HighPeak Energy Targets Stable Output, Lower Costs and Debt Reduction

Key Points

• HighPeak Energy is prioritizing stable production, lower operating costs and debt reduction to create longer-term shareholder value, while maintaining a substantial cash position.
• The company expects relatively flat production through 2026 despite reducing annual capital spending to below $300 million; its Midland Basin inventory could expand from roughly 650 to 900–950 top-tier locations if Middle Spraberry wells continue to perform well.
• Management plans to use sustained free cash flow primarily to reduce debt and improve refinancing flexibility, with a 1-percentage-point reduction in borrowing costs potentially lowering annual interest expense by about $12 million.

HighPeak Energy NASDAQ: HPK executives said the company is emphasizing production stability, lower operating costs and debt reduction as it seeks to position its Midland Basin asset base for longer-term shareholder value creation.

Speaking at the Water Tower Research Virtual Insights Conference, Chief Executive Officer Mike Hollis said HighPeak has executed its operational plan as intended since he took the CEO role in September 2025. The company’s priorities have included disciplined maintenance spending, improving capital efficiency and reducing operating costs across the business, he said.

Those efforts have helped HighPeak build a “meaningful and substantial cash position,” Hollis said, providing flexibility to support the company’s broader financial objectives.

Inventory and Midland Basin Position

HighPeak’s acreage is concentrated in northeast Howard County and southeast Borden County in the Midland Basin, with two principal blocks known as Flat Top and Signal Peak. The company’s production averaged approximately 45,500 barrels of oil equivalent per day during the first half of 2026, with oil representing about 66% of total production, according to the conference introduction.

Hollis said the company has generally allocated capital on a 70%-30% basis between its northern and southern acreage blocks, closely matching its acreage and inventory distribution. He said results from that development approach—including production above guidance and lower lease operating expenses than budgeted—support management’s confidence in the inventory.

HighPeak has identified about 650 undeveloped locations in its primary Wolfcamp A and Lower Spraberry targets. Hollis said the company has drilled 440 producing wells, with the “high-90%” range located in those two formations, providing substantial data coverage across its acreage.

The Middle Spraberry could expand the company’s higher-priority inventory, he added. HighPeak has drilled at least eight Middle Spraberry wells and has five online. Management estimates roughly 300 locations could move into its top-tier inventory category, potentially increasing that inventory from about 650 locations to between 900 and 950.

Capital Spending and Production Management

HighPeak’s 2026 capital program was designed to sustain a stable production base. The company spent 69% of its planned annual capital budget during the first half, above its initial expectation that more than 60% would be spent during that period.

Hollis attributed the higher first-half spending percentage partly to the decision to bring forward a four-well pad from the second half of the year. The total capital budget has not changed, he said. Faster drilling activity also will allow the company to drill additional wells in 2026, setting up its completion program for 2027 while keeping a single drilling rig active.

While fewer completions are expected in the second half, Hollis said HighPeak also expects fewer production interruptions from frac impacts on nearby wells. Combined with continued base-production optimization, he said the company expects to maintain relatively flat production through 2026, albeit at a level somewhat above original guidance.

Hollis said HighPeak has reduced annual capital spending sharply from more than $1 billion several years ago to well under $300 million expected in 2026, while maintaining approximately the same production level. Management has not issued formal 2027 guidance, but he said the company’s drilling and completion approach next year is expected to look “extremely similar” to 2026.

Infrastructure and Operating Efficiency

The company has invested heavily in field infrastructure, including more than 40 central tank batteries, which Hollis said has helped support lower operating costs despite HighPeak producing less gas per barrel of oil and more water per barrel of oil than some other Permian operators.

HighPeak plans to build pipelines and a central tank battery for the northern portion of the Flat Top acreage during 2026. After that work, Hollis said the “vast majority” of the infrastructure backbone across its existing footprint will be in place, reducing future infrastructure spending required to connect new wells.

Management also highlighted base-production optimization efforts, including lift and chemical optimization as well as newer approaches such as mini-stimulations and nanosurfactants. Hollis characterized the work as relatively low-cost activity that can produce returns exceeding those of drilling additional wells.

Debt Reduction Remains Central Focus

Executive Vice President Ryan Hightower said HighPeak’s desired capital structure would resemble a more traditional exploration-and-production financing model with a materially lower cost of capital. He said every 1 percentage point reduction in the company’s interest coupon would reduce annual interest expense by approximately $12 million.

Hightower said the company is focused on using sustained free cash flow to reduce absolute debt, improve financial flexibility and ultimately refinance its debt. At oil prices near $100 per barrel, he said incremental free cash flow would be directed toward debt reduction rather than a material change in capital-allocation strategy.

Management said investors should watch capital efficiency, lease operating expense trends, free-cash-flow generation through commodity cycles and debt reduction as measures of HighPeak’s progress.

About HighPeak Energy (NASDAQ:HPK)

HighPeak Energy, Inc is an independent oil and natural gas exploration and production company focused on developing oil-rich properties in the Midland Basin of the Permian Basin in West Texas. Its operations are concentrated in Howard, Borden, and adjacent counties, where it owns and operates acreage prospective for crude oil, natural gas, and natural gas liquids.

The company's activities include acquiring mineral and leasehold interests, drilling and completing horizontal wells, producing hydrocarbons, and managing related gathering and infrastructure operations.

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