HighPeak Energy, Inc.

Thank you for standing by and welcome to High Peak Energy's fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker 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. Please be advised that today's call is being recorded. Should you require any further assistance, please press star 0. I would now like to hand the call over to Stephen Tholen, Chief Financial Officer. Please, go ahead.

Thank you. Good morning, everyone, and welcome to High Peak Energy's fourth quarter 2021 conference call. Representing High Peak today are Chairman and CEO Jack Hightower, President Mike Hollis, 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 March investor presentation, our fourth quarter 2021 earnings release, and our 2021 Form 10-K, all of 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 yesterday afternoon. Our prepared remarks will begin on slide four of our March investor presentation. I will now turn the call over to our chairman and chief executive officer, Jack Hightower.

Thank you, Stephen, and good morning, everyone, and welcome to today's call. As you probably realize, every CEO is always excited to talk about their company and the performance of the company. I'm more of a macro person in terms of annualized performance, but this is a great, exciting time with High Peak and with oil and gas prices in the world, unfortunately, some of which contributing to the Ukraine crisis. But we had a great fourth quarter. Our average production averaged over 14,900 barrels a day, which was an 81% increase compared with our third quarter average. We successfully executed our drilling program and averaged almost three rigs throughout the quarter. We had a large number of wells that are in the process of being completed. And most of these wells will come online and be completed and contributing to our production towards the end of this year. The majority of the wells are anticipated to ramp up and be reaching peak rates towards the end of the year again. We added our fourth rig in January. and are now very active with four rigs running in the market. We continue to consider adding to our rig count if commodity prices remain strong. And so we are contemplating adding to our drilling activity. And with our cash flow, as we go through the numbers, you can see we could do so without increasing our outspend. High peak is a growth story, and we're going to take advantage of current market strength in oil and gas prices to create additional value for our shareholders. So I'd like everyone to point to slide four over our March investor presentation. And this gives you an overview and key statistics for the company. I previously mentioned that our average production was 14,900 barrels a day, consisting of 95% liquids This contributes tremendously to our economic success. We continue to realize peer-leading prices and cash operating margins. And on a BALY basis, our fourth quarter unhedged cash margin was $60.26 per barrel of oil equivalent, approximately 84% of our fourth quarter realized pricing. Also, in the first quarter of 22, we entered into a series of acquisitions, which in the aggregate include 9,500 acres and almost 2,500 barrels a day of production, and an additional 40 locations with a saltwater disposal system, including three disposal wells and rights to local non-potable water sourcing of approximately 35,000 barrels a day. These acquisitions also contribute to about $3 million per year in savings on water. The acquisitions just in closing in the first quarter add 15% increase to our total acreage position and 29% to our flat top acreage position. If you think about it and looking back, A year ago in 2021, we had about 51,000 acres. And today, with the closing of that transaction, we will have almost 72,000 acres. In a little over a year, a 40% increase for High Peak, increasing our scale and giving additional locations to our inventory. The acquisitions check all the boxes. They're immediately available for development, and related gathering infrastructure is already in place. We paid less than a three times multiple on cash flow, and we're projected to increase our EBITDAX in 2022 over $50 million, more than that with present pricing, but $50 million assuming commodity prices that stay in the range of $70 to $90 a barrel. The assets are contiguous to our flat top operating area. They provide many synergies, including adding to our robust infrastructure system. The acreage is 100% operated and will be easy to integrate into our development plan. The 40 locations with $15 to $20 million of net present value And of course, it's hard to pick pricing right now because prices are so high compared to the numbers that we've been utilizing. But they add potential upside value to high peak in addition to the current PDP value. In other words, we will be actively developing that area and each well at approximately $20 million net present value with 40 locations can add significantly to our value. If you'll turn to page five, or slide five, I'm only going to pick out a few things in this particular slide. We still have the highest oil cut amongst our peers in the basin. Our income stream was 88 percent oil, 95 percent liquids. Our realized price was $72.07 on a BOE basis, which was 93 percent of the weighted average of NIMAC's oil price during the quarter. And this is because we have such a high percentage of oil. Our hedge price was $67.50, still a great price compared to a lot of our peers that are having significant write-downs because of their hedges. We lowered our LOE by $0.60 a barrel in the third quarter compared to the third quarter. But I look at what's happening in the future. And Mike's going to talk about operationally what's happening with our lease operating expenses But they're going to continue decreasing once the substation and other things become operable that are active things in progress. Our EVA tax was $72.4 million, which was a 117% increase. But that was at a very low oil price, at $72. Think about what it would be today on an unhedged basis. It gives you a sense of what's happening in the future and how excited we are about our future plans and our future drilling and our future EBITDAX. If you'll turn to slide six, our track record of delivering capital-efficient oil-weighted growth will continue into the future. You look at 2020 from 1,900 barrels a day all the way up to almost 15,000 barrels, and then take our guidance for this year of averaging on the low end 27,000 barrels to 32,500 barrels with the four rigs drilling and going all the way up to around 45,000 barrels. That's tremendous growth. If you look at our EBIDACs as a function of increasing production, and we'll talk about drilling performance in terms of single well performance, payouts, and reserves. But if you think about, this was based on roughly $70 to $90 oil at $600 to $800 million average for 2022. And exiting the year at between $850 and $1,100,000,000, At a higher oil price of around $110 a barrel, that takes us up to $1.4 billion to $1.6 billion in 2022. And so that you can see what oil and gas prices are doing for High Peak in terms of cash flow. And now if you turn to slide seven, High Peak is continuing to provide rapid, proved developed reserves growth. I've mentioned many times, and I'm going to mention many times in today's presentation, we are a growth company. If you look at our growth from 2020, going up from $51 million to $400 million to $744 million to exiting this year, at over $815 million in approved developed reserves and another added up to $1,498,000,000 counting our approved reserves. And that's at a low price deck. It's much higher than that at today's prices, just a month or so after the end of the year. And then look at, and this is very important, to look at our rapid growth and what that's going to do to us going into the end of 2022. And we did some numbers at a price deck of $110 a barrel, basically $14 a barrel below, actually oil prices are higher than that right this minute, almost $19 a barrel cheaper, I mean more expensive today than what we projected And it takes us up to $3.8 billion of approved reserves in just this 12-month period. I'm counting what will be in process of being completed at year end. So we're on a rapid growth. We're very excited about what's taking place. We're going to drill over 100 wells this year. And as you can see, and use your own imagination as to what price deck you want to use, we are having tremendous success. And with that, I'll turn the presentation over to Mike, who's going to talk about the next few slides and give you an update on operations.