HighPeak Energy(US:HPK)2022-11-15 22:51Financial Data and Key Metrics Changes - The company reported a 63% increase in average production from the second quarter to the fourth quarter, reaching over 35,750 barrels of oil per day [6][12] - The average production for the third quarter was 26,250 barrels per day, a 19% increase from the second quarter and a 220% increase year-over-year [11] - The unhedged cash operating margin for the third quarter was $72.01 per barrel, with a significant increase in EBITDA run rate approaching $1 billion [12][20][49] Business Line Data and Key Metrics Changes - The company has expanded its acreage position to over 105,000 net acres, a 68% increase compared to the previous year [13] - The average well results for 2022 are outperforming prior year results, indicating improved reservoir quality and operational efficiency [8][48] - The company maintained best-in-class margins, generating 36% more margin per BOE than its peer group [23] Market Data and Key Metrics Changes - The company has successfully navigated supply chain constraints and inflationary pressures while maintaining production growth [9][49] - The current production rate is expected to continue growing, with the potential for significant increases in oil prices due to low storage levels and high demand [55] Company Strategy and Development Direction - The company is focused on responsible growth, with a flexible development program that allows for adjustments based on market conditions [18][44] - HighPeak is positioned for continued margin expansion through various cost reduction initiatives, including electrification and water recycling [24][37] - The company aims to delineate significant proved reserves and expand its drilling program across multiple formations [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate significant free cash flow while maintaining production growth [50] - The company anticipates a challenging capital market environment but believes its strong asset base and liquidity position will support ongoing development [44][85] - Management highlighted the potential for higher oil prices in the coming year due to increasing demand and declining storage levels [55] Other Important Information - The company raised a total of $435 million in recent financings, significantly enhancing its liquidity [15][44] - HighPeak's ESG initiatives are integral to its operations, with a focus on reducing emissions and improving environmental impact [39][40] Q&A Session Summary Question: Can you discuss the performance improvement in the 2022 drilling program? - Management confirmed that moving to full pad development has improved results, allowing for more efficient production growth [58][60] Question: What is the average well cost and how has it progressed through the year? - The blended average well cost is approximately $7 million, with inflationary pressures leading to a 15% increase in costs due to various efficiency initiatives [74][76] Question: Can you elaborate on the capital program and production progression? - Management acknowledged delays in production due to simultaneous frac operations but expects a more normal growth pattern moving forward [79][80] Question: Does the recent private placement provide sufficient liquidity for 2023? - Management confirmed that the $225 million private placement enhances liquidity, supporting the development drilling program [85] Question: What are the company's oil price realizations and differentials? - The company has consistently averaged above WTI prices, benefiting from advantageous location and marketing strategies [86]