HighPeak Energy (NASDAQ:HPK) reported second-quarter results marked by production above its guidance range, lower-than-guided lease operating expenses and sequential growth in adjusted EBITDA and free cash flow, according to management’s earnings call.
President and CEO Michael Hollis said production was essentially flat from the first quarter and again exceeded the high end of the company’s guidance. For the first six months of 2026, production averaged 45,500 barrels of oil equivalent per day, while unit lease operating expense averaged $7.56 per BOE, approximately 13% below the midpoint of full-year guidance.
Completion Activity Accelerated, Second-Half Spending Expected to Fall
HighPeak said it accelerated a portion of completion activity into the second quarter to take advantage of favorable frac pricing and continue work with a simul-frac crew that management said had delivered improved efficiencies, faster cycle times and lower costs.
The company drilled 17 of its planned 29 wells during the first half of the year and completed 24 of its planned 33 wells. It also turned 20 wells in line, putting it on track toward its full-year target of 37 wells turned in line.
Hollis said the acceleration caused first-half capital spending to reach the mid- to upper-60% range of the annual budget, compared with an original expectation that about 60% of annual capital would be spent during the first half. HighPeak invested $185.9 million during the first six months, according to management.
Management characterized the spending shift as a timing decision rather than an increase to the budget. With more development activity completed earlier in the year, HighPeak expects capital spending to decline materially in the second half while production remains strong.
During the question-and-answer session, Hollis said the company completed 69% of its planned completion work in the first half. He added that HighPeak expects fewer frac-related production impacts during the remainder of the year.
“We think volumes will stay strong throughout the last half of the year,” Hollis said, adding that the company expects to generate significant free cash flow at reasonable oil prices.
Workover Program Supported Production
Management highlighted its workover program as a contributor to second-quarter production. Hollis said HighPeak evaluated wells across its asset base and deployed relatively modest capital to return production to service and improve well productivity.
The company said workovers can offer quick paybacks and capital-efficient returns compared with drilling new wells. Workover costs are generally recorded in lease operating expenses when they involve required well interventions, while mini-stimulation work intended to increase reserves is captured as capital spending, Hollis said.
Hollis told analysts that the company had addressed much of the inventory of wells that could be quickly brought forward for workovers during the first half. However, he said workover opportunities will continue as wells require maintenance and interventions over time.
The workover activity also affected the company’s production mix in the second quarter. HighPeak’s oil percentage declined to 64%, below its guided 67% to 68% range, as completion activity temporarily affected higher-oil-cut wells and workovers brought back older wells with higher gas content.
For the remainder of the year, Hollis said he expects the oil cut to move closer to 67%.
Hedging and Balance Sheet Approach
Stronger realized oil prices and stable production supported sequential increases in adjusted EBITDA and free cash flow, despite approximately $55 million of net cash hedge losses during the second quarter, Hollis said.
The company said a larger percentage of expected production is exposed to spot commodity prices. At the same time, it retains oil hedges primarily in the mid-$60-per-barrel range to provide downside protection.
HighPeak also added NYMEX WTI roll swaps to manage calendar-spread exposure and Waha basis swaps to reduce exposure to West Texas natural-gas pricing volatility, management said.
Hollis said the company had $146 million of cash at quarter-end and plans to make scheduled term-loan amortization payments of $30 million per quarter beginning at the end of the third quarter. While HighPeak expects to generate more than enough cash at current oil prices to meet that requirement, he said management will be cautious about accelerating repayments because prepayments cannot be reborrowed.
“We will definitely do the $30 million a quarter,” Hollis said. “We will have enough cash on hand to be able to weather any kind of variability over the next year or so.”
Gas Realizations Improve Following Weak Second Quarter
HighPeak said it experienced a negative $1.50-per-Mcf gas realization in the second quarter amid weak Waha pricing, though Hollis described that result as comparatively favorable versus many public peers.
Looking ahead, he said the Gulf Coast Express expansion had helped narrow Waha differentials closer to negative $1 per Mcf, compared with negative $3 to negative $5 per Mcf previously. HighPeak expects better gas realizations during the rest of 2026 and at least through the first half of 2027.
Management said gas takeaway capacity has not constrained its operations. “We have not had one Mcf that we wasn’t able to put into a pipe,” Hollis said, though he noted the company had at times effectively paid for gas transportation because of depressed pricing.
For 2027, Hollis said the company’s setup should resemble 2026 in terms of capital requirements and production volumes. He said drilling efficiencies could result in two additional drilled-but-uncompleted wells moving into next year.
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.
