HighPeak Energy(HPK) - 2025 Q2 - Quarterly Results

HighPeak Energy, Inc. Second Quarter 2025 Financial and Operating Results Highlights and Recent Events The company reported stable Q2 2025 sales volumes and net income while amending its credit facilities to extend maturity and increase borrowing capacity Q2 2025 Key Metrics | Metric | Value | | :--- | :--- | | Average Sales Volumes | 48.6 MBoe/d | | Net Income | $26.2 million | | Diluted EPS | $0.19 | | EBITDAX | $156.0 million | | Lease Operating Expenses (ex. workover) | $6.55 per Boe | | Quarterly Dividend | $0.04 per share | - On August 4, 2025, the Company materially amended its Term Loan and Senior Credit Facility (Super Priority RCF) with key changes including extended maturity to September 2028, an upsized Term Loan to $1.2 billion, and deferred mandatory amortization payments until September 30, 2026[6] Management Commentary The amended Term Loan and proactive hedging strategy provide significant financial flexibility to capitalize on future opportunities, particularly with anticipated lower interest rates - The amendment and extension of the term loan is a strategic initiative that increases capital structure flexibility, enhances liquidity, and minimizes refinancing costs[4][5] - The floating interest rate structure of the term loan is preferred over a high-yield, fixed-rate bond, as it allows the company to benefit from projected lower interest rates[5] - A significant portion of production has been hedged for the next 18 months to minimize downside risk from potential commodity price declines[5] Operational and Financial Performance The company maintained production at 48.6 MBoe/d while reducing capital expenditures by over 30% quarter-over-quarter to $125.4 million Operational Update - Q2 2025 sales volumes averaged 48.6 MBoe/d, composed of approximately 70% crude oil and 85% total liquids[7] - During the quarter, the company operated with an average of one drilling rig and one frac crew, drilling 13 gross wells and turning 14 gross wells to production[8] - As of June 30, 2025, there were 20 gross horizontal wells in various stages of drilling and completion[8] Financial Results Q2 2025 Financial Summary | Metric | Value | | :--- | :--- | | Net Income | $26.2 million | | Diluted EPS | $0.19 | | EBITDAX | $156.0 million | | Diluted EBITDAX per share | $1.12 | Q2 2025 Average Realized Prices | Product | Price (Excluding Derivatives) | Price (Including Derivatives) | | :--- | :--- | :--- | | Crude Oil | $63.74 / Bbl | $65.27 / Bbl | | NGL | $20.34 / Bbl | $20.34 / Bbl | | Natural Gas | $1.50 / Mcf | $2.18 / Mcf | | Overall | $45.27 / Boe | $46.94 / Boe | - Total capital expenditures for Q2 2025 were $125.4 million, a decrease of over 30% compared to Q1 2025[11] - Cash costs for the quarter were $11.69 per Boe, leading to an unhedged EBITDAX margin of $33.58 per Boe[10] Hedging Strategy HighPeak has entered into additional derivative contracts to hedge a significant portion of its forecasted production through early 2027 Crude Oil Hedges - The company has outstanding crude oil derivative instruments, including swaps, collars, and puts, extending through March 2027 to mitigate price volatility[12][13] Natural Gas Hedges - HighPeak has natural gas swap contracts in place for 30,000 MMBtu per day through 2026 and a reduced amount for Q1 2027, with weighted average prices ranging from $4.30 to $4.43 per MMBtu[14][15] Shareholder Returns and Corporate Information The company declared a quarterly dividend of $0.04 per share, and outstanding warrants are set to expire on August 21, 2025 - The Board of Directors declared a quarterly dividend of $0.04 per share, payable on September 25, 2025, to stockholders of record on September 2, 2025[16] - The company's outstanding warrants (NASDAQ: HPKEW), which allow holders to purchase common stock at $11.50 per share, are set to expire on August 21, 2025[17] Financial Statements Unaudited financials show total assets of $3.09 billion, with net income of $62.5 million and operating cash flow of $298.3 million for the first half of 2025 Unaudited Condensed Consolidated Balance Sheet Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,853 | $86,649 | | Total assets | $3,089,453 | $3,063,288 | | Long-term debt, net | $1,027,354 | $928,384 | | Total stockholders' equity | $1,654,086 | $1,602,456 | Unaudited Condensed Consolidated Statements of Operations Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total operating revenues | $200,400 | $275,266 | | Income from operations | $43,444 | $87,260 | | Net income | $26,176 | $29,717 | | Diluted EPS | $0.19 | $0.21 | Unaudited Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $298,265 | $373,770 | | Net cash used in investing activities | ($322,078) | ($324,612) | | Net cash used in financing activities | ($40,983) | ($85,762) | | Net decrease in cash | ($64,796) | ($36,604) | Unaudited Summary Operating Highlights - Average daily sales volumes in Q2 2025 were 48,649 Boe, nearly flat compared to 48,531 Boe in Q2 2024[33] - The average realized price per Boe, excluding derivatives, decreased to $45.27 in Q2 2025 from $62.33 in Q2 2024, primarily due to lower crude oil prices[33] Non-GAAP Financial Measures and Reconciliations The company reported Q2 2025 EBITDAX of $156.0 million, negative free cash flow of $42.7 million, and adjusted net income of $13.9 million Reconciliation of Net Income to EBITDAX and Discretionary Cash Flow EBITDAX Reconciliation for Q2 (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $26,176 | $29,717 | | EBITDAX | $156,024 | $215,829 | Reconciliation of Net Cash Provided by Operations and Free Cash Flow Free Cash Flow Reconciliation for Q2 (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $141,213 | $202,331 | | Additions to crude oil and natural gas properties | ($126,338) | ($164,199) | | Free cash flow | ($42,677) | $6,447 | Reconciliation of Net Income to Adjusted Net Income Adjusted Net Income Reconciliation for Q2 2025 (in thousands) | Metric | Amount | Per Diluted Share | | :--- | :--- | :--- | | Net income | $26,176 | $0.19 | | Noncash derivative gain, net | ($19,034) | ($0.14) | | Adjusted net income | $13,851 | $0.10 |