HighPeak Energy, Inc., First Quarter 2023 Results

Development Outlook and Revised Guidance

HighPeak revised its development outlook for 2023 by reducing its drilling rig count from four (4) to two (2) rigs effective June through the remainder of 2023. The Company previously reduced the number of completion crews from four (4) to two (2) and will continue to run an average of two (2) through the remainder of 2023 to complete the operational DUCs generated by the previous six (6) rig program. This revised plan is expected to reduce 2023 capital expenditures by approximately $250 million from the original capital budget.

In early 2024, HighPeak expects to increase its drilling activity back to a four (4) rig program and maintain two (2) completion crews while entirely funding all activity through operating cash flow. The Company continues to regularly monitor market conditions and the state of the overall economy and may accelerate drilling activity if commodity prices warrant.

First Quarter Operational Update and Financial Results

During the first quarter of 2023, the Company drilled 25 gross horizontal wells utilizing an average of five drilling rigs. The Company completed 32 gross producing wells. At March 31, 2023, the Company had 49 gross wells in various stages of completion and was in the process of drilling 15 gross wells.

The Company's sales volumes during the first quarter of 2023 averaged 37,222 Boe/d, consisting of approximately 85% crude oil and 94% liquids. HighPeak reported net income of $50.3 million for the first quarter of 2023, or $0.39 per diluted share, and EBITDAX of $173.9 million, or $1.34 per diluted share.

First quarter average realized prices were $76.07 per barrel of crude oil, $27.04 per barrel of NGL and $2.21 per Mcf of natural gas, resulting in an overall realized price of $66.80 per Boe, or 88% of the weighted average of NYMEX crude oil prices, excluding the effects of derivatives. HighPeak's cash costs for the first quarter were $14.25 per Boe, including lease operating expenses of $8.57 per Boe, workover expenses of $1.26 per Boe, production and ad valorem taxes of $3.67 per Boe and cash G&A expenses of $0.75 per Boe. The Company's cash margin was $52.56 per Boe, or 69% of the weighted average of NYMEX crude oil prices for the quarter, excluding the effects of derivatives.

HighPeak's first quarter 2023 capital expenditures to drill, complete, equip, provide facilities and to build water and power infrastructure were approximately $379.1 million. In addition, the Company incurred capital expenditures of approximately $5.5 million primarily related to leasehold acquisitions.

At March 31, 2023, the Company had $895.0 million in long-term debt and $47.5 million of cash on hand.

HighPeak President Michael Hollis commented, "HighPeak is a differentiated growth story. Our first quarter production increased more than 200 percent year over year. Our plan for the second half of 2023 is to run two drilling rigs and keep two full frac crews busy by completing our existing DUCs generated with our previous six rig program. On average, one frac crew can service two drilling rigs. Maintaining two frac crews equates to bringing the same number of wells online as we would with four rigs. The plan is to go back to four rigs around the end of the year to keep the completion cadence level-loaded throughout 2024. We project an additional 30 percent growth of average production in 2024 over this year's average with our new development plan. With free cash flow, we have the optionality to reduce debt, increase shareholder returns, or accelerate our production growth, all of which increases the value of the Company for strategic alternatives."

Hedging

As of March 31, 2023, the Company had crude oil swaps in place to hedge 822,000 barrels of its remaining 2023 crude oil production, or 2,989 barrels of oil per day, at an average swap price of $69.32 per barrel. In addition, the Company had deferred premium put options in place for the remainder of 2023 and 2024 totaling 1.93 million barrels and 1.37 million barrels or 7,011 and 3,743 barrels of oil per day, respectively, with deferred premiums of $5.00 per barrel and strike prices averaging $58.43 and $51.50 for the remainder of 2023 and 2024, respectively. In addition, in April 2023, the Company entered into an additional deferred premium put option contract for 5,000 barrels of oil per day from January 2024 through September 2024 at a strike price of $56.15 per barrel with deferred premiums of $5.00 per barrel. The Company's crude oil derivative contracts are based on reported settlement prices on the New York Mercantile Exchange for West Texas Intermediate pricing.

Dividends

During the first quarter of 2023, the Company's Board of Directors approved quarterly dividends of $0.025 per share which resulted in a total of $2.8 million in dividends paid to stockholders during the quarter. In addition, in April 2023, the Company's Board of Directors declared a quarterly dividend of $0.025 per share which will result in a total of $2.8 million in dividends paid to stockholders on May 25, 2023.