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What changed in HighPeak Energy, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HighPeak Energy, Inc.'s 2024 and 2025 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 2025 report.

+317 added−291 removedSource: 10-K (2026-03-11) vs 10-K (2025-03-10)

Top changes in HighPeak Energy, Inc.'s 2025 10-K

317 paragraphs added · 291 removed · 210 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

110 edited+51 added−52 removed347 unchanged
Biggest changeHighPeak 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.
Biggest changeHighPeak Energy may be unable to obtain required capital or financing on satisfactory terms, including as a result of 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.
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.
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.
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 extended or 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.
HighPeak Energy may be unable to obtain required capital or financing on satisfactory terms, including as a result of recent increases in the cost of capital resulting from Federal Reserve policies or otherwise, which could reduce its ability to access or increase production and reserves. The crude oil and natural gas industry is capital-intensive.
HighPeak Energy may be unable to obtain required capital or financing on satisfactory terms, including as a result of increases in the cost of capital resulting from Federal Reserve policies or otherwise, which could reduce its ability to access or increase production and reserves. The crude oil and natural gas industry is capital-intensive.
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.
In addition, organizations that provided information and ratings to investors on ESG and related matters have developed 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.
There is current uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs and we cannot predict whether, and to what extent, U.S. trade policies will change in the future, including as a result of changes by the incoming U.S. presidential administration.
There is current uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs and we cannot predict whether, and to what extent, U.S. trade policies will change in the future, including as a result of changes by the U.S. presidential administration.
Such sentiment may focus on the Company’s environmental or social commitments (such as reducing GHG emissions) or its pursuit of certain employment practices or social initiatives that are alleged to be political or polarizing in nature or are alleged to violate laws based, in part, on changing priorities of, or interpretations by, federal agencies or state governments.
Such sentiment may focus on the Company’s environmental or social commitments (such as reducing GHG emissions) or its pursuit of certain employment or business practices or social initiatives that are alleged to be political or polarizing in nature or are alleged to violate laws based, in part, on changing priorities of, or interpretations by, federal agencies or state governments.
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.
Moreover, while we may create and publish mandatory or voluntary disclosures regarding ESG matters from time to time, certain statements in those 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 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.
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. 49 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.
Factors affecting the trading price of our securities may include: ● actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be similar to us; ● changes in the market’s expectations about our operating results; ● success of our competitors; ● our operating results failing to meet the expectation of securities analysts or investors in a particular period; ● changes in financial estimates and recommendations by securities analysts concerning us or the market in general; ● operating and stock price performance of other companies that investors deem comparable to us; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of shares of HighPeak Energy common stock available for public sale; ● any major change in our Board or management; 55 ● sales of substantial amounts of HighPeak Energy common stock by the Principal Stockholder Group, our directors, executive officers or significant stockholders, or the perception that such sales could occur; and ● general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations, OPEC+’s ability to continue to agree to limit production among its members and acts of war or terrorism.
Factors affecting the trading price of our securities may include: ● actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be similar to us; ● changes in the market’s expectations about our operating results; ● success or failure of our competitors; ● our operating results failing to meet the expectation of securities analysts or investors in a particular period; ● changes in financial estimates and recommendations by securities analysts concerning us or the market in general; ● operating and stock price performance of other companies that investors deem comparable to us; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of shares of HighPeak Energy common stock available for public sale; ● any major change in our Board or management; 54 ● sales of substantial amounts of HighPeak Energy common stock by the Principal Stockholder Group, our directors, executive officers or significant stockholders, or the perception that such sales could occur; and ● general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations, OPEC+’s ability to continue to agree to limit production among its members and acts of war or terrorism.
HighPeak Energy’s ability to drill and develop its acreage and establish production to maintain its leases depends on a number of uncertainties, including crude oil, NGL and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of water sourcing, frac sand and distribution systems, regulatory approvals and other factors. 38 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.
HighPeak Energy’s ability to drill and develop its acreage and establish production to maintain its leases depends on a number of uncertainties, including crude oil, NGL and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of water sourcing, frac sand and distribution systems, regulatory approvals and other factors. 37 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.
It is believed that many OPEC+ countries will be unable to increase their production levels or even produce at expected levels due to their lack of capital investments in developing incremental crude oil supplies over the past few years.
Currently, it is believed that many OPEC+ countries will be unable to increase their production levels or even produce at expected levels due to their lack of capital investments in developing incremental crude oil supplies over the past few years.
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.
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 ESG targets, such targets are often aspirational.
If HighPeak Energy is unable to obtain water to use in operations, it may need to be obtained from non-local sources and transported to drilling sites, resulting in increased costs, or HighPeak Energy may be unable to economically produce crude oil and natural gas, which could have a material and adverse effect on its financial condition, results of operations and cash flows. 43 The Company ’ s assets are located in the northeastern Midland Basin, making HighPeak Energy vulnerable to risks associated with operating in a limited geographic area.
If HighPeak Energy is unable to obtain water to use in operations, it may need to be obtained from non-local sources and transported to drilling sites, resulting in increased costs, or HighPeak Energy may be unable to economically produce crude oil and natural gas, which could have a material and adverse effect on its financial condition, results of operations and cash flows. 42 The Company ’ s assets are located in the northeastern Midland Basin, making HighPeak Energy vulnerable to risks associated with operating in a limited geographic area.
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.
Elevated inflation rates throughout 2023 and 2024 and inflationary pressures have resulted in and may continue to 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.
Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of reserves.” In addition, the cost of drilling, completing and operating wells will often be uncertain. 39 Further, many factors may curtail, delay or cancel scheduled drilling operations, including: ● delays imposed by, or resulting from, compliance with regulatory requirements, including the IRA 2022, limitations on wastewater disposal, emission of GHGs and hydraulic fracturing; ● pressure or irregularities in geological formations; ● shortages of or delays in obtaining equipment and qualified personnel or in obtaining water for hydraulic fracturing activities; ● equipment failures, accidents or other unexpected operational events; ● lack of available gathering facilities or delays in construction of gathering facilities; ● lack of available capacity on interconnecting transmission pipelines; ● lack of availability of water and electricity; ● adverse weather conditions; ● issues related to compliance with environmental regulations; ● environmental hazards, such as crude oil and natural gas leaks, crude oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment; ● declines in crude oil and natural gas prices; ● limited availability of financing on acceptable terms; ● title issues; and ● other market limitations in HighPeak Energy’s industry.
Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of reserves.” In addition, the cost of drilling, completing and operating wells will often be uncertain. 38 Further, many factors may curtail, delay or cancel scheduled drilling operations, including: ● delays imposed by, or resulting from, compliance with regulatory requirements, limitations on wastewater disposal, emission of GHGs and hydraulic fracturing; ● pressure or irregularities in geological formations; ● shortages of or delays in obtaining equipment and qualified personnel or in obtaining water for hydraulic fracturing activities; ● equipment failures, accidents or other unexpected operational events; ● lack of available gathering facilities or delays in construction of gathering facilities; ● lack of available capacity on interconnecting transmission pipelines; ● lack of availability of water and electricity; ● adverse weather conditions; ● issues related to compliance with environmental regulations; ● environmental hazards, such as crude oil and natural gas leaks, crude oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment; ● declines in crude oil and natural gas prices; ● limited availability of financing on acceptable terms; ● title issues; and ● other market limitations in HighPeak Energy’s industry.
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.
HighPeak Energy may incur increased 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.
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.
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. 41 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.
To what extent these and other external factors (such as government action with respect to climate change regulation) ultimately impact our future business, liquidity, financial condition, and results of operations is highly uncertain and dependent on numerous factors, including future developments, which are not within our control and cannot be accurately predicted. 37 The marketability of HighPeak Energy ’ s production is dependent upon transportation, storage and other facilities, certain of which it does not control.
To what extent these and other external factors (such as government action with respect to climate change regulation) ultimately impact our future business, liquidity, financial condition, and results of operations is highly uncertain and dependent on numerous factors, including future developments, which are not within our control and cannot be accurately predicted. 36 The marketability of HighPeak Energy ’ s production is dependent upon transportation, storage and other facilities, certain of which it does not control.
Further, if HighPeak Energy were no longer listed on the Nasdaq, its securities would not be covered securities and HighPeak Energy would be subject to regulation in each state in which HighPeak Energy offers its securities. 58 Unanticipated changes in effective tax rates or laws or adverse outcomes resulting from examination of HighPeak Energy ’ s income or other tax returns could adversely affect HighPeak Energy ’ s financial condition, results of operations and cash flow.
Further, if HighPeak Energy were no longer listed on the Nasdaq, its securities would not be covered securities and HighPeak Energy would be subject to regulation in each state in which HighPeak Energy offers its securities. 58 Unanticipated changes in effective tax rates or laws or adverse outcomes resulting from examination of HighPeak Energy ’ s income or other tax returns could adversely affect HighPeak Energy ’ s financial condition, results of operations and cash flows.
Business and Properties—Regulation of Environmental and Occupational Safety and Health Matters— Hydraulic Fracturing Activities.” 51 Legislation or regulatory initiatives intended to address seismic activity could restrict HighPeak Energy ’ s drilling and production activities, as well as HighPeak Energy ’ s ability to dispose of produced water gathered from such activities, which could have a material adverse effect on its future business.
Business and Properties—Regulation of Environmental and Occupational Safety and Health Matters— Hydraulic Fracturing Activities.” 50 Legislation or regulatory initiatives intended to address seismic activity could restrict HighPeak Energy ’ s drilling and production activities, as well as HighPeak Energy ’ s ability to dispose of produced water gathered from such activities, which could have a material adverse effect on its future business.
A significant reduction in cash flows from operations or the availability of credit could materially and adversely affect its ability to achieve its planned growth and operating results. 52 HighPeak Energy ’ s use of seismic data is subject to interpretation and may not accurately identify the presence of crude oil and natural gas, which could adversely affect the results of its drilling operations.
A significant reduction in cash flows from operations or the availability of credit could materially and adversely affect its ability to achieve its planned growth and operating results. 51 HighPeak Energy ’ s use of seismic data is subject to interpretation and may not accurately identify the presence of crude oil and natural gas, which could adversely affect the results of its drilling operations.
HighPeak Energy cannot ensure that it will continue to have ready access to suitable markets for its future crude oil and natural gas production. 44 HighPeak Energy ’ s operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to its business activities.
HighPeak Energy cannot ensure that it will continue to have ready access to suitable markets for its future crude oil and natural gas production. 43 HighPeak Energy ’ s operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to its business activities.
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 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. 31 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.
Failure to comply with those regulations in the future could subject our operators to civil penalty liability, as described in “Items 1 and 2: Business and Properties—Regulation of the Crude Oil and Natural Gas Industry.” 49 The operations of HighPeak Energy are subject to a variety of risks arising from climate change.
Failure to comply with those regulations in the future could subject our operators to civil penalty liability, as described in “Items 1 and 2: Business and Properties—Regulation of the Crude Oil and Natural Gas Industry.” 48 The operations of HighPeak Energy are subject to a variety of risks arising from climate change.
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, 2021 through December 31, 2025, 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, 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, 2021 through December 31, 2025, 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.
Realization of any of these factors could adversely affect our financial condition. 35 HighPeak Energy experiences periods of higher costs when commodity prices rise and inflation may adversely affect our operating results, which could negatively impact our profitability, cash flow and ability to complete development activities as planned.
Realization of any of these factors could adversely affect our financial condition. 34 HighPeak Energy experiences periods of higher costs when commodity prices rise and inflation may adversely affect our operating results, which could negatively impact our profitability, cash flow and ability to complete development activities as planned.
Further, HighPeak Energy’s drilling operations may be curtailed, delayed or cancelled as a result of numerous factors, including: ● unexpected drilling conditions; ● title issues; ● pressure or lost circulation in formations; ● equipment failures or accidents; ● adverse weather conditions; ● compliance with, or changes in, environmental and other governmental or contractual requirements, including the IRA 2022; and ● increases in the cost of, and shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services. 47 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.
Further, HighPeak Energy’s drilling operations may be curtailed, delayed or cancelled as a result of numerous factors, including: ● unexpected drilling conditions; ● title issues; ● pressure or lost circulation in formations; ● equipment failures or accidents; ● adverse weather conditions; ● compliance with, or changes in, environmental and other governmental or contractual requirements; and ● increases in the cost of, and shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services. 46 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 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 entirety of our $1.2 billion of total indebtedness is maturing in 2028. 33 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.
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.
Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. 52 HighPeak Energy ’ s business could be adversely affected by security threats, including cybersecurity threats, and related disruptions.
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.
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 followed by three rate cuts in 2025 and although the Federal Reserve has indicated that such decreases should continue in 2026, uncertainty remains as to when or if such elevated rates may be decreased further.
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.
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, 2025. The Term Loan Credit Agreement also limits the amounts HighPeak Energy can borrow under the Senior Credit Facility Agreement to $100.0 million.
Further, adding new debt could limit HighPeak Energy’s ability to service existing debt service obligations. 33 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.
Further, adding new debt could limit HighPeak Energy’s ability to service existing debt service obligations. 32 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.
To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations. 41 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.
To the extent we transact with counterparties in foreign jurisdictions, we may become subject to such regulations. 40 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.
Still, crude oil and natural gas prices have declined from the highs experienced in second quarter of 2022 and could decrease or increase with any changes in demand due to, among other things, uncertainty and volatility from global supply chain disruptions attributable to the pandemic, the ongoing conflict in Ukraine, the Israel-Hamas conflict, international sanctions, speculation as to future actions by OPEC+, increasing inflation and government efforts to reduce inflation, and possible changes in the overall health of the global economy, including a prolonged recession.
Still, crude oil and natural gas prices have declined from the highs experienced in second quarter of 2022 and could decrease or increase with any changes in demand due to, among other things, uncertainty and volatility from global supply chain disruptions attributable to the pandemic, the ongoing conflict in Ukraine, the Israel-Hamas conflict, U.S. intervention in Venezuela, international sanctions, speculation as to future actions by OPEC+, increasing inflation and government efforts to reduce inflation, and possible changes in the overall health of the global economy, including a prolonged recession.
The Second Amended and Restated Certificate of Incorporation (“A&R Charter”) provides that, unless HighPeak Energy consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (“Court of Chancery”) will, to the fullest extent permitted by applicable law and subject to applicable jurisdictional requirements, be the sole and exclusive forum for (i) any derivative action or proceeding as to which the Delaware General Corporation Law (“DGCL”) confers jurisdiction upon the Court of Chancery, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of HighPeak Energy to HighPeak Energy or its stockholders, (iii) any action asserting a claim against HighPeak Energy, its directors, officers or employees arising pursuant to any provision of the DGCL, the A&R Charter or HighPeak Energy’s bylaws or (iv) any action asserting a claim against HighPeak Energy, its directors, officers or employees that is governed by the internal affairs doctrine, in each case except for such claims as to which (a) the Court of Chancery determines that it does not have personal jurisdiction over an indispensable party, (b) exclusive jurisdiction is vested in a court or forum other than the Court of Chancery or (c) the Court of Chancery does not have subject matter jurisdiction.
The A&R Charter provides that, unless HighPeak Energy consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (“Court of Chancery”) will, to the fullest extent permitted by applicable law and subject to applicable jurisdictional requirements, be the sole and exclusive forum for (i) any derivative action or proceeding as to which the Delaware General Corporation Law (“DGCL”) confers jurisdiction upon the Court of Chancery, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of HighPeak Energy to HighPeak Energy or its stockholders, (iii) any action asserting a claim against HighPeak Energy, its directors, officers or employees arising pursuant to any provision of the DGCL, the A&R Charter or HighPeak Energy’s bylaws or (iv) any action asserting a claim against HighPeak Energy, its directors, officers or employees that is governed by the internal affairs doctrine, in each case except for such claims as to which (a) the Court of Chancery determines that it does not have personal jurisdiction over an indispensable party, (b) exclusive jurisdiction is vested in a court or forum other than the Court of Chancery or (c) the Court of Chancery does not have subject matter jurisdiction.
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 businesses.
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.
Such ratings are used by some investors to inform their investment and voting decisions. Additionally, certain investors use these scores to benchmark businesses against their peers and if a business entity is perceived as lagging, these investors may engage with such entities to require improved ESG disclosure or performance.
Such assessments are used by some investors to inform their investment and voting decisions. Additionally, certain investors use these assessments to benchmark businesses against their peers and if a business entity is perceived as lagging, these investors may engage with such entities to require improved ESG disclosure or performance.
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.
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, conflicts in the Middle East and U.S. intervention in Venezuela; ● 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.
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.
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) for 2025 soon to be adjusted for 2026 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.
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.
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 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, conflicts in the Middle East, U.S. intervention in Venezuela 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.
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.
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, 2025, the Company has delivered approximately 31,594 Bopd under the contract.
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.
Estimated future development costs relating to the development of such PUDs at December 31, 2025 are approximately $1.3 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.
These costs and liabilities could arise under a wide range of federal, state and local environmental laws and regulations, including the following federal laws and their state counterparts, as amended from time to time, among others: ● the CAA, which restricts the emission of air pollutants from many sources, imposes various pre-construction, monitoring and reporting requirements and is relied upon by the EPA as authority for adopting climate change regulatory initiatives relating to GHG emissions; ● the CWA, which regulates discharges of pollutants from facilities and sources to federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; ● the OPA, which imposes liabilities for removal costs and damages arising from a crude oil spill into waters of the United States; 45 ● the SDWA, which ensures the quality of the nations’ public drinking water through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations; ● the RCRA, which imposes requirements for the generation, treatment, storage, transport, disposal and cleanup of non-hazardous, hazardous and solid wastes; ● CERCLA, which imposes liability on generators, transporters and those who arrange for transportation or disposal of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as imposes liability on present and certain past owners and operations of sites where hazardous substance releases have occurred or are threatening to occur; ● the ESA, which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas; and ● OSHA, under which federal Occupational Safety and Health Administration and similar state agencies have promulgated regulations limiting exposures to hazardous substances in the workplace and imposing various worker safety requirements.
These costs and liabilities could arise under a wide range of federal, state and local environmental laws and regulations, including the following federal laws and their state counterparts, as amended from time to time, among others: ● the CAA, which restricts the emission of air pollutants from many sources, imposes various pre-construction, monitoring and reporting requirements; ● the CWA, which regulates discharges of pollutants from facilities and sources to federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; ● the OPA, which imposes liabilities for removal costs and damages arising from a crude oil spill into waters of the United States; 44 ● the SDWA, which ensures the quality of the nations’ public drinking water through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations; ● the RCRA, which imposes requirements for the generation, treatment, storage, transport, disposal and cleanup of non-hazardous, hazardous and solid wastes; ● CERCLA, which imposes liability on generators, transporters and those who arrange for transportation or disposal of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as imposes liability on present and certain past owners and operations of sites where hazardous substance releases have occurred or are threatening to occur; ● the ESA, which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas; and ● OSHA, under which federal Occupational Safety and Health Administration and similar state agencies have promulgated regulations limiting exposures to hazardous substances in the workplace and imposing various worker safety requirements.
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.
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) for 2025 soon to be adjusted for 2026 and disgorgement of profits associated with any violation.
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.
As of December 31, 2025, 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 $93.1 million.
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.
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, implement or make progress against such goals because of potential costs or technical, inaccurate assumptions or operational obstacles.
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 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 and the Middle East and U.S. intervention in Venezuela, 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.
Increases in interest rates could adversely affect HighPeak Energy ’ s business. HighPeak Energy will require continued access to capital and its business and operating results could be harmed by factors such as the availability, terms of and cost of capital, increases in interest rates or a reduction in credit rating.
HighPeak Energy will require continued access to capital and its business and operating results could be harmed by factors such as the availability, terms of and cost of capital, increases in interest rates or a reduction in credit rating.
Certain regulators, such as the SEC and various state agencies, as well as non-governmental organizations and other private actors have filed lawsuits under various securities and consumer protection laws alleging that certain ESG statements, goals or standards were misleading, false or otherwise deceptive.
Such regulators, as well as non-governmental organizations and other private actors, have filed lawsuits under various securities and consumer protection laws alleging that certain ESG statements, goals or standards were misleading, false or otherwise deceptive.
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.
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 extended or renewed. As of December 31, 2025, approximately 72% of HighPeak Energy’s acreage was held by production.
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 one (1) rig development program in the future.
Certain social and inclusion initiatives are the subject of scrutiny by both those calling for the continued advancement of such policies, as well as those who believe they should be curbed, including government actors, and the complex regulatory and legal frameworks applicable to such initiatives continue to evolve.
Certain employment or business initiatives are the subject of scrutiny by both those calling for the continued advancement of such policies, as well as those who believe they should be curbed, including government actors, and the complex regulatory and legal frameworks applicable to such initiatives continue to evolve.
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.
Under previous presidential administrations, the EPA 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.
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 CFTC rules subject violators to a civil penalty of up to the greater of $1,487,712 per day (annually adjusted for inflation) for 2025 soon to be adjusted for 2026 or triple the monetary gain to the person for each violation.
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.
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. 35 Volatility in the political, legal and regulatory environments as a result of the 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, conflicts in the Middle East, U.S. intervention in Venezuela and OPEC+ policy decisions could have a material adverse impact on our business, financial condition or future results.
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.
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 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, conflicts in the Middle East and U.S. intervention in Venezuela.
During 2020, the reduction in global demand caused by COVID-19, coupled with the actions of foreign crude oil producers such as Saudi Arabia and Russia, materially decreased global crude oil prices and generated a surplus of crude oil.
During 2020, a reduction in global demand, coupled with the actions of foreign crude oil producers such as Saudi Arabia and Russia, materially decreased global crude oil prices and generated a surplus of crude oil.
The CFTC’s aggregation rules are now in effect, though CFTC staff have granted relief—until August 12, 2025 or the effective date of any codifying rulemaking—from various conditions and requirements in the final aggregation rules.
The CFTC’s aggregation rules are now in effect, though CFTC staff have granted relief from various conditions and requirements in the final aggregation rules until the effective date of any codifying rulemaking.
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.
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 changes in U.S. energy policy, the ongoing war between Russia and Ukraine, conflicts in the Middle East, U.S. intervention in Venezuela, 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, 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; ● expectations about future commodity prices; and ● U.S. federal, state and local and non-U.S. governmental regulation and taxes.
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.
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. 29 ● 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 war between Russia and Ukraine, conflicts in the Middle East, U.S. intervention in Venezuela, 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. ● 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.
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.
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, although this trend has been declining.
HighPeak Energy’s failure to achieve consolidation savings, to integrate the acquired businesses and assets, including those from the Hannathon and Alamo Acquisitions, into its then-existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on its financial condition and results of operations.
HighPeak Energy’s failure to achieve consolidation savings, to integrate the acquired businesses and assets into its then-existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on its financial condition and results of operations.
In response to these concerns, regulators in some states are seeking to impose additional requirements, including requirements in the permitting of produced water disposal wells or otherwise to assess the relationship between seismicity and the use of such wells.
In response to these concerns, regulators in some states have imposed additional requirements, including requirements in the permitting of produced water disposal wells or otherwise to assess the relationship between seismicity and the use of such wells.
Furthermore, escalations of the Israel-Hamas conflict may result in heightened geopolitical risks for crude oil and natural gas markets, given the significant share of global oil supply in the Middle East.
Furthermore, conflicts in the Middle East may result in heightened geopolitical risks for crude oil and natural gas markets, given the significant share of global oil supply in the Middle East.
For example, the SEC has recently taken enforcement action against companies for ESG-related misconduct, including alleged “greenwashing,” ( i.e. , the process of conveying misleading information or making false claims that overstate potential ESG benefits).
For example, the SEC and various state agencies have taken enforcement action against companies for ESG-related misconduct, including alleged “greenwashing,” ( i.e. , the process of conveying misleading information or making false claims that overstate potential ESG benefits).
If HighPeak Energy has insufficient production to meet the minimum volume commitments under any of these agreements or if HighPeak Energy fails to take delivery of supplies which it committed to, HighPeak Energy’s cash flow from operations will be reduced, which may require HighPeak Energy to reduce or delay its planned investments and capital expenditures, or seek alternative means of financing, all of which may have a material adverse effect on HighPeak Energy’s results of operation. 40 Hedging transactions expose HighPeak Energy to counterparty credit risk and may become more costly or unavailable.
If HighPeak Energy has insufficient production to meet the minimum volume commitments under this agreement, HighPeak Energy’s cash flow from operations will be reduced, which may require HighPeak Energy to reduce or delay its planned investments and capital expenditures, or seek alternative means of financing, all of which may have a material adverse effect on HighPeak Energy’s results of operation. 39 Hedging transactions expose HighPeak Energy to counterparty credit risk and may become more costly or unavailable.
As a consequence, perceived uncertainties related to our future may result in the loss of potential business opportunities and volatility in the market price of our common stock and may make it more difficult for us to attract and retain qualified personnel and business partners. HighPeak Energy may not be able to pay dividends on our common stock.
As a consequence, perceived uncertainties related to our future may result in the loss of potential business opportunities and volatility in the market price of our common stock and may make it more difficult for us to attract and retain qualified personnel and business partners.
As of December 31, 2024, HighPeak Energy was running a two-rig program and expects to average two (2) drilling rigs and approximately one (1) frac crew during 2025 under our current development plan. HighPeak Energy will continue to monitor the extent by which prices continue to increase and/or stabilize as we execute our capital expenditure program.
As of December 31, 2025, HighPeak Energy was running a two-rig program and expects to average one (1) drilling rig and one (1) frac crew during 2026 under our current development plan depending on certain market conditions. HighPeak Energy will continue to monitor the extent by which prices continue to increase and/or stabilize as we execute our capital expenditure program.
Our Board of Director’s determination with respect to any such dividends, including the record date, the payment date and the actual amount of the dividend, will depend upon our profitability and financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that the Board of Directors deems relevant at the time of such determination. 54 The Principal Stockholder Group has significant influence over HighPeak Energy.
Our Board of Director's determination with respect to any such dividends, including the record date, the payment date and the actual amount of the dividend, will depend upon our profitability and financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that the Board of Directors deems relevant at the time of such determination.
Consequently, a low sustainability score could result in exclusion of HighPeak Energy’s stock from consideration by certain investment funds, engagement by investors seeking to improve such scores and a negative perception of HighPeak Energy’s operation by certain investors.
Consequently, a low sustainability score could result in exclusion of HighPeak Energy’s stock from consideration by certain investment funds, restrictions on our ability to obtain insurance, and engagement by investors seeking to improve such assessments and a negative perception of HighPeak Energy’s operation by certain investors.
The ability to make these capital expenditures will be highly dependent on the price of crude oil and available funding of HighPeak Energy. Commodity prices have recovered, with the calendar month average NYMEX WTI price of $71.69 per Bbl and last trading day NYMEX natural gas price of $3.43 per MMBtu for the month of December 2024.
The ability to make these capital expenditures will be highly dependent on the price of crude oil and available funding of HighPeak Energy. Commodity prices have fallen, with the calendar month average NYMEX WTI price of $57.87 per Bbl and last trading day NYMEX natural gas price of $4.424 per MMBtu for the month of December 2025.
The prices HighPeak Energy receives for its crude oil, NGL and natural gas production heavily influence its revenue, profitability, access to capital, future rate of growth and the carrying value of its properties. The markets for crude oil and natural gas have been volatile historically and are likely to remain volatile in the future.
The prices HighPeak Energy receives for its crude oil, NGL and natural gas production heavily influence its revenue, profitability, access to capital, future rate of growth and the carrying value of its properties.
There can be no assurance that HighPeak Energy common stock issued, including issuable upon exercise of our warrants, will remain listed on the Nasdaq, or that HighPeak Energy will be able to comply with the continued listing standards of the Nasdaq.
There can be no assurance that HighPeak Energy common stock issued will remain listed on the Nasdaq, or that HighPeak Energy will be able to comply with the continued listing standards of the Nasdaq. HighPeak Energy’s common stock is currently listed on the Nasdaq.
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.
For example, our reserve volumes and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $65.34 per Bbl of crude oil and NGL and $3.387 per MMBtu of natural gas as of December 31, 2025, which are somewhat higher for crude oil and lower for natural gas than the December 31, 2025 front-month forward pricing of $57.42 per Bbl of crude oil and $3.686 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.
For example, our reserve volumes and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $65.34 per Bbl of crude oil and NGL and $3.387 per MMBtu of natural gas as of December 31, 2025, which are higher for crude oil and lower for natural gas than December 31, 2025 front-month forward pricing of $57.42 per Bbl of crude oil and $3.686 per Mcf of natural gas.
HighPeak Energy is a “ controlled company ” within the meaning of Nasdaq rules and qualifies for exemptions from certain corporate governance requirements. As a result, you do not have the same protections afforded to stockholders of companies that are not exempt from such corporate governance requirements.
The Principal Stockholder Group has significant influence over HighPeak Energy. We are currently a “ controlled company ” within the meaning of Nasdaq rules and qualify for exemptions from certain corporate governance requirements. As a result, stockholders do not have the same protections afforded to stockholders of companies that are not exempt from such corporate governance requirements.
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. Historically, capital and operating costs have risen during periods of increasing crude oil, NGL and natural gas prices.
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.
For example, in May 2024, the dunes sagebrush lizard was listed and, in November 2022, the FWS listed two distinct population segments of the lesser prairie-chicken under the ESA, although this decision has been challenged.
For example, in May 2024, the dunes sagebrush lizard was listed, although this decision has been challenged. And, in November 2022, the FWS listed two distinct population segments of the lesser prairie-chicken under the ESA, although in March 2025, the U.S. District Court for the Western District of Texas vacated the rule for the northern distinct population segment.

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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.
Removed
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.
Removed
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.
Removed
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 changeIssuer 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.
Biggest changeIssuer Purchases of Equity Securities Our common stock repurchase activity for the three months ended December 31, 2025 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, 2025 - October 31, 2025 — $ — — $ 39,907 November 1, 2025 - November 30, 2025 — $ — — $ 39,907 December 1, 2025 - December 31, 2025 256,989 $ 4.74 — $ 39,907 Total 256,989 $ 4.74 — (1) Consists entirely of 256,989 shares of common stock repurchased from officers of the Company in order to satisfy tax withholding requirements.
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.
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 incorporates it by reference to such filing. 63 The graph below compares the cumulative total stockholder return on the Company’s common stock during the period from December 31, 2020 through December 31, 2025, 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.
The Company also approved a special dividend of $0.075 per share of common stock that was paid in July 2021. During the first quarter of 2024, the Company announced an increase in its quarterly cash dividends to $0.04 per share of our common stock.
The Company also approved a special dividend of $0.075 per share of common stock that was paid in July 2021. During the first quarter of 2024, the Company announced an increase in its quarterly cash dividends to $0.04 per share of our common stock which has continued through the fourth quarter of 2025 thus far.
(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.
(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. However, on March 6, 2025, our Board extended the program in its entirety to December 31, 2025.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information HighPeak Energy’s common stock and warrants are listed and traded on the Nasdaq under the symbols “HPK” and “HPKEW,” respectively.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information HighPeak Energy’s common stock is listed and traded on the Nasdaq under the symbol “HPK.” Holders As of March 6, 2026, there were 43 holders of record of HighPeak Energy common stock.
The decision to pay any future dividends is solely within the discretion of, and subject to approval by, our Board.
There can be no assurance that we will resume paying dividends following the expiration of this restriction, and any decision to pay any future dividends is solely within the discretion of, and subject to approval by, our Board.
(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.
The program has not been extended beyond December 31, 2025 and if it is, it may be suspended, modified, or discontinued by the Board at any time. (4) A nondeductible 1% excise tax is imposed on the net value of certain stock repurchases. All dollar amounts presented exclude such excise taxes, as applicable.
Removed
Holders 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.
Added
However, in the first quarter of 2026, the Board elected not to declare a quarterly dividend and suspended the payment of dividends by the Company for the foreseeable future.
Removed
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
Such shares have been cancelled and retired. These shares also do not count toward the dollar value that may yet to be purchased under the plan nor are they subject to the 1% excise tax discussed below. (2) The average price paid per share includes any commissions paid to repurchase stock.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeThe primary components of the $76.1 million decrease in net income include: • a $253.8 million decrease in crude oil, NGL and natural gas revenues due to a 20% decrease in average realized commodity prices per Boe and a 4% decrease in daily sales volumes resulting from natural decline and a decrease in the Company’s drilling and completion activities with the lower commodity price environment, excluding the effects of derivatives; • a $25.4 million increase in loss on extinguishment of debt related to the Company amending its long-term debt in September 2025, extending the maturity and deferring mandatory amortization payments, among other things; • a $20.6 million increase in the Company’s gathering, processing and transportation expense primarily as a result of connecting natural gas in the Signal Peak area to processing and treating facilities, thereby increasing sales volumes as well; • a $15.2 million increase in exploration and abandonment expense primarily due to unsuccessful exploratory well costs, plugging and abandonment expenses and certain abandoned leasehold that the Company chose not to extend; • a $7.2 million increase in crude oil and natural gas production costs related primarily to increased expense workover activities related to our aging well inventory; • a $4.9 million increase in the Company’s general and administrative expense, primarily as a result of the resignation and retirement of our former Chief Executive Officer in September 2025; and • a $4.8 million decrease in interest income related to the Company’s lower cash balance throughout 2025 compared with 2024; Partially offset by: • a $91.4 million increase in the Company’s derivative instruments gain from a loss of $46.5 million in 2024 to a gain of $44.9 million in 2025 primarily as a result of declining commodity prices during 2025; • a $79.0 million decrease in DD&A expense due to a 13% decrease in the DD&A rate from $27.39 to $23.93 per Boe primarily as a result of increased reserves at year end 2024, however the DD&A rate for the three months ended December 31, 2025 was $27.52 due to lower commodity prices at year end 2025 which contributed to lower reserve volumes, in addition to a 4% decrease in daily sales volumes primarily due to natural decline and a decrease in the Company’s drilling and completion activities; • a $28.6 million decrease in the Company’s income tax expense primarily due to the net income realized during 2025 being less than the net income realized during 2024; • a $22.5 million decrease in production and ad valorem taxes primarily attributable to a 20% decrease in operating revenues and a $10.0 million natural gas severance tax refund realized; • a $21.6 million decrease in interest expense primarily related to overall lower rates than 2024 in addition to less amortization of discounts and debt issuance costs; and • a $12.1 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. • During the year ended December 31, 2025, average daily sales volumes totaled 48,297 Boepd, a decrease of 3% from 2024, due to natural decline and decreased drilling and completion activities given the lower commodity price environment. • Weighted average realized crude oil prices per Bbl decreased during the year ended December 31, 2025 to $65.43, excluding the effects of derivatives, compared with $76.42 for 2024.
The Company continues to assess and monitor the impact of these factors and consequences on the Company and its operations. Outlook HighPeak Energy’s financial position and future prospects, including its revenues, operating results, profitability, liquidity, future growth and the value of its assets, depend heavily on prevailing commodity prices.
The Company continues to assess and monitor the impact of these factors and consequences on the Company and its operations. 66 Outlook HighPeak Energy’s financial position and future prospects, including its revenues, operating results, profitability, liquidity, future growth and the value of its assets, depend heavily on prevailing commodity prices.
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.
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. 83 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.
To the extent that the interest rate is fixed, interest rate changes will affect the Term Loan Credit Agreement’s and Senior Credit Facility Agreement’s fair value but will not impact results of operations or cash flows.
To the extent the interest rate is fixed, interest rate changes will affect the Term Loan Credit Agreement’s and Senior Credit Facility Agreement’s fair value but will not impact results of operations or cash flows.
To reduce the impact of fluctuations in crude oil, NGL and natural gas prices on revenues, the Company may periodically enter into derivative contracts with respect to a portion of its estimated crude oil, NGL and natural gas production through various transactions that fix or set a floor price for future prices received. 69 Principal Components of Cost Structure Costs associated with producing crude oil, NGL and natural gas are substantial.
To reduce the impact of fluctuations in crude oil, NGL and natural gas prices on revenues, the Company may periodically enter into derivative contracts with respect to a portion of its estimated crude oil, NGL and natural gas production through various transactions that fix or set a floor price for future prices received. 70 Principal Components of Cost Structure Costs associated with producing crude oil, NGL and natural gas are substantial.
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.
The Company’s proved reserve information included in this Annual Report as of December 31, 2025, 2024 and 2023 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.
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.
Specifically, the Company’s 2023, 2024 and 2025 capital program has been and continues to be impacted by higher prices for steel, diesel, chemicals and services, among other items.
General and administrative expenses (“G&A”) are costs incurred for overhead, including payroll and benefits for corporate staff and costs of maintaining a headquarters, costs of managing production and development operations, IT expenses and audit and other fees for professional services, including legal compliance and acquisition-related expenses. 70 Results of Operations Results of operations should be read together with the Company’s consolidated financial statements and related notes included in “Item 8.
General and administrative expenses (“G&A”) are costs incurred for overhead, including payroll and benefits for corporate staff and costs of maintaining a headquarters, costs of managing production and development operations, IT expenses and audit and other fees for professional services, including legal compliance and acquisition-related expenses. 71 Results of Operations Results of operations should be read together with the Company’s consolidated financial statements and related notes included in “Item 8.
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 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. 82 Proved reserve estimates.
In addition, sanctions and import bans on Russia have been implemented by various countries in response to the war in Ukraine, further impacting global crude oil supply.
Sanctions and import bans on Russia have been implemented by various countries in response to the war in Ukraine, further impacting global crude oil supply.
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, 2021 through December 31, 2025, 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.
In Texas, ad valorem taxes are based on a valuation of the wells on January 1 of a given year. Exploration and abandonments expense.
In Texas, ad valorem taxes are based on a valuation of the wells on January 1 of a given year. 73 Exploration and abandonments expense.
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.
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 2025, the Company did not have any unrecognized tax benefits.
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.
In accordance with SEC requirements, the Company based the 2025 standardized measure on a twelve-month average of commodity prices on the first day of each month in 2025 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 {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.
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.
The Company’s short-term and long-term liquidity requirements consist primarily of (i) capital expenditures, (ii) acquisitions of crude oil and natural gas properties, (iii) payments of contractual obligations, (iv) working capital obligations, and (v) interest payments on and amortization of its indebtedness. Funding for these cash needs may be provided by any combination of the Company’s sources of liquidity.
The Company’s short-term and long-term liquidity requirements consist primarily of (i) capital expenditures, (ii) acquisitions of crude oil and natural gas properties, (iii) payments of other contractual obligations, (iv) working capital obligations, and (v) interest payments on and amortizations of its indebtedness. Funding for these cash needs may be provided by any combination of the Company’s sources of liquidity.
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.
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.
Non-GAAP Financial Measures EBITDAX represents net income before interest expense, interest and other income, income taxes, depletion, depreciation, and amortization, accretion of discount on asset retirement obligations, exploration and abandonment expense, non-cash stock-based compensation expense, noncash derivative gains and losses, other expense, gains and losses on divestitures and certain other items.
Non-GAAP Financial Measures EBITDAX represents net income before interest expense, interest and other income, income taxes, depletion, depreciation, and amortization, accretion of discount on asset retirement obligations, exploration and abandonment expense, non-cash stock-based compensation expense, noncash derivative gains and losses, loss on extinguishment of debt, other expense, gains and losses on divestitures and certain other items.
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.
In February, May, August and November 2025, the Board declared a quarterly dividend of $0.04 per share of common stock outstanding which resulted in a total of $5.0 million, $5.0 million, $5.0 million and $5.0 million, respectively, in dividends being paid on March 25, 2025, June 25, 2025, September 25, 2025 and December 23, 2025, respectively.
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.
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, 2024 filed with the SEC on March 10, 2025 for a discussion of the Company’s 2024 results of operations compared with the Company’s 2023 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.
See the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 10, 2025 for a discussion of the Company ’ s 2024 results of operations compared with the Company ’ s 2023 results of operations.
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.
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. 67 Financial and Operating Performance The Company’s financial and operating performance for the year ended December 31, 2025 included the following highlights: • Net income for the year ended December 31, 2025 was $19.0 million ($0.14 per diluted share) compared with $95.1 million for the year ended December 31, 2024.
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.
Interest Rate Risk. We are exposed to market risk due to the floating interest rates associated with any outstanding balance on the Term Loan Credit Agreement and the Senior Credit Facility Agreement. As of December 31, 2025, we had a $1.2 billion outstanding balance on the Term Loan Credit Agreement and zero outstanding on the Senior Credit Facility Agreement.
The Company remains committed to maintaining as much of its undeveloped acreage leasehold position as possible, but from time to time, certain acreage is not able to be extended at reasonable prices and we are not able to get a drilling rig in the area in time to save the leases for a multitude of reasons.
The Company remains committed to maintaining as much of its undeveloped acreage leasehold position as possible, but from time to time, certain acreage is not able to be extended at reasonable prices and we are not able to get a drilling rig in the area in time to save the leases for a multitude of reasons. 74 Depletion, depreciation and amortization expense.
Global crude oil price levels and inflationary pressures will ultimately depend on various factors that are beyond the Company’s control, such as (i) general economic conditions and increasing expectations that the world may be heading into a global recession, (ii) the ability of OPEC and other crude oil producing nations to manage the global crude oil supply, (iii) the impact of sanctions and import bans on production from Russia and any resulting impact on production from the Israel-Hamas conflict, (iv) the timing and supply impact of any Iranian or Venezuelan sanction relief on their ability to export crude oil, (v) the global supply chain constraints associated with manufacturing and distribution delays, (vi) oilfield service demand and cost inflation, and (vii) political stability of crude oil consuming countries.
Global crude oil price levels and inflationary pressures will ultimately depend on various factors that are beyond the Company’s control, such as (i) general economic conditions and increasing expectations that the world may be heading into a global recession, (ii) the ability of OPEC+ and other crude oil producing nations to manage the global crude oil supply, (iii) the impact of sanctions and import bans on production from Russia and any resulting impact on production from conflicts in the Middle East and U.S. intervention in Venezuela, (iv) the timing and supply impact of any Iranian or Venezuelan sanction relief on their ability to export crude oil, (v) the global supply chain constraints associated with manufacturing and distribution delays, (vi) oilfield service demand and cost inflation, and (vii) political stability of crude oil consuming countries.
Our Term Loan Credit Agreement fixes the interest rate for all of the principal balance for a period of three months and the Senior Credit Facility Agreement allows us to fix the interest rate for all or a portion of the principal balance for a period of up to six months.
Our Term Loan Credit Agreement fixes the interest rate for all of the principal balance of the Term Loan Credit Agreement at the end of each quarter for a period of three months and the Senior Credit Facility Agreement allows us to fix the interest rate for all or a portion of the principal balance for a period of up to six months.
For example, the Company may increase field-level expenditures to optimize their operations, incurring higher expenses in one quarter relative to another, or they may acquire or dispose of properties that have different LOE per Boe. These initiatives would influence overall operating cost and could cause fluctuations when comparing LOE on a period-to-period basis. ● Production and other taxes.
For example, the Company may increase field-level expenditures to optimize their operations, incurring higher expenses in one quarter relative to another, or they may acquire or dispose of properties that have different LOE per Boe. These initiatives would influence overall operating cost and could cause fluctuations when comparing LOE on a period-to-period basis. ● Gathering, Processing and Transportation Expense.
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.
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, 2025, the Company carried unproved property costs of $59.3 million. Management assesses unproved crude oil and natural gas properties for impairment on a project-by-project basis.
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 contained 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 prior to the amendments discussed below.
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.
For the year ended December 31, 2025, sales to the Company’s largest purchaser accounted for approximately 82% of the Company’s total crude oil, NGL and natural gas sales revenues.
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.
As of December 31, 2025, the Company had $1.2 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 $162.1 million as of December 31, 2025.
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.
In addition, the Company accrued an additional combined $86,000 in March 2025, $84,000 in June 2025, $31,000 in September 2025 and $3,000 in December 2025 in dividends on the restricted stock issued to directors, management directors and certain employees that was paid or will be payable upon vesting, assuming no forfeitures. Acquisitions.
Based on year-end 2024 proved reserves, we anticipate our DD&A rate going into 2025 to be in the $23.00 per Boe range, similar to the fourth quarter of 2024. General and administrative expense.
Based on year-end 2025 proved reserves, we anticipate our DD&A rate going into 2026 to be in the $27.52 per Boe range, similar to the fourth quarter of 2025. General and administrative expense.
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.
Investing activities. The decrease in net cash used in investing activities for the year ended December 31, 2025, compared with 2024, was primarily due to a decrease in additions to crude oil and natural gas properties including drilling and completion operations. Financing activities.
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.
In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $531,000 in March 2025, $531,000 in June 2025, $531,000 in September 2025 and $502,000 in December 2025.
The effective income tax rate differs from the statutory rate primarily due to a revision on the deferred tax asset related to certain stock-based compensation and permanent differences between GAAP income and taxable income. See Note 13 of Notes to Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” in this Annual Report for additional information.
The effective income tax rate differs from the statutory rate primarily due to a revision on the deferred tax asset related to certain wage and stock-based compensation and permanent differences between GAAP income and taxable income. See Note 13 of Notes to Consolidated Financial Statements included in “Item 8.
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.
Based on our sales volumes during the year ended December 31, 2025 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, 2025 would have increased (decreased) the Company’s revenues by approximately $12.9 million and a $0.10 per Mcf increase (decrease) in the weighted average natural gas price for the year ended December 31, 2025 would have increased (decreased) the Company’s revenues by approximately $1.6 million.
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.
For the year ended December 31, 2025, approximately 85% and 15% of sales volumes from the assets were attributable to liquids (both crude oil and NGL) and natural gas, respectively.
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.
During the year ended December 31, 2025, the Company incurred a total of $6.7 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 and Natural Gas Industry Considerations.
The Term Loan Credit Agreement matures on September 30, 2026. Loans under the Term Loan Credit Agreement bear interest at a rate per annum equal to the Adjusted Term SOFR (as defined in the Term Loan Credit Agreement) plus an applicable margin of 7.50%.
The Term Loan Credit Agreement was set to mature on September 30, 2026 prior to the amendments discussed below. Loans under the Term Loan Credit Agreement bear interest at a rate per annum equal to the Adjusted Term SOFR (as defined in the Term Loan Credit Agreement) plus an applicable margin of 7.50%.
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’s primary sources of short-term liquidity are (i) cash and cash equivalents, (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) sales of nonstrategic assets.
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.
For the years ended December 31, 2025, 2024 and 2023, revenues from our assets were derived approximately 91%, 95% and 96%, respectively, from crude oil sales and 9%, 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.
Strategic Alternatives On January 23, 2023, the Company announced the intention of its Board to initiate a process to evaluate certain strategic alternatives to maximize shareholder value, including a potential sale of the Company. Texas Capital Securities and Wells Fargo Securities, LLC have been retained as a financial advisors with respect to this strategic alternatives process.
Strategic Alternatives On January 23, 2023, the Company announced the intention of its Board to initiate a process to evaluate certain strategic alternatives to maximize shareholder value, including a potential sale of the Company. Texas Capital Securities was retained as a financial advisor with respect to this strategic alternatives process.
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.
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 one (1) drilling rig program for 2026 depending on certain market conditions.
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.
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 commodity-specific tariffs and the possibility of trade wars, the ongoing war between Russia and Ukraine, conflicts in the Middle East, U.S. intervention in Venezuela, and elevated interest rates and associated policies of the Federal Reserve, which could adversely affect HighPeak Energy.
As a result of crude oil and natural gas supply constraints, there have been significant increases in European energy costs, which have resulted in inflationary pressures throughout Europe, increasing prospects of recession in many countries throughout the continent. In April 2023, OPEC announced production cuts of around 1.16 million Bopd.
As a result of crude oil and natural gas supply constraints, there have been significant increases in European energy costs, which have resulted in inflationary pressures throughout Europe, increasing prospects of recession in many countries throughout the continent.
The above mark-to-market gains and losses and cash settlements relate to crude oil and natural gas derivative swap, enhanced collars and deferred premium put contracts. Income tax expense.
The above mark-to-market gains and losses and cash settlements relate to crude oil and natural gas derivative swap, enhanced collars and deferred premium put contracts. Loss on extinguishment of debt.
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%.
As of December 31, 2025, the assets consisted of two highly contiguous leasehold positions of approximately 154,472 gross (142,560 net) acres, approximately 72% of which were held by production, with an average working interest of 92%.
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.
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, 2025 2024 2023 Net income $ 18,963 $ 95,069 $ 215,866 Interest expense 147,136 168,712 147,901 Interest income (3,847 ) (8,685 ) (2,908 ) Provision for income taxes 7,205 35,851 65,905 Depletion, depreciation and amortization 421,776 500,752 424,424 Accretion of discount 1,075 966 522 Exploration and abandonment expense 16,685 1,476 5,234 Stock-based compensation 619 12,701 25,957 Derivative related noncash activity (30,829 ) 32,218 (51,796 ) Loss on extinguishment of debt 25,437 — 27,300 Other expense 2,836 3,795 8,262 EBITDAX $ 607,056 $ 842,855 $ 866,667 Critical Accounting Estimates The Company prepares its consolidated financial statements for inclusion in this Annual Report in accordance with GAAP.
Weighted average realized NGL prices per Bbl increased during the year ended December 31, 2024 to $22.06, compared with $21.51 for 2023.
Weighted average realized NGL prices per Bbl decreased during the year ended December 31, 2025 to $19.69, compared with $22.06 for 2024.
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.
Weighted average realized natural gas prices per Mcf increased to $1.25 during the year ended December 31, 2025, excluding the effects of derivatives, compared with $0.49 during 2024. • Cash provided by operating activities totaled $511.6 million for the year ended December 31, 2025, compared with $690.4 million for the year ended December 31, 2024. 68 Derivative Financial Instruments Derivative financial instrument exposure.
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.
Derivative gain (loss), net is as follows (in thousands): Year Ended December 31, 2025 2024 Change Noncash gain (loss) on derivative instruments, net $ 30,829 $ (32,218 ) $ 63,047 Cash received (paid) on settlement of derivative instruments, net 14,084 (14,246 ) 28,330 Gain (loss) on derivative instruments, net $ 44,913 $ (46,464 ) $ 91,377 76 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.
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.
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, 2025 is the current market value of the Company’s estimated proved reserves.
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.
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.
The decrease in noncash stock-based compensation expense is due to fewer awards granted in 2024 compared with 2023. Interest expense.
The decrease in noncash stock-based compensation expense is due to fewer awards granted recently. Other expense.
Risk Factors.” Given the dynamic nature of this situation, the Company is maintaining flexibility in its capital plan and will continue to evaluate drilling and completion activity on an economic basis, with future activity levels assessed monthly. Capital resources .
For additional information on the risks, see “Part I, Item 1A. Risk Factors.” The Company is maintaining flexibility in its capital plan and will continue to evaluate drilling and completion activity on an economic basis, with future activity levels assessed monthly. Capital resources .
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.
As of December 31, 2025, HighPeak Energy was developing its properties using two (2) drilling rigs and one (1) frac crew and expects to average one (1) drilling rig and one (1) frac crew during 2026 under our current development plan, depending on certain market conditions. Recent Events Recent management changes. In September 2025, Mr.
In addition, the war between Russia and Ukraine and ongoing conflict between Israel and Hamas and other tensions in the Middle East have resulted in global supply chain disruptions, which has led to significant cost inflation. Such impacts may also be exacerbated by recent developments in the Israel-Hamas conflict.
The ongoing war between Russia and Ukraine, conflicts in the Middle East, and U.S. intervention in Venezuela have resulted in global supply chain disruptions, which has led to significant cost inflation. Such impacts may also be exacerbated by the tariffs and proposed tariffs by the current administration.
As of December 31, 2024, the Company was a party to the following open crude oil derivative financial instruments.
As of December 31, 2025 and factoring in derivative instruments entered into subsequent to year end, the Company was a party to the following open crude oil derivative financial instruments.
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 decrease in net cash flow provided by operating activities for the year ended December 31, 2025, compared with 2024, was primarily due to a decrease in cash flow from the statement of operations related mostly to decreased revenues associated with lower commodity prices and decreased sales volumes as a result of natural decline and decreased drilling and completion activity due to the 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. 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.
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.
For the year ended December 31, 2024, net upward revisions of our proved reserves totaled approximately 18,017 MBoe and for the years ended December 31, 2023 and 2022, net downward revisions of our proved reserves totaled approximately 16,093 MBoe and 9,211 MBoe, respectively. We cannot predict the amounts or timing of future reserve revisions or removals.
For the year ended December 31, 2025, net downward revisions of our proved reserves totaled approximately 11,531 Mboe, for the year ended December 31, 2024, net upward revisions of our proved reserves totaled approximately 18,017 MBoe and for the year ended December 31, 2023 net downward revisions of our proved reserves totaled approximately 16,093 MBoe.
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.
The weighted average prices, excluding the effects of derivatives, are as follows: Year Ended December 31, 2025 2024 % Change Crude oil per Bbl $ 65.43 $ 76.42 (14 )% NGL per Bbl 19.69 22.06 (11 )% Natural gas per Mcf 1.25 0.49 155 % Total per Boe $ 48.98 $ 61.10 (20 )% The decrease in prices for crude oil and NGL can be attributed to an overall lower commodity price environment for crude oil for the year ended December 31, 2025, compared with 2024, partially offset by higher natural gas prices in 2025 compared to 2024.
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.
Year Ended December 31, 2025 2024 Change Provision for income taxes $ 7,205 $ 35,851 $ (28,646 ) Effective income tax rate 27.5 % 27.4 % 0.1 % The change in provision for income taxes during the year ended December 31, 2025, compared with 2024, was due to decreased net income during the year ended December 31, 2025 compared with 2024.
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.
Crude oil and natural gas production costs are as follows (in thousands): Year Ended December 31, 2025 2024 Change Crude oil and natural gas production costs $ 139,492 $ 132,244 $ 7,248 72 Crude oil and natural gas production costs per Boe are as follows: Year Ended December 31, 2025 2024 % Change Lease operating expense $ 6.78 $ 6.76 0 % Workover costs 1.13 0.47 140 % $ 7.91 $ 7.23 9 % Lease operating expense per Boe for 2025 remained relatively flat compared with 2024.
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.
HighPeak Energy expects to fund its forecasted capital expenditures with cash on its consolidated balance sheet, cash generated by operations and borrowing capacity available under its Senior Credit Facility Agreement, if needed.
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.
Exploration and abandonment expense details are as follows (in thousands): Year Ended December 31, 2025 2024 Change Unsuccessful exploratory well costs $ 11,092 $ — $ 11,092 Plugging and abandonment expense 2,950 551 2,399 Abandoned leasehold costs 1,371 35 1,336 Geologic and geophysical personnel costs 1,272 856 416 Geologic and geophysical data costs — 34 (34 ) Exploration and abandonments expense $ 16,685 $ 1,476 $ 15,209 The increase in exploration and abandonment expenses is primarily the result of an $11.1 million unsuccessful exploratory well that was realized in 2025, $2.4 million in additional plugging and abandonment expenses over the prior year due to more wells failing fluid tests and requiring plugging according to state regulations, $1.3 million more 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 2025 and $416,000 in increased geologic and geophysical personnel costs.
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.
Although the Company expects its sources of funding will be adequate to fund its 2026 planned capital expenditures and provide adequate liquidity to fund other needs, however this may be subject to significant uncertainty due to changes in crude oil, NGL and natural gas pricing and potential covenant compliance issues under its debt instruments described below and no assurance can be given that such funding sources will be adequate to meet the Company’s future needs.
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.
During the year ended December 31, 2025, the Company recognized a net derivative gain of $44.9 million, including a $30.8 million mark-to-market gain and $14.1 million in net monthly settlement receipts.
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.
As of December 31, 2025, a $1.00 increase (decrease) in the forward curves associated with our crude oil commodity derivative instruments would have decreased (increased) our net derivative positions for these products by approximately $6.5 million.
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.
Operations and Drilling Highlights Average daily crude oil, NGL and natural gas sales volumes are as follows: Year Ended December 31, 2025 Crude Oil (Bbls) 32,911 NGL (Bbls) 7,931 Natural Gas (Mcf) 44,733 Total (Boe) 48,297 The Company's liquids production was 85% of total production on a Boe basis for the year ended December 31, 2025. 69 Costs incurred are as follows (in thousands): Year Ended December 31, 2025 Unproved property acquisition costs $ 6,724 Proved acquisition costs — Total acquisitions 6,724 Development costs 366,084 Exploration costs 145,679 Total finding and development costs 518,487 Asset retirement obligations 3,823 Total costs incurred $ 522,310 Development/service and exploration/extension drilling activity is as follows: Year Ended December 31, 2025 Development/ Service Exploration/ Extension Beginning wells in progress 13 10 Well spud 30 22 Successful wells (34 ) (17 ) Unsuccessful wells — (1 ) Ending wells in progress 9 14 Results of Operations Results of operations should be read together with the Company’s consolidated financial statements and related notes included in “Item 8.
Commodity prices have improved from historic lows in 2020 resulting from the impacts of the COVID-19 pandemic. Additionally, commodity prices are subject to heightened levels of uncertainty related to geopolitical issues such as the ongoing armed conflict between Russia and Ukraine. The realized prices we receive for our production also depend on numerous factors that are typically beyond our control.
Commodity prices have improved from historic lows in 2020 resulting from the impacts of the COVID-19 pandemic but are significantly down from the past two years. Additionally, commodity prices are subject to heightened levels of uncertainty related to geopolitical issues such as the ongoing war between Russia and Ukraine, conflicts in the Middle East, and U.S. intervention in Venezuela.
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.
The Company’s capital budget for 2026 is expected to be in the range of approximately $255 to $285 million for drilling, completion, facilities and equipping crude oil wells, field infrastructure buildout and other costs, excluding acquisitions. The 2026 capital budget excludes acquisitions, asset retirement obligations, geological and geophysical expenses and general and administrative expenses.
The following table illustrates the variance in revenues attributable to prices versus volumes (in thousands except prices and percentages): Year Ended December 31, 2024 2023 % Change Total operating revenues $ 1,069,414 $ 1,111,293 (4 )% Average daily sales volumes (Boe) 49,960 45,577 10 % Realized price per Boe $ 58.48 $ 66.80 (12 )% Revenue change from prior period due to prices $ (138,408 ) (12 )% Revenue change from prior period due to volumes 96,478 9 % Rounding 51 0 % Total change from prior period revenues $ (41,879 ) As detailed above, the decrease in total operating revenues for the year ended December 31, 2024 compared to the same period in 2023 is the result of a 12% decrease in average realized price per Boe partially offset by a 10% increase in average daily sales volumes primarily as a result of the Company’s successful drilling program.
The following table illustrates the variance in revenues attributable to prices versus volumes (in thousands except prices and percentages): Year Ended December 31, 2025 2024 % Change Total operating revenues $ 863,359 $ 1,117,175 (23 )% Average daily sales volumes (Boe) 48,297 49,960 (3 )% Realized price per Boe $ 48.98 $ 61.10 (20 )% Revenue change from prior period due to prices $ (221,619 ) (20 )% Revenue change from prior period due to volumes (32,178 ) (3 )% Rounding (19 ) 0 % Total change from prior period revenues $ (253,816 ) As detailed above, the decrease in total operating revenues for the year ended December 31, 2025 compared to the same period in 2024 is the result of a 20% decrease in average realized price per Boe in addition to a 3% decrease in average daily sales volumes primarily as a result of natural decline and decreased drilling and completion activities of the Company due to the lower commodity price environment.
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.
General and administrative expense and stock-based compensation expense are as follows (in thousands): Year Ended December 31, 2025 2024 Change General and administrative expense $ 25,270 $ 20,392 $ 4,878 Stock-based compensation expense $ 619 $ 12,701 $ (12,082 ) General and administrative expense per Boe is as follows: Year Ended December 31, 2025 2024 % Change General and administrative expense per Boe $ 1.43 $ 1.12 28 % The increase in general and administrative expense for the year ended December 31, 2025 is primarily as a result of the resignation and retirement of our former Chief Executive Officer which accounted for approximately $3.4 million of the increase and the increase in legal, insurance and audit related expenses.
Other joint owners in the properties operated by the Company could incur portions of the costs represented by these commitments.
The Company’s contractual obligations include leases (primarily related to contracted drilling rigs, equipment and office facilities), capital funding obligations and other liabilities. Other joint owners in the properties operated by the Company could incur portions of the costs represented by these commitments.
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.
Crude oil, NGL and natural gas revenues are as follows (in thousands): Year Ended December 31, 2025 2024 Change Crude oil, NGL and natural gas revenues $ 863,359 $ 1,117,175 $ (253,816 ) Average daily sales volumes are as follows: Year Ended December 31, 2025 2024 % Change Crude Oil (Bbls) 32,911 37,914 (13 )% NGL (Bbls) 7,931 6,241 27 % Natural Gas (Mcf) 44,733 34,828 28 % Total (Boe) 48,297 49,960 (3 )% The decrease in average daily Boe sales volumes for the year ended December 31, 2025, compared with 2024 was due to the natural decline on its producing properties and decreased drilling and completion activities, partially offset by the Company tying in all of its existing production facilities into natural gas gathering, processing and treating facilities.
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 Company’s capital expenditures for the year ended December 31, 2025 were $511.8 million, including the completion and/or continuation of certain one-time infrastructure projects but excluding acquisitions. 79 However, there are many factors and consequences beyond the Company’s control impacting our capital budget, such as political and regulatory uncertainties associated with the new Trump Administration, economic downturn or potential recession, geo-political risks and additional actions by businesses, OPEC or OPEC+, and governments in response to pandemics, that may have an impact on the Company’s future results and drilling plans.
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.
However, they began declining in 2024 and continued to decline in 2025 and early 2026 due to concerns over trade wars and energy tariffs, among other factors, and has decreased from 2022 levels overall, as a result of increased supply outpacing increased demand for each of the commodities we produce.
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.
Production and ad valorem taxes are as follows (in thousands): Year Ended December 31, 2025 2024 Change Production and ad valorem taxes $ 37,224 $ 59,677 $ (22,453 ) Production and ad valorem taxes per Boe are as follows: Year Ended December 31, 2025 2024 % Change Production taxes per Boe $ 1.75 $ 2.87 (39 )% Ad valorem taxes per Boe $ 0.36 $ 0.39 (8 )% $ 2.11 $ 3.26 (35 )% Production taxes per Boe for the year ended December 31, 2025, compared with 2024, decreased primarily due to the 20% overall decrease in realized sales prices and 3% decrease in average daily sales volumes in addition to a $10.0 million natural gas severance tax refund that was realized by taking advantage of previously unrealized marketing deductions allowed by the State of Texas.

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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, 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.
Biggest changeThe average forward prices based on December 31, 2025 market quotes were as follows: Remainder of 2026 Year Ending December 31, 2027 Average forward NYMEX crude oil price per Bbl $ 57.03 $ 57.42 Average forward NYMEX natural gas price per MMBtu $ 3.72 $ 3.88 The average forward purchase prices based on March 6, 2026 market quotes were as follows: Remainder of 2026 Year Ending December 31, 2027 Average forward NYMEX crude oil price per Bbl $ 74.26 $ 65.78 Average forward NYMEX natural gas price per MMBtu $ 3.71 $ 3.84 Credit risk.
Due to this volatility, the Company uses commodity derivative instruments, such as collars, puts, swaps and basis swaps, to hedge price risk associated with a portion of anticipated production.
Due to this volatility, the Company uses commodity derivative instruments, such as collars, swaps, puts, basis swaps and roll swaps, to hedge price risk associated with a portion of anticipated production.
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.
During the period from January 1, 2021 through December 31, 2025, 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.
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.
Interest Rate Risk. At December 31, 2025, we had $1.2 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, 2024 would have resulted in an annual increase in interest expense of approximately $10.8 million. 80
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, 2025 would have resulted in an annual increase in interest expense of approximately $12.0 million. 85
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.
A $1.00 per barrel increase (decrease) in the weighted average crude oil price for the year ended December 31, 2025 would have increased (decreased) the Company’s crude oil and NGL revenues by approximately $12.9 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, 2025 would have increased (decreased) the Company’s natural gas revenues by approximately $1.6 million, excluding the effects of derivatives.

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