A Fireside Chat: Building Value at HighPeak



KEY POINTS
  • We hosted a Fireside Chat on Monday, November 22 with Jack Hightower and Mike Hollis of HighPeak Energy. Mr. Hightower is HighPeak’s Chairman and CEO, and Mr. Hollis is the company’s President.
  • HighPeak has assembled approximately 62,000 net acres in two large contiguous blocks, Flat Top and Signal Peak in the northeastern portion of the Midland Basin. Based on the simple premise that location is everything, management built the position in areas that it believes have high-quality reservoir rock with high oil cuts in multiple formations.
  • Current development is focused on the Lower Spraberry and Wolfcamp A formations in Flat Top and delineating the Lower Spraberry, Wolfcamp A, and Wolfcamp D across Signal Peak.
  • The two contiguous acreage positions enhance HighPeak’s drive toward capital efficiency. Long-lateral pad development allows for shared surface facilities, including tank-batteries, produced fluid handling system and power. Combined, HighPeak is pursuing opportunities across multiple fronts to manage costs, enhance margins, and improve its ESG metrics.
  • HighPeak is a growth-oriented company. Management has laid out a four-rig 2022 development plan that could drive significant production and EBITDAX growth. The plan could take FY2022 average production to the range of 26 – 31 MBOE/d with a year-end exit rate in the range of 36 – 42 MBOE/d on a $645 - $700 million capital budget. At recent commodity prices, the company could begin to generate free cash flow late next year or early in 2023.
  • Management’s value-creation strategy is to execute on a growth plan of converting its deep inventory of high-return locations into cash flow generating assets while maintaining low leverage (targeting <1.0x Debt: EBITDAX).
  • Our prior content on HighPeak can be accessed here.

THE COMPANY

HighPeak Energy is an independent oil and gas exploration and production company, headquartered in Fort Worth, Texas. The company is focused on the acquisition, development, exploration and exploitation of unconventional oil and gas reserves in the Midland Basin of West Texas. HighPeak currently owns interests in approximately 62,000 net acres in Howard County.

EXECUTIVE DISCUSSION

Jeff Robertson: Good afternoon. I want to thank you for joining us today. I am Jeff Robertson, Managing Director—Natural Resources, with Water Tower Research. We are joined today for a Fireside Chat with Jack Hightower, Chairman and CEO of HighPeak Energy, and Mike Hollis, who serves at HighPeak’s President.

Before we begin, I want to refer viewers to the corporate presentation dated November 9, 2021 that HighPeak posted to its website in connection with the company’s third quarter earnings release. We will not directly refer to the presentation; however, I do want to point viewers to the disclosure language regarding forward-looking statements. Management may make some forward-looking statements during today’s chat, which involve risks and uncertainties. Please refer to pages two and three of HighPeak’s presentation for the company’s disclaimer language.

So with that bit of housekeeping out of the way, I want to get started. HighPeak is an i...

ABOUT THE EXECUTIVES
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Jack Hightower

Chairman & CEO

HighPeak Energy

Jack Hightower is Chairman and Chief Executive Officer of HighPeak Energy. He has over 51 years of experience in the oil and gas industry managing multiple E&P platforms.

Mr. Hightower served as Chairman, President & CEO of Bluestem Energy Partners LP from 2011 to 2013.

Prior to forming Bluestem, Mr. Hightower served as Chairman, President, and CEO of Celero Energy II, LP from 2006 to 2009 ad as Chairman, President, and CEO of Celero Energy LP from 2004 to 2005. Prior to forming Celero,

Mr. Hightower served as Chairman, President, and CEO of Pure Resources (NYSE: PRS), which became the 11th largest publicly traded independent E&P company in North America. In October 2002, Unocal tendered for the Pure Resources shares it did not already own. In March 1995, Mr. Hightower founded Titan (Nasdaq: TEXP), the predecessor to Pure Resources and served as Chairman, President, and CEO.

Prior to founding Titan, Mr. Hightower served as Chairman, President, and CEO o Enertex Inc., the general partner and operator of record for several oil and gas partnerships from 1991 to 1994.

Mr. Hightower graduated from Texas Tech University in 1970 with Bachelor of Business Administration degrees in Administrative Finance and Money, Banking & Investments.

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Michael L. Hollis

President

HighPeak Energy

Michael L. Hollis serves as HighPeak’s President and director with a history of delivering cost effective operations and efficient asset growth. Prior to joining HighPeak, Mr. Hollis served as President and COO of Diamondback Energy, Inc. (Nasdaq: FANG), a Permian focused oil and gas producer, from January 2017 to September 2019, prior to which he served as COO since 2015 and Vice President of Drilling. Since 2011, Mr. Hollis also served on the Board of Directors for Diamondback as well as on the Board of Directors of Viper Energy Partners LP (Nasdaq: VNOM).

Prior to his positions at Diamondback, Mr. Hollis was a Drilling Manager at Chesapeake Energy Corporation and held roles of increasing responsibility in production, completions, and drilling engineering at ConnocoPhillips and Burlington Resources, Inc.

Mr. Hollis has over 20 years of oil and gas experience and graduated from Louisiana State University in 1998 with a Bachelor of Science in Chemical Engineering

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