HighPeak Energy, Inc.

Good day and thank you for standing by. Welcome to the High Peak Energy 2021 Third Quarter Earnings Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, Stephen Tholen, Chief Financial Officer. You may begin, sir.

Good morning, everyone, and welcome to High Peak Energy's third quarter 2021 conference call. Representing High Peak today are Chairman and CEO Jack Hightower, President Michael Hollis, and Vice President of Business Development Ryan Hightower, and I am Stephen Tholen, the Chief Financial Officer. During today's call, we will make reference to our November investor presentation and our third quarter 2021 earnings release, which can be found on High Peak'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. 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. We will also refer to certain non-GAAP financial measures on today's call. So, please see the reconciliations in the earnings release which was issued on Monday afternoon. Our prepared remarks will begin on slide four of our November investor presentation. I will now turn the call over to our chairman and CEO, Jack Hightower.

Jack Hightower Steve, thank you very much for the introduction and I want to welcome everybody to our third quarter conference call. And basically, I'm amazed that this is a very exciting report we have for you. We know that you have your press release and can look at financial numbers. And as we had mentioned earlier, we have lumpy production. So therefore, our financials are not as exciting. But when you look at our production, This is a significant growth story for 2022. We added our second rig early in the third quarter. We're focused on drilling large infill pads in our flat top operating area. And as we mentioned in our August call, we expected that this would cause our production volumes in the third quarter to be lumpy because we had to temporarily curtail some of our producing wells. And I'll go into that in more detail throughout the presentation. But now that that's behind us, our production volumes getting our wells back online and getting new wells starting to produce, we've rebounded nicely. And since the beginning of October, we've been averaging approximately 15,500 barrels of oil a day, which is almost an 80% increase over and above our production in the third quarter. And that is a tremendous increase in production. It shows you the benefit of having our oil production come back online successfully and then how much success we're having in adding our new wells. It's important to note that these production levels are a product of our initial one-rig development program. So, wells that are drilled with our second rig will begin to contribute meaningful production volumes in early 22. And then we're going to, in addition, due to our excellent well economics and current strength of the commodity market, we batted a third rig in late October. and now plan to add the four-year end, another rig, a fourth rig. We will continue to pull our present value forward for our investors, and yet we'll do all this while maintaining our philosophy of staying less than one time debt to EBITDA. So we'll go through the financials and talk about that as we go forward. Now if you'll turn to slide four, on your presentation. And it's really interesting, I think, to look at Howard County as the faded white line and all the activity in Howard County. But when you see our acreage block, our two contiguous acreage blocks, and what we've added to signal peak from the last conference call and what we have up in Flat Top now, it's a tremendous acreage position. In the quarter, we average 8,200 barrels a day compared to 8,900 barrels a day in the first quarter. And we, of course, told everybody that our production would be off. We literally had between 4,000 and 6,000 barrels a day shut in during this period to frack other wells. But since mid-October, we've averaged 15,500 barrels a day. We've increased our acreage position up to 62,000 acres. and we still operate 92% of our acreage position. We significantly closed 10,600 additional acres during the quarter. This gave us almost 100 more additional locations. So when you look at us as a whole, and even with four rigs drilling, we're going to have plenty of inventory, plenty of go-forward value, And our production increases that we'll talk about later are going to continue increasing throughout 2023 and beyond. We also have still the highest cash operating margins of any of our peers at $51.88 and an average realized price of $63.18 through the quarter. On page five, the next slide, to me, is the most exciting slide, one of the most that we have, at least through this quarter. It gives you an explanation of when we started getting to 3,300 barrels a day, and then we had the COVID-19 that was during that period. Then in a short period of time, we had the winter storm that took our production off, but we increased from that up to 5,300 barrels a day in the first quarter. Then we started back with our program and our production started taking off. And of course, then we had the offset fracking where we had to shut in. Each of those categories have inhibited our growth during the period. And then all of a sudden, when we get our wells back online... and look at our production taking off in the third quarter, or beyond the third quarter, into the fourth quarter, and throughout the end of the year, just going straight up. And that's with one ridge, and that's significant because we're growing our production exponentially. We're adding the second, the third, and the fourth rig before year end, and that growth is going to continue on into 2022. Turning the next page, getting to slide number six, we continue to receive great prices for our production. Our realized price of 6318 is 89% of WTI. That's higher than any of our peers in the industry. And even with our hedges in place, and I'll point out we have a lot. Later on, I'll point out we have a lot of hedges that are A very small amount of our production is hedged, and we have plenty of exposure to price increases with oil prices going up. Our capex in the third quarter was $64 million, excluding acquisitions. we drill over 124,400 feet of lateral foot, not including our second horizontal SWD well. So we now have two horizontal SWD wells. We think they're the only two in the United States. And they are very sufficiently handling our water disposal needs up in Flat Top. As mentioned in our call, the This quarter is really the stepping stone for growth as we go forward. Now, if you turn to slide six and looking at that, we mentioned that in our press release, the earnings were down from $40 million to $33 million, principally because of having our wells offline. Our CapEx, we mentioned what we were doing there. Our realized pricing is still fantastic compared to our peers. Our production is starting to come back up again. And so I wouldn't pay too much attention to this in the sense of we knew this was going to happen. We knew we had to take these wells offline. When you take wells offline, your LOE goes up. Your GNA cost per barrel goes up. All of these things will go right back into very efficient and being number one in our class as we exit the year in this quarter. And now I'm going to turn it over to Mike Hollis to discuss the operations and the margins in some of the next few slides. Mike?