HighPeak Energy, Inc.

Good day, and thank you for standing by. Welcome to the High Peak Energy 2024 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 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 first speaker today, Stephen Tholen, CFO. Please go ahead.

Good morning, everyone, and welcome to High Peak Energy's second quarter 2024 earnings call. Representing High Peak today are Chairman and CEO Jack Hightower, President Michael Hollis, 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 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 August investor presentation. I will now turn the call over to our Chairman and CEO, Jack Hightower.

Jack Hightower Thank you, Steve, and good morning, ladies and gentlemen, and thank you for joining us today on this call. My prepared remarks will begin on slide four of our August investor presentation. I'm very proud to report that High Peak had another solid quarter of execution across the board as we continue to stay committed to our 2024 core values, which include maintaining disciplined operations, strengthening our balance sheet, and focusing on maximizing shareholder value. Operationally, our drilling program continued to generate impressive production results, And our operations team remains aggressively focused on optimizing daily operations and reducing our cost structure. Financially, we generated positive free cash flow for the fourth consecutive quarter, even taking into account that the second quarter will be our highest level of CapEx spend this year. And we continue to use our free cash flow to prioritize debt reduction while also executing our opportunistic share buyback program as we implement our primary objective of increasing shareholder value through improved operational results, our return of capital strategy, and ultimately maximizing value through our strategic alternatives process. The second quarter, if you turn to slide five, was another strong operational success for High Peak. Our production remained in the high 40,000 BOE range, which was a nice beat compared to our consensus estimate for the quarter. It's also worth noting that we were delayed bringing online a keypad which pushed out some of our well turn-on dates no later than we initially expected in the quarter. This materially reduced expected second quarter production volumes. Further, the quarter is off to a very strong start in the third quarter, as production volumes have averaged over 52,000 barrels a day. And I want to emphasize that when you think of an average of 48.5 for the last quarter, and then already in the third quarter here, we're over 52,000 barrels a day, and seeing impressive early results from our recent northern extension wells in our flat top operating area. Mike will provide additional insights into our continued strong production results later in the presentation. But after achieving an impressive first quarter reduction in lease operating expenses, our operations team continued to maintain a significant sub $7 per BOE cost level, even considering the lower production volumes due to the PAD delay. Our continued operational success led to High Peak maintaining its peer-leading cash margins, which equated to a net back for the quarter of over 80% of our realized price on a BOE basis. And our cash margins per BOE continue to be over 65% higher than our peer average, which Mike will emphasize is very important to our income stream and our success as a company. As a result of our solid production volumes and sustained lower operating expenses, we generated another strong quarter of cash flow and remain in a very healthy financial position. We also reduced long-term debt by another $30 million at par and continue to opportunistically implement our share buyback program by acquiring over 413,000 shares during the second quarter. Now if you'll turn to slide six, this is really an important slide because we are exceeding our expectations. As a result of our successful first half 24 results, we're updating our 24 guidance ranges in a few key categories. We're raising our production guidance to 45,000 to 49,000 BOE a day, an approximate 4.5% increase compared to our initial 24 range. Our production volumes continue to remain strong, and we are confident in lifting this bar for the remainder of the year. We're also lowering our lease operating expenses per BOE to $6.50 to $7.50, which is a 12.5% reduction from our initial expectations. Our operations team has done an exceptional job optimizing our field-wide program throughout the first half of this year. And I'm hopeful that there are incremental savings that we will continue to see throughout the remainder of the year. We're also narrowing our capital budget from our initial band of $85 million down to a band of only $40 million. This slight increase is due to some additional infrastructure projects that we undertook primarily related to our northern extension area. And Mike will provide some additional color on this in a few minutes. The key takeaway is that we've had a very impressive start to the year, with our results exceeding initial expectations. And we're confident in our ability to continue to achieve higher production volumes and lower costs for the remainder of the year. With that, I'll now turn the call over to our president, Mike Hollis, to provide an operational update as well as some additional details supporting our improved guidance.