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What changed in HighPeak Energy, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HighPeak Energy, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+252 added−223 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-06)

Top changes in HighPeak Energy, Inc.'s 2024 10-K

252 paragraphs added · 223 removed · 181 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

93 edited+46 added−32 removed370 unchanged
Biggest changeAdditionally, supply constraints due to the conflict in Ukraine, the Israel-Hamas conflict, elevated interest rates and associated policies of the Federal Reserve has increased the cost of oilfield services. HighPeak Energy’s operations are concentrated in areas in which oilfield activity levels have previously increased rapidly.
Biggest changeThe incoming U.S. presidential administration has signaled it will encourage increased domestic exploration and production activity, which could lead to a reduction in crude oil, NGL and natural gas prices. Additionally, supply constraints due to the conflict in Ukraine, the Israel-Hamas conflict, elevated interest rates and associated policies of the Federal Reserve has increased the cost of oilfield services.
Inflationary factors such as increases in the labor costs, material costs and overhead costs may adversely affect our operating results.
Inflationary factors such as increases in the labor costs, material costs and overhead costs may adversely affect our operating results.
These cost increases have resulted from a variety of factors that HighPeak Energy will be unable to control, such as increases in the cost of electricity, steel and other raw materials; increased demand for labor, services and materials as drilling activity increases; and increased taxes.
These cost increases have resulted from a variety of factors that HighPeak Energy will be unable to control, such as increases in the cost of electricity, steel and other raw materials; increased demand for labor, services and materials as drilling activity increases; and increased taxes.
The entirety of our $1.2 billion of total indebtedness is maturing in 2026. 34 Among other events of default, an event of default will occur under the Term Loan Credit Agreement and the Senior Credit Facility Agreement if HighPeak Energy should fail to make any payment (whether of principal or interest and regardless of amount) in respect of any material debt, when and as the same shall become due and payable and such failure to pay continues beyond any applicable grace period, or any event or condition occurs that results in any material debt becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any material debt or any trustee or agent on its or their behalf to cause any material debt to become due, or to require the redemption thereof or any offer to redeem to be made in respect thereof, prior to its scheduled maturity or require HighPeak Energy to make an offer in respect thereof and such event or condition continues beyond any applicable grace period.
The entirety of our $1.1 billion of total indebtedness is maturing in 2026. 34 Among other events of default, an event of default will occur under the Term Loan Credit Agreement and the Senior Credit Facility Agreement if HighPeak Energy should fail to make any payment (whether of principal or interest and regardless of amount) in respect of any material debt, when and as the same shall become due and payable and such failure to pay continues beyond any applicable grace period, or any event or condition occurs that results in any material debt becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any material debt or any trustee or agent on its or their behalf to cause any material debt to become due, or to require the redemption thereof or any offer to redeem to be made in respect thereof, prior to its scheduled maturity or require HighPeak Energy to make an offer in respect thereof and such event or condition continues beyond any applicable grace period.
The loss of one or more of such purchasers could, among other factors, limit HighPeak Energy’s access to suitable markets for the crude oil, NGL and natural gas it produces. 30 ● HighPeak Energy may be unable to make additional attractive acquisitions or successfully integrate acquired businesses with its current assets, and any inability to do so may disrupt its business and hinder its ability to grow. ● The unavailability or high cost of drilling rigs, equipment, supplies, personnel, frac crews and oilfield services due to commodity price volatility or supply constraints as a result of the conflict in Ukraine, the Israel-Hamas conflict, elevated interest rates and associated policies of the Federal Reserve could adversely affect HighPeak Energy’s ability to execute its development plans within its budget and on a timely basis and consequently could materially and adversely affect our cash flows and results of operations. ● The IRA 2022 could accelerate the transition to a low carbon economy and could impose new costs on our operations. ● HighPeak Energy may be involved in legal proceedings that could result in substantial liabilities. ● Should our operators fail to comply with all applicable regulatory agency administered statutes, rules, regulations and orders, our operators could be subject to substantial penalties and fines. ● The operations of HighPeak Energy are subject to a variety of risks arising from climate change. ● Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays in the completion of crude oil and natural gas wells and adversely affect HighPeak Energy’s production. ● Continued increases in interest rates could adversely affect HighPeak Energy’s business. ● HighPeak Energy’s business could be adversely affected by security threats, including cyber-security threats, and related disruptions.
The loss of one or more of such purchasers could, among other factors, limit HighPeak Energy’s access to suitable markets for the crude oil, NGL and natural gas it produces. 30 ● HighPeak Energy may be unable to make additional attractive acquisitions or successfully integrate acquired businesses with its current assets, and any inability to do so may disrupt its business and hinder its ability to grow. ● The unavailability or high cost of drilling rigs, equipment, supplies, personnel, frac crews and oilfield services due to commodity price volatility or supply constraints as a result of the conflict in Ukraine, the Israel-Hamas conflict, elevated interest rates and associated policies of the Federal Reserve could adversely affect HighPeak Energy’s ability to execute its development plans within its budget and on a timely basis and consequently could materially and adversely affect our cash flows and results of operations. ● The IRA 2022 could accelerate the transition to a low carbon economy and could impose new costs on our operations. ● HighPeak Energy may be involved in legal proceedings that could result in substantial liabilities. ● Should our operators fail to comply with all applicable regulatory agency administered statutes, rules, regulations and orders, our operators could be subject to substantial penalties and fines. ● The operations of HighPeak Energy are subject to a variety of risks arising from climate change. ● Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays in the completion of crude oil and natural gas wells and adversely affect HighPeak Energy’s production. ● Increases in interest rates could adversely affect HighPeak Energy’s business. ● HighPeak Energy’s business could be adversely affected by security threats, including cybersecurity threats, and related disruptions.
Also, despite these aspirational goals and any other actions taken, we may receive pressure from investors, lenders, or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.
Also, despite these aspirational goals and any other actions taken, we may receive pressure from investors, lenders, or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.
Moreover, while we may create and publish voluntary disclosures regarding ESG matters from time to time, certain statements in those voluntary disclosures may be based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Moreover, while we may create and publish voluntary disclosures regarding ESG matters from time to time, certain statements in those voluntary disclosures may be based on expectations and assumptions or hypothetical scenarios that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Litigation risks are also increasing, as a number of entities have sought to bring suit against crude oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change or that such companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts. 50 There are also increasing financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all their investments into other sectors.
Litigation risks are also increasing, as a number of entities have sought to bring suit against crude oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change or that such companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts. 50 There have also recently been increasing financial risks for fossil fuel producers as certain shareholders currently invested in fossil-fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all their investments into other sectors.
HighPeak Energy’s implementation of various procedures and controls to monitor and mitigate such security threats and to increase security for its information, systems, facilities and infrastructure may result in increased costs. Moreover, there can be no assurance that such procedures and controls will be sufficient to prevent security breaches from occurring.
HighPeak Energy’s implementation of various procedures and controls to identify, monitor and mitigate such security threats and to increase security for its information, systems, facilities and infrastructure may result in increased costs. Moreover, there can be no assurance that such procedures and controls will be sufficient to prevent security breaches from occurring.
We may also announce participation in, or certification under, various third-party ESG frameworks in an attempt to improve our ESG profile, but such participation or certification may be costly and may not achieve the desired results. Additionally, while we may announce various voluntary ESG targets, such targets are aspirational.
We may also announce participation in, or certification under, various third-party ESG frameworks in an attempt to improve our ESG profile, but such participation or certification may be costly and may not achieve the desired results. Additionally, while we may announce various voluntary ESG targets, such targets are often aspirational.
Elevated inflation rates throughout 2023 and inflationary pressures have resulted in and may result in additional increases to the costs of our oilfield goods, services and personnel, which would in turn cause our capital expenditures and operating costs to rise.
Elevated inflation rates throughout 2023 and 2024 and inflationary pressures have resulted in and may result in additional increases to the costs of our oilfield goods, services and personnel, which would in turn cause our capital expenditures and operating costs to rise.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established approach to identifying, measuring and reporting on many ESG matters.
Moreover, there can be no assurance that reserves will ultimately be produced or that proved undeveloped reserves will be developed within the periods anticipated. 32 HighPeak Energy ’ s development projects and acquisitions will require substantial capital expenditures.
Moreover, there can be no assurance that reserves will ultimately be produced or that proved undeveloped reserves will be developed within the periods anticipated. HighPeak Energy ’ s development projects and acquisitions will require substantial capital expenditures.
The prices HighPeak Energy receives for its production, and the levels of HighPeak Energy’s production, will depend on numerous factors beyond HighPeak Energy’s control, which include the following: ● worldwide and regional economic conditions, including elevated interest rates and associated policies of the Federal Reserve, impacting the global supply and demand for crude oil, NGL and natural gas; ● the price and quantity of foreign imports of crude oil, NGL and natural gas; ● domestic and global political and economic conditions, such as the upcoming U.S. presidential election, the ongoing conflict in Ukraine, the Israel-Hamas conflict, socio-political unrest and instability, terrorism or hostilities in or affecting other producing regions or countries, including the Middle East, Africa, South America and Russia; ● the occurrence or threat of epidemic or pandemic diseases, such as the recent outbreak of COVID-19, or any government response to such occurrence or threat; ● actions of OPEC, its members and other state-controlled crude oil companies relating to crude oil price and production controls; ● the level of global exploration, development and production; ● the level of global inventories; ● prevailing prices, and expectations regarding future prices, on local price indexes in the areas in which HighPeak Energy operates; ● the proximity, capacity, cost and availability of gathering and transportation facilities; ● localized and global supply and demand fundamentals and transportation availability; ● the cost of exploring for, developing, producing and transporting reserves; ● weather conditions and natural disasters; ● technological advances affecting energy consumption; ● the price and availability of alternative fuels, including the potential acceleration of the development of alternative fuels as a result of the IRA 2022 or otherwise; ● expectations about future commodity prices; and ● U.S. federal, state and local and non-U.S. governmental regulation and taxes.
The prices HighPeak Energy receives for its production, and the levels of HighPeak Energy’s production, will depend on numerous factors beyond HighPeak Energy’s control, which include the following: ● worldwide and regional economic conditions, including elevated interest rates and associated policies of the Federal Reserve, impacting the global supply and demand for crude oil, NGL and natural gas; ● the price and quantity of foreign imports of crude oil, NGL and natural gas; ● domestic and global political and economic conditions, such as the change in U.S. presidential administration, the ongoing conflict in Ukraine, the Israel-Hamas conflict, socio-political unrest and instability, terrorism or hostilities in or affecting other producing regions or countries, including the Middle East, Africa, South America and Russia; ● the occurrence or threat of epidemic or pandemic diseases, such as COVID-19, or any government response to such occurrence or threat; ● actions of OPEC, its members and other state-controlled crude oil companies relating to crude oil price and production controls; ● the level of global exploration, development and production; ● the level of global inventories; ● prevailing prices, and expectations regarding future prices, on local price indexes in the areas in which HighPeak Energy operates; ● the proximity, capacity, cost and availability of gathering and transportation facilities; ● localized and global supply and demand fundamentals and transportation availability; ● the cost of exploring for, developing, producing and transporting reserves; ● weather conditions and natural disasters; ● technological advances affecting energy consumption; ● the price and availability of alternative fuels, including the potential acceleration of the development of alternative fuels as a result of the IRA 2022 or otherwise; ● expectations about future commodity prices; and ● U.S. federal, state and local and non-U.S. governmental regulation and taxes.
HighPeak Energy may be unable to obtain required capital or financing on satisfactory terms, including as a result of recent increases in cost of capital resulting from Federal Reserve policies or otherwise, which could reduce its ability to access or increase production and reserves. ● Restrictions in the Term Loan Credit Agreement, the Senior Credit Facility Agreement and any future debt agreements could limit HighPeak Energy’s growth and ability to engage in certain activities. ● Our ability to repurchase shares under our recently announced share repurchase program is subject to certain considerations, and any share repurchases thereunder could increase the volatility of our stock prices and could diminish our cash reserves. ● Our existing and future indebtedness may adversely affect our cash flows and ability to operate our business, remain in compliance and repay our debt. ● Our results of operations and cash flows vary significantly from year to year due to the cyclical nature of the crude oil and natural gas industry. ● HighPeak Energy has experienced periods of higher costs as commodity prices have risen and inflation may adversely affect our operating results, which negatively impacts our profitability, cash flow and ability to complete development activities as planned.
HighPeak Energy may be unable to obtain required capital or financing on satisfactory terms, including as a result of recent increases in cost of capital resulting from Federal Reserve policies or otherwise, which could reduce its ability to access or increase production and reserves. ● Restrictions in the Term Loan Credit Agreement, the Senior Credit Facility Agreement and any future debt agreements could limit HighPeak Energy’s growth and ability to engage in certain activities. ● Our ability to repurchase shares under our share repurchase program is subject to certain considerations, and any share repurchases thereunder could increase the volatility of our stock prices and could diminish our cash reserves. ● Our existing and future indebtedness may adversely affect our cash flows and ability to operate our business, remain in compliance and repay our debt. ● Our results of operations and cash flows vary significantly from year to year due to the cyclical nature of the crude oil and natural gas industry. ● HighPeak Energy experiences periods of higher costs as commodity prices have risen and inflation may adversely affect our operating results, which negatively impacts our profitability, cash flow and ability to complete development activities as planned.
Certain of the undeveloped leasehold acreage of HighPeak Energy ’ s assets is subject to leases that will expire over the next several years unless production is established on units containing the acreage or the leases are renewed. As of December 31, 2023, approximately 64% of HighPeak Energy’s acreage was held by production.
Certain of the undeveloped leasehold acreage of HighPeak Energy ’ s assets is subject to leases that will expire over the next several years unless production is established on units containing the acreage or the leases are renewed. As of December 31, 2024, approximately 64% of HighPeak Energy’s acreage was held by production.
Cyber-security attacks in particular are becoming more sophisticated and include, but are not limited to, installation of malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data.
Cybersecurity attacks in particular are becoming more sophisticated and include, but are not limited to, installation of malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 53 HighPeak Energy ’ s business could be adversely affected by security threats, including cyber-security threats, and related disruptions.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 53 HighPeak Energy ’ s business could be adversely affected by security threats, including cybersecurity threats, and related disruptions.
Businesses that do not adapt to or comply with investor or stakeholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition and/or stock price of such business entity could be materially and adversely affected.
Businesses that do not adapt to or comply with such stakeholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG related issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition and/or stock price of such business entity could be adversely affected.
Estimated future development costs relating to the development of such PUDs at December 31, 2023 are approximately $1.5 billion over the next five (5) years. HighPeak Energy’s ability to fund these expenditures is subject to several risks. See “—HighPeak Energy’s development projects and acquisitions will require substantial capital expenditures.
Estimated future development costs relating to the development of such PUDs at December 31, 2024 are approximately $1.4 billion over the next five (5) years. HighPeak Energy’s ability to fund these expenditures is subject to several risks. See “—HighPeak Energy’s development projects and acquisitions will require substantial capital expenditures.
Increasing attention to climate change, increasing societal expectations on businesses to address climate change, and potential consumer use of substitutes to energy commodities may result in increased costs, reduced demand for HighPeak Energy’s hydrocarbon products, reduced profits, increased investigations and litigation and negative impacts on its stock price and access to capital markets.
Increasing attention to climate change, increasing societal expectations on businesses to address climate change, changes in regulation relating to climate change, and potential consumer use of substitutes to energy commodities may result in increased costs, reduced demand for HighPeak Energy’s hydrocarbon products, reduced profits, increased investigations and litigation and negative impacts on its stock price and access to capital markets.
As a producer of crude oil and natural gas, HighPeak Energy faces various security threats, including cyber-security threats, to gain unauthorized access to its sensitive information or to render its information or systems unusable, and threats to the security of its facilities and infrastructure or third-party facilities and infrastructure, such as gathering and processing and other facilities, refineries and pipelines.
As a producer of crude oil and natural gas, HighPeak Energy faces various security threats, including cybersecurity threats, such as attempts to gain unauthorized access to its sensitive information or to render its information or systems unusable, and threats to the security of its facilities and infrastructure or third-party facilities and infrastructure, such as gathering and processing and other facilities, refineries and pipelines.
The Principal Stockholder Group owns approximately 67% of HighPeak Energy’s common stock as of December 31, 2023. This includes an aggregate of approximately one million shares of common stock purchased by the Principal Stockholder Group in connection with the Company’s underwritten equity offering in July 2023, which further increased the Principal Stockholder Group’s ownership in the Company.
The Principal Stockholder Group owns approximately 68% of HighPeak Energy’s common stock as of December 31, 2024. This includes an aggregate of approximately one million shares of common stock purchased by the Principal Stockholder Group in connection with the Company’s underwritten equity offering in July 2023, which further increased the Principal Stockholder Group’s ownership in the Company.
Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise. ● Volatility in the political, legal and regulatory environment ahead of the upcoming U.S. presidential election and political instability or armed conflict in crude oil or natural gas producing regions, such as the ongoing war between Russia and Ukraine, the Israel-Hamas conflict and OPEC+ policy decisions could have a material adverse impact on our business, financial condition or future results. ● The marketability of HighPeak Energy’s production is dependent upon transportation, storage and other facilities, certain of which it does not control.
Continuing or worsening inflationary issues and associated changes in monetary policy, including tariffs, have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise. ● Volatility in the political, legal and regulatory environment as a result of the change in U.S. presidential administration and political instability or armed conflict in crude oil or natural gas producing regions, such as the ongoing war between Russia and Ukraine, the Israel-Hamas conflict and OPEC+ policy decisions could have a material adverse impact on our business, financial condition or future results. ● The marketability of HighPeak Energy’s production is dependent upon transportation, storage and other facilities, certain of which it does not control.
Additionally, the FTC has regulations intended to prohibit market manipulation in the petroleum industry with authority to fine violators of the regulations civil penalties of up to $1,472,546 per day (annually adjusted for inflation) and the CFTC prohibits market manipulation in the markets regulated by the CFTC, including similar anti-manipulation authority with respect to crude oil swaps and futures contracts as that granted to the CFTC with respect to crude oil purchases and sales.
Additionally, the FTC has regulations intended to prohibit market manipulation in the petroleum industry with authority to fine violators of the regulations civil penalties of up to $1,510,803 per day (annually adjusted for inflation) and the CFTC prohibits market manipulation in the markets regulated by the CFTC, including similar anti-manipulation authority with respect to crude oil swaps and futures contracts as that granted to the CFTC with respect to crude oil purchases and sales.
We cannot predict any future trends in the rate of inflation, and a significant increase in inflation, to the extent we are unable to recover higher costs through higher crude oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations. 36 Volatility in the political, legal and regulatory environments ahead of the upcoming U.S. presidential election and political instability or armed conflict in crude oil or natural gas producing regions, such as the ongoing war between Russia and Ukraine, the Israel-Hamas conflict and OPEC+ policy decisions could have a material adverse impact on our business, financial condition or future results.
We cannot predict any future trends in the rate of inflation, and a significant increase in inflation, to the extent we are unable to recover higher costs through higher crude oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations. 36 Volatility in the political, legal and regulatory environments as a result of the change in U.S. presidential administration and political instability or armed conflict in crude oil or natural gas producing regions, such as the ongoing war between Russia and Ukraine, the Israel-Hamas conflict and OPEC+ policy decisions could have a material adverse impact on our business, financial condition or future results.
The contract includes the Company’s current and future crude oil production from the majority of its horizontal wells in Flat Top where DKL is constructing a crude oil gathering system and custody transfer meters to most of the Company’s central tank batteries.
The contract includes the Company’s current and future crude oil production from the majority of its horizontal wells in Flat Top and Signal Peak where DKL is continually constructing a crude oil gathering system and custody transfer meters to most of the Company’s central tank batteries.
If these facilities are unavailable, in whole or in part, HighPeak Energy’s operations could be interrupted, and its revenues reduced. ● Certain factors could require HighPeak Energy to shut-in production or cease its capital expenditure program. ● Certain of the undeveloped leasehold acreage of HighPeak Energy’s assets is subject to leases that will expire over the next several years unless production is established on units containing the acreage or the leases are renewed. ● Certain factors could require HighPeak Energy to write-down the carrying values of its crude oil and natural gas properties, including commodity prices decreasing to a level such that future undiscounted cash flows from its properties are less than their carrying value. ● Drilling for and producing crude oil and natural gas are high risk activities with many uncertainties that could adversely affect HighPeak Energy’s business, financial condition or results of operations. ● Hedging transactions expose HighPeak Energy to counterparty credit risk and may become more costly or unavailable. ● The standardized measure of estimated reserves may not be an accurate estimate of the current fair value of estimated crude oil and natural gas reserves. ● Properties that HighPeak Energy acquires may not produce as projected, and HighPeak Energy may be unable to determine reserve potential, identify liabilities associated with such properties or obtain protection from sellers against such liabilities. ● Adverse weather conditions may negatively affect HighPeak Energy’s operating results and ability to conduct drilling activities. ● HighPeak Energy’s operations are substantially dependent on the availability of sand and water.
If these facilities are unavailable, in whole or in part, HighPeak Energy’s operations could be interrupted, and its revenues reduced. ● Certain factors could require HighPeak Energy to shut-in production or cease its capital expenditure program. ● Certain of the undeveloped leasehold acreage of HighPeak Energy’s assets is subject to leases that will expire over the next several years unless production is established on units containing the acreage or the leases are renewed. ● Certain factors could require HighPeak Energy to write-down the carrying values of its crude oil and natural gas properties, including commodity prices decreasing to a level such that future undiscounted cash flows from its properties are less than their carrying value. ● Drilling for and producing crude oil and natural gas are high risk activities with many uncertainties that could adversely affect HighPeak Energy’s business, financial condition or results of operations. ● Hedging transactions expose HighPeak Energy to counterparty credit risk and may become more costly or unavailable. ● The enactment of derivatives legislation could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business. ● The standardized measure of estimated reserves may not be an accurate estimate of the current fair value of estimated crude oil and natural gas reserves. ● Properties that HighPeak Energy acquires may not produce as projected, and HighPeak Energy may be unable to determine reserve potential, identify liabilities associated with such properties or obtain protection from sellers against such liabilities. ● Adverse weather conditions may negatively affect HighPeak Energy’s operating results and ability to conduct drilling activities. ● HighPeak Energy’s operations are substantially dependent on the availability of sand and water.
The convergence of these events, along with the significantly reduced demand because of the COVID-19 pandemic, created an unprecedented global crude oil and natural gas supply and demand imbalance, reduced global crude oil and natural gas storage capacity, caused crude oil and natural gas prices to decline significantly and resulted in continued volatility in crude oil, NGL and natural gas prices into the second quarter of 2020.
The convergence of these events, along with the significantly reduced demand because of the COVID-19 pandemic, created an unprecedented global crude oil and natural gas supply and demand imbalance, reduced global crude oil and natural gas storage capacity, caused crude oil and natural gas prices to decline significantly and resulted in continued volatility in crude oil, NGL and natural gas prices.
Under the Energy Policy Act of 2005, FERC has civil penalty authority under the Natural Gas Act of 1938 to impose penalties for current violations of up to $1,544,521 per day for each violation (annually adjusted for inflation) and disgorgement of profits associated with any violation.
Under the Energy Policy Act of 2005, FERC has civil penalty authority under the Natural Gas Act of 1938 to impose penalties for current violations of up to $1,584,648 per day for each violation (annually adjusted for inflation) and disgorgement of profits associated with any violation.
The Company had an aggregate maximum commitment amount of $100.0 million and commitment amount of $75.0 million with respect to the Senior Credit Facility Agreement as of December 31, 2023. The Term Loan Credit Agreement also limits the amounts HighPeak Energy can borrow under the Senior Credit Facility Agreement to $100.0 million.
The Company had an aggregate maximum commitment amount and actual commitment amount of $100.0 million with respect to the Senior Credit Facility Agreement as of December 31, 2024. The Term Loan Credit Agreement also limits the amounts HighPeak Energy can borrow under the Senior Credit Facility Agreement to $100.0 million.
Our business, financial condition and future results are subject to political and economic risks and uncertainties, including volatility in the political, legal and regulatory environments ahead of the upcoming U.S. presidential election and instability resulting from civil unrest, political demonstrations, mass strikes or armed conflict or other crises in crude oil or natural gas producing areas such as the ongoing war between Russia and Ukraine and the Israel-Hamas conflict.
Our business, financial condition and future results are subject to political and economic risks and uncertainties, including volatility in the political, legal and regulatory environments as a result of the change in U.S. presidential administration and instability resulting from civil unrest, political demonstrations, mass strikes or armed conflict or other crises in crude oil or natural gas producing areas such as the ongoing war between Russia and Ukraine and the Israel-Hamas conflict.
For the year ended December 31, 2023, there were two purchasers that accounted for approximately 96% of our revenue (one at approximately 82% and one at approximately 14%) and for the years ended December 31, 2022 and 2021, there was one purchaser that accounted for approximately 88% and 94% of our revenue, respectively.
For the years ended December 31, 2024 and 2023, there were two purchasers that accounted for approximately 94% and 96% of our revenue, respectively (one at approximately 76% and 82%, respectively, and one at approximately 18% and 14%, respectively), and for the year ended December 31, 2022, there was one purchaser that accounted for approximately 88% of our revenue.
In addition, organizations that provided information to investors on corporate governance and related matters have developed rating processes for evaluating business entities on their approach to ESG matters. Currently, there are no universal standards for such scores or ratings, but the importance of sustainability evaluations is becoming more broadly accepted by investors and shareholders.
In addition, organizations that provided information to investors on ESG and related matters have developed rating processes for evaluating business entities on their approach to ESG matters. Currently, there are no universal standards for such scores or ratings, but the importance of sustainability evaluations has become more broadly accepted by investors and shareholders.
The CFTC rules subject violators to a civil penalty of up to the greater of $1,450,040 per day (annually adjusted for inflation) or triple the monetary gain to the person for each violation.
The CFTC rules subject violators to a civil penalty of up to the greater of $1,487,712 per day (annually adjusted for inflation) or triple the monetary gain to the person for each violation.
The methane emissions charge would start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025, and be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA 2022.
The methane emissions charge began in calendar year 2024 at $900 per ton of methane, increases to $1,200 in 2025, and will be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA 2022.
However, generally if the Company never takes delivery of any additional frac sand under the agreement, the monetary commitment that remains as of December 31, 2023 is approximately $9.5 million.
Generally, if the Company never takes delivery of any additional frac sand under the agreement, the monetary commitment that remains as of December 31, 2024 is approximately $5.2 million.
Sustained volatility, or declines in, crude oil, NGL and natural gas prices could adversely affect HighPeak Energy’s business, financial condition and results of operations and its ability to meet its capital expenditure obligations and other financial commitments. ● Reserve estimates depend on many assumptions that may turn out to be inaccurate.
Sustained volatility, or declines in, crude oil, NGL and natural gas prices could adversely affect HighPeak Energy’s business, financial condition and results of operations and its ability to meet its capital expenditure obligations and other financial commitments. ● Changes in the global trade environment, including the imposition of tariffs, could adversely affect our business. ● Reserve estimates depend on many assumptions that may turn out to be inaccurate.
HighPeak Energy’s cash flow from operations and access to capital are subject to several variables, including: ● the prices at which HighPeak Energy’s production is sold; ● proved reserves; ● the amount of hydrocarbons HighPeak Energy is able to produce from its wells; ● HighPeak Energy’s ability to acquire, locate and produce new reserves; ● the amount of HighPeak Energy’s operating expenses; ● cash settlements from HighPeak Energy’s derivative activities; ● restrictions on capital expenditures in certain circumstances under the Term Loan Credit Agreement or the Senior Credit Facility Agreement; ● HighPeak Energy’s ability to obtain additional debt financing, including increases to the Term Loan Credit Agreement or the Senior Credit Facility Agreement; ● the duration and scope of the ongoing war between Russia and Ukraine and conflict in the Middle East, including between Israel and Hamas; ● HighPeak Energy’s ability to obtain storage capacity for the crude oil it produces; ● restrictions in the instruments governing HighPeak Energy’s debt on HighPeak Energy’s ability to incur additional indebtedness; and ● HighPeak Energy’s ability to access the public or private capital markets.
HighPeak Energy’s cash flow from operations and access to capital are subject to several variables, including: ● the prices at which HighPeak Energy’s production is sold; ● proved reserves; ● the amount of hydrocarbons HighPeak Energy is able to produce from its wells; ● HighPeak Energy’s ability to acquire, locate and produce new reserves; ● the amount of HighPeak Energy’s operating expenses; ● cash settlements from HighPeak Energy’s derivative activities; ● production interruptions or curtailments from time-to-time related to third-party infrastructure downtime or delays in third-party installation of infrastructure, including electrical power supply, that affects our ability to produce our crude oil and natural gas; ● restrictions on capital expenditures in certain circumstances under the Term Loan Credit Agreement or the Senior Credit Facility Agreement; ● HighPeak Energy’s ability to obtain additional debt financing, including increases to the Term Loan Credit Agreement or the Senior Credit Facility Agreement; ● the duration and scope of the ongoing war between Russia and Ukraine and conflict in the Middle East, including between Israel and Hamas; ● HighPeak Energy’s ability to obtain storage capacity for the crude oil it produces; ● restrictions in the instruments governing HighPeak Energy’s debt on HighPeak Energy’s ability to incur additional indebtedness; and ● HighPeak Energy’s ability to access the public or private capital markets.
Cost increases necessary to bring wells back online may be significant enough that such wells would become uneconomic at low commodity price levels, which may lead to decreases in HighPeak Energy’s proved reserve estimates and potential impairments and associated charges to its earnings. HighPeak Energy curtailed the majority of its production in April 2020.
Cost increases necessary to bring wells back online may be significant enough that such wells would become uneconomic at low commodity price levels, which may lead to decreases in HighPeak Energy’s proved reserve estimates and potential impairments and associated charges to its earnings.
Certain of these agreements require HighPeak Energy to meet minimum volume commitments, often regardless of actual throughput. In May 2021, the Company entered into a crude oil marketing contract with Delek as the purchaser and DKL Permian Gathering, LLC (“DKL”) as the gatherer and transporter.
Certain of these agreements require HighPeak Energy to meet minimum volume commitments, often regardless of actual throughput. In September 2024, the Company entered into an amended and restated crude oil marketing contract with Delek as the purchaser and DKL Permian Gathering, LLC (“DKL”) as the gatherer and transporter.
As of December 31, 2023, we had $1.2 billion of total indebtedness, including $1.2 billion outstanding of our Term Loan Credit Agreement and no indebtedness outstanding under our Senior Credit Facility Agreement, and available capacity under our Senior Credit Facility Agreement of approximately $68.9 million.
As of December 31, 2024, we had $1.1 billion of total indebtedness, including $1.1 billion outstanding of our Term Loan Credit Agreement and no indebtedness outstanding under our Senior Credit Facility Agreement, and available capacity under our Senior Credit Facility Agreement of approximately $93.1 million.
For example, during the period from January 1, 2020 through December 31, 2023, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $16.70 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.50 to a high of $9.35.
For example, during the period from January 1, 2021 through December 31, 2024, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $52.10 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.58 to a high of $9.35.
For example, during the period from January 1, 2020 through December 31, 2023, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $16.70 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.50 to a high of $9.35.
For example, during the period from January 1, 2021 through December 31, 2024, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $52.10 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.58 to a high of $9.35.
For example, during the period from January 1, 2020 through December 31, 2023, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $16.70 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.50 to a high of $9.35.
For example, during the period from January 1, 2021 through December 31, 2024, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $52.10 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.58 to a high of $9.35.
HighPeak Energy may incur increasing attention to ESG matters that may impact its business. Businesses across all industries are facing increasing scrutiny from stakeholders related to their ESG practices.
HighPeak Energy may incur increasing attention to ESG matters that may impact its business. Businesses across all industries are facing increasing scrutiny from investors, customers, employees, regulatory bodies and other stakeholders related to their ESG practices.
Our repurchase program expires December 31, 2024 and does not obligate HighPeak to repurchase any specific dollar amount or to acquire any specific number of shares and will depend upon, among other things, our earnings, liquidity, capital requirements, financial condition and other factors deemed relevant by our board of directors.
The extension did not alter the terms of the 2024 Repurchase Program, did not increase the total amount under the program and does not obligate HighPeak to repurchase any specific dollar amount or to acquire any specific number of shares and will depend upon, among other things, our earnings, liquidity, capital requirements, financial condition and other factors deemed relevant by our board of directors.
To the extent we meet such targets, it may be achieved through various contractual arrangements, including the purchase of various credits or offsets that may be deemed to mitigate our ESG impact instead of actual changes in our ESG performance.
To the extent we meet such targets, it may be achieved through various contractual arrangements, including the purchase of various credits or offsets that may be deemed to mitigate our ESG impact instead of actual changes in our business operations. Some of these arrangements may receive scrutiny from certain constituencies.
For example, our reserve volumes and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $78.22 per Bbl of crude oil and NGL and $2.637 per MMBtu of natural gas as of December 31, 2023, which are somewhat higher than the December 31, 2023 front-month forward pricing of $71.65 per Bbl of crude oil and $2.514 per Mcf of natural gas.
For example, our reserve volumes and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $75.48 per Bbl of crude oil and NGL and $2.130 per MMBtu of natural gas as of December 31, 2024, which are somewhat higher for crude oil and lower for natural gas than the December 31, 2024 front-month forward pricing of $71.72 per Bbl of crude oil and $3.633 per Mcf of natural gas.
Separately, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
Business and Properties—Regulation of Environmental and Occupational Safety and Health Matters— Regulation of Greenhouse Gas Emissions.” Separately, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
If any of the analysts who may cover HighPeak Energy change their recommendation regarding HighPeak Energy common stock adversely, or provide more favorable relative recommendations about its competitors, the price of HighPeak Energy common stock would likely decline.
If any of the analysts who may cover HighPeak Energy change their recommendation regarding HighPeak Energy common stock adversely, or provide more favorable relative recommendations about its competitors, the price of HighPeak Energy common stock would likely decline. Similarly, unfavorable social media trends or negative comments about HighPeak Energy could drive down the stock price.
HighPeak Energy expects to average two (2) drilling rigs and one (1) frac crew during 2024. However, HighPeak Energy recognizes that commodity prices remain highly volatile and that its liquidity is limited, and as a result, there is no certainty that HighPeak Energy will operate a two (2) rig development program in the future.
However, HighPeak Energy recognizes that commodity prices remain highly volatile and that its liquidity is limited, and as a result, there is no certainty that HighPeak Energy will operate a two (2) rig development program in the future.
HighPeak Energy has evaluated multiple development scenarios under multiple potential commodity price assumptions. Under its current 2024 development program, HighPeak Energy would expect to incur approximately $450 to $525 million of capital expenditures for drilling, completion, facilities and equipping costs and $50 - $60 million for field infrastructure, land and other costs.
HighPeak Energy has evaluated multiple development scenarios under multiple potential commodity price assumptions. Under its current 2025 development program, HighPeak Energy would expect to incur approximately $375 to $405 million of capital expenditures for drilling, completion, facilities and equipping costs, $40 - $50 million for field infrastructure, land and other costs and $33 - $35 million on one-time infrastructure expenditures.
For example, our reserve volumes and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $78.22 per Bbl of crude oil and NGL and $2.637 per MMBtu of natural gas as of December 31, 2023, which are substantially higher than December 31, 2023 front-month forward pricing of $71.65 per Bbl of crude oil and $2.514 per Mcf of natural gas.
For example, our reserve volumes and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $75.48 per Bbl of crude oil and NGL and $2.130 per MMBtu of natural gas as of December 31, 2024, which are higher for crude oil and lower for natural gas than December 31, 2024 front-month forward pricing of $71.72 per Bbl of crude oil and $3.633 per Mcf of natural gas.
Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and together with the DOT, implement GHG emissions limits on vehicles manufactured for operation in the United States.
However, the EPA has adopted rules that, among other things, established construction and operating permit reviews for GHG emissions from certain large stationary sources, required the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and together with the DOT, implemented GHG emissions limits on vehicles manufactured for operation in the United States.
Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel energy companies.
Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel energy companies or seek to require more aggressive action with respect to climate-related risks.
From 2024 through 2026, approximately 21%, 14% and 1%, respectively, of the net acreage associated with the leases are set to expire. If the leases expire and HighPeak Energy is unable to renew the leases, HighPeak Energy will lose its right to develop the related properties.
From 2025 through 2027, approximately 54%, 31% and 11%, respectively, of the net undeveloped acreage associated with the leases are set to expire. If the leases expire and HighPeak Energy is unable to renew the leases, HighPeak Energy will lose its right to develop the related properties.
As a result, crude oil and natural gas exploration and production operations are subject to a series of regulatory, political, litigation and financial risks associated with the production and processing of fossil fuels and emission of GHGs.
As a result, crude oil and natural gas exploration and production operations are subject to a series of regulatory, political, litigation and financial risks associated with the production and processing of fossil fuels and emission of GHGs. In the United States, no comprehensive climate change legislation has been implemented.
Finally, many scientists have concluded that increasing concentrations of GHG in the atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climate events that could have an adverse effect on HighPeak Energy’s operations.
Finally, increasing concentrations of GHG in the atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climate events that could have an adverse effect on HighPeak Energy’s operations. If such effects were to occur, our development and production operations have the potential to be adversely affected.
Furthermore, the success and timing of development activities operated by its partners will depend on several factors that will be largely outside of HighPeak Energy’s control, including: ● the timing and amount of capital expenditures; ● the operator’s expertise and financial resources; ● the approval of other participants in drilling wells; 42 ● the selection of technology; and ● the rate of production of reserves, if any.
Furthermore, the success and timing of development activities operated by its partners will depend on several factors that will be largely outside of HighPeak Energy’s control, including: ● the timing and amount of capital expenditures; ● the operator’s expertise and financial resources; ● the approval of other participants in drilling wells; ● the selection of technology; and ● the rate of production of reserves, if any. 42 This limited ability to exercise control over the operations and associated costs of some of HighPeak Energy’s drilling locations could prevent the realization of targeted returns on capital in drilling or acquisition activities.
The remaining monetary commitment as of December 31, 2023, if the Company never delivers any additional volumes under the agreement, is approximately $7.8 million. The Company is party to an amended agreement whereby it has agreed to purchase at least 1.6 million tons of frac sand over a two-year period beginning July 1, 2022.
The remaining monetary commitment as of December 31, 2024, if the Company never delivers any additional volumes under the agreement, is approximately $130.3 million. The Company is party to an amended agreement whereby it has agreed to purchase at least 750,000 tons of frac sand over a fifteen-month period beginning April 1, 2024.
It is unclear how any additional federal regulation of hydraulic fracturing activities may affect HighPeak Energy’s operations, but such additional federal regulation could have an adverse effect on its business, financial condition and results of operations. In December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources.
It is unclear how any additional federal regulation of hydraulic fracturing activities may affect HighPeak Energy’s operations, but such additional federal regulation could have an adverse effect on its business, financial condition and results of operations.
Due to the high levels of inflation in the U.S., the Federal Reserve and other central banks increased interest rates multiple times in 2022 and 2023, and although the Federal Reserve has indicated that such increases have ceased going into 2024, uncertainty remains as to when or if such elevated rates may be decreased.
Due to the high levels of inflation in the U.S., the Federal Reserve and other central banks increased interest rates multiple times in 2022 and 2023, and began decreasing rates with three rate cuts toward the end of 2024 and although the Federal Reserve has indicated that such decreases could continue into 2025, uncertainty remains as to when or if such elevated rates may be decreased further.
For example, due to the high levels of inflation in the U.S., the Federal Reserve and other central banks increased interest rates multiple times in 2022 and 2023, and although the Federal Reserve has indicated that such increases have ceased going into 2024, uncertainty remains as to when or if such elevated rates may be decreased.
For example, due to the high levels of inflation in the U.S., the Federal Reserve and other central banks increased interest rates multiple times in 2022 and 2023, and began decreasing rates with three rate cuts toward the end of 2024 and although the Federal Reserve has indicated that such decreases should continue in 2025, uncertainty remains as to when or if such elevated rates may be decreased further.
HighPeak Energy will not be insured against all risks. Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect its business, financial condition or results of operations.
Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect its business, financial condition or results of operations.
Our ability to repurchase shares under our recently announced share repurchase program is subject to certain considerations, and any share repurchases thereunder could increase the volatility of our stock prices and could diminish our cash reserves. We recently adopted a share repurchase program that authorizes us to repurchase up to an aggregate $75.0 million of shares of our common stock.
Our ability to repurchase shares under our recently announced share repurchase program is subject to certain considerations, and any share repurchases thereunder could increase the volatility of our stock prices and could diminish our cash reserves.
Additional response areas have been established, most recently the Northern Culberson-Reeves Seismic Response Area, where 23 deep disposal well permits were suspended in December 2023. HighPeak Energy will likely dispose of large volumes of produced water gathered from its drilling and production operations by injecting it into wells pursuant to permits issued by governmental authorities overseeing such disposal activities.
For example, in December 2023, the TRRC issued a notice to suspend the permits of all deep disposal wells within the Northern Culberson-Reeves Seismic Response Area. HighPeak Energy will likely dispose of large volumes of produced water gathered from its drilling and production operations by injecting it into wells pursuant to permits issued by governmental authorities overseeing such disposal activities.
Actual future production, crude oil, NGL and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable crude oil and natural gas reserves may vary from the estimates included in this Annual Report.
The process also requires economic assumptions about matters such as crude oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. 32 Actual future production, crude oil, NGL and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable crude oil and natural gas reserves may vary from the estimates included in this Annual Report.
The EPA report concluded that “water cycle” activities associated with hydraulic fracturing may impact drinking water under certain limited circumstances. Moreover, some states and local governments have adopted, and other governmental entities are considering adopting, regulations that could impose more stringent permitting, disclosure and well-construction requirements on hydraulic fracturing operations, including states in which our properties are located.
Moreover, some states and local governments have adopted, and other governmental entities are considering adopting, regulations that could impose more stringent permitting, disclosure and well-construction requirements on hydraulic fracturing operations, including states in which our properties are located.
The trading market for HighPeak Energy common stock will be influenced by the research and reports that industry or securities analysts may publish about HighPeak Energy, HighPeak Energy’s business, HighPeak Energy’s market, or HighPeak Energy’s competitors.
The trading market for HighPeak Energy common stock will be influenced by the research and reports that industry or securities analysts may publish about HighPeak Energy, HighPeak Energy’s business, HighPeak Energy’s market, or HighPeak Energy’s competitors. Additionally, the sentiments and discussions on social media platforms can significantly impact investor perceptions and trading behaviors.
As of December 31, 2023, the Company’s assets contained 74,569 MBoe of proved undeveloped reserves, or PUDs, consisting of 60,923 MBbls of crude oil, 7,913 MBbls of NGL and 34,400 MMcf of natural gas. Development of these proved undeveloped reserves may take longer and require higher levels of capital expenditures than anticipated.
As of December 31, 2024, the Company’s assets contained 90,879 MBoe of proved undeveloped reserves, or PUDs, consisting of 69,639 MBbls of crude oil, 11,365 MBbls of NGL and 59,252 MMcf of natural gas. Development of these proved undeveloped reserves may take longer and require higher levels of capital expenditures than anticipated.
ESG matters may also impact our suppliers and customers, which may ultimately have adverse impacts on our operations. 46 HighPeak Energy may incur substantial losses and be subject to substantial liability claims as a result of operations. Additionally, HighPeak Energy may not be insured for, or insurance may be inadequate to protect HighPeak Energy against, these risks.
HighPeak Energy may incur substantial losses and be subject to substantial liability claims as a result of operations. Additionally, HighPeak Energy may not be insured for, or insurance may be inadequate to protect HighPeak Energy against, these risks. HighPeak Energy will not be insured against all risks.
If that were to happen again, demand for drilling rigs, equipment, supplies and personnel may increase the costs for these services. Access to transportation, processing and refining facilities in these areas may become constrained resulting in higher costs and reduced access for those items. Historically, crude oil, NGL and natural gas prices have been volatile.
HighPeak Energy’s operations are concentrated in areas in which oilfield activity levels have previously increased rapidly. If that were to happen again, demand for drilling rigs, equipment, supplies and personnel may increase the costs for these services. Access to transportation, processing and refining facilities in these areas may become constrained resulting in higher costs and reduced access for those items.
However, the Company has the ability under the contract to cumulatively bank excess volumes delivered to offset future minimum volume commitments. For the period from October 1, 2021 to December 31, 2023, the Company has delivered approximately 29,600 Bopd under the contract.
However, the Company generally has the ability under the contract to cumulatively bank dollars based on excess volumes delivered to offset the minimum volume commitment. For the period from May 1, 2024 to December 31, 2024, the Company has delivered approximately 31,196 Bopd under the contract.
The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment and more stringent laws and regulations may be adopted in the future.
While from time to time there have been periods of deregulation under certain U.S. presidential administrations, the trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment and more stringent laws and regulations may be adopted in the future.
For example, the EPA finalized rules in June 2016 that prohibit the discharge of wastewater from hydraulic fracturing operations to publicly owned wastewater treatment plants. Congress has, from time to time, considered legislation to provide for federal regulation of hydraulic fracturing under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process.
Congress has, from time to time, considered legislation to provide for federal regulation of hydraulic fracturing under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process.
As a result, a substantial or extended decline in commodity prices may materially and adversely affect HighPeak Energy’s future business, financial condition, results of operations, liquidity and ability to finance planned capital expenditures. Reserve estimates depend on many assumptions that may turn out to be inaccurate.
As a result, a substantial or extended decline in commodity prices may materially and adversely affect HighPeak Energy’s future business, financial condition, results of operations, liquidity and ability to finance planned capital expenditures. Changes in the global trade environment, including the imposition of tariffs, could adversely affect our business.
HighPeak Energy will continue to monitor the extent by which prices continue to increase and/or stabilize as we execute our capital expenditure program. Any shut-in or curtailment of the crude oil, NGL and natural gas produced from HighPeak Energy’s fields could adversely affect its financial condition and results of operations.
Any shut-in or curtailment of the crude oil, NGL and natural gas produced from HighPeak Energy’s fields could adversely affect its financial condition and results of operations.
There are stipulations in the agreement that reduce this commitment should we experience a downturn in crude oil prices. As of December 31, 2023, the Company has purchased approximately 1.2 million tons of frac sand under the contract.
The Company has taken deliveries of approximately 547,000 tons of sand through December 31, 2024, leaving a commitment of approximately 203,000 tons remaining. There are stipulations in the agreement that reduce this commitment should we experience a downturn in crude oil prices.
Business and Properties—Regulation of Environmental and Occupational Safety and Health Matters— Regulation of Greenhouse Gas Emissions.” Governmental, scientific and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate change related pledges made by certain candidates in public office.
Therefore, the full impact of these actions cannot be predicted at this time. Governmental, scientific and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate change related pledges made by certain candidates in public office.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe provide our system users with access consistent with the principle of least privilege, which requires that such users be given no more access than necessary to complete their job functions. We have also implemented a multi-factor authentication process for employees accessing company information. We use encryption methods to protect sensitive data.
Biggest changeWe have also implemented a multi-factor authentication process for employees accessing company information. We use encryption methods to protect sensitive data. This includes the encryption of our customer data, financial information, and other confidential data.
The Company has implemented various internal and external controls and processes, including internal risk assessment and policy implementation, to incorporate a risk-based cybersecurity framework to monitor and mitigate security threats and other strategies to increase security for our information, facilities, and infrastructure.
The Company has implemented various internal and external controls and processes, including internal risk assessment and policy implementation, to incorporate a risk-based cybersecurity framework to identify, monitor and mitigate security threats and other strategies to increase security for our information, facilities, and infrastructure.
In connection with and pursuant to the IRP, our incident response team, made up of management, employees and third-party cybersecurity personnel, works collaboratively across HighPeak Energy to carry out a program that has been designed to protect our information system from cybersecurity threats, assess and manage risks arising from any such threats, and to respond to potential cybersecurity incidents.
In connection with and pursuant to the IRP, our incident response team, made up of management, employees and third-party cybersecurity personnel, works collaboratively across HighPeak Energy to carry out a program that has been designed to protect our information systems from cybersecurity threats, assess and manage risks arising from any such threats, and to respond to potential cybersecurity incidents.
Risk Management and Strategy The Company recognizes the risk that cybersecurity threats pose to our operations, and cybersecurity is an important component of our overall risk management strategy. HighPeak Energy’s cybersecurity team consists of certain of our executive officers as well as internal and third-party cybersecurity personnel.
Risk Management and Strategy The Company recognizes the risk that cybersecurity threats pose to our operations, and cybersecurity is an important component of our overall risk management strategy. HighPeak Energy’s cybersecurity team consists of certain of our executive officers, as well as internal and third-party cybersecurity personnel, with cybersecurity expertise across multiple industries.
This includes the encryption of our customer data, financial information, and other confidential data. We have programs in place to monitor our retained data with the goal of identifying personal identifiable information and taking appropriate actions to secure the data. Third parties also play a role in the Company’s approach to cybersecurity and its associated risk management framework.
We have programs in place to monitor our retained data with the goal of identifying personal identifiable information and taking appropriate actions to secure the data. Third parties also play a role in the Company’s approach to cybersecurity and its associated risk management framework.
Notwithstanding the approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. For more information on our cybersecurity related risks, see “Item 1A. Risk Factors” for additional information.
Despite the implementation of our cybersecurity processes, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. For more information on our cybersecurity related risks, see “Item 1A. Risk Factors” for additional information. 61
HighPeak Energy leverages technological tools and partners with the goal of augmenting and enabling the efforts of its internal cybersecurity team. Separately, management and oversight of the risks from cybersecurity threats associated with our engagement of third-party service providers is included in our internal auditing processes.
HighPeak Energy leverages technological tools and partners with the goal of augmenting and enabling the efforts of its internal cybersecurity team. Separately, our internal auditing processes include processes to identify, manage and oversee the risks from cybersecurity threats associated with our engagement of third-party service providers.
The cybersecurity team, led by professionals with cybersecurity expertise across multiple industries, takes a cross-functional approach to addressing these risks and engages in discussions with the Board and our executive management team on an as-needed basis. We have implemented a monitoring and detection system to help promptly identify cybersecurity incidents.
The cybersecurity team takes a cross-functional approach to addressing these risks and engages in discussions with the Board and our executive management team on an as-needed basis. We have implemented a monitoring and detection system to help promptly identify cybersecurity incidents. We also require our employees and contractors to receive annual cybersecurity awareness training.
We also require our employees and contractors to receive annual cybersecurity awareness training. We perform cybersecurity tabletop exercises to test the effectiveness of our incidence response plan (“IRP”) and implement post-incident “lessons learned” to enhance our response.
We perform cybersecurity tabletop exercises to test the effectiveness of our incidence response plan (“IRP”) and implement post-incident “lessons learned” to enhance our response. We provide our system users with access consistent with the principle of least privilege, which requires that such users be given no more access than necessary to complete their job functions.
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Our cybersecurity team is made up of experienced professionals, both employees and third parties with extensive backgrounds in information security, risk management, and incident response. This team is lead by an officer of the Company, bringing over a decade of experience in IT leadership, policy development, and technology strategy.
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With a strong background in overseeing IT departments and driving digital transformation, the team plays a critical role in ensuring the security, efficiency, and innovation of our technology infrastructure. Cybersecurity remains a top priority, with a focus on risk management, regulatory compliance, and safeguarding company data.
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Our cybersecurity team regularly interacts with the Board of Directors and the Audit Committee, providing insights on IT governance, cybersecurity initiatives, and emerging technology trends.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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On May 29, 2024, a purported HighPeak stockholder filed a derivative lawsuit in the Delaware Court of Chancery against various current and former HighPeak directors, alleging that the Company’s directors breached their fiduciary duties in approving the compensation awarded to the Company’s CEO and President and that the Company’s CEO was unjustly enriched by the compensation.
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The initial complaint alleged that the Company’s directors engaged in an inadequate process and approved excessive compensation in the years 2020 through 2023. After the defendants filed a motion to dismiss the initial complaint, the plaintiff filed an amended complaint on September 30, 2024.
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The amended complaint removed the plaintiff’s challenge to the Company’s President’s compensation, but it continues to challenge the compensation awarded to the Company’s CEO in “at least 2022, 2023, and 2024.” The defendants filed a motion to dismiss the amended complaint, and the court has not yet ruled on that motion.
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The plaintiff seeks to recover purported damages on behalf of the Company, disgorgement of the Company’s CEO’s compensation, an order requiring HighPeak to make various changes to its corporate governance policies, attorneys’ fees, and other relief. The Company believes the lawsuit is without merit and intends to vigorously defend against it.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders As of February 29, 2024, there were 41 holders of record of HighPeak Energy common stock and 5 holders of record of HighPeak Energy’s warrants.
Biggest changeHolders As of March 6, 2025, there were 35 holders of record of HighPeak Energy common stock and 5 holders of record of HighPeak Energy’s warrants.
Stock Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall the information be incorporated by reference into any future filing under the Securities Act or Exchange Act except to the extent that the Company specifically incorporate it be reference to such filing. 62 The graph below compares the cumulative total stockholder return on the Company’s common stock during the period from August 24, 2020 through December 31, 2023, with cumulative total returns during the same period for the Standard & Poor’s (“S&P”) 500 Index and the S&P Oil and Gas Exploration & Production Index.
Stock Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall the information be incorporated by reference into any future filing under the Securities Act or Exchange Act except to the extent that the Company specifically incorporate it be reference to such filing. 63 The graph below compares the cumulative total stockholder return on the Company’s common stock during the period from August 24, 2020 through December 31, 2024, with cumulative total returns during the same period for the Standard & Poor’s (“S&P”) 500 Index and the S&P Oil and Gas Exploration & Production Index.
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Issuer Purchases of Equity Securities Our common stock repurchase activity for the three months ended December 31, 2024 was as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet to Be Purchased Under the Plan (3)(4) ($ in thousands, except per share amounts and shares) October 1, 2024 - October 31, 2024 — $ — — 47,809 November 1, 2024 - November 30, 2024 67,289 $ 14.05 67,289 $ 46,866 December 1, 2024 - December 31, 2024 490,496 $ 14.22 490,496 $ 39,907 Total 557,785 $ 14.20 557,785 (1) Such shares are cancelled and retired.
Added
(2) The average price paid per share includes any commissions paid to repurchase stock. (3) In February 2024, our Board approved a stock repurchase program for up to $75.0 million, excluding excise taxes and other expenses. The stock repurchase program expired on December 31, 2024.
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However, on March 6, 2025, our Board extended the program in its entirety to December 31, 2025. The program may be suspended, modified, or discontinued by the Board at any time.
Added
(4) The IRA of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. All dollar amounts presented exclude such excise taxes, as applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

72 edited+14 added−9 removed113 unchanged
Biggest changeThe primary components of the $21.0 million decrease in net income include: • a $246.7 million increase in DD&A expense due to an 86% increase in daily sales volumes as a result of the Company’s successful horizontal drilling program, in addition to a 28% increase in the DD&A rate from $19.89 to $25.51 per Boe primarily as a result of significant inflationary pressures on capital costs; • a $27.3 million increase in loss on extinguishment of debt as a result of the Company refinancing its debt which resulted in the recognition of a loss thereon, which included $22.8 million of unamortized debt issuance costs and discounts and a make whole premium on the 10.625% Senior Notes of $4.5 million; • a $97.3 million increase in interest expense due to the increase in the Company’s overall indebtedness and increased amortization of debt issuance costs and discounts; • a $75.8 million increase in lease operating expenses related primarily to the increased well count and production from the Company’s successful horizontal drilling program, increased power and chemical costs, repair and maintenance costs and other inflationary pressures; • a $20.0 million increase in production and ad valorem taxes, primarily attributable to the 86% increase in daily sales volumes as a result of the Company’s successful horizontal drilling program partially offset by 21% lower production taxes on a dollar per Boe basis due to lower overall realized prices of 21%, excluding the effects of derivatives; • an $8.3 million increase in the Company’s other expenses primarily attributable to a contract settlement and repairs made in response to a fire at one of our production facilities; • a $4.1 million increase in the Company’s general and administrative expenses primarily attributable to increased employee count, salary increases and annual bonuses in addition to increased internal and external audit costs and legal expenses as a result of the growth of the Company; and • a $4.1 million increase in exploration and abandonments expense primarily due to an increase in leasehold abandonments and plugging and abandonment expenses related to legacy vertical wells; Partially offset by: • a $355.6 million increase in crude oil, NGL and natural gas revenues due to an 86% increase in daily sales volumes resulting from the Company’s successful horizontal drilling program, partially offset by a 21% decrease in average realized commodity prices per Boe, excluding the effects of derivatives; • a $87.6 million increase in the Company’s net derivative instruments gain from a $60.0 million loss to a $27.6 million gain year over year as a result of its crude oil commodity contracts entered into and the decrease in crude oil prices thereafter; • a $9.5 million decrease in the Company’s income tax expense primarily due to the net income realized during 2023 being less than the net income realized during 2022; • a $7.4 million decrease in the Company’s stock-based compensation expense as a result of fewer stock options being issued relative to the prior period; and • a $2.6 million increase in the Company’s interest income due to the increased cash on hand (interest-bearing) subsequent to the closing of the Term Loan Credit Agreement. • During the year ended December 31, 2023, average daily sales volumes totaled 45,577 Boepd, an increase of 86% over 2022, due to the Company’s successful horizontal drilling program in the Permian Basin. • Weighted average realized crude oil prices per Bbl decreased during the year ended December 31, 2023 to $78.26, excluding the effects of derivatives, compared with $94.61 for 2022.
Biggest changeThe primary components of the $120.8 million decrease in net income include: • a $76.3 million increase in DD&A expense due to an 10% increase in daily sales volumes as a result of the Company’s successful horizontal drilling program, in addition to a 7% increase in the DD&A rate from $25.51 to $27.39 per Boe primarily as a result of significant inflationary pressures on capital costs; • a $74.1 million increase in the Company’s net derivative instruments loss from a $27.6 million gain to a $46.5 million loss year over year as a result of its crude oil commodity contracts entered into and the change in crude oil prices thereafter; • a $41.9 million decrease in crude oil, NGL and natural gas revenues due to a 12% decrease in average realized commodity prices per Boe, partially offset by a 10% increase in daily sales volumes resulting from the Company’s successful horizontal drilling program, excluding the effects of derivatives; • a $20.8 million increase in interest expense due to the increase in the Company’s average overall indebtedness and the increase in overall interest rates, partially offset by decreased amortization of debt issuance costs and discounts; • a $3.8 million increase in the Company’s general and administrative expenses primarily attributable to increased employee count, salary increases and annual bonuses in addition to increased internal and external audit costs and legal expenses as a result of the growth of the Company; and • a $1.2 million increase in production and ad valorem taxes primarily attributable to an increase in ad valorem taxes, partially offset by lower production taxes as a result of lower revenues recognized by the Company; Partially offset by: • a $30.1 million decrease in the Company’s income tax expense primarily due to the net income realized during 2024 being less than the net income realized during 2023; • a $27.3 million decrease in loss on extinguishment of debt as a result of the Company refinancing its debt in 2023 which resulted in the recognition of a loss thereon, which included $22.8 million of unamortized debt issuance costs and discounts and a make whole premium on the 10.625% Senior Notes of $4.5 million; • a $13.3 million decrease in the Company’s stock-based compensation expense as a result of fewer restricted stock and stock options being issued relative to the prior period; • a $13.1 million decrease in lease operating expenses related primarily to lower chemical and treating costs, lower costs of handling produced water and lower workover costs, partially offset by increased pumper, roustabout and supervision costs, communication expenses, rental equipment and contract services; • a $5.8 million increase in the Company’s interest income due to the increased cash on hand (interest-bearing) subsequent to the closing of the Term Loan Credit Agreement in September 2023; • a $4.5 million decrease in the Company’s other expense primarily as a result of the settlement of a water treatment contract in the prior year; and • a $3.8 million decrease in the Company’s exploration and abandonment expense due to a decrease in the amount of leasehold abandonments experienced in 2024 compared to 2023. • During the year ended December 31, 2024, average daily sales volumes totaled 49,960 Boepd, an increase of 10% over 2023, due to the Company’s successful horizontal drilling program in the Permian Basin. • Weighted average realized crude oil prices per Bbl decreased during the year ended December 31, 2024 to $76.42, excluding the effects of derivatives, compared with $78.26 for 2023.
The Company’s primary sources of short-term liquidity are (i) cash and cash equivalents, including remaining cash proceeds from our recent $1.2 billion Term Loan Credit Agreement, (ii) net cash provided by operating activities, (iii) unused borrowing capacity under the Senior Credit Facility Agreement, (iv) on an opportunistic basis, other issuances of debt or equity securities and (v) other sources, such as sales of nonstrategic assets.
The Company’s primary sources of short-term liquidity are (i) cash and cash equivalents, including remaining cash proceeds from our $1.2 billion Term Loan Credit Agreement, (ii) net cash provided by operating activities, (iii) unused borrowing capacity under the Senior Credit Facility Agreement, (iv) on an opportunistic basis, other issuances of debt or equity securities and (v) other sources, such as sales of nonstrategic assets.
The Company does not carry the costs of drilling an exploratory well as an asset in its consolidated balance sheets following the completion of drilling unless both of the following conditions are met: ● The well has found a sufficient quantity of reserves to justify its completion as a producing well; and ● The Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. 77 Due to the capital-intensive nature and the geographical location of certain projects, it may take an extended period of time to evaluate the future potential of an exploration project and economics associated with making a determination of its commercial viability.
The Company does not carry the costs of drilling an exploratory well as an asset in its consolidated balance sheets following the completion of drilling unless both of the following conditions are met: ● The well has found a sufficient quantity of reserves to justify its completion as a producing well; and ● The Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. 78 Due to the capital-intensive nature and the geographical location of certain projects, it may take an extended period of time to evaluate the future potential of an exploration project and economics associated with making a determination of its commercial viability.
However, there are many factors beyond the Company’s control, including commodity markets, unavailability or high cost of drilling rigs, equipment, supplies, personnel, frac crews and oilfield services or supply constraints remain subject to heightened levels of uncertainty as a result of the conflicts in Russia and Ukraine and in Israel and Hamas, elevated interest rates and associated policies of the Federal Reserve, which could adversely affect HighPeak Energy.
However, there are many factors beyond the Company’s control, including commodity markets, unavailability or high cost of drilling rigs, equipment, supplies, personnel, frac crews and oilfield services or supply constraints remain subject to heightened levels of uncertainty as a result of the conflicts between Russia and Ukraine and between Israel and Hamas, elevated interest rates and associated policies of the Federal Reserve, which could adversely affect HighPeak Energy.
The Company’s proved reserve information included in this Annual Report as of December 31, 2023, 2022 and 2021 was prepared by independent petroleum engineers. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, proved reserve estimates will be different from the quantities of crude oil and natural gas that are ultimately recovered.
The Company’s proved reserve information included in this Annual Report as of December 31, 2024, 2023 and 2022 was prepared by independent petroleum engineers. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, proved reserve estimates will be different from the quantities of crude oil and natural gas that are ultimately recovered.
However, there are many factors and consequences beyond the Company’s control, such as policies of the Biden Administration, economic downturn or potential recession, geo-political risks and additional actions by businesses, and OPEC and other cooperating countries, that may have an impact on the Company’s future results and drilling plans. For additional information on the risks, see “Part I, Item 1A.
However, there are many factors and consequences beyond the Company’s control, such as policies of the Trump Administration, economic downturn or potential recession, geo-political risks and additional actions by businesses, and OPEC and other cooperating countries, that may have an impact on the Company’s future results and drilling plans. For additional information on the risks, see “Part I, Item 1A.
The critical difference between the successful efforts method of accounting and the full cost method is that under the successful efforts method, exploratory dry holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas, under the full cost method of accounting, such costs and expenses are capitalized as assets, pooled with the costs of successful wells and charged against the earnings of future periods as a component of DD&A expense. 76 Proved reserve estimates.
The critical difference between the successful efforts method of accounting and the full cost method is that under the successful efforts method, exploratory dry holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas, under the full cost method of accounting, such costs and expenses are capitalized as assets, pooled with the costs of successful wells and charged against the earnings of future periods as a component of DD&A expense. 77 Proved reserve estimates.
The increase in ad valorem taxes per Boe for the year ended December 31, 2023, compared with 2022, was primarily due to the increase in commodity prices in 2022 and a significant number of wells that came on production during 2022 that had no ad valorem tax in 2022. 2023 was the first year these wells were assessed ad valorem taxes.
The increase in ad valorem taxes per Boe for the year ended December 31, 2024, compared with 2023, was primarily due to the increase in commodity prices in 2023 and a significant number of wells that came on production during 2023 that had no ad valorem tax in 2023. 2024 was the first year these wells were assessed ad valorem taxes.
If all or a portion of the unrecognized tax benefits is sustained upon examination by the taxing authorities, the tax benefit will be recorded as a reduction to the Company's deferred tax liability and will affect the Company's effective tax rate in the period it is recorded. As of December 2023, the Company did not have any unrecognized tax benefits.
If all or a portion of the unrecognized tax benefits is sustained upon examination by the taxing authorities, the tax benefit will be recorded as a reduction to the Company's deferred tax liability and will affect the Company's effective tax rate in the period it is recorded. As of December 2024, the Company did not have any unrecognized tax benefits.
The markets for the commodities produced by our industry strengthened in 2021 and continued to remain strong through 2023 and into 2024, although the market has decreased from 2022 levels overall, as a result of increased demand outpacing increased supply for each of the commodities we produce.
The markets for the commodities produced by our industry strengthened in 2021 and continued to remain strong through 2024 and into 2025, although the market has decreased from 2022 levels overall, as a result of increased demand outpacing increased supply for each of the commodities we produce.
In accordance with SEC requirements, the Company based the 2023 standardized measure on a twelve-month average of commodity prices on the first day of each month in 2023 and prevailing costs on the date of the estimate. Actual future prices and costs may be materially higher or lower than the prices and costs utilized in the estimate.
In accordance with SEC requirements, the Company based the 2024 standardized measure on a twelve-month average of commodity prices on the first day of each month in 2024 and prevailing costs on the date of the estimate. Actual future prices and costs may be materially higher or lower than the prices and costs utilized in the estimate.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the other sections of this Annual Report, including but not limited to “ Items 1 and 2.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS {START HERE} The following discussion and analysis should be read in conjunction with the other sections of this Annual Report, including but not limited to “ Items 1 and 2.
Financial Statements and Supplementary Data” of this Annual Report. See the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 6, 2023 for a discussion of the Company’s 2022 results of operations compared with the Company’s 2021 results of operations.
Financial Statements and Supplementary Data” of this Annual Report. See the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 6, 2024 for a discussion of the Company’s 2023 results of operations compared with the Company’s 2022 results of operations.
See the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 6, 2023 for a discussion of the Company ’ s 2022 results of operations compared with the Company ’ s 2021 results of operations.
See the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 6, 2024 for a discussion of the Company ’ s 2023 results of operations compared with the Company ’ s 2022 results of operations.
We operate approximately 98% of the net acreage across the Company’s assets and more than 90% of the net operated acreage provides for horizontal wells with lateral lengths of 10,000 feet or greater.
We operate approximately 97% of the net acreage across the Company’s assets and more than 90% of the net operated acreage provides for horizontal wells with lateral lengths of 10,000 feet or greater.
Interest Rate Risk. We are exposed to market risk due to the floating interest rate associated with any outstanding balance on the Term Loan Credit Agreement and the Senior Credit Facility Agreement. As of December 31, 2023, we had a $1.2 billion outstanding balance on the Term Loan Credit Agreement and zero outstanding on the Senior Credit Facility Agreement.
Interest Rate Risk. We are exposed to market risk due to the floating interest rate associated with any outstanding balance on the Term Loan Credit Agreement and the Senior Credit Facility Agreement. As of December 31, 2024, we had a $1.1 billion outstanding balance on the Term Loan Credit Agreement and zero outstanding on the Senior Credit Facility Agreement.
The approval grants HighPeak’s management the authority to repurchase shares opportunistically in the open market from time to time, through block trades, in privately negotiated transactions or by such other means which comply with applicable state and federal laws. This is the Company’s first authorization for a stock repurchase program since its founding.
HighPeak’s management the authority to repurchase shares opportunistically in the open market from time to time, through block trades, in privately negotiated transactions or by such other means which comply with applicable state and federal laws. This is the Company’s second authorization for a stock repurchase program since its founding.
For example, power costs are incurred in connection with various production-related activities, such as pumping to recover crude oil and natural gas and separation and treatment of water produced in connection with crude oil and natural gas production. The Company monitors the operation of its assets to ensure that it is incurring LOE at an acceptable level.
For example, power costs are incurred in connection with various production-related activities, such as pumping to recover crude oil and natural gas and separation and treatment of water produced in connection with crude oil and natural gas production. The Company monitors the operation of its assets to determine whether it is incurring LOE at an acceptable level.
The decrease in noncash stock-based compensation expense is due to fewer awards granted in 2023 compared with 2022. Interest expense.
The decrease in noncash stock-based compensation expense is due to fewer awards granted in 2024 compared with 2023. Interest expense.
Based on our 2023 sales volumes and excluding the effects on derivatives, a $1.00 per barrel increase (decrease) in the weighted average crude oil price for the year ended December 31, 2023 would have increased (decreased) the Company’s crude oil and NGL revenues by approximately $14.3 million and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the year ended December 31, 2023 would have increased (decreased) the Company’s natural gas revenues by approximately $722,000.
Based on our 2024 sales volumes and excluding the effects on derivatives, a $1.00 per barrel increase (decrease) in the weighted average crude oil price for the year ended December 31, 2024 would have increased (decreased) the Company’s crude oil and NGL revenues by approximately $14.5 million and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the year ended December 31, 2024 would have increased (decreased) the Company’s natural gas revenues by approximately $1.3 million.
The Company does not intend to comment further regarding the strategic alternatives process unless and until our Board has approved a specific course of action or we have otherwise determined that further disclosure is appropriate or required by law. 66 Financial and Operating Performance The Company’s financial and operating performance for the year ended December 31, 2023 included the following highlights: • Net income for the year ended December 31, 2023 was $215.9 million ($1.58 per diluted share) compared with $236.9 million for the year ended December 31, 2022.
The Company does not intend to comment further regarding the strategic alternatives process unless and until our Board has approved a specific course of action or we have otherwise determined that further disclosure is appropriate or required by law. 66 Financial and Operating Performance The Company’s financial and operating performance for the year ended December 31, 2024 included the following highlights: • Net income for the year ended December 31, 2024 was $95.1 million ($0.67 per diluted share) compared with $215.9 million for the year ended December 31, 2023.
As of December 31, 2023, the Company was a party to the following open crude oil derivative financial instruments.
As of December 31, 2024, the Company was a party to the following open crude oil derivative financial instruments.
As of December 31, 2023, a $1.00 increase (decrease) in the forward curves associated with our crude oil commodity derivative instruments would have changed our net derivative positions for these products by approximately $6.8 million. 75 Contractual obligations. The Company’s contractual obligations include leases (primarily related to contracted drilling rigs, equipment and office facilities), capital funding obligations and other liabilities.
As of December 31, 2024, a $1.00 increase (decrease) in the forward curves associated with our crude oil commodity derivative instruments would have changed our net derivative positions for these products by approximately $1.4 million. 76 Contractual obligations. The Company’s contractual obligations include leases (primarily related to contracted drilling rigs, equipment and office facilities), capital funding obligations and other liabilities.
See Note 2 of Notes to Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” for additional information. Impairment of unproved crude oil and natural gas properties. At December 31, 2023, the Company carried unproved property costs of $72.7 million. Management assesses unproved crude oil and natural gas properties for impairment on a project-by-project basis.
See Note 2 of Notes to Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” for additional information. Impairment of unproved crude oil and natural gas properties. At December 31, 2024, the Company carried unproved property costs of $70.9 million. Management assesses unproved crude oil and natural gas properties for impairment on a project-by-project basis.
For the years ended December 31, 2023, 2022 and 2021, revenues from our assets were derived approximately 98%, 95% and 96%, respectively, from crude oil sales and 2%, 5% and 4%, respectively, from NGL and natural gas sales. The Company is subject to credit risk resulting from the concentration of its crude oil and natural gas receivables with significant purchasers.
For the years ended December 31, 2024, 2023 and 2022, revenues from our assets were derived approximately 99%, 98% and 95%, respectively, from crude oil sales and 1%, 2% and 5%, respectively, from NGL and natural gas sales. The Company is subject to credit risk resulting from the concentration of its crude oil and natural gas receivables with significant purchasers.
In addition, the Company spent $745,000 on plugging various old vertical wells across our acreage position in accordance with applicable regulations. 72 Depletion, depreciation and amortization expense.
In addition, the Company spent $194,000 less in 2024 on plugging various old vertical wells across our acreage position in accordance with applicable regulations. 72 Depletion, depreciation and amortization expense.
The Company is able to repay any amounts borrowed prior to the maturity date without premium or penalty. The Senior Credit Facility Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first lien security interest in substantially all assets of the Company and certain of its subsidiaries. Underwritten equity offering.
The Company is able to repay any amounts borrowed prior to the maturity date without premium or penalty. The Senior Credit Facility Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first lien security interest in substantially all assets of the Company and certain of its subsidiaries. 2025 capital budget .
As of December 31, 2023, HighPeak Energy was developing its properties using three (3) drilling rigs and one (1) frac crew and expects to average two (2) drilling rigs and one (1) frac crew during 2024 under our current development plan.
As of December 31, 2024, HighPeak Energy was developing its properties using two (2) drilling rigs and one (1) frac crew and expects to average two (2) drilling rigs and approximately one (1) frac crew during 2025 under our current development plan.
Although the Company expects its sources of funding will be adequate to fund its 2024 planned capital expenditures and provide adequate liquidity to fund other needs, no assurance can be given that such funding sources will be adequate to meet the Company’s future needs. 2024 capital budget .
Although the Company expects its sources of funding will be adequate to fund its 2025 planned capital expenditures and provide adequate liquidity to fund other needs, no assurance can be given that such funding sources will be adequate to meet the Company’s future needs. Debt Refinancing.
For the year ended December 31, 2023, sales to the Company’s largest purchaser accounted for approximately 82% of the Company’s total crude oil, NGL and natural gas sales revenues.
For the year ended December 31, 2024, sales to the Company’s largest purchaser accounted for approximately 76% of the Company’s total crude oil, NGL and natural gas sales revenues.
The stock repurchase program does not obligate HighPeak to acquire any particular dollar amount or number of shares of its common stock and the stock repurchase program may be suspended from time to time, modified, extended or discontinued by the Company’s Board of Directors. The stock repurchase program authority will expire December 31, 2024. Debt Refinancing.
The stock repurchase program does not obligate HighPeak to acquire any particular dollar amount or number of shares of its common stock and the stock repurchase program may be suspended from time to time, modified, extended or discontinued by the Company’s Board of Directors. The stock repurchase program authority will expire December 31, 2025. Dividends and dividend equivalents.
Weighted average realized natural gas prices per Mcf decreased to $1.56 during the year ended December 31, 2023, compared with $5.36 during 2022. • Cash provided by operating activities totaled $756.4 million for the year ended December 31, 2023, compared with $504.0 million for the year ended December 31, 2022. 67 Derivative Financial Instruments Derivative financial instrument exposure.
Weighted average realized natural gas prices per Mcf decreased to $0.49 during the year ended December 31, 2024, compared with $1.56 during 2023. • Cash provided by operating activities totaled $690.4 million for the year ended December 31, 2024, compared with $756.4 million for the year ended December 31, 2023. 67 Derivative Financial Instruments Derivative financial instrument exposure.
For additional information on the risks, see “Part I, Item 1A. Risk Factors.” Given the dynamic nature of this situation, the Company is maintaining flexibility in its capital plan as indicated by its recent shift to an anticipated two (2) drilling rig program for 2024.
For additional information on the risks, see “Part I, Item 1A. Risk Factors.” Given the dynamic nature of this situation, the Company is maintaining flexibility in its capital plan as indicated by its plan to maintain a two (2) drilling rig program for 2025.
Specifically, the Company’s 2023 and 2024 capital program has been and continues to be impacted by higher inflation in steel, diesel, chemical prices and services, among other items.
Specifically, the Company’s 2023 and 2024 capital program has been and continues to be impacted by higher prices for steel, diesel, chemicals and services, among other items.
For the year ended December 31, 2023, approximately 93% and 7% of sales volumes from the assets were attributable to liquids (both crude oil and NGL) and natural gas, respectively.
For the year ended December 31, 2024, approximately 88% and 12% of sales volumes from the assets were attributable to liquids (both crude oil and NGL) and natural gas, respectively.
Production and ad valorem taxes are as follows (in thousands): Year Ended December 31, 2023 2022 Change Production and ad valorem taxes $ 58,472 $ 38,440 $ 20,032 In general, production taxes and ad valorem taxes are directly related to production and commodity price changes; however, Texas ad valorem taxes are based upon prior year commodity prices and valuations as of the first of the year, whereas production taxes are based upon current year commodity prices and sales volumes.
Production and ad valorem taxes are as follows (in thousands): Year Ended December 31, 2024 2023 Change Production and ad valorem taxes $ 59,677 $ 58,472 $ 1,205 In general, production taxes and ad valorem taxes are directly related to production and commodity price changes; however, Texas ad valorem taxes are based upon prior year commodity prices and valuations as of the first of the year, whereas production taxes are based upon current year commodity prices and sales volumes.
For example, during the period from January 1, 2020 through December 31, 2023, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $16.70 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.50 to a high of $9.35.
For example, during the period from January 1, 2021 through December 31, 2024, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $52.10 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.58 to a high of $9.35.
The Company’s significant financing activities are as follows: • 2023: The Company (i) borrowed $1.4 billion and repaid $1.0 billion for a net increase in long-term debt related to the now refinanced debt in the form of the Term Loan Credit Agreement of $425.0 million, (ii) received $155.8 million from the issuance of 14,835,000 shares of common stock in a public offering, (iii) received $4.2 million in proceeds from the exercises of warrants and stock options of the Company, (iv) paid dividends to its common stockholders of $11.9 million and dividend equivalents to certain holders of vested stock options of $1.3 million, (v) spent $28.4 million on debt issuance costs primarily related to the issuance of the Term Loan Credit Agreement and to a lesser extent the new Senior Credit Facility Agreement and amendments to increase its borrowing capacity under the Prior Credit Agreement, (vi) spent $5.4 million in stock offering costs related to the public offering and (vii) spent $4.5 million in make whole payments to retire the 10.625% Senior Notes early. • 2022: The Company (i) borrowed $925.0 million and repaid $755.0 million for a net increase in long-term debt related to the Prior Credit Agreement of $170.0 million, (ii) issued an aggregate principal amount of $225.0 million ($210.2 million net of discounts) of its 10.000% Senior Notes and an aggregate principal amount of $250.0 million ($230.0 million net of discounts) of its 10.625% Senior Notes, (iii) received $85.0 million from the issuance of 3,933,376 shares of common stock in a private placement, (iv) received $7.9 million in proceeds from the exercises of warrants and stock options of the Company, (v) paid dividends to its common stockholders of $10.4 million and dividend equivalents to certain holders of vested stock options of $1.2 million and (vi) spent $17.1 million on debt issuance costs related to amendments to increase its borrowing capacity under the Prior Credit Agreement and the issuance of the 10.000% Senior Notes and 10.625% Senior Notes.
The Company’s significant financing activities are as follows: • 2024: The Company (i) repaid $120.0 million of the Term Loan Credit Agreement, (ii) repurchased $35.2 million of its common stock and (iii) paid dividends to its common stockholders of $20.1 million and dividend equivalents to certain holders of vested stock options of $2.1 million. • 2023: The Company (i) borrowed $1.4 billion and repaid $1.0 billion for a net increase in long-term debt related to the now refinanced debt in the form of the Term Loan Credit Agreement of $425.0 million, (ii) received $155.8 million from the issuance of 14,835,000 shares of common stock in a public offering, (iii) received $4.2 million in proceeds from the exercises of warrants and stock options of the Company, (iv) paid dividends to its common stockholders of $11.9 million and dividend equivalents to certain holders of vested stock options of $1.3 million, (v) spent $28.4 million on debt issuance costs primarily related to the issuance of the Term Loan Credit Agreement and to a lesser extent the new Senior Credit Facility Agreement and amendments to increase its borrowing capacity under the Prior Credit Agreement, (vi) spent $5.4 million in stock offering costs related to the public offering and (vii) spent $4.5 million in make whole payments to retire the 10.625% Senior Notes early.
Investing activities. The slight decrease in net cash used in investing activities for the year ended December 31, 2023, compared with 2022, was primarily due to a decrease in additions to crude oil and natural gas properties including drilling and completion operations and acquisitions in total. Financing activities.
Investing activities. The decrease in net cash used in investing activities for the year ended December 31, 2024, compared with 2023, was primarily due to a decrease in additions to crude oil and natural gas properties including drilling and completion operations and a decrease in the change in working capital associated with oil and gas property additions. Financing activities.
As of December 31, 2023, the Company had $1.2 billion in outstanding borrowings under the Term Loan Credit Agreement and approximately $68.9 million available to borrow under the Senior Credit Facility Agreement. The Company also had unrestricted cash on hand of $194.5 million as of December 31, 2023.
As of December 31, 2024, the Company had $1.1 billion in outstanding borrowings under the Term Loan Credit Agreement and approximately $93.1 million available to borrow under the Senior Credit Facility Agreement. The Company also had unrestricted cash on hand of $86.6 million as of December 31, 2024.
The following table provides a reconciliation of our net income (GAAP) to EBITDAX (non-GAAP) for the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Net income $ 215,866 $ 236,854 $ 55,559 Interest expense 147,901 50,610 2,484 Interest and other income (2,908 ) (266 ) (1 ) Income tax expense 65,905 75,361 16,904 Depletion, depreciation and amortization 424,424 177,742 65,201 Accretion of discount 522 370 167 Exploration and abandonment expense 5,234 1,149 1,549 Stock-based compensation 25,957 33,352 6,676 Derivative related noncash activity (51,796 ) 1,909 15,467 Loss on extinguishment of debt 27,300 — — Other expense 8,262 — 167 EBITDAX $ 866,667 $ 577,081 $ 164,173 Critical Accounting Estimates The Company prepares its consolidated financial statements for inclusion in this Annual Report in accordance with GAAP.
The following table provides a reconciliation of our net income (GAAP) to EBITDAX (non-GAAP) for the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 95,069 $ 215,866 $ 236,854 Interest expense 168,712 147,901 50,610 Interest income (8,685 ) (2,908 ) (266 ) Income tax expense 35,851 65,905 75,361 Depletion, depreciation and amortization 500,752 424,424 177,742 Accretion of discount 966 522 370 Exploration and abandonment expense 1,476 5,234 1,149 Stock-based compensation 12,701 25,957 33,352 Derivative related noncash activity 32,218 (51,796 ) 1,909 Other expense 3,795 8,262 — Loss on extinguishment of debt — 27,300 — EBITDAX $ 842,855 $ 866,667 $ 577,081 Critical Accounting Estimates The Company prepares its consolidated financial statements for inclusion in this Annual Report in accordance with GAAP.
As of December 31, 2023, the assets consisted of two highly contiguous leasehold positions of approximately 143,187 gross (131,636 net) acres, approximately 64% of which were held by production, with an average working interest of 92%.
As of December 31, 2024, the assets consisted of two highly contiguous leasehold positions of approximately 154,368 gross (141,907 net) acres, approximately 64% of which were held by production, with an average working interest of 92%.
Exploration and abandonment expense details are as follows (in thousands): Year Ended December 31, 2023 2022 Change Abandoned leasehold costs $ 3,372 $ — $ 3,372 Geologic and geophysical personnel costs 993 1,003 (10 ) Plugging and abandonment expense 745 — 745 Geologic and geophysical data costs 124 146 (22 ) Exploration and abandonments expense $ 5,234 $ 1,149 $ 4,085 The increase in exploration and abandonment expenses is primarily the result of $3.4 million in abandoned leasehold costs related to undeveloped acreage that was not in an area where the Company had current plans to drill and thus the leases were allowed to expire.
Exploration and abandonment expense details are as follows (in thousands): Year Ended December 31, 2024 2023 Change Geologic and geophysical personnel costs $ 856 $ 993 $ (137 ) Plugging and abandonment expense 551 745 (194 ) Abandoned leasehold costs 35 3,372 (3,337 ) Geologic and geophysical data costs 34 124 (90 ) Exploration and abandonments expense $ 1,476 $ 5,234 $ (3,758 ) The decrease in exploration and abandonment expenses is primarily the result of $3.3 million less in abandoned leasehold costs related to undeveloped acreage that was not in an area where the Company had current plans to drill and thus the leases were allowed to expire in 2023.
The Term Loan Credit Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first lien security interest in substantially all assets of the Company and certain of its subsidiaries. 64 The Term Loan Credit Agreement also contains certain financial covenants, including (i) an asset coverage ratio that may not be less than 1.50 to 1.00 as of the last day of any fiscal quarter and (ii) a total net leverage ratio that may not exceed 2.00 to 1.00 as of the last day of any fiscal quarter.
The Term Loan Credit Agreement also contains certain financial covenants, including (i) an asset coverage ratio that may not be less than 1.50 to 1.00 as of the last day of any fiscal quarter and (ii) a total net leverage ratio that may not exceed 2.00 to 1.00 as of the last day of any fiscal quarter.
Weighted average realized NGL prices per Bbl decreased during the year ended December 31, 2023 to $21.51, compared with $35.67 for 2022.
Weighted average realized NGL prices per Bbl increased during the year ended December 31, 2024 to $22.06, compared with $21.51 for 2023.
Derivative loss, net is as follows (in thousands): Year Ended December 31, 2023 2022 Change Noncash gain (loss) on derivative instruments, net $ 51,796 $ (58,096 ) $ 109,892 Cash paid on settlement of derivative instruments, net (24,194 ) (1,909 ) (22,285 ) Gain (loss) on derivative instruments, net $ 27,602 $ (60,005 ) $ 87,607 73 The Company primarily utilizes commodity swap contracts, enhanced collars and deferred premium puts to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company’s annual capital budget and expenditure plans and (iii) reduce commodity price risk associated with certain capital projects.
Derivative loss, net is as follows (in thousands): Year Ended December 31, 2024 2023 Change Noncash gain (loss) on derivative instruments, net $ (32,218 ) $ 51,796 $ (84,014 ) Cash paid on settlement of derivative instruments, net (14,246 ) (24,194 ) 9,948 Gain (loss) on derivative instruments, net $ (46,464 ) $ 27,602 $ (74,066 ) 73 The Company primarily utilizes commodity swap contracts, collars, enhanced collars and deferred premium puts to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company’s annual capital budget and expenditure plans and (iii) reduce commodity price risk associated with certain capital projects.
Additionally, the impact of inflation as well as elevated interest rates continue to have a negative impact on our cash flows and results of operations. Recent Events Share Repurchase Program. In February 2024, the Board approved a repurchase program of up to $75 million of the Company’s common stock.
Additionally, the impact of inflation as well as elevated interest rates continue to have a negative impact on our cash flows and results of operations. Recent Events Share Repurchase Program.
General and administrative expense and stock-based compensation expense are as follows (in thousands): Year Ended December 31, 2023 2022 Change General and administrative expense $ 16,598 $ 12,470 $ 4,128 Stock-based compensation expense $ 25,957 $ 33,352 $ (7,395 ) General and administrative expense per Boe is as follows: Year Ended December 31, 2023 2022 % Change General and administrative expense per Boe $ 1.00 $ 1.40 (29 )% The increase in general and administrative expense for the year ended December 31, 2023 is primarily as a result of increased employee count, salary increases and annual bonuses in addition to an increase in internal and external audit costs and legal expenses related to the growth of the Company.
General and administrative expense and stock-based compensation expense are as follows (in thousands): Year Ended December 31, 2024 2023 Change General and administrative expense $ 20,392 $ 16,598 $ 3,794 Stock-based compensation expense $ 12,701 $ 25,957 $ (13,256 ) General and administrative expense per Boe is as follows: Year Ended December 31, 2024 2023 % Change General and administrative expense per Boe $ 1.12 $ 1.00 12 % The increase in general and administrative expense for the year ended December 31, 2024 is primarily as a result of salary increases and annual bonuses in addition to an increase in internal and external audit costs and legal expenses related to the growth of the Company.
Production and ad valorem taxes per Boe are as follows: Year Ended December 31, 2023 2022 % Change Production taxes per Boe $ 3.19 $ 4.04 (21 )% Ad valorem taxes per Boe $ 0.32 $ 0.26 23 % $ 3.51 $ 4.30 (18 )% Production taxes per Boe for the year ended December 31, 2023, compared with 2022, decreased primarily due to the 21% overall decrease in realized sales prices.
Production and ad valorem taxes per Boe are as follows: Year Ended December 31, 2024 2023 % Change Production taxes per Boe $ 2.87 $ 3.19 (10 )% Ad valorem taxes per Boe $ 0.39 $ 0.32 22 % $ 3.26 $ 3.51 (7 )% Production taxes per Boe for the year ended December 31, 2024, compared with 2023, decreased primarily due to the 12% overall decrease in realized sales prices.
We cannot predict the amounts or timing of future reserve revisions or removals. It should not be assumed that the standardized measure included in this Annual Report as of December 31, 2023 is the current market value of the Company’s estimated proved reserves.
It should not be assumed that the standardized measure included in this Annual Report as of December 31, 2024 is the current market value of the Company’s estimated proved reserves.
Enhanced Collars & Deferred Swaps Premium Puts Floor or Deferred Strike Ceiling Premium Settlement Month Settlement Year Type of Contract Bbls Per Day Index Price per Bbl Price per Bbl Price per Bbl Payable per Bbl Crude Oil: Jan - Mar 2024 Swap 4,000 WTI $ 84.00 $ — $ — $ — Jan - Mar 2024 Collar 6,000 WTI $ — $ 80.00 $ 100.00 $ 3.50 Jan - Mar 2024 Put 20,000 WTI $ — $ 66.44 $ — $ 5.00 Apr - Jun 2024 Swap 4,000 WTI $ 84.00 $ — $ — $ — Apr - Jun 2024 Collar 5,500 WTI $ — $ 69.73 $ 95.00 $ 0.61 Apr - Jun 2024 Put 14,000 WTI $ — $ 60.41 $ — $ 5.00 Jul - Sep 2024 Swap 4,000 WTI $ 84.00 $ — $ — $ — Jul - Sep 2024 Collar 1,500 WTI $ — $ 69.00 $ 95.00 $ 0.85 Jul - Sep 2024 Put 14,000 WTI $ — $ 60.41 $ — $ 5.00 Oct - Dec 2024 Swap 5,500 WTI $ 76.37 $ — $ — $ — Oct - Dec 2024 Collar 10,600 WTI $ — $ 65.68 $ 90.32 $ 1.85 Oct - Dec 2024 Put 2,000 WTI $ — $ 58.00 $ — $ 5.00 Jan - Mar 2025 Swap 5,500 WTI $ 76.37 $ — $ — $ — Jan - Mar 2025 Collar 8,000 WTI $ — $ 65.00 $ 90.00 $ 2.12 Jan - Mar 2025 Put 2,000 WTI $ — $ 58.00 $ — $ 5.00 Apr - Jun 2025 Swap 5,500 WTI $ 76.37 $ — $ — $ — Apr - Jun 2025 Collar 7,000 WTI $ — $ 65.00 $ 90.08 $ 2.28 Apr - Jun 2025 Put 2,000 WTI $ — $ 58.00 $ — $ 5.00 Jul - Sep 2025 Swap 3,000 WTI $ 75.85 $ — $ — $ — Jul - Sep 2025 Collar 7,000 WTI $ — $ 65.00 $ 90.08 $ 2.28 Jul - Sep 2025 Put 2,000 WTI $ — $ 58.00 $ — $ 5.00 The estimated fair value of the outstanding open derivative financial instruments as of December 31, 2023 was a net asset of $34.4 million which is included in current assets, noncurrent assets, current liabilities and noncurrent liabilities on the Company’s consolidated balance sheet as of December 31, 2023.
Swaps Collars, Enhanced Collars & Deferred Premium Puts Settlement Month Settlement Year Type of Contract Bbls Per Day Index Price per Bbl Floor or Strike Price per Bbl Ceiling Price per Bbl Deferred Premium Payable per Bbl Crude Oil: Jan - Mar 2025 Swap 7,467 WTI Cushing $ 74.69 $ — $ — $ — Jan - Mar 2025 Collar 11,000 WTI Cushing $ — $ 63.64 $ 86.66 $ 1.54 Jan - Mar 2025 Put 9,000 WTI Cushing $ — $ 65.78 $ — $ 5.00 Apr - Jun 2025 Swap 5,500 WTI Cushing $ 76.37 $ — $ — $ — Apr - Jun 2025 Collar 7,989 WTI Cushing $ — $ 64.38 $ 88.55 $ 2.00 Apr - Jun 2025 Put 9,000 WTI Cushing $ — $ 65.78 $ — $ 5.00 Jul - Sep 2025 Swap 3,000 WTI Cushing $ 75.85 $ — $ — $ — Jul - Sep 2025 Collar 7,000 WTI Cushing $ — $ 65.00 $ 90.08 $ 2.28 Jul - Sep 2025 Put 9,000 WTI Cushing $ — $ 65.78 $ — $ 5.00 The estimated fair value of the outstanding open derivative financial instruments as of December 31, 2024 was a net asset of $2.2 million which is included in current assets and current liabilities on the Company’s consolidated balance sheet as of December 31, 2024.
Year Ended December 31, 2023 2022 Change Income tax expense (in thousands) $ 65,905 $ 75,361 $ (9,456 ) Effective income tax rate 23.4 % 24.1 % (0.7) % The change in income tax expense during the year ended December 31, 2023, compared with 2022, was due to decreased net income during the year ended December 31, 2023 compared with 2022.
Year Ended December 31, 2024 2023 Change Income tax expense (in thousands) $ 35,851 $ 65,905 $ (30,054 ) Effective income tax rate 27.4 % 23.4 % 4.0 % The change in income tax expense during the year ended December 31, 2024, compared with 2023, was due to decreased net income during the year ended December 31, 2024 compared with 2023.
The weighted average prices, excluding the effects of derivatives, are as follows: Year Ended December 31, 2023 2022 % Change Crude oil per Bbl $ 78.26 $ 94.61 (17 )% NGL per Bbl $ 21.51 $ 35.67 (40 )% Natural gas per Mcf $ 1.56 $ 5.36 (71 )% Total per Boe $ 66.80 $ 84.56 (21 )% The decrease in prices for crude oil, NGL and natural gas for the year ended December 31, 2023, compared with 2022 was due to a lower commodity price environment.
The weighted average prices, excluding the effects of derivatives, are as follows: Year Ended December 31, 2024 2023 % Change Crude oil per Bbl $ 76.42 $ 78.26 (2 )% NGL per Bbl $ 22.06 $ 21.51 3 % Natural gas per Mcf $ 0.49 $ 1.56 (69 )% Total per Boe $ 58.48 $ 66.80 (12 )% The slight decrease in prices for crude oil, slight increase in prices for NGL and decrease in prices for natural gas for the year ended December 31, 2024, compared with 2023 was due to an overall lower commodity price environment.
Additionally, the Term Loan Credit Agreement contains additional restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness (with such exceptions including, among other things, a super priority revolving credit facility limited to $100 million), incur additional liens, make investments and loans, enter into mergers and acquisitions, materially increase dividends and other payments, enter into certain hedging transactions, sell assets, engage in transactions with affiliates and make certain capital expenditures based on the Company’s total net leverage ratio.
Additionally, the Term Loan Credit Agreement contains additional restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness (with such exceptions including, among other things, a super priority revolving credit facility limited to $100 million), incur additional liens, make investments and loans, enter into mergers and acquisitions, materially increase dividends and other payments, enter into certain hedging transactions, sell assets, engage in transactions with affiliates and make certain capital expenditures based on the Company’s total net leverage ratio. 74 The Term Loan Credit Agreement contains customary mandatory prepayments, including quarterly installments of $30.0 million in aggregate principal amount beginning March 31, 2024, the prepayment of gross proceeds from an incurred indebtedness other than Permitted Indebtedness (as defined in the Term Loan Credit Agreement), the prepayment of net cash proceeds for asset sales and hedge terminations in excess of $20.0 million within one calendar year, and prepayments of Excess Cash Flow (as defined in the Term Loan Credit Agreement) beginning with the fiscal quarter ending March 31, 2024.
In addition, the Company accrued an additional combined $53,000 in February 2023, $53,000 in May 2023, $54,000 in August 2023 and $54,000 in November 2023 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting. Acquisitions.
In addition, the Company accrued an additional combined $84,000 in March 2024, $84,000 in June 2024, $86,000 in September 2024 and $86,000 in December 2024 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting, assuming no forfeitures. Acquisitions.
The increase in net cash flow provided by operating activities for the year ended December 31, 2023, compared with 2022, was primarily due to an increase in cash flow from the statement of operations related mostly to increased revenues associated with increased production volumes as a result of our successful horizontal drilling program, coupled with a positive working capital change of $52.5 million.
The decrease in net cash flow provided by operating activities for the year ended December 31, 2024, compared with 2023, was primarily due to a decrease in cash flow from the statement of operations related mostly to decreased revenues associated with lower commodity prices partially offset by increased production volumes as a result of our successful horizontal drilling program, increased interest expense due to a higher debt balance and increased interest rates, partially offset by lower operating expenses.
The budget above assumes that the Company will operate an average of two (2) drilling rigs and an average of one (1) frac crew during 2024.
The Company’s capital expenditures for the year ended December 31, 2024 were $604.3 million, excluding acquisitions. The budget above assumes that the Company will operate an average of two (2) drilling rigs and an average of one (1) frac crew during 2025.
In January, April, July and October 2023, the Board declared a quarterly dividend of $0.025 per share of common stock outstanding which resulted in a total of $2.8 million, $2.8 million, $3.2 million and $3.2 million, respectively, in dividends being paid on February 24, 2023, May 25, 2023, August 25, 2023 and November 22, 2023, respectively.
In February, May, August and November 2024, the Board declared a quarterly dividend of $0.04 per share of common stock outstanding which resulted in a total of $5.1 million, $5.0 million, $5.0 million and $5.0 million, respectively, in dividends being paid on March 25, 2024, June 25, 2024, September 25, 2024 and December 23, 2024, respectively.
Swaps Settlement Month Settlement Year Type of Contract Bbls Per Day Index Weighted Average Differential per Bbl Crude Oil: Jan - Mar 2024 Basis Swap 16,484 Argus WTI Midland $ 1.12 Apr - Jun 2024 Basis Swap 25,000 Argus WTI Midland $ 1.12 Jul - Sep 2024 Basis Swap 25,000 Argus WTI Midland $ 1.12 Oct - Dec 2024 Basis Swap 25,000 Argus WTI Midland $ 1.12 Operations and Drilling Highlights Average daily crude oil, NGL and natural gas sales volumes are as follows: Year Ended December 31, 2023 Crude Oil (Bbls) 38,041 NGL (Bbls) 4,239 Natural Gas (Mcf) 19,777 Total (Boe) 45,577 The Company's liquids production was 93% of total production on a Boe basis for the year ended December 31, 2023. 68 Costs incurred are as follows (in thousands): Year Ended December 31, 2023 Unproved property acquisition costs $ 11,777 Proved acquisition costs 3,308 Total acquisitions 15,085 Development costs 481,528 Exploration costs 527,502 Total finding and development costs 1,024,115 Asset retirement obligations 6,048 Total costs incurred $ 1,030,163 Development/service and exploration/extension drilling activity is as follows: Year Ended December 31, 2023 Development/ Service Exploration/ Extension Beginning wells in progress 3 62 Well spud 45 51 Successful wells (32 ) (98 ) Ending wells in progress 16 15 Results of Operations Results of operations should be read together with the Company’s consolidated financial statements and related notes included in “Item 8.
Settlement Month Settlement Year Type of Contract MMBtu Per Day Index Price per MMBtu Natural Gas: Jan – Mar 2025 Swap 10,333 HH $ 4.43 Apr – Jun 2025 Swap 30,000 HH $ 4.43 Jul – Sep 2025 Swap 30,000 HH $ 4.43 Oct – Dec 2025 Swap 30,000 HH $ 4.43 Jan – Mar 2026 Swap 19,667 HH $ 4.43 Operations and Drilling Highlights Average daily crude oil, NGL and natural gas sales volumes are as follows: Year Ended December 31, 2024 Crude Oil (Bbls) 37,914 NGL (Bbls) 6,241 Natural Gas (Mcf) 34,828 Total (Boe) 49,960 The Company's liquids production was 88% of total production on a Boe basis for the year ended December 31, 2024. 68 Costs incurred are as follows (in thousands): Year Ended December 31, 2024 Unproved property acquisition costs $ 14,459 Proved acquisition costs 385 Total acquisitions 14,844 Development costs 442,076 Exploration costs 162,223 Total finding and development costs 619,143 Asset retirement obligations 1,068 Total costs incurred $ 620,211 Development/service and exploration/extension drilling activity is as follows: Year Ended December 31, 2024 Development/ Service Exploration/ Extension Beginning wells in progress 16 15 Well spud 49 12 Successful wells (52 ) (18 ) Ending wells in progress 13 9 Results of Operations Results of operations should be read together with the Company’s consolidated financial statements and related notes included in “Item 8.
Crude oil and natural gas production costs are as follows (in thousands): Year Ended December 31, 2023 2022 Change Crude oil and natural gas production costs $ 145,362 $ 69,599 $ 75,763 71 Crude oil and natural gas production costs per Boe are as follows: Year Ended December 31, 2023 2022 % Change Lease operating expense $ 8.04 $ 7.49 7 % Workover costs 0.70 0.30 133 % $ 8.74 $ 7.79 12 % Lease operating expense per Boe for 2023 increased slightly compared with 2022.
Crude oil and natural gas production costs are as follows (in thousands): Year Ended December 31, 2024 2023 Change Crude oil and natural gas production costs $ 132,244 $ 145,362 $ (13,118 ) 71 Crude oil and natural gas production costs per Boe are as follows: Year Ended December 31, 2024 2023 % Change Lease operating expense $ 6.76 $ 8.04 (16 )% Workover costs 0.47 0.70 (33 )% $ 7.23 $ 8.74 (17 )% Lease operating expense per Boe for 2024 decreased compared with 2023.
During the year ended December 31, 2023, the Company incurred a total of $15.1 million in acquisition costs primarily to acquire additional bolt-on undeveloped acreage contiguous to its Flat Top and Signal Peak operating areas. 65 Crude Oil and Natural Gas Industry Considerations. Since mid-2020, crude oil prices have improved, with demand steadily increasing.
During the year ended December 31, 2024, the Company incurred a total of $14.8 million in acquisition costs related to lease extensions and to acquire additional crude oil and natural gas leases covering additional contiguous bolt-on undeveloped acreage to its Flat Top and Signal Peak operating areas. Crude oil sales contract.
DD&A expense is as follows (in thousands): Year Ended December 31, 2023 2022 Change DD&A expense $ 424,424 $ 177,742 $ 246,682 DD&A expense per Boe is as follows: Year Ended December 31, 2023 2022 % Change DD&A expense per Boe $ 25.51 $ 19.89 28 % The increase in DD&A expense is primarily due to the increased production associated with our successful horizontal drilling program.
DD&A expense is as follows (in thousands): Year Ended December 31, 2024 2023 Change DD&A expense $ 500,752 $ 424,424 $ 76,328 DD&A expense per Boe is as follows: Year Ended December 31, 2024 2023 % Change DD&A expense per Boe $ 27.39 $ 25.51 7 % The increase in DD&A expense is primarily due to the increased production associated with our successful horizontal drilling program in addition to an increase in the DD&A rate primarily attributed to increased infrastructure and associated costs as we test new areas.
The Company’s capital budget for 2024 is expected to be in the range of approximately $450 to $525 million for drilling, completion, facilities and equipping crude oil wells plus $50 to $60 million for field infrastructure buildout and other costs. The 2024 capital budget excludes acquisitions, asset retirement obligations, geological and geophysical general and administrative expenses and corporate facilities.
The Company’s capital budget for 2025 is expected to be in the range of approximately $375 to $405 million for drilling, completion, facilities and equipping crude oil wells plus $40 to $50 million for field infrastructure buildout and other costs and $33 - $35 million on one-time infrastructure expenditures.
HighPeak Energy expects to fund its forecasted capital expenditures with cash on its balance sheet, cash generated by operations and borrowings under the Senior Credit Facility Agreement, if needed. The Company’s capital expenditures for the year ended December 31, 2023 were $1.0 billion, excluding acquisitions.
The 2025 capital budget excludes acquisitions, asset retirement obligations, geological and geophysical general and administrative expenses and corporate facilities. HighPeak Energy expects to fund its forecasted capital expenditures with cash on its balance sheet, cash generated by operations and borrowings under the Senior Credit Facility Agreement, if needed.
Interest expense is as follows (in thousands): Year Ended December 31, 2023 2022 Change Interest expense on Term Loan Credit Agreement $ 47,820 $ — $ 47,820 Interest expense on Prior Credit Agreement 30,493 14,022 16,471 Interest expense on 10.625% Senior Notes 27,064 3,593 23,471 Interest expense on 10.000% Senior Notes 15,875 19,625 (3,750 ) Interest expense on Senior Credit Facility Agreement 98 — 98 Amortization of discounts 15,140 7,735 7,405 Amortization of debt issuance costs 11,411 5,635 5,776 $ 147,901 $ 50,610 $ 97,291 The increase in interest expense can be primarily attributed to higher interest rates in 2023 compared to 2022, but more importantly, to increased borrowings under the Term Loan Credit Agreement beginning in September 2023, increased borrowings under the Prior Credit Agreement throughout 2023 until September 2023 when it was paid in full and the issuance of $250.0 million of the Company’s 10.625% Senior Notes in late-2022 that were also paid off in September 2023.
Interest expense is as follows (in thousands): Year Ended December 31, 2024 2023 Change Interest expense on Term Loan Credit Agreement $ 149,844 $ 47,820 $ 102,024 Interest expense on Senior Credit Facility Agreement 725 98 627 Interest expense on Prior Credit Agreement — 30,493 (30,493 ) Interest expense on 10.625% Senior Notes — 27,064 (27,064 ) Interest expense on 10.000% Senior Notes — 15,875 (15,875 ) Amortization of discounts 9,865 15,140 (5,275 ) Amortization of debt issuance costs 8,278 11,411 (3,133 ) $ 168,712 $ 147,901 $ 20,811 The increase in interest expense can be primarily attributed to higher interest rates in 2024 compared to 2023, but more importantly, to increased borrowings under the Term Loan Credit Agreement beginning in September 2023, partially offset by lower amortization of discounts and debt issuance costs with the longer term on the new debt issuances in 2023.
In addition, results of drilling, testing and production after the date of an estimate may justify material revisions, positively or negatively, to the estimate of proved reserves. For the years ended December 31, 2023, 2022 and 2021, net downward revisions of our proved reserves totaled approximately 16,093 MBoe, 9,211 MBoe and 1,658 MBoe, respectively.
In addition, results of drilling, testing and production after the date of an estimate may justify material revisions, positively or negatively, to the estimate of proved reserves.
During the year ended December 31, 2023, the Company recognized a net derivative gain of $27.6 million, including a $51.8 million mark-to-market gain partially offset by $24.2 million in net monthly settlement payments.
During the year ended December 31, 2024, the Company recognized a net derivative loss of $46.5 million, including a $32.2 million mark-to-market loss and $14.3 million in net monthly settlement payments. Natural gas derivative instruments.
This amounted to approximately 2,000 Boe in daily production that we were not able to sell for the year ended December 31, 2023. The crude oil, NGL and natural gas prices that the Company reports are based on the market prices received for each commodity.
The crude oil, NGL and natural gas prices that the Company reports are based on the market prices received for each commodity.
Year Ended December 31, 2023 2022 Change Net cash provided by operating activities $ 756,389 $ 504,014 $ 252,375 Net cash used in investing activities $ (1,125,935 ) $ (1,182,408 ) $ 56,473 Net cash provided by financing activities $ 533,557 $ 674,029 $ (140,472 ) 74 Operating activities.
Year Ended December 31, 2024 2023 Change Net cash provided by operating activities $ 690,391 $ 756,389 $ (65,998 ) Net cash used in investing activities $ (620,843 ) $ (1,125,935 ) $ 505,092 Net cash provided by financing activities $ (177,414 ) $ 533,557 $ (710,971 ) 75 Operating activities.
Crude oil, NGL and natural gas revenues are as follows (in thousands): Year Ended December 31, 2023 2022 Change Crude oil, NGL and natural gas revenues $ 1,111,293 $ 755,686 $ 355,607 Average daily sales volumes are as follows: Year Ended December 31, 2023 2022 % Change Crude Oil (Bbls) 38,041 20,718 84 % NGL (Bbls) 4,239 2,249 88 % Natural Gas (Mcf) 19,777 9,105 117 % Total (Boe) 45,577 24,485 86 % The increase in average daily Boe sales volumes for the year ended December 31, 2023, compared with 2022 was due to the Company’s successful horizontal drilling program.
Crude oil, NGL and natural gas revenues are as follows (in thousands): Year Ended December 31, 2024 2023 Change Crude oil, NGL and natural gas revenues $ 1,069,414 $ 1,111,293 $ (41,879 ) Average daily sales volumes are as follows: Year Ended December 31, 2024 2023 % Change Crude Oil (Bbls) 37,914 38,041 (0 )% NGL (Bbls) 6,241 4,239 47 % Natural Gas (Mcf) 34,828 19,777 76 % Total (Boe) 49,960 45,577 10 % The increase in average daily Boe sales volumes for the year ended December 31, 2024, compared with 2023 was due to the Company tying in all of its existing production facilities into natural gas gathering, processing and treating facilities and maintaining relatively flat crude oil production utilizing only a two-rig drilling program throughout 2024.
In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $282,000 in February 2023, $286,000 in May 2023, $334,000 in August 2023 and $348,000 in November 2023 and accrued a dividend equivalent per share to all unvested stock option holders which is payable upon vesting, assuming no forfeitures.
In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $530,000 in March 2024, $538,000 in June 2024, $534,000 in September 2024 and $531,000 in December 2024.
The Senior Credit Facility Agreement has aggregate maximum commitments of $100.0 million with current commitments of $75.0 million.
The Senior Credit Facility Agreement has aggregate maximum commitments of $100.0 million and effective March 29, 2024 pursuant to the First Facility Amendment, current commitments of $100.0 million and customary debt issuance costs which totaled approximately $1.1 million.
Removed
The Term Loan Credit Agreement contains customary mandatory prepayments, including quarterly installments of $30.0 million in aggregate principal amount beginning March 31, 2024, the prepayment of gross proceeds from an incurred indebtedness other than Permitted Indebtedness (as defined in the Term Loan Credit Agreement), the prepayment of net cash proceeds for asset sales and hedge terminations in excess of $20.0 million within one calendar year, and prepayments of Excess Cash Flow (as defined in the Term Loan Credit Agreement) beginning with the fiscal quarter ending March 31, 2024.
Added
In February 2024, the Company’s board of directors approved a common stock repurchase program to acquire up to $75.0 million of the Company’s outstanding common stock, excluding excise taxes and other expenses, which was subject to being suspended from time to time, modified, extended or discontinued by the board of directors at any time.
Removed
In July 2023, we completed an underwritten equity offering of 14,835,000 shares of common stock at a price of $10.50, netting proceeds to the Company of approximately $151.2 million that was used for working capital and to otherwise enhance near-term liquidity.
Added
The common stock repurchase program expired on December 31, 2024 (the “2024 Repurchase Program”). On March 6, 2025, the Company’s board of directors extended the program from its original expiration on December 31, 2024 and extended the program through December 31, 2025 (the “Repurchase Extension”).
Removed
Certain of our existing stockholders, including the John Paul DeJoria Family Trust, a holder of approximately 12% of our common stock, and Jack Hightower, our Chief Executive Officer and Chairman of our Board of Directors, and entities and individuals associated with them, purchased an aggregate 10,029,070 shares in the offering.
Added
The Repurchase Extension did not alter any of the original terms of the 2024 Repurchase Program nor did it change the total amount provided for under the original 2024 Repurchase Program.
Removed
The underwriters in such offering received a reduced underwriting discount on such shares purchased by these persons or entities compared with the other shares sold to the public in the offering. Dividends and dividend equivalents.
Added
In September 2024, the Company entered into an amended and restated crude oil marketing contract with DK Trading & Supply, LLC (“Delek”) as the purchaser and DKL Permian Gathering, LLC (“DKL”) as the gatherer and transporter.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe average forward prices based on December 31, 2023 market quotes were as follows: Year Ending December 31 2024 Year Ending December 31, 2025 Average forward NYMEX crude oil price per Bbl $ 71.30 $ 65.10 Average forward NYMEX natural gas price per MMBtu $ 2.67 $ 3.49 The average forward purchase prices based on March 1, 2024 market quotes were as follows: Remainder of 2024 Year Ending December 31, 2025 Average forward NYMEX crude oil price per Bbl $ 75.97 $ 70.74 Average forward NYMEX natural gas price per MMBtu $ 2.51 $ 3.46 Credit risk.
Biggest changeThe average forward prices based on December 31, 2024 market quotes were as follows: Year Ending December 31 2025 Year Ending December 31, 2026 Average forward NYMEX crude oil price per Bbl $ 69.59 $ 66.45 Average forward NYMEX natural gas price per MMBtu $ 3.53 $ 3.91 The average forward purchase prices based on March 6, 2025 market quotes were as follows: Remainder of 2025 Year Ending December 31, 2026 Average forward NYMEX crude oil price per Bbl $ 64.41 $ 62.48 Average forward NYMEX natural gas price per MMBtu $ 4.66 $ 4.25 Credit risk.
A $1.00 per barrel increase (decrease) in the weighted average crude oil price for the year ended December 31, 2023 would have increased (decreased) the Company’s crude oil and NGL revenues by approximately $14.3 million, excluding the effects of derivatives, and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the year ended December 31, 2023 would have increased (decreased) the Company’s natural gas revenues by approximately $722,000, excluding the effects of derivatives.
A $1.00 per barrel increase (decrease) in the weighted average crude oil price for the year ended December 31, 2024 would have increased (decreased) the Company’s crude oil and NGL revenues by approximately $14.5 million, excluding the effects of derivatives, and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the year ended December 31, 2024 would have increased (decreased) the Company’s natural gas revenues by approximately $1.3 million, excluding the effects of derivatives.
Interest Rate Risk. At December 31, 2023, we had $1.2 billion outstanding under the Term Loan Credit Agreement and had $68.9 million of available borrowing capacity under the Senior Credit Facility Agreement. The Company is subject to interest rate risk on its variable rate debt from our Term Loan Credit Agreement and Senior Credit Facility Agreement.
Interest Rate Risk. At December 31, 2024, we had $1.1 billion outstanding under the Term Loan Credit Agreement and had $93.1 million of available borrowing capacity under the Senior Credit Facility Agreement. The Company is subject to interest rate risk on its variable rate debt from our Term Loan Credit Agreement and Senior Credit Facility Agreement.
The Company also periodically has fixed rate debt but does not currently utilize derivative instruments to manage the economic effect of changes in interest rates. The impact of a 1% increase in interest rates on our outstanding debt as of December 31, 2023 would have resulted in an annual increase in interest expense of approximately $12.0 million. 79
The Company also periodically has fixed rate debt but does not currently utilize derivative instruments to manage the economic effect of changes in interest rates. The impact of a 1% increase in interest rates on our outstanding debt as of December 31, 2024 would have resulted in an annual increase in interest expense of approximately $10.8 million. 80
During the period from January 1, 2020 through December 31, 2023, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $16.70 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.50 to a high of $9.35.
During the period from January 1, 2021 through December 31, 2024, the calendar month average NYMEX WTI crude oil price per Bbl ranged from a low of $52.10 to a high of $114.34, and the last trading day NYMEX natural gas price per MMBtu ranged from a low of $1.58 to a high of $9.35.
Removed
For the month of April 2020, the calendar month average NYMEX WTI crude oil price was $16.70 per Bbl and the last trading day NYMEX natural gas price was $1.63 per MMBtu.

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