Accelerating Howard County Development
|52 Week Range||$4.20-$21.82|
|Avg. Daily Vol. (30 day)||19,061|
|Shares Out (MM)||92.7|
|Market Cap (MM)||$1,012|
|Insiders Own %||90%|
|Short Int./% of Float||117k / 2.60%|
|Debt to Equity||2.4%|
|Fiscal Year End||December|
- 2Q21 production averaged 8.8 MBOE/d, a 66% gain from 1Q21. Oil represented 91% of total volumes. EBITDAX was $38.4 million in 2Q21, a 91% gain from 1Q21.
- Oil weighted production drives peer leading margins. HighPeak’s 2Q21 cash margin was $49.32/BOE, up 17% from 1Q21.
- HighPeak is intensely focused on cost control in all aspects of its operations to positively affect margins. Initiatives to recycle produced water, to use locally sourced sand in completion activity, and to upgrade the electrical grid serving Flat Top could result in meaningful savings and help mitigate some inflationary cost pressures moving into 2022. The company’s crude oil marketing arrangement will transport more barrels through pipe rather than roads, lowering costs. Further, each initiative supports HighPeak’s ESG commitment.
- HighPeak announced agreements to acquire an aggregate 6,200 net acres area for an undisclosed purchase amount. Closings are anticipated in 3Q21. The acquired acreage is expected to contribute about 1.4 MBOE/d to production over the balance of 2021.
- A second rig was added to the development program at the beginning of 3Q21. After drilling a horizontal saltwater disposal well, the rig has moved onto a four-well pad in Flat Top.
- Projected 2021 capital spending has increased to $245 - $270 million from $135 - $150 million. Incremental activity could begin to affect production in 4Q21 or early 2022.
- A one-rig development program concentrated on the Wolfcamp A and Lower Spraberry formations in Flat Top underpins management’s full-year 2021 production growth outlook. Full-year production guidance is 10.5 – 12.0 MBOE/d with an exit rate in the 12.0 – 14.0 MBOE/d range. By comparison, the 4Q20 average was 3.3 MBOE/d. The addition of a second rig could allow the company to extend significant volume and EBITDAX growth into 2022.
- HighPeak initiated a regular $0.025 per share quarterly dividend along with a $0.075 per share special dividend that was paid on July 26, 2021. The dividend reflects management’s view that it can deliver capital efficient growth while maintaining a conservative leverage profile. The current dividend yield is 0.92%.
HighPeak Energy (HPK) is a growth-oriented exploration and production company that is focused on the Midland Basin in West Texas. The company owns approximately 51,000 net acres in the eastern portion of Howard County. The acreage position consists of two contiguous acreage blocks, Flat Top and Signal Peak, that afford the opportunity for long-lateral horizontal development. Year-end 2020 proved reserves were 22.5 MMBOE (84% oil/46% proved developed). Management has a long history building Permian Basin focused exploration and production companies and currently controls about 90% of the voting shares.
2Q21 production averaged 8.8 MBOE/d, a 66% gain from 1Q21. Oil represented 91% of total volumes. EBITDAX was $38.4 million in 2Q21, a 91% gain from 1Q21.
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