HighPeak Energy(US:HPK)2025-05-12 20:11PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) This section presents HighPeak Energy's unaudited condensed consolidated financial statements, detailing balance sheets, operations, equity changes, and cash flows, alongside notes on key financial positions and programs Condensed Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,093,081 | $3,063,288 | | Cash and cash equivalents | $51,619 | $86,649 | | Total crude oil and natural gas properties, net | $2,918,291 | $2,845,729 | | Total Liabilities | $1,459,687 | $1,460,832 | | Current maturities of long-term debt | $120,000 | $120,000 | | Long-term debt, net | $902,844 | $928,384 | | Total Stockholders' Equity | $1,633,394 | $1,602,456 | Condensed Consolidated Statement of Operations Highlights (Unaudited) | (in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total operating revenues | $257,448 | $287,764 | | Income from operations | $90,379 | $103,020 | | Loss on derivative instruments, net | $(7,927) | $(53,043) | | Net income | $36,335 | $6,438 | | Basic net income per share | $0.26 | $0.05 | | Diluted net income per share | $0.26 | $0.05 | Condensed Consolidated Statement of Cash Flows Highlights (Unaudited) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $157,052 | $171,439 | | Net cash used in investing activities | $(156,594) | $(148,223) | | Net cash used in financing activities | $(35,488) | $(44,351) | | Net decrease in cash and cash equivalents | $(35,030) | $(21,135) | - The company is an independent crude oil and natural gas E&P company focused on the Midland Basin in West Texas, primarily in Howard and Borden Counties, with its two core areas being Flat Top and Signal Peak36 - As of March 31, 2025, the company had a $1.05 billion outstanding balance on its Term Loan Credit Agreement due 2026 and no outstanding balance on its $100 million Senior Credit Facility Agreement9596101 - In February 2024, the Board approved a stock repurchase program for up to $75.0 million, with approximately $39.9 million remaining available as of March 31, 2025129 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial and operational performance, noting increased net income driven by lower derivative losses despite reduced commodity prices, alongside production growth, capital program updates, and strategic alternatives evaluation - Net income for Q1 2025 was $36.3 million, a $29.9 million increase from Q1 2024, primarily due to a $45.1 million decrease in derivative losses and a $21.5 million decrease in DD&A expense, partially offset by a $30.3 million decrease in revenues from lower commodity prices151 Average Daily Sales Volumes | Commodity | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Crude Oil (Bbls) | 38,222 | 39,959 | (4)% | | NGL (Bbls) | 7,724 | 5,147 | 50% | | Natural Gas (Mcf) | 43,096 | 27,733 | 55% | | Total (Boe) | 53,128 | 49,729 | 7% | Weighted Average Realized Prices (Excluding Derivatives) | Commodity | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Crude Oil per Bbl | $71.64 | $77.65 | (8)% | | NGL per Bbl | $24.21 | $24.94 | (3)% | | Natural Gas per Mcf | $2.34 | $1.33 | 76% | | Total per Boe | $53.84 | $63.59 | (15)% | Operating Costs per Boe | Cost Category | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Production Costs (ex. workovers) | $6.61 | $6.30 | 5% | | DD&A Expense | $22.86 | $28.92 | (21)% | | G&A Expense | $1.33 | $1.04 | 28% | - The company is developing its properties with two drilling rigs and one frac crew, drilling 16 gross (16.0 net) horizontal wells and completing 13 gross (12.9 net) wells in the Flat Top area during Q1 2025157 - The 2025 capital budget is projected to be $375-$405 million for drilling and completions, expected to be funded by cash on hand, cash from operations, and available credit174 - The company continues to evaluate strategic alternatives to maximize shareholder value, including a potential sale, though the process remains exploratory with no decisions made150 EBITDAX Reconciliation (Non-GAAP) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $36,335 | $6,438 | | Interest expense | $36,988 | $43,634 | | Provision for income taxes | $9,939 | $2,297 | | Depletion, depreciation and amortization | $109,325 | $130,850 | | Derivative related noncash activity | $4,856 | $47,895 | | Other adjustments | $(205) | $4,536 | | EBITDAX | $197,318 | $233,258 | Quantitative and Qualitative Disclosures About Market Risk This section outlines HighPeak Energy's primary market risks, including commodity price volatility, interest rate fluctuations, and counterparty credit risk, detailing mitigation strategies and sensitivity analysis impacts - The company's main market risk is commodity price volatility, where a $1.00 per barrel change in crude oil price would impact annualized revenues by approximately $14.7 million, and a $0.10 per Mcf change in natural gas price would impact revenues by $1.6 million, excluding derivative effects193 - The company is exposed to interest rate risk on its variable-rate debt, with $1.05 billion outstanding under the Term Loan Credit Agreement, a 1% increase in interest rates would result in an approximate annual increase in interest expense of $10.5 million201 - HighPeak uses commodity derivative instruments, such as collars, puts, and swaps, to reduce price risk and ensure cash flow certainty for its capital program, as required by its credit agreements194 - Credit risk is concentrated with a few significant customers for crude oil and natural gas sales, mitigated through credit policies and monitoring, while counterparty risk on derivatives is managed by selecting investment-grade counterparties196198199 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025202 - No changes occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting203 PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, but does not anticipate any material adverse effect on its financial position, liquidity, or future operations from these matters - The company believes that the liability from any ongoing legal proceedings will not have a material adverse effect on its consolidated financial position, liquidity, or future results of operations205 Risk Factors This section notes no material changes to risk factors from the Annual Report, specifically highlighting potential adverse effects of new trade policies like tariffs on supply chains and profitability - There has been no material change in the company's risk factors from its Annual Report206 - A specific risk highlighted is the uncertainty of future U.S. trade policies, including tariffs, which could disrupt supply chains, increase costs, and materially adversely affect the company's financial condition207 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's stock repurchase activity, noting no repurchases in Q1 2025, with approximately $39.9 million remaining in the program extended through December 31, 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet to Be Purchased | | :--- | :--- | :--- | :--- | | Jan 2025 | — | — | $39,907,000 | | Feb 2025 | — | — | $39,907,000 | | Mar 2025 | — | — | $39,907,000 | | Total | — | — | $39,907,000 | - The Board of Directors extended the $75.0 million stock repurchase program to December 31, 2025210 Other Information During Q1 2025, no director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during Q1 2025211 Exhibits This section lists exhibits filed with the Form 10-Q report, including key corporate documents and required CEO and CFO certifications - The report includes key corporate documents and required certifications as exhibits, such as CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act213