Pure Acquisition Corp. (“Pure”) (NASDAQ: PACQ, PACQU, PACQW), a
special purpose acquisition company focused on oil and gas
exploration and production, and its wholly owned subsidiary,
HighPeak Energy, Inc. (“HighPeak”), previously announced a business
combination whereby, among other things, Pure will merge with
HighPeak, with HighPeak surviving as a publicly traded company, and
HighPeak will concurrently acquire the oil and gas assets and cash
from certain affiliates (“HighPeak Affiliates”) in exchange for
HighPeak common stock, and the oil and gas assets of Grenadier
Energy Partners II, LLC (“Grenadier”) will be contributed in
exchange for HighPeak common stock and cash. Upon completion of the
business combination and the acquisition of such assets from the
HighPeak Affiliates and Grenadier (such assets collectively, the
“Combined HighPeak Assets”), HighPeak will conduct its business as
an independent oil and gas company engaged in the acquisition,
development and production of oil, natural gas and NGL reserves
with assets primarily located in Howard County, Texas in the
Midland Basin.
Today, Pure announced that the 2019 year-end exit
rate net production for the Combined HighPeak Assets successfully
achieved management’s forecasted projection of approximately 12,000
barrels of oil equivalent per day (“Boe/d”)1. Such year-end
production was approximately 79% oil, 13% NGLs and 8% natural
gas.
Pure’s Chairman and CEO, Jack Hightower, said, “The
Combined HighPeak Assets have achieved multiple milestones during
the last half of 2019 which include reaching our projected year-end
2019 production forecast while dramatically lowering our drilling
and completion costs. Production from the Combined HighPeak Assets
has more than doubled from the second quarter of 2019 to an exit
rate of approximately 12,000 Boe/d, demonstrating strong results in
multiple zones across the acreage position. On average, our wells
have performed in-line with our type curves for the Wolfcamp A and
the Lower Spraberry and continue to support our forecasted
production and reserve growth projections. With our ongoing
operations and drilling program, we expect the Combined HighPeak
Assets to continue to build production throughout the first quarter
of 2020.”
During the fourth quarter of 2019, the HighPeak
Affiliates and Grenadier drilled and completed seven 7,500-foot
laterals, five 10,000-foot laterals and two 12,500-foot laterals on
the Combined HighPeak Asset base. The cost of drilling, completion,
equipping and facilities continues to improve for both wells
drilled by the HighPeak Affiliates and by Grenadier. The costs for
wells operated by the HighPeak Affiliates during the last quarter
of 2019 have trended down to approximately $6.5 million for
10,000-foot lateral wells, which is about $1.0 million below
previous company estimates. These capital cost reductions are
driven by our intense focus on operational efficiencies which
include drilling multiple well pads, zipper completions, faster
drilling times and our extensive vendor network stemming from our
long-term relationships in the Permian Basin.
Pure’s President Mike Hollis commented, “We are
extremely pleased with our drilling and completion performance; and
with our ongoing focus on capital efficiency, we intend to continue
to identify opportunities to reduce costs and improve results
throughout the year.”
The HighPeak Affiliates and Grenadier are currently
running three operated rigs and three frac crews on the Combined
HighPeak Assets and collectively have 36 operated horizontal wells
on production, including seven wells that were recently brought
online, plus working interests in an additional 70 horizontal
producing wells. During the first quarter of 2020, we expect that
the HighPeak Affiliates and Grenadier will undertake completion
operations on 12 operated, drilled uncompleted wells (“DUCs”),
including two 12,500-foot laterals and ten 10,000-foot laterals.
Eight of the DUCs were drilled in the Wolfcamp A formation and four
were drilled in the Lower Spraberry formation. In January, the
HighPeak Affiliates finished drilling the adjacent Oldham 38-27 B
Unit and O’Daniel Ranch 28-37 A Unit pads with four wells targeting
the Wolfcamp A formation and two wells targeting the Lower
Spraberry formation. These six 10,000-foot lateral wells are
presently being completed utilizing two frac crews. There are
currently six wells in the process of being drilled on three
surface pads, including four 12,500-foot laterals and two
10,000-foot laterals.
Howard County continues to be one of the most
active counties in the Midland Basin with 27 rigs currently running
by many public and private operators. Many of these operators are
similarly achieving great results in the Wolfcamp A and Lower
Spraberry formations while also further delineating additional
zones, including the Wolfcamp B, Middle Spraberry, Jo Mill,
Wolfcamp C and Wolfcamp D formations, with very encouraging
results. Recently, offset operators have drilled successful wells
in the Wolfcamp B and Wolfcamp D formations adjacent to the asset
base of the Combined HighPeak Assets.
Mr. Hightower continued, “We are excited about our
pending business combination and believe our continued production
and cash flow growth will create significant near-term and
long-term value for our stockholders.”
About Pure Acquisition Corp.
Pure is a blank check company formed in Delaware on
November 13, 2017 for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses. Pure’s
units were listed for trading on the Nasdaq under the symbol
“PACQU” on April 13, 2018. On May 29, 2018, Pure’s Class A common
stock and warrants began trading on the Nasdaq under the symbols
“PACQ” and “PACQW,” respectively.
About HighPeak Energy, Inc.
HighPeak is an independent oil and natural gas
company engaged in the acquisition, development and production of
oil, natural gas and NGL reserves. HighPeak’s assets, after giving
effect to the potential business combination, will be primarily
located in Howard County, Texas, which lies within the
northeastern part of the oil-rich Midland Basin. HighPeak is
led by its Chairman, CEO and President, Jack Hightower, an industry
veteran with over 48 years of experience in the oil and natural gas
industry, primarily in the Permian Basin managing multiple
exploration and production platforms and generating strong returns
despite industry cycles by consistently applying a disciplined,
risk-adjusted approach designed to balance capital preservation
with value creation. HighPeak’s objective is to maximize returns by
generating rapid production growth initially followed by steady
production growth with strong margins and cash flow. HighPeak also
intends to generate attractive full cycle returns on capital
employed.
About Grenadier Energy Partners II,
LLC
Grenadier was formed in 2012 with the purpose of
acquiring, exploring and developing oil and natural gas properties.
Grenadier’s operations and assets are located in Howard County,
Texas, in the northeastern part of the oil-rich Midland Basin with
a focus on its strategy to profitably develop long-lived oil and
natural gas reserves by applying cutting edge technology through
the drilling, completion and production phases of its wells. Since
inception, Grenadier has maintained a disciplined, opportunistic
approach to acquisitions where it seeks to find long-life reserves
that can be developed with low risk and moderate capital
requirements. Grenadier is backed by EnCap Investments L.P. and
Kayne Anderson Capital Advisors, L.P.
Forward-Looking Statements
The information included herein and in any oral
statements made in connection herewith include “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as
amended. All statements regarding the benefits of the business
combination transaction and HighPeak’s future financial performance
following the business combination transaction, as well as
HighPeak’s and Pure’s strategy, future operations, financial
position, estimated revenues, and losses, projected costs,
prospects, plans and objectives of management are forward looking
statements. When used herein, including any oral statements made in
connection herewith, the words “could,” “should,” “will,” “may,”
“believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,”
the negative of such terms and other similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on management’s current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. Except as otherwise required by applicable law,
HighPeak and Pure disclaim any duty to update any forward-looking
statements, all of which are expressly qualified by the statements
in this section, to reflect events or circumstances after the date
hereof. HighPeak and Pure caution you that these forward-looking
statements are subject to all of the risks and uncertainties, most
of which are difficult to predict and many of which are beyond the
control of HighPeak and Pure, incident to the development,
production, gathering and sale of oil, natural gas and natural gas
liquids. These risks include, but are not limited to, commodity
price volatility, low prices for oil and/or natural gas, global
economic conditions, inflation, increased operating costs, lack of
availability of drilling and production equipment, supplies,
services and qualified personnel, certificates related to new
technologies, geographical concentration of operations,
environmental risks, weather risks, security risks, drilling and
other operating risks, regulatory changes, the uncertainty inherent
in estimating oil and natural gas reserves and in projecting future
rates of production, reductions in cash flow, lack of access to
capital, HighPeak’s ability to satisfy future cash obligations,
restrictions in existing or future debt agreements, the timing of
development expenditures, managing growth and integration of
acquisitions, failure to realize expected value creation from
property acquisitions, title defects and limited control over
non-operated properties. Should one or more of the risks or
uncertainties described herein and in any oral statements made in
connection therewith occur, or should underlying assumptions prove
incorrect, actual results and plans could differ materially from
those expressed in any forward-looking statements. Additional
information concerning these and other factors that may impact
Pure’s and HighPeak’s expectations and projections can be found in
Pure’s periodic filings with the U.S. Securities and Exchange
Commission (the “SEC”), including Pure’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018, as well as HighPeak’s
Registration Statement on Form S-4, filed with the SEC on December
2, 2019, as amended on January 10, 2020. HighPeak’s and Pure’s SEC
Filings are available publicly on the SEC’s website at
www.sec.gov.
No Offer or Solicitation
This release is for informational purposes only and
shall not constitute an offer to sell or the solicitation of an
offer to buy any securities pursuant to the proposed transaction or
otherwise, nor shall there be any sale of securities in any
jurisdiction in which the offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act.
Important Information For Investors and
Stockholders
In connection with the proposed business
combination, HighPeak has filed with the SEC a registration
statement on Form S-4, which includes a prospectus of HighPeak and
a proxy statement of Pure. Pure and HighPeak have also filed other
documents with the SEC regarding the proposed transaction. After
the registration statement has been declared effective by the SEC,
a definitive proxy statement/prospectus will be mailed to the
shareholders of Pure. INVESTORS AND SHAREHOLDERS OF PURE ARE URGED
TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS
AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE
PROPOSED BUSINESS COMBINATION THAT WILL BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS
COMBINATION. Investors and shareholders will be able to obtain free
copies of the proxy statement/prospectus and other documents
containing important information about Pure and HighPeak once such
documents are filed with the SEC, through the website maintained by
the SEC at www.sec.gov. In addition, stockholders will be able to
obtain free copies of the proxy statement/prospectus by directing a
request to: Pure Acquisition Corp., 421 W. 3rd St., Suite 1000,
Fort Worth, Texas 76102, email: IR@highpeakenergy.com, Attn:
Investor Relations.
Participants in the
Solicitation
Pure, HighPeak, Grenadier and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from Pure’s shareholders in
connection with the proposed transactions. Information about the
directors and executive officers of Pure is set forth in the
Company’s Annual Report on Form 10-K which was filed with the SEC
on February 8, 2019. Other information regarding the participants
in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, is set forth
in the proxy statement/prospectus relating to the business
combination.
Additional Information About the Business
Combination and Where to Find It
In connection with the proposed business
combination, HighPeak has filed a registration statement on Form
S-4 and the related proxy statement/prospectus with the SEC.
Additionally, Pure and HighPeak have filed other relevant materials
with the SEC in connection with the proposed business combination.
The materials filed by the Pure and HighPeak with the SEC may be
obtained free of charge at the SEC’s web site at www.sec.gov.
Investors and security holders of Pure are urged to read the proxy
statement/prospectus and the other relevant materials when they
become available before making any voting or investment decision
with respect to the proposed business combination because they will
contain important information about the business combination and
the parties to the business combination.
Pure, HighPeak, Grenadier and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies of Pure’s shareholders in connection
with the proposed business combination. Investors and security
holders may obtain more detailed information regarding the names,
affiliations and interests of certain of Pure’s executive officers
and directors in the solicitation by reading Pure’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2018, and the
proxy statement/prospectus and other relevant materials filed with
the SEC in connection with the business combination when they
become available. Information concerning the interests of Pure’s
and HighPeak’s participants in the solicitation, which may, in some
cases, be different than those of their stockholders generally, is
set forth in the proxy statement/prospectus relating to the
business combination.
Contact:
info@highpeakenergy.com
(817) 850-9200
1 Estimates reflect preliminary field-level
results that have not yet been audited or otherwise reviewed by our
independent registered public accounting firm.
Pure Acquisition (NASDAQ:PACQ)
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