HPK - Earnings call transcript Q1 2021

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Operator

Thank you for standing by and welcome to the HighPeak Energy First Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Steven Tholen, Chief Financial Officer, please go ahead, sir.

Steven Tholen

welcome Energy's and conference quarter everyone call. morning to first HighPeak XXXX Good are Jack and Michael HighPeak Chairman Representing today CEO, Hollis. Hightower; President, and

Investor future certain be results plans, found During to HighPeak's financial website. quarter will condition, we participants on performance. relating earnings Presentation may goals, to call May company's make XXXX can today's expectations, first statements and assumptions, of which make release, operations, Today's and our forward-looking call, our reference the

cautionary information in variety the our forward-looking statements filings, So the are risks to please to actual of from regarding and related of which differ beyond the including a refer many expectations due materially SEC our company's reasons, results control. fact that may

today's We will also refer to on call. certain measures non-GAAP financial

in release, on earnings see So which reconciliations please afternoon. Monday the issued was the

Our and on prepared our to Presentation. I four call Jack now May CEO, our Hightower. Investor of over remarks turn the begin will Chairman Slide will

Jack Hightower

Thank this each you, Steve, and one to today's morning of welcome call. every and our I want to you

XXXX quarter had we light in the of Uri. first smooth even operations that Our Winter fact Storm the went of

We efficiency to metrics. peer-leading are our capital build upon and continuing improve

a website, who of through story. middle we growth growth from XXX% the had it, and the relative factor through I And that story. the presentation one on Page X, of the fact to turn important of first the the We as biggest have quarter definitely if are is those growth there – to you go you that's access end the but to May unprecedented

extremely We are excited.

a We're and operating I now first of with very oil value we and responsible margins. In barrels story up production quickly XX% day as growth growth creating high weighted all significant fiscally a May, we're with X,XXX operations. efficient on have to cut. very, the mentioned, half focused We are

most drilling day are XX that. producing are wells with barrels XX and continuing. well growth completed, represents X,XXX we another additional been that but story get them to program. a our growth So have wells have we is we as approximately of online, We'll that That add wells that continuing these

what we is acreage have have We a position. that – continuous allows

and low Of our at oil and or in $XX course definitely had which current leading margins the barrel. X,XXX commodity economics in returns leverage EBITDA committed Recently, our a differentiated a conservative costs sheet. We're management's a contributes is have over to year we cycle keep either are keeping approximately and We no with or of barrel for just peer one best $XX.XX full strategy. financial leading price second to at expertise to nature of our strong industry. day balance have a a level debt. prices, in leading a the low currently barrels That's

If a you which generated Slide basis quarter, generated we first and the of over is profit turn on X, very comparative successful. to million very, in $XX we EBITDAX a

Our was a average almost barrels in quarter X,XXX day. the production

is now million we We phase to system for going the operational. forward. ability lease our we've completed fully on also go And debt and the as company-owned first expenses leading $X.X have zero our That's of operating continue cash to water lower hand. us

able, have a Boe and we are one exit growth, on program, production with XX,XXX to XX,XXX our to rig day. and can to the been continuing So at guidance the we see, tremendous year a we've you have are as track

debt, zero do most structure. but by continue and additional here On five and high operations, the of in date will thing the leading significant program. cost it's in maintaining we've ESG oil and low low are that is reserve able going That's EBITDAX at production balance So wells And efficiency capital we sustain And in drilling we've our Slide cost conservative continue every almost margins on operational cuts to we go focusing we're will while over a which achieving growth our X, while we implementation into maintaining peer-leading we industry. production sheet driven been later XXX% when months. a still to get the in increased low structure, in cost Michael these unprecedented that case our overview. important

to you XXX%, and $XXX annual has with that year. on EBITDAX we're an exit start million we're EBITDAX, gone Our up well where but forward projecting over as going basis the looking

as averaging And XX% we also drilled. now XX,XXX we almost oil the last of were recall, and And investor presentation, continued, up averaging presentation approximately our in XX% mix oil. we're per X,XXX you foot feet. We about lateral our feet maintain

So it's on the wells. going up, of still we've costs in maintain our our terms our been to equip, are facilities drill, very capital to able efficiency and complete, place drilling as cost been and put effective maintain in

expenses as place Slide place take as to we've will up our increases story. in XX% effective more Turning infrastructure operating contributing our to become X, operational also our we've lowered we continue this lease to growth efficiency. in these put our and facilities as that We and put is place production continue

went almost continue Again our XX%. G&A that continue down and to production. will improve we cash happen Our as

unprecedented been that. Our do that margin went over so operating able up we've XX%, really that's to

realized of $XX.XX of margin and have Boe, highest pricing We $XX the of cash industry which the per one Boe. of is in a

drilling in maintaining and what And finance at place feet first drilled, of yet cost. sand, in costs, about up from rigs excited to extremely wells XX,XXX to X we've place facilities we X our have lateral $XXX a been with we're – drilling taking know you costs. average continue to completion, able for able a every all to all the is inflation everything completed, been to equipped, area we've efficiency in going rig opposed length single the some to still still XX,XXX $XXX foot drilling the accomplish pipe, foot and So over quarter feet and and as there X,XXX in

presentation that over with turn operations. President, to So I'm Mike our Hollis, about to talk basic to update, the going

Michael Hollis

like partners job business year such with handled well and for I'd the take the service chance these Uri, and of exceptional folks to had monumental Jack. thank our providers, for the just last Thanks, as Winter we've effective that pandemic lean a performance this the the employees, our all to HighPeak Storm as that workforce.

extremely with completed wells going As XXXX one we mentioned, four of We've system as growth up. from Jack We've debt. mentioned, wells, Ellenburger are we're QX. recycle and very its in Jack SWD. and we've drilled the XXX% fully we volume our the Signal – And more of to inventory back Peak. has fourth the zones planning greatly acreage. got flowing basins done of well a stories Signal quickest We've down horizontal and which of there. drilling on and from wells of out or six our not rig. The length acreage drilled operational have and are Jack these Peak, our mentioned Wolfcamp planned been and our increase few excited one growth We're potential quarter the cleaning the we've flowing to also had we've We've so block Again, in deep can about The well are that that D to running zero got and first to quarter and have of lateral slow four feet with in XX,XXX far. in we is wells in our got Phase the flowback, Southern that any phase. water mentioned come. these the – soon. completed eight X oil two drilling being Wolfcamp these Southern our company C online, D in first machine's in naturally cut two high Wolfcamp

and been to efficiency be As peer our leading. Jack solid mentioned, recent pressures, continues rock despite these inflationary capital has

we'll has If through capital you X, peer pre-combination. efficiency IPO less or and to than continued we been capital and significantly or business walk Post turn improve leading to where efficiency Slide were or combination, margins. you

drill Our drilling dramatically foot equipping and TD. continue best-in-class. current these we've wells of increased days to Since is the IPO the facilitating lateral all-in reduce our $XXX at to length number and completion, a

our differential significantly peers. many high our we completion is cut different. measure differential is why of have by current to BOE explain peaks. with sake, our drilling that, I start is to our comparison per And $XXX peers, to to our to For help unit our peers, of so are oil foot. And cost and margins mean,

is XX% oil rest area of drive the revenue. but between have liquids our of the natural difference are cut the XX% for liquids With life We today, life gas is Oil XX%. County cut your Howard and liquids wells; wells. the the oil these in our and basin of these we Midland Eastern

LOE cost with and a to with our XX% revenue continuing a cash of again that down XX% unit So has come quarter-over-quarter. higher unit our costs quarter-over-quarter, G&A down, measure per down

we're come cut cost higher equal per cash Cash down, that this to again, best-in-class So quarter BOE. margin. $XX.XX oil continue that margin

If Slide XX,XXX metrics, you returns. Wolfcamp generate these phenomenal foot oil at A execution cut, to turn XXX% $XX IRR. cost well low generates and A best-in-class XX, roughly oil high

net of length IRR is footage economics present again one closer of is The approaching of in these single foot, the for peer lateral will wells average million well. value returns. increase year XX,XXX Our A foot extra to Wolfcamp leading XX,XXX that by well XX%, $XX roughly

capital and cost production, growth Our drives well low in value efficient performance and reserves.

and and which The in from oil system will midnight well up pipe, gathering Flat will new team also give the XX% we'll long-term install system the a to got is pressure with important HighPeak price a as improve Top and to agreement in-fuel excrutiatingly burnt signed and and to has It processing crude this to both for revenue expand give emissions of HighPeak, will extremely oil is reduce I gathering thanks our our gas flattop the and eliminate assigned as this marketing If this plans. because meet and agreement, low oil our a attributed our we lot agreement, and We natural will This you gas to compression, our will trucks system our flaring. you for A been move cells need to and associated Slide midstream side. realized of busy that. gas XX, the downtime quarter. system, gathering to be the quarter, as been that development new on we've turn partners, in midstream update. many this system gatherer oil in has long-term a marketing

Our very efficient system It disposal Higher produced our to continue operational all Phase water the deliver being fully We've future. lower in Southern attacked equation. this sides area HighPeak operating the the leading margin both constructed the will in currently Flat of prices, for peer two is how us stimulation realized gives also ability and margin that's SWD recycle Phase of is that in fluids, system provides QX. fluid. X of our cost a to of Top. cost

turn If highlights. you ESG you ESG to January, board at XX, we In our level. established committee our Slide give the

well organization in our system wire evaluating allowed of Our substation surface started XX,XXX preliminary proud we've community to and and future. in more with field can home, reducing And area Again, environment. almost zero trucks for number to with as short zero to new of more and this contract accomplished flexibility renewable SWD electrical we'll over that at exciting post-COVID signed what as our from us employees upgrade, believe Flat a back from a absolutely well build active disclose couldn't office had have use QX. from regulatory local as developments and order of that, is trucks Jack. I double call also the we're our sources to to To date, off energy in safety To-date the getting we're here be such our has emissions as had incidents. We've and remove I'll violations. provide has several a our we in disturbance. continue HighPeak just that in currently that operations. I the road, also the the turn HighPeak, We've Top work

Jack Hightower

team, proud team. also our and have Mike. And to I reiterate am how a of I Thanks lean we want

that BOE getting to per our because started, have We of. basis overall for perspective, costs overall the are necessarily aware investors, any of but G&A a company in G&A our of from we're not a we very lowest terms costs public efficient I'm just on

the program we're to the to continue going the on all we return make world in So investment. have you give that sure best opportunity and

increase go and to our in can access growth, very which continue strong XXX% looking Slide As additional that an sheet in we see XX, area. our a we gives to zero you forward capital our debt as program operations responsible, balance and ability revolver, our growing as at program, and we undrawn with the need us de-risk

about profit the any operating great discussed, will operating line best of we is in we cut, have almost very and that know cut, it's wells any knowledge, companies, days, but we our I profitability margin also that success think Mike and mentioned company but profit contributes base feature one the very as the We to to our We efficiency, but not bottom wells spend South profit well to of a public the Signal drives one company. is the of on it's literally the on down after operational all have oil have in and team be margin new capital lot of five in best of the and that's Mike my time addition terms I I'm that. one basin. this that is XX% in Peak, highest successful don't private – unusual that, but thing going know at XX% of our experience to way have, the

So geologically about and that. about excited acreage very we're very, cover's so extremely position, excited we're that entire our

for our proud we've of and the I company a increased production, the success value and little business increased efficiencies it stock so lower utilize of and has XX successful of within An currently lean more organization I their having that success basically Positive that I'm the earnings, EBITDAX, something first the paying that significantly guess context costs, base investor our quarter tremendous are and every value debt-free, just has of their years a a can call a base. very investor in currency And conference success. bit initially cash in my company and tremendous also all the recognizes had. And importance stream. was

I your more friends, as we even we trading $X multiple where peers just invest project our more what price dollars because what saw to flow, deluded fit we million don't our an we be. EBITDA stock our us and not to can't, need if you mind need offering last to almost time we stock need as tell below of a it's and presently float, You bought long you though having and on see is we are at to

we what of our expectations. from so we excited is And we've accomplished like lot lot and everything and a of movement production and tremendously a feel about upside, have exceeding perspective a we're

for So with that, any I'll open the call questions. up

Operator

Jeff first Instructions] Robertson from comes Research. question [Operator line Water from of Our the Tower

question Your please.

Jeff Robertson

Howard you. early Flat bit relatively your morning. business into might Peak. a Jack, model? Thank whether that County fit Good still Signal can talk Top you and you're little of both about consolidation stage and opportunities in How given

Jack Hightower

run, through Yes. growth great the well Jeff, basically bit, XXX companies drill been we've with a Historically, consolidation. out as the balanced with question. as that's

accretive consolidation have. to hard we us. We're time our consolidated to restricted ability large at County. a from company are lots such selective and opportunities both adjacent our area, area. we also to of out acreage are asset be more what such companies sure have North, Howard and lot are a present grow would over But up A developing. an looking good the East as all that on and down as we're We that in accretive having West an going inventory having South our not good it's we and opportunities in of with and anything both a levered be at moving that making our from to lot in And to

consolidation and Lehman or our in at not we know and we're so. even history, to and years transactions continuing evaluate at did as with brothers, work pure two So look on you back

at, be thoughtful very of has much the looking in sense in be we will good We very to as but what to… restrictive as want we'll have it we be and

Jeff Robertson

over of progress Thanks. to in question on quarter quarter. you the you that LOE, about what a Mike, the you of the see talk Can significant balance made all XXXX? compared and the the fourth drivers

Michael Hollis

owned trucks, There's project electricity a we've of these year. them, one system into SWD and a lot SWDs generators went our our is every company off is third-party lot of big and big of some job taken Again, that have we attack off that right? is very So water of to Getting on and this Absolutely knobs a throughout water ESPs efficient we Jeff. huge. operate. of a that

we will the there. of start we So as have the we've a are see presentation, that dramatically LOE once come time. lower mentioned And we in as we've still the preliminary system upgrade Flat Top built a over out contract signed to you that in, remove to – electrical some generators in substation up get the in will

So to try of as here fluids hit reduce the being on reuse equation. to margin again, from do both it unit address we only for and sides and cost our cost, again, the to to everything not that recycle. want them we these far of we from disposing able try kind We them, as lifting

to from lifting downtime We issues, have both our the reduce we also well of electrical amount as that want as equipment.

to here. zero had wood ESP I'm on So To-date date, have we failures. knocking

in dollars, ESPs had a be the these and have can these a team has time of fantastic to replace some done date. we've zero of we Midland one And job failures the So operating to again, million every quarter roughly equipment.

LOE. So into of factor reducing the all go those for that

in down costs. is with piece high that to new these other we'll And number. The Again, and the rates help their continue wells future. their us average low that lifting do

system and have less production will weather lacked with trucks nice. As have and again, units we'll you we downtime in build oil increased our because out gathering see also

have all of implement So as efficient place. the continue next processes over more become the everything months we that to in we will six

question. from equation. realized cost, well the every can attacking So again, price we're we And as angle as that the great

Jeff Robertson

these in quite with Signal aggressive you more wells, have And with that your it's issues Thanks. any there for become there? infrastructure have two if clearly first later for deal Peak, talk secondly, you plans then with are any at XXXX additional drilling And to might wells? you but about you early can there there down lastly,

Jack Hightower

it's in a place, is the infrastructures gas time – early a was still So or field was there C there. there – Wolfcamp old

we early and lay plan, mostly we all The as Peak would would is we've as 'XXs. to development, the Signal be well in our these course, infrastructure the upgrade come got as in across this and again infrastructure. locations we also as of a gas gathering the and than 'XXs go time the infrastructure wells full out. Signal out in or different systems power takeaway there have oil done development trucked. Again, is mapped out to back what for So was Peak well how will two year Once

we and more gas require generate a in and was lot than more lot what So past. a oil done the power

time, have we're is So upgrade yes, future, everything ready in early place to we'd to but in the go. those and

Jeff Robertson

very Right. Thank you much.

Jack Hightower

bet. You

Operator

Carter [Operator Our DEM. the you. question from with next comes Instructions] Thank line Dunlap of

your question mute. Your line might you please. on have Carter,

Carter Dunlap

better? sorry. that Is I'm

Operator

we Yes. There go.

Carter Dunlap

me. Hi, Pardon guys.

the to XX, spoken on and the XX call, What them. but I You've the layman's those, mean, the not me? deck in takeaway appendix included for XX, including three Slides, in is from the

Jack Hightower

you're a wells know in the there just in eastern the part of side, Carter, the the dip. industry you if to the drilled XXXX, edge that basically, up moved move something Howard County of basin had a County. as Well, back western on moving to there you out growth the was hundred the from closer shelf east. And And west and mentality has we of

carbonates. more have definitely You

have able we with that didn't with is zone zone side XX% carbonate as that was and Slide much limestone thick this almost our can just for any was been We organic, out long, and over, that's was as one as out geologically gets oil it's increased had of since which a oil. thought the you the produced not of profitable it going dense came of carbonate, going it the you oil And into wouldn't and You're tied, from long moved historical as any area knew the realize would And you carbonates, XX. naturally thick. see that of more been be was And all wasn't be oil production in that as have limestone Basin particular and that in to that is recover have The just to itself get the typical XXXX. a that a water, place limestone. working and Slide Well, that that we people XX the the didn't there in but we formation. time Permian to carbonates.

sample, In It's you oil the and coming in it totally in. is level generation out at It oil black. carriage It's actually a the organic. when it's of got the of just look very out high of carbonate. fact, of makes

selective two of reservoirs build knew large having inside put reservoir very decline we down to bad, though So, the and of and which we for XX what is curve treadmill value because the starting with already place. area, and we as D is now the not we inventory in and new really on Wolfcamp we by zones C to have any existed Slide the didn't that's having that at possibility in to on so south in even leads high while just one be know in terms Peak simply already the almost our not then consolidation, the oil the Signal being company our or we'll And can wells. Wolfcamp that showing a of those what prove our we And had. more developing

to that on we geologically, terms So place in in gets north to through in lot C, XX and appendix the to big And and off the of oil in of inventory, it's D throughout very a barrels section further and geophysically place. XX barrels is areas that and the A much back we're way Wolf up place physically, million in per in in the oil of the our south. looking the area that petrophysical million XX and in a just to have and our show flush XX Spraberry inventory, potential a And XX and and numbers. decade Wolfcamp at the you all

Carter Dunlap

I as about thank but answer robust very of expected, you I replay to the sort make was to all, have That to could much. have I'll sure as it listen an

Jack Hightower

you. thank Okay,

Steven Tholen

Thank you.

Operator

today's Thank Thank for and conclude participation. as question-and-answer ladies you. well you, This gentlemen, your program. does the session as

You may day. Good now disconnect.

HighPeak Energy (HPK) 18 May 212021 Q1 Earnings call transcript