Still the small size of the spill limits the cost and impact. I discussed that in some detail here, yes the spill was close to the California cost, which is a sensitive area. AMPY's spill was small at around 600 barrels of oil, for context that's four orders of magnitude less than the Deepwater Horizon spill and three orders of magnitude less than Exxon Valdeez. The cost of spills are correlated to the amount of oil released.
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There are three reasons for this: A Relatively Small Spill Reduces Costs March NewsĪMPY's release in early March further reinforced that the spill is likely a management and relatively minor economic event for the company. The Q4 earnings release expected on March 9 may highlight the potential attractiveness of the investment once more for this smallcap E&P. However, news flow continues to reinforce that Amplify's spill was minor, not directly their fault, covered, in part, by insurance and of course oil prices (spot and futures) have increased materially since October, further helping the investment case. It is quite reasonable for investors to head for the exit after a spill event, as past consequences of spills have been painful for equity holders.
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The reason for this is an oil spill in October 2021, though arguably it was cheap before the spill too. Amplify appears inexpensive as spill costs are overly discounted in the valuation.Īmplify Energy ( NYSE: AMPY) is inexpensive relative to its energy reserves and run-rate production.