Q4 2025 Highpeak Energy Inc Earnings Call

March 12, 2026

Operator 1: Good day, and thank you for standing by. Welcome to the HighPeak 2025 Q4 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steven Tholen, CFO. Please go ahead.

Operator: Good day, and thank you for standing by. Welcome to the HighPeak 2025 Q4 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steven Tholen, CFO. Please go ahead.

Speaker #2: Good day and thank you for standing by . Welcome to the High Peak 2025 fourth quarter Earnings Conference call At this time , all participants are in a listen only mode .

Speaker #2: After the speaker's presentation , there will be a question and answer session to ask a question . During the session , you'll need to press star one on your telephone .

Speaker #2: You will then hear an automated message advising your hand is raised to withdraw your question , please press star one one again , please be advised , today's conference is being recorded .

Speaker #2: I would like to turn the conference over to your speaker today, Steven Tholen, CFO. Please go ahead.

Steven Tholen: Good morning, everyone, and welcome to HighPeak Energy's Earnings Call. Representing HighPeak today, our President and CEO, Michael Hollis, Executive Vice President, Ryan Hightower, Executive Vice President, Daniel Silver, Senior Vice President, Chris Mundy, and I'm Steven Tholen, the Chief Financial Officer. During today's call, we may refer to our March investor presentation and press release, which can be found on HighPeak's website. 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 performance. Please refer to the cautionary information regarding forward-looking statements 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 #3: Good morning , everyone , and welcome to HighPeak Energy, Inc. earnings call representing High Peak today . Our president and CEO , Michael Hollis Executive Vice President Ryan Hightower executive Vice president Daniel Silver , senior Vice president .

Speaker #3: Chris Monday . And I'm Steven Tholen , the chief financial officer . During today's call , we may refer to our March investor presentation and press release , which can be found on High Peaks website 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 performance .

Steven Tholen: Please refer to the cautionary information regarding forward-looking statements 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. We will also refer to certain non-GAAP financial measures on today's call, so please see the reconciliations in the earnings release and in our March investor presentation. I will now turn the call over to our President and CEO, Mike Hollis.

Speaker #3: So please refer to the Cautionary information regarding forward looking statements 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 .

Steven Tholen: We will also refer to certain non-GAAP financial measures on today's call, so please see the reconciliations in the earnings release and in our March investor presentation. I will now turn the call over to our President and CEO, Mike Hollis.

Speaker #3: We will also refer to certain non-GAAP financial measures on today's call . So please see the reconciliations in the earnings release and in our March investor presentation I will now turn the call over to our president and CEO , Michael Hollis .

Michael L. Hollis: Thank you, Steve. Good morning, everyone, and thank you for joining us. I thought about kicking off things today by walking through our 2025 results and the execution of our business plan. But that feels like a whole different world today. I'm far more energized by what lies ahead than by revisiting what's already behind us and implemented. For anyone interested in a deeper look at the changes that brought us to this point, our prior quarter's investor presentation and earnings call transcript offer a comprehensive overview. With that, let's turn the page and talk about 2026 and how we're positioning the company to move forward with purpose, confidence, and a whole lot of momentum.

Mike Hollis: Thank you, Steve. Good morning, everyone, and thank you for joining us. I thought about kicking off things today by walking through our 2025 results and the execution of our business plan. But that feels like a whole different world today. I'm far more energized by what lies ahead than by revisiting what's already behind us and implemented. For anyone interested in a deeper look at the changes that brought us to this point, our prior quarter's investor presentation and earnings call transcript offer a comprehensive overview. With that, let's turn the page and talk about 2026 and how we're positioning the company to move forward with purpose, confidence, and a whole lot of momentum.

Speaker #3: Thank you , Steve . Good .

Speaker #4: Morning , everyone , and thank you for joining us . I thought about kicking off things today by walking through our 2025 results and the execution of our business plan , but that feels like a whole different world today I'm far more energized by what lies ahead than by revisiting what's already behind us and implemented .

Speaker #4: For anyone in a deeper look at the changes that brought us to this point , our prior quarters investor presentation and earnings call transcript offer a comprehensive overview So with that , let's turn the page and talk about 2026 and how we're provisioning the company to move forward with purpose , confidence , and a whole lot of momentum in today's fast moving geopolitical and commodity landscape .

Michael L. Hollis: In today's fast-moving geopolitical and commodity landscape, we are approaching 2026 with focus and discipline, and our focus is clear, protect profitability, maximize cash flow, and strengthen the foundation of our business, not pursue growth for its own sake. Over the past several quarters, we have taken a hard, honest look at every part of our business, and that work continues today. It has given us a firm handle grounded on financial discipline and operational excellence. This means a plan we can fully and confidently execute within cash flow, sustaining stable production with minimal capital intensity and driving further efficiency gains to expand margins. Our top financial priority is strengthening the balance sheet. As commodity prices rise, incremental cash flow will be directed first toward debt reduction and liquidity improvement. To support that objective, we're taking several decisive steps.

Mike Hollis: In today's fast-moving geopolitical and commodity landscape, we are approaching 2026 with focus and discipline, and our focus is clear, protect profitability, maximize cash flow, and strengthen the foundation of our business, not pursue growth for its own sake. Over the past several quarters, we have taken a hard, honest look at every part of our business, and that work continues today. It has given us a firm handle grounded on financial discipline and operational excellence. This means a plan we can fully and confidently execute within cash flow, sustaining stable production with minimal capital intensity and driving further efficiency gains to expand margins. Our top financial priority is strengthening the balance sheet. As commodity prices rise, incremental cash flow will be directed first toward debt reduction and liquidity improvement. To support that objective, we're taking several decisive steps.

Speaker #4: We are approaching 2026 with focus and discipline , and our focus is clear Protect profitability , maximize cash flow , and strengthen the foundation of our business , not pursue growth .

Speaker #4: For its own sake . Over the past several quarters , we have taken a hard , honest look at every part of our business and that work continues today It has given us a firm handle grounded on financial discipline and operational excellence This means a plan we can fully and confidently execute within cash flow .

Speaker #4: Sustaining stable production with minimal capital intensity and driving further efficiency gains to expand margins. Our top financial priority is strengthening the balance sheet. As commodity prices rise, incremental cash flow will be directed first toward debt reduction and liquidity improvement.

Speaker #4: To support that objective We're taking several decisive steps . First , we rightsized our annual capital budget to ensure our development program stays within cash flow , even in a much softer price environment Second , we expanded our hedging program to reduce exposure to volatility and secure pricing that supports continued investment and debt reduction Third , we suspended our dividend , which will increase annual liquidity by an estimated 20 to $25 million .

Michael L. Hollis: First, we right-sized our annual capital budget to ensure our development program stays within cash flow, even in a much softer price environment. Second, we expanded our hedging program to reduce exposure to volatility and secure pricing that supports continued investment and debt reduction. Third, we suspended our dividend, which will increase annual liquidity by an estimated $20 to 25 million. The reality is the market wasn't giving us credit for the dividend, and most of the investors we speak with regularly have shared that same perspective. We believe that capital is far better deployed, strengthening the balance sheet and building long-term value for our shareholders. We are positioning the company to thrive, not just for the next couple quarters, but for years to come. Our 2026 development plan is intentionally conservative and built for durability.

Mike Hollis: First, we right-sized our annual capital budget to ensure our development program stays within cash flow, even in a much softer price environment. Second, we expanded our hedging program to reduce exposure to volatility and secure pricing that supports continued investment and debt reduction. Third, we suspended our dividend, which will increase annual liquidity by an estimated $20 to 25 million. The reality is the market wasn't giving us credit for the dividend, and most of the investors we speak with regularly have shared that same perspective. We believe that capital is far better deployed, strengthening the balance sheet and building long-term value for our shareholders. We are positioning the company to thrive, not just for the next couple quarters, but for years to come. Our 2026 development plan is intentionally conservative and built for durability.

Speaker #4: The reality is, the market wasn't giving us credit for the dividend, and most of the investors we speak with regularly have shared that same perspective. We believe that capital is far better deployed strengthening the balance sheet and building long-term value for our shareholders.

Speaker #4: We are positioning the company to thrive, not just for the next couple of quarters, but for years to come. Our 2026 development plan is intentionally conservative and built for durability.

Michael L. Hollis: It is anchored around one drilling rig and roughly one completion crew, which positions us to drill about 30 wells and bring 36 to 38 wells online over the course of the year. We designed this pace of development with three clear objectives in mind. First, to ensure we operate fully within cash flow, covering every financial obligation, even if oil prices settle in the mid- to upper 50s. Second, to maximize free cash flow in a stronger commodity environment so we can accelerate debt reduction. Third, to maintain strict cost discipline across the organization. Given the recent strength in oil prices, this is an opportune time for us to lean into debt reduction and continue improving our financial footing. Our 2026 program also reflects a balanced approach between investing in new wells and optimizing our existing base production. You can see that balance clearly in our capital allocation.

Mike Hollis: It is anchored around one drilling rig and roughly one completion crew, which positions us to drill about 30 wells and bring 36 to 38 wells online over the course of the year. We designed this pace of development with three clear objectives in mind. First, to ensure we operate fully within cash flow, covering every financial obligation, even if oil prices settle in the mid- to upper 50s. Second, to maximize free cash flow in a stronger commodity environment so we can accelerate debt reduction. Third, to maintain strict cost discipline across the organization. Given the recent strength in oil prices, this is an opportune time for us to lean into debt reduction and continue improving our financial footing. Our 2026 program also reflects a balanced approach between investing in new wells and optimizing our existing base production. You can see that balance clearly in our capital allocation.

Speaker #4: It is anchored around one drilling rig and roughly one completion crew , which positions us to drill about 30 wells and bring 36 to 38 wells online .

Speaker #4: Over the course of the year . We designed this pace of development with three clear objectives in mind . First , to ensure we operate fully within cash flow , covering every financial obligation even if oil prices settle in the mid to upper 50 s .

Speaker #4: Second , to maximize free cash flow in a stronger commodity environment so we can accelerate debt reduction . And third , to maintain strict cost discipline across the organization .

Speaker #4: Given the recent strength in oil prices, this is an opportune time for us to lean into debt reduction and continue improving our financial footing. Our 2026 program also reflects a balanced approach between investing in new wells and optimizing our existing base production.

Michael L. Hollis: Our capital budget is nearly 50% lower than last year, while unit lease operating expenses per BOE are modestly higher as we invest in targeted initiatives to enhance base production. The result is a development program built for capital efficiency, highlighted by an estimated 65% increase in production per dollar invested. The early results are encouraging. Quarter to date, production is averaging more than 46,000 BOE per day. That is roughly 10% above the midpoint of our 2026 guidance range, even after accounting for the impacts of Winter Storm Ezra. Based on today's market environment, we believe production in the low-to-mid 40,000 BOE per day range represents a sustainable baseline for our 2026 budget and our plans to reduce absolute debt. Stepping back, it's important to recognize how the market is valuing companies like ours today.

Mike Hollis: Our capital budget is nearly 50% lower than last year, while unit lease operating expenses per BOE are modestly higher as we invest in targeted initiatives to enhance base production. The result is a development program built for capital efficiency, highlighted by an estimated 65% increase in production per dollar invested. The early results are encouraging. Quarter to date, production is averaging more than 46,000 BOE per day. That is roughly 10% above the midpoint of our 2026 guidance range, even after accounting for the impacts of Winter Storm Ezra. Based on today's market environment, we believe production in the low-to-mid 40,000 BOE per day range represents a sustainable baseline for our 2026 budget and our plans to reduce absolute debt. Stepping back, it's important to recognize how the market is valuing companies like ours today.

Speaker #4: You can see that balance clearly in our capital allocation. Our capital budget is nearly 50% lower than last year, while unit lease operating expenses per BOE are modestly higher.

Speaker #4: As we invest in targeted initiatives to enhance base production . The result is a development program built for capital efficiency , highlighted by an estimated 65% increase in production per dollar invested in the early results are encouraging .

Speaker #4: Quarter to date , production is averaging more than 46,000 boe per day . That is roughly 10% above the midpoint of our 2026 guidance range .

Speaker #4: Even after accounting for the impacts of winter storm Fern, based on today's market environment, we believe production in the low to mid 40,000 BOE per day range represents a sustainable baseline for our '26 budget and our plans to reduce absolute debt. Stepping back, it's important to recognize how the market is valuing companies like ours today.

Michael L. Hollis: In the current environment, mid-cap E&P are rewarded for durable free cash flow, balance sheet strength, and meaningful high-quality inventory depth. What they are not rewarded for is headline production growth. Now, there are a few realities shaping our industry right now. Core Permian inventory is becoming increasingly strategic. Tier one shale inventory is finite. Future wells will naturally move down the quality curve as inventory tightens, and preserving and expanding high-quality inventory is what drives long-term value. Now, with that in mind, our guiding principle is straightforward. Return on capital employed matters more than production growth. Disciplined development today allows us to protect and preserve our tier one inventory for a future time when our financial capacity and a strong, sustained commodity environment align. What are we doing to support this strategy? Our disciplined approach centers on several key priorities.

Mike Hollis: In the current environment, mid-cap E&P are rewarded for durable free cash flow, balance sheet strength, and meaningful high-quality inventory depth. What they are not rewarded for is headline production growth. Now, there are a few realities shaping our industry right now. Core Permian inventory is becoming increasingly strategic. Tier one shale inventory is finite. Future wells will naturally move down the quality curve as inventory tightens, and preserving and expanding high-quality inventory is what drives long-term value. Now, with that in mind, our guiding principle is straightforward. Return on capital employed matters more than production growth. Disciplined development today allows us to protect and preserve our tier one inventory for a future time when our financial capacity and a strong, sustained commodity environment align.

Speaker #4: In the current environment , Smid cap , E&P are rewarded for durable free cash flow balance sheet strength and meaningful high quality inventory depth .

Speaker #4: What they are not rewarded for is headline production growth Now , there are a few realities shaping our industry right now . Core Permian inventory is becoming increasingly strategic .

Speaker #4: Tier one shale inventory is finite . Future wells will naturally move down the quality curve as inventory tightens and preserving and expanding high quality inventory is what drives long term value .

Speaker #4: Now , with that in mind , our guiding principle is straightforward return on capital employed matters more than production growth . Disciplined development .

Speaker #4: Today allows us to protect and preserve our tier one inventory for a future time . When our financial capacity and a strong , sustained commodity environment align So what are we doing to support this strategy Our disciplined approach centers on several key priorities .

Mike Hollis: What are we doing to support this strategy? Our disciplined approach centers on several key priorities. First, we are protecting liquidity and reinforcing our financial cushion by eliminating the dividend and expanding our hedge position. Second, we are moderating drilling activity so the business remains cash flow neutral, even if oil prices move down into the mid- to high $50s, while still positioning us to accelerate debt reduction if prices remain stronger. Third, we are investing in optimizing across our base production, generating incremental volumes and cash flow without the capital intensity that comes with drilling new wells. Finally, we've continued to delineate additional high-return inventory across our acreage, expanding the long-term opportunity set for the company.

Michael L. Hollis: First, we are protecting liquidity and reinforcing our financial cushion by eliminating the dividend and expanding our hedge position. Second, we are moderating drilling activity so the business remains cash flow neutral, even if oil prices move down into the mid- to high $50s, while still positioning us to accelerate debt reduction if prices remain stronger. Third, we are investing in optimizing across our base production, generating incremental volumes and cash flow without the capital intensity that comes with drilling new wells. Finally, we've continued to delineate additional high-return inventory across our acreage, expanding the long-term opportunity set for the company.

Speaker #4: First , we are protecting liquidity and reinforcing our financial cushion by eliminating the dividend and expanding our hedge position . Second , we are moderating drilling activity .

Speaker #4: So the business remains cash flow neutral even if oil prices move down into the mid to high 50s . While still positioning us to accelerate debt reduction .

Speaker #4: If prices remain strong Third , we are investing in optimizing across our base production , generating incremental volumes and cash flow without the capital intensity that comes with drilling new wells .

Speaker #4: And finally , we continue to delineate additional high return inventory across our acreage , expanding the long term opportunity set for the company Taken together , these actions position hip to increase free cash flow , reduce leverage , and potentially lower our cost of capital in the future , preserve premium inventory for periods of sustained , stronger commodity prices .

Michael L. Hollis: Taken together, these actions position HighPeak to increase free cash flow, reduce leverage, and potentially lower our cost of capital in the future, preserve premium inventory for periods of sustained stronger commodity prices, expand our strategic optionality, whether through drilling, production optimization, or potential accretive M&A, increase long-term NAV realization for shareholders, and ultimately, implementing these key priorities will strengthen the value of our equity. Let me take a moment to talk about our capital allocation philosophy because it's the backbone of long-term shareholder value. Our approach, again, is straightforward and disciplined. We will protect the balance sheet. A strong financial position gives us the flexibility to navigate commodity cycles and act when appropriate and opportunities present themselves. We will prioritize high-return investments. Every dollar we deploy must earn its place, whether it's drilling a new well, optimizing existing production, reducing debt, or pursuing strategic opportunities.

Mike Hollis: Taken together, these actions position HighPeak to increase free cash flow, reduce leverage, and potentially lower our cost of capital in the future, preserve premium inventory for periods of sustained stronger commodity prices, expand our strategic optionality, whether through drilling, production optimization, or potential accretive M&A, increase long-term NAV realization for shareholders, and ultimately, implementing these key priorities will strengthen the value of our equity. Let me take a moment to talk about our capital allocation philosophy because it's the backbone of long-term shareholder value.

Speaker #4: Expand our strategic optionality , whether through drilling , production , optimization or potential accretive M&A . Increased long term Nav realization for shareholders and ultimately implementing these key priorities will strengthen the value of our equity .

Speaker #4: Let me take a moment to talk about our capital allocation philosophy , because it's the backbone of long term shareholder value . Our approach , again , is straightforward and disciplined .

Mike Hollis: Our approach, again, is straightforward and disciplined. We will protect the balance sheet. A strong financial position gives us the flexibility to navigate commodity cycles and act when appropriate and opportunities present themselves. We will prioritize high-return investments. Every dollar we deploy must earn its place, whether it's drilling a new well, optimizing existing production, reducing debt, or pursuing strategic opportunities.

Speaker #4: We will protect the balance sheet. A strong financial position gives us the flexibility to navigate commodity cycles and act when appropriate and opportunities present themselves.

Speaker #4: We will prioritize high return investments dollar we deploy must earn its place . Whether it's drilling a new well , optimizing existing production , reducing debt , or pursuing strategic opportunities , we will preserve premium inventory Tier one drilling locations are finite across the industry and disciplined development .

Michael L. Hollis: We will preserve premium inventory. Tier one drilling locations are finite across the industry, and disciplined development today safeguards the long-term value of those assets. Finally, we will focus on generating sustainable free cash flow that strengthens the balance sheet, allows us to potentially lower our cost of capital in the future, and ultimately supports a higher long-term equity valuation. When you look at 2026 development plan through that lens, every decision from reducing activity levels, eliminating the dividend, and expanding our hedging program is designed to enhance the durability and long-term value of the business. Simply put, our goal isn't to grow the fastest. Growth should be the outcome of a well-executed, financially solid plan. This does not happen overnight. HighPeak's goal is to build a resilient, valuable company that delivers for shareholders over the long haul.

Mike Hollis: We will preserve premium inventory. Tier one drilling locations are finite across the industry, and disciplined development today safeguards the long-term value of those assets. Finally, we will focus on generating sustainable free cash flow that strengthens the balance sheet, allows us to potentially lower our cost of capital in the future, and ultimately supports a higher long-term equity valuation. When you look at 2026 development plan through that lens, every decision from reducing activity levels, eliminating the dividend, and expanding our hedging program is designed to enhance the durability and long-term value of the business. Simply put, our goal isn't to grow the fastest. Growth should be the outcome of a well-executed, financially solid plan. This does not happen overnight. HighPeak's goal is to build a resilient, valuable company that delivers for shareholders over the long haul.

Speaker #4: Today safeguards the long term value of those assets . And finally , we will focus on generating free cash flow that strengthens the balance sheet , allows us to potentially lower our cost of capital in the future and ultimately supports a higher long term equity valuation When you look at 2026 development plan , through that lens , every decision from reducing activity levels , eliminating the dividend , expanding our hedging program is designed to enhance the durability and long term value of the business .

Speaker #4: Simply put , our goal isn't to grow the fastest growth should be the outcome of a well executed financially solid plan This does not happen overnight .

Speaker #4: High peaks goal is to build a resilient , valuable company that delivers for shareholders over the long haul . A key part of our capital efficiency strategy in 2026 is the continued optimization of our existing production base These efforts include targeted well workovers artificial lift enhancements and other operational improvements designed to increase recoveries from wells already online projects like these typically generate strong returns on invested capital and allow us to unlock additional value from assets we already own It's a practical high return way to drive incremental volumes and cash flow without the capital intensity of new well drilling Let me now provide a quick operational update across our core development areas at Flat Top .

Michael L. Hollis: A key part of our capital efficiency strategy in 2026 is the continued optimization of our existing production base. These efforts include targeted well workovers, artificial lift enhancements, and other operational improvements designed to increase recoveries from wells already online. Projects like these typically generate strong returns on invested capital and allow us to unlock additional value from assets we already own. It's a practical, high return way to drive incremental volumes and cash flow without the capital intensity of new well drilling. Let me now provide a quick operational update across our core development areas. At Flat Top, our results in the North Borden area, see slide 6 of our presentation, continue to demonstrate strong performance in both the Lower Spraberry and Wolfcamp A.

Mike Hollis: A key part of our capital efficiency strategy in 2026 is the continued optimization of our existing production base. These efforts include targeted well workovers, artificial lift enhancements, and other operational improvements designed to increase recoveries from wells already online. Projects like these typically generate strong returns on invested capital and allow us to unlock additional value from assets we already own. It's a practical, high return way to drive incremental volumes and cash flow without the capital intensity of new well drilling. Let me now provide a quick operational update across our core development areas. At Flat Top, our results in the North Borden area, see slide 6 of our presentation, continue to demonstrate strong performance in both the Lower Spraberry and Wolfcamp A.

Speaker #4: Our results in the North Borden area . See slide six of our presentation . Continue to demonstrate strong performance in both the lower Sprayberry and Wolfcamp .

Michael L. Hollis: These wells are delivering outcomes comparable to what we see in our core Flat Top area, which reinforce the quality and consistency of this acreage. The northernmost row of wells in our North Borden area is the only part of the field that will require minimal incremental infrastructure, and we expect that work to take place in tranches beginning in late 2026 and into 2027. Now in the core of the Flat Top area, we will continue developing Lower Spraberry and Wolfcamp A locations using the infrastructure already in place, driving corporate efficiency higher. Now, the Northeast Flat Top area, highlighted by the small red box, also on slide 6 of our March investor deck, shows where 6 wells experienced anomalous water inflows. We completed remedial work on several of those wells and are seeing encouraging early results.

Mike Hollis: These wells are delivering outcomes comparable to what we see in our core Flat Top area, which reinforce the quality and consistency of this acreage. The northernmost row of wells in our North Borden area is the only part of the field that will require minimal incremental infrastructure, and we expect that work to take place in tranches beginning in late 2026 and into 2027. Now in the core of the Flat Top area, we will continue developing Lower Spraberry and Wolfcamp A locations using the infrastructure already in place, driving corporate efficiency higher. Now, the Northeast Flat Top area, highlighted by the small red box, also on slide 6 of our March investor deck, shows where 6 wells experienced anomalous water inflows. We completed remedial work on several of those wells and are seeing encouraging early results.

Speaker #4: A . These wells are delivering outcomes comparable to what we see in our core flat top area , which reinforce the quality and consistency of this acreage .

Speaker #4: The northernmost row of wells in our North Borden area is the only part of the field that will require minimal incremental infrastructure , and we expect that work to take place in tranches beginning in late 2026 and into 2027 .

Speaker #4: Now , in the core of the flat top area , we will continue developing lower Sprayberry and Wolfcamp , a locations using the infrastructure already in place , driving corporate efficiency , higher .

Speaker #4: Now, the northeast Flat Top area highlighted by the small red box also on slide six of our March Investor Day shows where six wells experienced anomalous water inflows.

Speaker #4: We completed remedial work on several of those wells and are seeing encouraging early results because of the presence of the water flows. Our 2026 plan includes no new drilling in the Northeast Flat Top area.

Michael L. Hollis: Because of the presence of the water flows, our 2026 plan includes no new drilling in the Northeast Flat Top area. Instead, we're focused on maximizing value through the remediation and optimization of the existing producing wells. Importantly, the impact to our long-term inventory is minimal. Even if we chose not to drill any additional wells in this area, it would affect only 18 Wolfcamp A locations that we carry in inventory, as we do not carry any additional zones in inventory for this area. We're also seeing encouraging progress in delineating the Middle Spraberry across both HighPeak and our offset operators. There are now 9 successful producers, and we expect that momentum to continue with roughly 6 additional delineation wells planned between HighPeak and our offset operators in the first half of 2026.

Mike Hollis: Because of the presence of the water flows, our 2026 plan includes no new drilling in the Northeast Flat Top area. Instead, we're focused on maximizing value through the remediation and optimization of the existing producing wells. Importantly, the impact to our long-term inventory is minimal. Even if we chose not to drill any additional wells in this area, it would affect only 18 Wolfcamp A locations that we carry in inventory, as we do not carry any additional zones in inventory for this area. We're also seeing encouraging progress in delineating the Middle Spraberry across both HighPeak and our offset operators. There are now 9 successful producers, and we expect that momentum to continue with roughly 6 additional delineation wells planned between HighPeak and our offset operators in the first half of 2026.

Speaker #4: Instead , we are focused on maximizing value through the remediation and optimization of the existing producing wells Importantly , the impact to our long term inventory is minimal .

Speaker #4: Even if we chose not to drill any additional wells in this area , it would affect only 18 wolfcamp a locations that we carry in inventory .

Speaker #4: As we do not carry any additional zones in inventory for this area . We're also seeing encouraging progress in delineating the middle Sprayberry across both High Peak and our offset operators .

Speaker #4: There are now nine successful producers, and we expect that momentum to continue with roughly six additional delineation wells planned between HighPeak and our offset operators in the first half of 2026.

Michael L. Hollis: Our long-term objective for the Middle Spraberry is clear: convert more than 200 Middle Spraberry locations at Flat Top into fully delineated sub $50 breakeven inventory. At Signal Peak, we will continue developing our core area in the Wolfcamp A and Lower Spraberry, both of which continue to deliver strong, consistent results. See slide 7 of the presentation. Beyond those core zones, Signal Peak holds substantial upside. We've demonstrated Wolfcamp D performance across the field in two different landing zones with results that closely track one another. The resource is clearly present across the acreage, and it's not going anywhere. We haven't drilled a Wolfcamp D well in roughly 3 years. However, during that time, the industry has made meaningful strides in optimizing deeper wells. We will continue to evaluate the development of the Wolfcamp D to determine when the economics fully support those wells competing for capital.

Mike Hollis: Our long-term objective for the Middle Spraberry is clear: convert more than 200 Middle Spraberry locations at Flat Top into fully delineated sub $50 breakeven inventory. At Signal Peak, we will continue developing our core area in the Wolfcamp A and Lower Spraberry, both of which continue to deliver strong, consistent results. See slide 7 of the presentation. Beyond those core zones, Signal Peak holds substantial upside. We've demonstrated Wolfcamp D performance across the field in two different landing zones with results that closely track one another.

Speaker #4: Our long-term objective for the Middle Sprayberry is clear: convert more than 200 Middle Sprayberry locations at Flat Top into fully delineated, sub-$50 breakeven inventory at Signal Peak.

Speaker #4: We will continue developing our core area in the Wolfcamp A and lower Sprayberry , both of which continue to deliver strong , consistent results .

Speaker #4: See slide seven of the presentation . Beyond those core zones , signal peak holds substantial upside . We've demonstrated Wolfcamp d performance across the field and two different landing zones , with results that closely track one another .

Mike Hollis: The resource is clearly present across the acreage, and it's not going anywhere. We haven't drilled a Wolfcamp D well in roughly 3 years. However, during that time, the industry has made meaningful strides in optimizing deeper wells. We will continue to evaluate the development of the Wolfcamp D to determine when the economics fully support those wells competing for capital.

Speaker #4: The resource is clearly present across the acreage , and it's not going anywhere . We haven't drilled a wolf camp de well in roughly three years .

Speaker #4: However , during that time , the industry has made meaningful strides in optimizing deeper wells . We will continue to evaluate the development of the Wolfcamp D to determine when the economics fully support those wells competing for capital .

Michael L. Hollis: We also see additional long-term potential in the Middle Spraberry, Wolfcamp B, and Wolfcamp C formations, which add further depth and optionality to our inventory over time. Our drilling results and technical work continue to reinforce what we believe is one of the deepest premium inventories among mid-cap operators. Today, HighPeak has more than 2,600 total drilling locations across the Stack, Spraberry, and Wolfcamp formations. At our current cadence of drilling, that includes more than 30 years of high return inventory in the Wolfcamp A, Lower Spraberry, and Middle Spraberry alone. Over 100 total rig years of inventory across the full Stack. This level of inventory depth meaningfully differentiates HighPeak from most of our peers. One point that we believe the market continues to underappreciate is the growing scarcity of Tier one shale inventory across the Permian Basin.

Mike Hollis: We also see additional long-term potential in the Middle Spraberry, Wolfcamp B, and Wolfcamp C formations, which add further depth and optionality to our inventory over time. Our drilling results and technical work continue to reinforce what we believe is one of the deepest premium inventories among mid-cap operators. Today, HighPeak has more than 2,600 total drilling locations across the Stack, Spraberry, and Wolfcamp formations. At our current cadence of drilling, that includes more than 30 years of high return inventory in the Wolfcamp A, Lower Spraberry, and Middle Spraberry alone. Over 100 total rig years of inventory across the full Stack. This level of inventory depth meaningfully differentiates HighPeak from most of our peers. One point that we believe the market continues to underappreciate is the growing scarcity of Tier one shale inventory across the Permian Basin.

Speaker #4: We also see additional long term potential in the middle Sprayberry Wolfcamp B and Wolfcamp C formations , which add further depth and optionality to our inventory over time .

Speaker #4: Our drilling results in technical work continue to reinforce what we believe is one of the deepest premium inventories among among mid-cap operators . Today , High Peak has more than 2600 total drilling locations across the stacked Spraberry and Wolfcamp formations .

Speaker #4: At our current cadence of drilling that includes more than 30 years of high return inventory in the Wolf camp , a lower Sprayberry and Middle Sprayberry alone over 100 total rig years of inventory across the full stack .

Speaker #4: This level of inventory depth meaningfully differentiates High Peak from most of our peers One point that we believe the market continues to underappreciate is the growing scarcity of tier one shale inventory across the Permian Basin .

Michael L. Hollis: The industry has spent the last decade or so developing its best rock, and the reality is that premium locations are not infinite. As that inventory tightens across the basin, the strategic value of companies that still hold significant high return drilling inventory will only increase. Our responsibility is to develop those locations with discipline, maximizing the long-term value for our shareholders. When we think about the value of this company, several key components stand out. First, our existing production base, a highly visible, reliable source of cash flow that underpins the business today. At current valuation levels, HighPeak is trading close to the PV-10 proved developed value. The real long-term value lies with the untapped inventory. That inventory includes approximately 200 proved undeveloped locations in our core zones. More than 400 additional premium Wolfcamp A and Lower Spraberry locations.

Mike Hollis: The industry has spent the last decade or so developing its best rock, and the reality is that premium locations are not infinite. As that inventory tightens across the basin, the strategic value of companies that still hold significant high return drilling inventory will only increase. Our responsibility is to develop those locations with discipline, maximizing the long-term value for our shareholders. When we think about the value of this company, several key components stand out.

Speaker #4: The industry has spent the last decade or so developing its best rock , and the reality is that premium locations are not infinite , as that inventory tightens across the basin .

Speaker #4: The strategic value of companies that still hold significant high return drilling inventory will only increase our responsibility is to develop those locations with disciplined maximizing the long term value for our shareholders .

Speaker #4: When we think about the value of this company , several key , key components stand out . First , our existing production base , a highly visible , reliable source of cash flow that underpins the business today .

Mike Hollis: First, our existing production base, a highly visible, reliable source of cash flow that underpins the business today. At current valuation levels, HighPeak is trading close to the PV-10 proved developed value. The real long-term value lies with the untapped inventory. That inventory includes approximately 200 proved undeveloped locations in our core zones. More than 400 additional premium Wolfcamp A and Lower Spraberry locations.

Speaker #4: And at current valuation levels . High Peak is trading close to the PV ten proved developed value , but the real long term value lies with the untapped inventory that inventory includes .

Speaker #4: Approximately 200 proved undeveloped locations in our core zones , more than 400 additional premium Wolfcamp , A and lower Sprayberry locations . Over 200 Middle Sprayberry locations progressing toward the .

Michael L. Hollis: Over 200 Middle Spraberry locations progressing toward the sub-$50 breakeven delineation. Further upside potential in the Wolfcamp B, C, and D zones. All of this is complemented by our continued focus on optimizing existing production, which enhances returns and strengthens the value of our asset base over time. In closing, our focus in 2026 is on returns and resilience, not headline growth. We will apply strict capital and operational discipline to protect the bottom line. We will prioritize free cash flow generation. Any incremental free cash flow will first be directed toward reducing leverage and strengthening the balance sheet, positioning us for a lower cost of capital over time. We will remain precise and selective in how we deploy capital, concentrating on high return inventory, base production optimization, and disciplined delineation of additional premium locations.

Mike Hollis: Over 200 Middle Spraberry locations progressing toward the sub-$50 breakeven delineation. Further upside potential in the Wolfcamp B, C, and D zones. All of this is complemented by our continued focus on optimizing existing production, which enhances returns and strengthens the value of our asset base over time. In closing, our focus in 2026 is on returns and resilience, not headline growth. We will apply strict capital and operational discipline to protect the bottom line. We will prioritize free cash flow generation. Any incremental free cash flow will first be directed toward reducing leverage and strengthening the balance sheet, positioning us for a lower cost of capital over time. We will remain precise and selective in how we deploy capital, concentrating on high return inventory, base production optimization, and disciplined delineation of additional premium locations.

Speaker #4: Sub $50 breakeven delineation and further upside potential in the Wolf Camp . Be C and D zones . All of this is complemented by our continued focus on optimizing existing production , which enhances returns and strengthens the value of our asset base over time .

Speaker #4: In closing , our focus in 2026 is on returns and resilience , not headline growth . We will apply strict capital and operational discipline to protect the bottom line .

Speaker #4: We will prioritize free cash flow generation . Any incremental free cash flow will first be directed toward reducing leverage and strengthening balance sheet , positioning us for a lower cost of capital over time , we will remain precise and selective in how we deploy capital , concentrating on high return inventory base production optimization and disciplined delineation of additional premium locations .

Michael L. Hollis: At our current development pace, our premium inventory alone represents decades of high return drilling, even before accounting for the additional upside we continue to delineate across our acreage. As Tier one shale inventory becomes increasingly scarce across the industry, the strategic value of remaining core drilling locations will only continue to rise. Ultimately, we are building a company designed to generate strong returns across commodity cycles, improve long-term NAV realization, and strengthen our equity value. It all starts with reinforcing our financial foundation. Before I close, I want to recognize our employees. The progress we've discussed today is a direct result of their hard work, grit, and professionalism. Day after day, they show up, tackle challenges, and keep this company moving forward. Their commitment, both in the field and in the office, is the backbone of everything we're building. Again, I'm deeply grateful for what they do.

Mike Hollis: At our current development pace, our premium inventory alone represents decades of high return drilling, even before accounting for the additional upside we continue to delineate across our acreage. As Tier one shale inventory becomes increasingly scarce across the industry, the strategic value of remaining core drilling locations will only continue to rise. Ultimately, we are building a company designed to generate strong returns across commodity cycles, improve long-term NAV realization, and strengthen our equity value. It all starts with reinforcing our financial foundation. Before I close, I want to recognize our employees.

Speaker #4: At our current development pace , our premium inventory alone represents decades of high return drilling even before accounting for the additional upside , we continue to delineate across our acreage and as tier one shale inventory becomes increasingly scarce across the industry , the strategic value of remaining core drilling locations will only continue to rise .

Speaker #4: Ultimately , we are building a company designed to generate strong returns across commodity cycles , improve long term nav realization , and strengthen our equity value .

Speaker #4: And it all starts with reinforcing our financial foundation . Before I close , I want to recognize our employees . The progress we've discussed today is a direct result of their hard work , grit , and professionalism day after day , they show up , tackle challenges , and keep this company moving forward .

Mike Hollis: The progress we've discussed today is a direct result of their hard work, grit, and professionalism. Day after day, they show up, tackle challenges, and keep this company moving forward. Their commitment, both in the field and in the office, is the backbone of everything we're building. Again, I'm deeply grateful for what they do. With my comments now complete, operator, please open the call up for questions.

Speaker #4: Their commitment , both in the field and in the office , is the backbone of everything we're building . Again , I'm deeply grateful for what they do with my comments now complete Operator , please open the call up for questions .

Michael L. Hollis: With my comments now complete, operator, please open the call up for questions.

Operator 1: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Noah Hungness with Bank of America. Your line is open.

Operator: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Noah Hungness with Bank of America. Your line is open.

Speaker #2: Thank you , ladies and gentlemen . If you have a question or comment at this time , please press star one one on your telephone .

Speaker #2: If your question has been answered , you wish to remove yourself from the queue , please press star one one . Again . We'll pause for a moment while we compile our Q&A roster Our first question comes from Noah Harkness with Bank of America .

Noah Hungness: Morning, Mike and team. Yeah, I just wanted to start off here, Mike, if you could add any more color on some of your cost reduction and production optimization efforts that you've implemented over the last six months.

Speaker #2: Your line is open .

Speaker #5: Good morning , Mike and team . I just wanted to start off here , Mike , if you could add any more color on some of your cost reduction and production optimization efforts that you've implemented over the last six months .

Michael L. Hollis: You bet, Noah. Thank you for the question. You know, obviously, it's what we do every day, so it's not like this was an initiative started, you know, a quarter ago. To kind of walk through some of the cost reductions that we've seen both on the capital side and on the expense side. We've done a lot of optimization on how we are drilling and completing these wells. Obviously, we get a little faster every day drilling, a little faster completions. We've also optimized the completion chemical program, the perforation schemes, how we are landing these wells. As well as kind of structural changes to how we complete these wells, like utilizing finer frac today versus what we were doing in the first part of 2025. There's a lot on the capital side being worked.

Mike Hollis: You bet, Noah. Thank you for the question. You know, obviously, it's what we do every day, so it's not like this was an initiative started, you know, a quarter ago. To kind of walk through some of the cost reductions that we've seen both on the capital side and on the expense side. We've done a lot of optimization on how we are drilling and completing these wells. Obviously, we get a little faster every day drilling, a little faster completions. We've also optimized the completion chemical program, the perforation schemes, how we are landing these wells. As well as kind of structural changes to how we complete these wells, like utilizing finer frac today versus what we were doing in the first part of 2025. There's a lot on the capital side being worked.

Speaker #3: You bet .

Speaker #4: Noah , the question . You know , obviously , it's what we do every day . So it's not like this was an initiative started , you know , a quarter ago , but to kind of walk through some of the some of the cost reductions that we've seen both on the capital side and on the expense side .

Speaker #4: So we've done a lot of optimization on how we are drilling and completing these wells . Obviously , we get a little faster every day drilling a little faster , completions .

Speaker #4: We've also optimized the completion chemical program , the perforation schemes , how we are landing these wells , as well as kind of structural changes to how we complete these wells , like utilizing simple frac today versus what we were doing in the first part of 2025 .

Michael L. Hollis: On the expense side, we're doing a lot of production-based production optimization. Think lowering pumps, changing the type of artificial lift that we utilize, utilizing some chemical opportunities that we have for, you hate to say re-stimulation, but being able to pump some things down hole that can increase production and your return from the wells, as well as remove some of what they call skin damage that allows more of the fluid to flow into the well. We have a program ongoing doing that. Overall, we've had lower commodity prices over the last couple quarters, which, you know, again, not that we don't do this every day, but we constantly rebid, reevaluate, look structurally at what we're doing with our infrastructure, how we treat the wells chemically, and go out for bids very routinely.

Mike Hollis: On the expense side, we're doing a lot of production-based production optimization. Think lowering pumps, changing the type of artificial lift that we utilize, utilizing some chemical opportunities that we have for, you hate to say re-stimulation, but being able to pump some things down hole that can increase production and your return from the wells, as well as remove some of what they call skin damage that allows more of the fluid to flow into the well. We have a program ongoing doing that.

Speaker #4: So there's a lot on the capital side being worked on the expense side , we're doing a lot of production based production optimization .

Speaker #4: So think lowering pumps , changing the type of artificial lift that we utilize , utilizing some chemical opportunities that we have for you hate to say Restimulation , but being able to pump some things down hole that can increase production and what your return from the wells as well as remove some of what they call skin damage that allows more of the fluid to flow into the well .

Mike Hollis: Overall, we've had lower commodity prices over the last couple quarters, which, you know, again, not that we don't do this every day, but we constantly rebid, reevaluate, look structurally at what we're doing with our infrastructure, how we treat the wells chemically, and go out for bids very routinely. We're seeing some cost savings on that front, not just how we're drilling the wells, but just the unit prices that go into it, and staying on top of that and making sure we're getting the best price for HighPeak.

Speaker #4: So we have a program ongoing doing that . And overall , we've had lower commodity prices over the last couple quarters , which , you know , again , not that we don't do this every day , but we .

Speaker #4: Constantly rebid , reevaluate , look structurally at what we're doing with our infrastructure , how we treat the wells chemically and go out for bids very routinely .

Michael L. Hollis: We're seeing some cost savings on that front, not just how we're drilling the wells, but just the unit prices that go into it, and staying on top of that and making sure we're getting the best price for HighPeak.

Speaker #4: So we're seeing some cost savings on that front . Not just how we're drilling the wells , but just the unit pieces that go into it and staying on top of that and making sure we're getting the best price for High Peak

Noah Hungness: That's helpful color. Then for my second question, could you maybe help us think about the split of wells across your development area for 2026? What is the split for, you know, Lower Spraberry versus Wolfcamp A versus Middle Spraberry look like? Then also, the different development areas that you've helped to highlight this quarter. You know, North Borden versus your core Flat Top versus your core Signal. If you could just give us any color there.

Speaker #5: That's helpful. Color. And then for my second question, could you maybe help us think about the split of TTYLs across your development area for '26?

Speaker #5: So what is the split for lower Sprayberry versus Wolfcamp A versus middle Sprayberry look like ? And then also the different area development areas that you've helped highlight this quarter .

Speaker #5: So you know , North Borden versus your core flat top versus your core signal . If you could just give us any color there ?

Michael L. Hollis: You bet. The good news is, what we are drilling for the foreseeable future will look almost identical to what we've done for the last year and a half, right? It's about 70% of the capital will be spent in Flat Top, the northern block. Again, that happens to be about the acreage split between the blocks between Flat Top and Signal Peak. Thirty percent, give or take, of the capital in Signal Peak. Think 90+% of that capital will be Wolfcamp A, Lower Spraberry co-development. The other 5 to 8% of capital will be Middle Spraberry. Some of the Middle Spraberrys will be co-developed with A and Lower Spraberrys as well, but it will be in the Middle Spraberry, not in just the A and Lower Spraberry.

Mike Hollis: You bet. The good news is, what we are drilling for the foreseeable future will look almost identical to what we've done for the last year and a half, right? It's about 70% of the capital will be spent in Flat Top, the northern block. Again, that happens to be about the acreage split between the blocks between Flat Top and Signal Peak. Thirty percent, give or take, of the capital in Signal Peak. Think 90+% of that capital will be Wolfcamp A, Lower Spraberry co-development. The other 5 to 8% of capital will be Middle Spraberry. Some of the Middle Spraberrys will be co-developed with A and Lower Spraberrys as well, but it will be in the Middle Spraberry, not in just the A and Lower Spraberry.

Speaker #4: You bet . So the good news is what we are drilling for the foreseeable future will look almost identical to what we've done for the last year and a half , right ?

Speaker #4: It's about 70% of the capital will be spent in flat top . The northern block . And again , that happens to be about the acreage split between the blocks , between flat top and signal peak .

Speaker #4: So 30% , give or take , of the capital in signal peak . Think 90 plus percent of that capital will be Wolf , a lower Sprayberry co-development .

Speaker #4: The other 5 to 8% of capital will be middle Sprayberry and some of the middle Sprayberry will be co-developed with A and lower Sprayberry as well .

Speaker #4: But it will be in the middle Sprayberry , not in just the A and lower Sprayberry . Now the split between . You know , again in the northern Borden versus flat top core , almost 5050 for the flat top area .

Michael L. Hollis: Now, the split between, you know, again, in the Northern Borden versus Flat Top core, almost 50/50 for the Flat Top area. That 70% will be almost 50/50 between North Borden and Flat Top Central, I guess you'd call it. One point to make, as I said in the prepared remarks, we will not drill any wells like we did in 2025 in that little red box that's on slide 6 of our presentation. There will be no drilling in that area in 2026.

Mike Hollis: Now, the split between, you know, again, in the Northern Borden versus Flat Top core, almost 50/50 for the Flat Top area. That 70% will be almost 50/50 between North Borden and Flat Top Central, I guess you'd call it. One point to make, as I said in the prepared remarks, we will not drill any wells like we did in 2025 in that little red box that's on slide 6 of our presentation. There will be no drilling in that area in 2026.

Speaker #4: That's 70% will be almost 5050 between North Borden and flat top central . I guess you'd call it one point to make . As I said in the prepared remarks , we will not drill any wells like we did in 2025 in that little red box .

Speaker #4: That's on the slide six of our presentation. There will be no drilling in that area in 2026.

Noah Hungness: You're completing a few more wells than you're drilling this year. Can we assume that the percentages you talked about on the drills is going to be somewhat similar to the completions this year?

Speaker #5: And you're killing a few more wells than you're drilling this year. Can we assume that the percentages you talked about on the drills is going to be pretty similar to the TTYLs this year?

Michael L. Hollis: Absolutely, 'cause it was basically the same percentage of drills last year. Those DUCs go into 2026. You make a great point. We are completing, you know, call it 7, roughly 7 more wells than we're drilling this year. We brought into 2026 something close to 20+ wells, called, you know, operational DUCs. If you kinda math out where we'll be at the end of the year, we should carry out into 2027 roughly 14 to 15 DUCs. Again, setting us up very nicely in 2027 to be able to effectuate exactly the same plan that we have in 2026, again, for further strong reduction in absolute debt.

Mike Hollis: Absolutely, 'cause it was basically the same percentage of drills last year. Those DUCs go into 2026. You make a great point. We are completing, you know, call it 7, roughly 7 more wells than we're drilling this year. We brought into 2026 something close to 20+ wells, called, you know, operational DUCs. If you kinda math out where we'll be at the end of the year, we should carry out into 2027 roughly 14 to 15 DUCs. Again, setting us up very nicely in 2027 to be able to effectuate exactly the same plan that we have in 2026, again, for further strong reduction in absolute debt.

Speaker #4: Absolutely . Because it was basically the same percentage of drills last year . So those ttyl's go into 2026 and you make a great point .

Speaker #4: We are completing . You know , call it seven , roughly seven more wells than we're drilling this year . We brought into 2026 something close to 20 plus wells called , you operational ducts .

Speaker #4: And then if you kind of map out where we'll be at the end of the year . We should carry out into 2027 , roughly 14 to 15 ducks , again , setting us up very nicely in 2027 to be able to effectuate exactly the same plan that we have in 2026 .

Speaker #4: Again , for further strong reduction in absolute debt .

Noah Hungness: That's helpful color. Thank you.

Michael L. Hollis: Yes, sir. Thank you.

Mike Hollis: Yes, sir. Thank you.

Operator 2: One moment for our next question. Our next question comes from Jeff Robertson with Water Tower Research. Your line is open.

Operator: One moment for our next question. Our next question comes from Jeff Robertson with Water Tower Research. Your line is open.

Speaker #5: That's helpful color . Thank you .

Speaker #4: Yes , sir . Thank you

Speaker #2: One moment for our next question Our next question comes from Jeff Robertson with WaterTower Research . Your line is open .

Jeff Robertson: Thank you. Good morning. Mike, on slides 10 and 11, you show the production profile and CapEx and the capital intensity. Can you talk a little bit about where the company's corporate decline curve was at the beginning of 2026 and where you think it might be at the end of 2026, and how that plays into the notion of increasing capital efficiency over time and delivering the balance sheet in 2026 and 2027?

Speaker #6: Thank you . Good morning Mike . On slides ten and 11 . You talked you show production profile and CapEx and the capital intensity .

Speaker #6: Can you talk a little bit about where the company's corporate decline curve was at the beginning of 2026 , and where you think it might be at the end of 26 ?

Speaker #6: And how that plays into the notion of increasing capital efficiency over time, and delivering the balance sheet in '26 and '27.

Michael L. Hollis: You bet, Jeff, and thank you for that question. I may step back a couple years prior to that instead of starting just on, you know, 25 and 26 because it's really important. Again, building a company from absolute greenfield all through the drill bit and building up to close to 50,000 BOEs a day, we had to drill a lot of new wells with several rigs. If you go all the way back to kind of the exit of 2024, corporate decline rate was, call it, mid-40%. Again, a pretty steep because you have a lot of new wells. At the end of 2025, we were down to about 38% corporate decline, because if you recall, we had slowed down at the, you know, kind of midpoint of 2024 and into 2025, we slowed way down.

Mike Hollis: You bet, Jeff, and thank you for that question. I may step back a couple years prior to that instead of starting just on, you know, 25 and 26 because it's really important. Again, building a company from absolute greenfield all through the drill bit and building up to close to 50,000 BOEs a day, we had to drill a lot of new wells with several rigs. If you go all the way back to kind of the exit of 2024, corporate decline rate was, call it, mid-40%. Again, a pretty steep because you have a lot of new wells. At the end of 2025, we were down to about 38% corporate decline, because if you recall, we had slowed down at the, you know, kind of midpoint of 2024 and into 2025, we slowed way down.

Speaker #4: You bet . Jeff . And thank you for that question . I may step back a couple years prior to that . Instead of starting just on , you know , 25 and 26 , because it's really important , again , building a company from absolute Greenfield , all through the drill bit and building up to close to $50,000 a day , we had to drill a lot of new wells with several rigs .

Speaker #4: So if you go all the way back to kind of the exit of 2024 , corporate decline rate was call it mid 40% .

Speaker #4: So again , a pretty steep because you have a lot of new wells at the end of 2025 , we were down to about 38% corporate decline because if you recall , we had slightly slowed down at the , you know , kind of midpoint of 24 and into 25 .

Michael L. Hollis: Even midpoint of 25, we went down to 1 rig. As you look forward into 2026, of course, you came into the year right at 38%. At our current cadence and what we assume we will continue to do for at least the foreseeable future, you can expect about 2% decline in corporate decline rate. The 38 we came into the year with, we should exit the year into 2027 at, you know, 36% or so. To your point, as your corporate decline goes down, the amount of CapEx needed for maintenance CapEx to hold your production flat also comes down by that kind of relation.

Mike Hollis: Even midpoint of 25, we went down to 1 rig. As you look forward into 2026, of course, you came into the year right at 38%. At our current cadence and what we assume we will continue to do for at least the foreseeable future, you can expect about 2% decline in corporate decline rate. The 38 we came into the year with, we should exit the year into 2027 at, you know, 36% or so. To your point, as your corporate decline goes down, the amount of CapEx needed for maintenance CapEx to hold your production flat also comes down by that kind of relation.

Speaker #4: We slowed way down . And then even midpoint of 25 , we went down to one rig . So as you look forward into 2026 , of course you came into the year right at 38% at our current cadence .

Speaker #4: And what we assume we will continue to do for at least the foreseeable future, you can expect about a 2% decline in corporate decline rate.

Speaker #4: So the 38 , we came into the year with , we should exit the year into 2027 at , you know , 36% or so .

Speaker #4: And to your point, as your corporate decline goes down, the amount of CapEx needed for maintenance CapEx to hold your production flat also comes down by that kind of relation.

Jeff Robertson: HighPeak's amortization on the term loan starts again in Q3. I think it's about $120 million a year. If you were to be 20 over the next four quarters beginning late this year, $120 million a year is roughly $1 a share based on 125 million shares outstanding. Are you trying to position the company where you could accelerate the amortization of the term loan?

Speaker #6: Does High peaks , amortization on the term loan starts again in the third quarter . I think it's about $120 million a year .

Speaker #6: So if you were to be, let's just say, 20 over the next four quarters beginning late this year, $120 million a year is roughly a dollar a share with, based on 125 million shares outstanding.

Speaker #6: Are you trying to position the company where you could accelerate the amortization of the term loan

Michael L. Hollis: Absolutely. Jeff, you know, and the great thing is the amortization is a set rate, right? It's $30 million a quarter. The great thing about where we sit with the term loan is that we have the ability to pay down any amount on the term loan at par. To your point, we can take any additional free cash flow that we're generating with this capital efficient program in 2026 in the backdrop of commodity prices being higher today. You know, HighPeak's literally me, right? We're geared very heavily to oil price. As you mentioned, where else could you find in the public world where you have such a high gearing to the debt level that we have? To your point, in this environment, we will be able to pay down debt at a much accelerated rate.

Mike Hollis: Absolutely. Jeff, you know, and the great thing is the amortization is a set rate, right? It's $30 million a quarter. The great thing about where we sit with the term loan is that we have the ability to pay down any amount on the term loan at par. To your point, we can take any additional free cash flow that we're generating with this capital efficient program in 2026 in the backdrop of commodity prices being higher today. You know, HighPeak's literally me, right? We're geared very heavily to oil price. As you mentioned, where else could you find in the public world where you have such a high gearing to the debt level that we have? To your point, in this environment, we will be able to pay down debt at a much accelerated rate.

Speaker #4: Absolutely . So , Jeff , you know , the great thing is the amortization is a set rate , right ? It's 30 million a quarter .

Speaker #4: The great thing about where we sit with the term loan is that we have the ability to pay down any amount on the term loan at par.

Speaker #4: So to your point , we can take any additional free cash flow that we're generating with this capital efficient program in 2026 in the backdrop of commodity prices being higher today .

Speaker #4: And , you know , high , a little unique , right ? We're geared very heavily to oil price . And as you mentioned , where else could you find in the public world where you have such a high gearing to the debt level that we have to your point , in this environment , we will be able to pay down debt at a much accelerated rate .

Michael L. Hollis: For every $125 million we pay down, as you absolutely said, correct, it should be roughly $1 per share. In today's price environment, that's close to 20% increase in market value. By doing exactly the same thing in the next year, you should have similar results, except you've paid down more debt, and there's kind of a snowball effect because we do have a high cost of capital, call it 10+% interest. It would be reasonable to assume that later down the road, once we get the financial house in order by staying very disciplined, we will have opportunities to hopefully lower that cost of capital going into the future.

Mike Hollis: For every $125 million we pay down, as you absolutely said, correct, it should be roughly $1 per share. In today's price environment, that's close to 20% increase in market value. By doing exactly the same thing in the next year, you should have similar results, except you've paid down more debt, and there's kind of a snowball effect because we do have a high cost of capital, call it 10+% interest. It would be reasonable to assume that later down the road, once we get the financial house in order by staying very disciplined, we will have opportunities to hopefully lower that cost of capital going into the future.

Speaker #4: And for every $125 million , we pay down , as you Absolutely said , correct . It should be roughly a dollar per share .

Speaker #4: And in today's price environment that's close to 20% increase in market value . By doing exactly the same thing in the next year , you should have similar results except you pay down more debt .

Speaker #4: And there's kind of a snowball effect because we do have a high cost of capital , call it ten plus percent interest , and it would be reasonable to assume that later down the road , once we get the financial house in order by staying very disciplined , we will have opportunities to hopefully lower that cost of capital going into the future

Jeff Robertson: Thanks. Lastly on operations, Mike, is there anything structurally with respect to, say, water handling or anything else in the field that you're working on in 2026 that might offset some of the production optimization spending that you've outlined?

Speaker #6: Thanks . And lastly , on operations , Mike , is there anything structurally with respect to , say , water handling or anything else in the field that you're working on in 2026 that might offset some of the production optimization spending that you you've outlined .

Michael L. Hollis: You know, there's the good thing is anything we do to optimize production increases the revenue that we have in, lowers all of the per BOE metrics that we have. Now on the water system, the great thing is the water system's there. It's paid for. It's been there for a while. We just utilize what we already have, which makes both on the capital side for recycled water, for simulations, as well as disposal of any of the produced fluids very, very efficient. When you look at the capital reduction or what we like to call the intensity of capital needed to produce a certain level of volumes of hydrocarbons continued to go down over the last couple years. If you go all the way back to 2023, HighPeak spent $1 billion.

Mike Hollis: You know, there's the good thing is anything we do to optimize production increases the revenue that we have in, lowers all of the per BOE metrics that we have. Now on the water system, the great thing is the water system's there. It's paid for. It's been there for a while. We just utilize what we already have, which makes both on the capital side for recycled water, for simulations, as well as disposal of any of the produced fluids very, very efficient. When you look at the capital reduction or what we like to call the intensity of capital needed to produce a certain level of volumes of hydrocarbons continued to go down over the last couple years. If you go all the way back to 2023, HighPeak spent $1 billion.

Speaker #4: So , you know , there's the good thing is anything we do to optimize production increases the revenue that we have in lowers all of the per boe metrics that we have .

Speaker #4: Now on the water system , the great thing is the water system's there . It's paid for . It's been there for a while .

Speaker #4: We just utilize what we already have, which makes both on the capital side for recycled water, for stimulations, as well as disposal of any of the produced fluids.

Speaker #4: Very , very efficient . And when you look at the capital reduction or what we like to call the intensity of capital needed to produce a certain level of , of volumes of hydrocarbons continued to go down over the last couple of years .

Speaker #4: If you go all the way back to 2023 , high peak spent $1 billion , 2025 , it was , you know , call it 500 million , 2026 .

Michael L. Hollis: 2025, it was, you know, call it $500 million. 2026, half that number. Now, I don't want anyone to think 2027 is gonna be half of 2026. It'll be slightly lower because we do have some infrastructure that we have planned and in the budget in 2026 that's not going to happen in 2027. Think $15 to 20 million dollars cheaper total CapEx in 2027 to effectuate the exact plan that we have for 2026. The company will continue to get more efficient. As you laid out earlier with the corporate decline dropping each year, that also helps accelerate that corporate efficiency.

Mike Hollis: 2025, it was, you know, call it $500 million. 2026, half that number. Now, I don't want anyone to think 2027 is gonna be half of 2026. It'll be slightly lower because we do have some infrastructure that we have planned and in the budget in 2026 that's not going to happen in 2027. Think $15 to 20 million dollars cheaper total CapEx in 2027 to effectuate the exact plan that we have for 2026. The company will continue to get more efficient. As you laid out earlier with the corporate decline dropping each year, that also helps accelerate that corporate efficiency.

Speaker #4: Half that number now. I don't want anyone to think 2027 is going to be half of 2026. It will be slightly lower because we do have some infrastructure that we have planned.

Speaker #4: And in the budget in 2026, that's not going to happen in 2027. So, think $15 to $20 million cheaper total CapEx in '27 to effectuate the exact plan that we have for '26.

Speaker #4: So the company will continue to get more efficient . And as you laid out earlier with the corporate decline dropping each year , that also helps accelerate that corporate efficiency

Jeff Robertson: Thank you.

Michael L. Hollis: Yes, sir. Thank you.

Mike Hollis: Yes, sir. Thank you.

Operator 1: Once again, ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. Actually, one moment. We have a follow question from Jeff Robertson with Water Tower Research.

Mike Hollis: Once again, ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. Actually, one moment. We have a follow question from Jeff Robertson with Water Tower Research.

Speaker #6: Thank you .

Speaker #4: Yes , sir . Thank you .

Speaker #2: Once again , ladies and gentlemen , if you have a question or comment at this time , please press star one one on your telephone And I'm not showing any further , actually .

Speaker #2: One moment We have a follow up question from Jeff Robertson with Water Tower Research

Jeff Robertson: Perfect. Ryan, one question that came up on the November conference call was the distribution of shares by the HighPeak Energy entities. Is there any update you can provide on the planned distributions in 2026 and 2027?

Speaker #6: Perfect . Ryan , one one question that came up on the November conference call was the distribution of shares by the High peak in entities ?

Ryan Hightower: Yeah. Good morning, Jeff. Good question. When we rolled into the 2026 calendar year and oil prices were kinda in the mid- to upper $50s at the time, we got with the majority investors in the partnership and ended up extending for an additional year, which will allow us to, you know, get into hopefully a healthier market environment for fund distribution timing. We do have the flexibility to do it throughout the calendar year, or we could kind of go all the way through 2026 and start the distribution in early 2027.

Speaker #6: Is there any update you can provide on the plan distributions in 2026 and 2027 ?

Speaker #4: Yeah . Good morning Jeff . Good , good question . When we rolled into the 2026 calendar year and oil prices were kind of in the mid to upper 50s at the time , we got with the majority investors and the partnership and ended up extending for an additional year , which will allow us to , you know , get into hopefully a healthier market environment for for fund distribution timing .

Speaker #4: We do have the flexibility to , to do it throughout the calendar year . Or we could kind of go all the way through 2026 and start the distribution in early 2027 .

Jeff Robertson: Okay. Thank you.

Ryan Hightower: You bet.

Operator 1: Again, ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone. I'm not showing any further questions at this time. As such, this does conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.

Operator: Again, ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone. I'm not showing any further questions at this time. As such, this does conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day.

Speaker #6: Okay . Thank you .

Speaker #4: You bet

Speaker #2: Again , ladies and gentlemen , if you have a question or comment at this time , please press star one one on your telephone And I'm not showing any further questions at this time .

Q4 2025 Highpeak Energy Inc Earnings Call

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