HighPeak Energy, Inc 10-K, filed Mar 15, 2021

HighPeak Energy, Inc. (HPK)

10-K 2021-03-15 For: 2020-12-31

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Added on April 11, 2026

About this 10-K

HighPeak Energy, Inc filed this 10-K on March 15, 2021, covering the fiscal year ended December 31, 2020.

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Title of each class	Trading Symbol	Name of each exchange on which registered

Common Stock, par value $0.0001 per share	HPK	The Nasdaq Stock Market LLC
Warrants to purchase Common Stock	HPKEW	The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

		Page
Definitions of Certain Terms and Conventions Used Herein		1
Cautionary Statement Concerning Forward-Looking Statements		5
	PART I
Items 1 and 2.	Business and Properties	6
Item 1A.	Risk Factors	22
Item 1B.	Unresolved Staff Comments	49
Item 3.	Legal Proceedings	49
Item 4.	Mine Safety Disclosures	49
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	50
Item 6.	Selected Financial Data	51
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	62
Item 8.	Financial Statements and Supplementary Data	63
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	93
Item 9A.	Controls and Procedures	93
Item 9B.	Other Information	93
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	93
Item 11.	Executive Compensation	94
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
Item 13.	Certain Relationships and Related Transactions, and Director Independence	94
Item 14.	Principal Accountant Fees and Services	97
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	98
Item 16.	Form 10-K Summary	100
Signatures		101

	•	*"3-D seismic"* means three-dimensional seismic data which is geophysical data that depicts the subsurface strata in three dimensions. 3-D seismic data typically provides a more detailed and accurate interpretation of the subsurface strata than two-dimensional data.
	•	*"Basin"* means a large natural depression on the earth’s surface in which sediments generally brought by water accumulate.
	•	*"Bbl"* means a standard barrel containing 42 United States gallons.
	•	*"Boe"* means a barrel of oil equivalent and is a standard convention used to express oil and gas volumes on a comparable oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feet of gas to one Bbl of oil or natural gas liquid.
	•	*"Boe/d"* means Boe per day.
	•	*"Bopd"* means one barrel of oil per day.
	•	*"Btu"* means British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.
	•	“Business Combination Agreement” are to the Business Combination Agreement, dated May 4, 2020, as amended, by and among the Company, Pure, MergerSub, HighPeak I, HighPeak II, HighPeak III, HPK GP, and solely for the limited purposes specified therein, HPK Energy Management, LLC, pursuant to which, among other things and subject to the terms and conditions contained therein, (i) MergerSub merged with and into Pure, with Pure surviving as a wholly owned subsidiary of HighPeak Energy, (ii) each outstanding share of Pure’s Class A common stock, par value $0.0001 per share, and Pure’s Class B common stock, par value $0.0001 per share (other than certain shares of Pure’s Class B common stock that were surrendered for cancellation by HighPeak Pure Acquisition, LLC (“Pure’s Sponsor”) were converted into the right to receive (A) one share of HighPeak Energy’s common stock (and cash in lieu of fractional shares, if any), and (B) solely with respect to each outstanding share of Pure’s Class A common stock, (I) a cash amount, without interest, equal to $0.62, which represented the amount by which the per-share redemption value of Pure’s Class A common stock at the closing exceeded $10.00 per share, without interest, in each case, totaling approximately $767,902, (II) one (1) Contingent Value Right, for each one whole share of HighPeak Energy’s common stock (excluding fractional shares) issued to holders of Pure’s Class A common stock pursuant to clause (A), representing the right to receive additional shares of HighPeak Energy’s common stock (or such other specified consideration as is specified with respect to certain events) under certain circumstances if necessary to satisfy a 10% preferred simple annual return, subject to a floor downside per-share price of $4.00, as measured at the applicable maturity, which will occur on a date to be specified and which may be any date occurring during the period beginning on (and including) August 21, 2022 and ending on (and including) February 21, 2023, or in certain circumstances after the occurrence of certain change of control events with respect to the Company’s business, including certain mergers, consolidations and asset sales (with an equivalent number of shares of HighPeak Energy’s common stock held by the HPK Contributors being collectively forfeited) and (III) one warrant to purchase one share of HighPeak Energy’s common stock for each one whole share of HighPeak Energy’s common stock (excluding fractional shares) issued to holders of Pure’s Class A common stock pursuant to clause (A), (iii) the HPK Contributors contributed their limited partner interests in HPK LP to HighPeak Energy in exchange for HighPeak Energy common stock and the general partner interests in HPK LP to a wholly owned subsidiary of HighPeak Energy in exchange for no consideration, and (b) contributed the outstanding Sponsor Loans (as defined in the Business Combination Agreement) in exchange for HighPeak Energy common stock and such Sponsor Loans (as defined in the Business Combination Agreement) were cancelled in connection with the closing, and (iv) following the consummation of the foregoing transactions, HighPeak Energy caused HPK LP to merge with and into the Surviving Corporation (as successor to Pure) and all interests in HPK LP were cancelled in exchange for no consideration.
	•	*“Closing*” means the closing of the HighPeak business combination between the Company, Pure, HPK LP, HighPeak I and HighPeak II on August 21, 2020.
	•	“common stock” or “HighPeak Energy common stock” means the Company’s common stock, par value $0.0001 per share.
	•	*“Completion*” The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas or oil, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.
	•	*“Contingent Value Right” or “CVR*” refers to contractual contingent value rights, representing the right, under certain circumstances, to receive additional shares of HighPeak Energy common stock, if necessary, to satisfy a 10% preferred simple annual return, subject to a floor downside per-share price of $4.00, as measured on August 21, 2022 or February 21, 2023 (with an equivalent number of shares of HighPeak Energy common stock held by HighPeak I and HighPeak II being collectively forfeited).
	•	"DD&A" means depletion, depreciation and amortization expense.
	•	*“Development costs*” Costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing the oil and natural gas. For a complete definition of development costs, refer to the SEC’s Regulation S-X, Rule 4-10(a)(7).
	•	*“Development project*” A development project is the means by which petroleum resources are brought to the status of economically producible. As examples, the development of a single reservoir or field, an incremental development in a producing field or the integrated development of a group of several fields and associated facilities with a common ownership may constitute a development project.

	•	*“Development well*” A well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
	•	*“Differential*” An adjustment to the price of oil, natural gas or natural gas liquids from an established spot market price to reflect differences in the quality and/or location of oil or natural gas.
	•	*“Dry hole*” A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.
	•	*“Economically producible*” The term economically producible, as it relates to a resource, means a resource which generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation.
	•	*“EUR” or “Estimated ultimate recovery*” The sum of reserves remaining as of a given date and cumulative production as of that date.
	•	*“Exploratory well*” An exploratory well is a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well or a stratigraphic test well as those items are defined by the SEC.
	•	*“Field*” An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
	•	*“Formation*” A layer of rock which has distinct characteristics that differs from nearby rocks.
	•	*"GAAP"* means accounting principles generally accepted in the United States of America.
	•	*“Gross wells” or “gross wells*” means the total wells in which a working interest is owned.
	•	*“Held by production*” Acreage covered by a mineral lease that perpetuates a company’s right to operate a property as long as the property produces a minimum paying quantity of oil or natural gas.
	•	*“HighPeak business combination*” means the transactions contemplated by the Business Combination Agreement, which closed on August 21, 2020.
	•	*"HighPeak Energy"* or the "Company" means, at the time of and after the HighPeak business combination, HighPeak Energy, Inc. and its subsidiaries (the “Successor”) and, prior to the HighPeak business combination, the Predecessors.
	•	*“HighPeak Group*” means HighPeak Pure Acquisition, LLC, a Delaware limited liability company, and wholly owned subsidiary of HighPeak I, the HPK Contributors and Jack Hightower and each of their respective affiliates and certain permitted transferees, collectively.
	•	*“HighPeak I*” means HighPeak Energy, LP, a Delaware limited partnership.
	•	*“HighPeak II*” means HighPeak Energy II, LP, a Delaware limited partnership.
	•	*“HighPeak III*” means HighPeak Energy III, LP, a Delaware limited partnership.
	•	*“Horizontal drilling*” A drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled at a right angle within a specified interval.
	•	*“HPK Contributors*” means HighPeak I, HighPeak II and HPK GP.
	•	*“HPK GP*” means HPK Energy, LLC, a Delaware limited liability company.
	•	*“HPK LP*” means HPK Energy, LP, a Delaware limited partnership.
	•	“Hydraulic fracturing” is the technique of stimulating the production of hydrocarbons from tight formations. The Company routinely utilizes hydraulic fracturing techniques in its drilling and completion programs. The process involves the injection of water, sand, and chemicals under pressure into the formation to fracture the surrounding rock and stimulate production.
	•	“Lease operating expenses” The expenses of lifting oil or natural gas from a producing formation to the surface, constituting part of the current operating expenses of a working interest including labor, superintendence, supplies, repairs, short-lived assets, maintenance, allocated overhead costs, workover, marketing and transportation costs, ad valorem taxes, insurance and other expenses incidental to production, but excluding lease acquisition or drilling or completion expenses.
	•	*"MBbl"* means one thousand Bbls.
	•	*"MBoe"* means one thousand Boes.
	•	*"Mcf"* means one thousand cubic feet and is a measure of gas volume.
	•	*“MergerSub*” means Pure Acquisition Merger Sub, Inc., a Delaware corporation.
	•	*"MMBbl"* means one million Bbls.
	•	*"MMBtu"* means one million Btus.
	•	*"MMcf"* means one million cubic feet and is a measure of gas volume.
	•	*“Net acres*” The percentage of total acres an owner has out of a particular number of gross acres or a specified tract. As an example. an owner who has 50% interest in 100 gross acres owns 50 net acres.
	•	*“Net production*” Production that is owned by us, less royalties and production due others.
	•	*"NGL"* or “*natural gas liquids*” means natural gas liquids, which are the heavier hydrocarbon liquids that are separated from the gas stream; such liquids include ethane, propane, isobutane, normal butane and natural gasoline.

	•	*"NYMEX"* means the New York Mercantile Exchange.
	•	*"OPEC"* means the Organization of Petroleum Exporting Countries.
	•	*“Operator*” The individual or company responsible for the exploration and/or production of an oil or natural gas well or lease.
	•	*“Plugging*” A downhole tool that is set inside the casing to isolate the lower part of the wellbore.
	•	*“Pooling*” The bringing together of small tracts or fractional mineral interests in one or more tracts to form a drilling and production unit for a well under applicable spacing rules.
	•	*“Predecessors*” refers to, collectively, HPK LP and HighPeak I.
	•	*“Production costs*” Costs incurred to operate and maintain wells and related equipment and facilities, including depreciation and applicable operating costs of support equipment and facilities and other costs of operating and maintaining those wells and related equipment and facilities. For a complete definition of production costs, refer to the SEC’s Regulation S-X, Rule 4-10(a)(20).
	•	*“Productive well*” A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes.
	•	*“Proration unit*” A unit that can be effectively and efficiently drained by one well, as allocated by a governmental agency having regulatory jurisdiction.
	•	*“Prospect*” A specific geographic area which, based on supporting geological, geophysical or other data and also preliminary economic analysis using reasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons.
	•	“Proved developed nonproducing reserves” means developed nonproducing reserves.
	•	“Proved developed producing reserves” means developed producing reserves.
	•	*“Proved developed reserves*” Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods and can be expected to be recovered through extraction technology installed and operational at the time of the reserve estimate.
	•	*“Proved reserves*” Those quantities of oil and gas, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

	(i) The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.
	(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering or performance data and reliable technology establishes a lower contact with reasonable certainty.
	(iii) Where direct observation from well penetrations has defined a highest known oil elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.
	(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.
	(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

	•	*“PUD” or “Proved undeveloped reserves*” Proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. Undrilled locations can be classified as having PUDs only if a development plan has been adopted indicating that such locations are scheduled to be drilled within five (5) years, unless specific circumstances justify a longer time.
	•	*“Pure*” means Pure Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company.
	•	*“PV-10*” When used with respect to oil and natural gas reserves, PV-10 means the estimated future gross revenue to be generated from the production of proved reserves, net of estimated production and future development and abandonment costs, using prices and costs in effect at the determination date, before income taxes, and without giving effect to non-property related expenses, discounted to a present value using an annual discount rate of 10%. PV-10 is not a financial measure calculated in accordance with GAAP and generally differs from standardized measure, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues. Neither PV-10 nor standardized measure represents an estimate of the fair market value of our oil and natural gas properties. We and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities.

	•	*“Realized price*” The cash market price less all expected quality, transportation and demand adjustments.
	•	*“Recompletion*” The process of re-entering an existing wellbore that is either producing or not producing and completing new reservoirs in an attempt to establish or increase existing production.
	•	*“Reserves*” Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.
	•	*“Reservoir*” A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs.
	•	*“Resources*” Quantities of oil and natural gas estimated to exist in naturally occurring accumulations. A portion of the resources may be estimated to be recoverable and another portion may be considered unrecoverable. Resources include both discovered and undiscovered accumulations.
	•	*“Revolving Credit Facility*” refers to the Company’s senior secured reserve-based lending facility which matures June 17, 2024.
	•	*“Royalty*” An interest in an oil and natural gas lease that gives the owner the right to receive a portion of the production from the leased acreage (or of the proceeds from the sale thereof) but does not require the owner to pay any portion of the production or development costs on the leased acreage. Royalties may be either landowner’s royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.
	•	*"SEC"* means the United States Securities and Exchange Commission.
	•	*“Service well*” A well drilled or completed for the purpose of supporting production in an existing field. Specific purposes of service wells include gas injection, water injection, steam injection, air injection, salt-water disposal, water supply for injection, observation, or injection for in-situ combustion.
	•	“Spacing” The distance between wells producing from the same reservoir. Spacing is often expressed in terms of acres, e.g., 100-acre spacing, and is often established by regulatory agencies.
	•	*“Sponsor*” means HighPeak Pure Acquisition, LLC, a Delaware limited liability company.
	•	*“Spot market price*” The cash market price without reduction for expected quality, transportation and demand adjustments.
	•	*“Standardized measure*” Discounted future net cash flows estimated by applying year-end prices to the estimated future production of year-end proved reserves. Future cash inflows are reduced by estimated future production and development costs based on period-end costs to determine pre-tax cash inflows. Future income taxes, if applicable, are computed by applying the statutory tax rate to the excess of pre-tax cash inflows over our tax basis in the oil and natural gas properties. Future net cash inflows after income taxes are discounted using a 10% annual discount rate.
	•	*“Stratigraphic test well*” A drilling effort, geologically directed, to obtain information pertaining to a specific geologic condition. Such wells customarily are drilled without the intent of being completed for hydrocarbon production. The classification also includes tests identified as core tests and all types of expendable holes related to hydrocarbon exploration. Stratigraphic tests are classified as “exploratory type” if not drilled in a known area or “development type” if drilled in a known area.
	•	*“Undeveloped acreage*” Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves.
	•	*“Unit*” The joining of all or substantially all interests in a reservoir or field, rather than a single tract, to provide for development and operation without regard to separate property interests. Also, the area covered by a unitization agreement.
	•	*"U.S."* means the United States.
	•	*“warrants*” means warrants to purchase one share of HighPeak Energy common stock at a price of $11.50 per share.
	•	*“Wellbore*” The hole drilled by the bit that is equipped for natural gas production on a completed well. Also called well or borehole.
	•	*“Working interes*t” The right granted to the lessee of a property to explore for and to produce and own natural gas or other minerals. The working interest owners bear the exploration, development and operating costs on either a cash, penalty or carried basis.
	•	*“Workover*” Operations on a producing well to restore or increase production.
	•	*"WTI"* means West Texas Intermediate, a light sweet blend of oil produced from fields in western Texas and is a grade of oil used as a benchmark in oil pricing.
	•	With respect to information on the working interest in wells and acreage, *"net"* wells and acres are determined by multiplying *"gross"* wells and acres by the Company's working interest in such wells or acres. Unless otherwise specified, wells and acreage statistics quoted herein represent gross wells or acres.
	•	All currency amounts are expressed in U.S. dollars.

	As of December 31, 2020
Proved Developed Reserves:
Oil (MBbl)		8,730
Natural Gas (MMcf)		3,572
NGL (MBbl)		957
Total (MBoe)		10,282
Proved Undeveloped Reserves:
Oil (MBbl)		10,302
Natural Gas (MMcf)		4,367
NGL (MBbl)		1,203
Total (MBoe)		12,233
Total Proved Reserves:
Oil (MBbl)		19,032
Natural Gas (MMcf)		7,939
NGL (MBbl)		2,160
Total (MBoe)		22,515

	Predecessors
	Total (MBoe)
Proved undeveloped reserves at January 1, 2020		6,534
Conversions into proved developed reserves		(529	)
Revisions		(241	)
Proved undeveloped reserves at August 21, 2020		5,764

	Successor
	Total (MBoe)
Proved undeveloped reserves at August 22, 2020		5,764
Extensions and discoveries		7,015
Revisions		(546	)
Proved undeveloped reserves at December 31, 2020		12,233

	●	Extensions and discoveries of 7,015 MBoe related to new proved undeveloped locations added as a result of HighPeak Energy’s drilling activities; and
	●	Downward revisions of 546 MBoe including 409 MBoe related to proved undeveloped locations that were removed from the development plan due to the Company’s election not to renew certain leases, 102 MBoe related to adjustments to forecasts and 35 MBoe attributable to a decrease in oil, natural gas and NGL prices.

	●	Conversions into proved developed reserves of 529 MBoe as a result of the Company’s ongoing drilling program in early 2020 and prior to the Company shutting down its drilling program in the late 2020 first quarter due to COVID-19 and the downturn in oil prices.
	●	Downward revisions of 241 MBoe including 181 MBoe resulting from adjustments to our forecasts and 60 MBoe resulting from a decrease in oil, natural gas and NGL prices.

	Proved Developed		Proved Undeveloped		Total Proved
Estimated future net cash flows	$	229,599	$	177,896	$	407,495
Present value of estimated future net cash flows	$	162,582	$	72,908	$	235,490
Present value of future income taxes/abandonment costs					$	(13,298	)
Standardized measure					$	222,192

	Oil							Gas
	Gross		Net		Average Working Interest			Gross		Net		Average Working Interest
*Horizontal:*
Operated		19		18.3		96	%		-		-		n/a
Non-operated		-		-		n/a			-		-		n/a
*Vertical:*
Operated		35		30.9		88	%		6		4.5		75	%
Non-operated		49		11.6		24	%		6		2.0		33	%
*Total:*
Operated		54		49.1		91	%		6		4.5		75	%
Non-operated		49		11.6		24	%		6		2.0		33	%

Developed Acres(1)(4)				Undeveloped Acres(4)				Total Acres
Gross(2)		Net(3)		Gross(2)		Net(3)		Gross(2)		Net(3)
	15,602		11,100		43,490		39,536		59,092		50,636

2021			2022			2023			2024			2025			Thereafter
30,257			2,430			112			5,522			-			-

	Period from August 22, 2020 through December 31, 2020 (Successor)				Period from January 1, 2020 through August 21, 2020 (Predecessors)				Year Ended December 31, 2019				Year Ended December 31, 2018
	Gross		Net		Gross		Net		Gross		Net		Gross		Net
Development wells:
Productive		-		-		1		1.0		1		0.8		-		-
Dry		-		-		-		-		-		-		-		-
Exploratory wells:
Productive		14		13.8		6		6.0		2		2.0		1		0.8
Dry		-		-		-		-		-		-		-		-
Service wells:
Salt-Water Disposal		1		1.0		-		-		-		-		-		-

	Years Ended December 31,
Major Customers	2020			2019			2018
Lion Oil Trading and Transportation, LLC		80	%		*			*
Enlink Crude Purchasing, LLC		17	%		67	%		32	%
Sunoco Partners Marketing & Terminals, LP		*			21	%		49	%

	●	Oil, natural gas and NGL prices are volatile and sustained periods of low, or further declines in, oil, natural gas and NGL prices could adversely affect HighPeak Energy’s business, financial condition and results of operations.
	●	The recent and ongoing outbreak of COVID-19 and other pandemic outbreaks could negatively impact HighPeak Energy’s business and results of operation.
	●	The marketability of HighPeak Energy’s production is dependent upon transportation, storage and other facilities, certain of which it does not control. If these facilities are unavailable, HighPeak Energy’s operations could be interrupted, and its revenues reduced.
	●	Certain factors could require HighPeak Energy to write-down the carrying values of its properties, including commodity prices decreasing to a level such that future undiscounted cash flows from its properties are less than their carrying value.
	●	HighPeak Energy’s development projects and acquisitions will require substantial capital expenditures. HighPeak Energy may be unable to obtain required capital or financing on satisfactory terms, which could reduce its ability to access or grow production and reserves.
	●	Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect HighPeak Energy’s business, financial condition or result of operations.
	●	Restrictions in HighPeak Energy’s Revolving Credit Facility and any future debt agreements could limit HighPeak Energy’s growth and ability to engage in certain activities.
	●	Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of reserves.
	●	HighPeak Energy is not the operator on all its acreage or drilling locations, and, therefore, HighPeak Energy is not able to control the timing of exploration or development efforts, associated costs or the rate of production of any non-operated assets.
	●	The Company’s assets are located in the north eastern portion of the Midland Basin, making HighPeak Energy vulnerable to risks associated with operating in a limited geographic area.
	●	HighPeak Energy may incur losses as a result of title defects in the properties in which it invests.
	●	The development of estimated PUDs may take longer and may require higher levels of capital expenditures than anticipated. Therefore, estimated PUDs may not be ultimately developed or produced.
	●	Unless HighPeak Energy replaces its reserves with new reserves and develops those new reserves, its reserves and production will decline, which would adversely affect future cash flows and results of operations.
	●	Conservation measures and technological advances could reduce or slow the demand for oil and natural gas.
	●	HighPeak Energy depends upon a small number of significant purchasers for the sale of most of its oil, natural gas and NGL production. The loss of one or more of such purchasers could, among other factors, limit HighPeak Energy’s access to suitable markets for the oil, natural gas and NGL it produces.
	●	HighPeak Energy’s operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to its business activities.
	●	HighPeak Energy may incur substantial losses and be subject to substantial liability claims as a result of operations. Additionally, HighPeak Energy may not be insured for, or insurance may be inadequate to protect HighPeak Energy against, these risks.
	●	HighPeak Energy may be unable to make additional attractive acquisitions or successfully integrate acquired businesses with its current assets, and any inability to do so may disrupt its business and hinder its ability to grow.
	●	Certain of HighPeak Energy’s properties are subject to land use restrictions, which could limit the manner in which HighPeak Energy conducts business.
	●	The unavailability or high cost of drilling rigs, equipment, supplies, personnel, frac crews and oilfield services could adversely affect HighPeak Energy’s ability to execute its development plans within its budget and on a timely basis.
	●	Should our operators fail to comply with all applicable regulatory agency administered statutes, rules, regulations and orders, our operators could be subject to substantial penalties and fines.
	●	The operations of HighPeak Energy are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which HighPeak Energy may conduct oil and natural gas exploration and production activities and reduce demand for the oil and natural gas HighPeak Energy produces.
	●	Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect HighPeak Energy’s production.
	●	Legislation or regulatory initiatives intended to address seismic activity could restrict HighPeak Energy’s drilling and production activities, as well as HighPeak Energy’s ability to dispose of produced water gathered from such activities, which could have a material adverse effect on its future business.
	●	Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect HighPeak Energy’s ability to conduct drilling activities in areas where it operates.

	●	There are inherent limitations in all control systems, and misstatements due to error or fraud that could seriously harm HighPeak Energy’s business may occur and not be detected.
	●	HighPeak Energy’s business could be adversely affected by security threats, including cyber-security threats, and related disruptions.

	●	The HighPeak Group, including the Principal Stockholder Group, has significant influence over HighPeak Energy.
	●	HighPeak Energy’s only significant asset is its ownership of 100% of the operating companies acquired in the business combination and cash on hand after the Closing of the business combination, and such ownership may not be sufficient to pay dividends on its common stock or satisfy its other financial obligations.
	●	Because HighPeak Energy has a limited operating history, it may be difficult to evaluate its ability to successfully implement its business strategy.
	●	HighPeak Energy is a “controlled company” within the meaning of Nasdaq Rules and, as a result, qualifies for exemptions from certain corporate governance requirements. As a result, you do not have the same protections afforded to stockholders of companies that are subject to such requirements.
	●	HighPeak Energy may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on HighPeak Energy’s financial condition, results of operations and stock price, which could cause you to lose some or all your investment.
	●	The terms of our warrants may be amended in a manner that may be adverse to holders of our warrants with the approval by the holders of at least 50% of our then-outstanding warrants.
	●	A significant portion of HighPeak Energy’s total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of HighPeak Energy common stock to drop significantly, even if HighPeak Energy’s business is doing well.
	●	There can be no assurance that HighPeak Energy common stock issued, including issuable upon exercise of our warrants or upon satisfaction of conditions under the CVR Agreement with respect to the CVRs, will remain listed on the Nasdaq, or that HighPeak Energy will be able to comply with the continued listing standards of the Nasdaq.
	●	HighPeak Energy is an emerging growth company within the meaning of the Securities Act, and if HighPeak Energy takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make HighPeak Energy’s securities less attractive to investors and may make it more difficult to compare its performance with other public companies.
	●	Under certain circumstances, the Contingent Value Rights will have no value and will be automatically terminated without any further consideration.
	●	A market for the CVRs may not develop and, even if a market for the CVRs does develop, there can be no assurance the extent to which trading of the CVRs will lead to an illiquid trading market with respect to such CVRs, which would adversely affect the liquidity and price of the CVRs.

	●	worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas and NGL;

	●	the price and quantity of foreign imports of oil, natural gas and NGL;

	●	domestic and global political and economic conditions, socio-political unrest and instability, terrorism or hostilities in or affecting other producing regions or countries, including the Middle East, Africa, South America and Russia;

	●	the occurrence or threat of epidemic or pandemic diseases, such as the recent and ongoing outbreak of COVID-19, or any government response to such occurrence or threat;

	●	actions of the Organization of the Petroleum Exporting Countries (“OPEC”), its members and other state-controlled oil companies relating to oil price and production controls;

	●	the level of global exploration, development and production;

	●	the level of global inventories;

	●	prevailing prices on local price indexes in the areas in which HighPeak Energy operates;

	●	the proximity, capacity, cost and availability of gathering and transportation facilities;

	●	localized and global supply and demand fundamentals and transportation availability;

	●	the cost of exploring for, developing, producing and transporting reserves;

	●	weather conditions and natural disasters;

	●	technological advances affecting energy consumption;

	●	the price and availability of alternative fuels;

	●	expectations about future commodity prices; and

	●	U.S. federal, state and local and non-U.S. governmental regulation and taxes.

	●	the prices at which HighPeak Energy’s production is sold;

	●	proved reserves;

	●	the amount of hydrocarbons HighPeak Energy is able to produce from its wells;

	●	HighPeak Energy’s ability to acquire, locate and produce new reserves;

	●	the amount of HighPeak Energy’s operating expenses;

	●	cash settlements from HighPeak Energy’s derivative activities;

	●	HighPeak Energy’s ability to obtain additional debt financing, including increases to the Revolving Credit Facility;

	●	the duration of economic uncertainty surrounding the COVID-19 pandemic;

	●	the duration and uncertainty of OPEC+’s agreement not to increase production above agreed levels and the compliance by its members with their respective production quotas during the term of the agreement;

	●	HighPeak Energy’s ability to obtain storage capacity for the oil it produces;

	●	restrictions in the instruments governing HighPeak Energy’s debt on HighPeak Energy’s ability to incur additional indebtedness; and

	●	HighPeak Energy’s ability to access the public or private capital markets.

	●	landing its wellbore in the desired drilling zone;

	●	staying in the desired drilling zone while drilling horizontally through the formation;

	●	running its casing the entire length of the wellbore; and

	●	being able to run tools and other equipment consistently through the horizontal wellbore.

	●	the ability to fracture stimulate the planned number of stages;

	●	the ability to run tools the entire length of the wellbore during completion operations; and

	●	the ability to successfully clean out the wellbore after completion of the final fracture stimulation stage.

	●	delays imposed by, or resulting from, compliance with regulatory requirements, including limitations on wastewater disposal, emission of GHGs and hydraulic fracturing;

	●	pressure or irregularities in geological formations;

	●	shortages of or delays in obtaining equipment and qualified personnel or in obtaining water for hydraulic fracturing activities;

	●	equipment failures, accidents or other unexpected operational events;

	●	lack of available gathering facilities or delays in construction of gathering facilities;

	●	lack of available capacity on interconnecting transmission pipelines;

	●	lack of availability of water and electricity;

	●	adverse weather conditions;

	●	issues related to compliance with environmental regulations;

	●	environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment;

	●	declines in oil and natural gas prices;

	●	limited availability of financing on acceptable terms;

	●	title issues; and

	●	other market limitations in HighPeak Energy’s industry.

	●	require HighPeak Energy to dedicate a portion of cash flow from operations to service its debt, thereby reducing the cash available to finance operations and other business activities and could limit its flexibility in planning for or reacting to changes in its business and the industry in which it operates;

	●	increase vulnerability to economic downturns and adverse developments in HighPeak Energy’s business;

	●	place restrictions on HighPeak Energy’s ability to engage in certain business activities, including without limitation, to raise capital, obtain additional financing (whether for working capital, capital expenditures or acquisitions) or to refinance indebtedness, grant or incur liens on assets, pay dividends or make distributions in respect of its capital stock, make investments, amend or repay subordinated indebtedness, sell or otherwise dispose of assets, businesses or operations and engage in business combinations or other fundamental changes;

	●	potentially place HighPeak Energy at a competitive disadvantage relative to competitors with lower levels of indebtedness in relation to their overall size or less restrictive terms governing their indebtedness; and

	●	limit management’s discretion in operating HighPeak Energy’s business.

	●	the timing and amount of capital expenditures;

	●	the operator’s expertise and financial resources;

	●	the approval of other participants in drilling wells;

	●	the selection of technology; and

	●	the rate of production of reserves, if any.

	●	the CAA, which restricts the emission of air pollutants from many sources, imposes various pre-construction, monitoring and reporting requirements and is relied upon by the EPA as authority for adopting climate change regulatory initiatives relating to GHG emissions;

	●	the CWA, which regulates discharges of pollutants from facilities and sources to federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States;

	●	the OPA, which imposes liabilities for removal costs and damages arising from an oil spill into waters of the United States;

	●	the Safe Drinking Water Act (“SDWA”), which ensures the quality of the nations’ public drinking water through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations;

	●	the Resource Conservation and Recovery Act (“RCRA”), which imposes requirements for the generation, treatment, storage, transport, disposal and cleanup of non-hazardous, hazardous and solid wastes;

	●	the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which imposes liability on generators, transporters and those who arrange for transportation or disposal of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as imposes liability on present and certain past owners and operations of sites where hazardous substance releases have occurred or are threatening to occur;

	●	the ESA, which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas; and

	●	The OSHA, under which federal Occupational Safety and Health Administration and similar state agencies have promulgated regulations limiting exposures to hazardous substances in the workplace and imposing various worker safety requirements.

	●	environmental hazards, such as uncontrollable releases of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater, air and shoreline contamination, damage to natural resources or wildlife, or the presence of endangered or threatened species;

	●	abnormally pressured formations;

	●	mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse;

	●	fires, explosions and ruptures of pipelines;

	●	personal injuries and death;

	●	natural disasters; and

	●	terrorist attacks targeting oil and natural gas related facilities and infrastructure.

	●	injury or loss of life;

	●	damage to and destruction of property, natural resources and equipment;

	●	pollution and other environmental or natural resource damage;

	●	regulatory investigations and penalties; and

	●	repair and remediation costs.

	●	unexpected drilling conditions;

	●	title issues;

	●	pressure or lost circulation in formations;

	●	equipment failures or accidents;

	●	adverse weather conditions;

	●	compliance with environmental and other governmental or contractual requirements; and

	●	increases in the cost of, and shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services.