HPK 10-Q

HighPeak Energy, Inc. (HPK)

10-Q 2022-11-14 For: 2022-09-30

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Added on April 11, 2026

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Delaware	84-3533602
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

421 W. 3rd St., Suite 1000	76102
Fort Worth, Texas	(Zip Code)
(Address of principal executive offices and zip code)

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		4
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
Signatures		35

	•	*“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.
	•	*“Alamo Acquisitions*” means the recently completed acquisitions of certain crude oil and natural gas properties in Howard and Borden Counties, Texas, collectively, from (i) Alamo Borden County II, LLCD (“Alamo II”), Alamo Borden County III, LLC (“Alamo III”) and Alamo Borden County IV, LLC (“Alamo IV”) pursuant to that certain Purchase and Sale Agreement dated February 15, 2022 by and among HighPeak Energy, HighPeak Energy Assets, LLC (together with HighPeak Energy, the “HighPeak Parties”), Alamo II, Alamo III, and Alamo IV and (ii) Alamo Borden County 1, LLC (“Alamo I”) pursuant to that certain Purchase and Sale Agreement dated June 3, 2022 by and among the HighPeak Parties and Alamo I.
	•	*“ASU*” means Accounting Standards Update.
	•	*“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.
		*“Bcf*” means one billion cubic feet.
	•	*"Boe"* means a barrel of crude oil equivalent and is a standard convention used to express crude oil and natural gas volumes on a comparable crude oil equivalent basis. Natural gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feet of natural gas to one Bbl of crude oil or NGL.
	•	*“Boepd*” means Boe per day.
	•	*“Bopd*” means one barrel of crude 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.
	•	*“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 crude oil and natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.
	•	*“Credit Agreement*” means the Company’s Credit Agreement, dated as of December 17, 2020, as amended from time to time, among HighPeak Energy, Inc., as Borrower, Wells Fargo Bank, National Association, as administrative agent, and the Lenders party thereto.
	•	*“DD&A*” means depletion, depreciation and amortization.
	•	*“Development costs*” Costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing the crude 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 a crude oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
	•	*“Differential*” An adjustment to the price of crude oil, NGL or natural gas from an established spot market price to reflect differences in the quality and/or location of crude oil, NGL or natural gas.
	•	*“Dry hole” or “dry well*” 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, to find a new reservoir in a field previously found to be productive of crude oil or natural gas in another reservoir or to extend the limits of an existing 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.
	•	*“FASB*” Financial Accounting Standards Board.
	•	*“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.

	•	*“Fifth Amendment*” means the Fifth Amendment to Credit Agreement, dated as of October 14, 2022, by and among HighPeak Energy, Inc., as Borrower, Fifth Third Bank, National Association, as the existing administrative agent, Wells Fargo Bank, National Association, as the new administrative agent, the guarantors party thereto and the lenders party thereto.
	•	*“First Amendment*” means the First Amendment to Credit Agreement, dated as of June 23, 2021, among HighPeak Energy, Inc., as Borrower, Fifth Third Bank, National Association, as administrative agent, and the Guarantors and Lenders party thereto.
	•	*“Formation*” A layer of rock which has distinct characteristics that differs from nearby rocks.
	•	*“Fourth Amendment*” means the Fourth Amendment to Credit Agreement, dated as of June 27, 2022, among HighPeak Energy, Inc., as Borrower, Fifth Third Bank, National Association, as administrative agent, and the Guarantors and Lenders party thereto.
	•	*“GAAP*” means accounting principles generally accepted in the United States of America.
	•	*“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 crude oil or natural gas.

	•	*“HH*” means Henry Hub, a distribution hub in Louisiana that serves as the delivery location for natural gas futures contracts on the NYMEX.
	•	*“Hannathon Acquisition*” means the recently completed acquisition of various crude oil and natural gas properties contiguous to the Company’s Signal Peak operating area in Howard County, Texas pursuant to that certain Purchase and Sale Agreement dated as of April 26, 2022, with Hannathon Petroleum, LLC and certain other third-party private sellers set forth therein.
	•	*“HighPeak Energy” or the “Company*” means HighPeak Energy, Inc. and its subsidiaries.
	•	*“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.
	•	*“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 crude 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, 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 natural gas volume.
	•	*“MMBbl*” means one million Bbls.
	•	*“MMBtu*” means one million Btus.
	•	*“MMcf*” means one million cubic feet and is a measure of natural 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*” means natural gas liquids, which are the heavier hydrocarbon liquids that are separated from the natural gas stream; such liquids include ethane, propane, isobutane, normal butane and 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 a crude 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.
	•	*“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” or “PDNP*” means proved reserves that are developed nonproducing reserves.
	•	*“Proved developed producing reserves” or “PDP*” means proved reserves that are developed producing reserves.
	•	*“Proved developed reserves*” means proved 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 and can be subdivided into PDP and PDNP reserves.
	•	*“Proved reserves*” Those quantities of crude oil and natural 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 crude oil or natural 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 crude oil elevation and the potential exists for an associated natural gas cap, proved crude 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.

	•	*“Proved undeveloped reserves” or “PUD*” means 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 being 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.
	•	*“PV-10*” When used with respect to crude 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 crude 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 crude oil and natural 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 crude oil and natural 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 crude oil and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs.
	•	*“Resources*” Quantities of crude 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*” means the Company’s senior secured reserve-based lending facility which matures June 17, 2024.
	•	*“Royalty*” An interest in a crude 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.
	•	*“Second Amendment*” means the Second Amendment to Credit Agreement, dated as of October 1, 2021, among HighPeak Energy, Inc., as Borrower, Fifth Third Bank, National Association, as administrative agent, and the Guarantors and Lenders party thereto.
	•	*“Service well*” A well drilled or completed for the purpose of supporting production in an existing field. Specific purposes of service wells include natural gas injection, water injection, steam injection, air injection, salt-water disposal, water supply for injection, observation, or injection for in-situ combustion.
	•	*“Sixth Amendment*” means the Sixth Amendment to Credit Agreement, dated as of October 31, 2022, by and among HighPeak Energy, Inc., as Borrower, Wells Fargo Bank, National Association, as administrative agent, the Guarantors party thereto and the Lenders party thereto.
	•	*“Spacing*” The distance between wells producing from the same reservoir. Spacing is often expressed in terms of acres, e.g., 100-acre spacing, the distance between horizontal wellbores, e.g., 880-foot spacing or the number of wells per section, e.g., 6-well spacing. It is often established by regulatory agencies and/or the operator to optimize recovery of hydrocarbons.
	•	*“Spot market price*” The cash market price without reduction for expected quality, transportation and demand adjustments.
	•	*“Standardized measure*” The present value (discounted at an annual rate of 10 percent) of estimated future net revenues to be generated from the production of proved reserves net of estimated income taxes associated with such net revenues, as determined in accordance with FASB guidelines as well as the rules and regulations of the SEC, without giving effect to non-property related expenses such as indirect general and administrative expenses, and debt service or to DD&A. Standardized measure does not give effect to derivative transactions.
	•	*“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.
	•	*“Third Amendment*” means the Third Amendment to Credit Agreement, dated as of February 9, 2022, among HighPeak Energy, Inc., as Borrower, Fifth Third Bank, National Association, as administrative agent, and the Lenders party thereto.

	•	*“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 crude 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 crude oil and 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 crude oil produced from fields in western Texas and is a grade of crude oil used as a benchmark in crude 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.

	●	the market prices of crude oil, NGL, natural gas and other products or services;
	●	political instability or armed conflict in crude oil or natural gas producing regions, such as the ongoing war between Russia and Ukraine;
	●	the supply and demand for crude oil, NGL, natural gas and other products or services;
	●	the integration of acquisitions, including the Alamo Acquisitions and the Hannathon Acquisition;
	●	the availability of capital resources;
	●	production and reserve levels;
	●	drilling risks;
	●	the length, scope and severity of the ongoing coronavirus disease (“COVID-19”) pandemic, including the effects of related public health concerns and the impact of continued actions taken by governmental authorities and other third parties in response to the pandemic and its impact on commodity prices, supply and demand considerations, and storage capacity;
	●	economic and competitive conditions;
	●	capital expenditures and other contractual obligations, including obligations under the senior notes issued during 2022;
	●	weather conditions;
	●	inflation rates and the impacts of associated monetary policy responses, including increased interest rates and resulting pressures on economic growth;
	●	the availability of goods and services and supply chain issues;
	●	legislative, regulatory or policy changes;
	●	cyber-attacks;
	●	occurrence of property acquisitions or divestitures;

	●	the securities or capital markets and related risks such as general credit, liquidity, market and interest-rate risks; and
	●	other factors disclosed under “Part I, Items 1 and 2. Business and Properties,” “Part I, Item 1A. Risk Factors,” “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk,” included in the Company’s Annual Report on Form 10-K filed on March 7, 2022 (“Annual Report”), as supplemented by our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022 and this Quarterly Report under “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risk,” and elsewhere in this Quarterly Report.

	September 30, 2022 (Unaudited)			December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	34,348		$	34,869
Accounts receivable		83,201			39,378
Derivatives		17,261			2,199
Inventory		8,181			3,304
Prepaid expenses		5,686			7,154
Deposits		—			50
Total current assets		148,677			86,954
Crude oil and natural gas properties, using the successful efforts method of accounting:
Proved properties		1,903,134			699,701
Unproved properties		157,046			108,392
Accumulated depletion, depreciation and amortization		(176,799	)		(82,478	)
Total crude oil and natural gas properties, net		1,883,381			725,615
Other property and equipment, net		3,548			1,600
Other noncurrent assets		6,656			4,791
Total assets	$	2,042,262		$	818,960
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade	$	124,021		$	38,144
Accrued liabilities		101,302			32,230
Revenues and royalties payable		12,806			7,502
Derivatives		11,071			13,591
Advances from joint interest owners		7,560			10,841
Other current liabilities		3,590			692
Total current liabilities		260,350			103,000
Noncurrent liabilities:
Long-term debt, net		561,756			97,929
Deferred income taxes		111,159			55,802
Asset retirement obligations		8,252			4,260
Derivatives		—			4,075
Other		—			831
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding at September 30, 2022 and December 31, 2021		—			—
Common stock, $0.0001 par value, 600,000,000 shares authorized, 113,162,827 and 96,774,185 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		11			10
Additional paid-in capital		1,004,778			617,489
Retained earnings (accumulated deficit)		95,956			(64,436	)
Total stockholders' equity		1,100,745			553,063
Total liabilities and stockholders' equity	$	2,042,262		$	818,960

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating Revenues:
Crude oil sales	$	189,441		$	44,785		$	467,305		$	116,640
NGL and natural gas sales		14,673			2,687			30,466			4,819
Total operating revenues		204,114			47,472			497,771			121,459
Operating Costs and Expenses:
Crude oil and natural gas production		19,707			6,710			45,748			13,629
Production and ad valorem taxes		10,526			1,783			25,833			5,990
Exploration and abandonments		290			488			683			1,142
Depletion, depreciation and amortization		42,624			13,917			94,531			43,737
Accretion of discount		125			44			245			116
General and administrative		1,877			1,666			5,833			5,042
Stock-based compensation		10,655			905			29,210			2,894
Total operating costs and expenses		85,804			25,513			202,083			72,550
Income from operations		118,310			21,959			295,688			48,909
Interest and other income		1			—			253			1
Interest expense		(14,608	)		(947	)		(29,142	)		(1,153	)
Derivative gain (loss), net		35,798			(10,820	)		(42,487	)		(24,416	)
Other expense		—			—			—			(127	)
Income before income taxes		139,501			10,192			224,312			23,214
Income tax expense		31,597			2,145			55,357			4,680
Net income	$	107,904		$	8,047		$	168,955		$	18,534
Earnings per share:
Basic net income	$	0.90		$	0.07		$	1.48		$	0.18
Diluted net income	$	0.85		$	0.08		$	1.40		$	0.18

Weighted average shares outstanding:
Basic		108,681			92,676			102,614			92,648
Diluted		115,118			92,678			109,144			92,715

Dividends declared per share	$	0.025		$	0.125		$	0.075		$	0.125

Three and Nine Months Ended September 30, 2022
	Shares Outstanding		Common Stock		Additional Paid-in- Capital			Retained Earnings (Accumulated Deficit)			Total Stockholders' Equity
Balance, December 31, 2021		96,774	$	10	$	617,489		$	(64,436	)	$	553,063
Dividends declared ($0.025 per share)		—		—		—			(2,434	)		(2,434	)
Dividend equivalents declared on outstanding stock options ($0.025 per share)		—		—		—			(250	)		(250	)
Stock issued for acquisition		6,960		—		156,599			—			156,599
Stock issuance costs		—		—		(55	)		—			(55	)
Exercise of warrants		69		—		779			—			779
Stock-based compensation costs:
Shares issued upon options being exercised		8		—		75			—			75
Compensation costs included in net loss		—		—		2,614			—			2,614
Net loss		—		—		—			(16,510	)		(16,510	)
Balance, March 31, 2022		103,811		10		777,501			(83,630	)		693,881
Dividends declared ($0.025 per share)		—		—		—			(2,630	)		(2,630	)
Dividend equivalents declared on outstanding stock options ($0.025 per share)		—		—		—			(249	)		(249	)
Stock issued for acquisitions		3,894		1		108,382			—			108,383
Stock issuance costs		—		—		(3	)		—			(3	)
Exercise of warrants		897		—		6,971			—			6,971
Stock-based compensation costs:
Shares issued upon options being exercised		4		—		45			—			45
Restricted shares issued to outside directors		21		—		—			—			—
Restricted shares issued to employees		600		—		—			—			—
Compensation costs included in net income		—		—		16,429			—			16,429
Net income		—		—		—			77,561			77,561
Balance, June 30, 2022		109,227		11		909,325			(8,948	)		900,388
Dividends declared ($0.025 per share)		—		—		—			(2,730	)		(2,730	)
Dividend equivalents declared on outstanding stock options ($0.025 per share)		—		—		—			(270	)		(270	)
Stock issued in private placement		3,933		—		85,000			—			85,000
Stock issuance costs		—		—		(232	)		—			(232	)
Exercise of warrants		3		—		30			—			30
Stock-based compensation costs:
Shares issued upon options being exercised		—		—		—			—			—
Compensation costs included in net income		—		—		10,655			—			10,655
Net income		—		—		—			107,904			107,904
Balance, September 30, 2022		113,163	$	11	$	1,004,778		$	95,956		$	1,100,745

	As of September 30, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Commodity price derivatives	$	—	$	17,261	$	—	$	17,261
Liabilities:
Commodity price derivatives		—		11,071		—		11,071
Total recurring fair value measurements	$	—	$	6,190	$	—	$	6,190

	As of December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
Assets:
Commodity price derivatives	$	—	$	2,199		$	—	$	2,199
Liabilities:
Commodity price derivatives – current		—		13,591			—		13,591
Commodity price derivatives – noncurrent		—		4,075			—		4,075
Total liabilities		—		17,666			—		17,666
Total recurring fair value measurements	$	—	$	(15,467	)	$	—	$	(15,467	)

	As of September 30, 2022				As of December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash and cash equivalents	$	34,348	$	34,348	$	34,869	$	34,869
Liabilities:
Long-term debt:
10.000% Senior Notes (a)	$	225,000	$	225,000	$	—	$	—

			2023
	Remainder		First		Second		Third
	of 2022		Quarter		Quarter		Quarter		Total
Crude Oil Price Swaps - WTI:
Volume (MBbls)		1,072.8		900.0		546.0		276.0		1,722.0
Price per Bbl	$	85.85	$	73.67	$	67.81	$	72.30	$	71.59

	Nine Months Ended September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	168,955		$	18,534
Adjustments to reconcile net income to net cash provided by operations:
Exploration and abandonment expense		134			698
Depletion, depreciation and amortization expense		94,531			43,737
Accretion expense		245			116
Stock-based compensation expense		29,210			2,894
Amortization of debt issuance costs		3,261			259
Amortization of original issue discount on senior notes		4,609			—
Derivative-related activity		(21,656	)		19,402
Deferred income taxes		55,357			4,680
Changes in operating assets and liabilities:
Accounts receivable		(43,822	)		(16,168	)
Prepaid expenses, inventory and other assets		(7,148	)		(7,816	)
Accounts payable, accrued liabilities and other current liabilities		19,130			21,401
Net cash provided by operating activities		302,806			87,737
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to crude oil and natural gas properties		(725,107	)		(154,599	)
Changes in working capital associated with crude oil and natural gas property additions		142,299			15,995
Acquisitions of crude oil and natural gas properties		(258,385	)		(53,276	)
Proceeds from sales of properties		—			3,234
Other property additions		(2,158	)		(453	)
Net cash used in investing activities		(843,351	)		(189,099	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility		450,000			95,000
Repayments under revolving credit facility		(195,000	)		—
Proceeds from issuance of senior unsecured notes, net of discount		210,179			—
Proceeds from issuance of common stock in private placement		85,000			—
Debt issuance costs		(9,221	)		(1,757	)
Proceeds from exercises of warrants		7,780			5,466
Proceeds from subscription receivable from exercises of warrants		—			3,596
Proceeds from exercises of stock options		120			1,574
Dividends paid		(7,636	)		(9,274	)
Dividend equivalents paid		(908	)		(829	)
Stock issuance costs		(290	)		—
Net cash provided by financing activities		540,024			93,776
Net decrease in cash and cash equivalents		(521	)		(7,586	)
Cash and cash equivalents, beginning of period		34,869			19,552
Cash and cash equivalents, end of period	$	34,348		$	11,966

Supplemental cash flow information:
Interest paid	$	18,318		$	752
Income taxes paid	$	—		$	—
Supplemental disclosure of non-cash transactions:
Stock issued for acquisition	$	264,982		$	—
Additions to asset retirement obligations	$	3,748		$	1,841

	September 30, 2022		December 31, 2021
Land	$	2,139	$	1,122
Transportation equipment		645		202
Buildings		547		—
Leasehold improvements		210		143
Field equipment		7		8
Information technology		—		125
Total other property and equipment, net	$	3,548	$	1,600

	●	Level 1 – quoted prices for identical assets or liabilities in active markets.
	●	Level 2 – quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means.
	●	Level 3 – unobservable inputs for the asset or liability, typically reflecting management’s estimate of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore, determined using model-based techniques, including discounted cash flow models.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Noncash derivative gain (loss), net	$	38,098		$	(6,844	)	$	21,656		$	(19,402	)
Derivative settlements, net		(2,300	)		(3,976	)		(64,143	)		(5,014	)
Derivative gain (loss), net	$	35,798		$	(10,820	)	$	(42,487	)	$	(24,416	)

	As of September 30, 2022
Bank of America, National Association	$	10,835
Citizens Bank, National Association		5,767
Fifth Third Bank, National Association		(10,412	)
	$	6,190

	Nine Months Ended September 30, 2022
Beginning capitalized exploratory well costs	$	28,076
Additions to exploratory well costs		385,440
Reclassification to proved properties		(319,220	)
Exploratory well costs charged to exploration and abandonment expense		—
Ending capitalized exploratory well costs	$	94,296

	September 30, 2022			December 31, 2021
Revolving Credit Facility due 2024	$	355,000		$	100,000
10.000% Senior Notes due 2024		225,000			—
Discounts, net (a)		(10,212	)		—
Debt issuance costs, net (b)		(8,032	)		(2,071	)
Total debt		561,756			97,929
Less current portion of long-term debt		—			—
Long-term debt, net	$	561,756		$	97,929

	Nine Months Ended September 30, 2022
Beginning asset retirement obligations	$	4,260
Liabilities incurred from wells acquired		3,219
Liabilities incurred from new wells		528
Accretion of discount		245
Ending asset retirement obligations	$	8,252

	September 30, 2022
Approved and authorized awards		14,340,039
Awards issued under plan		(13,769,191	)
Awards available for future grant		570,848

	Stock Options			Exercise Price		Remaining Term in Years		Intrinsic Value (in thousands)
Outstanding at December 31, 2020		9,705,495		$	10.00		9.7	$	57,942
Awards granted		442,500		$	14.36
Exercised		(154,268	)	$	10.00
Forfeitures		(10,000	)	$	10.00
Outstanding at December 31, 2021		9,983,727		$	10.19		8.7	$	44,395
Awards granted		1,564,500		$	25.07
Exercised		(12,000	)	$	10.00
Forfeitures		(18,999	)	$	18.66
Outstanding at September 30, 2022		11,517,228		$	12.20		8.2	$	115,484

Vested at December 31, 2021		8,551,070		$	10.13		8.7	$	38,556
Exercisable at December 31, 2021		8,551,070		$	10.13		8.7	$	38,556

Vested at September 30, 2022		11,218,914		$	12.00		8.2	$	114,169
Exercisable at September 30, 2022		11,218,914		$	12.00		8.2	$	114,169

	September 30, 2022
Remainder of 2022	$	116
2023		349
Total lease payments		465
Less present value discount		(9	)
Present value of lease liabilities	$	456

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Current income tax expense:
Federal	$	—	$	—	$	—	$	—
State		—		—		—		—
Total current income tax expense		—		—		—		—
Deferred income tax expense:
Federal		30,599		2,145		53,726		4,680
State		998		—		1,631		—
Deferred income tax expense		31,597		2,145		55,357		4,680
Total income tax expense	$	31,597	$	2,145	$	55,357	$	4,680

	September 30, 2022			December 31, 2021
Deferred tax assets:
Interest expense limitations	$	6,120		$	—
Net operating loss carryforwards		4,602			2,870
Stock-based compensation		3,612			4,373
Unrecognized derivative losses		—			3,248
Other		266			31
Deferred tax assets		14,600			10,522
Deferred tax liabilities:
Crude oil and natural gas properties, principally due to differences in basis and depreciation and the deduction of intangible drilling costs for tax purposes		(124,423	)		(66,324	)
Unrecognized derivative gains		(1,336	)		—
Deferred tax liabilities		(125,759	)		(66,324	)
Net deferred tax liabilities	$	(111,159	)	$	(55,802	)

	•	a $46.6 million increase in the Company's net derivative gain as a result of its crude oil and natural gas commodity contracts entered into and the decrease of crude oil and natural gas prices thereafter; partially offset by:

	•	a $29.5 million increase in the Company’s income tax expense due to the net income realized during the three months ended September 30, 2022 compared with the three months ended September 30, 2021;

	•	a $28.7 million increase in DD&A expense due to a 221% increase in daily sales volumes, partially offset by a 5% decrease in the DD&A rate from $18.52 to $17.65 per Boe, both as a result of increased proved reserves due to the Company’s successful horizontal drilling program and to a lesser extent, bolt-on acquisitions;

	•	A $13.7 million increase in interest expense due to the issuance of two year 10.000% senior unsecured notes in February 2022 (“10.000% Senior Notes”), increased borrowings on the revolving credit facility and increased amortization of debt issuance costs and discounts;

	•	A $13.0 million increase in lease operating expenses related primarily to the increased well count and production from the Company’s successful horizontal drilling program and to a lesser extent, bolt-on acquisitions;

	•	a $9.8 million increase in the Company’s stock-based compensation expense primarily attributable to equity-based awards issued in August 2022; and

	•	A $8.7 million increase in production and ad valorem taxes, primarily attributable to the 221% increase in daily sales volumes as a result of the Company’s successful horizontal drilling program and to a lesser extent, bolt-on acquisitions combined with 33% higher production taxes on a dollar per Boe basis due to higher overall realized prices of 34%, excluding the effects of derivatives.

	Nine Months Ended September 30, 2022
Crude Oil (Bbls)		16,964
NGL (Bbls)		1,894
Natural Gas (Mcf)		7,755
Total (Boe)		20,150

	Nine Months Ended September 30, 2022
Unproved property acquisition costs	$	170,712
Proved acquisition costs		352,654
Total acquisitions		523,366
Development costs		385,569
Exploration costs		339,532
Total finding and development costs		1,248,467
Asset retirement obligations		3,754
Total costs incurred	$	1,252,221

	Drilled				Completed
	Gross		Net		Gross		Net
Flat Top area		71		58.7		59		51.9
Signal Peak area		17		16.9		13		12.9
Total		88		75.6		72		64.8

	•	2022: The Company received $210.2 million in net proceeds from the issuance of the 10.000% Senior Notes, borrowed net $205.0 million on its Revolving Credit Facility, received $85.0 million in proceeds from a private placement issuance of 3.9 million common shares and received $7.8 million from the exercise of 676,188 of the Company’s $11.50 warrants and $120,000 from the exercise of 12,000 of stock options by employees of the Company. These cash inflows were partially offset by the Company incurring $9.2 million of debt issuance costs primarily related to the 10.000% Senior Notes and the Fourth Amendment to the Revolving Credit Facility, $8.5 million in dividends and dividend equivalent payments and $290,000 in stock issuance costs.

	•	2021: The Company borrowed $95.0 million on its Revolving Credit Facility, received $9.1 million from the exercise of 788,009 of the Company’s $11.50 warrants and $1.6 million from the exercise of 154,268 of stock options by employees of the Company. Partially offsetting these cash inflows was the Company incurring $10.1 million in dividends and dividend equivalent payments and $1.8 million of debt issuance costs related to its Revolving Credit Facility.

Exhibit
Number	Description

2.1#	Purchase and Sale Agreement, dated as of April 26, 2022, by and among HighPeak Energy, Inc., HighPeak Energy Assets, LLC, Hannathon Petroleum, LLC and other sellers party thereto (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on June 30, 2022).

3.1	Amended and Restated Certificate of Incorporation of HighPeak Energy, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on August 27, 2020).

3.2	Amended and Restated Bylaws of HighPeak Energy, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on November 9, 2020).

4.1	Registration Rights Agreement, dated as of August 21, 2020, by and among HighPeak Energy, Inc., HighPeak Pure Acquisition, LLC, HighPeak Energy, LP, HighPeak Energy II, LP, HighPeak Energy III, LP and certain other security holders named therein (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on August 27, 2020).

4.2	Stockholders’ Agreement, dated as of August 21, 2020, by and among HighPeak Energy, Inc., HighPeak Pure Acquisition, LLC, HighPeak Energy, LP, HighPeak Energy II, LP, HighPeak Energy III, LP, Jack Hightower and certain directors of Pure Acquisition Corp. (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on August 27, 2020).

4.3	Amendment and Assignment to Warrant Agreement, dated as of August 21, 2020, by and among Pure Acquisition Corp., Continental Stock Transfer & Trust Company and HighPeak Energy, Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-4 and Form S-1 (File No. 333-235313) filed with the SEC on August 5, 2020).

4.4	Indenture, dated February 16, 2022 (“February Indenture”), by and among HighPeak Energy, Inc., the guarantors party thereto and UMB Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on February 22, 2022).

4.5	Supplement No. 1 to February Indenture, dated November 9, 2022, by and among HighPeak Energy, Inc., as issuer, the guarantors party thereto and UMB Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on November 10, 2022).

4.6	Indenture, dated as of November 8, 2022, by and among HighPeak Energy, Inc., the guarantors party thereto and UMB Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on November 10, 2022).

4.7#	Registration Rights Agreement, dated as of June 27, 2022, by and among HighPeak Energy, Inc., Hannathon Petroleum, LLC, the parties listed as signatories hetero in their capacities as holders of Registrable Securities, and any Transferees thereof which hold Registrable Securities (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on June 30, 2022).

10.1	Fifth Amendment to Credit Agreement, dated as of October 14, 2022, among HighPeak Energy, Inc., as Borrower, Fifth Third Bank, National Association, as the existing administrative agent, Wells Fargo Bank, National Association, as the new administrative agent, guarantors party thereto and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on October 18, 2022).

10.2	Sixth Amendment to Credit Agreement, dated as of October 31, 2022, among HighPeak Energy, Inc., as Borrower, Wells Fargo Bank, National Association, as the administrative agent, the Guarantors party thereto and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on November 4, 2022).

10.2	Form of Subscription Agreement, by and among HighPeak Energy, Inc. and the purchaser party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-39464) filed with the SEC on August 24, 2022).

31.1*	Certification of the Company’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).

31.2*	Certification of the Company’s Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).

32.1**	Certification of the Company’s Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).

32.2**	Certification of the Company’s Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).

101.INS**	Inline XBRL Instance Document

101.SCH**	Inline XBRL Taxonomy Extension Schema Document

101.CAL**	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE**	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).