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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

<ul><li>We are updating our estimates to reflect actual 2Q24 NYMEX reference prices of $80.66/bbl for oil and $2.32/MMBtu for natural gas.</li><li>Oil accounts for 78% of our 2Q24 oil production estimate and 98% of our 2Q24 revenue estimate.</li><li>Management’s FY24 production outlook is 43.0-47.0 MBOE/d (Figure 1). 1Q24 production averaged 49.7 MBOE/d (80% oil). </li></ul>

We are updating our estimates to reflect actual 2Q24 NYMEX reference prices of $80.66/bbl for oil and $2.32/MMBtu for natural gas.Oil accounts for 78% of our 2Q24 oil production estimate and 98% of our 2Q24 revenue estimate.Management’s FY24 production outlook is 43.0-47.0 MBOE/d (Figure 1). 1Q24 production averaged 49.7 MBOE/d (80% oil). 

HighPeak Energy, Inc. - Free Cash Flow Tailwind

<ul><li>HighPeak has pivoted its FY24 development plan to concentrate on free cash flow generation from growth.</li><li>Our updated adjusted EBITDA and free cash flow estimates, incorporating NYMEX reference prices of $79.19/bbl for oil and $2.33/MMBtu for natural gas, are $858 million and $168 million, respectively.</li><li>FY23 free cash flow was negative $271 million.</li></ul>

HighPeak has pivoted its FY24 development plan to concentrate on free cash flow generation from growth.Our updated adjusted EBITDA and free cash flow estimates, incorporating NYMEX reference prices of $79.19/bbl for oil and $2.33/MMBtu for natural gas, are $858 million and $168 million, respectively.FY23 free cash flow was negative $271 million.

HighPeak Energy, Inc. -Moderating Growth for Free Cash Flow Generation

<ul><li>HighPeak declared a quarterly common stock dividend of $0.04 per share on February 5, 2024, a 60% increase from the prior dividend of $0.025 per share.</li><li>The 1Q24 dividend will be paid on March 25, 2024, to shareholders of record as of March 1, 2024.</li><li>The board also authorized a $75-million common stock repurchase program effective through December 31, 2024.</li></ul>

HighPeak declared a quarterly common stock dividend of $0.04 per share on February 5, 2024, a 60% increase from the prior dividend of $0.025 per share.The 1Q24 dividend will be paid on March 25, 2024, to shareholders of record as of March 1, 2024.The board also authorized a $75-million common stock repurchase program effective through December 31, 2024.

HighPeak Energy, Inc. - Dividend Hike; Estimate Update

<div><div><div><div><ul style="list-style-type: disc;"><li><p>HighPeak recapitalized its balance sheet with the proceeds from a new $1.2 billion term loan, which closed September 13, 2023.</p></li><li><p>Proceeds were used to redeem $225 million of senior notes due February 2024, $250 million of senior notes due November 2024, and repay all outstanding borrowings under the company’s RBL facility.</p></li><li><p>The remaining proceeds can be used for general corporate purposes. The 2020 RBL was subsequently terminated. The term loan is scheduled to mature September 30, 2026.</p></li></ul></div></div></div></div>

HighPeak recapitalized its balance sheet with the proceeds from a new $1.2 billion term loan, which closed September 13, 2023.Proceeds were used to redeem $225 million of senior notes due February 2024, $250 million of senior notes due November 2024, and repay all outstanding borrowings under the company’s RBL facility.The remaining proceeds can be used for general corporate purposes. The 2020 RBL was subsequently terminated. The term loan is scheduled to mature September 30, 2026.

HighPeak Energy, Inc. - Refocused on Development

<ul style="list-style-type: disc;"><li><p>HighPeak closed a secondary offering of ~14.8 million shares of common stock on July 21, 2023.</p></li><li><p>The shares were priced at $10.50, netting the company proceeds of ~$151.2 million.</p></li><li><p>Members of the management team and board of directors purchased ~10.0 million, or 68% of the shares sold</p></li></ul>

HighPeak closed a secondary offering of ~14.8 million shares of common stock on July 21, 2023.The shares were priced at $10.50, netting the company proceeds of ~$151.2 million.Members of the management team and board of directors purchased ~10.0 million, or 68% of the shares sold

HighPeak Energy, Inc. - Equity Improves Liquidity Position

United States

HighPeak Energy, Inc. operates as an exploration company. The Company offers petroleum engineering, geology, geophysics, drilling, and land financing services. HighPeak Energy serves customers in the United States.

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HighPeak Energy Inc (HPK US)

HighPeak Energy, Inc. - Free Cash Flow Tailwind

We are updating our estimates to reflect actual 2Q24 NYMEX reference prices of $80.66/bbl for oil and $2.32/MMBtu for natural gas.

Water Tower Research

HighPeak Energy, Inc. -Moderating Growth for Free Cash Flow Generation

Our updated adjusted EBITDA and free cash flow estimates, incorporating NYMEX reference prices of $79.19/bbl for oil and $2.33/MMBtu for natural...

Water Tower Research

HighPeak Energy, Inc. - Dividend Hike; Estimate Update

HighPeak declared a quarterly common stock dividend of $0.04 per share on February 5, 2024, a 60% increase from the prior dividend of $0.025 per...

Water Tower Research

HighPeak Energy, Inc. - Refocused on Development

HighPeak recapitalized its balance sheet with the proceeds from a new $1.2 billion term loan, which closed September 13, 2023.

Water Tower Research

HighPeak Energy, Inc. - Equity Improves Liquidity Position

HighPeak closed a secondary offering of ~14.8 million shares of common stock on July 21, 2023. The shares were priced at $10.50, netting the...

Water Tower Research

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