HighPeak Energy, Inc. Q2 FY2025 earnings call

• Production: Achieved strong quarter with production, though slower than Q1 due to timing of turned-in-lines and reduced development activity.
• Margins: Strong margins at $33.58 per barrel of oil equivalent, generating over $155 million of EBITDAX.
• CapEx: Q2 CapEx 30% lower than Q1, reduced activity to 1 rig in mid-May.
• Refinancing: Amended and extended term loan and super priority RBL, extending maturities to 2028, upsizing term loan to $1.2B, flexible amortization.
• Hedging: Added new crude oil derivative contracts, over 50% of volumes hedged for H2 2025 with floor price, 90% of H2 2025 gas volumes hedged at $4.43 per MMBtu.
• Operational: Reduced activity to 1 rig, used simul-frac in completions with savings, Middle Spraberry test outperformed, Signal Peak wells producing, solar farm reducing costs and emissions.

No specific product segment financial breakdown provided in the transcript. Key highlights include strong production albeit slower than Q1, strong margins at $33.58 per barrel of oil equivalent generating over $155 million of EBITDAX, and hedging details for oil and gas volumes.

• Production: Confident in achieving 2025 production guidance despite quarterly fluctuations.
• Hedging: Systematically hedge at least 50% of projected PDP crude oil production quarterly.
• Rig addition: Plan to add second rig in September, but flexible based on market conditions.

• Geopolitical issues and tariffs affecting commodity prices.
• Macroeconomic uncertainties impacting margins.
• Fluctuations in oil and gas prices affecting cash flows.

Q: On the financing side, how much liquidity to maintain and ability to pay off term loan principal?

A: Michael Hollis mentioned wanting to maintain fair liquidity, currently over $200M to over $250M, intent to use free cash flow to pay down debt but dependent on oil prices. Steven Tholen noted infrastructure projects affecting net working capital in Q2.

Q: On cash flow statement swings in working capital and investing cash flows?

A: Michael Hollis said it's due to reducing from 2 rigs to 1, with accounts payable and working capital adjusting, expecting numbers to be static until adding second rig. Steven Tholen added infrastructure bills flowed into Q2.

Q: Limiting factors on simul-frac?

A: Michael Hollis said it's harder with 1-2 rigs and smaller pads, ideal is 4+ wells per pad, but looking at hybrid simul-frac for 3-well pads with lower savings.

Q: Impact of Middle Spraberry on 2025 reserve numbers?

A: Michael Hollis said more impact than 2024, expecting 1-2 more Middle Spraberry wells drilled plus offset activity to increase PUDs.

Q: Production outlook over next couple of quarters?

A: Michael Hollis said production has lumpiness due to pad timing, yearly guidance still solid despite quarterly fluctuations, no quarterly guidance given.