HighPeak Energy(US:HPK)2023-05-11 21:03Financial 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]