Sign in

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

HE

HighPeak Energy, Inc. (HPK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $234.8M and diluted EPS was $0.06; volumes were steady at 50.2 MBoe/d (86% liquids), but lower realized prices drove sequential revenue/EPS declines .
  • EBITDAX was $179.4M in Q4 (vs. $214.3M in Q3), reflecting price-driven cash margin compression despite continued cost discipline; LOE fell to $6.81/Boe in Q4 .
  • 2025 guidance targets flat production (47–50.5k Boe/d) with a 20% lower capital budget ($448–$490M total, incl. $33–$35M one-time infrastructure), and LOE of $7.00–$7.50/Boe and G&A of $1.25–$1.35/Boe .
  • Management highlighted capital structure optimization post March 12 (make-whole expiration), with potential to materially cut interest expense (term loan SOFR+750 bps drove 13%/$150M cash interest in 2024) and accelerate levered FCF—an important stock catalyst .
  • Board declared a $0.04 quarterly dividend (Q4 paid; next payable March 25, 2025), and extended the $75M buyback (≈$40M remaining) .

What Went Well and What Went Wrong

What Went Well

  • “We ran a disciplined and efficient drilling program, reduced our capex budget by 40% from the prior year, increased production by 10%, beat and raised guidance on production, and reduced our operating costs” .
  • Reserves grew 29% YoY to 199 MMBoe (68% oil); proved developed reserves +36% to 108 MMBoe; PV-10 ≈ $3.4B at SEC pricing; reserve replacement ratio 345% .
  • Strong operational execution: Q4 LOE $6.81/Boe; unhedged EBITDAX per Boe $39.35 despite price headwinds; continued delineation of Middle Spraberry with potential >200 sub-$50/Bbl breakeven locations .

What Went Wrong

  • Pricing headwind: Q4 realized price fell to $50.83/Boe (crude $70.46/Bbl), down from $57.49/Boe in Q3 and $62.33/Boe in Q2, compressing margins; derivative loss in Q4 further impacted GAAP earnings .
  • Interest burden persisted: Q4 interest expense was $39.5M (term loan at SOFR+750 bps); diluted EPS dropped to $0.06 vs. $0.35 in Q3 .
  • Q4 CapEx ($152.5M) ran higher than internal plans due to accelerated D&C work and initiation of key 2025 infrastructure projects (timing pull-forward) .

Financial Results

Revenue, Earnings, and EBITDAX (Sequential trend)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$275.3 $271.6 $234.8
Net Income ($USD Millions)$29.7 $49.9 $9.0
Diluted EPS ($USD)$0.21 $0.35 $0.06
EBITDAX ($USD Millions)$215.8 $214.3 $179.4

YoY Comparison (Q4 2023 vs. Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$301.2 $234.8
Diluted EPS ($USD)$0.66 $0.06
Average Realized Price ($/Boe)$58.48 $50.83
Volumes (MBoe/d)49.96 50.22

Margin and Cost Metrics (Sequential)

MetricQ2 2024Q3 2024Q4 2024
Realized Price ($/Boe)$62.33 $57.49 $50.83
LOE ($/Boe)$6.79 $7.12 $6.81
G&A ($/Boe)$1.07 $1.05 $1.30
Production & Ad Valorem Taxes ($/Boe)$3.76 $3.26 $2.87
Unhedged EBITDAX per Boe ($/Boe)N/A$45.68 $39.35

KPIs

KPIQ2 2024Q3 2024Q4 2024
Sales Volumes (MBoe/d)48.53 51.35 50.22
% Liquids89% 88% 86%
Crude Realized Price ($/Bbl)$81.39 $75.99 $70.46
NGL Realized Price ($/Bbl)$20.32 $21.14 $22.30
Gas Realized Price ($/Mcf)$0.13 $0.42 $0.29
CapEx ($USD Millions)$164.0 $140.0 $152.5
Adjusted Net Income ($USD Millions)$39.4 N/A$28.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Average Production (Boe/d)FY 2025N/A47,000–50,500 New (initial)
Net Operated Wells TILFY 2025N/A52–56 New (initial)
D,C,E&F CapEx ($MM)FY 2025N/A$375–$405 New (initial)
Infrastructure/Other CapEx ($MM)FY 2025N/A$40–$50 New (initial)
One-Time Infrastructure ($MM)FY 2025N/A$33–$35 New (initial)
Total CapEx ($MM)FY 2025N/A$448–$490 New (initial)
LOE ($/Boe)FY 2025N/A$7.00–$7.50 New (initial)
G&A ($/Boe)FY 2025N/A$1.25–$1.35 New (initial)
Dividend per ShareOngoing$0.04/quarter (Q4, Feb declaration) $0.04/quarter (next payable Mar 25, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Capital discipline & corporate efficiencyLower LOE guidance; first-half weighted CapEx; maintenance mode; free cash flow generation 2025 plan: flat volumes, ~20% lower CapEx; infrastructure one-offs; improving efficiency Improving efficiency; CapEx downshift
Infrastructure build-out (gas, power, water)Emphasis on life-of-field systems; first-half CapEx weighting Expanded low-pressure gas gathering, overhead electric; redundancy with midstream; enabling lower OpEx and scalability Execution progressing; benefits to LOE/CapEx
Middle Spraberry delineationFirst well success; east/north acreage outperformance Second well on production; potential >200 sub-$50 locations; early flowback ~400 bopd Positive delineation momentum
Reserves growthInventory depth and additions emphasized Year-end proved reserves +29%; PD +36%; PV-10 ≈ $3.4B Strengthened reserves/asset base
Capital structure optimizationStrategic alternatives noted; high cost of capital acknowledged Plan to refinance post make-whole; potential big cash interest savings and flexibility Actionable near-term initiative
Hedging & commodityModest oil hedges in 2025; prices pressured Added HH gas swaps at $4.43/MMBtu (30k MMBtu/d Mar’25–Feb’26) Gas hedges layered; manage price risk

Management Commentary

  • CEO: “We will maintain capital discipline… keep production flat while reducing capital expenditures by an additional 20%… reduce interest expense and boost levered free cash flow by optimizing our capital structure” .
  • President: “Continued successful delineation of [Middle Spraberry] has the potential to add over 200 additional sub-$50/Bbl breakeven locations” .
  • CEO (call): “Term loan carries… ~13% average interest rate… ~$150M cash interest expense; transitioning to normal way financing would materially improve our corporate structure” .
  • President (call): “We can flex upwards to 6–8 rigs… or hold 143,000 acres with <1 rig… flexibility to take advantage of any pricing environment” .

Q&A Highlights

  • Infrastructure enables more complete gas capture and sales, supports oil operations; added HH gas hedges at $4.43/MMBtu for 30k MMBtu/d through Feb’26; liquids mix expected ~85% with oil low-to-mid 70% over time .
  • Corporate efficiency: level-loaded 2-rig plan, one-time infra drives 2025 first-half weighting; potential 2026 all-in maintenance CapEx ~30% lower as infra base matures .
  • Capital structure: 100 bps borrowing cost reduction ≈ $10M FCF; illustrative drop from ~13% to ~8% could save ~$50M, plus eliminating amortization adds flexibility; path to rapid deleveraging while maintaining dividend/buybacks .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (EPS, revenue, EBITDA) were unavailable due to data access limits; as a result, we cannot assess beats/misses vs. Wall Street consensus at this time. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Pricing pressure drove Q4 sequential revenue/EBITDAX declines despite stable volumes; cost control (LOE) remained strong, supporting resilient cash margins .
  • 2025 plan focuses on efficiency: flat production with ~20% lower CapEx, plus one-time infra to reduce OpEx and improve redundancy; expect CapEx to be front-loaded in H1 .
  • Capital structure optimization is a near-term catalyst; refinancing post make-whole expiration could materially reduce interest burden and expand FCF, enabling faster debt paydown and potential buyback capacity .
  • Resource depth and delineation continue to de-risk the asset base (reserves +29%, PD +36% YoY; potential >200 Middle Spraberry locations) strengthening medium-term free cash flow durability .
  • Hedging posture adds downside protection (oil collars/swaps; new HH gas swaps at $4.43), while infrastructure investments improve uptime and lower LOE—important amid commodity volatility .
  • Dividend maintained at $0.04/quarter and buyback authorization extended ($75M, ~$40M remaining), signaling shareholder returns alongside deleveraging .
  • Without consensus estimates available, focus shifts to internal execution milestones: infra completion, refinancing progress, LOE/G&A delivery within guidance, and sustained flat-to-slightly-up volumes .