FORT WORTH, Texas, April 24, 2024 (GLOBE NEWSWIRE) -- HighPeak Energy, Inc. (NASDAQ: HPK) (“HighPeak Energy”), today announced that it plans to release its 2024 first quarter financial and operating results after the close of trading on Wednesday, May 8, 2024. HighPeak Energy 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 2024 first quarter financial results and operational highlights. Participants may register for the ca ...

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): March 7, 2024 HighPeak Energy, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation) Delaware 001-39464 84-3533602 (Commission File Number) (IRS Employer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Identification No.) 421 W. 3rd St., Suite 1000 Fort Worth, Texas 76102 (address of princ ...

Reserves and Production - As of December 31, 2023, HighPeak Energy's estimated proved reserves were 154,162 MBoe, a significant increase from 122,958 MBoe in 2022, representing a 25% growth[43]. - The composition of the proved reserves as of December 31, 2023, was 91% crude oil and NGL, with 52% classified as developed reserves[43]. - HighPeak Energy reported 74,569 MBoe of proved undeveloped reserves as of December 31, 2023, up from 61,700 MBoe in 2022, indicating a growth of about 21%[54][55]. - The company added 42,440 MBoe of extensions and discoveries related to new proved undeveloped locations in 2023, showcasing ongoing exploration success[57]. - The company drilled 57 productive development wells in 2023, compared to 28 in 2022, marking a 104% increase[70]. - Average net sales volumes for crude oil increased to 13,885 MBbl in 2023 from 7,562 MBbl in 2022, representing an increase of 83%[62]. - Total average net daily sales volumes reached 45,577 Boepd in 2023, up from 24,485 Boepd in 2022, an increase of 86%[62]. Financial Performance - Estimated future net cash flows from proved reserves as of December 31, 2023, were $5,277,582,000, down from $6,889,267,000 in 2022, indicating a decrease of approximately 23%[60]. - The present value of estimated future net cash flows (PV-10) for total proved reserves was $2,884,067,000 as of December 31, 2023, compared to $3,872,045,000 in 2022, a decline of about 26%[60]. - The average adjusted price realized for crude oil as of December 31, 2023, was $78.13 per barrel, compared to $94.59 per barrel in 2022, reflecting a decrease of approximately 17%[60]. - Development capital expenditures for converting proved undeveloped reserves to proved developed reserves were $481.5 million in 2023, compared to $391.3 million in 2022, reflecting a 23% increase[56]. Operational Strategy - HighPeak Energy operated approximately 98% of its net acreage, which totaled 143,187 gross (131,636 net) acres, with 64% held by production[34]. - The company plans to average two drilling rigs and one frac crew during 2024, down from three drilling rigs and one frac crew at the end of 2023[41]. - The company has the discretion to modify its capital program based on various factors, including drilling success and market conditions[42]. - HighPeak Energy's drilling and completion activities are focused on optimizing crude oil and natural gas recoveries to enhance return on investment[34]. Market and Competition - HighPeak Energy faces intense competition in the crude oil and natural gas industry, with larger competitors having greater resources and capabilities to acquire properties and explore during low market prices[78]. - The company competes with alternative energy sources, such as wind and solar, which may impact its market position[79]. - Seasonal demand fluctuations affect natural gas prices, typically higher in Q4 and Q1, while crude oil demand peaks in Q2 and Q3[80]. Regulatory Environment - The regulatory environment significantly impacts operations, with compliance costs potentially increasing due to changing federal, state, and local laws[86]. - The company believes it is in substantial compliance with applicable laws, but future regulatory changes could affect profitability and operational costs[89]. - The company is subject to new EPA regulations requiring the reduction of volatile organic compounds from certain crude oil and natural gas wells, which may increase development costs[121]. - The company may incur significant costs if new endangered species designations restrict land use for crude oil and natural gas development[133]. Employee and Corporate Governance - As of December 31, 2023, the company employed forty-eight full-time employees dedicated to operating its assets[138]. - The company is committed to fostering a diverse workforce and providing equal employment opportunities based on merit[141]. - The company has a strong focus on talent development and retention, promoting cross-training and leadership learning[143]. - The company’s board includes experienced executives with extensive backgrounds in the oil and gas industry, such as CEO Jack Hightower with over 50 years of experience[146].

Financial Data and Key Metrics Changes - The company averaged over 52,000 barrels of oil equivalent (Boe) per day for the quarter, representing a 25% increase compared to the second quarter and over 100% increase compared to the third quarter of 2022 [28][60] - Third quarter EBITDAX increased by 44% compared to the second quarter, translating to an annual run rate of over $1 billion [60][2] - The company generated significant free cash flow of over $75 million during the third quarter, marking a major achievement [60][2] - The net debt level is now below one turn, with expectations to continue decreasing as free cash flow is generated [3][8] Business Line Data and Key Metrics Changes - HighPeak's margin was approximately 60% higher than the peer average during the second quarter, with expectations for further expansion in the third quarter due to a high oil cut [5][30] - The company plans to maintain a three-rig program throughout the remainder of the year, with 41 wells expected to be turned in line in the second half of 2023 [68][90] Market Data and Key Metrics Changes - The company has seen a significant increase in production while maintaining a reasonable amount of leverage, which is now back below one turn [29][28] - The average oil prices increased by approximately $8.50 per barrel compared to the second quarter, contributing to an increase in margins [92] Company Strategy and Development Direction - The company aims to focus on responsible growth while maintaining capital discipline, with plans to potentially increase dividends and consider share buybacks if share prices remain dislocated [35][36] - HighPeak is positioned to capitalize on its prime oil-weighted Permian Basin asset base, with a long runway of Tier 1 inventory to develop [9][72] - The company has successfully completed a transformative debt refinancing, extending all debt maturities to September 2026, which strengthens its financial position [7][95] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the exit production rate of 57,000 barrels per day, with potential for upside due to strong well results [23][86] - The company anticipates continued improvement in financial metrics and free cash flow generation, provided commodity prices remain stable [71][60] - Management highlighted the importance of maintaining capital discipline and controlling working capital to avoid overextending in the future [52][35] Other Important Information - The company has implemented initiatives to reduce operating costs, with expectations for lower dollar per Boe in the range of $7.50 for the upcoming year [19][82] - HighPeak's electrical build-out and solar farm are expected to reduce lifting costs and provide protection from high spot pricing during peak demand [6][81] Q&A Session Summary Question: What is the expectation for production exit rate in the near term? - Management confirmed that they are not changing their guidance and expect to achieve the exit rate of 57,000 barrels per day, with potential for upside [23] Question: Can you discuss the impact of operating costs and where they might go in 2024? - Management indicated that operating costs have come down and expect to see a lower dollar per Boe, estimating around $7.50, while emphasizing the benefits of a high oil mix [19][17] Question: How does the company plan to balance debt repayment and return of capital to shareholders? - Management stated that they will utilize cash flow for debt repayment while also considering dividends and share repurchases, depending on market conditions [83][20]

Disclaimer (Cont'd) Q3 2023 Key Highlights Note: Acreage map per Enverus and company data. (1) Net acreage, % oil & liquids, and wells in progress as of 9/30/23. (2) EBITDAX is a non-GAAP financial measure. See disclaimer for definition. (3) Free Cash Flow is a non-GAAP financial measure and defined as discretionary cash flow less capex excluding acquisitions. (1) LQA EBITDAX in $MM. HPK PRODUCING HPK OPERATED 2H'23 PRODUCING •Reserve engineering is a process of estimating the recovery of underground accumu ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 001-3946 HighPeak Energy, Inc. (Exact name of Registrant as specified in its charter) Delaware 84-3533602 (State or othe ...

Definitions of Certain Terms and Conventions Used Herein Cautionary Statement Concerning Forward-Looking Statements PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents HighPeak Energy's unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2023 and 2022 [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :----- | :------------ | :---------------- | | Total assets | $2,790,003 | $2,279,482 | | Total current liabilities | $1,138,175 | $266,129 | | Total stockholders' equity | $1,255,410 | $1,169,647 | | Current portion of long-term debt, net | $741,155 | $— | | Accounts payable – trade | $215,845 | $105,565 | - Total assets increased by approximately **$510.5 million** from December 31, 2022, to June 30, 2023, primarily driven by an increase in proved crude oil and natural gas properties[31](index=31&type=chunk) - Current liabilities significantly increased by over **$872 million**, mainly due to the reclassification of long-term debt (Credit Agreement, 10.000% Senior Notes) to current portion as their maturities fall within the next twelve months[31](index=31&type=chunk) [Condensed Consolidated Statements of Operations](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating revenues | $240,760 | $201,428 | $464,554 | $293,657 | | Income from operations | $84,954 | $122,804 | $173,540 | $177,378 | | Net income | $31,826 | $77,561 | $82,083 | $61,051 | | Basic net income per share | $0.26 | $0.69 | $0.67 | $0.56 | | Diluted net income per share | $0.25 | $0.64 | $0.64 | $0.52 | | Dividends declared per share | $0.025 | $0.025 | $0.05 | $0.05 | - Net income decreased significantly by **59%** for the three months ended June 30, 2023, compared to the same period in 2022, primarily due to increased operating costs and expenses, particularly depletion, depreciation, and amortization (DD&A) and interest expense[34](index=34&type=chunk) - Total operating revenues increased by **19.5%** for the three months ended June 30, 2023, year-over-year, mainly driven by higher crude oil sales[34](index=34&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=15&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in Stockholders' Equity (in thousands) | Metric | Balance, December 31, 2022 | Balance, June 30, 2023 | | :----- | :------------------------- | :------------------- | | Total Stockholders' Equity | $1,169,647 | $1,255,410 | | Net Income (Six Months) | $160,740 (Retained Earnings) | $236,589 (Retained Earnings) | | Dividends Declared (Six Months) | N/A | $(5,659) | | Stock-based Compensation Costs (Six Months) | N/A | $8,038 | - Total stockholders' equity increased by **$85.7 million** from December 31, 2022, to June 30, 2023, primarily due to net income and stock-based compensation, partially offset by dividends declared[36](index=36&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=17&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $363,676 | $148,186 | | Net cash used in investing activities | $(612,521) | $(549,145) | | Net cash provided by financing activities | $248,606 | $388,507 | | Net decrease in cash and cash equivalents | $(239) | $(12,452) | | Cash and cash equivalents, end of period | $30,265 | $22,417 | | Cash paid for interest | $51,027 | $1,689 | - Net cash provided by operating activities increased by **145%** year-over-year for the six months ended June 30, 2023, reaching **$363.7 million**, primarily due to higher production volumes[40](index=40&type=chunk)[201](index=201&type=chunk) - Cash paid for interest significantly increased to **$51.0 million** for the six months ended June 30, 2023, compared to **$1.7 million** in the prior year, reflecting increased debt and interest rates[40](index=40&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=18&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1. Organization and Nature of Operations](index=18&type=section&id=NOTE%201.%20Organization%20and%20Nature%20of%20Operations) - HighPeak Energy, Inc. is an independent crude oil and natural gas exploration and production company operating in the Permian Basin in West Texas, specifically the Midland Basin in Howard and Borden Counties[42](index=42&type=chunk) - The company's common stock and warrants are listed and traded on the Nasdaq Global Market under ticker symbols 'HPK' and 'HPKEW', respectively[42](index=42&type=chunk) [NOTE 2. Basis of Presentation and Summary of Significant Accounting Policies](index=18&type=section&id=NOTE%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) - Management identified substantial doubt about the Company's ability to continue as a going concern within one year due to significant current debt and working capital deficits, necessitating refinancing or repayment of current debt[45](index=45&type=chunk)[46](index=46&type=chunk) - The Company uses the successful efforts method of accounting for crude oil and natural gas properties, capitalizing costs associated with productive wells and nonproductive development wells, while expensing nonproductive exploration costs[55](index=55&type=chunk) - Revenue from crude oil, NGL, and natural gas sales is recognized when control of the product is transferred to the purchaser, typically at the wellhead or lease location, based on market-based pricing adjusted for differentials[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) [NOTE 3. Acquisitions](index=26&type=section&id=NOTE%203.%20Acquisitions) - In June 2022, the Company completed the Hannathon Acquisition for **$337.2 million**, including 3,522,117 shares of common stock, to acquire crude oil and natural gas properties in Howard County[87](index=87&type=chunk) - In March and June 2022, the Company completed the Alamo Acquisitions for a total of **$167.1 million**, including 7,331,517 shares of common stock, to acquire properties in Borden County[88](index=88&type=chunk) - During the six months ended June 30, 2023, the Company incurred **$7.8 million** in acquisition costs for undeveloped crude oil and natural gas properties contiguous to its operating areas[89](index=89&type=chunk) [NOTE 4. Fair Value Measurements](index=27&type=section&id=NOTE%204.%20Fair%20Value%20Measurements) Fair Value Measurements of Derivatives (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :----- | :------------ | :---------------- | | Commodity price derivatives – current assets | $435 | $17 | | Commodity price derivatives – current liabilities | $10,700 | $16,702 | | Commodity price derivatives – noncurrent liabilities | $1,094 | $691 | | Total recurring fair value measurements (net liability) | $(11,359) | $(17,376) | - The Company's commodity price derivatives, primarily crude oil swap contracts and deferred premium put options, are measured using Level 2 inputs (observable market data) and resulted in a net liability of **$11.4 million** as of June 30, 2023[91](index=91&type=chunk)[93](index=93&type=chunk) [NOTE 5. Derivative Financial Instruments](index=29&type=section&id=NOTE%205.%20Derivative%20Financial%20Instruments) - The Company uses commodity swap contracts and deferred premium put options to manage crude oil price volatility, support capital budgeting, protect borrowing base, and meet contractual obligations[96](index=96&type=chunk) Effect of Derivatives on Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Noncash derivative gain (loss), net | $703 | $25,191 | $6,017 | $(16,442) | | Cash payments on settled derivatives, net | $(5,066) | $(37,082) | $(7,260) | $(61,843) | | Derivative loss, net | $(4,363) | $(11,891) | $(1,243) | $(78,285) | Outstanding Crude Oil Derivative Contracts as of June 30, 2023 | Contract Type | Period | Volume (MBbls) | Price per Bbl | | :------------ | :----- | :------------- | :------------ | | Crude Oil Price Swaps – WTI | Remainder of 2023 | 276.0 | $72.30 | | Deferred Premium Put Options – WTI (Put Price) | Remainder of 2023 | 1,564.0 | $57.82 | | Deferred Premium Put Options – WTI (Net of Premium) | Remainder of 2023 | 1,564.0 | $52.82 | | Deferred Premium Put Options – WTI (Put Price) | 2024 Total | 2,740.0 | $53.83 | | Deferred Premium Put Options – WTI (Net of Premium) | 2024 Total | 2,740.0 | $48.83 | [NOTE 6. Exploratory/Extension Well Costs](index=31&type=section&id=NOTE%206.%20Exploratory%2FExtension%20Well%20Costs) Changes in Capitalized Exploratory/Extension Well Costs (in thousands) | Metric | Six Months Ended June 30, 2023 | | :----- | :----------------------------- | | Beginning capitalized costs | $186,427 | | Additions | $322,902 | | Reclassification to proved properties | $(428,306) | | Ending capitalized costs | $81,023 | - The Company capitalizes exploratory/extension well and project costs until proved reserves are found, or the project is impaired or sold. All current capitalized costs have been for less than one year[102](index=102&type=chunk)[103](index=103&type=chunk) [NOTE 7. Long-Term Debt](index=31&type=section&id=NOTE%207.%20Long-Term%20Debt) Components of Long-Term Debt (in thousands) | Debt Type | June 30, 2023 | December 31, 2022 | | :-------- | :------------ | :---------------- | | Credit Agreement due 2024 | $525,000 | $270,000 | | 10.625% Senior Notes, due 2024 | $250,000 | $250,000 | | 10.000% Senior Notes, due 2024 | $225,000 | $225,000 | | Total debt | $973,009 | $704,349 | | Less current portion of long-term debt, net | $(741,155) | $— | | Long-term debt, net | $231,854 | $704,349 | - The Credit Agreement's borrowing base was increased to **$700.0 million** in March 2023, with elected commitments at **$575.0 million** as of June 30, 2023. Outstanding borrowings under the Credit Agreement increased to **$525.0 million**[109](index=109&type=chunk)[112](index=112&type=chunk) - The Company is required to redeem or refinance its 10.000% Senior Notes (due February 2024) or extend their maturity by September 1, 2023, or face an event of default under the Credit Agreement[109](index=109&type=chunk)[111](index=111&type=chunk) - The Credit Agreement requires a total debt to EBITDAX ratio not exceeding **3.00 to 1.00** and a current ratio of at least **1.00 to 1.00**. The Company obtained waivers for the current ratio covenant as of March 31, 2023, and June 30, 2023[113](index=113&type=chunk) [NOTE 8. Asset Retirement Obligations](index=36&type=section&id=NOTE%208.%20Asset%20Retirement%20Obligations) Asset Retirement Obligations Activity (in thousands) | Metric | Six Months Ended June 30, 2023 | | :----- | :----------------------------- | | Beginning asset retirement obligations | $7,502 | | Liabilities incurred from new wells | $186 | | Dispositions | $(40) | | Accretion of discount | $238 | | Ending asset retirement obligations | $7,886 | - The Company's asset retirement obligations, primarily for future well plugging and abandonment, increased to **$7.9 million** as of June 30, 2023, and are classified as noncurrent[119](index=119&type=chunk)[120](index=120&type=chunk) [NOTE 9. Incentive Plans](index=36&type=section&id=NOTE%209.%20Incentive%20Plans) - The Company's 401(k) Plan includes a **100%** matching contribution up to **4%** of a participant's annual base salary. Contributions for the six months ended June 30, 2023, were **$134,000**[121](index=121&type=chunk) - Stock-based compensation expense for stock options was **$555,000** for the six months ended June 30, 2023, with **$443,000** of unrecognized expense remaining[122](index=122&type=chunk) - In July 2023, an additional **1.9 million** stock options were issued to employees, valued at approximately **$10.2 million**[122](index=122&type=chunk) [NOTE 10. Commitments and Contingencies](index=37&type=section&id=NOTE%2010.%20Commitments%20and%20Contingencies) Maturities of Operating Lease Obligations (in thousands) | Period | Amount | | :----- | :----- | | Remainder of 2023 | $392 | | 2024 | $552 | | Total lease payments | $944 | | Less present value discount | $(53) | | Present value of lease liabilities | $891 | - The Company has a crude oil delivery commitment with Delek for **10,000 Bopd** for eight years, with a remaining monetary commitment of approximately **$14.2 million** if no additional volumes are delivered[130](index=130&type=chunk) - A sand purchase commitment requires buying at least **1.7 million tons** over two years, with a remaining monetary commitment of approximately **$19.1 million** as of June 30, 2023, if no additional sand is delivered[134](index=134&type=chunk) [NOTE 11. Related Party Transactions](index=39&type=section&id=NOTE%2011.%20Related%20Party%20Transactions) - The Company terminated a water treatment contract with Pilot Exploration, Inc. (a related party) in April 2023, incurring a **$6.5 million** charge to other expense[136](index=136&type=chunk) - Payments to Pilot for water treatment services totaled **$1.5 million** for the six months ended June 30, 2023[136](index=136&type=chunk) [NOTE 12. Major Customers](index=41&type=section&id=NOTE%2012.%20Major%20Customers) - Delek accounted for approximately **77%** of the Company's revenues during the six months ended June 30, 2023[137](index=137&type=chunk) - Energy Transfer Crude Marketing, LLC (ETC) accounted for approximately **19%** of the Company's revenues during the six months ended June 30, 2023[137](index=137&type=chunk) [NOTE 13. Income Taxes](index=41&type=section&id=NOTE%2013.%20Income%20Taxes) Income Tax Expense (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Deferred income tax expense | $9,644 | $24,072 | $24,151 | $23,760 | | Total income tax expense | $9,644 | $24,072 | $24,151 | $23,760 | | Effective income tax rate | 23.3% | 23.7% | 22.7% | 28.0% | - The effective income tax rate for the six months ended June 30, 2023, was **22.7%**, down from **28.0%** in the prior year, primarily due to decreased net income and a revision in deferred tax assets related to stock-based compensation[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - The Inflation Reduction Act of 2022 (IRA 2022) did not materially impact the Company's current year tax provision[138](index=138&type=chunk) [NOTE 14. Earnings Per Share](index=43&type=section&id=NOTE%2014.%20Earnings%20Per%20Share) Earnings Per Share Reconciliation (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income as reported | $31,826 | $77,561 | $82,083 | $61,051 | | Basic earnings attributable to common stockholders | $28,884 | $77,185 | $74,493 | $55,882 | | Diluted net income attributable to common stockholders | $28,930 | $71,347 | $74,616 | $55,006 | | Basic weighted average shares outstanding | 111,227 | 103,178 | 111,227 | 99,530 | | Diluted weighted average shares outstanding | 115,978 | 111,228 | 117,127 | 106,843 | - Basic net income per share decreased from **$0.69** to **$0.26** for the three months ended June 30, 2023, compared to the prior year, reflecting lower net income and an increase in weighted average shares outstanding[34](index=34&type=chunk)[146](index=146&type=chunk) [NOTE 15. Stockholders' Equity](index=45&type=section&id=NOTE%2015.%20Stockholders'%20Equity) - As of June 30, 2023, the Company had **113,385,923 shares** of common stock outstanding and **8,134,977 warrants** outstanding with an exercise price of **$11.50 per share**[154](index=154&type=chunk) - Quarterly dividends of **$0.025 per share** were declared in January and April 2023, totaling **$5.6 million** in dividends and dividend equivalents paid for the six months ended June 30, 2023[150](index=150&type=chunk)[151](index=151&type=chunk) [NOTE 16. Subsequent Events](index=45&type=section&id=NOTE%2016.%20Subsequent%20Events) - In July 2023, the Board approved a quarterly dividend of **$0.025 per share**, totaling approximately **$3.2 million**, to be paid on August 25, 2023[155](index=155&type=chunk) - In July 2023, the Company completed a public stock offering of **14,835,000 shares** at **$10.50 per share**, netting approximately **$151.2 million** for working capital and liquidity[158](index=158&type=chunk) - The Ninth Amendment to the Credit Agreement in July 2023 provided waivers for the minimum current ratio covenant and postponed the 10.000% Senior Notes obligation to September 1, 2023[157](index=157&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses HighPeak Energy's financial condition, operational results, key performance drivers, and future outlook [Overview](index=47&type=section&id=Overview) - HighPeak Energy operates in the Midland Basin, West Texas, with approximately **127,267 gross (114,164 net) acres**, **62%** held by production, and an average working interest of **90%**[161](index=161&type=chunk) - For the six months ended June 30, 2023, liquids (crude oil and NGL) accounted for approximately **93%** of sales volumes, with natural gas making up the remaining **7%**[161](index=161&type=chunk) - As of June 30, 2023, the Company was developing properties using two drilling rigs and two frac fleets, expecting to average two drilling rigs and one frac crew for the remainder of 2023[161](index=161&type=chunk) [Recent Events](index=47&type=section&id=Recent%20Events) - In July 2023, the Company completed a public stock offering, issuing **14,835,000 shares** at **$10.50**, generating **$151.2 million** in net proceeds for working capital and liquidity[162](index=162&type=chunk) - The Ninth Amendment to the Credit Agreement in July 2023 waived the minimum current ratio covenant for Q2 2023 and postponed the 10.000% Senior Notes obligation to September 1, 2023[163](index=163&type=chunk) - Failure to refinance or repay the 10.000% Senior Notes by September 1, 2023, could trigger an event of default under the Credit Agreement, leading to acceleration of all outstanding debt[164](index=164&type=chunk) [Crude Oil and Natural Gas Industry Considerations](index=49&type=section&id=Crude%20Oil%20and%20Natural%20Gas%20Industry%20Considerations) - Global crude oil prices remain strong despite a decrease from the prior quarter, influenced by low worldwide inventories, OPEC production cuts (announced April 2023, extended June 2023), and geopolitical conflicts like the Russia-Ukraine war[168](index=168&type=chunk) - The Company's 2023 capital program is impacted by significant cost inflation in steel, diesel, chemicals, and services due to global supply chain disruptions[168](index=168&type=chunk) [Outlook](index=49&type=section&id=Outlook) - The Company's financial position is highly dependent on volatile commodity prices, which have ranged significantly (NYMEX WTI crude oil from **$16.70** to **$114.34 per Bbl**, NYMEX natural gas from **$1.50** to **$9.35 per MMBtu**) between January 2018 and June 2023[170](index=170&type=chunk) - HighPeak Energy is maintaining flexibility in its capital plan, shifting to an anticipated two-drilling rig program for the remainder of 2023, and will assess future activity levels monthly based on economic conditions[172](index=172&type=chunk) [Strategic Alternatives](index=51&type=section&id=Strategic%20Alternatives) - The Board initiated a process in January 2023 to evaluate strategic alternatives, including a potential sale of the Company, with Credit Suisse and Wells Fargo as financial advisors[173](index=173&type=chunk) - The strategic review is in preliminary stages, with no timetable set for conclusion, and no assurance of any transaction or strategic change[173](index=173&type=chunk) [Financial and Operating Performance](index=51&type=section&id=Financial%20and%20Operating%20Performance) Key Financial Performance Changes (Three Months Ended June 30, 2023 vs. 2022) | Metric | Change (in millions) | Reason | | :----- | :------------------- | :----- | | Net income | $(45.8) | Increased DD&A, interest expense, lease operating expenses, other expense, production taxes, G&A, exploration and abandonments; partially offset by increased revenues, decreased income tax expense, decreased stock-based compensation, and increased net derivative gain. | | DD&A expense | $58.1 (increase) | 92% increase in daily sales volumes and 39% increase in DD&A rate due to inflationary capital costs and acquisitions. | | Interest expense | $30.0 (increase) | Issuance of Existing Notes, increased Credit Agreement borrowings, $8.3M additional interest on 10.625% Senior Notes, increased amortization of debt costs. | | Lease operating expenses | $18.3 (increase) | Increased well count, power/chemical costs, repair/maintenance, and inflationary pressures. | | Crude oil, NGL, natural gas revenues | $39.3 (increase) | 92% increase in daily sales volumes, partially offset by 38% decrease in average realized commodity prices. | | Income tax expense | $(14.4) (decrease) | Lower net income. | | Stock-based compensation expense | $(10.6) (decrease) | Less options and restricted stock issued. | | Net derivative gain | $7.5 (increase) | Crude oil commodity contracts and subsequent price decrease. | Key Operating Performance (Three Months Ended June 30, 2023 vs. 2022) | Metric | 2023 | 2022 | Change | | :----- | :--- | :--- | :----- | | Average daily sales volumes (Boe/d) | 42,207 | 21,995 | 92% increase | | Realized crude oil prices per Bbl (excl. derivatives) | $73.21 | $111.26 | (34%) decrease | | Realized NGL prices per Bbl | $20.77 | $47.29 | (56%) decrease | | Realized natural gas prices per Mcf | $0.70 | $6.02 | (88%) decrease | | Cash provided by operating activities (in millions) | $173.7 | $98.2 | 76.9% increase | [Derivative Financial Instruments](index=53&type=section&id=Derivative%20Financial%20Instruments) - As of June 30, 2023, the estimated fair value of outstanding open derivative financial instruments was a net liability of **$11.4 million**[177](index=177&type=chunk) - For the six months ended June 30, 2023, the Company recognized a net derivative gain of **$1.2 million**, comprising a **$6.0 million** mark-to-market gain and **$7.2 million** in net monthly settlement payments[177](index=177&type=chunk) - In July 2023, the Company entered into an additional crude oil price swap to hedge approximately **8,000 Bopd** for the second half of 2023 at a strike price of **$74.46 per Bbl**[178](index=178&type=chunk) [Operations and Drilling Highlights](index=54&type=section&id=Operations%20and%20Drilling%20Highlights) Average Daily Sales Volumes (Six Months Ended June 30, 2023) | Commodity | Volume | | :-------- | :----- | | Crude Oil (Bbls) | 33,506 | | NGL (Bbls) | 3,482 | | Natural Gas (Mcf) | 16,444 | | Total (Boe) | 39,728 | - Liquids production constituted **93%** of total production on a Boe basis for the six months ended June 30, 2023[179](index=179&type=chunk) Horizontal Producing Wells Drilled and Completed (Six Months Ended June 30, 2023) | Area | Drilled (Gross) | Drilled (Net) | Completed (Gross) | Completed (Net) | | :--- | :-------------- | :------------ | :---------------- | :-------------- | | Flat Top | 36 | 35.7 | 53 | 45.3 | | Signal Peak | 13 | 12.1 | 21 | 20.8 | | Total | 49 | 47.8 | 74 | 66.1 | - As of June 30, 2023, **42 gross (35.7 net)** wells were in various stages of completion, and **13 gross (8.6 net)** horizontal wells were in the process of drilling[182](index=182&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) [Crude Oil, NGL and natural gas revenues](index=55&type=section&id=Crude%20Oil,%20NGL%20and%20natural%20gas%20revenues) Average Daily Sales Volumes (Boe/d) and Realized Prices (per Boe, excluding derivatives) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Total (Boe/d) | 42,207 | 21,995 | 92% | | Total per Boe | $62.68 | $100.63 | (38%) | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total (Boe/d) | 39,728 | 17,051 | 133% | | Total per Boe | $64.60 | $95.15 | (32%) | - The significant increase in sales volumes was driven by the Company's successful horizontal drilling program, partially offset by temporary third-party gas takeaway issues[183](index=183&type=chunk) [Crude Oil and natural gas production costs](index=55&type=section&id=Crude%20Oil%20and%20natural%20gas%20production%20costs) Crude Oil and Natural Gas Production Costs (in thousands, except per Boe) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Total production costs | $34,934 | $16,595 | 111% | | Production costs per Boe (excl. workovers) | $8.39 | $8.27 | 1% | | Workover expense per Boe | $0.71 | $0.02 | 3,450% | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total production costs | $67,876 | $26,041 | 161% | | Production costs per Boe (excl. workovers) | $8.48 | $8.39 | 1% | | Workover expense per Boe | $0.96 | $0.05 | 1,820% | - Total production costs increased significantly due to more producing wells, higher chemical and treating costs, increased repair and maintenance, and expense workovers[186](index=186&type=chunk) - Production was negatively impacted by a weather event, a fire, and temporary shut-ins for offset completion operations, as well as third-party natural gas plant issues in Flat Top[186](index=186&type=chunk) [Production and ad valorem taxes](index=57&type=section&id=Production%20and%20ad%20valorem%20taxes) Production and Ad Valorem Taxes (in thousands, except per Boe) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Total taxes | $13,259 | $10,301 | 29% | | Production taxes per Boe | $3.03 | $4.82 | (37%) | | Ad valorem taxes per Boe | $0.42 | $0.33 | 27% | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total taxes | $25,556 | $15,307 | 67% | | Production taxes per Boe | $3.09 | $4.56 | (32%) | | Ad valorem taxes per Boe | $0.46 | $0.40 | 15% | - The decrease in production taxes per Boe was primarily due to a **38%** and **32%** decrease in realized prices for the three and six months ended June 30, 2023, respectively[188](index=188&type=chunk) [Exploration and abandonments expense](index=57&type=section&id=Exploration%20and%20abandonments%20expense) Exploration and Abandonments Expense (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Total expense | $480 | $184 | 161% | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total expense | $2,644 | $393 | 573% | | Abandoned leasehold costs | $1,931 | $(1) | n/m | | Plugging and abandonment expense | $225 | $(2) | n/m | - The significant increase in exploration and abandonment costs for the six months ended June 30, 2023, was mainly due to **$1.9 million** in abandoned leasehold costs and higher plugging and abandonment costs for legacy vertical wells[189](index=189&type=chunk) [DD&A expense](index=57&type=section&id=DD%26A%20expense) DD&A Expense (in thousands, except per Boe) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Total DD&A expense | $93,011 | $34,883 | 167% | | DD&A expense per Boe | $24.22 | $17.43 | 39% | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total DD&A expense | $174,142 | $51,907 | 235% | | DD&A expense per Boe | $24.22 | $16.82 | 44% | - The substantial increase in DD&A expense and rate per Boe is attributed to increased production from the successful horizontal drilling program and significant inflationary pressures on capital costs, as well as bolt-on acquisitions[190](index=190&type=chunk) [General and administrative expense](index=58&type=section&id=General%20and%20administrative%20expense) General and Administrative Expense (in thousands, except per Boe) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Total G&A expense | $2,516 | $2,016 | 25% | | G&A expense per Boe | $0.66 | $1.01 | (35%) | | Stock-based compensation expense | $3,984 | $14,579 | (73%) | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total G&A expense | $5,018 | $3,956 | 27% | | G&A expense per Boe | $0.70 | $1.28 | (45%) | | Stock-based compensation expense | $8,038 | $18,555 | (57%) | - General and administrative expense increased due to new employees, higher salaries, and increased audit/tax/internal audit costs, but the rate per Boe decreased due to economies of scale from increased production[191](index=191&type=chunk) - Stock-based compensation expense decreased significantly by **73%** and **57%** for the three and six months ended June 30, 2023, respectively, due to fewer options and restricted stock issuances compared to the prior year[191](index=191&type=chunk) [Interest expense](index=59&type=section&id=Interest%20expense) Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Total interest expense | $39,284 | $9,282 | 323% | | Credit Agreement | $11,323 | $735 | 1441% | | 10.625% Senior Notes | $6,633 | $— | n/m | | 10.000% Senior Notes | $5,625 | $5,562 | 1% | | Additional interest on 10.625% Senior Notes | $8,330 | $— | n/m | | Amortization of discount | $4,337 | $1,848 | 135% | | Amortization of debt issuance costs | $3,036 | $1,137 | 167% | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total interest expense | $66,256 | $14,534 | 356% | - Interest expense increased significantly due to higher borrowings under the Credit Agreement, the issuance of 10.000% and 10.625% Senior Notes, and an **$8.3 million** additional interest payment on the 10.625% Senior Notes[192](index=192&type=chunk) [Derivative loss, net](index=59&type=section&id=Derivative%20loss,%20net) Derivative Loss, Net (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Noncash derivative gain (loss), net | $703 | $25,191 | (97%) | | Cash payments on settled derivative instruments, net | $(5,066) | $(37,082) | (86%) | | Derivative loss, net | $(4,363) | $(11,891) | (63%) | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Derivative loss, net | $(1,243) | $(78,285) | (98%) | - The net derivative loss decreased significantly by **63%** and **98%** for the three and six months ended June 30, 2023, respectively, primarily due to changes in noncash derivative gains/losses and lower cash payments on settled instruments[193](index=193&type=chunk) [Other expense](index=59&type=section&id=Other%20expense) Other Expense (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Water treatment contract buyout | $6,516 | $— | 100% | | Other | $986 | $— | 100% | | Total other expense | $7,502 | $— | 100% | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Total other expense | $7,502 | $— | 100% | - Other expense increased to **$7.5 million** for the three and six months ended June 30, 2023, primarily due to a **$6.5 million** buyout of a water treatment contract and **$986,000** in repairs from a production facility fire[194](index=194&type=chunk) [Income tax expense](index=60&type=section&id=Income%20tax%20expense) Income Tax Expense (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | % Change (YoY) | | :----- | :------------------------------- | :------------------------------- | :------------- | | Income tax expense | $9,644 | $24,072 | (60%) | | Effective income tax rate | 23.3% | 23.7% | (2%) | | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | % Change (YoY) | | :----- | :----------------------------- | :----------------------------- | :------------- | | Income tax expense | $24,151 | $23,760 | 2% | | Effective income tax rate | 22.7% | 28.0% | (19%) | - The change in income tax expense and effective rate is primarily due to decreased net income in the current periods compared to the prior year[195](index=195&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) [Operating activities](index=61&type=section&id=Operating%20activities) Net Cash Provided by Operating Activities (in thousands) | Period | Amount | | :----- | :----- | | Six Months Ended June 30, 2023 | $363,676 | | Six Months Ended June 30, 2022 | $148,186 | | Change | $215,490 | | % Change | 145% | - The **145%** increase in net cash from operating activities was primarily driven by higher revenues from increased production volumes and an increase in accounts payables and accrued liabilities, partially offset by decreased realized prices[201](index=201&type=chunk) [Investing activities](index=61&type=section&id=Investing%20activities) Net Cash Used in Investing Activities (in thousands) | Period | Amount | | :----- | :----- | | Six Months Ended June 30, 2023 | $(612,521) | | Six Months Ended June 30, 2022 | $(549,145) | | Change | $(63,376) | | % Change | (12%) | - The increase in net cash used in investing activities was mainly due to higher additions to crude oil and natural gas properties, partially offset by a significant decrease in cash acquisition costs[202](index=202&type=chunk) [Financing activities](index=61&type=section&id=Financing%20activities) Net Cash Provided by Financing Activities (in thousands) | Period | Amount | | :----- | :----- | | Six Months Ended June 30, 2023 | $248,606 | | Six Months Ended June 30, 2022 | $388,507 | | Change | $(139,901) | | % Change | (36%) | - For the six months ended June 30, 2023, financing activities included **$255.0 million** in Credit Agreement borrowings and **$1.7 million** from warrant exercises, offset by **$5.6 million** in dividends and **$1.4 million** in debt issuance costs[205](index=205&type=chunk) - For the six months ended June 30, 2022, financing activities included **$210.2 million** from 10.000% Senior Notes, **$185.0 million** net from Credit Agreement, and **$7.8 million** from warrant exercises, offset by **$9.1 million** in debt issuance costs and **$5.4 million** in dividends[205](index=205&type=chunk) [Interest Rate Risk](index=61&type=section&id=Interest%20Rate%20Risk) - The Company is exposed to market risk from the floating interest rate on its **$525.0 million** outstanding Credit Agreement balance as of June 30, 2023[203](index=203&type=chunk) - A **1%** increase in interest rates on outstanding debt as of June 30, 2023, would result in an annual increase of approximately **$5.3 million** in interest expense[225](index=225&type=chunk) [Commodity Price Risk](index=61&type=section&id=Commodity%20Price%20Risk) - Crude oil, NGL, and natural gas prices are highly volatile, impacting revenue, profitability, and growth, with fluctuations driven by supply/demand, macroeconomic conditions, and geopolitical events[204](index=204&type=chunk) - A **$1.00 per barrel** increase (decrease) in crude oil price would change revenues by approximately **$12.5 million** annually, and a **$0.10 per Mcf** change in natural gas price would change revenues by approximately **$595,000** annually, excluding derivatives[206](index=206&type=chunk)[217](index=217&type=chunk) - A **$1.00** increase (decrease) in forward curves for crude oil derivatives would decrease (increase) net derivative positions by approximately **$886,000**[207](index=207&type=chunk) [Contractual obligations](index=62&type=section&id=Contractual%20obligations) - The Company's contractual obligations include leases for drilling rigs, equipment, and office facilities, capital funding obligations, volume commitments, and aid-in-construction obligations[208](index=208&type=chunk) [Non-GAAP Financial Measures](index=63&type=section&id=Non-GAAP%20Financial%20Measures) - EBITDAX is a non-GAAP measure used to assess the Company's ability to generate funds for exploration, development, acquisitions, and debt service, and is a key metric for financial covenants under the Credit Agreement and Senior Notes[209](index=209&type=chunk) EBITDAX Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $31,826 | $77,561 | $82,083 | $61,051 | | EBITDAX | $184,985 | $135,434 | $358,844 | $186,510 | - EBITDAX increased by **36.6%** for the three months ended June 30, 2023, and by **92.4%** for the six months ended June 30, 2023, compared to the same periods in 2022[210](index=210&type=chunk) [New Accounting Pronouncements](index=63&type=section&id=New%20Accounting%20Pronouncements) - Management's judgments and estimates in financial reporting are based on internal and external information, including reserve estimation, asset retirement obligations, impairment, stock-based compensation, and derivative valuations[212](index=212&type=chunk)[213](index=213&type=chunk) - There have been no material changes in critical accounting policies and procedures during the three months ended June 30, 2023[214](index=214&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details HighPeak Energy's exposure to commodity price and interest rate risks, and mitigation strategies - The Company's primary market risk is the volatile pricing of crude oil, NGL, and natural gas, with NYMEX WTI crude oil prices ranging from **$16.70** to **$114.34 per Bbl** and natural gas from **$1.50** to **$9.35 per MMBtu** between January 2018 and June 2023[216](index=216&type=chunk)[217](index=217&type=chunk) - Commodity derivative instruments (swaps, puts, collars) are used to hedge price risk, reduce cash flow variability, provide certainty for drilling programs, and protect the Credit Agreement borrowing base, as required by debt covenants[218](index=218&type=chunk) Average Forward NYMEX Prices | Commodity | June 30, 2023 (Remainder of 2023) | June 30, 2023 (Year Ending Dec 31, 2024) | August 3, 2023 (Remainder of 2023) | August 3, 2023 (Year Ending Dec 31, 2024) | | :-------- | :-------------------------------- | :--------------------------------------- | :--------------------------------- | :------------------------------------- | | Crude oil per Bbl | $70.41 | $68.51 | $79.94 | $76.53 | | Natural gas per MMBtu | $3.05 | $3.52 | $2.95 | $3.44 | - The Company faces credit risk from significant purchasers (Delek, ETC) and derivative counterparties, mitigated by credit risk policies and master netting arrangements[219](index=219&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) [Item 4. Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of HighPeak Energy's disclosure controls and procedures as of June 30, 2023 - HighPeak Energy's disclosure controls and procedures were deemed effective as of June 30, 2023, ensuring timely and accurate reporting of information under the Exchange Act[226](index=226&type=chunk) - No material changes in the Company's internal control over financial reporting occurred during the three months ended June 30, 2023[227](index=227&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) Addresses HighPeak Energy's legal proceedings, asserting no material adverse effect on financial position or operations - The Company believes that the financial impact of any legal proceedings or claims will not materially adversely affect its consolidated financial position, liquidity, capital resources, or future annual results of operations[229](index=229&type=chunk) [Item 1A. Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, emphasizing the critical need for supplemental financing to address significant debt maturities - Failure to redeem, refinance, or extend the 10.000% Senior Notes by September 1, 2023, will result in an event of default under the Credit Agreement, potentially accelerating all outstanding debt and leading to cross-defaults on other indebtedness[231](index=231&type=chunk)[232](index=232&type=chunk)[235](index=235&type=chunk) - As of June 30, 2023, the Company had **$1.0 billion** in total indebtedness, all maturing in 2024, including **$225.0 million** of 10.000% Senior Notes, **$250.0 million** of 10.625% Senior Notes, and **$527.4 million** under the Credit Agreement[236](index=236&type=chunk) - Approximately **50.2%** of the Company's total estimated proved reserves at December 31, 2022, were undeveloped, requiring significant capital expenditures (**$934.3 million** over five years) that may be constrained by current liquidity and debt covenants[246](index=246&type=chunk) - Beginning in Q4 2024, the absence of commodity hedging contracts for projected production could expose the Company to greater adverse effects of price volatility and significant fluctuations in net income[247](index=247&type=chunk) [Item 5. Other Information](index=71&type=section&id=Item%205.%20Other%20Information) States no director or officer adopted or terminated Rule 10b5-1 trading arrangements during Q2 2023 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[248](index=248&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance and debt documents - The exhibits include the Second Amended & Restated Certificate of Incorporation, Amended and Restated Bylaws, Registration Rights Agreement, Stockholders' Agreement, and various Indentures for Senior Notes[250](index=250&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits[250](index=250&type=chunk) Signatures

Financial Data and Key Metrics Changes - The company achieved an average production of 37,000 barrels per day in Q1 2023, which represents a year-over-year increase of over 200% compared to Q1 2022 [69] - The EBITDA run rate is projected to be about $1.2 billion at an $80 price deck, with potential increases at higher prices [4] - The company maintains the highest operating margins among its Permian peers, with a first-quarter margin per BOE that was 55% higher than the peer average [5][6] Business Line Data and Key Metrics Changes - HighPeak has more than doubled its acreage footprint over the last few years, leading to improved well results and confidence in substantial inventory [9] - The company plans to turn in line 110 wells in 2023, with 64 wells in various stages of drilling and completion at quarter-end [70] - The average lateral length of HighPeak's inventory is 12,000 feet, contributing to increased capital efficiency and well performance [11] Market Data and Key Metrics Changes - The company is positioned to continue increasing production next year at a four-rig cadence, funded entirely from cash flow from operations [4] - HighPeak's production is expected to grow at least 50% this year and another 30% next year, indicating strong market positioning [30] Company Strategy and Development Direction - The company is focused on a long-term development strategy to maximize shareholder value through sustained operations and strategic alternatives [68] - A reduction in rig count from four to two for the remainder of the year is aimed at strengthening financial position while maintaining production guidance [78] - The company anticipates entering a phase of positive free cash flow in the second half of the year, allowing for continued growth and financial discipline [33][83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to optimize shareholder value despite current market volatility and commodity price fluctuations [76][77] - The company is committed to maintaining a debt-to-EBITDA ratio of about 0.5 turns while continuing to grow [33] - Management highlighted the importance of under-promising and over-performing in the current economic environment [81] Other Important Information - HighPeak's operations are highly oil-weighted, with 85% of production being oil and 94% liquids, which is expected to continue [32] - The company is actively working on ESG initiatives, including energy efficiency and recycling of stimulation fluids [24][25] Q&A Session Summary Question: Discussion on upcoming notes maturity - Management reassured that there is no immediate pressure regarding the notes maturing in 2024, with plans in place to address any liquidity concerns [37][39] Question: Impact of new wells on production - Management indicated that approximately 20 producing wells were offline for fracking activities, but significant growth is expected in Q2 and Q3 from these completions [51][57] Question: Trends in LOE expenses - Management explained that the Q1 LOE expense was influenced by workover activities and that trends are expected to decrease as new wells come online [41][42] Question: Production growth expectations - Management confirmed that production is expected to grow significantly throughout the year, with a steady number of wells being brought online [60][62]

($ in millions) | --- | --- | --- | |-------------------------|---------|---------| | Production (MBoe/d) | 2023 | 2024 | | Average production rate | 45 - 51 | 60 - 66 | | Exit production Rate | 55 - 61 | 68 - 76 | YoY Est. Avg. Production Growth >30% 4 (1) Free Cash Flow is a non-GAAP financial measure and defined as estimated EBITDAX less Capex, interest expense & dividends at various oil prices combined with gas price of $4/Mcf. Positive and increasing FCF projected in 2H'23 onwards HighPeak's oil cut ge ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 001-39464 HighPeak Energy, Inc. (Exact name of Registrant as specified in its charter) Delaware 84-3533602 (State or other j ...