HighPeak Energy(HPK) - 2024 Q3 - Quarterly Report

Cash and Cash Equivalents - Cash and cash equivalents decreased to $135.573 million as of September 30, 2024, from$194.515 million as of December 31, 2023[13] - The company's cash and cash equivalents as of September 30, 2024, are $135.573 million, down 10.7$151.807 million at the end of 2023[19] - Cash and cash equivalents at the end of the period decreased to $135,573 in 2024 from$151,807 in 2023, a decline of 10.7%[19] Accounts Receivable - Accounts receivable decreased to $76.444 million as of September 30, 2024, from$94.589 million as of December 31, 2023[13] - Accounts receivable as of September 30, 2024, are $67.5 million, down 18.2$82.5 million at the end of 2023[26] - The company's accounts receivables primarily consist of amounts due from the sale of crude oil, NGL, and natural gas, totaling $67.5 million as of September 30, 2024[26] - Receivables related to contracts with purchasers were approximately$67.5 million as of September 30, 2024, down from $82.5 million as of December 31, 2023[46] Proved Properties - Proved properties increased to$3.798 billion as of September 30, 2024, from $3.338 billion as of December 31, 2023[13] - Capitalized exploratory/extension well costs increased by$103.7 million, with a reclassification of $126.2 million to proved properties, resulting in an ending balance of$18.1 million[77] Retained Earnings - Retained earnings increased to $432.446 million as of September 30, 2024, from$363.284 million as of December 31, 2023[13] - Retained earnings grew to $432.446 million as of September 30, 2024, compared to$271.827 million in the same period in 2023[15][17] Long-term Debt - Long-term debt decreased to $953.825 million as of September 30, 2024, from$1.030 billion as of December 31, 2023[13] - Long-term debt decreased from $1.15 billion as of December 31, 2023, to$1.07 billion as of September 30, 2024, with current maturities of $120 million[78] - The Term Loan Credit Agreement totals$1.2 billion with a 2.5% original issue discount of $30 million and$24 million in debt issuance costs, maturing on September 30, 2026[80] - The company had a $1.11 billion outstanding balance on the Term Loan Credit Agreement as of September 30, 2024[186] Total Current Liabilities - Total current liabilities decreased to$259.628 million as of September 30, 2024, from $287.393 million as of December 31, 2023[13] - Current liabilities totaled approximately$259.6 million as of September 30, 2024, down from $287.4 million as of December 31, 2023[42] Total Assets - Total assets slightly decreased to$3.061 billion as of September 30, 2024, from $3.081 billion as of December 31, 2023[13] - Total assets decreased from$3,080.79 million in December 2023 to $3,061.47 million in September 2024, a decline of 0.63$7.966 million as of September 30, 2024, from $7.254 million as of December 31, 2023[13] - Inventory as of September 30, 2024, is$8.0 million, up 9.6% from $7.3 million at the end of 2023[29] - The company's materials and supplies inventory as of September 30, 2024, is$8.0 million, with no valuation allowance recognized[29] Prepaid Expenses - Prepaid expenses increased to $3.921 million as of September 30, 2024, from$995,000 as of December 31, 2023[13] - Prepaid expenses as of September 30, 2024, are $3.9 million, a 290$1.0 million at the end of 2023[30] Total Stockholders' Equity - Total stockholders' equity increased to $1.606 billion as of September 30, 2024, from$1.553 billion as of December 31, 2023[13] - Stockholders' equity as of September 30, 2024, was $1,605.69 million, up from$1,455.10 million as of September 30, 2023[15][17] - The company's stockholders' equity increased to $1.60569 billion as of September 30, 2024, up from$1.455102 billion in the same period in 2023[15][17] Operating Revenues - Total operating revenues for the three months ended September 30, 2024, were $271.58 million, compared to$345.59 million in the same period in 2023[14] - Total operating revenues for the nine months ended September 2024 were $834.61 million, a 3.02$810.14 million in the same period in 2023[14] - Total operating revenues decreased by 21% to $271.58 million in Q3 2024 compared to$345.59 million in Q3 2023[161] Net Income - Net income for the three months ended September 30, 2024, was $49.93 million, up from$38.78 million in the same period in 2023[14] - Net income for 2024 is $86.088 million, compared to$120.862 million in 2023, representing a decrease of 28.8%[19] - Net income for the nine months ended September 2024 was $86.09 million, compared to$120.86 million in the same period in 2023, a decrease of 28.76%[14] - HighPeak Energy's net income for the nine months ended September 30, 2024, was $49.933 million, compared to$38.779 million for the same period in 2023[15][17] - Net income increased to $49.9 million ($0.35 per diluted share) for Q3 2024, up from $38.8 million in Q3 2023, driven by a$62.0 million gain in derivative instruments and a $27.3 million decrease in debt extinguishment loss[148] - Net income for the three months ended September 30, 2024, was$49.9 million, up from $38.8 million in the same period in 2023[194] Crude Oil Sales - Crude oil sales for the three months ended September 30, 2024, were$270.64 million, down from $338.37 million in the same period in 2023[14] - Crude oil sales for the nine months ended September 2024 were$827.60 million, up 4.70% from $790.46 million in the same period in 2023[14] - Crude oil realized price decreased by 8$75.99 per Bbl in Q3 2024 compared to $82.87 in Q3 2023[160] NGL and Natural Gas Sales - NGL and natural gas sales for the three months ended September 30, 2024, were$0.94 million, significantly lower than $7.21 million in the same period in 2023[14] - NGL sales volumes increased by 38$0.42 per Mcf in Q3 2024 from 1.89 in Q3 2023[160] Depletion, Depreciation, and Amortization (DD&A) - Depletion, depreciation, and amortization expenses for the three months ended September 30, 2024, were 136.58 million, up from $117.42 million in the same period in 2023[14] - Depletion, depreciation, and amortization expenses for the nine months ended September 2024 were$395.12 million, up 35.52% from 291.56 million in the same period in 2023[14] - DD&A expense increased by 16% to 136.58 million in Q3 2024 from 117.42 million in Q3 2023, driven by increased production and inflationary pressures[169] - The Company's DD&A expense increased by 19% to 28.91 per Boe in Q3 2024 due to inflationary pressures on capital costs, partially offset by a 3% decrease in daily sales volumes[149] Dividends - Dividends declared per share for the three months ended September 30, 2024, were $0.04, compared to$0.025 in the same period in 2023[14] - Dividends declared per share for the nine months ended September 2024 were $0.12, a 60.00$0.075 in the same period in 2023[14] - Quarterly dividend of $0.04 per share declared in August 2024, resulting in$5.0 million paid in September 2024[126] - Total of $5.0 million in dividends paid in June 2024 from a$0.04 per share dividend declared in May 2024[127] - $5.1 million in dividends paid in March 2024 from a$0.04 per share dividend declared in February 2024[128] - $3.2 million in dividends paid in August 2023 from a$0.025 per share dividend declared in July 2023[129] - $2.8 million in dividends paid in May 2023 from a$0.025 per share dividend declared in April 2023[130] - $2.8 million in dividends paid in February 2023 from a$0.025 per share dividend declared in January 2023[131] - HighPeak Energy declared dividends of $0.04 per share in Q3 2024, resulting in a total dividend payout of$5.082 million[15] Stock-based Compensation - Stock-based compensation costs for the three months ended September 30, 2024, were $3.75 million, down from$14.06 million in the same period in 2023[14] - Stock-based compensation expense for stock option awards was $86,000 for the nine months ended September 30, 2024, compared to$10.9 million in the same period in 2023[96] - Stock-based compensation expense decreased by 73% to $3.75 million in Q3 2024 from$14.06 million in Q3 2023[171] - Stock-based compensation costs included in net income for Q3 2024 were $3.753 million[15] Weighted Average Shares Outstanding - Weighted average shares outstanding (diluted) for the three months ended September 30, 2024, were 129.09 million, compared to 127.01 million in the same period in 2023[14] - The company's diluted weighted average shares outstanding for the nine months ended September 30, 2024, were 129.581 million, compared to 120.531 million for the same period in 2023[122] Net Cash Provided by Operating Activities - Net cash provided by operating activities in 2024 is$550.873 million, up 5.6% from $521.742 million in 2023[19] - Net cash provided by operating activities increased to$550.873 million for the nine months ended September 2024, a 6% rise from $521.742 million in 2023[183] - Cash provided by operating activities increased to$177.1 million in Q3 2024, up from $158.1 million in Q3 2023[153] Additions to Crude Oil and Natural Gas Properties - Additions to crude oil and natural gas properties in 2024 total$452.148 million, a 46.2% decrease from $840.663 million in 2023[19] - Additions to crude oil and natural gas properties decreased to$452,148 in 2024 from $840,663 in 2023, a reduction of 46.2$(475.827) million for the nine months ended September 2024, a 49% reduction from $(937.245) million in 2023[183] - Net cash used in investing activities decreased to$475,827 in 2024 from $937,245 in 2023, a reduction of 49.2$133,988 in 2024, compared to net cash provided by financing activities of $536,806 in 2023[19] Cash Paid for Interest - Cash paid for interest increased to$117,018 in 2024 from $93,549 in 2023, a rise of 25.1$3.483 million as of September 30, 2024, compared to $3.572 million as of December 31, 2023[38] Aid-in-Construction Assets - The company had aid-in-construction assets totaling$14.7 million as of September 30, 2024, up from $5.2 million as of December 31, 2023[40] Debt Issuance Costs - The company incurred$25.1 million in debt issuance costs, with $58,000 incurred during the nine months ended September 30, 2024[43] - The company realized$64.8 million in original issue discounts on the issuance of its Term Loan Credit Agreement, 10.000% Senior Notes, and 10.625% Senior Notes[43] Texas Margin Tax - The company recognized $519,000 in current Texas Margin Tax during the nine months ended September 30, 2024, compared to zero in the same period in 2023[56] - The company recognized a net deferred Texas margin tax liability of$8.3 million as of September 30, 2024, compared to $6.0 million as of December 31, 2023[119] Crude Oil Marketing Contracts - The company's crude oil marketing contracts transfer physical custody and title at or near the wellhead, with revenue recognized based on market-based pricing adjusted for delivery location and crude oil quality[47] Natural Gas Sales Contracts - The majority of the company's natural gas is sold at the lease location, with revenue recognized as the net amount received from the purchaser under percentage of proceeds or hybrid contracts[48] Derivatives - The company's derivatives are accounted for as non-hedge derivatives and are recorded at estimated fair value, with changes in fair value recorded as gains or losses in the periods they occur[50] - As of September 30, 2024, the company's recurring fair value measurements for commodity price derivatives totaled$22.9 million, with $24.8 million in assets and$1.9 million in liabilities[68] - The company recorded a noncash derivative gain of $33.8 million for the three months ended September 30, 2024, compared to a loss of$15.9 million in the same period of 2023[73] - The company's outstanding NYMEX WTI Cushing crude oil derivative contracts for October-December 2024 include 8,500 barrels per day at a swap price of $74.12 per barrel[74] - Net derivative assets associated with the company's open commodity derivative instruments totaled$22.9 million as of September 30, 2024, with Mercuria Energy Trading SA holding the largest share at $11.8 million[75] - The company's crude oil production derivatives are tied to NYMEX WTI Cushing and Argus WTI Midland prices, with Argus WTI Midland basis swaps used to manage price volatility[73] - The company's fair value measurements are based on a three-level hierarchy, with Level 1 using quoted prices in active markets and Level 3 relying on unobservable inputs and model-based techniques[67] - The Company's derivative financial instruments had a net asset value of$22.9 million as of September 30, 2024, with a net derivative loss of $23.4 million recognized during the nine months ended September 30, 2024[154] - Noncash gain on derivative instruments, net, was$33.775 million for the three months ended September 2024, a 313% increase from $(15.883) million in 2023[174] Acquisition Costs - The company incurred$10.4 million in acquisition costs for the nine months ended September 30, 2024, primarily for undeveloped crude oil and natural gas leases[65] - $10.4 million incurred in acquisition costs for lease extensions and additional acreage during the nine months ended September 30, 2024[140] FASB Standards and SEC Climate Rules - The company is evaluating the impact of new FASB standards on income tax disclosures (ASU 2023-09) and segment reporting (ASU 2023-07), which will be effective for annual periods beginning after December 15, 2024 and December 15, 2023, respectively[61][62] - The company is assessing the potential impact of the SEC's