Fundamental Analysis of Midstates Petroleum Company, Inc. (MPO): A Post-Existence Review
Any attempt at a fundamental analysis of Midstates Petroleum Company, Inc. (MPO) must begin with the critical fact that the company, as an independent, publicly-traded entity, no longer exists. MPO followed a trajectory typical of many smaller, financially stressed independent Exploration and Production (E&P) companies in the commodity downcycles of the last decade: bankruptcy, restructuring, and eventual acquisition.
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| Fundamental Analysis of Midstates Petroleum Company, Inc. (MPO): A Post-Existence Review |
The last major event for MPO investors was its merger-of-equals with Amplify Energy Corp. (AMPY) in 2019, which resulted in MPO's stock being converted and its name being retired.
I. The Fundamental End: Merger into Amplify Energy (AMPY)
The most essential fundamental factor for a historical review of MPO is the corporate restructuring that led to its disappearance from the New York Stock Exchange (NYSE) under the ticker MPO.
A. The Merger Transaction
On August 6, 2019, Midstates Petroleum Company, Inc. completed an all-stock business combination with Amplify Energy Corp. (formerly trading under AMPY on the OTCQX).
Reverse Merger: The transaction was structured as a reverse merger, with the publicly-listed entity, Midstates, technically acquiring Amplify. Crucially, Midstates changed its name to Amplify Energy Corp., and the combined company now trades on the NYSE under the ticker symbol AMPY.
Exchange Ratio: Amplify shareholders received 0.933 shares of Midstates common stock for each share of Amplify common stock they held.
Result for MPO Shareholders: Current Midstates stockholders and former Amplify stockholders each owned approximately 50% of the combined company (Amplify Energy Corp.).
Conclusion: For any investor performing a fundamental analysis after this date, the focus must shift entirely to Amplify Energy Corp. (AMPY), whose financials now represent the combined assets and debt of both companies. The MPO ticker and corporate name are permanently retired from public trading.
II. Historical Fundamental Drivers (Pre-2019)
Prior to the merger, MPO's fundamental valuation was driven by factors common to independent E&P companies, but complicated significantly by persistent financial distress.
A. Core Business and Assets
MPO was an independent E&P company primarily focused on the Mississippian Lime trend in northwestern Oklahoma and the Anadarko Basin.
Commodity Price Exposure: As a producer, MPO's revenue and cash flow were directly and acutely exposed to the market prices of oil, natural gas liquids (NGLs), and natural gas. This direct exposure made its financial results highly volatile.
Focus on Liquids: The Mississippian Lime was considered an oil and liquids-rich basin. The fundamental value hinged on MPO's ability to maximize liquid (oil and NGL) production, as these generally commanded higher prices than dry natural gas.
Production and Reserves: The core of any E&P fundamental analysis is the volume and cost of its reserves. Investors looked at:
Proved Developed Producing (PDP) Reserves: The most certain source of cash flow.
Finding and Development (F&D) Costs: The cost to replenish reserves, compared favorably against industry peers.
B. Financial Distress and Capital Structure
The most defining and detrimental fundamental factor for MPO was its heavy debt load relative to its operating cash flow, leading to two major financial restructurings.
2016 Chapter 11 Bankruptcy: MPO filed for Chapter 11 protection in May 2016, a result of the 2014-2016 collapse in oil and gas prices.
Fundamental Consequence: The bankruptcy eliminated approximately $2 billion of debt and converted much of the remaining debt into equity (new common stock), which severely diluted existing shareholders. The company emerged with a much cleaner balance sheet, but the fundamental damage to the original equity was catastrophic.
Solvency and Debt Ratios: Post-bankruptcy, fundamental analysis still centered on solvency. Key metrics included:
Debt-to-EBITDA: E&P companies are typically valued on a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). MPO's ability to keep this ratio low was paramount to avoiding another default.
Net Debt: After the 2016 restructuring, any subsequent capital spending or commodity price downturn could quickly put MPO back into financial danger, a risk that overshadowed nearly all other operational fundamentals.
III. Key Performance Indicators (Post-Restructuring/Pre-Merger)
In the brief window between its 2016 emergence from bankruptcy and the 2019 merger, MPO’s fundamental health was assessed using these indicators:
| Fundamental Metric | Significance to MPO (2016-2019) |
| P/E Ratio | Less reliable due to non-cash items (like depreciation) typical in E&P. Often low or negative after restructuring. |
| Price-to-Cash Flow (P/CF) | More relevant than P/E. Evaluates the market price against the actual cash being generated from operations. A low P/CF suggested undervaluation or high market risk perception. |
| Return on Equity (ROE) | Often distorted by the debt-for-equity swaps during bankruptcy. It was critical to look at unadjusted operating returns. |
| Hedge Program | The extent of MPO's commodity price hedging was a key fundamental for risk management, providing a floor for future cash flow to service debt. |
| General & Administrative (G&A) Costs | Focus on streamlining operations and reducing high G&A costs was a post-bankruptcy focus, as efficient cost structures are essential for marginal producers. |
The eventual decision to merge with Amplify Energy was a final fundamental vote by management and the board, concluding that combining assets and realizing synergies (cost savings) was the most effective way to create sustainable shareholder value and scale the business, finally putting an end to Midstates Petroleum Company, Inc.
The video below covers the company's Initial Public Offering, marking the beginning of the public trading history that eventually concluded with the merger into Amplify Energy. Midstates Petroleum Company IPOs and rings the NYSE Closing Bell