8-K: Amplify Energy Addresses Stockholder Lawsuits and Provides Supplemental Disclosures Regarding Proposed Mergers

Amplify Energy Corp. addresses stockholder lawsuits alleging disclosure deficiencies in the definitive proxy statement related to the proposed mergers with North Peak Oil & Gas, LLC and Century Oil and Gas Sub-Holdings, LLC, providing supplemental disclosures to avoid delays and minimize expenses.

Summary

• Amplify Energy Corp. has received demand letters and faces lawsuits from purported stockholders alleging disclosure deficiencies in the definitive proxy statement related to the proposed mergers with North Peak Oil & Gas, LLC (NPOG) and Century Oil and Gas Sub-Holdings, LLC (COG).
• To avoid delaying the mergers and minimize expenses, Amplify is voluntarily providing supplemental disclosures without admitting any liability or wrongdoing.
• The supplemental disclosures relate to the background of the transactions, selected companies analysis, and discounted cash flow analysis.
• The special meeting of Amplify's stockholders to vote on the mergers is scheduled for April 14, 2025.
• Houlihan Lokey reviewed financial data for selected companies similar to Amplify and the acquired companies, considering factors like business activities, size, hydrocarbon mix, and geographic location.
• Houlihan Lokey applied multiple ranges to Amplify's and the acquired companies' CY 2024E, CY 2025E, and CY 2026E Adjusted EBITDA to derive implied value reference ranges.
• Houlihan Lokey conducted NAV DCF analysis using risk-adjusted discount rates and various pricing scenarios (Strip Pricing, market pricing, and consensus pricing) to determine implied value reference ranges.
• Houlihan Lokey also conducted Corporate DCF analysis, applying terminal value multiples and discount rates to estimate the implied value reference range for both Amplify and the acquired companies.
• The board was aware that Martyn Willsher is expected to continue as chief executive officer of Amplify, and Christopher W. Hamm is expected to continue as the Chairman of the Board.
• No discussions have been had with any of Amplify's directors or executive officers with respect to any new arrangements regarding their employment, compensation or benefits in connection with the Transactions.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company is facing lawsuits, it is proactively addressing the issues and believes the allegations are without merit. The supplemental disclosures aim to ensure the merger proceeds as planned.

Positives

• Amplify is proactively addressing stockholder concerns to avoid potential delays in the merger process.
• The company is providing additional transparency through supplemental disclosures.
• The company believes the allegations in the demand letters and stockholder actions are without merit.
• The company is taking steps to minimize the expense of defending the stockholder actions.

Negatives

• Amplify is facing demand letters and lawsuits from stockholders alleging disclosure deficiencies.
• The lawsuits could potentially delay the mergers.
• The company is incurring expenses to defend against the stockholder actions.

Risks

• The outcome of the stockholder lawsuits is uncertain.
• Additional similar demand letters or complaints may be received or filed.
• The mergers are subject to the satisfaction of regulatory requirements and closing conditions.
• Actual results could differ materially from those expressed in forward-looking statements due to various risks and uncertainties.

Future Outlook

The document contains forward-looking statements regarding the expected timing, benefits, synergies, growth opportunities, and other financial and operating benefits of the mergers, as well as the anticipated operations, financial position, liquidity, performance, prospects, or growth and scale opportunities of the combined company.

Management Comments

• Amplify and Amplify's directors believe that the allegations contained in the Demand Letters and Stockholder Actions are without merit.
• Amplify specifically denies all allegations in the Demand Letters and the Stockholder Actions, including that any additional disclosure was or is required and that the supplemental disclosures below are otherwise material.

Industry Context

The document references selected companies in the oil and gas industry, such as Berry Corporation, Crescent Energy Company, and Diversified Energy Company PLC, suggesting that Amplify's performance and valuation are being compared to its peers in the sector.

Comparison to Industry Standards

• The document compares Amplify to publicly traded companies like Berry Corporation, Crescent Energy Company, Diversified Energy Company PLC, Empire Petroleum Corporation, Mach Natural Resources LP, Ring Energy, Inc., Riley Exploration Permian, Inc., SandRidge Energy, Inc., and TXO Partners, LP.
• Houlihan Lokey used these companies to derive valuation multiples based on CY 2024E, CY 2025E, and CY 2026E Adjusted EBITDA.
• The multiples ranged from a low of 3.0x to a high of 8.7x for CY 2024E Adjusted EBITDA, 2.8x to 5.7x for CY 2025E Adjusted EBITDA, and 2.3x to 5.4x for CY 2026E Adjusted EBITDA.

Legal Proceedings

• Amplify has received demand letters and faces lawsuits from purported stockholders alleging disclosure deficiencies in the definitive proxy statement related to the proposed mergers.
• The lawsuits were filed in the Supreme Court of the State of New York, County of New York under the captions Katherine Finger v. Amplify Energy Corp., et al., No. 651557/2025, and Shannon Jenkins v. Amplify Energy Group., et al., No. 651564/2025.

Stakeholder Impact

• The mergers could impact Amplify stockholders, employees, and other stakeholders.
• The supplemental disclosures are intended to provide stockholders with more information to make an informed decision about the mergers.

Next Steps

• Amplify stockholders will vote on the proposed mergers at a special meeting on April 14, 2025.
• Amplify will continue to defend against the stockholder lawsuits.
• The company will monitor and comply with regulatory requirements and closing conditions for the mergers.

Key Dates

Keywords

Merger, Amplify Energy, Stockholder Lawsuit, Proxy Statement, Disclosures, North Peak Oil & Gas, Century Oil and Gas, Houlihan Lokey, Valuation, DCF Analysis