HighPeak Energy, Inc. Q4 FY2024 earnings call

• 2024 Highlights: Maintained disciplined operations with a 10% production increase year over year, 30% increase in proved reserves, 17% decrease in lease operating expenses on a BOE basis, $120 million reduction in absolute debt, and a 10% production increase with 40% less capital spend than 2023.
• 2025 Objectives: Maintain capital discipline, especially due to volatile market conditions; improve corporate efficiency with flat production volumes and a 20% lower maintenance capital budget than 2024; optimize capital to reduce interest expense and increase levered free cash flow; pursue shareholder-friendly initiatives like debt reduction, dividends, and share repurchases.
• Well Performance: 29% increase in proved reserves year over year (36% increase in proved developed reserves), improved well performance across all acreage, 345% reserve replacement including extensions and positive revisions despite lower SEC pricings.
• Infrastructure Projects: Connecting newly acquired acreage to core infrastructure, expanding gas gathering systems, and adding redundancy in gas takeaway outlets to ensure flexibility in midstream operations.

In the fourth quarter, production averaged over 50,000 BOEs per day, and Q1 2025 volumes averaged over 52,000 barrels a day. Proved reserves increased by almost 30% by year-end 2023. 2024 EBITDA was roughly flat despite lower average oil prices in 2024. Lease operating expenses decreased by 17% on a BOE basis. Revenue contribution details for product segments were not specifically detailed in the transcript.

• 2025 CapEx budget is over 20% lower than 2024, inclusive of one-time infrastructure projects. Production volumes are anticipated to be similar to 2024. Plan to transition to a more traditional capital structure to reduce interest expense, extend debt maturities, and increase liquidity. The 2025 development plan is level loaded with a two-rig and one frac crew, with 33% of the annual budget in the first quarter.

• Volatile market conditions due to external factors that can impact operations and financial performance. Uncertainty in oil prices which may materially affect EBITDA and the company's financial position.

Q: John White asked about 2025 middle Spraberry well plans.

A: Michael Hollis said 2-3 additional middle Spraberry wells are reasonable for 2025, with 70% of CapEx for co-developing Wolfcamp A and lower Spraberry in flat top and 30% for Signal Peak.

Q: Jeffrey Robertson inquired about infrastructure impact on efficiency and gas/oil movement.

A: Michael Hollis discussed how infrastructure improvements help tie in gas, gas hedges, and provide flexibility in handling gas volumes and moving oil by connecting new acreage to core infrastructure.

Q: Jeffrey Robertson asked about capitalization and debt reduction vs share buybacks.

A: Jack Hightower mentioned potential borrowing cost reduction could lead to increased free cash flow, which could be used for debt reduction and share buybacks, with the ability to pay off debt quickly in a normalized capital structure scenario