-year field cost outlook by $5.0 million, bringing the middle of the range down to $85.0 million. By our math, after $67.5 million of expenses in the first nine months, the midpoint implies fourth-quarter costs of $17.5 million, down 22.9% from the third quarter. This is the second $2.5 million midpoint reduction in a row.
Tightened upward. The bottom of the range for production, property and franchise taxes rose by 1.0 percentage point, moving the midpoint to 6.5% of revenue. Third-quarter taxes were 6.2% of revenue, up from 5.8% in the second quarter.
Tightened to the high end. The company fixed its full-year transport cost outlook at $3.0 million, up $0.5 million at the middle of the range. Through the first nine months of 2026, transport expenses totaled $2.5 million by our math.
Tightened upward. Management lifted the bottom of the overhead cost range by $3.0 million, raising the midpoint to $21.0 million. After spending $16.0 million in the first three quarters, the middle of the range leaves $5.0 million for the fourth quarter by our math, compared with $4.6 million in the third.
Unchanged. The full-year operating cash profit plan stays at a midpoint of $35.0 million, assuming $90 WTI oil for the rest of the year. By our math, subtracting the $23.2 million earned in the first nine months leaves $11.8 million for the fourth quarter, up 8.9% from the third quarter.
Unchanged. Full-year cash interest costs, which mainly consist of surety bond premiums for the offshore Beta field, remain at a $3.5 million midpoint. Nine-month cash interest totaled $2.6 million, leaving about $0.9 million for the fourth quarter by our math.
Tightened upward. The bottom of the capital spending range rose by $5.0 million, moving the middle of the range up $2.5 million to $52.5 million. Because Amplify has already invested $49.7 million year to date, the midpoint leaves just $2.8 million of spending for the fourth quarter by our math, down from $8.0 million in the third.
Unchanged. Amplify will contribute $9.0 million this year into the dedicated decommissioning fund for its offshore Beta platforms, unchanged since the start of the year.
Raised at the bottom end. The floor of the buyback range moved up to $6.0 million to reflect the $6.9 million of stock already repurchased through early November, leaving up to $8.1 million under the current authorization through December 31.
❓ Key Questions
Why did Beta operating costs jump 24% last quarter?
Beta lease operating expenses rose from $11.9 million in the second quarter to $14.7 million in the third. Management mentioned waterflood pressure maintenance and workovers, but did not state how much of that $2.8 million increase is one-time versus permanent.
What happened to the delayed C55 well at Beta?
In the first quarter, Amplify said the C55 well hit an over-pressured zone and would be completed in the second or third quarter. The third-quarter release detailed results for C29 and C16, but did not mention C55.
What are the volume thresholds for the new royalty relief?
Amplify secured a 12.4% royalty rate on all Beta production starting November 1, subject to certain volume and price thresholds detailed in the 10-Q filing. The release gave the $92 per barrel price cap, but omitted the minimum production volume required.
Will banks change the $25 million borrowing base this quarter?
Amplify is completing its semi-annual credit facility redetermination later in the fourth quarter. With cash down to $10.0 million and the company planning to continue share buybacks, any change to the $15.0 million elected commitment affects available liquidity.