HighPeak Energy Targets Stable Output, Lower Costs and Debt Reduction

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, Inc. 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.

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.

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 expe...