HighPeak Energy, Inc. Announces First Quarter 2024 Financial and Operating Results
FORT WORTH, Texas, May 08, 2024 (GLOBE NEWSWIRE) -- HighPeak Energy, Inc. (“HighPeak” or the “Company”) (NASDAQ: HPK) today announced financial and operating results for the quarter ended March 31, 2024. HighlightsFirst Quarter 2024 Sales volumes averaged 49,729 barrels of crude oil equivalent per day (“Boe/d”), consisting of 80% crude oil and 91% liquids, representing a 34% increase over first quarter 2023.Lease operating expenses, excluding expense workovers, were reduced for the fourth consecutive quarter to $6.30 per Boe, representing a 26% decrease from the first quarter 2023.Net income was $6.4 million, or $0.05 per diluted share, and EBITDAX (a non-GAAP financial measure defined and reconciled below) was $233.3 million, or $1.63 per diluted share. Adjusted net income (a non-GAAP financial measure defined and reconciled below) was $48.3 million, or $0.37 per diluted share.The Company generated free cash flow (a non-GAAP financial measure defined and reconciled below) of $48.0 million, an increase of 42% compared with the fourth quarter 2023.The Company utilized its free cash flow to reduce debt by $30 million, increase its quarterly dividend by 60% to $0.04 per share and to implement a share buyback plan whereby it repurchased over 565,000 shares during the first quarter. Recent Events On May 8, 2024, the Company’s Board of Directors declared a quarterly dividend of $0.04 per common share outstanding payable in June 2024. HighPeak Chairman and CEO, Jack Hightower, said, “We had a solid first quarter, delivering on our 2024 core values of operating with discipline, strengthening our balance sheet and maximizing value for our shareholders. HighPeak is in the optimal position – generating free cash flow from operations, possessing a valuable inventory comprising roughly 2,600 undrilled locations, of which over 1,100 have a breakeven of less than $50 per barrel, and being able to scale our drilling program as commodity prices dictate. This affords us a high degree of optionality as we continue to measure every strategic decision by the short and long-term return it provides our shareholders.” First Quarter 2024 Operational Update HighPeak’s sales volumes during the first quarter of 2024 averaged 49,729 Boe/d, a 34% increase over first quarter of 2023. First quarter sales volumes consisted of approximately 80% crude oil and 91% liquids. The Company averaged two drilling rigs and one frac crew during the first quarter, drilled 19 gross (17.8 net) operated horizontal wells and completed 12 gross (12.0 net) operated producing wells. At March 31, 2024, the Company had 21 gross (19.9 net) operated horizontal wells and 9 gross (0.6 net) non-operated horizontal wells in various stages of drilling and completion. HighPeak President, Michael Hollis, commented, “Holding to our core values this quarter, HighPeak generated significant free cash flow and reduced overall debt, while keeping production flat quarter over quarter. We reduced our lifting costs per Boe approximately 16% from last quarter by optimizing chemical programs, utilizing our world-class infrastructure at scale and enhancing uptime. The team has been laser-focused on driving costs out of the system. By reducing opex and capex per foot, we continue to enhance our already strong corporate efficiency.” First Quarter 2024 Financial Results HighPeak reported net income of $6.4 million for the first quarter of 2024, or $0.05 per diluted share, and adjusted net income of $48.3 million, or $0.37 per diluted share. The Company reported EBITDAX of $233.3 million, or $1.63 per diluted share. First quarter average realized prices were $77.65 per barrel (“$/Bbl”) of crude oil, $24.94 per barrel of NGL and $1.33 per Mcf of natural gas, resulting in an overall realized price of $63.59 per Boe, or 83% of the weighted average of NYMEX crude oil prices, excluding the effects of derivatives. HighPeak’s cash costs for the third quarter were $10.91 per Boe, including lease operating expenses of $6.30 per Boe, workover expenses of $0.39 per Boe, production and ad valorem taxes of $3.18 per Boe and G&A expenses of $1.04 per Boe. The Company’s cash margin was $52.68 per Boe, or 83% of the overall realized price per Boe for the quarter, excluding the effects of derivatives. HighPeak’s first quarter 2024 capital expenditures to drill, complete, equip, provide facilities and for infrastructure were $147.8 million. Dividends During the first quarter of 2024, HighPeak’s Board of Directors approved a quarterly dividend of $0.04 per share, or $5.1 million in dividends paid to stockholders during the quarter. In addition, in May 2024, the Company’s Board of Directors declared a quarterly dividend of $0.04 per share, or approximately $5.1 million in dividends, to be paid on June 25, 2024 to stockholders of record on June 3, 2024. Conference Call HighPeak will host a conference call and webcast on Thursday, May 9, 2024, at 10:00 a.m. Central Time for investors and analysts to discuss its results for the first quarter of 2024. Conference call participants may register for the call here. Access to the live audio-only webcast and replay of the earnings release conference call may be found here. A live broadcast of the earnings conference call will also be available on the HighPeak Energy website at www.highpeakenergy.com under the “Investors” section of the website. A replay will also be available on the website following the call. When available, a copy of the Company’s earnings release, investor presentation and Quarterly Report on Form 10-Q may be found on its website at www.highpeakenergy.com. Conference ParticipationHighPeak Energy will participate in-person in the upcoming RBC Capital Markets Global Energy, Power & Infrastructure Conference in New York on June 4th-5th, 2024. About HighPeak Energy, Inc. HighPeak Energy, Inc. is a publicly traded independent crude oil and natural gas company, headquartered in Fort Worth, Texas, focused on the acquisition, development, exploration and exploitation of unconventional crude oil and natural gas reserves in the Midland Basin in West Texas. For more information, please visit our website at www.highpeakenergy.com.Cautionary Note Regarding Forward-Looking Statements The information in this press release contains forward-looking statements that involve risks and uncertainties. When used in this document, the words “believes,” “plans,” “expects,” “anticipates,” “forecasts,” “intends,” “continue,” “may,” “will,” “could,” “should,” “future,” “potential,” “estimate” or the negative of such terms and similar expressions as they relate to HighPeak Energy, Inc. (“HighPeak Energy,” the “Company” or the “Successor”) are intended to identify forward-looking statements, which are generally not historical in nature. The forward-looking statements are based on the Company's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company's control. For example, the Company’s review of strategic alternatives may not result in a sale of the Company, a recommendation that a transaction occur or result in a completed transaction, and any transaction that occurs may not increase shareholder value, in each case as a result of such risks and uncertainties. These risks and uncertainties include, among other things, the results of the strategic review being undertaken by the Company’s Board and the interest of prospective counterparties, the Company’s ability to realize the results contemplated by its 2024 guidance, volatility of commodity prices, product supply and demand, the impact of a widespread outbreak of an illness, such as the coronavirus disease pandemic, on global and U.S. economic activity, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms, litigation, the costs and results of drilling and operations, availability of equipment, services, resources and personnel required to perform the Company's drilling and operating activities, access to and availability of transportation, processing, fractionation, refining and storage facilities, HighPeak Energy's ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to any credit facility and derivative contracts entered into by HighPeak Energy, if any, and purchasers of HighPeak Energy's oil, natural gas liquids and natural gas production, uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future, the assumptions underlying forecasts, including forecasts of production, expenses, cash flow from sales of oil and gas and tax rates, quality of technical data, environmental and weather risks, including the possible impacts of climate change, cybersecurity risks and acts of war or terrorism. These and other risks are described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and other filings with the SEC. The Company undertakes no duty to publicly update these statements except as required by law. Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. Reserves estimates included herein may not be indicative of the level of reserves or PV-10 value of oil and natural gas production in the future. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions could impact HighPeak’s strategy and change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered. Use of Projections The financial, operational, industry and market projections, estimates and targets in this press release and in the Company’s guidance (including production, operating expenses and capital expenditures in future periods) are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond the Company’s control. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the financial, operational, industry and market projections, estimates and targets, including assumptions, risks and uncertainties described in “Cautionary Note Regarding Forward-Looking Statements” above. These projections are speculative by their nature and, accordingly, are subject to significant risk of not being actually realized by the Company. Projected results of the Company for 2024 are particularly speculative and subject to change. Actual results may vary materially from the current projections, including for reasons beyond the Company’s control. The projections are based on current expectations and available information as of the date of this release. The Company undertakes no duty to publicly update these projections except as required by law. Drilling Locations The Company has estimated its drilling locations based on well spacing assumptions and upon the evaluation of its drilling results and those of other operators in its area, combined with its interpretation of available geologic and engineering data. The drilling locations actually drilled on the Company’s properties will depend on the availability of capital, regulatory approvals, commodity prices, costs, actual drilling results and other factors. Any drilling activities conducted on these identified locations may not be successful and may not result in additional proved reserves. Further, to the extent the drilling locations are associated with acreage that expires, the Company would lose its right to develop the related locations. HighPeak Energy, Inc.Unaudited Condensed Consolidated Balance Sheet Data(In thousands) March 31, 2024 December 31, 2023 Current assets: Cash and cash equivalents $173,380 $194,515 Accounts receivable 109,005 94,589 Derivative instruments 11,179 31,480 Inventory 2,772 7,254 Prepaid expenses 2,639 995 Total current assets 298,975 328,833 Crude oil and natural gas properties, using the successful efforts method of accounting: Proved properties 3,487,622 3,338,107 Unproved properties 72,997 72,715 Accumulated depletion, depreciation and amortization (814,961) (684,179) Total crude oil and natural gas properties, net 2,745,658 2,726,643 Other property and equipment, net 3,563 3,572 Derivative instruments 1,380 16,059 Other noncurrent assets 5,116 5,684 Total assets $3,054,692 $3,080,791 Current liabilities: Current portion of long-term debt, net $120,000 $120,000 Accrued capital expenditures 49,232 39,231 Accounts payable - trade 47,273 63,583 Revenues and royalties payable 29,344 29,724 Other accrued liabilities 19,580 19,613 Derivative instruments 16,440 13,054 Advances from joint interest owners 4,845 262 Accrued interest 847 1,398 Operating leases 400 528 Total current liabilities 287,961 287,393 Noncurrent liabilities: Long-term debt, net 1,004,798 1,030,299 Deferred income taxes 198,757 197,068 Asset retirement obligations 13,685 13,245 Derivatives 1,054 65 Commitments and contingencies Stockholders' equity Common stock 13 13 Additional paid-in capital 1,184,371 1,189,424 Retained earnings 364,053 363,284 Total stockholders' equity 1,548,437 1,552,721 Total liabilities and stockholders' equity $3,054,692 $3,080,791 HighPeak Energy, Inc. Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) Three Months Ended March 31, 2024 2023 Operating revenues: Crude oil sales $282,369 $215,696 NGL and natural gas sales 5,395 8,098 Total operating revenues 287,764 223,794 Operating costs and expenses: Crude oil and natural gas production 30,271 32,942 Production and ad valorem taxes 14,402 12,297 Exploration and abandonments 498 2,164 Depletion, depreciation and amortization 130,850 81,131 Accretion of discount 239 118 General and administrative 4,685 2,502 Stock-based compensation 3,798 4,054 Total operating costs and expenses 184,743 135,208 Other expense 1 — Income from operations 103,020 88,586 Interest and other income 2,392 30 Interest expense (43,634) (26,972) Derivative gain (loss), net (53,043) 3,120 Income before income taxes 8,735 64,764 Income tax expense 2,297 14,507 Net income $6,438 $50,257 Earnings per share: Basic net income $0.05 $0.41 Diluted net income $0.05 $0.39 Weighted average shares outstanding: Basic 125,696 111,055 Diluted 129,641 117,765 Dividends declared per share $0.040 $0.025 HighPeak Energy, Inc. Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $6,438 $50,257 Adjustments to reconcile net income to net cash provided by operations: Provision for deferred income taxes 1,688 14,507 Loss (gain) on derivative instruments 53,043 (3,120) Cash paid on settlement of derivative instruments (5,148) (2,194) Amortization of debt issuance costs 2,053 2,668 Amortization of original issue discounts on long-term debt 2,453 4,290 Stock-based compensation expense 3,798 4,054 Accretion expense 239 118 Depletion, depreciation and amortization expense 130,850 81,131 Exploration and abandonment expense 274 1,950 Changes in operating assets and liabilities: Accounts receivable (14,414) 15,617 Prepaid expenses, inventory and other assets (4,722) (2,567) Accounts payable, accrued liabilities and other current liabilities (5,113) 23,295 Net cash provided by operating activities 171,439 190,006 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to crude oil and natural gas properties (147,698) (379,103) Changes in working capital associated with crude oil and natural gas property additions 1,705 65,062 Acquisitions of crude oil and natural gas properties (2,171) (5,463) Other property additions (59) (18) Net cash used in investing activities (148,223) (319,522) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments under Term Loan Credit Agreement (30,000) — Repurchased shares under buyback program (8,764) — Dividends paid (5,050) (2,776) Dividend equivalents paid (530) (282) Debt issuance costs (7) (544) Borrowings under Prior Credit Agreement — 150,000 Proceeds from exercises of stock options — 148 Proceeds from exercises of warrants — 2 Net cash provided by financing activities (44,351) 146,548 Net decrease in cash and cash equivalents (21,135) 17,032 Cash and cash equivalents, beginning of period 194,515 30,504 Cash and cash equivalents, end of period $173,380 $47,536 HighPeak Energy, Inc. Unaudited Summary Operating Highlights Three Months Ended March 31, 2024 2023 Average Daily Sales Volumes: Crude oil (Bbls) 39,959 31,507 NGLs (Bbls) 5,147 3,280 Natural gas (Mcf) 27,733 14,611 Total (Boe) 49,729 37,222 Average Realized Prices (excluding effects of derivatives): Crude oil per Bbl $77.65 $76.07 NGL per Bbl $24.94 $27.04 Natural gas per Mcf $1.33 $2.21 Total per Boe $63.59 $66.80 Margin Data ($ per Boe): Average price $63.59 $66.80 Lease operating expenses (6.30) (8.57) Expense workovers (0.39) (1.26) Production and ad valorem taxes (3.18) (3.67) $53.72 $53.30 HighPeak Energy, Inc. Unaudited Earnings Per Share Details Three Months Ended March 31, 2024 2023 Net income as reported $6,438 $50,257 Participating basic earnings (605) (4,638) Basic earnings attributable to common shareholders 5,833 45,619 Reallocation of participating earnings 1 75 Diluted net income attributable to common shareholders $5,834 $45,694 Basic weighted average shares outstanding 125,696 111,055 Dilutive warrants and unvested stock options 1,786 4,588 Dilutive unvested restricted stock 2,159 2,122 Diluted weighted average shares outstanding 129,641 117,765 Net income per share attributable to common shareholders: Basic $0.05 $0.41 Diluted $0.05 $0.39 HighPeak Energy, Inc. Unaudited Reconciliation of Net Income to EBITDAX, Discretionary Cash Flow and Net Cash Provided by Operations (in thousands) Three Months Ended March 31, 2024 2023 Net income $6,438 $50,257 Interest expense 43,634 26,972 Interest and other income (2,392) (30) Income tax expense 2,297 14,507 Depletion, depreciation and amortization 130,850 81,131 Accretion of discount 239 118 Exploration and abandonment expense 498 2,164 Stock based compensation 3,798 4,054 Derivative related noncash activity 47,895 (5,314) Other expense 1 — EBITDAX 233,258 173,859 Cash interest expense (39,128) (20,014) Other (a) 1,558 (184) Discretionary cash flow 195,688 153,661 Changes in operating assets and liabilities (24,249) 36,345 Net cash provided by operating activities $171,439 $190,006 (a) includes interest and other income net of current tax expense, other expense and operating portion of exploration and abandonment expenses. HighPeak Energy, Inc. Unaudited Reconciliation of Net Income to Adjusted Net Income (in thousands, except per share data) Three Months Ended March 31, 2024 Amounts Amounts per Diluted Share Net income $6,438 $0.05 Derivative loss, net 53,043 0.41 Stock-based compensation 3,798 0.03 Income tax adjustment for above items * (14,947) (0.12) Adjusted net income $48,332 $0.37 * Assuming 26.3% effective tax rate consistent with overall tax provision HighPeak Energy, Inc. Unaudited Cash Margin Reconciliation (in thousands, except per Boe data) Three Months Ended March 31, 2024 2023 Crude oil, NGL and natural gas sales revenue $287,764 $223,794 Less: Lease operating expenses (28,533) (28,720) Less: Workover expenses (1,738) (4,222) Less: Production and ad valorem taxes (14,402) (12,297) Less: General and administrative expenses (4,685) (2,502) Cash Margin $238,406 $176,053 Divide by: Sales volumes (MBoe) 4,525.3 3,350.0 Cash Margin per Boe, excluding effects of derivatives $52.68 $52.55 Cash Margin $238,406 $176,053 General and administrative expenses $4,685 $2,502 Divide by: Sales volumes (MBoe) 4,525.3 3,350.0 Cash Operating Margin per Boe, excluding effects of derivatives $53.72 $53.30 HighPeak Energy, Inc. Unaudited Free Cash Flow Reconciliation (in thousands) Three Months Ended March 31, 2024 Net cash provided by operating activities $171,439 Changes in operating assets and liabilities 24,249 Less: Costs incurred excluding acquisitions (147,698) Free cash flow $47,990 Investor Contact: Ryan HightowerVice President, Business [email protected] Source: HighPeak Energy, Inc.
|
