HighPeak Energy Pivots to Maintenance CapEx at Water Tower Conference, Targets Flat Output & Debt Paydown

Key Points

• HighPeak is shifting to a maintenance CapEx model, budgeting about $260–$270 million in 2026 to keep production near the mid-40,000 BOE/d range while generating free cash flow for debt paydown; the 2026 program is designed to be roughly cash‑flow neutral at mid‑$50s oil.
• Term loan amortization of $30 million per quarter restarts on September 30, 2026, which should reduce the loan by about $180 million by end‑2027 and allows prepayment at par, with management noting every $125 million of debt repaid equates to roughly $1 of shareholder value.
• Operationally, corporate declines have improved to ~39% (and could fall ~1.5 percentage points per year with maintenance spending), HighPeak expects about 15 DUCs at year‑end to support flat output, and it has drilled 400+ wells with nearly 100 million BOE produced and >650 locations in inventory.

HighPeak Energy NASDAQ: HPK executives told investors at Water Tower Research’s Water Tower Insights Conference that the company is shifting from an earlier, infrastructure-heavy growth phase to a “maintenance CapEx” model designed to hold production roughly flat while generating free cash flow to accelerate debt reduction.

From greenfield buildout to maintenance mode

Chief Executive Officer Mike Hollis described HighPeak’s evolution from “virtually zero production” roughly five years ago to about 43,000–44,000 barrels of oil equivalent per day (BOE/d) in the fourth quarter, noting that quarter-to-date production at the time of the company’s recent update was running about 10% above that level.

Hollis said the company’s earlier growth required assembling acreage and building infrastructure from scratch—work that contributed to today’s debt load. He said HighPeak now expects to operate in a more stable mode for the “next foreseeable future,” targeting mid-40,000 BOE/d production with capital expenditures of about $260 million to $270 million, which he said should result in “significant free cash flow.”

Decline rates, DUCs, and capital pacing

Hollis said corporate declines were higher during the company’s rapid buildout, describing a “high- to mid-40%” corporate decline rate during peak growth. He said the decline rate is now about 39% and could fall by roughly 1.5 percentage points per year if the company continues its maintenance program for the next couple of years, reducing the amount of activity required to keep production flat.

He also pointed to drilled-but-uncompleted wells as part of the company’s pacing strategy, saying HighPeak expects to exit the year with about 15 DUCs that would allow it to run a similar program in 2027 as in 2026. Hollis said the 2026 plan is “fairly level loaded” but “slightly front-half weighted,” with about 60% of capital spending in the first half and 40% in the second half, and that 2027 should look “very similar.”

Operational optimization and capital efficiency

Asked how HighPeak might respond to elevated oil prices, Hollis emphasized that the company does not plan to change its drilling and completion cadence based on short-term price moves. Instead, he said higher prices mainly increase free cash flow available for debt paydown. Hollis said the company designed its 2026 program to be “cash flow neutral at a mid-$50s price of oil.”

On operations, Hollis said HighPeak has spent the last six months focused on “base optimization and production optimization,” including changes to artificial lift, chemicals used in wellbores, and “mini stimulations.” He said the company has seen “very positive results,” tying those efforts to the quarter-to-date production uplift he cited.

Hollis also framed capital efficiency gains as the result of multi-year infrastructure spending. He contrasted prior years’ spending and output, saying HighPeak produced about 45,000 BOE/d in 2023 while spending roughly $1 billion in capital, then spent $640 million the next year and $500 million the following year. He said the company expects to be in the mid-40,000 BOE/d range this year while spending about $270 million, and expects maintenance spending in that range for “the next year or two,” while acknowledging potential service-cost inflation.

Inventory and Middle Spraberry delineation

Hollis said HighPeak has drilled more than 400 wells and produced “almost 100 million BOE,” arguing the results support the quality of its rock. He said the company has more than 650 locations in the Wolfcamp A and Lower Spraberry, and that it is drilling more Middle Spraberry wells this year with results consistent with prior outcomes and offset operators.

Regarding Middle Spraberry upside, Hollis said the company plans one delineation well in 2026—“one of 30 drilled”—that would likely be completed in 2027. He said the well would be on the “very north end” of the company’s northern Borden block and would require additional infrastructure to tie into HighPeak’s system.

Debt reduction plan and term loan flexibility

Executive Vice President Ryan Hightower discussed the company’s term loan, saying that after the company amended and extended it last year, HighPeak paused its quarterly amortization. He said the $30 million per quarter amortization will restart at the end of the third quarter of 2026, beginning with a payment on September 30, and then continue quarterly thereafter.

Hightower said the company is “past any kind of make-whole protection penalty,” giving it flexibility to repay the term loan “in full or partially anytime we want at par.” He confirmed that scheduled amortization would reduce the term loan by about $180 million by the end of 2027.

Hollis said HighPeak’s near-term corporate focus is straightforward: maintain spending discipline while using free cash flow to reduce debt. He also outlined how the company thinks about the equity impact of deleveraging, saying HighPeak has about 125 million shares outstanding and that “every $125 million of debt that we pay down… translates to about $1 of shareholder value on the equity side.” Hollis characterized the process as a “transfer of value” from debt holders to equity holders, adding that the plan would leave the company with largely intact long-term inventory even after several years of maintenance activity.

About HighPeak Energy NASDAQ: HPK

HighPeak Energy, Inc NASDAQ: HPK is a Delaware‐incorporated independent oil and natural gas exploration and production company. The firm focuses on the acquisition, development and exploitation of onshore petroleum assets in the continental United States. Its operations encompass the full upstream value chain, including exploration, drilling, completion and production activities aimed at maximizing hydrocarbon recovery and operational efficiency.

The company’s primary business activities include identifying and acquiring conventional and unconventional oil and gas properties, applying advanced drilling and completion technologies, and managing midstream logistics to optimize product flow.

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