HighPeak Energy (NASDAQ:HPK) raised its 2026 production outlook and said a planned refinancing would substantially reduce debt and interest costs, as the oil producer reported third-quarter production above its original guidance and lower capital spending.
President and CEO Mike Hollis said the company generated approximately $164 million in EBITDAX and more than $58 million in free cash flow before working capital changes during the quarter. HighPeak reduced debt by $30 million, while capital spending declined 34% from the previous quarter.
Higher production outlook and capital budget
HighPeak increased its 2026 production guidance to 44,500 to 45,500 barrels of oil equivalent per day, or BOE/d, which Hollis said represents approximately 6% growth at the midpoint. The company also lowered its lease operating expense guidance by roughly 7%, to $8 to $8.25 per BOE.
At the same time, HighPeak raised its capital budget to $310 million to $320 million. Hollis said the increase reflected an expanded workover program and other investment opportunities, rather than inflation or cost overruns. The company chose to increase workover activity in response to a stronger commodity price environment, he said.
Workovers can bring incremental production online within days and, in some cases, pay out in one to two months, Hollis said. He added that production from older wells that have undergone workovers tends to decline more slowly than output from newly drilled wells.
Hollis estimated HighPeak’s corporate decline rate at about 38%, compared with an initial decline rate closer to 70% for a new well after peak production. He said the company plans to maintain drilling activity and enter 2027 with a larger inventory of wells in progress.
Refinancing targets lower debt and interest costs
The proposed refinancing would replace HighPeak’s legacy $1.2 billion term loan with $450 million of perpetual preferred equity and an $800 million credit facility. The facility comprises a $750 million reserve-based lending facility, or RBL, and a $50 million term loan A.
Hollis said total debt is expected to fall from approximately $1.17 billion to roughly $650 million, with leverage declining from about 2.1 times at quarter-end to an estimated 1.2 times at closing. The company expects to have more than $180 million of liquidity after the transaction and to extend its primary maturity profile to 2030.
HighPeak expects annual interest expense to fall by more than $50 million. During the question-and-answer session, Executive Vice President Ryan Hightower confirmed that the cost figure discussed by Hollis included the preferred dividend and the new RBL component, assuming the preferred dividend is paid in cash. Hollis estimated closing by the end of the month.
Hightower said the RBL would give HighPeak more flexibility in cash management because, unlike the legacy term loan, it would allow the company to redraw amounts paid down. HighPeak’s immediate leverage goal is to get comfortably below one times, he said, subject to reasonable oil prices and the company’s production forecast.
Infrastructure spending expected to decline
Hollis said HighPeak has invested heavily in infrastructure in recent years and expects wells planned for the foreseeable future to connect to existing central tank batteries. He estimated infrastructure spending at close to $20 million in 2026 and about $15 million in 2027, followed by roughly $10 million or less on a continuing basis.
The company’s water disposal infrastructure is currently 50% or less utilized, Hollis said. HighPeak already handles water for a small number of nearby operators and is open to additional third-party business, he said. Hollis estimated the company’s all-in disposal cost at less than $0.20 per water barrel.
HighPeak did not provide 2027 production guidance. Asked about the first half of next year, Hollis said investors could expect a similar level of activity to the maintenance-oriented approach the company has followed in recent quarters.
About HighPeak Energy (NASDAQ:HPK)
HighPeak Energy, Inc. is an independent oil and natural gas exploration and production company. It focuses on acquiring, developing and operating oil and gas properties, with production that includes crude oil, natural gas and natural gas liquids. The company’s operations are concentrated in the Permian Basin of West Texas, particularly in Howard and Borden counties. Its activities include drilling and completing wells and managing the infrastructure needed to produce and transport hydrocarbons.
