Development Program Exposes Shareholders to Significant Upside



KEY POINTS
  • HighPeak Energy owns approximately 51,000 net (~59,000 gross) acres in the northern Midland Basin in Howard County, Texas. The company operates approximately 93% of its acreage and owns average 84% working interest in the operated acreage. The position consists of two contiguous blocks giving HighPeak the opportunity to maximize capital efficiency with long-lateral horizontal well development.
  • The Flat Top area, which accounts for ~33,000 net acres in northeast Howard County, has been substantially de-risked in the Wolfcamp A and Lower Spraberry zones.
  • Management estimates that Flat Top can hold about 320 Wolfcamp A and Lower Spraberry locations on 880-foot spacing. Based on analogous landing zones in more developed parts of the play, HighPeak estimates that 12,500-foot laterals in the Wolfcamp A and Lower Spraberry can achieve single-well IRRs of 120% and 71%, respectively, at $50/bbl oil.
  • HighPeak has laid out a one-rig development plan for 2021 aimed at growing production from about 6 MBOE/d in early February to 12 to 14 MBOE/d at year-end 2021 with a full-year average of 10.5 to 12 MBOE/d.
  • HighPeak’s 2021 estimated production is around 90% oil, which could translate into peer-leading production netbacks.
  • Management plans to maintain conservative leverage levels targeting debt/EBITDAX below 1.0x.

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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, LP. Management has a long history building Permian Basin focused exploration and production companies and currently controls about 90% of the voting shares.

HighPeak Energy owns approximately 51,000 net (~59,000 gross) acres in the northern Midland Basin in Howard County, Texas. The company operates approximately 93% of its acreage and owns average 84% working interest in the operated acreage. The position consists of two contiguous blocks giving HighPeak the opportunity to maximize capital efficiency with long-lateral horizontal well development.

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