HighPeak Energy, Inc.

Good day, and thank you for standing by. Welcome to the High Peak Energy 2023 Third Quarter Earnings 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your questions, please press star 11 again. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your first speaker today, Steven Tholen, CFO.

Good morning, everyone, and welcome to High Peak Energy's third quarter 2023 earnings 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 November investor presentation and our third quarter 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 and the earnings release in our November investor presentation. I will now turn the call over to our Chairman and CEO, Jack Hightower.

Thank you, Steve, and good morning, ladies and gentlemen, and want to thank you for joining our third quarter earnings call today. My prepared remarks will begin on slide four of our presentation. Historically, I always start off saying it's an exciting time to talk about High Peak. And there's no question that this is an exciting, but beyond that exciting time, this is a transformational quarter for High Peak Energy. It's perhaps our best quarter in the history of the company today. Our production averaged over 52,000 BOE a day for the quarter. Our third quarter EBITDAX translates to over $1 billion on an annual run rate. We transitioned from a historical capital outspend to generating a material amount of positive free cash flow. And we secured necessary capital and liquidity needed to accomplish our long-term strategic plan. We definitely are substantially a different company today than where we were just a few short months ago. And we'll further discuss these points in greater detail as we go through the presentation. So if you'll turn to slide five in the presentation, this will start the amazing, exciting time at High Peak. Looking at this slide, we achieved three major company milestones during the third quarter, and not only positioned us to achieve our primary goals, but also these are transforming us into a completely different looking company. All three of these milestones were in accordance with our internal projections and our expectations. First and primary is We average over 50,000 barrels a day, which continues not only to highlight the high quality of our asset base, but also establishes a new level of scale for high peak. Thinking about increasing our production as much as we did starting at 42,000 barrel a day average, that 25% increase compared to our second quarter average and over 100% increase compared to our third quarter 22 average. That is phenomenal growth when we only had two rigs running. Prior to that, we had six rigs running, but the last quarter we had two rigs running. Second, in conjunction with our increase in production, our third quarter EBITDAX increased 44% compared to our second quarter and equates to over $1 billion on an annual run rate. Again, translates to a new level of scale for the company. Third, we reached a milestone of generating significant free cash flow during the third quarter of over $75 million. This is a major achievement for the company and illustrates the quality of our asset base and our strong financial health. At current prices and our third three-rig cadence, we expect to generate positive free cash flow this quarter and throughout 2024. I can't emphasize that enough, that we're going to continue our strategy of responsible growth while maintaining capital discipline. In accordance with our updated development program, we averaged two rigs and one frack crew during the quarter. We recently introduced both a third rig and a second frack crew into the field after the quarter. We plan to maintain the three rig program throughout the remainder of the year, and the second frac crew is currently completing a handful of ducts that we generated during the third quarter. This third frac crew will be used intermittently while we are running three rigs. As we previously said, from here forward, we intend to finance our development program through cash flow from operations, generate additional free cash flow, reduce our outstanding debt, and increase our return to shareholders. At the end of the quarter, we still had a considerable number of wells in progress, which will continue to support our production profile as these wells are turned online. We ended the quarter with a little under a one turn of leverage, which is a significant improvement over the past three months. If commodity prices continue to stay in the current range, We expect to exit this year at well below one times net debt to EBITDA and continue that progress into 2024. Proforma with the closing of our super priority revolving credit facility, our liquidity is greater than $220 million. Our recent debt refinancing should provide all the capital we need to accomplish our objectives. In addition, on a go-forward basis, as we generate additional free cash flow, we expect our liquidity to continue to increase and our net debt to decrease. Now, going to slide six, this is a very enticing slide, and by evidence on the charts on this slide, we have demonstrated a track record of delivering consistent organic production and cash flow growth through the drill bit. Very few companies have grown the way we've grown through the drill bit. Over the past year, our quarterly production average has grown over 100%, which has also translated into significant cash flow growth through the same timeframe, despite declining oil prices. We continue to exemplify our high-quality asset base through our consistent growth and production, our high oil and liquids content, and our sustained peer-leading margins, all of which are reflected on this slide. It's also a true testament to the high quality of our reservoirs that our current production level continues to be supported by a small number of producing wells. And it's worth noting that we've been able to achieve this level of growth while maintaining a very reasonable amount of leverage, which is now back below one term. The result of the aforementioned attributes is the transition to free cash flow generation, which we expect to maintain going forward without sacrificing our measured production growth expectations. Now I'm going to turn the call over to Mike Hollis to discuss the next few slides and our operational efficiencies.