false 0001792849 0001792849 2022-09-06 2022-09-06 0001792849 hpk:CommonStockCustomMember 2022-09-06 2022-09-06 0001792849 hpk:WarrantCustomMember 2022-09-06 2022-09-06
 


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of report (Date of earliest event reported): September 6, 2022
 
 

 
 
HighPeak Energy, Inc.
(Exact name of registrant as specified in its charter)
 
 

 
 
Delaware
001-39464
84-3533602
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
 
421 W. 3rd St., Suite 1000
Fort Worth, Texas 76102
(address of principal executive offices) (zip code)
 
(817) 850-9200
(Registrant’s telephone number, including area code)
 
 

 
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencements communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange on Which Registered
Common Stock
 
HPK
 
The Nasdaq Stock Market LLC
Warrant
 
HPKEW
 
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ☒
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 


 
 

 
 
Introductory Note
 
On March 25, 2022, HighPeak Energy, Inc. (the “Company”) completed the acquisition (the “February Acquisition”) of various oil and gas properties contiguous to its Flat Top operating area in Howard and Borden Counties, Texas (the “February Assets”). On June 21, 2022, the Company completed the acquisition (together with the February Acquisition, the “Alamo Acquisitions”) of certain assets of Alamo Borden County 1, LLC and its affiliates located in Borden County, Texas (together with the February Assets, the “Alamo Assets”). On June 23, 2022, the Company filed certain historical and pro forma financial statements relating to the Alamo Assets on a Current Report on Form 8-K.
 
On June 27, 2022, the Company completed the acquisition (the “Hannathon Acquisition”) of various oil and gas properties contiguous to its Signal Peak operating area in Howard County, Texas (the “Hannathon Assets”). On June 30, 2022, the Company filed certain historical and pro forma financial statements relating to the Hannathon Assets on a Current Report on Form 8-K.
 
This Current Report on Form 8-K is being filed to provide certain pro forma financial statements of the Company giving effect to the Alamo Acquisitions and the Hannathon Acquisition, giving effect thereto as if each such acquisition had occurred on January 1, 2021, as more fully described in Item 8.01 below.
 
Item 8.01
Other Events.
 
This Current Report on Form 8-K provides the following additional financial information:
 
 
Unaudited pro forma condensed combined statements of operations of the Company for the six months ended June 30, 2022 and the year ended December 31, 2021, and the related notes to the unaudited pro forma condensed combined statements of operations, attached as Exhibit 99.1 hereto.
 
Item 9.01
Financial Statements and Exhibits.
 
(d)  Exhibits.
 
Exhibit
Number
Description of Exhibit
99.1 Unaudited pro forma condensed combined statements of operations of the Company for the six months ended June 30, 2022 and the year ended December 31, 2021.
104 Cover Page Interactive Data File (embedded within Inline XBRL document).
 
2

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
HIGHPEAK ENERGY, INC.
 
     
Date:        September 6 , 2022
   
 
By: 
/s/ Steven W. Tholen
 
 
Name:
Steven W. Tholen
 
 
Title: 
Chief Financial Officer
 
 
 
3
 
 

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

As previously disclosed in a Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2022, HighPeak Energy Assets, LLC (“HighPeak LLC”), a wholly owned subsidiary of HighPeak Energy, Inc. (the “Company” or “HighPeak” and, together with HighPeak LLC, the “HighPeak Parties”) entered into that certain Purchase and Sale Agreement (the “February Purchase Agreement”), dated as of February 15, 2022, with the third party private sellers set forth therein (the “Alamo Parties”) to acquire various oil and gas properties contiguous to its Flat Top operating area in Howard and Borden Counties, Texas (the “February Acquisition”). On March 25, 2022, the Company completed the February Acquisition, consisting of producing properties, undeveloped acreage, water system infrastructure and in-field fluid gathering pipelines (the “February Assets”), in exchange for a combined purchase price consisting of 6,960,000 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), valued at closing at $156.6 million, and $141,000 in cash, which remains subject to final post-closing settlement between the Company and the Alamo Parties.

 

Concurrently with the entry into the February Purchase Agreement, the HighPeak Parties entered into that certain Put/Call Agreement with the Alamo Parties, pursuant to which certain members of the Alamo Parties were granted the option, if and when such Alamo Parties acquired additional interests in certain additional producing crude oil and natural gas properties in Borden County, Texas, to become a party to a purchase and sale agreement and accordingly sell such member’s interests in any such additional properties (the “Put/Call Agreement” and, together with the February Purchase Agreement, the “February Acquisition Agreements”).

 

Pursuant to, and in connection with, the February Acquisition Agreements, on June 3, 2022, the HighPeak Parties and Alamo Borden County 1, LLC (“Alamo I” and, together with the Alamo Parties, “Alamo”) entered into a Purchase and Sale Agreement (the “June Purchase Agreement” and, together with the February Acquisition Agreements, the “Alamo Acquisition Agreements”), to acquire certain assets of Alamo I, or any affiliate of Alamo I, located in Borden County, Texas (the “June Assets” and, together with the February Assets, the “Alamo Assets”) and closed the acquisition (the “June Acquisition” and, together with the February Acquisition, the “Alamo Acquisitions”) on June 21, 2022. The consideration for this June Acquisition was 371,517 shares of Common Stock, valued at closing at $11.2 million, which remains subject to final post-closing settlement between the Company and Alamo I.

 

Also, as previously disclosed in a Current Report on Form 8-K, filed with the SEC on April 27, 2022, the Company and HighPeak LLC entered into that certain Purchase and Sale Agreement (the “Hannathon Purchase Agreement”), dated as of April 26, 2022, with Hannathon Petroleum, LLC (“Hannathon”) and certain other third party private sellers set forth therein (the “Hannathon Parties”) to acquire various oil and gas properties contiguous to its Signal Peak operating area in Howard County, Texas (the “Hannathon Acquisition”). On June 27, 2022, the Company completed the Hannathon Acquisition, consisting of producing properties, undeveloped acreage, water system infrastructure and in-field fluid gathering pipelines (the “Hannathon Assets”).  The aggregate consideration for the Hannathon Acquisition was a combined purchase price consisting of 3,522,117 shares of Common Stock, valued at closing at $97.2 million based on the Company’s share price as of the date of closing, $237.4 million in cash, which remains subject to final post-closing settlement between the Company and the Hannathon Parties, and estimated transaction costs of approximately $300,000.

 

The Alamo Acquisitions and the Hannathon Acquisition were accounted for as asset acquisitions as substantially all of the gross assets acquired were concentrated in a group of similar identifiable assets. The preliminary allocation of the total purchase prices in the Alamo Acquisitions and Hannathon Acquisition are based upon management’s estimates of and assumptions related to the fair value of assets acquired and liabilities assumed. The pro forma financial statements have been prepared to reflect the transaction accounting adjustments to the Company’s historical condensed consolidated financial information in order to account for the Alamo Acquisitions and Hannathon Acquisition and include the assumption of liabilities for acquisition-related expenses and the recognition of the estimated tax impact of the pro forma adjustments.

 

An unaudited pro forma condensed combined balance sheet of the Company as of June 30, 2022 is not presented in this Current Report on Form 8-K as the Alamo Acquisitions and Hannathon Acquisition had each been completed as of that date and are reflected in the Company’s historical condensed consolidated balance sheet as of June 30, 2022 included in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. The unaudited pro forma condensed combined statements of operations of the Company for the six months ended June 30, 2022 and for the year ended December 31, 2021, were prepared to give effect to the Alamo Acquisitions and Hannathon Acquisition as if each had been completed on January 1, 2021. Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the pro forma condensed combined financial statements.

 

The unaudited pro forma condensed combined statements of operations do not purport to represent what the Company’s results of operations would have been had the Alamo Acquisitions and Hannathon Acquisition actually been consummated on January 1, 2021. The unaudited pro forma condensed combined financial information is not indicative of the Company’s future results of operations and does not reflect future events that may occur after the Alamo Acquisitions and Hannathon Acquisition, including, but not limited to, the anticipated realization of ongoing savings from operating efficiencies, or offsetting unforeseen incremental costs.

 

 

 

The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2022 has been derived from:

 

 

the unaudited historical condensed consolidated statement of operations of the Company for the six months ended June 30, 2022 included in its Quarterly Report on Form 10-Q for quarter ended June 30, 2022;

 

 

the unaudited historical revenues and direct operating expenses of the Alamo Assets for the three months ended March 31, 2022 (included as Exhibit 99.3 to the Current Report on Form 8-K filed on June 23, 2022); and

 

 

the unaudited historical revenues and direct operating expenses of the Hannathon Assets for the three months ended March 31, 2022 (included as Exhibit 99.2 to the Current Report on Form 8-K filed on June 30, 2022).

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2021 has been derived from:

 

 

the audited historical consolidated statement of operations of the Company for the year ended December 31, 2021 included in its 2021 Annual Report on Form 10-K for the year ended December 31, 2021;

 

 

the audited historical consolidated statement of revenues and direct operating expenses of the Alamo Assets for the year ended December 31, 2021 (included as Exhibit 99.2 to the Current Report on Form 8-K filed on June 23, 2022); and

 

 

the audited historical consolidated statements of revenues and direct operating expenses of the Hannathon Assets for the year ended December 31, 2021 (included as Exhibit 99.3 to the Current Report on Form 8-K filed on June 30, 2022).

 

 

 

 

HIGHPEAK ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2022

($ in thousands, except per share amounts)

 

   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Adjustments

     

HighPeak

Pro Forma

Combined

 

OPERATING REVENUES:

                                         

Crude oil sales

  $ 277,864     $     $       31,474   (a)   $ 309,338  

NGL and natural gas sales

    15,793                   5,818   (a)     21,611  

Crude oil, NGL and natural gas revenues

          7,827       30,202       (38,029

)

(a)      

Total operating revenues

    293,657       7,827       30,202       (737

)

      330,949  

OPERATING COSTS AND EXPENSES:

                                         

Crude oil and natural gas production

    26,041                   3,375   (a)     29,416  

Production and ad valorem taxes

    15,307                   2,470   (a)     17,777  

Direct operating expenses

          1,102       5,480       (6,582

)

(a)      

Exploration and abandonments

    393                             393  

Depletion, depreciation and amortization

    51,907                   8,769   (b)     60,676  

Accretion of discount

    120                   116   (c)     236  

General and administrative

    3,956                             3,956  

Stock-based compensation

    18,555                             18,555  

Total expenses

    116,279       1,102       5,480       8,148         131,009  

INCOME (LOSS) FROM OPERATIONS OTHER INCOME (EXPENSE):

    177,378       6,725       24,722       (8,885

)

      199,940  

Interest and other income

    252                             252  

Interest expense

    (14,534

)

                (4,736

)

(d)     (19,270

)

Derivative loss, net

    (78,285

)

                          (78,285

)

Total other income (expense), net

    (92,567

)

                (4,736

)

      (97,303

)

NET INCOME (LOSS) BEFORE INCOME TAXES

    84,811       6,725       24,722       (13,621

)

      102,637  

INCOME TAX EXPENSE

    23,760                   3,743   (e)     27,503  

NET INCOME (LOSS)

    61,051       6,725       24,722       (17,364

)

      75,134  

LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST OWNERS

                               

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 61,051     $ 6,725     $ 24,722     $ (17,364

)

    $ 75,134  
                                           

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS):

                                         

Basic

    99,530       3,543       3,444                 106,517  

Diluted

    106,843       3,543       3,444                 113,830  

EARNINGS PER COMMON SHARE:

                                         

Basic net income

  $ 0.56                           (f)   $ 0.66  

Diluted net income

  $ 0.52                           (f)   $ 0.61  

 

 

 

 

HIGHPEAK ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2021

($ in thousands, except per share amounts)

 

   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Adjustments

     

HighPeak

Pro Forma

Combined

 

OPERATING REVENUES:

                                         

Crude oil sales

  $ 210,453     $     $       48,663   (a)   $ 259,116  

NGL and natural gas sales

    9,671                   12,503   (a)     22,174  

Crude oil, NGL and natural gas revenues

          6,895       55,872       (62,767

)

(a)      

Total operating revenues

    220,124       6,895       55,872       (1,601

)

      281,290  

OPERATING COSTS AND EXPENSES:

                                         

Crude oil and natural gas production

    25,053                   9,635   (a)     34,688  

Production and ad valorem taxes

    10,746                   4,536   (a)     15,282  

Direct operating expenses

          2,520       13,252       (15,772

)

(a)      

Exploration and abandonments

    1,549                             1,549  

Depletion, depreciation and amortization

    65,201                   20,207   (b)     85,408  

Accretion of discount

    167                   250   (c)     417  

General and administrative

    8,885                             8,885  

Stock-based compensation

    6,676                             6,676  

Total expenses

    118,277       2,520       13,252       18,856         152,905  

INCOME (LOSS) FROM OPERATIONS OTHER INCOME (EXPENSE):

    101,847       4,375       42,620       (20,457

)

      128,385  

Interest and other income

    1                             1  

Interest expense

    (2,484

)

                (9,473

)

(d)     (11,957

)

Derivative loss, net

    (26,734

)

                          (26,734

)

Other expense

    (167

)

                          (167

)

Total other income (expense), net

    (29,384

)

                (9,473

)

      (38,857

)

NET INCOME (LOSS) BEFORE INCOME TAXES

    72,463       4,375       42,620       (29,930

)

      89,528  

INCOME TAX EXPENSE (BENEFIT)

    16,904                   3,584   (e)     20,488  

NET INCOME (LOSS)

    55,559       4,375       42,620       (33,514

)

      69,040  

LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST OWNERS

                               

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 55,559     $ 4,375     $ 42,620     $ (33,514

)

    $ 69,040  
                                           

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS):

                                         

Basic

    93,127       7,332       3,522                 103,981  

Diluted

    94,772       7,332       3,522                 105,626  

EARNINGS PER COMMON SHARE:

                                         

Basic net income

  $ 0.55                           (f)   $ 0.62  

Diluted net income

  $ 0.54                           (f)   $ 0.61  

 

 

 

 

HIGHPEAK ENERGY, INC.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Note 1. Basis of Presentation

 

The accompanying pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X, as amended by SEC Final Rule Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and based on the historical consolidated and combined financial information of the Company, the Alamo Assets and the Hannathon Assets. The Alamo Acquisitions and Hannathon Acquisition have been accounted for herein as asset acquisitions. The preliminary allocation of the total purchase prices in the Alamo Acquisitions and Hannathon Acquisition are based upon management’s estimates of and assumptions related to the fair value of assets acquired and liabilities assumed.

 

Certain transaction accounting adjustments have been made in order to show the effects of the Alamo Acquisitions and Hannathon Acquisition on the combined historical financial information of the Company, the Alamo Assets and the Hannathon Assets. The transaction accounting adjustments are preliminary and based on estimates of the purchase consideration and estimates of fair value and useful lives of the assets acquired and liabilities assumed.

 

The transaction accounting adjustments are described in the accompanying notes and are based on available information and certain assumptions that the Company believes are reasonable; however, actual results may differ from those reflected in these statements. The unaudited pro forma condensed combined statements do not purport to represent what the Company’s results of operations would have been if the Alamo Acquisitions and Hannathon Acquisition had occurred on the date indicated above, nor are they indicative of the Company’s future results of operations. Certain information normally included in financial statements and the accompanying notes has been condensed or omitted. These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements and related notes of the Company, Alamo and the Hannathon Parties for the periods presented.

 

In addition, the financial statements of the Alamo Assets and the Hannathon Assets from which the unaudited pro forma condensed combined statements were derived represent the revenues and direct operating expenses of such assets. Certain costs such as depreciation, depletion, and amortization, accretion of asset retirement obligations, general and administrative expenses, interest and income taxes are omitted from such historical financial statements and estimated for purposes of preparing these unaudited pro forma condensed combined statements. This financial information is not intended to be a complete presentation of the revenues and expenses of such assets and may not be representative of future operations due to changes in the business and the exclusion of the omitted information.

 

There is no unaudited condensed combined balance sheet presented as the Alamo Acquisitions and Hannathon Acquisition had all been consummated and recorded in the Company’s historical condensed consolidated balance sheet as of June 30, 2022 included in its Quarterly Report of Form 10-Q for the quarter ended June 30, 2022. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and the year ended December 31, 2021 give effect to the Alamo Acquisitions and Hannathon Acquisition as if they had been completed on January 1, 2021.

 

Note 2. Accounting Policies and Presentation

 

The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and the year ended December 31, 2021 have been compiled in a manner consistent with the accounting policies adopted by the Company. Certain reclassifications and adjustments have been made to the historical financial information of the Alamo Assets and the Hannathon Assets presented herein to conform to the Company’s historical presentation.

 

Note 3. Preliminary Purchase Price Allocation

 

The preliminary allocation of the total purchase prices in the Alamo Acquisitions and Hannathon Acquisition are based upon management’s estimates of and assumptions related to the fair value of assets to be acquired and liabilities to be assumed as of June 30, 2022 using currently available information. Because the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final purchase prices allocation and the resulting effect on results of operations may differ significantly from the pro forma amounts included herein.

 

The preliminary purchase price allocation is subject to change due to several factors, including but not limited to changes in the estimated fair value of assets acquired and liabilities assumed as of the respective closing dates of the Alamo Acquisitions and the Hannathon Acquisition, which could result from changes in future oil and natural gas commodity prices, reserve estimates, interest rates, as well as other factors.

 

 

 

The consideration transferred, fair value of assets acquired and liabilities assumed by the Company have been recorded as follows (in thousands, except share amounts and stock price):

 

   

February

Acquisition

   

June

Acquisition

   

Hannathon

Acquisition

   

Pro Forma

Combined

 

Consideration:

                               

Shares of Common Stock issued

    6,960,000       371,517       3,522,117       10,853,634  

Common Stock price as of closing

  $ 22.50     $ 30.07     $ 27.60          

Common Stock consideration

  $ 156,600     $ 11,172     $ 97,210     $ 264,982  

Cash consideration

    (602

)

          237,929       237,327  

Total consideration transferred

  $ 155,998     $ 11,172     $ 335,139     $ 502,309  

Fair value of assets acquired:

                               

Crude oil and natural gas properties

  $ 156,521     $ 11,190     $ 338,194     $ 505,905  

Amount attributable to assets acquired

  $ 156,521     $ 11,190     $ 338,194     $ 505,905  

Fair value of liabilities assumed:

                               

Revenues and royalties payable

  $     $     $ 377     $ 377  

Noncurrent liabilities - asset retirement obligations

    523       18       2,678       3,219  

Amount attributable to liabilities assumed

  $ 523     $ 18     $ 3,055     $ 3,596  

 

Total consideration is based on the terms of the Alamo Acquisition Agreements and the Hannathon Purchase Agreement, and the total consideration paid by the Company at closings consists of 10,853,634 shares of Common Stock and $237.7 million in cash, including transaction costs and customary closing adjustments, subject to the post-closing settlements described above.

 

The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and gas properties and asset retirement obligations were measured using the discounted cash flow technique of valuation.

 

Inputs to the valuation of oil and gas properties include estimates of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, (iv) future plugging and abandonment costs, (v) estimated future cash flows, and (vi) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates and are the most sensitive and subject to change.

 

Note 4. Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

 

The following adjustments were made in the preparation of the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and the year ended December 31, 2021:

 

 

(a)

Adjustment to reflect the Alamo Assets’ and Hannathon Assets’ revenues and direct operating expenses consistent with the Company’s classification and presentation.

 

 

(b)

Adjustment to reflect the additional depletion, depreciation and amortization expense associated with the Alamo Acquisitions and Hannathon Acquisition if consummated as of January 1, 2021.

 

 

(c)

Adjustment to reflect the additional accretion of discount on asset retirement obligations associated with the Alamo Acquisitions and Hannathon Acquisition if consummated as of January 1, 2021.

 

 

(d)

Adjustment to reflect the additional interest expense that would have been incurred related to the $225.0 million drawn on our Revolving Credit Facility to close the Hannathon Acquisition if consummated as of January 1, 2021.

 

 

(e)

Adjustment to reflect the additional deferred tax expense at the statutory rate of 21% that would have been recorded related to the Alamo Acquisitions and Hannathon Acquisition if consummated as of January 1, 2021.

 

 

(f)

Reflects the adjusted earnings per share if the Alamo Acquisitions and Hannathon Acquisition were consummated as of January 1, 2021.

 

 

 

Note 5. Supplemental Unaudited Combined Oil and Natural Gas Reserves and Standardized Measure Information

 

The following tables present estimated pro forma combined crude oil, NGL and natural gas reserves information as of December 31, 2021. The amounts below were determined based on the amounts reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the audited statement of revenues and direct operating expenses of the Alamo Assets for the year ended December 31, 2021 and the audited statement of revenues and direct operating expenses of the Hannathon Assets for the year ended December 31, 2021 and 2020. An explanation of the underlying methodology applied, as required by SEC regulations, can be found within the respective reports. The estimated pro forma reserve information below gives effect to the Alamo Acquisitions and Hannathon Acquisition as if they had been completed on January 1, 2021. The estimated crude oil and natural gas reserves of the Alamo Assets and the Hannathon Assets do not break out the wet natural gas stream into NGL and dry natural gas consistent with the Company’s presentation of crude oil, NGL and natural gas reserves. However, this is not considered material on an MBoe basis and the standardized measure is not affected. The reserves associated with the Alamo Acquisitions and Hannathon Acquisition will be converted to a split stream basis going forward once combined with the Company’s estimated crude oil, NGL and natural gas reserve information. The following estimated pro forma combined crude oil, NGL and natural gas reserves information is not necessarily indicative of the results that might have occurred had the Alamo Acquisitions and Hannathon Acquisition been completed on January 1, 2021 and is not intended to be a projection of future results. Future results may vary significantly from the results presented.

 

The following table presents a summary of changes in quantities of net remaining proved reserves during the year ended December 31, 2021:

 

   

Crude Oil (MBbl)

 
   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Combined

 

Proved Reserves at December 31, 2020

    19,032       584       12,532       32,148  

Extensions and discoveries

    36,867       6,357       3,218       46,442  

Purchase of minerals-in-place

    973                   973  

Sales of minerals-in-place

    (238 )                 (238 )

Revisions of previous estimates

    (1,807 )     73       7,288       5,554  

Production

    (3,002 )     (162 )     (627 )     (3,791 )

Proved Reserves at December 31, 2021

    51,825       6,852       22,411       81,088  

 

   

NGL (MBbl)

 
   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Combined

 

Proved Reserves at December 31, 2020

    2,160                   2,160  

Extensions and discoveries

    4,845                   4,845  

Purchase of minerals-in-place

    631                   631  

Sales of minerals-in-place

    (44 )                 (44 )

Revisions of previous estimates

    10                   10  

Production

    (224 )                 (224 )

Proved Reserves at December 31, 2021

    7,378                   7,378  

 

   

Natural Gas (MMcf)

 
   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Combined

 

Proved Reserves at December 31, 2020

    7,939       841       37,600       46,380  

Extensions and discoveries

    19,529       5,707       8,862       34,098  

Purchase of minerals-in-place

    2,910                   2,910  

Sales of minerals-in-place

    (139 )                 (139 )

Revisions of previous estimates

    842       6       38,044       38,892  

Production

    (1,020 )     (108 )     (2,406 )     (3,534 )

Proved Reserves at December 31, 2021

    30,061       6,446       82,100       118,607  

 

   

Total (MBoe)

 
   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Combined

 

Proved Reserves at December 31, 2020

    22,515       724       18,799       42,038  

Extensions and discoveries

    44,967       7,308       4,695       56,970  

Purchase of minerals-in-place

    2,089                   2,089  

Sales of minerals-in-place

    (305 )                 (305 )

Revisions of previous estimates

    (1,657 )     74       13,629       12,046  

Production

    (3,396 )     (180 )     (1,028 )     (4,604 )

Proved Reserves at December 31, 2021

    64,213       7,926       36,095       108,234  

 

 

 

The following table sets forth information with respect to the historical and combined estimated crude oil, NGL and natural gas reserves as of December 31, 2021:

 

   

As of December 31, 2021

 
   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Combined

 

Estimated Proved Developed Reserves:

                               

Crude oil (MBbl)

    22,610       2,679       6,270       31,559  

NGL (MBbl)

    3,540                   3,540  

Natural gas (MMcf)

    14,611       2,691       29,646       46,948  

Total (Mboe)

    28,585       3,127       11,211       42,923  

Estimated Proved Undeveloped Reserves:

                               

Crude oil (MBbl)

    29,215       4,173       16,141       49,529  

NGL (MBbl)

    3,838                   3,838  

Natural gas (MMcf)

    15,450       3,755       52,454       71,659  

Total (Mboe)

    35,628       4,799       24,884       65,311  

Estimated Proved Reserves:

                               

Crude oil (MBbl)

    51,825       6,852       22,411       81,088  

NGL (MBbl)

    7,378                   7,378  

Natural gas (MMcf)

    30,061       6,446       82,100       118,607  

Total (Mboe)

    64,213       7,926       36,095       108,234  

 

The pro forma standardized measure of discounted future net cash flows relating to proved crude oil, NGL and natural gas reserves as of December 31, 2021 is as follows (in thousands):

 

   

As of December 31, 2021

 
   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

Pro Forma

Combined

 

Future cash inflows

  $ 3,668,535     $ 486,274     $ 1,896,305     $ 6,051,114  

Future production costs

    (824,865 )     (93,085 )     (558,885 )     (1,476,835 )

Future development costs

    (432,370 )     (56,882 )     (354,929 )     (844,181 )

Future income tax expense

    (431,737 )     (2,553 )           (434,290 )

Future net cash flows

    1,979,563       333,754       982,491       3,295,808  

Discount to present value at 10% annual rate

    (860,754 )     (160,280 )     (566,511 )     (1,587,545 )

Standardized measure of discounted future net cash flows

  $ 1,118,809     $ 173,474     $ 415,980     $ 1,708,263  

 

The changes in the pro forma standardized measure of discounted future net cash flows relating to proved crude oil, NGL and natural gas reserves for the year ended December 31, 2021 are as follows (in thousands):

 

   

Year Ended December 31, 2021

 
   

HighPeak

   

Alamo

Acquisitions

   

Hannathon

Acquisition

   

 

Pro Forma

Combined

 

Standardized measure of discounted future net cash flows, beginning of year

  $ 222,192     $ 8,488     $ 46,932     $ 277,612  

Sales of crude oil and natural gas, net of production costs

    (184,325 )     (4,375 )     (41,028 )     (229,728 )

Extensions and discoveries, net of future development costs

    987,689       161,757       51,504       1,200,950  

Net changes in prices and production costs

    272,889       6,163       102,567       381,619  

Changes in estimated future development costs

    (13,551 )     (178 )     42,576       28,847  

Purchases of minerals-in-place

    31,353                   31,353  

Sales of minerals-in-place

    (3,067 )                 (3,067 )

Revisions of previous quantity estimates

    (40,466 )     1,688       154,015       115,237  

Accretion of discount

    23,419       855       5,714       29,988  

Net changes in income taxes

    (212,574 )     (1,336 )           (213,910 )

Net changes in timing of production and other

    35,250       412       53,700       89,362  

Standardized measure of discounted future net cash flows, end of year

  $ 1,118,809     $ 173,474     $ 415,980     $ 1,708,263