HighPeak Comments on Second-Quarter Success, Flat Top Frac Operations

HighPeak Energy announced that net sales volumes, excluding the acquired Hannathon production during the second quarter 2022 averaged 21,995 Boe/d, consisting of approximately 86% oil and 95% liquids.

Second quarter production increased 83% compared with the first quarter with oil production up about 88% compared with the first quarter. Production volumes from the Hannathon acquisition will be included in the company’s financials beginning in the third quarter 2022.

During the second quarter of 2022, the company drilled 29 gross (27.0 net) operated horizontal wells and one salt-water disposal well utilizing approximately four drilling rigs for most of the quarter, adding a fifth rig in June 2022 and a sixth rig upon closing the Hannathon acquisition at the end of June 2022.

Also, the company completed 27 gross (22.8 net) horizontal wells during the second quarter of 2022. At June 30, 2022, the company was in various stages of completion on 41 gross (35.8 net) horizontal wells, finishing one SWD well and was in the process of drilling 11 gross (11.0 net) horizontal wells and one salt-water disposal well.

The HighPeak 60-MW electric high-voltage substation was commissioned in May 2022 and as a result the company is in the process of removing rental generators, reducing both the company’s lease operating expenses and its carbon emissions.

To date, the company has removed approximately 70% of the rental generators in its Flat Top operating area. The electrification of the substation also enabled HighPeak to power its first drilling rig with highline power in Flat Top, reducing both drilling costs and fuel consumption.

The company’s contracted local sand project became operational in June 2022 and is anticipated to significantly reduce well completion costs and improve completion efficiencies. HighPeak is currently servicing 100% of its stimulation fluid needs for two frac crews in Flat Top with recycled produced fluids and local non-potable water sources. The company is also using recycled fluids for completion operations in Signal Peak.

Michael Hollis, HighPeak’s president, commented, “Inflationary pressures continue to be thematic, however, we have initiated a number of measures to mitigate the effects of industry wide cost increases on both the capital and operating expense side of the equation including our local sand project, the use of cost saving non-potable water and recycled fluids for our Flat Top frac operations and the commissioning of our electrical substation.”

Hollis further commented, “The HighPeak substation has enabled us to begin removing rental generators which is estimated to reduce lease operating expenses throughout the year, further expanding our industry leading margins while greatly reducing our carbon footprint. We started powering one of our drilling rigs with highline power, saving roughly $90,000 per well at today’s diesel costs. The use of local wet sand is decreasing capital costs per well while also reducing emissions associated with trucking and drying the sand. When fully utilized, wet sand will save approximately $300,000 per well.”