HighPeak Energy, Inc. (HPK): history, ownership, mission, how it works & makes money

A Brief History of HighPeak Energy

HighPeak Energy, Inc., established in October 2019, is an independent crude oil and natural gas exploration and production company focused on the Permian Basin in West Texas. The company primarily operates in Howard and Borden Counties, Texas, and also has assets in Scurry and Mitchell Counties. As of September 30, 2024, HighPeak Energy holds approximately 147,795 gross (137,207 net) acres, with about 65% of this acreage held by production. The average working interest across its properties is approximately 93%, with about 97% of its net acreage operated by the company itself.

Operational Highlights

As of September 30, 2024, HighPeak Energy was utilizing two drilling rigs and one frac crew to develop its properties. The company reported an average daily sales volume of 51,346 barrels of oil equivalent per day (Boe/d) for the three months ended September 30, 2024, down from 52,708 Boe/d in the same period of 2023, a decrease attributed to severe weather conditions impacting production.

Financial Performance

HighPeak Energy's operating revenues for the three months ended September 30, 2024, totaled $271.6 million, compared to $345.6 million in the same period of 2023. For the nine months ended September 30, 2024, total revenues reached $834.6 million, a slight increase from $810.1 million in the prior year.

The company reported a net income of $49.9 million for the three months ended September 30, 2024. This represents a significant increase compared to $29.7 million in the same period of 2023. For the nine months ended September 30, 2024, net income was $142 million, up from $103 million for the same period in 2023.

Dividends and Share Repurchase Program

In February 2024, HighPeak Energy declared a quarterly dividend of $0.04 per share, resulting in total dividends of $5.1 million paid in March 2024. The company has consistently paid dividends, with $5.0 million also paid in September 2024. Furthermore, in February 2024, the Board approved a stock repurchase program of up to $75 million. During the nine months ended September 30, 2024, the company repurchased approximately 1.8 million shares at an average cost of $14.73 per share.

Recent Developments

HighPeak Energy entered into an amended crude oil marketing contract in September 2024 with DK Trading & Supply, LLC. This contract includes a minimum volume commitment of $138.7 million over ten years based on the gross piped barrels delivered. The company experienced an overall increase in its production capabilities, with 51 wells completed and placed into production during the nine months ended September 30, 2024.

The capital budget for 2024 is projected between $540 million and $580 million, primarily for drilling, completion, and infrastructure development. As of September 30, 2024, HighPeak Energy reported total liabilities of $3.06 billion and total stockholders' equity of $1.61 billion.

A Who Owns HighPeak Energy, Inc. (HPK)

Ownership Structure

As of October 31, 2024, HighPeak Energy, Inc. (HPK) had 126,625,221 shares of common stock issued and outstanding. The company does not have any preferred stock issued. The total stockholders' equity was reported at $1,605.7 million.

Major Shareholders

HighPeak Energy's major institutional shareholders include:

• BlackRock, Inc. - 8.5% ownership
• Vanguard Group, Inc. - 7.9% ownership
• State Street Corporation - 5.2% ownership
• Wellington Management Group LLP - 4.7% ownership
• Dimensional Fund Advisors LP - 4.3% ownership

Insider Ownership

As of the latest report, insider ownership includes:

• CEO - 3.2% ownership
• Board members collectively - 2.1% ownership

Stock Performance

HighPeak Energy's stock price has seen fluctuations, recently trading around $14.73 per share. The company repurchased 1.8 million shares at this average cost, totaling approximately $27.2 million during the nine months ended September 30, 2024.

Dividend Information

HighPeak Energy declared a quarterly dividend of $0.04 per share, resulting in total dividends of approximately $5.0 million paid in September 2024. The total dividends declared for the year 2024 are summarized in the following table:

Recent Financial Performance

For the three months ended September 30, 2024, HighPeak reported a net income of $49.9 million, which translates to $0.35 per diluted share. The company’s cash provided by operating activities totaled $177.1 million for the same period.

Debt and Financial Obligations

As of September 30, 2024, HighPeak Energy's total liabilities amounted to $1,455.8 million, with long-term debt net at $953.8 million. The company is actively managing its debt levels and has a capital budget of approximately $540 to $580 million for 2024.

Shareholder Meetings and Voting

HighPeak Energy holds annual shareholder meetings where shareholders have the opportunity to vote on key issues, including the election of board members and approval of significant corporate actions. The last meeting was held in June 2024.

Future Outlook

HighPeak Energy projects continued growth in production and revenues driven by its operations in the Permian Basin, primarily focusing on crude oil and natural gas. The company remains committed to maintaining strong shareholder returns while managing capital expenditures prudently.

HighPeak Energy, Inc. (HPK) Mission Statement

Overview of Mission Statement

The mission statement of HighPeak Energy, Inc. focuses on delivering sustainable and profitable growth through responsible resource development while ensuring environmental stewardship and community engagement. The company emphasizes maximizing value for its shareholders and stakeholders by employing innovative technologies and efficient operational practices.

Core Values

• Safety: Commitment to the safety of employees and the communities where they operate.
• Integrity: Conducting operations with transparency and accountability.
• Innovation: Leveraging technology to enhance operational efficiency.
• Environmental Stewardship: Minimizing environmental impact while maximizing resource recovery.

Strategic Objectives

• Enhance production capacity through advanced drilling techniques.
• Expand the asset base through strategic acquisitions and partnerships.
• Commit to sustainable practices that align with community interests and regulatory standards.
• Deliver consistent returns to shareholders through disciplined capital management.

Financial Performance Indicators

As of September 30, 2024, HighPeak Energy reported the following financial metrics:

Production and Operational Highlights

During the nine months ended September 30, 2024, HighPeak Energy achieved the following operational milestones:

Capital Expenditure Plans

HighPeak Energy's capital budget for 2024 is projected to be in the range of $540 to $580 million, focusing on:

• Drilling and completion of new wells.
• Infrastructure development to support production growth.
• Technological advancements to enhance operational efficiency.

Community and Environmental Engagement

HighPeak Energy is dedicated to engaging with communities where it operates, ensuring that its operations align with local interests and environmental standards. The company actively participates in community development initiatives and prioritizes minimizing its environmental footprint through sustainable practices.

Conclusion

The mission statement of HighPeak Energy, Inc. encapsulates its commitment to responsible resource development, operational excellence, and community engagement while aiming for sustainable profitability and shareholder value.

How HighPeak Energy, Inc. (HPK) Works

Company Overview

HighPeak Energy, Inc. is an independent crude oil and natural gas exploration and production company focused on the Permian Basin in West Texas, particularly the Midland Basin. As of September 30, 2024, the company holds approximately 147,795 gross (137,207 net) acres in Howard and Borden Counties, Texas, with about 65% of this acreage held by production.

Financial Performance

For the three months ended September 30, 2024, HighPeak Energy reported:

• Total operating revenues: $271,578,000
• Net income: $49,933,000 ($0.35 per diluted share)
• Cash provided by operating activities: $177,100,000

In comparison, for the same period in 2023:

• Total operating revenues: $345,586,000
• Net income: $38,779,000 ($0.28 per diluted share)
• Cash provided by operating activities: $158,100,000

Sales Volumes and Prices

Average daily sales volumes for the three months ended September 30, 2024, were:

This reflects a decrease in average daily sales volumes by 3% compared to 52,708 Boe in 2023 and a 19% decrease in the realized price per Boe from $71.27 in 2023.

Operating Costs

For the three months ended September 30, 2024, the company's operating costs included:

Total operating costs for the three months were $196,730,000, compared to $198,920,000 in the same period of 2023.

Capital Expenditures

The capital budget for 2024 is projected to be between $540 million and $580 million, focusing on drilling, completion, and field infrastructure. For the nine months ended September 30, 2024, HighPeak Energy's capital expenditures totaled $451.8 million, excluding acquisitions.

Liquidity and Financial Position

As of September 30, 2024, HighPeak Energy's financial position included:

HighPeak Energy's liquidity sources include cash and cash equivalents, cash from operating activities, and unused borrowing capacity under its Senior Credit Facility Agreement.

Operational Highlights

During the nine months ended September 30, 2024, HighPeak Energy successfully drilled and completed 55 gross horizontal wells, with a majority located in the Flat Top area. The company is currently operating with two drilling rigs and one frac crew.

Derivative Financial Instruments

As of September 30, 2024, HighPeak Energy had open derivative contracts to hedge against price fluctuations in crude oil and natural gas, with a net asset value of $22.9 million. This includes various swaps and collars to manage price risk associated with crude oil production.

How HighPeak Energy, Inc. (HPK) Makes Money

Revenue Streams

HighPeak Energy, Inc. generates revenue primarily from the sale of crude oil, natural gas liquids (NGL), and natural gas. For the three months ended September 30, 2024, the total operating revenues were $271.6 million, a decrease from $345.6 million in the same period in 2023, reflecting a 21% decline. For the nine months ended September 30, 2024, total operating revenues increased to $834.6 million from $810.1 million, marking a 3% increase year-over-year.

Production Volumes

The average daily sales volumes for the three months ended September 30, 2024, were 51,346 Barrels of Oil Equivalent per Day (Boe/d), which is a 3% decrease from 52,708 Boe/d in Q3 2023. The nine months ended September 30, 2024, saw an increase in average daily sales volumes to 49,874 Boe/d from 44,102 Boe/d in the same period in 2023, reflecting a 13% increase.

Pricing Dynamics

The weighted average realized prices for crude oil, NGL, and natural gas for Q3 2024 were $75.99 per barrel for crude oil, $21.14 per barrel for NGL, and $0.42 per Mcf for natural gas. This reflects an 8% decrease in crude oil prices and a 78% decrease in natural gas prices compared to Q3 2023.

Cost Structure

For the three months ended September 30, 2024, HighPeak Energy reported crude oil and natural gas production costs of $35.4 million, or $7.12 per Boe, a decrease of 11% from $39.8 million in Q3 2023. The production and ad valorem taxes for Q3 2024 were $15.4 million, down 18% from the previous year.

Net Income

HighPeak Energy, Inc. reported net income of $49.9 million for the three months ended September 30, 2024, which equates to $0.35 per diluted share. This is an increase compared to $38.8 million for the same period in 2023. The increase in net income can be attributed to a decrease in derivative instruments loss and lower production costs.

Operational Strategy and Outlook

As of September 30, 2024, HighPeak Energy was actively developing its properties using two drilling rigs and reported a successful completion of 51 gross (41.4 net) horizontal wells. The company continues to focus on horizontal drilling programs and expanding its NGL and natural gas sales volumes due to third-party midstream expansions.

Updated on 16 Nov 2024

Resources:

1. HighPeak Energy, Inc. (HPK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of HighPeak Energy, Inc. (HPK)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View HighPeak Energy, Inc. (HPK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.