HighPeak Energy, Inc.

Good day, and thank you for standing by. Welcome to High Peak Energy 2023 Fourth 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Thorn, Chief Financial Officer. Please go ahead.

Good morning, everyone, and welcome to High Peak Energy's fourth quarter 2023 earnings call. Representing High Peak today are Chairman and CEO Jack Hightower, President Michael Hollis, and I am Stephen Tholen, the Chief Financial Officer. During today's call, we will make reference to our March investor presentation and our fourth 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 in the earnings release and in our March 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 thank you for joining us today. If you'll turn to page four of the slide presentation in the March Investor Deck, that's where I'm going to begin the presentation. As mentioned in implementing our corporate vision, 2023 was absolutely a transformational year for High Peak. Just look at what we accomplished in 23. We reached a production milestone of over 50,000 barrels a day. We grew our average production rate by over 86% from 22. We exercised capital discipline by reducing our rig count as commodity prices pulled back. We strengthened our balance sheet and our liquidity position with our debt refinancing in 23. We reached two additional major milestones when we became free cash flow positive and generated over one billion in annual revenue. With a transformational 23 behind us, we now focus on 24 being a year of realization for High Peak, a year where we focus on free cash flow generation, pay down of debt, and returning value to our shareholders. Now turning to slide five, We're going to outline our core values and how we're going to create additional shareholder value. We will continue to exercise disciplined operations. Our two-rig program will allow our operations team to be laser focused on optimizing our capital costs and to continue driving down our operating expenses. We will also continue to organically increase our acreage position through the ground game in areas where we have expanded the delineation of our primary zones. From a financial perspective, we will remain focused on generating free cash flow, which will be earmarked for debt pay down and provide us with a nice liquidity cushion going forward. In addition, we will look to maximize shareholder value through our recent 60% dividend increase to an annual rate of over 16 cents per share our recently announced opportunistic share repurchase program, and an additional acreage acquisitions, and ultimately through our strategic alternative process. Now turn to page six, and we're going to talk about some of the company highlights. Focusing on production levels for a moment in the fourth quarter, our sales volume averaged over 50,000 BOE a day. our fourth quarter production volumes were negatively impacted by weather issues and unforeseen midstream maintenance interruptions, which total over 3,000 barrels a day, in addition to our frack hits that just normally happen on a day-to-day, monthly basis as we frack additional wells. So far during the first quarter, our operations have been running smoothly, and weather-related impacts have been fairly minimal as evidenced by our current production rates of approximately 50,000 barrels a day. I'd also like to take this opportunity to point out that although we reduced our development plan from six rigs to two rigs, during the middle of the year we were still able to hit both of our 2023 annual production guidance after factoring in fourth quarter production impacts and our annual capital budget. This is a testament to the quality of our asset base and the caliber and dedication of our operations team. I'd like to now draw your attention to the red line on the map, which highlights our newly acquired acreage in Northern Flat Top. We've increased our acreage position by over 18,000 acres in Northern Flat Top, moving from a roughly 114 to 132,000 net acres now. The majority of which is located in this area where we have continued to have success in our primary zones moving north. We remain very excited about our recent well results in this area, which are consistent with the performance in our core flat top area. Almost 200 additional locations in our primary operating zones. Even considering under financial highlights, The slightly reduced sales volumes and lower commodity prices during the fourth quarter compared with the third quarter, our quarterly EBITDAX still approximates one billion annual run rate. We ended the year with a very reasonable leverage ratio of one times net debt to fourth quarter annualized EBITDAX. We generated additional free cash flow during the quarter of about $34 million, and that brings our total second half 2023 cash flow to approximately $110 million. As I previously reported, we also increased our quarterly dividend by 60% over $0.04 a share, and we authorized a $75 million opportunistic share buyback. Now, turning to slide seven, This gives the established proven position of high peak now in the Midland Basin as a player that is established now and shows a history from 2020 all the way up through 2023. We consummated our business combination in 2020. We started with minimum production and over the past few years we have increased our production as quickly as I have ever witnessed anyone organically grow production during my 53 years of history in this business, while also establishing Eastern Howard County as a core oil producing area of the Midland Basin. Looking forward into 2024, our capital efficiency will continue to improve as we maintain focus on co-developing our primary reserves and primary zones in the Wolf Camp A and Lower Sprayberry. Historically, we have flexed our development plan up or down, depending on commodity prices and return on investment. We will make sure that as we adapt to various pricing environments, we will be slow on the gas and quick on the brakes. And you can demonstrate how easy it is as we increase the rig count to increase our production with the wonderful inventory we have in place. As I always say, this business is about location, location, location, and our ability to grow the business with this trajectory is the ultimate proof that our rock in this area is excellent. Now turning to slide eight, I'm going to talk a little bit about our year-end proof reserves. As noted, you can see that we continue to significantly increase year over year with 2023 growing 25% compared to the prior year, and from 22 to 23, over 30%. So we've had consistent almost 30% growth for the last two years. We have over 90% liquids approved reserve stack, which absolutely differentiates us from all our public peers. This provides high peak with higher operating margins, especially during this period of relatively low natural gas prices. Over the past three years as a public company, we have achieved a 90% approved reserves compounded annual growth rate almost entirely through the drill bit. Unprecedented. Our 2023 reserve replacement ratio was almost 300% and we grew our total crude reserves to 154 million barrels in spite of the SEC price dropping close to 20% year over year. I want to remind everyone that we are very conservative in the way we book our PUDs. In fact, of our total primary locations, less than 190 locations are booked as PUDs. So we have substantial additional reserve value that is not captured in these numbers. And we have significant additional inventory that we will cover later in the presentation. And now I'm gonna turn the presentation over to Mike Hollis, who is our president to discuss operations and corporate efficiency. Mike.