Sign in

You're signed outSign in or to get full access.

HE

HighPeak Energy, Inc. (HPK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered stable volumes at 48.6 MBoe/d with strong unit cost control (LOE $6.55/Boe) and EBITDAX of $156.0M, but headline revenue of $200.4M declined sequentially on softer realized prices, driving diluted EPS to $0.19 .
  • Estimates comparison: Revenue and EBITDA missed Wall Street consensus, while normalized EPS beat; $200.4M vs $217.4M*, $147.7M* vs $173.8M*, and $0.10* normalized EPS vs $0.00* consensus; GAAP EPS was $0.19 .
  • Capital structure de-risked: term loan and RCF extended to Sep-2028, term loan upsized to $1.2B, amortization deferred to Sep-2026, and call protection expiration in Sep-2025 enables paydown at par; Board declared a $0.04 quarterly dividend .
  • Operational efficiencies were a bright spot (simul-frac savings ~$0.4M/well on the Lauren pad, D&C cost declines), with management reaffirming confidence in full-year production guidance despite temporarily running one rig and pacing completions to market conditions .
  • Near-term stock reaction catalysts: financing extension and optionality (par call), increased hedging coverage (>50% H2 oil, ~90% H2 gas), and cost/efficiency gains; offsets include macro/tariff pressures affecting prices and sequential revenue decline .

What Went Well and What Went Wrong

What Went Well

  • Efficiency gains: first simul-frac project delivered $1.6M total savings ($0.4M per well) and low single-digit quarterly declines in well costs; plan to apply simul-frac to ~⅓ of remaining 2025 completions .
  • Balance sheet optionality: debt maturities extended to Sep-2028, call protection expiring Sep-2025 allows paydown at par, and floating-rate structure to benefit if rates decline; liquidity cited at $200–$250M .
  • Unit costs/margins: LOE decreased 1% QoQ to $6.55/Boe; EBITDAX $156.0M and unhedged EBITDAX per Boe $33.58 (74% of realized price), demonstrating resilient margins despite price headwinds .

What Went Wrong

  • Sequential revenue decline: total operating revenues fell to $200.4M from $257.4M in Q1, driven by lower realized prices (total $45.27/Boe vs $53.84/Boe in Q1) .
  • Estimate misses: revenue and EBITDA came in below consensus ($200.4M vs $217.4M*; $147.7M* vs $173.8M*), pressuring near-term estimate trajectories *.
  • Macro/tariffs/geopolitical uncertainty: management flagged lower commodity prices driven by geopolitical issues and newly instituted tariffs; activity reduced to one rig mid-May, creating near-term lumpiness in volumes and cash flows .

Financial Results

MetricQ2 2024Q1 2025Q2 2025Q2 2025 Consensus Est.
Revenue ($USD Millions)—$257.448 $200.400 $217.353*
Net Income ($USD Millions)—$36.335 $26.176 —
Diluted EPS ($USD)$0.45 $0.26 $0.19 —
Adjusted EPS ($USD)—$0.31 $0.10 $0.00*
EBITDAX ($USD Millions)—$197.318 $156.024 —
EBITDA (S&P actual, $USD Millions)——$147.681*$173.787*
Avg Realized Price ($/Boe)$49.72 $53.84 $45.27 —
LOE ($/Boe)$6.58 $6.61 $6.55 —
Capex ($USD Millions)—$179.819 $125.4 —
  • Values marked with * are retrieved from S&P Global.

KPIs and operating metrics

KPIQ2 2024Q1 2025Q2 2025
Total Sales Volumes (MBoe/d)50.876 53.128 48.649
Oil Mix (% of Volumes)~70% crude, ~85% liquids ~72% crude, ~86% liquids ~70% crude, ~85% liquids
Wells Drilled (gross/net)—16/16.0 13/13.0
Wells Turned-In-Line (gross/net)—13/12.9 14/14.0
DUCs at Quarter-End (gross/net)—28/28.0 20/20.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Average Production (Boe/d)FY 202547,000 – 50,500 48,000 – 50,500 Raised midpoint
LOE ($/Boe)FY 2025$7.00 – $7.50 Maintained (Q2 actual $6.55/Boe) Maintained
G&A ($/Boe)FY 2025$1.25 – $1.35 Maintained Maintained
Total Capex ($MM)FY 2025$448 – $490 Maintained; H1 weighted; Q2 down >30% QoQ Maintained (pace adjusted)
Net Operated Wells TILFY 202552 – 56 Maintained Maintained
Dividend per ShareOngoing$0.04 quarterly $0.04 declared Aug-2025 Maintained
Debt Maturity ProfileCorporateTerm Loan/RCF maturities 2026 Extended to Sep-2028; call protection expires Sep-2025 Extended/Improved optionality

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Capital discipline & development pacingTwo-rig plan; capex -20% YoY targeted; H1 infra capex; flexibility to slow program Dropped to one rig mid-May; second rig planned for Sep but flexible; completions paced to market Increased caution; flexible cadence
Cost/Efficiency (D&C, LOE)LOE down 17% YoY in 2024; drilling faster; four extra wells in Q1 Simul-frac success (~$0.4M/well savings); low single-digit D&C cost declines; LOE down QoQ Improving
Hedging & cash flow protectionAdded gas swaps at $4.43/MMBtu in Q1 >50% H2 oil volumes hedged (floors >$62), ~90% H2 gas at $4.43; extended through Mar-2027 Higher coverage
Capital structure optimization2025 objective to reduce interest/optimize structure Term loan/RCF extended to 2028; amortization deferred; par call optionality; floating rate De-risked
Middle Spraberry delineationDelineation potential +200 sub-$50 locations First Flat Top well >170k bbl oil in <1yr; second 15k’ lateral ramping; expect more tests Positive progress
ESG/Power costsSolar farm commissioning in 2024 Solar farm saved ~$810k and cut ~4,600 metric tons CO2 (Jun–Dec), 10MW off grid at peak Ongoing benefits
Macro/tariffs/geopoliticsVolatile prices, cost inflation noted Management flagged lower prices tied to geopolitics/tariffs; cautious stance Persistent headwind

Management Commentary

  • CEO on macro and margins: “Our margins remained quite strong at $33.58 per barrel of oil equivalent, allowing us to generate over $155,000,000 of EBITDAX during the quarter… we reduced activity in mid May as prudent allocators of capital” .
  • Financing optionality: “Call protection… will expire next month, which provides High Peak with significant flexibility to pay down this loan at par… floating interest rate structure… to benefit from projected lower interest rates” .
  • Operational efficiencies: “Completed our first simul-frac job… saved closer to $400,000 per well… expects to utilize simul-frac on roughly a third of remaining completions during the balance of 2025” .
  • Middle Spraberry results: “First Middle Spraberry test… has cumed over 170,000 barrels of oil… breakevens in the low to mid $40/bbl range” .
  • Hedging policy: “Over 50% of our volumes hedged for the second half… weighted average floor price of over $62/bbl… roughly 90% of second half 2025 gas volumes hedged at $4.43/MMBtu” .

Q&A Highlights

  • Liquidity and debt reduction: Management targets maintaining $200–$250M liquidity while using free cash flow to pay down debt over time; paydown cadence depends on oil prices and hedge protection .
  • Working capital dynamics: Reduction from two rigs to one created a large accounts payable/working capital adjustment in Q2; expect relative stability at one rig and improvement when second rig is added .
  • Simul-frac deployment: Ideal for pads with ≥4 wells; exploring hybrid simul-frac on 3-well pads with smaller savings ($50–$100k) to broaden applicability .
  • DUC inventory and rig decision: DUCs likely trend toward ~17–18 by year-end if one rig persists; nearly all wells for 2025 completions are already drilled, offering flexibility on re-adding a rig .
  • Reserves impact from Middle Spraberry: Expect significantly higher Middle Spraberry PUDs at YE 2025 vs 2024, supported by additional wells and offset operator results .

Estimates Context

  • Q2 2025 performance vs consensus:
    • Revenue: $200.4M vs $217.4M* → bold miss.
    • EBITDA: $147.7M* vs $173.8M* → bold miss.
    • Normalized EPS: $0.10* vs $0.00* → bold beat.
  • Sequential: Revenue down from $257.4M in Q1; GAAP diluted EPS down from $0.26 to $0.19; EBITDAX down from $197.3M to $156.0M .
  • Implications: Street models likely reduce near-term revenue/EBITDA on lower realized prices and paced activity; normalized EPS resilience aided by hedges and cost control could temper EPS cuts.
  • Values marked with * are retrieved from S&P Global.
MetricQ2 2025 ActualQ2 2025 ConsensusResult
Revenue ($USD Millions)$200.400 $217.353*Miss
EBITDA ($USD Millions)$147.681*$173.787*Miss
Primary EPS (Normalized, $USD)$0.10*$0.00*Beat
Diluted EPS (GAAP, $USD)$0.19 ——

Key Takeaways for Investors

  • Cost leadership persists: LOE lowered again and simul-frac/D&C efficiency gains support durable margin per Boe even amid weaker prices .
  • Capital structure risk reduced: 2028 maturities and near-term par call optionality provide strategic flexibility to delever if prices weaken or improve .
  • Hedge coverage elevated: >50% H2 oil and ~90% H2 gas hedged stabilizes cash flow and underpins dividend continuity at $0.04 per quarter .
  • Volume trajectory lumpy but framework intact: One-rig cadence and pad timing drive quarter-to-quarter fluctuations, but management reiterated confidence in FY production guidance midpoint raise .
  • Estimate revisions likely modest negative on revenue/EBITDA given misses; normalized EPS beat suggests resilience, with hedge floors buffering downside *.
  • Watch Middle Spraberry delineation and simul-frac scaling as medium-term drivers of capital efficiency and inventory quality .
  • Tactical setup: Near-term catalysts include debt paydown at par post-call protection, second rig decision in September, and commodity price direction; risk is macro/tariff-driven price pressure .
Notes: Values marked with * are retrieved from S&P Global.

Additional references

  • Q2 2025 press release details, hedging, dividend, and financial statements .
  • Q2 2025 call transcript for management themes and Q&A .
  • Term loan/RCF amendment press release .
  • Prior quarter context: Q1 2025 results/updated guidance ; Q4 2024 year-end and 2025 plan .