HighPeak Energy(US:HPK)2021-11-09 18:39Financial Data and Key Metrics Changes - The company's earnings decreased from $40 million to $33 million primarily due to having wells offline during the quarter [14] - Capital expenditures (CapEx) in the third quarter were $64 million, excluding acquisitions, with over 124,400 feet of lateral drilled [13] - The company maintained a debt-to-EBITDA ratio of approximately 0.3, indicating a healthy balance sheet [34] Business Line Data and Key Metrics Changes - Average production in the third quarter was 8,200 barrels per day, with a significant increase to approximately 15,500 barrels per day since mid-October, representing an almost 80% increase [10][8] - The company has added a third rig in late October and plans to add a fourth rig by year-end to enhance production capabilities [9] Market Data and Key Metrics Changes - The realized price for oil was $63.18, which is 89% of WTI, higher than any of the company's peers [12] - The company has maintained the highest cash operating margins among peers at $51.88 [10] Company Strategy and Development Direction - The company is focused on drilling margin fill pads in its Flat Top operating area and transitioning to full manufacturing mode for multi-well pad development [20] - HighPeak Energy aims to grow production volumes significantly in 2022, with a target of averaging 28,000 to 29,000 barrels per day and exiting the year at 36,000 to 42,000 barrels per day [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about production growth and the ability to maintain low costs despite inflationary pressures [16] - The company anticipates a significant reduction in operating costs once the new power distribution system is online in May 2022, projecting LOE costs to drop from $8.97 to approximately $4.50 to $5.25 per BOE [55] Other Important Information - The company recycled over 2 million barrels of produced fluids during the third quarter, equating to approximately 60% of its stimulation fluid needs [26] - HighPeak Energy has increased its credit facility to $195 million, providing ample liquidity for future operations [33] Q&A Session Summary Question: Clarification on drilling at Signal Peak - Management confirmed that they are currently drilling a Wolfcamp A well and a lower Spraberry well, with plans to drill a Wolfcamp D in the fourth quarter [39][41] Question: Details on the power project and its financial implications - Management explained that the new power substation and solar farm will significantly reduce operating costs and emissions, with LOE costs expected to decrease as the new system comes online [49][55] Question: Production profile and potential impacts - Management indicated that while there may be some impact from fracking operations, it will not be as significant as experienced in the third quarter due to improved infrastructure [56] Question: Opportunities for infrastructure enhancements in Signal Peak - Management acknowledged that while Signal Peak will require some infrastructure improvements, the focus will be on efficient water handling and gathering systems [60] Question: Update on Wolfcamp D locations and drilling plans - Management provided details on the number of wells planned for Wolfcamp D and the expected average lateral lengths for drilling in 2022 [62] Question: Competitive pressure and capital spending - Management stated that they do not see negative impacts from larger companies maintaining capital spending, as HighPeak Energy is focused on growth and building reserves [74]