HighPeak Energy Inc, an oil-focused exploration and production company operating in the heart of the Permian basin, said on Monday it would explore strategic options including possible sale of the company.
US energy producers have enjoyed stellar returns in the last two years, buoyed by higher oil prices stemming from the economic rebound from the pandemic and disruption to supply markets caused by Russia’s invasion of Ukraine.
Smaller producers – such as HighPeak – have struggled to capture the same investor attention, and therefore valuation increase, as larger rivals. This makes pursuing a merger to bolster scale, or a sale to a bigger peer, an attractive option.
“The Board and I believe now is an opportune time to capture the value we do not consider is presently reflected in our share price,” said HighPeak Chief Executive Jack Hightower in the statement.
HighPeak said it retained bankers from Credit Suisse and Wells Fargo to assist with exploring such options.
The Fort Worth, Texas-based company said it has around 110,000 acres in the Midland portion of the Permian, an area considered some of the most cost-effective for oil and gas drilling in the United States.
HighPeak shares closed up 3.6 per cent on Monday, prior to the announcement, giving the company a market capitalization of $3.1 billion.
A sale would be viewed as a lucrative win for oil and gas veteran Hightower and his team, with HighPeak taken public through a 2020 merger with Pure Acquisition Corp, a special purpose acquisition company (SPAC) affiliated with Hightower, at a $1.58 billion enterprise value.
HighPeak Pure Acquisition LLC still owns 71.8 per cent of HighPeak Energy, according to Refinitiv Eikon data.
HighPeak joins other smaller US producers, including Ranger Oil Corp, Berry Corporation and Brigham Minerals, which have put themselves for sale in recent months.
