HighPeak Energy, Inc. · NASDAQ:HPK
HighPeak Energy — SPAC Merger (July 2020)
38 slides from HighPeak Energy's SPAC merger presentation, July 2020
Slide 1: Investor Presentation – July 2020
Investor Presentation – July 2020
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING STATEMENTS The informat ion in this present ation and in any oral stat ements made in connection h erewith include “forward-looking stat ements” within the meaning of Sect ion 27A of the Securi ties Act of 1933, as amended, and Sec tion 21E of the Securiti es Exchange Act
Slide 3: Disclaimer (Cont'd)
Disclaimer (Cont’d) RESERVE INFORMATION Reserv e engineering is a proc ess of estimating underground accumulations of hydrocarbons that cannot be measured in an ex act way. Th e accuracy of any reserve estimat e d epends on the quality of av ail able dat a, the interpretat ion of such data and pric
Slide 4: Transaction Summary
Transaction Summary ◼ In April 2018, Jack Hightower, HighPeak Pure Acquisition, LLC and certain of its affiliates (collectively, the “Sponsor”) raised $414 million in the form of a Special Purpose Acquisition Company (“SPAC”) called Pure Acquisition Corp. (NASDAQ: PACQ) (“Pure”) ◼ Pure was establish
Slide 5: Superior and Differentiated E&P Business Model
Superior and Differentiated E&P Business Model ✓ Best in class drilling and operating execution ✓ High oil cut with best in class operating margins ✓ Low leverage in a debt-riddled industry ✓ Contiguous land position with minimal lease obligations ✓ Cycle tested management team ✓ Low cost G&A focusi
Slide 6: Experienced, Cross-Functional Management Team
Experienced, Cross-Functional Management Team History of Creating Value Across Multiple Platforms Key Points Name Position Select Prior Experience ◼ HighPeak has assembled a premier management and operations team Jack Hightower Chairman & CEO Bluestem Energy ◼ HighPeak will manage growth in activity
Slide 7: Proven Track Record of Valuation Creation
Proven Track Record of Valuation Creation Jack Hightower has a proven track record of successfully acquiring, developing and optimizing oil and gas businesses Jack Hightower’s prior businesses have generated average returns of >5.0x ROI and >100% IRR for original investors Jack Hightower has experie
Slide 8: Transaction Overview
Transaction Overview ◼ Certain entities controlled by the Sponsor, Pure and HighPeak entered into a definitive agreement to form a pure -play northern Midland Basin E&P Company ◼ Post-closing, the Sponsor is expected to be the largest stockholder of HighPeak, with approximately 89% ownership (1) ◼ P
Slide 9: Investor Incentives
Investor Incentives(1)(2) KEY POINTS Incentive Example ◼ Current SPAC shareholders will receive a cash payment equal to the amount by which the per-share redemption value of All numbers in millions except share price Pure’s Class A common stock exceeds $10.00 per share at the closing of the business
Slide 10: HighPeak Energy
HighPeak Energy Northern Midland Basin Pure-Play Capitalized for Efficient Oil-Weighted Value Generation HighPeak Acreage ◼ Led by Jack Hightower, former CEO of 2 public E&P companies Lower Spraberry Experienced, Cross- and multiple partnerships with majors and private equity investors Wolfcamp A Fu
Slide 11: Evolution of Development in Howard County
Evolution of Development in Howard County Legend 2014 Sticks 2016 Sticks 2020 Sticks and Permits HighPeak Acreage Middle Spbry Jo Mill Lower Spbry Dean Wolfcamp A Wolfcamp B Permit Howard Howard Howard Initial Development Early Development Full-Field Development HZ Rigs 6 13 30 (2) HZ Wells to Date
Slide 12: Howard County is the Growth Engine of the Permian
Howard County is the Growth Engine of the Permian Howard County production mix has the highest oil percentage and margins across the Midland Basin (ie. best economics) Howard County has seen the most rapid growth in oil volumes of all the major Midland Basin Counties Howard County: Highest Oil Conte
Slide 13: Achieving Excellent Efficiency & Margins
Achieving Excellent Efficiency & Margins CAPITAL EFFICIENCY FLAT TOP CAPITAL EFFICIENCY (D,C,E&F) ◼ Consistent capital performance demonstrating DCE&F costs of <$520/ft ─ Total well cost (10,000’): $5.25mm ◼ Continuous capital improvement ─ Pad development ─ Longer laterals ─ Service company relatio
Slide 14: Industry Leading Operating Margins
Industry Leading Operating Margins 1 HighPeak has the best margins among the Permian peers Peer $ / Boe PEER 1 PEER 2 PEER 3 PEER 4 PEER 5 PEER 6 PEER 7 PEER 8 PEER 9 PEER 10 PEER 11 PEER 12 HPK Average Highest oil cut Oil: 66% Oil: 35% Oil: 67% Oil: 56% Oil: 49% Oil: 75% Oil: 64% Oil: 65% Oil: 57%
Slide 15: Financial Projections
Financial Projections Assumes Model Price1 Key Points HighPeak Financial Projections 12-m o Period Ending ◼ Commodity Prices: 2020 2021 2022 7/31/2021 7/31/2022 Average Rigs, Operated 2 3 3 3 3 ─ Model Price Gross Wells Drilled, Operated 34 88 103 86 101 ─ NGLs: 36% of WTI Gross Wells Tied-In, Opera
Slide 16: Financial Projections (as of July 31, 2021)
Financial Projections (as of July 31, 2021) Sensitivity: Model Price: OIL ($/bbl): $32 (H2/2020), $35 (2021), $40 (2022) // GAS (MMBtu): $2.50 TTM EBITDA ($mm) & PRODUCTION (boepd) CAPITAL ($mm) & WELLS DRILLED NET DEBT ($mm) NET DEBT:LMA EBITDA (1) EBITDA Sensitivity per $1 / Bbl change in oil pric
Slide 17: Financial Projections (as of July 31, 2022)
Financial Projections (as of July 31, 2022) Sensitivity: Model Price: OIL ($/bbl): $32 (H2/2020), $35 (2021), $40 (2022) // GAS (MMBtu): $2.50 TTM EBITDA ($mm) & PRODUCTION (boepd) CAPITAL ($mm) & WELLS DRILLED NET DEBT ($mm) NET DEBT:LMA EBITDA (1) EBITDA Sensitivity per $1 / Bbl change in oil pric
Slide 18: Financial Projections: Price Comparison
Financial Projections Price Comparison1 Key Points HighPeak Financial Projections MODEL PRICE FLAT $40/bbl FLAT $50/bbl 12-m o Period Ending 12-m o Period Ending 12-m o Period Ending ◼ Development Pace & Methodology: 7/31/2021 7/31/2022 7/31/2021 7/31/2022 7/31/2021 7/31/2022 ─ Assumes an average of
Slide 19: Wolfcamp A: CGA Type Curve
Wolfcamp A: CGA Type Curve 10,000’ Wolfcamp A Key Points Cum Oil Production Normalized to 10,000’ (Bo) ◼ Wolfcamp A type curve wells selected from 250,000 geologically similar region Oil Type Curve ◼ HighPeak has directly analogous landing zones and oil in place to highly developed parts of the play
Slide 20: Lower Spraberry: CGA Type Curve
Lower Spraberry: CGA Type Curve 10,000’ Lower Spraberry Key Points Cum Oil Production Cum Oil Production Normalized Normalized to 10,000’ (Bo) to 10,000’ (Bo) ◼ Lower Spraberry type curve wells selected from 250,000 geologically similar region Oil Type Curve ◼ HighPeak has directly analogous landing
Slide 21: CGA Year-End 2019 Proved Reserves
CGA Year-End 2019 Proved Reserves (1) CGA Year-End 2019 Proved Reserves (1) Net Proved Reserves Oil Gas NGL Total % of % PV-10 Reserve Category (MBbl) (MMcf) (MBbl) (MBoe) Total Liquids ($MM) Proved Developed Producing (PDP) 990 498 101 1,174 10% 93% $ 21 Proved Developed Non-Producing (PDNP) 3,101
Slide 22: Internal Proved Reserves at Apr/20
Internal Proved Reserves at Apr/20 (1) HPK Proved Reserves at Apr/20 (1) Net Proved Reserves Oil Gas NGL Total % of % PV-10 Reserve Category (MBbl) (MMcf) (MBbl) (MBoe) Total Liquids ($MM) Proved Developed Producing (PDP) 4,481 1,473 435 5,161 12% 95% $ 74 Proved Developed Non-Producing (PDNP) 7,413
Slide 23: Summary of Apr/2020 Resource
Summary of Apr/2020 Resource (1) Key Statistics: Resource HighPeak Resource Summary (As of 04/01/20) ◼ Proved Reserves ~45 MMBoe Net Resource PD PV-10 + DEV PV-10 (3) Oil Gas NGL Total MODEL $40 / Bbl $50 / Bbl ◼ Unproved Resource ~317 MMBoe Category (MMBbl) (Bcf) (MMBbl) (MMBoe) ($MM) ($ MM) ($MM)
Slide 24: Level of Delineation
Significant Unquantified Upside Across Position from Productive Economic Horizons1 Operated Target Locations Formation Highlights Flat Top Type Log Signal Peak Type Log Griffin S. 21-2 Allar 20-3 ✓ Most delineated target on HighPeak’s acreage Wolfcamp A ~246 ✓ Wolfcamp A has consistently delivered t
Slide 25: Key Results: Primary Targets
Key Results: Primary Targets (1)(2) LL First EUR EUR Well Name Operator HighPeak Acreage (ft) Prod (MBoe) (MBo) ALLAR 19A-30 1LS HANNATHON 7,580 17-Aug Lower Spraberry 1 790 733 Wolfcamp A 2 MDRN FLANAGAN 13-24 1LS HANNATHON 7,733 18-Apr 617 531 WCA / LSBY 3 MARCHBANKS PARTEE HIGHPEAK 9,960 19-Dec S
Slide 26: Key Results: Upside Targets
Key Results: Upside Targets (1) HighPeak Acreage Key Points Middle Spraberry Jo Mill ◼ Outside of the primary targets HighPeak is developing, the Wolfcamp A Dean Wolfcamp B and Lower Spraberry, there is significant unquantified upside across Wolfcamp D the position from proven economic horizons, inc
Slide 27: Geologic Overview
Geologic Overview Key Points ◼ Wolfcamp A and Lower Spraberry have consistently high gross thickness moving from SM’s acreage through the easternmost HighPeak acreage ◼ Reservoir intervals are comprised of Middle interbedded organic-rich shale, Spraberry siltstone, and carbonate and robust porosity
Slide 28: Wolfcamp A and Lower Spraberry Geologic Overview
Wolfcamp A and Lower Spraberry Geologic Overview HighPeak Acreage Lies within the Core Fairways of the Wolfcamp A and Lower Spraberry Wolfcamp A characterized by >250’ gross, >200’ net, and >35 MMBo/section OOIP across majority of acreage Lower Spraberry characterized by >300’ gross, >250’ net, and
Slide 29: HighPeak Acreage Overlies Thermally Mature Reservoir
HighPeak Acreage Overlies Thermally Mature Reservoir Thermal Maturity Data Indicates Pay Section is Well Within Oil Window Key Points Wolfcamp A Structure (SSTVD’) and Wolfcamp A Geochemistry Tmax Data ◼ Howard County has one of the densest vertical well log data sets in the entire Permian Basin wit
Slide 30: HighPeak Recent Activity
HIGHPEAK RECENT ACTIVITY Key Points FLAT TOP ACTIVITY ◼ HighPeak has drilled 22 wells in the Flat Legend Top area with 6 wells producing, 8 wells PRODUCING completed (4 flowing back) and 8 DUCs COMPLETED DUC ◼ Jasmine wells were drilled first and have produced steadily since being put online ◼ Cole
Slide 31: Financial Appendix
ENERGY Financial Appendix
Slide 32: Financial Projections – Alternate Case
Financial Projections – Alternate Case Assumes $40.00 / Bbl (oil) & $2.50 / MMBtu (gas) Key Points HighPeak Financial Projections 12-m o Period Ending ◼ Commodity Prices: 2020 2021 2022 7/31/2021 7/31/2022 ─ Crude Oil: $40.00 / Bbl Average Rigs, Operated 2 3 3 3 3 ─ Natural Gas: $2.50 / MMBtu Gross
Slide 33: Financial Projections – Alternate Case
Financial Projections – Alternate Case Assumes $50.00 / Bbl (oil) & $2.50 / MMBtu (gas) Key Points HighPeak Financial Projections 12-m o Period Ending ◼ Commodity Prices: 2020 2021 2022 7/31/2021 7/31/2022 ─ Crude Oil: $50.00 / Bbl Average Rigs, Operated 2 3 3 3 3 ─ Natural Gas: $2.50 / MMBtu Gross
Slide 34: Illustrative Transaction Timeline
Illustrative Transaction Timeline Date Event ▪ Business Combination Transaction Agreed May 2019 ▪ Business Combination Transaction Announced ▪ Business Combination Proxy Filed with the SEC August 2020 ▪ Set Record Date for Stockholder Vote August 2020 ▪ Mail Final Proxy Materials to Stockholder Augu
Slide 35: Investment Highlights
Investment Highlights Attractive entry point valuation with differentiated growth and return profile ◼ Proposed valuation implies ~5.1x NTM EBITDA and ~3.0x 2021E EBITDA(1) (a ~41% discount to the Permian comps on a 2021E EBITDA multiple basis) (2)(3) 1 ◼ Projected two-year production CAGR in excess
Slide 36: Appendix
ENERGY Appendix
Slide 37: Extensive Access to Well Data
Extensive Access to Well Data Key Points ◼ Active drilling programs on and around HighPeak acreage has provided an extensive well data set ◼ Data through operated wells and numerous data trades ─ Access to daily production ─ Access to drilling & completion designs ─ Access to well costs Wells by Ben
Slide 38: Substantial Existing In-Basin Infrastructure with Premier Midstream & Marketing Solutions
Substantial Existing In-Basin Infrastructure with Premier Midstream & Marketing Solutions Available Attractive solutions identified for “manufacturing mode” development Big Spring Alon ◼ HighPeak anticipates entering into an agreement with a reputable Refinery third party containing the following te