1Q2 Results: Starting to Scale High-Margin Growth



KEY POINTS
  • Total 1Q21 production averaged 5,290 BOE/d (~90% oil), a 59% increase from 4Q20.
  • During the first half of May, production averaged approximately 8,300 BOE/d, 57% above 1Q output.
  • Full-year average production outlook remains 10,500 – 12,000 BOE/d with an estimated 2021 exit rate of 12,000 – 14,000 BOE/d. First quarter results provide an early indication of HighPeak’s growth potential.
  • Growth outlook is underpinned by HighPeak’s Lower Spraberry and Wolfcamp A development in its Flat Top area, a contiguous ~33,000-acre position in northeast Howard County.
  • HighPeak’s first two wells targeting the Wolfcamp D and Wolfcamp C zones on the contiguous ~18,000-acre Signal Peak acreage block are flowing back. The Wolfcamp D well has begun to cut oil faster than any other well the company has drilled.
  • During 1Q21, HighPeak completed five Wolfcamp A wells and one Lower Spraberry well in Flat Top. Currently four wells are being completed and two are drilling in Flat Top.
  • 1Q21 cash margin was $42.14/BOE, an 85% improvement from 4Q20. Higher realized prices and lower cash costs combined to drive the gain.
  • 1Q21 EBITDAX was $20.1 million, up 187% from 4Q20.
  • Gains in production, cash margin, and EBITDAX reflect the early benefits of HighPeak scaling its Midland Basin development program.
  • The balance sheet remains strong. HighPeak ended the quarter with $0 outstanding on its RBL that currently has a $50 million borrowing base and commitment level. The cash balance was $9.6 million on March 31.
  • Based on HighPeak’s full-year production outlook and NYMEX oil and natural gas reference prices of $60/bbl and $2.75, respectively, we estimate the company could generate approximately $165 - $197 million of EBITDAX for 2021.
COMPANY OVERVIEW

Source: YCharts, *As of May 19, 2021

COMPANY OVERVIEW

HighPeak Energy (HPK) is a Midland Basin-focused independent oil and gas exploration and production company that owns approximately 51,000 net acres in the eastern portion of Howard County, Texas. Year-end 2020 proved reserves were 22.5 MMBOE (84% oil/46% proved developed). The company commenced trading on the NASDAQ in August 2020 following the business combination of Pure Acquisition Corp., a special purpose acquisition vehicle, with HighPeak Energy, Inc. and certain affiliates of HighPeak Energy Partners, L.P. Management has a long history building Permian Basin focused exploration and production companies and currently controls about 90% of the voting shares.

Total 1Q21 production averaged 5,290 BOE/d (~90% oil), a 59% increase from 4Q20.

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