Amplify Energy: oil price up 31.7%, yet EBITDA came in 36% below what that price implied

On November 9, Amplify Energy reported third-quarter 2026 results. Average WTI in the period was $85.4 versus $64.9 a year earlier (+31.7%), yet revenue fell 22.5% to $51.4 million while EBITDA rose 31.8% to $16.7 million. On our calculation, at year-ago volumes and costs and current prices, revenue should have been $79.9 million and EBITDA $26.2 million; actual results were $28.4 million and $9.5 million lower respectively. The gap is explained by lower production and a discount to the benchmark: the realised price was $75.2 per barrel, or 0.88 of average WTI, plus $9.7 million of realised hedge losses booked inside operating income. Our conclusion: rather unattractive – on the portal's model the upside to fair value is minus 53%. Our view: the share is rather unattractive at the current price; upside on the portal model -53%.

Our view: is there upside

Our view in numbers

Key takeaways

— WTI rose 31.7% year on year, but revenue fell 22.5% – volumes and the discount outweighed the price

— On our calculation, at prior volumes and costs EBITDA should have been $26.2 million versus the actual $16.7 million

— Production rose 10.5% quarter on quarter but fell year on year – 682 MBoe versus roughly 790 MBoe a year earlier

— The realised price of $75.2 per barrel is 0.88 of average WTI; the discount eats a fifth of revenue

— Hedges cost $9.7 million of realised losses and $24.6 million of unrealised losses, and both sit inside operating income

— Net cash of $4.4 million with net debt/EBITDA of minus 0.19 – the balance sheet is strong, but that reflects a low base, not profit

— EV/EBITDA of 7.1 against minus 53% upside on the portal's model – the market has already priced in a recovery the report does not show

Key figures, USD bn

WTI rose 31.7% year on year, but revenue fell 22.5% – volumes and the discount outweighed the price

Average WTI in the third quarter of 2026 was $85.4 per barrel versus $64.9 a year earlier, up 31.7%. Against the previous quarter the price fell 7.9%, from $92.8. Spot on November 11 is $86.5, just 1.3% above the period average, so the quarter's price window has already closed.

Revenue nevertheless came in at $51.4 million, 22.5% below a year earlier, and the pace of decline barely changed from the second quarter (-22.9%). The price rose while revenue fell because the company does not sell at WTI: the average realised price before hedges was $75.2 per barrel, or 0.88 of the benchmark. A 12% discount to WTI at $85 is about $10 per barrel of forgone revenue.

The second factor is volume. Production in the quarter was 682 MBoe, or 7.4 MBoe per day, versus roughly 790 MBoe a year earlier. The company attributes the 10.5% quarter-on-quarter increase to development at Beta and lower costs at Bairoil, but the year-on-year volume is still lower.

Commodity prices: period average and now

On our calculation, at prior volumes and costs EBITDA should have been $26.2 million versus the actual $16.7 million

Holding third-quarter 2025 volumes and non-commodity costs and moving only prices to the reported period, revenue would have been $79.9 million (a price effect of +$13.5 million, or +20.3%) and EBITDA $26.2 million. Actual results were $51.4 million and $16.7 million: $28.4 million and $9.5 million lower, meaning EBITDA missed the price-implied level by 36.2%.

The gap has three causes named in the facts and the release. First, volume: production is lower year on year, which subtracts directly from revenue. Second, the discount to the benchmark: a realised price of $75.2 against average WTI of $85.4. Third, hedges: realised losses on commodity derivatives were $9.7 million and, per the release, are presented within costs and expenses, i.e. they reduce operating income and our EBITDA.

The portal's spot model, re-priced from the average of the previous four quarters, expected EBITDA of $7.9 million and revenue of $57.9 million; actual EBITDA of $16.7 million is 110.8% above the model while revenue is 11.1% below. That model tracks the run-rate and here disagrees with the year-ago calculation, so it should not be used as the yardstick for what the company should have earned.

What the prices implied and what the company earned

Production rose 10.5% quarter on quarter but fell year on year – 682 MBoe versus roughly 790 MBoe a year earlier

Production in the reported quarter was 682 MBoe, or 7.4 MBoe per day, versus 617 MBoe and 6.8 MBoe per day a quarter earlier (+10.5% and +8.8%). The entire volume is oil: gas and NGL are absent from the sales mix. Both assets drove the quarter-on-quarter increase: Beta added 12.5% (414 MBoe versus 368) and Bairoil 8.5% (268 MBoe versus 247).

The company attributes the growth to development at Beta – the C29 and C16 wells completed in June and July produced about 380 and 360 barrels per day each – and to lower costs at Bairoil. Full-year 2026 production guidance was tightened at the top: 7.0–7.3 MBbls/d versus the previous 7.0–7.5. That implies the fourth quarter should not lift the year above the current run-rate.

Year on year, volume is still lower: 682 MBoe versus roughly 790 MBoe in the third quarter of 2025. That, not the price, explains the revenue decline against a rising oil price.

Production, realised price and unit cost (company release)

The realised price of $75.2 per barrel is 0.88 of average WTI; the discount eats a fifth of revenue

The average realised price before hedges was $75.2 per barrel; including realised hedges it was $60.9. Average Brent in the quarter was $91.22 and WTI $85.79 per the release, so the discount to WTI is about 12%.

The company attributes the pricing pressure to shrinking refining capacity in California, which has reduced outlets for local crude. The release says fourth-quarter differentials have improved and guidance for the oil differential was narrowed to minus $8–10 per barrel from minus $9–11. That is an improvement, but it recovers only part of what was lost.

The price before hedges is not the whole economics. Realised losses on commodity derivatives of $9.7 million are about $14.3 per barrel, and they turn $75.2 into $60.9. Hedges protect cash flow, but in the reported quarter they were expensive.

Hedges cost $9.7 million of realised losses and $24.6 million of unrealised losses, and both sit inside operating income

In the third quarter the company recorded $9.7 million of realised losses on commodity derivatives and $24.6 million of unrealised losses. Per the release, both lines are presented within costs and expenses, i.e. inside operating income. That means our EBITDA of $16.7 million is already reduced by the $9.7 million realised loss; without it, EBITDA would be about $26.4 million.

The $24.6 million unrealised loss is the main cause of the $18.9 million net loss. The company itself calls it non-cash and uses it to explain the swing from $17.3 million of net income in the previous quarter to a loss. Adjusted net income, per the release, was $0.7 million – what remains after excluding the unrealised loss and other one-off items.

The one-offs are comparable in size to the result itself: the $24.6 million unrealised loss exceeds the $18.9 million net loss, and the $9.7 million realised loss is 58% of EBITDA. Without the hedge losses the picture would look markedly better, but hedges are part of the business model, not an anomaly.

Net cash of $4.4 million with net debt/EBITDA of minus 0.19 – the balance sheet is strong, but that reflects a low base, not profit

As of September 30, 2026, the company had no outstanding debt under its revolving credit facility and liquidity of $25.0 million – $10.0 million of cash and about $15.0 million of available borrowing capacity. Net cash was $4.4 million and net debt/EBITDA for the trailing twelve months was minus 0.19. The company expects to exit 2026 with a strengthened balance sheet and a net cash position.

Operating cash flow in the quarter was $3.1 million and capital investment $8.0 million per the release (the facts show minus $8.6 million on a different basis). Free cash flow per the release was $2.0 million. That covers debt service but not growth: capital went mainly to Beta ($7.3 million of the $8.0 million).

A net debt/EBITDA of minus 0.19 looks like an absence of debt, but it is arithmetic on a low base: trailing-twelve-month EBITDA is $23.0 million and has been compressed by weak quarters. The facts do not disclose the direction of this ratio, so one cannot speak of leverage rising or falling – only of its current level.

EV/EBITDA of 7.1 against minus 53% upside on the portal's model – the market has already priced in a recovery the report does not show

Market capitalisation on November 10 was $140.2 million, EV/EBITDA for the trailing twelve months 7.1 and P/E 5.7. The latter is misleading: trailing-twelve-month profit of $24.7 million includes quarters with one-off items, notably $64.4 million of net income in the fourth quarter of 2025, so P/E understates what the business can earn at current prices.

The portal's spot model re-prices EBITDA to current commodity prices at the target EV/EBITDA; against market capitalisation it gives minus 53% upside to fair value. This is our own estimate, not a consensus. Spot WTI on November 11 is $86.5 and Henry Hub $3.3; at such prices EBITDA is unlikely to exceed the trailing-twelve-month level materially.

The share closed at $3.33 before the release, fell 3.9% on the release day and has risen 5.3% from the release to November 10. The market reacted to the one-off nature of the loss but has not re-rated the discount to WTI or the cost of hedges. At EV/EBITDA of 7.1 and negative model upside there is no margin of safety.

Valuation on the latest reported figures

Bottom line

The strong point of the report was production: +10.5% quarter on quarter, growth at both assets and lower costs at Bairoil. But year-on-year volume is lower, the discount to WTI eats about 12% of the price, and hedges cost $9.7 million of realised losses – together that left EBITDA 36.2% below what prices implied. The $18.9 million net loss is almost entirely explained by the $24.6 million unrealised loss on derivatives, a one-off, non-cash item. The question for a holder now is not the balance sheet – net cash of $4.4 million – but whether the company can sell oil closer to WTI and hold production. Our conclusion: rather unattractive – on the portal's model the upside to fair value is minus 53%. Our view: the share is rather unattractive at the current price; upside on the portal model -53%.