0001437749-26-015191
SEC filingNet loss widened to $127.4M on 21% revenue drop amid lower volumes and commodity prices, with derivative losses rising $149.1M.
For the three months ended March 31, 2026, HighPeak Energy reported a net loss of $127.4 million compared to net income of $36.3 million in the prior-year period. The $163.8 million swing was primarily driven by a $149.1 million increase in derivative losses—both noncash mark-to-market and cash settlements—reflecting the impact of lower commodity prices and extensive hedging. Total operating revenues fell 21% to $215.9 million from $272.3 million, attributable to a 14% decline in average daily sales volumes (45,629 Boepd vs 53,128 Boepd) and an 8% decrease in realized price per Boe to $52.57. Crude oil volumes dropped 19% due to reduced activity and natural decline, while NGL and natural gas volumes were mixed. Production costs decreased 17% to $29.5 million, aided by lower workover and chemical costs, but gathering, processing and transportation expenses rose 19% to $17.7 million as more natural gas was connected to processing facilities. DD&A expense increased 3% to $113.0 million due to a higher depletion rate ($27.52/Boe vs $22.86/Boe) from lower proved reserves. Income tax reflected a $27.7 million benefit compared to a $9.9 million expense, driven by the pretax loss.
HighPeak operates as a single reporting segment (crude oil, NGL, and natural gas exploration and production). The revenue composition shifted: liquids made up 84% of total volumes on a Boe basis. Crude oil sales volumes declined 19% to 30,826 Bbl/d, while natural gas volumes rose 3% to 44,402 Mcf/d due to midstream expansions. Realized crude oil prices were nearly flat at $71.79/Bbl (+0.2%), but NGL and natural gas prices fell sharply—NGL down 29% to $17.22/Bbl and natural gas down 44% to $1.32/Mcf. Overall, the revenue decrease of $56.4 million was driven equally by volume declines (13%) and price declines (8%).
Management's outlook emphasizes flexibility amid commodity price volatility and covenant compliance risks. The 2026 capital budget is set at $255–$285 million (down from $511.8 million in 2025), supporting one drilling rig and one frac crew. The company plans to fund expenditures with cash, operating cash flow, and the $92.1 million available under its Senior Credit Facility. However, operating cash flow fell to $54.2 million from $157.1 million, raising liquidity concerns. Debt amendments eased covenants through Q1 2026, but asset coverage and leverage ratios revert to stricter levels in Q2 2026, potentially triggering defaults if commodity prices remain weak. Strategic alternatives review continues, but no substantive progress has been disclosed. Management remains cautious, citing geopolitical risks, trade tariffs, and OPEC+ dynamics as key uncertainties.
As of March 31, 2026, HighPeak Energy held $95.8 million in cash and equivalents, down from $162.1 million at year-end 2025. Total debt stood at $1,187.6 million (net of $12.4 million in unamortized debt issuance costs), comprising solely the Term Loan Credit Agreement due 2028 with $1.2 billion drawn. Current maturities of long-term debt increased to $90 million from $60 million, reflecting quarterly amortization terms. Shareholders' equity decreased to $1,468.0 million from $1,594.6 million, primarily due to a net loss of $127.4 million. The company reported current assets of $212.1 million and current liabilities of $317.1 million, resulting in a negative working capital position.
The company has a significant crude oil delivery commitment under an amended contract with DK Trading & Supply, LLC (Delek) and DKL Permian Gathering, LLC. The minimum volume commitment, commencing May 2024, totals $138.7 million over ten years based on 23,500 Bopd. As of March 31, 2026, the remaining monetary commitment, assuming no additional volumes are delivered, is approximately $111.7 million. The company has delivered excess volumes averaging 32,077 Bopd, which can be banked to offset future minimums. Additionally, HighPeak has power purchase agreements with a $4.6 million letter of credit in place.
HighPeak discontinued its quarterly dividend in the first quarter of 2026; no dividends were declared or paid during the three months ended March 31, 2026. In the prior-year period, dividends of $0.04 per share were paid, totaling $5.0 million on common stock plus $0.5 million in dividend equivalents on stock options. There were no share repurchases during the period. Capital expenditures, including acquisitions, totaled $78.6 million for Q1 2026, down from $182.5 million in Q1 2025, reflecting reduced development activity.
The company operates as a single reportable segment focused on crude oil and natural gas exploration and production in the Permian Basin (Midland Basin in West Texas). Operating revenues for the segment were $215.9 million, a decrease from $272.3 million in the prior-year period, primarily due to lower crude oil sales ($199.2 million vs. $246.4 million). The segment reported a net loss of $127.4 million, driven by a $157.0 million loss on derivative instruments and higher depletion, depreciation, and amortization. The chief operating decision maker uses net income to assess segment performance.