HighPeak Energy, Inc.

Dan, thank you for standing by. Welcome to the High Peak Energy 2022 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Toland, Chief Financial Officer. Please go ahead.

Good morning everyone and welcome to High Peak Energy's second quarter 2022 conference call. Representing High Peak today are Chairman and CEO Jack Hightower, President Michael Hollis, Vice President of Business Development Ryan Hightower, and I'm Stephen Tholen, the Chief Financial Officer. During today's call we will make reference to our August investor presentation and our second quarter 2022 earnings release, which can be found on HypeGeek'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 August investor presentation. I will now turn the call over to our chairman and CEO, Jack Hightower.

Steve, thank you very much for the introduction. And I am extremely excited about this quarter's performance and our growth, continued growth strategy, being able to execute that. I'd like everybody to think about the press release and earnings release that we just had. And in looking at that and studying that, it's just been a phenomenal quarter. You could say it's business as usual in terms of executing everything we set out to accomplish in the quarter. We, of course, increased our legacy high peak production volumes substantially. And if you think about going from 12,000 something on a pro forma basis to almost doubling that, we ended up integrating properties and infrastructure into our operations. We ended the quarter with six rigs running and three frack crews running, which was an increase, when you think about last year's business, of almost three times the number of, we had one rig running most of last year, and now we have six rigs running. We commissioned our flat top electrical substation project, and we're in the process of converting our flat top field operations to electrical power. Our sand mine partnership became operational in June, and we're integrating that into our completion operations. We increased our revolving credit facility up to $400 million, and we added multiple banks to our group syndication. I want to definitely congratulate our team with what we were able to accomplish. increasing our drilling activity, field operations, integrating the acquisitions without having to add significantly to our personnel and our employee base, and continuing to lower our lease operating expenses and on a per BOE basis lower our GNA per barrel. We are evolving on a quarterly basis as evidenced by our track record of consistent, responsible growth, I've talked about that many times. And assuming that prices hold in this range, we will start generating free cash flow next year while simultaneously continuing to materially increase our production. If you really look at the quarter and think about our differentiated growth project and our growth story, we are continuing to execute on our business plan And in my whole 52 years in business, other than making substantial acquisitions, I've never had this kind of growth profile of doubling production in one quarter. So please turn to page four of our investor presentation. And I'm just going to pick out a few things on this page that'll give you insights as to where we're going and what's happening. Our production average, legacy production, averaged over 22,000 barrels a day. And of course, from the beginning of the year, in terms of our effective date on Hannifon, our total pro forma production averaged over 25,000 barrels a day. Actually, almost 100 plus percent increase in production quarter over quarter. So this continues our growth story. But more importantly, we have 46 wells in progress right now of horizontal wells in various stages of drilling and completion. And that is tremendous growth profile in terms of increasing our production as we go forward. And we're doing all this on the basis of great operating margins. In addition to that, when you look at our acreage position, when we went public, we had 51,000 acres. Today, we've closed on over 97,000 acres, which is a 50% increase in the last year alone. And we have line of sight on acreage that we're still in the process of purchasing. that's going to take us well over 100,000 acres. So the company is growing. We're getting more and more inventory. And we now have a split of contiguous nature acreage, one of the largest two contiguous blocks in the Midland Basin. And it's roughly a 50-50 split between Flat Top and Signal Peak. At the end of the quarter, we still have six rigs running. we actually have the highest unhedged operating cash margin in the industry, way above any other companies. So I want to thank our bank group for their continued support and for the three new banks that joined our facility. We look forward to maintaining this relationship as we grow the company in the future. Now turn to slide five. That gives you four different perspectives It shows you our daily production growth, which is tremendous growth in terms of this particular quarter. And we're going to continue that as we go forward and looking forward to the rest of this year and into next year and throughout next year. We're going to continue this growth profile, which is unprecedented in the industry. We've increased the number of wells that we're drilling. Our EBITDA, as we mentioned, is almost equal to all of last year's EBITDA and one quarter. And on a fully unhedged basis, it's approaching $800 million. And our operational ducks, I'm going to spend a little time on that in the sense of people have asked, how many wells are you turning in line? When you have six rigs running, we now are gonna have approximately 30 to 35 wells that will be turning in line per quarter. And we have about the same number of ducts with six rigs. We're getting 10 to 12 ducts also, which is another 30 to 35. So that'll give you a sense of how our growth product profile is gonna go and give you a sense of timing relative to our legacy production and how the new drilling rigs will start adding to this continued increase in growth production. Keeping in mind that production from our sixth rig that Hanathon had been operating will not start contributing until the fourth quarter of income. So it takes time for these rigs to start contributing to production and start contributing to our EBITDA. So our successful program is gonna continue growing and we're gonna continue with the highest operating margins in the industry and great production growth in a tight supply in the oil market. Our next slide on page six is just looking at the numbers on this. I'm not gonna spend a lot of time other than we're continuing to maintain 95% liquids. Our total BOE including derivatives in terms of our realized pricing is the highest in the industry. Our LOE is continuing to go down and will continue going down over the course of the next 60 to 90 days as we bring on all the benefits that we have been outlining to you going forward. And therefore we also have the excluding hedges the highest operating margin in the industry and we're turning on about 30 wells a month plus and so we're very excited the other thing that I think is important relative to LOE is that we now have about 70% of our generators in online in that our pipeline system is starting to come in place and we're adding that and that reduces our generators as we go forward so our LOE is coming down appropriately as a result of that. Mentioning again high peak is an absolute differentiated growth story and we're going to continue taking advantage of current market conditions and pricing and in order to create maximum value for our shareholders. With that, I'm going to turn it over to Mike Hollis, who's going to talk about operating margins and operations and bring everybody up to speed on the successful quarter that we've had. Mike?