Q1 2025 HighPeak Energy Inc Earnings Call
Speaker Change: Hello, and welcome to HighPeak Energy 2025 First Quarter Earnings Conference Call.
Speaker Change: At this time, all participants on a misson only mode. After the speaker's presentation, there will be a question and an intercession. To ask the question during the session, you can need to press star one on your telephone. You will then hear an automated message advising your hand is raised.
To withdraw your question, please first start one more again.
Speaker Change: I will now like to turn the conference over to the CFO , Steven Tholen, you may begin.
Steven Tholen: Good morning, everyone, and welcome to HighPeak Energy's first quarter, 2025 Earnings Call.
Steven Tholen: Representative Michael Hollis, Vice President of Business Development, Ryan Hightower, and I'm Steven Tholen, the Chief Financial Officer.
Steven Tholen: During today's call, we may refer to our May Investor presentation and our first quarter earnings release, which can be found on HightPeak's website.
Speaker Change: Today's call participants may make certain forward-looking statements relating to the company's financial condition, results of operations, expectations, plans, goals, assumptions and future
So please refer to the cautionary information regarding forward-looking statements.
Speaker Change: and related risks in the company's SEC filings, including the fact that actual results may differ materially from our expectations due to a variety of reasons, many of which are beyond our control.
Speaker Change: We will also refer to certain non-GAF financial measures on today's call, so please see the recommendations in the earnings release in our May investor presentation.
Speaker Change: I will now turn the call over to our president, Michael Hollis.
Michael Hollis: Thank you, Steve. Good morning, ladies and gentlemen, and thank you for joining us today for HighPeak Energy's first quarter call.
Speaker Change: Our conference call will sound a little different today as Jack is at home recuperating. He's had a long, illustrious history of writing and cutting boards competitions.
which is his other passion outside of work.
Speaker Change: For those who are not familiar with the sport, quarter horses are among the most athletic animals on the planet, and recently one got the better of him during a practice session.
Speaker Change: The good news is he's going to be just fine. He's doing some physical therapy so that he can get back in the proverbial saddle as fast as possible.
Speaker Change: in the meantime, it's business as usual around here at Hightee as well as we all remain fully dedicated to guiding our company through this current volatile
[inaudible]
Speaker Change: Also, we are changing from our historical precedent of referring to each slide as we go through this call, but our comments will stay generally consistent and follow our May investor presentation.
with that housekeeping out of the way. Let's talk, I.P.
Speaker Change: We're all to a strong start in 2025 as we delivered another very solid quarter.
Speaker Change: Our production average over 53,000 BOEs a day, beating guidance and consensus estimates.
Speaker Change: This is approximately a 6% increase versus Q4 while maintaining the same oil percentage per
Speaker Change: Our strong production rate allowed HighPeak to generate almost $200 million of EBITDAQ during the quarter.
Speaker Change: which was an increase of approximately 10% compared to the fourth quarter at nearly the same weighted average oil price.
Speaker Change: Our cash margins remain healthy and were aided by roughly 3% drop at least operating expenses
Speaker Change: This is a great time to give a shout out to the HighPeak Film Organization. They are always finding new and innovative ways to reduce costs.
Speaker Change: This is an ongoing effort and I expect it will continue into the future.
Speaker Change: Another exciting thing that we will discuss is that we are realizing much higher levels of operating efficiencies in our development program compared to our historical averages.
Speaker Change: Given the strong start to the year, we are narrowing our production guide and raising the bottom end and increasing the midpoint of beaten rays. Now for an operational update.
Speaker Change: As I previously mentioned, our operating team is continuing to realize more and more efficiencies.
especially on the drilling side of the equation.
Speaker Change: Over the past two quarters, our spud-to-spud timing has dropped from an average of 14 days to about 11 days, which is over 20% faster than our previous expectations.
So what does that mean for HighPeak?
Speaker Change: This faster pace translates to a single rig drilling over 30 wells per year compared to our average over the past two years of about 25.
Speaker Change: As you would expect, there are some associated reductions to our daily variable drilling cost which translates to lower cost per foot.
Speaker Change: These drilling efficiencies are sticky and we expect them to continue on a go-forward basis.
Speaker Change: So let's talk about what we accomplished in our first quarter and walk you through our
Speaker Change: I'm proud to report that our first quarter DNC costs were in line with our 2025 expectations and further cost concessions are on the way.
Speaker Change: HighPeak's drilling team has significantly outperformed expectations, increased drilling efficiencies have allowed HighPeak to drill more wells than originally scheduled during the quarter.
Speaker Change: We actually spud 20 wells during the quarter, while rig releasing 16, compared to our initial plan of 12.
Speaker Change: In addition, we outlined on our March conference call our 2025 Infrastructure CapEx was heavily first half-weighted with the majority coming in the first quarter.
Speaker Change: I'm also proud to report that the implementation of these projects went smoothly and within budget.
Speaker Change: This investment will continue to support our peer leading margins and will also provide us with operational flexibility and optionality.
Speaker Change: As one would expect, with our increased drilling efficiencies, we were starting to build additional drilled but uncompleted inventory as our two-rig program without pacing our one-track group.
Speaker Change: This is evidenced by the increase in our work in progress, well count of 28 at the end of the first quarter.
Speaker Change: We typically manage the duck count to only have true operational ducks. HightPeak does not like to let invested capital sit unproductive.
Speaker Change: We made the decision to accelerate the completion of a four-well pad in the first quarter, when oil was over $70 a barrel.
Speaker Change: One side note for those of you studying our first quarter-turned-in line numbers.
Speaker Change: These additional four wells were not online at the end of the quarter.
Speaker Change: So they will actually show up in our Q2 till numbers, but the completion dollars were spent in Q1.
Speaker Change: As we detailed in our 2025 Capital Budget Guide, we planned on a heavy first quarter spin rate.
Speaker Change: In March, we estimated we would deploy roughly 35% of our yearly CAPEX budget in Q1.
Speaker Change: We were able to do more work with the same equipment. We accomplished everything that we laid out to do plus we drilled and completed the four additional wells.
Disequated to 38%.
of our full-year budget.
Speaker Change: By accomplishing all of this in Q1, we have set HighPeak Up for a great 2025 while still generating positive free cash flow during the quarter.
Speaker Change: In fact, if you remove the CAPEX associated with the additional 4-well pad, we actually would have come in under our expected spend for the quarter.
[inaudible]
Speaker Change: It's great that the HighPeak Development Machine is running more efficient than ever, but what does that mean looking forward?
Speaker Change: Effective immediately, we are dropping one of our two rigs for a period of four months, May through August .
Speaker Change: while also modifying our completion schedule with occasional pauses to track our level of operational ducts.
[inaudible]
Speaker Change: If we were to continue our two-rig program at the current cadence, we would expect to drill approximately 65 wells this year.
which is 30% more than our budgeted drilling activity.
Given the current macro-environment,
Speaker Change: Now is not the time to lean in and drill more wells in our initial plant.
Speaker Change: Excuse me, we are going to take our foot off the gas, and like we've always said, we will be fast on the break.
and Slow On The Accelerator.
Speaker Change: The overall effect of this updated development plan will allow us to stay within our original guided 2025 activity levels.
Speaker Change: Due to our increased operational efficiencies, we will still expect to complete the same number of wells as we originally guided to back in March.
Speaker Change: We also feel confident that this revised plan we will stay within our capital budget guide for the year.
Speaker Change: Additionally, I do want to stress that if the current market environment worsens
Speaker Change: or commodity prices further weakened. We always have the ability to modify our development program.
Speaker Change: HighPeak has total flexibility from a land and operations perspective to reduce the budget and leave a rig down for longer.
Speaker Change: or make any other appropriate changes to slow our capital spending, depending on market conditions.
Speaker Change: So speaking of the current market environment, I'll talk a little bit about its effect on our current drilling and completion calls.
Terrace
Speaker Change: Who knew that one tweet could move global markets and affect the business world to the extent it has over the past month?
Speaker Change: For HighPeak, the biggest effect tariffs have on our immediate cost is on OCTG products, i.e. casing and tubular goods, the steel products that we use in drilling and completing our wells.
Speaker Change: Our cost of tubular goods for the remainder of the year is up roughly 3%.
OTCG Goods make up approximately 8% of our typical AFE.
Speaker Change: So, the effect of a 25% tariff on all of our two-vieler goods could increase our overall AFB by roughly 2%.
if it applied to all of our tubular goods.
Speaker Change: HighPeak thankfully utilizes U.S. made steel products for the vast majority of our OTCG needs.
Speaker Change: Hence, they are not subject to import tariffs and the effect on our cost is less than what many of our peers are facing.
Speaker Change: The good news, we are seeing savings across the board on all AFE items except the OTCG products.
Speaker Change: Presently, we're seeing low single digit overall declines and well cost, inclusive of those increased OTCG prices.
Speaker Change: Lastly, the prescribed completion pauses and the softness in the OFS market will make it possible for HighPeak to implement some further efficiency changes to our 2025 plan.
Speaker Change: HighPeak will begin FIMO-FRAC operations on some of our multi-well pads, further reducing our already peer-leading per-foot development cost.
Speaker Change: The operations team have done a fantastic job over the last couple years incrementally
Speaker Change: We have been picking up pennies and nickels everywhere we can.
Speaker Change: It's been quite some time since we had dollar bills worth of efficiencies to pick up.
Speaker Change: but Simon Fracking represents a dollar bill size set change in our call structure.
Speaker Change: and for those of you updating your models, please note that we have not factored in any of these savings into our 2025 capital budget.
Speaker Change: This market continues to remain very volatile, and we'd like to operate with a conservative mindset.
Ryan Hightower: At this point, I would like to turn the call over to Ryan Hightower.
Ryan Hightower: Yeah, thanks Mike, and good morning everyone. As a quick recap, as many of you know, we built HightPeak the old-fashioned way.
Ryan Hightower: Primarily through grassroots leasing and production growth through the droplet, which is not the norm in today's public EMP world.
Ryan Hightower: And as you may recall, in our March Investor presentation, we included a slide detailing our year in 2024 reserves, which showed HightPeak having a 345% reserve replacement ratio last year.
Ryan Hightower: and now that all of our public peers have filed their 10Ks in year-end reserve reports, we wanted to go back and study how HighPeak measured up compared to the peer group.
Ryan Hightower: So we looked at all of our peers' reserve replacement ratios over the last three years.
Ryan Hightower: It's a small chart, but on slide 9 of our investor presentation, you can see that HightPeak has realized a 400% reserve replacement ratio over the past three years.
Ryan Hightower: which is almost exclusively driven through organic growth. You can also see how our reserve replacement, both from an overall and an organic perspective, compares favorably to the peer group.
Ryan Hightower: We also wanted to look at where the industry and HighPeak stand from a profitability standpoint at today's near $60 oil price.
Ryan Hightower: The other chart on Slide 9 shows everyone's three-year, all-in, finding and development costs. Plus, their operating costs, while adjusting each respective company's realized oil price to $60 a barrel.
Ryan Hightower: The results of this comparison show that as a whole the peer group is marginally profitable at today's prices.
Ryan Hightower: However, it also highlights HighPeak's outside level of profitability due to our superior cost structure and higher profit margins per B.O.E.
Michael Hollis: and while it's great that we can develop profitable reserves at this price point, as Mike said, we don't think it's the appropriate time to really lean in and increase activity in this current market.
Michael Hollis: Two other things to note. First, we believe that using all-in F&D costs is appropriate because whether you're an equity investor or a debt investor, not only are you investing in a particular asset but you're also investing in management's ability to allocate capital resources.
Michael Hollis: whether the capital is invested through drilling activity, or through acquisitions, or a combination of the two.
Michael Hollis: and as shown on the chart, HighPeak has successfully allocated capital over the past three years.
Michael Hollis: 2nd, we get a lot of in-bounds from investors who acknowledge that we do have really great single-well economics, but that over the past few years, we've had to invest quite a bit of capital in our infrastructure system in order to realize those great single-well economics.
Michael Hollis: This chart includes our total capex, which is inclusive of our infrastructure investment. And as you can see, from an all-end capex perspective, HighPeak stacks up very favorably to the peer group.
Michael Hollis: and moving forward, it's also important to remember that our infrastructure budget will draw out a significant lead.
Michael Hollis: The investment we've made over the last few years will drive HighPeak's capital efficiency for the life of our field.
Michael Hollis: Here at HighPeak, we've always been ahead of the curve from a technical perspective, which is what afforded us the opportunity to get in front of the broader industry and put our position together organically.
Michael Hollis: This was driven by management's extensive in-base and experience, local geologic knowledge and the amount of technical work we conducted on our area.
Michael Hollis: We've always been on the forefront, having to educate and improve to the rest of the industry that our rock is good.
So now, after drilling over 350 welds,
Targeting six different benches.
and producing 80 million DOE's.
Michael Hollis: It's nice to see the industry and various third-party research groups beginning to recognize the value of our position and the extent of which we have expanded the boundary of the play in our operating areas.
Michael Hollis: I'll now turn the call back over to Mike to wrap things up. Thanks, Ryan. In closing, we typically would pass to Jack. So I'll paraphrase some of his comments as they pertain to HighPeak's core pillars.
Improving Corporate Efficiency [inaudible]
Michael Hollis: Our operations are running smoother and more efficiently than ever, while continuing to keep her calls in line with her expectations.
Michael Hollis: Additionally, we see further savings on the horizon, which we would expect to lead to increase overall levels of corporate efficiency.
Maintaining Capital Discipline [inaudible]
Michael Hollis: Due to the current state of global economic uncertainty and its impact on oil prices, we have taken the proactive step to modify our development plan.
Michael Hollis: Again, due to our significant realized efficiency gains, we still expect to complete the same level of development activity this year.
Michael Hollis: We will remain and continue to monitor market conditions, and we will remain flexible to further adjust our program as conditions warrant, optimizing our capital structure.
Michael Hollis: One of our main objectives this year is optimizing our capital structure.
Michael Hollis: and we remain committed to executing our plan once the capital markets stabilized.
Michael Hollis: In the meantime, we are currently in a healthy financial position with no near-term dead maturities, and we are taking proactive steps to keep our balance sheet strong.
Creating shareholder value.
This is the time to state nimble and prudent.
Michael Hollis: which our high quality asset base allows us to do. As large owners of the company, management is fully aligned with our shareholders and has a long-term outlook on value creation.
Michael Hollis: It's important to remember that while markets may be temporarily volatile, the fundamental value of our asset base is still strong.
Michael Hollis: We are fortunate to have a long runway of high-value drilling locations at a time when core inventory is becoming increasingly scarce.
Michael Hollis: and we have the ultimate flexibility to develop our inventory when market conditions provide for realizing maximum value.
Michael Hollis: Thank you and with our comments, now complete. I'll open up the call to questions from our analysts.
Speaker Change: Thank you. Ladies and gentlemen, as it reminds us to ask the question, please press start one on your telephone, then wait for your name to be announced. To withdraw your question, please press start one on again. Please stand by while we compile the Q&A roster.
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Thank you, everyone.
Speaker Change: Our first question comes from the line of Noah Hengness with Bank of America, Yalan is open.
Noor Hungness: More than guys. For my first question here, I was hoping you could...
Speaker Change: Talk about what kind of impact you are seeing or you think you'll see on the use of IMOFRAC and what the per-foot DNC cost kind of impact is once that gets implemented.
Speaker Change: Great question. Again, like I said in the prepared remark, it's been a while since we've been able to pick up what I call dollar bill size the efficiencies in our program because
Speaker Change: You get pretty mature at a basin, you try to implement all of the tools that you have at your disposal.
Speaker Change: So, again, when we were running two rigs and one frack for you.
Speaker Change: At the pace we were drilling in the last couple years with two rigs, it fit with just what we call zipper fracking, which would be fracking single wells at a time, with the frack frug. It was a very balanced equilibrium kind of program.
Speaker Change: So fast forward to where we are today, obviously slowing down the program, taking some pauses in our fractal schedule allows us to be able to pause a little longer and then be able to [inaudible]
Speaker Change: You know, utilizing the final frack technique, that's just basically we're going to frack too well at a time, sipping between four wells too at a time. So what that does is that reduces the amount of days and time and cost.
Speaker Change: that you have for completing those same four wells. I'll put it in perspective for you.
Speaker Change: Fracking four wells that assume they're 15,000 foot laterals in our area typically takes 25 to 28 days to complete fracking those four wells.
Speaker Change: Doing it with the Simon Frank process, we'll cut that in half, call it somewhere in the 11 to 14 days to fry them.
Speaker Change: So, again, all of your variable calls change, everything goes into that. So, for a 15,000 foot lateral.
Speaker Change: You will typically see about a $4 million of savings per well.
Speaker Change: So on that pad, we would assume about a million dollars of savings.
Speaker Change: for the entire DC-E&F process. So again, if you took a million dollars over, that would be 60,000 lateral feet, that'll give you an idea of a dollar per foot savings at the final track process.
Will Help
Speaker Change: Now, there's some ancillary benefits to doing thymal fract. It's been a while since companies have actually made that change, right? Everybody does it now because they have bigger programs, more rigs to where you can feed a thymal fract prune.
Bye-bye.
Speaker Change: If you go back four or five years ago, what most operators experienced was whenever you did that, one...
Speaker Change: You always have a certain amount of your production that's impacted by the fracks of nearby new wells, right? We call that watered out. So instead of watering out all set production for 28 days, as we go forward, we'll only be watering those out for half that time.
Speaker Change: Also, you know, again, we get to bring that production on, so throughout this year, those wells will be on production longer than they would have been with our original plan.
Speaker Change: You also get the benefit of bringing forward a couple of these pads in time because you only took 14 days to crack them, and then we do the rest of our work to drill them out with the pump in and turn them on, so we will pull forward a little bit of production from a timing standpoint into 2025.
Speaker Change: So, again, when you look at the benefits of doing this, not only are we drilling a little faster, right, that you know we're now 25% plus faster than we were a year ago, there's variable call savings on the drilling front.
Speaker Change: and then on the completion side, obviously cheaper dollar per foot to complete the wealth exactly the same way you are going to complete them, getting them online, faster, and watering out less. So it's kind of, you know, it's a win, win, win, win in the whole process.
[inaudible]
Bye.
Speaker Change: that's all color. And then for my second question, I was hoping you guys could give us maybe a little update on where we do need to well results are in Borden County and kind of how you see productivity for those wells comparing to kind of the legacy stuff for the stuff that you are drilling and completing in northern Howard County.
Speaker Change: You bet. Now, great question though. Obviously, you know, we're very excited about the well-reformance that we're seeing up in Borden County.
Speaker Change: Today we've got eight wells that have been producing for quite some time. We've got a four-well pad up in boarding in order to order the porch of her boy.
that's been in flow back now for...
Speaker Change: a week or two that looked just like the original eight wells, and I guess that's a good point.
Speaker Change: If you go back to fourth quarter presentation that we'd put out, we have some detail on
Speaker Change: What our most recent wells look like in kind of a 180 day flowback period, you know, again roughly 20% better than what we had the year prior. Again, those eight wells were in that mix and part of that production performance.
Speaker Change: The new four wells that we are flowing back today look just like, and that's in three different zones that's Wolf Camp A.
Speaker Change: Lower Scravery, and Middle Scravery, and all three of those zones are performing.
Speaker Change: Just as we expected, and are part of that 20% improvement in oil production in the first 180 days.
Speaker Change: and also we have a four-wheel pad that's right off set some of this production that will be our very first cymo-frac pad. So in the next couple weeks, we will be implementing, you know, that first cymo-frac.
It's up, guys. Thank you. You bet. Thank you. You know what?
Please stand by for our next question.
Speaker Change: Our next question comes from the line of Jeff Robertson with Water Tower Research. The line is open.
Jeff Robertson: Thank you. Mike, you mentioned as a middle spray barrier in Borden County and I remember in the fourth quarter conference calls you talked about the
Jeff Robertson: Economic Development or Development locations with the Middle Spraybury. Can you give an update on where you stand with that?
Mike: Absolutely, Jeff. You know, the middle spray barrier is a very exciting development for Heidi. You know, obviously today we only have two middle spray marries that are producing. You know, both of those wells are...
Mike: Well below $50 break even prices think kind of low, you know, low single or low 40s for a break even. Now again, they're right in the middle of our northern block that we call flat top.
Mike: Has drilled five additional middle spray berries. So it's a little early in the game to be able to say all of the well that we have in our inventory. There's about 200 middle spray very well that we have an inventory up in our flat top area.
Mike: So, I would think over the next several quarters as we drill and prove up.
Mike: The same kind of performance across our entire flat top acreage that we would be able to feel comfortable for the street.
Mike: that we would be able to let them know, hey, these wells are now sub-fifty dollar break even and again about 200 of them would move over into that category. So today we sit at about a thousand wells that are below $50 break even and you know obviously we're drilling about 50 a year. So I would think over the next
Mike: Call it year, so we would be able to move 200 additional wells into that category of stuff, $50 break even. So, again, as we're developing at the pace we are over the next couple of years.
Mike: It would be reasonable to expect that our sub-50 dollar break even inventory count will actually go up.
[inaudible]
Mike: if you look at the changes you're making to the 2025 development plan with the great dropping the rigs in the summertime and...
Speaker Change: and creating some space in your completion calendar to be able to use Simul Cracks and the benefits play out the way you think they will. How will that have an impact on your GoFour development plan in 2026 in terms of being able to keep those efficiencies that you're gaining this year?
Jeff Robertson: Jeff, that's a great question. Obviously, we've got to work very closely with our vendor partners.
Jeff Robertson: So today's market makes it obviously very easy to kind of perturb this system. If everybody was very busy and all of the fractures had worked.
Jeff Robertson: to put pauses in place. You would have to work with that vendor much more closely. So again, if you look into 2026, if the market improved.
Jeff Robertson: that Fract Company doesn't have their equipment sitting and not generating revenue for too long of a period.
Jeff Robertson: But again, that's only going to be predicated on everyone getting busier, and again, you would have hopefully some more bright support there. So we're very encouraged, and we're working with our partners very closely, that we will be able to keep this.
Jeff Robertson: Efficiency built into the system and have it sticky going forward.
Speaker Change: and you raised the floor of production guidance to 48,000 BLE days. That mainly due to first quarter performance without factoring in any potential benefits for maybe decreased.
Jeff Robertson: Down time as you move towards Sommel Pracking in the second half of the year.
Jeff Robertson: You bet, Jeff. So, you know, again, there's been a whole lot of volatility and changes in the market over the last call it month and a half, right? So, when we look at changing guidance, we try to be extremely conservative.
Jeff Robertson: Again, it's always a good thing to be able to beat and raise.
Jeff Robertson: So with the really strong first quarter production that we had, all of the efficiencies that we talked about, so again we plan to do the same work.
Jeff Robertson: In 2025 that we originally laid out to do, we just did a little bit of that work sooner in the Q1 and what that means is you have some wealth that will be producing longer in 2025 than they would have.
Read through to that would be slightly higher yearly production.
Jeff Robertson: It would be reasonable to assume, come Q2, that we're looking forward to the opportunity of continuing to have very strong production, and that we would be able to reach out and to say, we're now tightening up again the cat X.
Jeff Robertson: Spin and range, and we're also increasing our production levels. Again, a good way that we look at this is...
50,000 B.O.E.s a day flat
Again, we're doing...
Jeff Robertson: you know large pad development so there will be some some lumpiness in that number you know 53 the next quarter could be 50 could be 49 and then you may have another 53 in there but I think that average is going to be well above the midpoint of our guided range.
Jeff Robertson: and on the balance sheet, I think you mentioned on the last call that with the Infrastructure Investment in 2025.
Jeff Robertson: that could clear the way for less maintenance capital requirements in 2026, which would potentially result in more free cash flow.
Jeff Robertson: Is it how much of the balance sheet recapitalization goal is to position it so that you have the flexibility to reduce leverage from time to time with free cash flow at par, as opposed to dealing with the amortization on the current term loan?
Speaker Change: Jeff, you know, again, a lot to unpack there, but this is all great stuff.
You know, corporate efficiency is what the goal is here.
That's right, we've over the last four years as-
Speaker Change: You know, Ryan kind of walked everybody through the prepared remark.
Speaker Change: that breakeven sub $50. We wanted life-a-filled infrastructure in place such that we could...
Speaker Change: Increased, decreased as we needed in as market conditions dictated throughout the life of this field.
Speaker Change: So, you bring up a great point. If you look at CAPEX spent at each one of the years or quarters in IVX history, a very large portion of that CAPEX every quarter has been infrastructure.
Today, the infrastructure is in place.
Speaker Change: We, as we go into, and you're going to see that, you know, for the rest of this year. Again, with our CAPEX spin that we had in Q1 of $179 million, when you look at the midpoint of our CAPEX range.
Speaker Change: and you subtract the 180 from it, or 179, and you divide by 3, you're going to have a pretty good idea of what we're going to be spending for Quartz.
You know, again, it's going to be somewhere in the-
Speaker Change: $100 million to $110 million, we would spend in each one of these quarters still producing 50 plus thousand B.O.E.'s a day, again in any model that you're running at any reasonable oil price, you're going to see that we're going to generate.
Speaker Change: Significant free cash flow. So your second kind of part of that question, I think, is very important. One, we want to optimize our capital structure for HightPeak.
Speaker Change: Again, typically that would mean a normal way financing with high yield bond and be reasonable with respect that you have a...
Speaker Change: Fairly large RBL. And again, that RBL typically you like to keep that well under 50% drawn when you to be kind of an awkward and awkward role.
Speaker Change: So with that, we would have significant ability over the next couple of years to pay down our net debt at par
Speaker Change: And again, a typical, you know, normal way high-yield bond usually has a two-year kind of no-called provision. So we would have that kind of two-year period to pay down debt.
Speaker Change: on the RBL at PAR. So again, allowing us a whole lot of flexibility with our to be able to utilize that large amount of free cash flow we're going to be generating. So great questions, Jeff.
Thank you. Be back. Thank you.
Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue. That does conclude today's conference call. Thank you for your participation. You may now disconnect.
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