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Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

<div><ul><li>On October 6, HighPeak announced a $450-million Series A Convertible Preferred Stock issuance and a new $800-million RBL Credit Facility.</li><li>Together with cash on hand, the proceeds will fully repay the ~$1.17 billion term loan that was scheduled to mature in September 2028.</li><li>The Series A Preferred will be purchased by PT Danantara Investment Management, a sovereign fund of the Republic of Indonesia, and PT Energi Mega Persada, an Indonesian upstream oil &amp; gas company. </li></ul></div>

On October 6, HighPeak announced a $450-million Series A Convertible Preferred Stock issuance and a new $800-million RBL Credit Facility.Together with cash on hand, the proceeds will fully repay the ~$1.17 billion term loan that was scheduled to mature in September 2028.The Series A Preferred will be purchased by PT Danantara Investment Management, a sovereign fund of the Republic of Indonesia, and PT Energi Mega Persada, an Indonesian upstream oil &amp; gas company. 

HPK: Balance Sheet Refinancing Boosts Free Cash Flow

<div><ul><li>HighPeak has executed its maintenance-focused strategy in the first year of Mike Hollis’ tenure as CEO.</li><li>Management has improved capital efficiency, lowered operating costs, and built a substantial cash position to support its goal of consistent long-term value creation.</li><li>Production is running ahead of guidance while capital spending has fallen sharply.</li></ul></div>

HighPeak has executed its maintenance-focused strategy in the first year of Mike Hollis’ tenure as CEO.Management has improved capital efficiency, lowered operating costs, and built a substantial cash position to support its goal of consistent long-term value creation.Production is running ahead of guidance while capital spending has fallen sharply.

HPK: Laying a Stronger Foundation for the Future

Thematic (Sector/Industry)

<ul><li>Global oil exploration seeing increased activity. Last month in our Energy Roundup, we wrote that the decline in global oil exploration over the past decade could eventually result in an oil supply shortage.</li><li>Much of this has been driven by energy exploration and production companies favoring cash returns to shareholders (dividends and stock buybacks) over reinvesting more capital into exploration activities.</li><li>As Figure 1 illustrates, industry oil &amp; gas exploration spending was down nearly 50% compared with the level from the late 2000s. </li></ul>

Global oil exploration seeing increased activity. Last month in our Energy Roundup, we wrote that the decline in global oil exploration over the past decade could eventually result in an oil supply shortage.Much of this has been driven by energy exploration and production companies favoring cash returns to shareholders (dividends and stock buybacks) over reinvesting more capital into exploration activities.As Figure 1 illustrates, industry oil &amp; gas exploration spending was down nearly 50% compared with the level from the late 2000s. 

Energy Roundup : Oil Exploration Back in Vogue; Middle East Oil Exports Recently at Pre-War Level

<div><ul><li>HighPeak is singularly focused on deleveraging the balance sheet to place it in a better position to realize long-term value from converting its inventory of development locations into proved reserves and cash flow. </li><li>The strategy, adopted in 2H25, emphasizes maximizing the company’s corporate efficiency though capital discipline to generate free cash flow for debt reduction.</li><li>The midpoint of FY26 capex guidance is ~50% lower than 2025 capex. </li></ul></div>

HighPeak is singularly focused on deleveraging the balance sheet to place it in a better position to realize long-term value from converting its inventory of development locations into proved reserves and cash flow. The strategy, adopted in 2H25, emphasizes maximizing the company’s corporate efficiency though capital discipline to generate free cash flow for debt reduction.The midpoint of FY26 capex guidance is ~50% lower than 2025 capex. 

HPK: 2026 Focused on Strengthening HPK's Foundation to Realize Future Value

<div><ul><li>In the face of uncertainty, management teams continue to emphasize capital discipline.</li><li>On the margin, activity could inch up as cash flow benefits from higher prices.</li><li>Incremental cash flow from elevated oil prices could help some companies accelerate their debt reduction goals.</li></ul></div>

In the face of uncertainty, management teams continue to emphasize capital discipline.On the margin, activity could inch up as cash flow benefits from higher prices.Incremental cash flow from elevated oil prices could help some companies accelerate their debt reduction goals.

WTR Small-Cap Spotlight Recap : Navigating Volatile Commodity Markets

United States

HighPeak Energy, Inc. operates as an exploration company. The Company offers petroleum engineering, geology, geophysics, drilling, and land financing services. HighPeak Energy serves customers in the United States.

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HighPeak Energy Inc (HPK US)

HPK: Balance Sheet Refinancing Boosts Free Cash Flow

On October 6, HighPeak announced a $450-million Series A Convertible Preferred Stock issuance and a new $800-million RBL Credit Facility.

Water Tower Research

HPK: Laying a Stronger Foundation for the Future

Management has improved capital efficiency, lowered operating costs, and built a substantial cash position to support its goal of consistent long...

Water Tower Research

Energy Roundup : Oil Exploration Back in Vogue; Middle East Oil Exports Recently at Pre-War Level

Last month in our Energy Roundup, we wrote that the decline in global oil exploration over the past decade could eventually result in an oil supply...

Water Tower Research

HPK: 2026 Focused on Strengthening HPK's Foundation to Realize Future Value

The strategy, adopted in 2H25, emphasizes maximizing the company’s corporate efficiency though capital discipline to generate free cash flow for...

Water Tower Research

WTR Small-Cap Spotlight Recap : Navigating Volatile Commodity Markets

In the face of uncertainty, management teams continue to emphasize capital discipline. On the margin, activity could inch up as cash flow benefits...

Water Tower Research

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