HighPeak Energy (HPK) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Changes in the global trade environment, including the imposition of tariffs, could adversely affect our business
2. 02Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of reserves74% rewritten
3. 03Our results of operations and cash flows vary significantly from year to year due to the cyclical nature of the crude oil and natural gas industry20% rewritten
4. 04Certain factors could require HighPeak Energy to write-down the carrying values of its crude oil and natural gas properties, including commodity prices decreasing to a level such that future undiscounted cash flows from its properties are less than their carrying value
5. 05Hedging transactions expose HighPeak Energy to counterparty credit risk and may become more costly or unavailable
6. 06The standardized measure of estimated reserves may not be an accurate estimate of the current fair value of estimated crude oil and natural gas reserves
7. 07Adverse weather conditions may negatively affect HighPeak Energy’s operating results and ability to conduct drilling activities
8. 08HighPeak Energy may be unable to make additional attractive acquisitions or successfully integrate acquired businesses with its current assets, and any inability to do so may disrupt its business and hinder its ability to grow35% rewritten
9. 09The operations of HighPeak Energy are subject to a variety of risks arising from climate change
10. 11Crude oil, NGL and natural gas prices are volatile. Sustained volatility, or declines in, crude oil, NGL and natural gas prices could adversely affect HighPeak Energy’s business, financial condition and results of operations and its ability to meet its capital expenditure obligations and other financial commitments29% rewritten
11. 12Cash flows from operations are subject to significant uncertainty. As a result, the amount of liquidity that HighPeak Energy will have in the future is uncertain
12. 13HighPeak Energy’s ability to access the public or private capital markets
13. 14limit management’s discretion in operating HighPeak Energy’s business45% rewritten
14. 15Our existing and future indebtedness may adversely affect our cash flows and ability to operate our business, remain in compliance and repay our debt
15. 16seeking to raise additional capital
16. 17In addition, if we fail to comply with the covenants or other terms of our Credit Agreements, our lenders will have the right to accelerate the maturity of that debt and foreclose upon the collateral, if any, securing that debt. Realization of any of these factors could adversely affect our financial condition20% rewritten
17. 18The marketability of HighPeak Energy’s production is dependent upon transportation, storage and other facilities, certain of which it does not control. If these facilities are unavailable, in whole or in part, HighPeak Energy’s operations could be interrupted, and its revenues reduced
18. 19Likewise, NGL, which are made up of ethane, propane, isobutane, normal butane and natural gasoline, each of which has different uses and pricing characteristics, have also fluctuated widely during this period
19. 20Part of HighPeak Energy’s business strategy involves using some of the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application
20. 21being able to run tools and other equipment consistently through the horizontal wellbore
21. 22the ability to successfully clean out the wellbore after completion of the final fracture stimulation stage
22. 23Drilling for and producing crude oil and natural gas are high risk activities with many uncertainties that could adversely affect HighPeak Energy’s business, financial condition or results of operations
23. 24We have entered into certain long-term contracts that require us to pay fees to our service providers based on minimum volumes regardless of actual volume throughput and that may limit our ability to use other service providers22% rewritten
24. 25The enactment of derivatives legislation could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business
25. 26Properties that HighPeak Energy acquires may not produce as projected, and HighPeak Energy may be unable to determine reserve potential, identify liabilities associated with such properties or obtain protection from sellers against such liabilities
26. 27the rate of production of reserves, if any
27. 28HighPeak Energy’s operations are substantially dependent on the availability of frac sand and water. Restrictions on its ability to obtain frac sand and water may have an adverse effect on its financial condition, results of operations and cash flows
28. 29HighPeak Energy may incur losses as a result of title defects in the properties in which it invests
29. 30The development of estimated PUDs may take longer and may require higher levels of capital expenditures than anticipated. Therefore, estimated PUDs may not be ultimately developed or produced
30. 31HighPeak Energy’s operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to its business activities
31. 32OSHA, under which federal Occupational Safety and Health Administration and similar state agencies have promulgated regulations limiting exposures to hazardous substances in the workplace and imposing various worker safety requirements
32. 33HighPeak Energy may incur increased attention to ESG matters that may impact its business
33. 34HighPeak Energy will not be insured against all risks. Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect its business, financial condition or results of operations
34. 35terrorist attacks targeting crude oil and natural gas related facilities and infrastructure
35. 36repair and remediation costs
36. 37Properties that HighPeak Energy decides to drill may not yield crude oil or natural gas in commercially viable quantities
37. 38increases in the cost of, and shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services
38. 39Certain of HighPeak Energy’s properties are subject to land use restrictions, which could limit the manner in which HighPeak Energy conducts business
39. 40HighPeak Energy could experience periods of higher costs if commodity prices rise and inflation may adversely affect our operating results. These increases in cost could reduce profitability, cash flow and ability to complete development activities as planned
40. 41HighPeak Energy may be involved in legal proceedings that could result in substantial liabilities
41. 42Should our operators fail to comply with all applicable regulatory agency administered statutes, rules, regulations and orders, our operators could be subject to substantial penalties and fines23% rewritten
42. 43Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays in the completion of crude oil and natural gas wells and adversely affect HighPeak Energy’s production
43. 44Legislation or regulatory initiatives intended to address seismic activity could restrict HighPeak Energy’s drilling and production activities, as well as HighPeak Energy’s ability to dispose of produced water gathered from such activities, which could have a material adverse effect on its future business
44. 45Competition in the crude oil and natural gas industry is intense, which will make it more difficult for HighPeak Energy to acquire properties, market crude oil or natural gas and secure trained personnel
45. 46The loss of senior management or technical personnel could adversely affect operations
46. 47Recent management changes could disrupt our operations and impair our ability to attract and retain key personnelNew
47. 48Increases in interest rates could adversely affect HighPeak Energy’s business
48. 49HighPeak Energy’s use of seismic data is subject to interpretation and may not accurately identify the presence of crude oil and natural gas, which could adversely affect the results of its drilling operations
49. 50Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect HighPeak Energy’s ability to conduct drilling activities in areas where it operates
50. 51HighPeak Energy may not be able to keep pace with technological developments in its industry
51. 52There are inherent limitations in all control systems, and misstatements due to error or fraud that could seriously harm HighPeak Energy’s business may occur and not be detected
52. 53HighPeak Energy’s business could be adversely affected by security threats, including cybersecurity threats, and related disruptions

Risks Related to Ownership of our Securities

1. 10HighPeak Energy is a “controlled company” within the meaning of Nasdaq rules and qualifies for exemptions from certain corporate governance requirements. As a result, you do not have the same protections afforded to stockholders of companies that are not exempt from such corporate governance requirements100% rewritten
2. 54HighPeak Energy has suspended the payment of dividends on our common stock and may not resume paying dividends in the futureNew
3. 55If HighPeak Energy’s operational and financial performance does not meet the expectations of investors or securities analysts, the market price of our securities may decline. The market values of our securities may vary significantly from time to time
4. 56general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations, OPEC+’s ability to continue to agree to limit production among its members and acts of war or terrorism84% rewritten
5. 57These requirements will not apply to HighPeak Energy as long as it remains a controlled company. However, a majority of the HighPeak Energy board members are independent and both the Nominating and Governance Committee and Compensation Committees are composed solely of independent members of the boardNew
6. 58If our former executive officer was forced to sell shares of our common stock that he has pledged to secure certain personal loan obligations, such sales could cause our stock price to declineNew
7. 59HighPeak Energy may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on HighPeak Energy’s financial condition, results of operations and stock price, which could cause you to lose some or all of your investment82% rewritten
8. 60Changes in laws or regulations, or a failure to comply with any laws or regulations, may adversely affect HighPeak Energy’s business, investments and results of operations
9. 61There can be no assurance that HighPeak Energy common stock issued will remain listed on the Nasdaq, or that HighPeak Energy will be able to comply with the continued listing standards of the Nasdaq27% rewritten
10. 62a decreased ability to issue additional securities or obtain additional financing in the future45% rewritten
11. 63Unanticipated changes in effective tax rates or laws or adverse outcomes resulting from examination of HighPeak Energy’s income or other tax returns could adversely affect HighPeak Energy’s financial condition, results of operations and cash flows100% rewritten
12. 64changes in tax laws, regulations or interpretations thereof74% rewritten
13. 65HighPeak Energy may not be able to use certain of its net operating loss carryforwards and other tax attributes to reduce its future U.S. federal income tax obligations, which could adversely affect HighPeak Energy’s financial condition, results of operations and cash flowsNew
14. 66HighPeak Energy has incurred and will continue to incur increased costs as a result of operating as a public companyNew