Stock prices for Texan oil company Amplify Energy Inc. plummeted to well below half their value when its operations ground to a halt following an oil spill just off the coast of Southern California.
Amplify Energy’s stock value fell to $3.21 per share, a 62% drop in its previous price as news of the disaster broke.
According to Amplify Energy CEO Martyn Willsher, operations at its California subsidiary Beta Offshore have been shut down. Moreover, any remaining oil within the pipeline has since been suctioned out.
A chilling similarity
It was a scenario eerily reminiscent of the Deepwater Horizon oil spill in the Gulf of Mexico that brought British Petroleum to its knees in 2010. Approximately 3,000 barrels’ worth of crude oil (126,000 gallons) has spilled into the waters of Huntington Beach. This is 40 miles south of Los Angeles, since the incident was first reported last Saturday, October 2nd.
The oil has since spread to cover approximately 13 square miles of the Pacific Ocean.
The spill made authorities close the beach down to prevent further damage to property and injury to tourists. Likewise, all scheduled activities for up to the next two weeks have been canceled.
An environmental catastrophe
Based on initial findings, the spill was caused by a breach in the Elly oil rig which stretched all the way down to Newport Beach, a favorite destination for surfers and beachgoers.
Huntington Beach mayor Kim Carr has called on Amplify Energy executives to take immediate action, referring to the incident as both an environmental catastrophe and a potential ecological disaster which may have a long-reaching impact on the area’s plant and wildlife.
What can this mean for Amplify Energy in the near-future?
The Beta Offshore facility was where Amplify Energy got 14% of its average net production in the 4th quarter of 2020. Thus, its closure could spell financial disaster for a company that was recently poised to maximize the potential of resurgent oil and natural gas prices.
Towards the end of Q3, Amplify Energy officials announced that they planned on increasing their capital spending for various sites, including Beta Offshore in California. It also recently upgraded its free-cash-flow guidance to between $45 million to $55 million for the remaining months of 2021, as well as $200 million up to 2023.
While Amplify Energy’s facilities in Texas, Oklahoma, and the Rockies are still in operation, the closure of its California hub can seriously hamper its chances for further growth moving forward into 2022.