DEFA14A: Amplify Energy Addresses Stockholder Lawsuits, Provides Additional Merger Disclosures

Amplify Energy Corp. supplements its definitive proxy statement with additional disclosures related to its mergers with North Peak Oil & Gas and Century Oil and Gas Sub-Holdings, addressing stockholder lawsuits alleging disclosure deficiencies.

Summary

• Amplify Energy Corp. has filed a Form 8-K to supplement its definitive proxy statement related to the proposed mergers with North Peak Oil & Gas, LLC (NPOG) and Century Oil and Gas Sub-Holdings, LLC (COG).
• The supplement addresses demand letters and stockholder actions alleging disclosure deficiencies in the definitive proxy statement.
• To avoid delaying the mergers and minimize expenses, Amplify is voluntarily making certain supplemental disclosures without admitting any liability or wrongdoing.
• The supplemental disclosures will not affect the timing of the special meeting of Amplify's stockholders, scheduled for April 14, 2025.
• The disclosures relate to the background of the transactions, selected companies analysis, and discounted cash flow analysis.
• Houlihan Lokey performed various financial analyses, including selected companies analysis and discounted cash flow analysis, to advise the Board.
• The analyses considered various factors, including adjusted EBITDA multiples and discount rates, to determine implied value reference ranges for the merger consideration and the acquired companies.
• The board considered the interests of Amplify's directors and executive officers in the merger when evaluating and negotiating the Merger Agreement.
• The document contains forward-looking statements subject to risks and uncertainties, and readers are cautioned not to place undue reliance on them.
• Investors are advised to read the definitive proxy statement and other relevant materials filed with the SEC for important information about the mergers.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company is addressing stockholder concerns, the existence of lawsuits and the need for supplemental disclosures introduce uncertainty.

Positives

• Amplify is proactively addressing stockholder concerns by providing additional disclosures.
• The company is attempting to minimize potential delays to the merger process.
• The board considered the interests of Amplify's directors and executive officers in the merger when evaluating and negotiating the Merger Agreement.

Negatives

• Stockholder lawsuits alleging disclosure deficiencies could indicate underlying concerns about the merger terms or process.
• The need for supplemental disclosures suggests potential weaknesses in the initial proxy statement.
• The NAV DCF Analysis indicated implied value reference ranges for the Aggregate Merger Consideration of $0.0 million to $51.9 million based on Strip Pricing, market pricing and consensus pricing.

Risks

• The outcome of the stockholder lawsuits is uncertain and could potentially delay or disrupt the mergers.
• Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially.
• The company's ability to achieve the expected benefits and synergies of the mergers is not guaranteed.

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, but readers are cautioned that actual results could differ materially.

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 with publicly traded equity securities that Houlihan Lokey deemed relevant, suggesting a comparison of Amplify's financial data and valuation to its peers in the oil and gas industry.

Comparison to Industry Standards

• The selected companies analysis includes 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.
• The analysis compares Enterprise Value / CY 2024E-2026E Adjusted EBITDA multiples for these companies to those of Amplify and the Acquired Companies.
• Houlihan Lokey applied selected multiple ranges of 3.50x to 4.00x to the Company's CY 2024E Adjusted EBITDA, 3.00x to 3.50x to Company's CY 2025E Adjusted EBITDA, and 3.00x to 3.50x to the Company's CY 2026E Adjusted EBITDA.

Legal Proceedings

• Two lawsuits were filed in the Supreme Court of the State of New York, County of New York by purported stockholders of Amplify 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.
• The Demand Letters and the Stockholder Actions allege that, among other things, the definitive proxy statement contains certain disclosure deficiencies and/or incomplete information regarding the Mergers.

Stakeholder Impact

• The mergers could impact Amplify stockholders through changes in the value of their investment.
• The mergers could impact Amplify's directors and executive officers through changes in their employment and compensation.
• The mergers could impact the combined company's employees, customers, and suppliers.

Next Steps

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

Key Dates

Keywords

Merger, Amplify Energy, Proxy Statement, Stockholder Lawsuits, Disclosures, NPOG, COG, Houlihan Lokey, Adjusted EBITDA, Discounted Cash Flow Analysis