HighPeak intends to fund the cash portion of the consideration using available cash and borrowing under the company’s revolving credit facility


HighPeak to buy Howard County assets. (Credit: WORKSITE Ltd. on Unsplash)

HighPeak Energy has agreed to acquire certain assets in Howard County from Hannathon Petroleum and others owners with non-operated stakes in the assets.

The total consideration for the transaction includes $255m cash, and around 3.78 million shares of HighPeak common stock, subject to customary closing adjustments.

HighPeak intends to fund the cash portion of the consideration using available cash and borrowing under the company’s revolving credit facility.

The company is planning to seek consents from its bank group to raise the aggregate elected commitments and borrowing base on its revolving credit facility.

The transaction has been unanimously approved by the Board of Directors of both HighPeak, Hannathon Petroleum and the other non-operated working interest owners

It is anticipated to be close in the third quarter of this year.

HighPeak chairman and chief executive officer Jack Hightower said: “We began our strategic expansion in the Signal Peak area in August 2021 by acquiring a non-operated ownership interest in these assets.

“Acquiring the balance of the working interest will bolster our drilling potential in the area and give us control of significant infrastructure to support, and accelerate, our development program in the region.

“This acquisition, coupled with our targeted leasing, has increased our total acreage position to over 91,000 net acres.”

The US-based oil and natural gas company currently owns non-operated working interest in around 60% of the acquired gross acreage position.

Through the acquisition, the company obtains around 150 net locations and 18,600 net acres largely contiguous to its existing Signal Peak position.

HighPeak is anticipated to advance the pace of Signal Peak development using existing infrastructure, and maintain Hannathon’s existing one rig drilling programme on the acquired acreage.

Credit Suisse Securities (USA) served as financial advisor to HighPeak Energy, while Jefferies served as financial advisor to Hannathon on the transaction.

Akin Gump Strauss Hauer & Feld, and Vinson & Elkins served as legal advisors for HighPeak Energy, while Shearman & Sterling served as legal advisor to Hannathon.

Jack added: “We are very excited to report continued success in accretive consolidation and value creation for our shareholders.

“We look forward to our first quarter earnings call in May, which will provide additional guidance, technical information and recent results related to our drilling program in the Signal Peak area, which should continue to prove out the value of our position.”