What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-11 compared with 2025-03-10 · 278 added, 244 removed, 731 unchanged (42% of the section changed)

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To the Stockholders and the Board of Directors of HighPeak Energy, Inc.

Opinion on the Consolidated Financial Statements

Opinion on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of HighPeak Energy, Inc.

and its subsidiaries (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

and its subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively, consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in COSO.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the entity’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that responds to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

An entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

An entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and directors of the entity;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter did not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Estimation of proved oil and gas reserves impacting depletion expense

As described in Note 2 to the consolidated financial statements, the Company utilizes the successful efforts method of accounting for its crude oil and natural gas properties.

Depletion of crude oil and natural gas properties is determined using estimates of proved crude oil, NGL and natural gas reserves.

There are numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures.

We identified the estimation of proved reserves of oil and gas properties, due to its impact on depletion expense, as a critical audit matter.

The principal consideration for our determination that the estimation of proved oil and gas reserves is a critical audit matter is that changes in certain inputs and assumptions, which require a high degree of subjectivity necessary to estimate volumes and future revenues of the Company’s proved oil and gas reserves could have a significant impact on the measurement of depletion expense.

In turn, auditing those inputs and assumptions required subjective and complex auditor judgment.

We obtained an understanding of the design and implementation of management’s controls and our audit procedures related to the estimation of proved oil and gas reserves included, among others, the following:

We evaluated the level of knowledge, skill, and ability of the Company’s external reservoir engineer specialists, made inquiries of these specialists regarding the process followed and judgments made to estimate the Company’s proved oil and gas reserve volumes, and read the report prepared by the Company’s specialists.

We tested the design and operating effectiveness of key controls relating to management’s estimation of proved oil and gas reserves for the purpose of calculating depletion expense.

We evaluated the methods, data (both company-produced and date from external sources) and significant assumptions used by the Company’s reservoir engineering specialists to estimate the Company’s proved oil and gas reserve volumes.

Specifically, our audit procedures included, among others, the following:

Compared estimated future production volumes to relevant historical and current period information, as applicable;

Assessed the reasonableness of the production volume decline curves by comparing to historical decline curve estimates.

/s/ WEAVER AND TIDWELL, L.L.P.

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Other accrued liabilities

Derivative instruments

Operating leases

Advances from joint interest owners

Accrued interest

Operating leases

Derivative instruments

Total current liabilities

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Asset retirement obligations

Operating leases

Derivative instruments

Operating leases

Commitments and contingencies (Note 10)

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Crude oil and natural gas production

Gathering, processing and transportation

Production and ad valorem taxes

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Interest expense

(Loss) gain on derivative instruments, net

Gain (loss) on derivative instruments, net

Loss on extinguishment of debt

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Dividend equivalents declared on outstanding stock options ($ 0.10 per share)

Stock issued for acquisitions

Stock issued in private placement

Stock issued in public offering

Stock issuance costs

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Restricted shares issued to outside directors

Restricted shares issued to employees

Compensation costs included in net income

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Dividend equivalents declared on outstanding stock options ($ 0.16 per share)

Stock issued in public offering

Stock issuance costs

Exercise of warrants

Repurchased shares under buyback program

Stock-based compensation costs:

Shares issued upon options being exercised

Restricted shares issued to outside directors

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Exercise of warrants

Repurchased shares under buyback program

Stock issuance costs

Stock-based compensation costs:

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Compensation costs included in net income

Cash paid for tax withholding on vested equity awards

Balance, December 31, 2025

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Loss on extinguishment of debt

Loss gain on derivative instruments, net

Cash paid on settlement of derivative instruments

(Gain) loss on derivative instruments, net

Cash received (paid) on settlement of derivative instruments

Amortization of debt issuance costs

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CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under Term Loan Credit Agreement, net of discount

Repayments under Term Loan Credit Agreement

Repurchased shares under buyback program

Borrowings under Senior Credit Facility Agreement

Repayments under Senior Credit Facility Agreement

Dividends paid

Dividend equivalents paid

Debt issuance costs

Cash paid for tax withholding on vested equity awards

Premium on extinguishment of debt

Dividend equivalents paid

Stock offering costs

Proceeds from exercises of warrants

Borrowings under Term Loan Credit Agreement, net of discount

Repurchased shares under buyback program

Borrowings under Prior Credit Agreement

Proceeds from issuance of senior notes, net of discount

Repayments under Prior Credit Agreement

Repayments of 10.000% Senior Notes and 10.625% Senior Notes

Premium on extinguishment of debt

Proceeds from issuance of common stock

Stock offering costs

Proceeds from exercises of stock options

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net cash provided (used in) by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

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Supplemental disclosure of non-cash transactions:

Stock issued for acquisitions

Additions to asset retirement obligations

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("HighPeak Energy" or the "Company,") is a Delaware corporation, formed in October 2019.

HighPeak Energy’s common stock and warrants are listed and traded on the Nasdaq Global Market (the "Nasdaq") under the ticker symbols “HPK” and “HPKEW,” respectively.

The Company is an independent crude oil and natural gas exploration and production company that explores for, develops and produces crude oil, NGL and natural gas in the Permian Basin in West Texas, more specifically, the Midland Basin primarily in Howard and Borden Counties.

HighPeak Energy’s common stock is listed and traded on the Nasdaq Global Market (the "Nasdaq") under the ticker symbol “HPK.” The Company is an independent crude oil and natural gas exploration and production company that explores for, develops and produces crude oil, NGL and natural gas in the Permian Basin in West Texas, more specifically, the Midland Basin primarily in Howard and Borden Counties.

Our acreage is composed of two core areas, Flat Top primarily in the northern portion of Howard County extending into southern Borden County, southwest Scurry County and northwest Mitchell County and Signal Peak in the southern portion of Howard County.

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All material intercompany balances and transactions have been eliminated.

Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation, which had an immaterial effect on the previously reported total assets, total liabilities, stockholders’ equity, results of operations or cash flows.

Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation, specifically gathering, processing and transportation expenses, which were previously netted against NGL and natural gas sales and are now reflected as a component of total operating costs and expenses, which had no immaterial effect on the previously reported total assets, total liabilities, stockholders’ equity, results of operations or cash flows.

Use of estimates in the preparation of consolidated financial statements.

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Accounts receivable.

As of December 31, 2024 and 2023, the Company’s accounts receivables primarily consist of amounts due from the sale of crude oil, NGL and natural gas of $ 76.0 million and $ 82.5 million, respectively, and are based on estimates of sales volumes and realized prices the Company anticipates it will receive, joint interest receivables of $ 4.7 million and $ 4.4 million, respectively, current U.S.

As of December 31, 2025 and 2024, the Company’s accounts receivables primarily consist of amounts due from the sale of crude oil, NGL and natural gas of $ 35.4 million and $ 76.0 million, respectively, and are based on estimates of sales volumes and realized prices the Company anticipates it will receive, receivables from the State of Texas of $ 10.0 million and zero , respectively, for a multi-year natural gas severance tax refund, joint interest receivables of $ 5.0 million and $ 4.7 million, respectively, current U.S.

federal income tax receivables of $ 3.2 million and $ 3.1 million, respectively, and receivables related to settlements of derivative contracts of $ 1.9 million and $ 1.4 million, respectively.

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The Company is subject to credit risk resulting from the concentration of its crude oil and natural gas receivables with significant purchasers.

For the years ended December 31, 2024, 2023 and 2022, sales to the Company’s largest purchaser accounted for approximately 76 %, 82 % and 88 %, respectively, of the Company’s total crude oil, NGL and natural gas sales revenues and for the years ended December 31, 2024 and 2023, sales to the Company’s second largest purchaser accounted for approximately 18 % and 14 %, respectively, of the Company’s total crude oil, NGL and natural gas revenues.

For the years ended December 31, 2025, 2024 and 2023, sales to the Company’s largest purchaser accounted for approximately 82 %, 76 % and 82 %, respectively, of the Company’s total crude oil, NGL and natural gas sales revenues and sales to the Company’s second largest purchaser accounted for approximately 8 %, 18 % and 14 %, respectively, of the Company’s total crude oil, NGL and natural gas revenues.

The Company generally does not require collateral and does not believe the loss of these particular purchasers would materially impact its operating results, as crude oil and natural gas are fungible products with well-established markets and numerous purchasers in various regions.

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Prepaid expenses.

Prepaid expenses are comprised primarily of fees related to strategic alternatives that will be deducted from eventual commissions on a future transaction, caliche that will be used on future locations and roads in our development areas and prepaid agency fees and software maintenance fees that will be amortized over the life of the contracts.

Prepaid expenses are comprised primarily of fees related to advisory services that will be deducted from eventual commissions on a future transaction, if any, caliche that will be used on future locations and roads in our development areas and prepaid agency fees and software maintenance fees that will be amortized over the life of the contracts.

Prepaid expenses as of December 31, 2025 and 2024 are $ 5.1 million and $ 4.6 million, respectively.

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Other property and equipment is recorded at cost.

The carrying values of other property and equipment, net of accumulated depreciation of $ 1.1 million and $ 904,000 as of December 31, 2024 and 2023, respectively, are as follows (in thousands):

The carrying values of other property and equipment, net of accumulated depreciation of $ 1.3 million and $ 1.1 million as of December 31, 2025 and 2024, respectively, are as follows (in thousands):

Transportation equipment

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As of December 31, 2025 and 2024, the Company had aid-in-construction assets totaling $ 15.2 million and $ 18.0 million, respectively, included in other noncurrent assets.

The Company funded aid-in-construction projects during the years ended December 31, 2024, 2023 and 2022 of $ 17.5 million, $ 1.0 million and $ 2.6 million, respectively, under the contract.

The Company funded aid-in-construction projects during the years ended December 31, 2025, 2024 and 2023 of $ 71,000 , $ 13.8 million and $ 1.0 million, respectively, under the contract.

The Company has received and will continue to receive payments based on gross system throughput, including any third-party natural gas that is potentially tied into the Flat Top gathering system in the future.

Payments received during the years ended December 31, 2024, 2023 and 2022 were approximately $ 2.0 million, $ 924,000 and $ 471,000 , respectively.

Payments received during the years ended December 31, 2025, 2024 and 2023 were approximately $ 2.8 million, $ 2.0 million and $ 924,000 , respectively.

The contract calls for future additional aid-in-construction fundings if expansions of the system are necessary as determined in the sole discretion of the Company.

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Debt issuance costs and original issue discount.

The Company has paid a total of $ 25.1 million in debt issuance costs, $ 58,000 and $ 25.0 million of which was incurred during the years ended December 31, 2024 and 2023, respectively, primarily related to the completion of the Term Loan Credit Agreement and Senior Credit Facility Agreement.

In addition, the Company incurred $ 3.3 million during the year ended December 31, 2023 primarily related to amendments to the Prior Credit Agreement.

The Company has paid and has capitalized a total of $ 8.9 million in debt issuance costs, $ 7.9 million of which was incurred during the year ended December 31, 2025, primarily related to amendments to the Term Loan Credit Agreement and Senior Credit Facility Agreement in August 2025.

In addition, the Company incurred $ 58,000 and $ 3.3 million during the years ended December 31, 2024 and 2023, respectively, primarily related to the Term Loan Credit Agreement and amendments to the Prior Credit Agreement.

Amortization based on the straight-line method over the terms of the Term Loan Credit Agreement, Senior Credit Facility Agreement, Prior Credit Agreement, 10.000 % Senior Notes and 10.625 % Senior Notes which approximates the effective interest method was $ 5.9 million, $ 8.3 million and $ 11.4 million during the years ended December 31, 2025, 2024 and 2023, respectively.

In addition, the Company realized a total of $ 64.8 million in original issue discounts on the issuance of its Term Loan Credit Agreement, 10.000 % Senior Notes and 10.625 % Senior Notes that is being amortized over the life of the agreements which approximates the effective interest method and was $ 9.9 million, $ 15.1 million and $ 7.7 million during the years ended December 31, 2024, 2023 and 2022, respectively.

All unamortized debt issuance costs and discounts as of the termination of the Prior Credit Agreement and redemption of the 10.000% Senior Notes and 10.625% Senior Notes during September 2023 were charged to expense and included in loss on extinguishment of debt in the accompanying consolidated statements of operations.

In addition, the Company realized a total of $ 64.8 million in original issue discounts on the issuances of its Term Loan Credit Agreement, 10.000 % Senior Notes and 10.625 % Senior Notes that were being amortized over the life of the agreements which approximates the effective interest method and was $ 5.7 million, $ 9.9 million and $ 15.1 million during the years ended December 31, 2025, 2024 and 2023, respectively.

All unamortized debt issuance costs and discounts as of the refinancing of the Term Loan Credit Agreement in August 2025 and the termination of the Prior Credit Agreement and redemption of the 10.000% Senior Notes and 10.625% Senior Notes during September 2023 were charged to expense and included in loss on extinguishment of debt in the accompanying consolidated statements of operations.

See Note 7 for more information.

As of December 31, 2024 and 2023, the remaining net debt issuance costs and discounts related to the Term Loan Credit Agreement and Senior Credit Facility Agreement are netted against the outstanding long-term debt on the accompanying consolidated balance sheets.

As of December 31, 2025 and 2024, the remaining net debt issuance costs related to the Term Loan Credit Agreement and Senior Credit Facility Agreement are netted against the outstanding long-term debt on the accompanying consolidated balance sheets.

Asset retirement obligations.

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The Company is also subject to Texas margin tax.

The Company realized current Texas margin tax for the year ended December 31, 2024 in the accompanying consolidated financial statements.

However, during prior years, the Company realized no current Texas margin tax as we did not owe any Texas margin tax.

The Company realized a $ 16,000 benefit and a $ 469,000 expense related to current Texas margin tax for the years ended December 31, 2025 and 2024, respectively, in the accompanying consolidated financial statements.

However, during all other years, the Company realized no current Texas margin tax as we did not owe any Texas margin tax.

Stock-based compensation.

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For financial reporting purposes, the Company aggregates its operations into one reporting segment due to the similar geographic location and nature of the operations.

The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”).

The Company’s President and Chief Executive Officer is the chief operating decision maker (“CODM”).

To assess the performance of our assets, the CODM uses net income.

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Lease operating expenses

Gathering, processing and transportation expenses

Production and ad valorem taxes

Expensed workover costs

Expense workover costs

Total significant expenses

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Capital costs incurred, including acquisitions

Interest expense, net included in segment net income includes interest expense and loss on extinguishment of debt, partially offset by interest income.

Other segment items included in segment net income are exploration and abandonment expense, accretion of discount, other expense and gains and losses on derivative instruments.

Recently adopted accounting pronouncements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This ASU updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

The amendments in this ASU are effective for public entities for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this standard provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid.

This ASU is effective for the Company prospectively to all annual periods beginning after December 15, 2024, and interim reporting periods beginning after December 15, 2025.

The Company adopted this update effective December 31, 2025.

The adoption of this update had no impact on the Company’s financial position, results of operations or liquidity.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses.” This update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income.

The amendments affect loans, debt securities, trade receivables, net investment in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

The Company adopted this update effective January 1, 2023.

The adoption of this update did not have a material impact on the Company’s financial position, results of operations or liquidity since it does not have a history of credit losses.

While the adoption of this ASU modified the Company’s disclosures, it had no impact on the Company’s consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows in its consolidated financial statements.

New accounting pronouncements not yet adopted.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures.

The amendments address more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures.

The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2024 on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of the adoption of this guidance.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220):

Disaggregation of Income Statement Expenses.

The amendments in this update require disclosure in the Company’s annual and interim consolidated financial statements of specified information about certain costs and expenses, including depletion, depreciation and amortization recognized as part of crude oil and natural gas producing activities and employee compensation.

This ASU is effective for the Company to all annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

While the adoption of this ASU will modify the Company’s disclosures, it will not have an impact on the Company's consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows in its consolidated financial statements.

The Company considers the applicability and the impact of all ASUs.

ASUs were assessed and determined to be either not applicable, the effects of adoption are not expected to be material or are clarifications of ASUs previously disclosed.

Hannathon Acquisition .

In June 2022, the Company closed the Hannathon Acquisition for total net consideration of $ 337.2 million after normal and customary closing adjustments, including 3,522,117 shares of HighPeak Energy common stock valued at $ 97.2 million at closing to acquire various crude oil and natural gas properties largely contiguous to its Signal Peak operating area in Howard County, including associated producing properties, water system infrastructure and in-field fluid gathering pipelines.

The Hannathon Acquisition was accounted for as an asset acquisition as substantially all of the gross assets acquired are concentrated in a group of similar identifiable assets.

The consideration paid was allocated to the individual assets acquired and liabilities assumed based on their relative fair values.

All transaction costs associated with the Hannathon Acquisition were capitalized.

Alamo Acquisitions .

In March and June 2022, the Company closed the Alamo Acquisitions in two separate deals for total net consideration of $ 156.1 million and $ 11.0 million, respectively, after normal and customary closing adjustments, including 6,960,000 and 371,517 shares of HighPeak Energy common stock valued at $ 156.6 million and $ 11.2 million, respectively, at closing to acquire various crude oil and natural gas properties contiguous to its Flat Top operating area in Borden county, including associated producing properties, water system infrastructure and in-field fluid gathering pipelines.

The Alamo Acquisitions were accounted for as asset acquisitions as substantially all of the gross assets acquired are concentrated in a group of similar identifiable assets.

The consideration paid was allocated to the individual assets acquired and liabilities assumed based on their relative fair values.

All transaction costs associated with the Alamo Acquisitions were capitalized.

Other Acquisitions .

During the years ended December 31, 2024, 2023 and 2022, the Company also incurred an additional $ 14.8 million, $ 15.1 million and $ 23.0 million, respectively, in acquisition costs primarily to acquire various undeveloped crude oil and natural gas properties largely contiguous to its Flat Top and Signal Peak operating areas primarily in Howard, Borden, Mitchell and Scurry counties.

During the years ended December 31, 2025, 2024 and 2023, the Company incurred $ 6.7 million, $ 14.8 million and $ 15.1 million, respectively, in acquisition costs primarily to acquire various undeveloped crude oil and natural gas properties largely contiguous to its Flat Top and Signal Peak operating areas primarily in Howard, Borden, Mitchell and Scurry counties.

Fair Value Measurements

The Company determines fair value based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable.

Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort.

The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The three input levels of the fair value hierarchy are as follows:

Level 1 – quoted prices for identical assets or liabilities in active markets.

Level 2 – quoted prices for similar assets or liabilities in active markets;

quoted prices for identical assets or liabilities in markets that are not active;

inputs other than quoted prices that are observable for the asset or liability ( e.g.

, interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – unobservable inputs for the asset or liability, typically reflecting management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The fair values are therefore, determined using model-based techniques, including discounted cash flow models.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and the use of unobservable inputs.

The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgement and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

The Company uses appropriate valuation techniques based on available techniques based on available inputs to measure the fair value of its assets and liabilities.

Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date.

Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data.

These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 – Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management’s best estimate of fair value.

Financial Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis.

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As of December 31, 2025

Total Gross Fair Value

Commodity price derivatives – current

Commodity price derivatives – noncurrent

Commodity price derivatives – current

Commodity price derivatives – noncurrent

Total liabilities

Total recurring fair value measurements

As of December 31, 2024

Total Gross Fair Value

Commodity price derivatives – current

Commodity price derivatives – noncurrent

Commodity price derivatives – current

Commodity price derivatives – noncurrent

Total liabilities

Total recurring fair value measurements

Commodity price derivatives.

The Company’s commodity price derivatives are currently made up of crude oil swap contracts, enhanced collars, costless collars and deferred premium put options.

The Company’s commodity price derivatives are currently made up of crude oil costless collars, swap contracts and basis swaps and natural gas swap contracts.

The Company measures derivatives using an industry-standard pricing model that is provided by the counterparties.

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Derivative Financial Instruments

The Company primarily utilizes commodity swap contracts, deferred premium put options, collars and enhanced collars to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company’s capital budgeting and expenditure plans, (iii) protect the Company’s commitments under the Term Loan Credit Agreement and Senior Credit Facility Agreement and (iv) support the payment of contractual obligations.

The Company utilizes derivative financial instruments, primarily swaps, costless collars, basis swaps and roll swaps to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company’s capital budgeting and expenditure plans, (iii) protect the Company’s commitments under the Term Loan Credit Agreement and Senior Credit Facility Agreement and (iv) support the payment of contractual obligations.

The Company has not designated its derivative financial instruments as hedges for accounting purposes and, as a result, marks its derivative instruments to fair value and recognizes the cash and non-cash changes in fair value in the consolidated statements of operations under the caption “Gain (loss) on derivative instruments, net.”

The following table summarizes the effect of derivative instruments on the Company’s consolidated statements of operations (in thousands):

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Noncash gain (loss) on derivative instruments, net

Cash paid on settlement of derivative instruments, net

Cash received (paid) on settlement of derivative instruments, net

Gain (loss) on derivative instruments, net

By using derivative instruments to economically hedge exposure to changes in commodity prices, the Company exposes itself to credit risk and market risk.

Credit risk is the failure of the counterparty to perform under the terms of the derivative contract.

When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk.

The Company has entered into commodity derivative instruments only with counterparties that are also lenders under its Term Loan Credit Agreement and Senior Credit Facility Agreement and have been deemed acceptable credit risk.

As such, collateral is not required from either the counterparties or the Company on its outstanding derivative contracts.

Crude oil production derivatives.

The Company sells its crude oil production at the lease and the sales contracts governing such crude oil production are tied directly to, or are correlated with, NYMEX WTI Cushing and Argus WTI Midland crude oil prices.

As such, the Company primarily uses NYMEX WTI Cushing derivative contracts as well as Argus WTI Midland basis swaps from time to time to manage future crude oil price volatility.

As such, the Company primarily uses NYMEX WTI Cushing derivative contracts as well as Argus WTI Midland basis swaps and NYMEX WTI roll swaps from time to time to manage future crude oil price volatility.

The Argus WTI Midland basis differential represents the amount of premium to NYMEX WTI Cushing.

The Company’s outstanding NYMEX WTI Cushing and Argus WTI Midland crude oil derivative instruments as of December 31, 2024 and the weighted average crude oil prices and premiums payable per barrel for those contracts are as follows:

Collars, Enhanced Collars

The Company uses credit and other financial criteria to evaluate the credit standings of, and to select, counterparties to its derivative financial instruments.

Although the Company does not obtain collateral or otherwise secure the fair value of its derivative financial instruments, associated credit risk is mitigated by the Company’s credit risk policies and procedures.

The Company’s outstanding NYMEX WTI Cushing and Argus WTI Midland crude oil derivative instruments as of December 31, 2025 and the weighted average crude oil prices per barrel for those contracts are as follows:

Costless Collar

Natural gas production derivatives.

The Company sells its natural gas production at the tailgate of the gas processing plants and the sales contracts governing such natural gas production are correlated with HH natural gas prices.

As such, the Company primarily uses HH derivative contracts to manage future natural gas price volatility.

The Company’s outstanding HH natural gas derivative instruments as of December 31, 2025 and the weighted average natural gas prices per MMBtu for those contracts are as follows:

Settlement Month

Balance Sheet Offsetting of Derivative Assets and Liabilities.

The fair value of derivative instruments is generally determined using established index prices and other sources which are based upon, among other things, futures prices and time to maturity.

While it is acceptable to record these fair values by netting asset and liability positions, including any deferred premiums, that are with the same counterparty and are subject to contractual terms which provide for net settlement, the Company elects to record them at the gross level showing assets and liabilities as if they were settled separately.

See Note 4 – Fair Value Measurements for further details.

Net derivative assets associated with the Company’s open commodity derivative instruments by counterparty are as follows (in thousands):

Mercuria Energy Trading SA

Fifth Third Bank, National Association

Wells Fargo Bank, National Association

Macquarie Bank Limited

Mercuria Energy Trading SA

Exploratory/Extension Well Costs

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Senior Credit Facility Agreement due 2028

Discounts, net (a)

Debt issuance costs, net (b)

Debt issuance costs, net (a)

Discounts, net (b)

Less current maturities of long-term debt

Long-term debt, net

Discounts as of December 31, 2024 and 2023 consisted of $ 30.0 million and $ 30.0 million, respectively, in discounts less accumulated amortization of $ 12.8 million and $ 2.9 million, respectively.

Debt issuance costs as of December 31, 2025 and 2024 consisted of $ 8.9 million and $ 25.1 million, respectively, in costs less accumulated amortization of $ 1.7 million and $ 10.7 million, respectively.

Discounts as of December 31, 2025 and 2024 consisted of zero and $ 30.0 million, respectively, in discounts less accumulated amortization of zero and $ 12.8 million, respectively.

Term Loan Credit Agreement.

On September 12, 2023, the Company entered into a Term Loan Credit Agreement with Texas Capital Bank (“Texas Capital”) as the administrative agent and Chambers Energy Management, LP (“Chambers”) as collateral agent and lenders from time-to-time party thereto to establish a term loan (“Term Loan Credit Agreement”) totaling $ 1.2 billion in borrowings, less a 2.5 % original issue discount of $ 30.0 million at closing and customary debt issuance costs which totaled approximately $ 24.0 million.

The Term Loan Credit Agreement matures on September 30, 2026.

On September 12, 2023, the Company entered into a Term Loan Credit Agreement with Texas Capital Bank (“Texas Capital”) as the administrative agent and Chambers Energy Management, LP (“Chambers”) as collateral agent and lenders from time-to-time party thereto to establish a term loan (“Term Loan Credit Agreement”) in an aggregate principal amount of $ 1.2 billion, less a 2.5 % original issue discount of $ 30.0 million at closing and customary debt issuance costs which totaled approximately $ 24.0 million.

The Term Loan Credit Agreement was set to mature on September 30, 2026.

On August 1, 2025, the Company entered into the First Term Loan Amendment whereby, among other things, (i) the maturity was extended to September 30, 2028, (ii) borrowings were upsized to $ 1.2 billion, providing additional liquidity, and (iii) the quarterly amortization payments of $ 30.0 million were deferred for one year such that they begin again in September 2026.

As of December 31, 2025, $ 1.2 billion was outstanding under the Term Loan Credit Agreement.

As a result of this amendment which was considered an extinguishment of debt, the Company recognized a loss on extinguishment of debt of $ 25.4 million consisting of (i) $ 11.5 million in unamortized discounts, (ii) $ 9.2 million in unamortized debt issuance costs and (iii) $ 4.7 million in premiums paid to those lenders that chose to exit the Term Loan Credit Agreement upon closing of the First Term Loan Amendment.

Effective as of December 30, 2025, the Company entered into the Second Term Loan Amendment whereby, among other things, (i) the Company will be required to maintain an asset coverage ratio of not less than 1.00 to 1.00 for the Fourth Quarter of 2025 and the first quarter of 2026, representing a 0.25x decrease in the required ratio levels for such quarters, (ii) the Company will be required to maintain a total net leverage ratio of not greater than 2.50 to 1.00 for the fourth quarter of 2025 and the first quarter of 2026, representing a 0.50x increase in the required ratio levels for such quarters, (iii) the Company’s hedging obligations will be increased requiring it to maintain hedging agreements with respect to 75% of its proved developed producing oil production for the period from April 1, 2026 to March 31, 2027 and 60% of its proved developed producing oil production for the period from April 1, 2027 to September 30, 2027, in each case as provided in the January 1, 2026 reserve report and (iv) the Company will be prohibited from making quarterly dividends on its common stock until September 30, 2026.

For the second quarter of 2026 and quarterly periods ending thereafter, the required asset coverage ratio and total net leverage ratio levels will reset to the levels in effect for such quarters prior to these amendments.

Loans under the Term Loan Credit Agreement bear interest at a rate per annum equal to the Adjusted Term SOFR (as defined in the Term Loan Credit Agreement) plus an applicable margin of 7.50 %.

To the extent that a payment default exists and is continuing, at the election of the Required Lenders (as defined in the Term Loan Credit Agreement) under the Term Loan Credit Agreement, all amounts outstanding under the Term Loan Credit Agreement will bear interest at 2.00 % per annum above the rate and margin otherwise applicable thereto.

The Company is able to repay any amounts borrowed prior to the maturity date, subject to a concurrent payment of (i) the Make-Whole Amount (as defined in the Term Loan Credit Agreement) for any optional prepayment prior to the date 18 months after the closing date, (ii) 1.00 % of the principal amount being repaid for any optional prepayment on or after the date 18 months after the closing date but prior to the date 24 months after the closing date and (iii) without any premium for any optional prepayment on or after the date that is 24 months after the closing date.

The Term Loan Credit Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first lien security interest in substantially all assets of the Company and certain of its subsidiaries.

The Term Loan Credit Agreement also contains certain financial covenants, including (i) an asset coverage ratio that may not be less than 1.50 to 1.00 as of the last day of any fiscal quarter and (ii) a total net leverage ratio that may not exceed 2.00 to 1.00 as of the last day of any fiscal quarter.

Additionally, the Term Loan Credit Agreement contains additional restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness (with such exceptions including, among other things, a super priority revolving credit facility limited to $ 100 million), incur additional liens, make investments and loans, enter into mergers and acquisitions, materially increase dividends and other payments, enter into certain hedging transactions, sell assets, engage in transactions with affiliates and make certain capital expenditures based on the Company’s total net leverage ratio.

The Term Loan Credit Agreement contains customary mandatory prepayments, including quarterly installments of $ 30.0 million in aggregate principal amount which began March 31, 2024 ($ 120.0 million paid to date through December 31, 2024), the prepayment of gross proceeds from an incurred indebtedness other than Permitted Indebtedness (as defined in the Term Loan Credit Agreement), the prepayment of net cash proceeds for asset sales and hedge terminations in excess of $ 20.0 million within one calendar year, and prepayments of Excess Cash Flow (as defined in the Term Loan Credit Agreement) which began with the fiscal quarter ending March 31, 2024 (none paid to date through December 31, 2024).

In addition, the Term Loan Credit Agreement is subject to customary events of default, including a change in control.

To the extent a payment or other event of default exists and is continuing, at the election of the Required Lenders (as defined in the Term Loan Credit Agreement), all amounts outstanding under the Term Loan Credit Agreement will bear interest at 2.00 % per annum above the rate otherwise applicable thereto.

The Company is able to repay any amounts borrowed prior to the maturity date without premium or penalty.

The Term Loan Credit Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first-lien second-out security interest in substantially all assets of the Company and certain of its subsidiaries, which will require the Company to comply with an asset coverage ratio of not less than 1.25 :1.00 for the fiscal quarter ending June 30, 2026 and 1.50 :1.00 for fiscal quarters ending thereafter and a total net leverage ratio of not greater than 2.00 :1.00 for the fiscal quarter ending June 30, 2026 and fiscal quarters ending thereafter.

The Term Loan Credit Agreement contains customary restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness (with exceptions permitting, among other things, the incurrence of a super priority revolving credit facility, subject to a cap of $ 100 million), incur additional liens, make investments and loans, enter into mergers and acquisitions, make dividends and certain other payments, enter into certain hedging transactions, sell assets, engage in transactions with affiliates and make certain capital expenditures.

In addition, the Term Loan Credit Agreement contains customary mandatory prepayments, in addition to quarterly scheduled amortization payments of $ 30.0 million referenced above, consisting of prepayments with proceeds of prohibited indebtedness and asset sales (including hedge terminations) in excess of $ 20.0 million in any calendar year, and prepayments with a percentage of Excess Cash Flow (as defined in the Term Loan Credit Agreement) equal to 0%, 25% or 50% based on a total net leverage ratio to the extent pro forma for any such payment, the aggregate cash and cash equivalents of the Company and its restricted subsidiaries would not be less than $ 100.0 million as of the date of such payment (with no such excess cash flow prepayments made as of December 31, 2025).

The Term Loan Credit Agreement is subject to customary events of default, including upon the occurrence of a change in control.

If an event of default occurs and is continuing, the collateral agent or the majority lenders may accelerate any amounts outstanding and terminate lender commitments.

Collateral Agency Agreement.

On September 12, 2023, the Company entered into a collateral agency agreement (the “Collateral Agency Agreement”) among the Company, Texas Capital, as collateral agent, Chambers, as term representative, and Mercuria Energy Trading SA, as first-out representative prior to giving effect to that certain Collateral Agency Joinder – Additional First-Out Debt, dated as of November 1, 2023 and Fifth Third Bank, National Association as first-out representative after giving effect to that certain Collateral Agency Joinder – Additional First-Out Debt, dated as of November 1, 2023.

The Collateral Agency Agreement provides for the appointment of Texas Capital, as collateral agent, for the present and future holders of the first lien obligations (including the obligations of the Company and certain of its subsidiaries under the Term Loan Credit Agreement) to receive, hold, administer and distribute the collateral that is at any time delivered to Texas Capital or the subject of the Security Documents (as defined in the Collateral Agency Agreement) and to enforce the Security Documents and all interests, rights, powers and remedies of Texas Capital with respect thereto or thereunder and the proceeds thereof.

On September 12, 2023, the Company entered into a collateral agency agreement (the “Collateral Agency Agreement”) with Texas Capital, as collateral agent, Chambers, as term representative, and Mercuria Energy Trading SA, as initial first-out representative, which was later joined by Fifth Third Bank, National Association, as successor first-out representative.

The Collateral Agency Agreement provides for the appointment of Texas Capital, as collateral agent, for the present and future holders of the first-lien obligations (including holders of “first-out” obligations and obligations under the Term Loan Credit Agreement) to receive, hold, administer and distribute proceeds of the collateral and to enforce the Security Documents.

Under the terms of the Collateral Agency Agreement, proceeds of collateral are first distributed to holders of “first-out” obligations, including certain hedging and cash management obligations and obligations under the Senior Credit Facility Agreement but excluding certain “excess” first-out obligations, and second to holders of obligations under the Term Loan Credit Agreement.

Senior Credit Facility Agreement.

On November 1, 2023, the Company entered into a credit agreement with Fifth Third Bank, National Association (“Fifth Third”) as the administrative agent and as the collateral agent and a number of banks included in the syndicate to establish a senior revolving credit facility (“Senior Credit Facility Agreement”) that matures on September 30, 2026.

The Senior Credit Facility Agreement has aggregate maximum commitments of $ 100.0 million and effective March 29, 2024 pursuant to the First Facility Amendment, current commitments of $ 100.0 million and customary debt issuance costs which totaled approximately $ 1.1 million.

On November 1, 2023, the Company entered into a credit agreement with Fifth Third Bank, National Association (“Fifth Third”) as the administrative agent and as the collateral agent, together with a number of other banks and financial institutions party thereto, to establish a senior revolving credit facility (“Senior Credit Facility Agreement”).

The Senior Credit Facility Agreement has aggregate maximum commitments of $ 100.0 million.

On August 1, 2025, the Company entered into the Second Facility Amendment which, among other things, extended the maturity date to September 30, 2028, which was not considered an extinguishment of debt.

As of December 31, 2025, the balance due under the Senior Credit Facility Agreement was zero.

Loans under the Senior Credit Facility Agreement bear interest at either the Adjusted Term SOFR (as defined in the Senior Credit Facility Agreement) or the Base Rate (as defined in the Senior Credit Facility Agreement) at the Company’s option, plus an applicable margin ranging (i) for Adjusted Term SOFR loans, from 4.00 % to 5.00 %, and (ii) for Base Rate loans, from 3.00 % to 4.00 %, in each case calculated based on the ratio at such time of the outstanding principal loan amounts to the aggregate amount of lenders’ commitments.

To the extent that a payment default exists and is continuing, at the election of the Required Lenders (as defined in the Senior Credit Facility Agreement) under the Senior Credit Facility Agreement, all amounts outstanding under the Senior Credit Facility Agreement will bear interest at 2.00 % per annum above the rate and margin otherwise applicable thereto.

To the extent that a payment or other event of default exists and is continuing, at the election of the Required Lenders (as defined in the Senior Credit Facility Agreement), all amounts outstanding under the Senior Credit Facility Agreement will bear interest at 2.00% per annum above the rate otherwise applicable thereto.

Effective as of December 30, 2025, the Company entered into the Third Facility Amendment whereby, among other things, (i) the Company will be required to maintain an asset coverage ratio of not less than 1.00 to 1.00 for the fourth quarter of 2025 and the first quarter of 2026, representing a 0.25x decrease in the required ratio levels for such quarters, (ii) the Company will be required to maintain a total net leverage ratio of not greater than 2.50 to 1.00 for the fourth quarter of 2025 and the first quarter of 2026, representing a 0.50x increase in the required ratio levels for such quarters, (iii) the Company’s hedging obligations will be increased requiring it to maintain hedging agreements with respect to 75% of its proved developed producing oil production for the period from April 1, 2026 to March 31, 2027 and 60% of its proved developed producing oil production for the period from April 1, 2027 to September 30, 2027, in each case as provided in the January 1, 2026 reserve report and (iv) the Company will be prohibited from making quarterly dividends on its common stock until September 30, 2026.

The Company is able to repay any amounts borrowed prior to the maturity date without premium or penalty.

The Senior Credit Facility Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first lien security interest in substantially all assets of the Company and certain of its subsidiaries.

The Senior Credit Facility Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first-lien first-out security interest in substantially all assets of the Company and certain of its subsidiaries.

The Term Loan Credit Agreement and the Senior Credit Facility Agreement have hedging requirements to which the Company adheres.

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In December 2020, the Company entered into a credit agreement with Fifth Third as the administrative agent and sole lender to establish a revolving credit facility (the “Prior Credit Agreement”) that was set to mature on June 17, 2024.

In February 2022, the Company entered into the Third Amendment to, among other things, (i) reduce the borrowing base from $ 195.0 million to $ 138.8 million, (ii) modify the terms of the Prior Credit Agreement to reduce the aggregate elected commitments from $ 195.0 million to $ 138.8 million, (iii) update the maturity date to a springing maturity date, which will cause the Prior Credit Agreement to mature on October 1, 2023 if the 10.000% Senior Notes are not redeemed or refinanced by that date or the terms of the 10.000% Senior Notes have not been amended to extend the scheduled repayment thereof to no earlier than October 1, 2024, (iv) allow the Company to redeem the 10.000% Senior Notes with proceeds of a refinancing, with proceeds of an equity offering or with cash, in each case, subject to certain customary conditions and (v) replace the USD LIBOR rates with Term SOFR rates.

In June 2022, the Company entered into the Fourth Amendment to, among other things, (i) increase (a) the aggregate elected commitments to $ 400.0 million, (b) the borrowing base to $ 400.0 million and (c) the maximum credit amount to $ 1.5 billion, (ii) increase the excess cash threshold to $ 75.0 million, (iii) modify the affirmative hedging requirement so that if total debt to EBITDAX is greater than 1.25 to 1.00 but less than or equal to 1.75 to 1.00, notional volumes covering the first 24 months following the measurement date shall be hedged in an amount equal to not less than 25 % of the projected production and if total debt to EBITDAX is greater than 1.75 to 1.00, notional volumes covering the first 24 months following the measurement date shall be hedged in an amount equal to not less than 50 % of the projection production and (iv) increase the number of banks included in the syndicate at differing levels of commitments, with Fifth Third remaining the administrative agent.

In October 2022, the Company entered into the Fifth Amendment to, among other things, (i) increase the elected commitments to $ 525 million and the borrowing base to $ 550 million, (ii) require an additional borrowing base redetermination on or about December 1, 2022, (iii) modify the permitted dividends and distributions conditions such that minimum availability under the credit facility must be 25 % percent (as opposed to 30 % before giving effect to the Fifth Amendment) and (iv) appoint Wells Fargo Bank, National Association (“Wells Fargo”) as the new administrative agent to replace Fifth Third.

In addition, in connection with the Fifth Amendment, to the extent the Company incurs any additional specified unsecured senior, senior subordinated or subordinated future indebtedness in an aggregate amount of up to $ 250.0 million before June 30, 2023, the Company’s obligation to reduce the borrowing base by an amount equal to 25 % of the principal amount of such additional future indebtedness shall be waived.

In connection with the Fifth Amendment, the lenders waived two events of default existing with the Prior Credit Agreement, as it existed prior to giving effect to the Fifth Amendment, related to entering into and maintaining certain minimum hedges as of the fiscal quarters ending June 30, 2022 and September 30, 2022 and complying with the required current ratio as of the fiscal quarter ending September 30, 2022.

In October 2022, the Company entered into the Sixth Amendment to, among other things, (i) change the period to 120 days following the maturity date for which there can be no scheduled principal payments, mandatory redemption or maturity date for the 10.000% Senior Notes and the Specified Senior Notes, (ii) clarify that the Specified Senior Notes are subject to the restriction on the voluntary redemption by the Company of certain specified additional debt, including the 10.000% Senior Notes, (iii) add a permitted lien basket in connection with the escrow account to be opened in connection with the Specified Senior Notes and (iv) provide for an exception for the restriction on mandatory redemptions of the Specified Senior Notes in connection with the special mandatory redemption provided for with respect to the Specified Senior Notes.

In December 2022, the Company entered into the Seventh Amendment to, among other things, increase the amount of Specified Senior Notes from $ 225.0 million to $ 250.0 million.

In March 2023, the Company entered into the Eighth Amendment to, among other things, (a) increase the borrowing base to $ 700.0 million, (b) add an aggregate elected commitments concept at an initial amount of $ 575.0 million, (c) provide that the applicable margin shall be determined in reference to such aggregate elected commitments (as opposed to being determined in reference to the borrowing base before giving effect to the Eighth Amendment), (d) modify the permitted dividends and distributions conditions such that minimum availability under the credit facility must be 25 % of such aggregate elected commitments (as opposed to the borrowing base before giving effect to the Eighth Amendment), (e) permit quarterly dividends and distributions in an amount not to exceed $ 4.0 million provided that there is no default and that after giving effect thereto and any concurrent borrowing, the Company is in pro forma compliance with its financial covenants, (f) require the Company, on or before June 30, 2023, to redeem or refinance the 10.000% Senior Notes, allocate a portion of its cash flow that will retire the 10.000% Senior Notes on or before November 30, 2023 or amend the terms of the 10.000% Senior Notes to extend the scheduled repayment thereof to no earlier than February 15, 2025, (g) permit the redemption of Specified Additional Debt (defined in the Prior Credit Agreement to mean any unsecured senior, senior subordinated or subordinated Debt of the Borrower incurred after the Effective Date and any refinancing of such Debt, including without limitation, the 10.000% Senior Notes;

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Participants may contribute up to 80 percent of their annual base salary into the 401(k) Plan.

Matching contributions are made to the 401(k) Plan in cash by the Company in amounts equal to 100 percent of a participant’s contributions to the 401(k) Plan up to four percent of the participant’s annual base salary (the “Matching Contribution”).

Each participant’s account is credited with the participant’s contributions, Matching Contributions and allocations of the 401(k) Plan’s earnings.

Matching contributions are made to the 401(k) Plan in cash by the Company in amounts equal to 100 percent of a participant’s contributions to the 401(k) Plan of up to four percent of the participant’s annual base salary (the “Matching Contributions”).

Each participant’s account is credited with the participant’s contributions, the Matching Contributions and allocations of the 401(k) Plan’s earnings.

Participants are fully vested in their account balances at their eligibility date.

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Stock option awards were granted to employees on August 24, 2020, November 4, 2021, May 4, 2022, August 15, 2022 and July 21, 2023.

Stock-based compensation expense related to the Company’s stock option awards for the years ended December 31, 2024, 2023 and 2022 was $ 86,000 , $ 11.0 million and $ 18.1 million, respectively, and as of December 31, 2024 there was no unrecognized stock-based compensation expense related to unvested stock option awards.

Stock-based compensation expense related to the Company’s stock option awards for the years ended December 31, 2025, 2024 and 2023 was negative $ 109,000 due to certain forfeitures, $ 86,000 and $ 11.0 million, respectively, and as of December 31, 2025 there was no unrecognized stock-based compensation expense related to unvested stock option awards.

The 1,949,000 stock options granted in July 2023 were 100% vested upon grant on July 21, 2023.

1 unchanged sentence

The Company estimates the fair value of stock options granted on the grant date using a Black-Scholes option valuation model, which requires the Company to make several assumptions.

The expected term of options granted was determined based on the simplified method of the midpoint between the vesting dates and the contractual term of the options.

In 2025, the Company approved an extension of the expiration term for certain outstanding stock options, lengthening the window to exercise those awards, and the table below reflects such extension.

The expected term of the stock options granted was determined based on the simplified method of the midpoint between the vesting dates and the contractual term of the stock options.

The risk-free interest rate is based on the U.S.

treasury yield curve rate for the expected term of the option at the date of grant and the volatility was based on the volatility of either an index of exploration and production crude oil and natural gas companies or on a peer group of companies with similar characteristics of the Company on the date of grant since the Company had minimal or did not have any trading history.

treasury yield curve rate for the expected term of the stock option at the date of grant and the volatility was based on the volatility of either an index of exploration and production crude oil and natural gas companies or on a peer group of companies with similar characteristics of the Company on the date of grant since the Company had minimal or did not have any trading history.

More detailed stock options activity and details are as follows:

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Outstanding at December 31, 2023

Awards granted

Outstanding at December 31, 2024

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There is no excess stock-based compensation expense as the closing price on the modification date was lower than the original grant dates.

On September 15, 2025, the Company’s Chief Executive Officer retired and in conjunction with said retirement, the 1,385,500 shares of restricted stock issued to him vested immediately.

As a result, 545,195 shares were withheld and cancelled in lieu of $ 3.8 million in cash taxes withheld and paid by the Company on his behalf.

On December 31, 2025, the remaining 715,000 shares of restricted stock issued to certain other employees became vested.

As a result, 256,989 shares were withheld and cancelled in lieu of $ 1.2 million in cash taxes withheld and paid by the Company on their behalf.

Stock issued to outside directors.

A total of 64,792 shares of restricted stock was approved by the Board to be granted to the outside directors of the Company on June 3, 2025, which will vest at the next annual meeting, assuming the Board members maintain their positions on the Board.

Therefore, stock-based compensation expense of $ 442,000 was recognized during the year ended December 31, 2024 and the remaining $ 316,000 will be recognized during the first half of 2025, which was based upon the closing price of the stock on the date of the restricted stock issuance.

Therefore, stock-based compensation expense of $ 413,000 was recognized during the year ended December 31, 2025 and the remaining $ 295,000 will be recognized through May 2026, which was based upon the closing price of the stock on the date of the restricted stock issuance.

In addition, a total of 53,879 shares of restricted stock was approved by the Board to be granted to the outside directors of the Company on June 4, 2024, which vested in June 2025.

Therefore, stock-based compensation expense of $ 316,000 and $ 442,000 was recognized during the years ended December 31, 2025 and 2024, respectively, which was based upon the closing price of the stock on the date of the restricted stock issuance.

Also, a total of 58,767 shares of restricted stock was approved by the Board to be granted to the outside directors of the Company on June 1, 2023, which vested in June 2024.

Therefore, stock-based compensation expense of $ 316,000 and $ 442,000 was recognized during the years ended December 31, 2024 and 2023, respectively, which was based upon the closing price of the stock on the date of the restricted stock issuance.

In addition, a total of 21,184 shares of restricted stock was approved by the Board to be granted to the outside directors of the Company on June 1, 2022, which vested during the second quarter of 2022.

Therefore, stock-based compensation expense of $ 305,000 , $ 427,000 was recognized during the years ended December 31, 2023 and 2022, respectively, which was based upon the closing price of the stock on the date of the restricted stock issuance.

Finally, a total of 67,779 shares of restricted stock was approved by the Board to be granted to the outside directors of the Company on June 1, 2021, which vested in January 2022.

Finally, a total of 21,184 shares of restricted stock was approved by the Board to be granted to the outside directors of the Company on June 1, 2022, which vested during the second quarter of 2023.

Therefore, stock-based compensation expense of $ 305,000 was recognized during the year ended December 31, 2023, which was based upon the closing price of the stock on the date of the restricted stock issuance.

1 unchanged sentence

The Company follows ASC Topic 842, “Leases” to account for its operating and finance leases.

Therefore, as of December 31, 2024, the Company had right-of-use assets totaling $ 1.4 million included in other noncurrent assets and operating lease liabilities totaling $ 1.4 million, $ 719,000 of which are included in current liabilities and $ 670,000 of which are included in noncurrent liabilities, and as of December 31, 2023 the Company had right-of-use assets totaling $ 510,000 included in other noncurrent assets and operating lease liabilities totaling $ 528,000 , all of which are included in other current liabilities on the accompanying consolidated balance sheets.

Therefore, as of December 31, 2025, the Company had right-of-use assets totaling $ 957,000 included in other noncurrent assets and operating lease liabilities totaling $ 987,000 , $ 845,000 of which are included in current liabilities and $ 142,000 of which are included in noncurrent liabilities , and as of December 31, 2024 the Company had right-of-use assets totaling $ 1.4 million included in other noncurrent assets and operating lease liabilities totaling $ 1.4 million, $ 719,000 of which are included in current liabilities and $ 670,000 of which are included in noncurrent liabilities on the accompanying consolidated balance sheets.

The Company does not currently have any finance right-of-use leases.

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Natural gas gathering and treating agreement.

In June 2024, the Company entered into a natural gas gathering and treating agreement to gather certain natural gas.

Pursuant to said agreement, the Company has agreed to fund certain aid-in-construction costs totaling $ 5.4 million which was paid during the year ended December 31, 2024 and an additional $ 27.2 million to be funded throughout 2025 as certain milestones are attained.

The agreement does not contain any minimum volume commitments.

Natural Gas Gathering and Treating Agreement.

In June 2024, the Company entered into a natural gas gathering and treating agreement to gather certain natural gas in its Signal Peak area.

Pursuant to said agreement, the Company has agreed to fund certain aid-in-construction costs totaling $ 21.9 million and $ 5.4 million during the years ended December 31, 2025 and 2024, respectively.

In addition, throughout the first quarter of 2026, the Company has a remaining commitment under the contract of $ 5.3 million as certain milestones are attained.

The agreement does not contain any minimum volume commitments.

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In conjunction with these contracts, the Company has a $ 4.6 million letter of credit in place in lieu of a deposit that is cancellable at the end of the contract term.

Sand commitments.

The Company is party to an amended agreement whereby it has agreed to purchase at least 750,000 tons of sand over a fifteen-month period beginning April 1, 2024.

The Company has taken deliveries of approximately 547,000 tons of sand through December 31, 2024, leaving a commitment of approximately 203,000 tons remaining.

There are stipulations in the agreement that reduce this commitment should there be a downturn in crude oil prices.

Generally, if the Company never takes delivery of any additional sand under the agreement, the monetary commitment that remains as of December 31, 2024 is approximately $ 5.2 million.

Related Party Transactions

Retirement of Jack Hightower.

On September 16, 2025, the Company announced Mr.

Jack Hightower’s retirement and resignation from his role as Chief Executive Officer and Chairman of the Board of the Company, effective as of September 15, 2025 (the “Separation Date”).

In connection with Mr.

Hightower’s notice of retirement and resignation from employment with the Company and his resignation from the Board, the Company entered into a Separation Agreement and General Release of Claims with Mr.

Hightower on September 15, 2025 (the “Separation Agreement”), pursuant to which Mr.

Hightower released the Company and its affiliates from certain liabilities and agrees to certain restrictive covenants.

The Company, in turn, released Mr.

Hightower from certain liabilities and provided Mr.

Hightower with certain payments and benefits pursuant to the terms and conditions of the Separation Agreement, which, among other things, modified the benefits provided under Mr.

Hightower’s outstanding equity awards, namely, his outstanding stock option grant notices and agreements, dated August 24, 2020, November 4, 2021, May 4, 2022, and August 15, 2022, respectively (the “Stock Option Agreements”), and his certain restricted stock agreement and the amendment thereto, dated November 4, 2021 and October 31, 2024, respectively (the “Restricted Stock Agreement”).

The Separation Agreement provided for (i) Mr.

Hightower’s 1,385,500 unvested shares outstanding under the Restricted Stock Agreement to fully vest as of the Separation Date;

(ii) extending the period in which Mr.

Hightower may exercise the stock options pursuant to the 2020 and 2021 Stock Option Agreements such that the stock options pursuant to such agreements remains exercisable by Mr.

Hightower until the date that is twelve (12) months following the Separation Date;

(iii) forfeiture by Mr.

Hightower of the right to exercise the outstanding stock options granted pursuant to the 2022 Stock Option Agreements as of the Separation Date;

(iv) a cash separation payment to Mr.

Hightower in the amount of $ 2,400,000 , payable on the Company’s next regularly scheduled payroll date after the Separation Date and (v) the registration of Mr.

Hightower’s 1,532,478 founder’s shares as soon as reasonably possible following the Separation Date.

Underwritten Equity Offering.

In connection with the Company’s underwritten equity offering in July 2023, certain of the Company’s stockholders, John Paul DeJoria Family Trust and Jack Hightower, the Company’s Chairman and Chief Executive Officer, and entities and individuals associated with them, purchased an aggregate of approximately 10 million shares of common stock in the offering at the public offering price per share.

In connection with the Company’s underwritten equity offering in July 2023, certain of the Company’s stockholders, John Paul DeJoria Family Trust and Jack Hightower, the Company’s former Chairman and Chief Executive Officer, and entities and individuals associated with them, purchased an aggregate of approximately 10 million shares of common stock in the offering at the public offering price per share.

In connection therewith, the Underwriter received a reduced underwriting discount on such shares purchased by these persons or entities compared with other shares sold to the public in the offering.

6 unchanged sentences

During the one-year term of the agreement, beginning on October 1, 2022, the Company agreed to a minimum volume commitment of 29.2 million barrels of produced water while maintaining the ability to bank excess produced water processed each month toward the minimum volume commitment.

During the years ended December 31, 2024, 2023 and 2022, the Company paid zero , $ 1.5 million and $ 1.6 million, respectively, to Pilot for such services.

During the years ended December 31, 2025, 2024 and 2023, the Company paid zero , zero and $ 1.5 million, respectively, to Pilot for such services.

In April 2023, the Company terminated the contract with Pilot in exchange for $ 6.5 million that was charged to other expense in the accompanying consolidated statements of operations during the year ended December 31, 2023.

Private Investment in Public Equity.

On August 22 and 23, 2022, HighPeak Energy entered into multiple Subscription Agreements (the “Subscription Agreements”) with certain accredited investors (collectively, the “Investors”) pursuant to which, among other things, the Investors agreed to subscribe for and purchase, and the Company agreed to issue and sell to the Investors, an aggregate 2,855,162 newly issued shares of the Company’s common stock at a price per share of $ 21.61 (as determined by the 5-day volume weighted average trading price per share for the five trading days immediately prior to (and excluding) August 22, 2022), for aggregate gross proceeds of approximately $ 61.7 million.

The Company used the proceeds of the Private Placement for general corporate purposes.

The transactions contemplated by the Subscription Agreements closed in multiple closings on or about September 2, 2022, subject to customary closing conditions.

As part of the private placement, certain related persons of the Company participated as investors, and such participation was approved by the Board pursuant to and in accordance with the terms of the Related Party Transactions Policy adopted by the Board on August 21, 2020.

Specifically, Messrs.

Jack Hightower (the Company’s Chief Executive Officer), Michael Hollis (the Company’s President), Steven Tholen (the Company’s Chief Financial Officer), Rodney Woodard (the Company’s Chief Operating Officer) and John Paul DeJoria as trustee for the John Paul DeJoria Family Trust (a greater than ten percent (10%) holder of the Company’s outstanding common stock) entered into Subscription Agreements to purchase 462,749 , 46,276 , 9,255 , 23,138 and 2,313,744 shares of common stock, respectively, in each case on substantially the same terms as other investors in the private placement.

In addition, each Subscription Agreement with an investor other than Messrs.

Hightower and DeJoria (each of which has existing registration rights with respect to the Company’s securities) provides for customary registration rights with respect to the shares issued thereunder, including the right to have such shares registered for resale on a “shelf” registration statement.

Major Customers

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Based on the current demand for crude oil and natural gas and the availability of other purchasers, management believes the loss of these major purchasers would not have a material adverse effect on our financial condition and results of operations because crude oil and natural gas are fungible products with well-established markets and numerous purchasers.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The Company is subject to corporate income taxes and Texas margin tax.

The Company and its subsidiaries file a U.S.

federal corporate income tax return on a consolidated basis.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA 2022”), which among other tax provisions, created a 15 percent corporate alternative minimum tax (“CAMT”) on the “adjusted financial statement income” of certain large corporations (generally, corporations reporting at least $1 billion of average adjusted pre-tax net income on their consolidated financial statements) as well as an excise tax of 1% on the fair market value of certain public company stock repurchases for tax years beginning after December 31, 2022.

Based on application of currently available guidance, the Company’s income tax expense for the years ended December 31, 2024 and 2023 was not impacted by the CAMT.

The Company’s excise tax imposed on its certain stock repurchases during the year ended December 31, 2024 was immaterial and was recognized as part of the cost basis of the stock repurchased.

The Company’s provision for income taxes attributable to income before income taxes consisted of the following (in thousands):

Income Tax Expense

The following table presents the Company’s income tax expense (in thousands):

Year Ended December 31,

Current income tax expense:

Total current income tax expense

Current income tax (benefit) expense:

Total current income tax (benefit) expense

Deferred income tax expense:

Deferred income tax expense

Total income tax expense

The reconciliation between the provision for income taxes computed by multiplying pre-tax income by the U.S.

federal statutory rate and the reported amounts of provision for income taxes is as follows (in thousands, except rate):

Income tax expense

The income tax expense differed from the amounts computed by applying the U.S.

federal income tax rate to earnings before income taxes as a result of the following (in thousands, except rate):

Year Ended December 31,

1 unchanged sentence

federal statutory rate

Limited tax benefit due to wage and stock-based compensation

State deferred income taxes

State income tax, net of federal income tax effect (1)

Changes in valuation allowances

Nontaxable or nondeductible items:

Limited tax benefit due to compensation

Changes in unrecognized tax benefits

162m stock compensation limitation

Income tax expense

Effective income tax rate

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows as of December 31, 2024 and 2023 (in thousands):

State taxes in Texas make up 100% of the tax effect of this category.

Income taxes were paid in the following jurisdictions (in thousands):

Total income taxes paid

On July 4, 2025, the “One Big Beautiful Bill” (“OBBB”) was signed into law.

The OBBB is a significant piece of tax legislation that includes provisions that restore 100% bonus depreciation under section 168(k) for certain property place in service after January 19, 2025, allow for the expensing of domestic R&D expenditures beginning in 2025, and allow for the deduction of intangible drilling costs as part of the computation of the corporate alternative minimum tax beginning in 2026.

The OBBB did not have a significant impact on the Company’s 2025 income tax expense.

Deferred Tax Assets and Liabilities

The following table presents the tax effects of temporary differences that give rise to the Company’s deferred tax assets and liabilities (in thousands):

Deferred tax assets:

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Stock-based compensation

Unrecognized derivative losses, net

Valuation allowance

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Net deferred tax liabilities

The effective income tax rate differs from the U.S.

statutory rate of 21 percent primarily due to reversing a portion of its deferred tax asset related to stock-based compensation, deferred state income taxes and other permanent differences between GAAP income and taxable income.

As required by ASC Topic 740, “Income Taxes,” (“ASC 740”) the Company uses reasonable judgments and makes estimates and assumptions related to evaluating the probability of uncertain tax positions.

8 unchanged sentences

IRC Section 162(m) limits compensation deductions to $ 1.0 million per year for certain Company executives.

This resulted in a $ 3.0 million and $ 3.4 million reduction in the deferred tax asset and increased the amount of income tax expense realized during the years ended December 31, 2024 and 2022, respectively.

This resulted in a $ 3.0 million reduction in the deferred tax asset and increased the amount of income tax expense realized during the year ended December 31, 2024.

The Company is also subject to Texas margin tax.

The Company realized $ 469,000 in current Texas margin tax in the accompanying consolidated financial statements for the year ended December 31, 2024 and zero for the years ended December 31, 2023 and 2022 as the Company did not owe any Texas margin tax for 2023 or 2022.

The Company has recognized a net deferred Texas margin tax liability of $ 8.6 million and $ 7.1 million as of December 31, 2024 and 2023, respectively, in the accompanying consolidated financial statements.

Earnings Per Share

The Company uses the two-class method of calculating earnings per share because certain of the Company’s stock-based awards qualify as participating securities.

The Company’s basic earnings per share attributable to common stockholders is computed as (i) net income as reported, (ii) less participating basic earnings (iii) divided by weighted average basic common shares outstanding.

The Company’s diluted earnings per share attributable to common stockholders is computed as (i) basic earnings attributable to common stockholders, (ii) plus reallocation of participating earnings (iii) divided by weighted average diluted common shares outstanding.

The following table reconciles the Company’s earnings from operations and earnings attributable to common stockholders to the basic and diluted earnings used to determine the Company’s earnings per share amounts for the years ended December 31, 2024, 2023 and 2022 under the two-class method (in thousands):

The Company realized a benefit of $ 16,000 and an expense of $ 469,000 in current Texas margin tax in the accompanying consolidated financial statements for the years ended December 31, 2025 and 2024, respectively, and zero for the year ended December 31, 2023 as the Company did not owe any Texas margin tax for 2023.

The Company has recognized a net deferred Texas margin tax liability of $ 9.7 million and $ 8.6 million as of December 31, 2025 and 2024, respectively, in the accompanying consolidated balance sheets.

In addition to the provision for income taxes, the Company recognized and paid an excise tax of 1% on its stock repurchases during the year ended December 31, 2024 of $ 351,000 recognized as part of the cost basis of the stock repurchased in the condensed consolidated statements of changes in stockholders’ equity.

(Losses) Earnings Per Share

The Company uses the two-class method of calculating (losses) earnings per share because certain of the Company’s stock-based awards qualify as participating securities.

The Company’s basic (losses) earnings per share attributable to common stockholders is computed as (i) net (loss) income as reported, (ii) less participating basic earnings (iii) divided by weighted average basic common shares outstanding.

The Company’s diluted (losses) earnings per share attributable to common stockholders is computed as (i) basic (losses) earnings attributable to common stockholders, (ii) plus reallocation of participating earnings (iii) divided by weighted average diluted common shares outstanding.

The following table reconciles the Company’s (losses) earnings from operations and (losses) earnings attributable to common stockholders to the basic and diluted (losses) earnings used to determine the Company’s (losses) earnings per share amounts for the years ended December 31, 2025, 2024 and 2023 under the two-class method (in thousands):

Year Ended December 31,

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Participating basic earnings (a)

Basic earnings attributable to common stockholders

Basic (losses) earnings attributable to common stockholders

Reallocation of participating earnings

Diluted net income attributable to common stockholders

Diluted net (loss) income attributable to common stockholders

Basic weighted average shares outstanding

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Stock Repurchase Program.

In February 2024, the Company’s board of directors approved a common stock repurchase program to acquire up to $ 75.0 million of the Company’s outstanding common stock, excluding excise taxes and other expenses, which was subject to being suspended from time to time, modified, extended or discontinued by the board of directors at any time.

The common stock repurchase program expired on December 31, 2024 (the “2024 Repurchase Program”).

On March 6, 2025, the Company’s board of directors extended the program from its original expiration on December 31, 2024 and extended the program through December 31, 2025 (the “Repurchase Extension”).

The Repurchase Extension did not alter any of the original terms of the 2024 Repurchase Program nor did it change the total amount provided for under the original 2024 Repurchase Program.

Purchases under the 2024 Repurchase Program were made from time to time in open market transactions, and were subject to market conditions, applicable legal requirements, contractual obligations and other factors.

During the year ended December 31, 2024, the Company repurchased 2,407,421 shares of common stock that were cancelled and terminated for approximately $ 35.1 million, excluding excise taxes and other expenses under this repurchase program.

Up to approximately $ 39.9 million remains available for use to repurchase shares under the Company’s common stock repurchase program, excluding excise taxes and other expenses, now that the program has been extended.

Purchases under the repurchase program could have been made from time to time in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, contractual obligations and other factors.

The repurchase program did not require the Company to acquire any specific number of shares.

This repurchase program has expired, but may be reimplemented by the board of directors at any time.

During the years ended December 31, 2025 and 2024, the Company repurchased zero and 2,407,421 , respectively, shares of common stock that were cancelled and terminated for a total of approximately zero and $ 35.1 million, respectively.

Issuance of Common Stock.

During the year ended December 31, 2024, the Company issued 55 shares of HighPeak Energy common stock as a result of warrants being exercised.

During the years ended December 31, 2025 and 2024, the Company issued 64,792 and 53,879 shares, respectively, of restricted stock to outside directors and 60 and 55 shares of HighPeak Energy common stock, respectively, as a result of warrants being exercised.

In July 2023, the Company issued 14,835,000 shares of its common stock in a public offering discussed below.

The remaining 420,896 shares of HighPeak Energy common stock issued during the year ended December 31, 2023 were the result of warrants ( 350,295 shares) being exercised, the issuance of restricted stock ( 58,767 shares) to outside directors and stock options ( 11,834 shares) being exercised.

On March 25, 2022, June 21, 2022 and June 27, 2022, respectively, the Company issued 6,960,000 , 371,517 and 3,522,117 shares of HighPeak Energy common stock related to the aforementioned crude oil and natural gas property acquisitions.

On June 1, 2022, the Company issued 21,184 and 600,000 shares of restricted stock to outside directors and certain employees, respectively.

On September 2, 2022, the Company closed an aggregate $ 85.0 million private placement of 3,933,376 newly issued shares of HighPeak Energy common stock at a price per share of $ 21.61 as determined by the 5-day volume weighted average closing price per share for the five days immediately prior to (and excluding) August 22, 2022.

The initial closings occurred on August 22, 2022, with the final closings on September 2, 2022.

The remaining 982,648 shares of HighPeak Energy common stock issued during the year ended December 31, 2022 were the result of warrants ( 970,648 shares) and stock options ( 12,000 shares) being exercised.

Public Offerings of Common Stock.

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Dividends and dividend equivalents .

In November 2025, the Board declared a quarterly dividend of $ 0.04 per share of common stock outstanding which resulted in a total of $ 5.0 million in dividends being paid in December 2025.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 502,000 in December 2025.

In addition, the Company accrued an additional combined $ 3,000 in dividends on the restricted stock issued to outside directors that will be payable upon vesting.

Also, simultaneously with the vesting of restricted stock previously issued to management directors and certain employees, previously accrued $ 372,000 in dividends were paid on that date.

In August 2025, the Board declared a quarterly dividend of $ 0.04 per share of common stock outstanding which resulted in a total of $ 5.0 million in dividends being paid in September 2025.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 531,000 in September 2025.

In addition, the Company accrued an additional combined $ 31,000 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting.

Also, simultaneously with the aforementioned retirement of our former Chief Executive Officer in September 2025, previously accrued $ 665,000 in dividends were paid in respect of his restricted stock vesting on that date.

In May 2025, the Board declared a quarterly dividend of $ 0.04 per share of common stock outstanding which resulted in a total of $ 5.0 million in dividends being paid in June 2025.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 531,000 in June 2025.

In addition, the Company accrued an additional combined $ 84,000 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting.

In February 2025, the Board declared a quarterly dividend of $ 0.04 per share of common stock outstanding which resulted in a total of $ 5.0 million in dividends being paid in March 2025.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 531,000 in March 2025.

In addition, the Company accrued an additional combined $ 86,000 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting.

In November 2024, the Board declared a quarterly dividend of $ 0.04 per share of common stock outstanding which resulted in a total of $ 5.0 million in dividends being paid on December 23, 2024.

22 unchanged sentences

In addition, the Company accrued an additional combined $ 53,000 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting.

In October 2022, the Board declared a quarterly dividend of $ 0.025 per share of common stock outstanding which resulted in a total of $ 2.8 million in dividends being paid on November 23, 2022.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 288,000 in November 2022 and accrued a dividend equivalent per share to all unvested stock option holders which is payable upon vesting, assuming no forfeitures.

In addition, the Company will accrue an additional combined $ 53,000 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting.

In July 2022, the Board declared a quarterly dividend of $ 0.025 per share of common stock outstanding which resulted in a total of $ 2.7 million in dividends being paid on August 25, 2022.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 481,000 in August 2022 and accrued a dividend equivalent per share to all unvested stock option holders which is payable upon vesting, assuming no forfeitures.

In April 2022, the Board declared a quarterly dividend of $ 0.025 per share of common stock outstanding which resulted in a total of $ 2.6 million in dividends being paid on May 25, 2022.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 214,000 in May 2022 and accrued a dividend equivalent per share to all unvested stock option holders which is payable upon vesting, assuming no forfeitures.

In addition, the Company will accrue an additional combined $ 53,000 in dividends on the restricted stock issued to management directors and certain employees that will be payable upon vesting.

In January 2022, the Board approved a quarterly dividend of $ 0.025 per share of common stock outstanding which resulted in a total of $ 2.4 million in dividends being paid on February 25, 2022.

In addition, under the terms of the LTIP, the Company paid a dividend equivalent per share to all vested stock option holders of $ 214,000 in February 2022 and accrued a dividend equivalent per share to all unvested stock option holders which was payable upon vesting, assuming no forfeitures.

In addition, the Company accrued an additional combined $ 53,000 in dividends on the restricted stock issued to management directors and certain employees that will be payable upon vesting.

Outstanding Securities.

At December 31, 2024 and 2023, the Company had 126,067,436 and 128,420,923 shares of common stock outstanding, respectively, and 7,934,922 and 7,934,977 warrants outstanding, respectively, with an exercise price of $ 11.50 per share that expire on August 20, 2025.

At December 31, 2025 and 2024, the Company had 125,330,104 and 126,067,436 shares of common stock outstanding, respectively, and zero and 7,934,977 warrants outstanding, respectively, with an exercise price of $ 11.50 per share.

All of the Company’s outstanding warrants expired on August 21, 2025.

Subsequent Events

Share Repurchase Program.

The 2024 Repurchase Program expired on December 31, 2024.

On March 6, 2025, the Company’s board of directors extended the program from its original expiration on December 31, 2024 and extended the program through December 31, 2025.

The Repurchase Extension did not alter any of the original terms of the 2024 Repurchase Agreement nor did it change the total amount provided for under the original 2024 Repurchase Program.

The 2024 Repurchase Program was entered into in 2024 to grant HighPeak’s management the authority to repurchase shares opportunistically in the open market from time to time, through block trades, in privately negotiated transactions or by such other means which comply with applicable state and federal laws.

This is the Company’s second authorization for a stock repurchase program since its founding.

The Company intends to fund the repurchases from available working capital, cash provided from operations and borrowings under its Senior Credit Facility Agreement.

The timing, number and value of shares repurchased under the program will be at the discretion of management and the Board of Directors and will depend on a number of factors, including general market and economic conditions, business conditions, the trading price of the Company’s common stock, the nature of other investment opportunities available to the Company and compliance with the Company’s debt and other agreements.

The stock repurchase program does not obligate HighPeak to acquire any particular dollar amount or number of shares of its common stock and the stock repurchase program may be suspended from time to time, modified, extended or discontinued by the Company’s Board of Directors.

The stock repurchase program authority will expire December 31, 2025.

Dividends and dividend equivalents.

In February 2025, the Board approved a quarterly dividend of $ 0.04 per share of common stock outstanding which will result in a total of approximately $ 5.0 million in dividends being paid on March 25, 2025.

In addition, under the terms of the LTIP, the Company will pay a dividend equivalent per share to all vested stock option holders of approximately $ 538,000 in March 2025.

In addition, the Company will accrue an additional combined $ 86,000 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting.

Natural gas derivative instruments.

In February 2025, the Company entered into the following natural gas derivative instruments, specifically HH fixed price swaps at $ 4.43 per MMBtu for 30,000 MMBtu per day for March 2025 through February 2026.

Issuance of restricted stock.

In January 2026, the Company issued 1,028,000 shares of restricted stock to certain employees of the Company which will vest pro-rata over the next three years.

Crude oil derivative financial instruments.

Subsequent to December 31, 2025, the Company entered into the following additional crude oil derivative financial instruments:

Argus WTI Midland

NYMEX WTI Roll

Argus WTI Midland

NYMEX WTI Roll

Argus WTI Midland

NYMEX WTI Roll

Argus WTI Midland

Natural gas derivative financial instruments.

In January 2026, the Company entered into the following additional natural gas derivative financial instruments:

Settlement Month

25 unchanged sentences

Lease operating expenses

Gathering, processing and transportation

Production and ad valorem taxes

34 unchanged sentences

Purchase of reserves-in-place

Sales of reserves-in-place

Revisions of previous estimates

1 unchanged sentence

Extensions and discoveries

Purchase of reserves-in-place

Sales of reserves-in-place

Revisions of previous estimates

1 unchanged sentence

Extensions and discoveries

Sales of reserves-in-place

Revisions of previous estimates

3 unchanged sentences

(i) drilling 17 gross ( 17.0 net) exploratory/extension wells that were on production as of December 31, 2025, (ii) 14 gross ( 14.0 net) exploratory/extension wells that were in the final stages of completion as of December 31, 2025, and (iii) the addition of 24 gross ( 24.0 net) PUDs.

Upward revisions of previous estimates of 18,017 MBoe for the year ended December 31, 2024 were the result of positive revisions of approximately 19,406 MBoe primarily due to technical revisions attributable to increased well performance and adjustments to our estimates, partially offset by approximately 804 MBoe primarily due to increased forecasted operating expenses and approximately 585 MBoe primarily related to decreases in crude oil, NGL and natural gas realized prices.

The aforementioned net increase in proved reserves was partially offset by 18,285 MBoe in production during the year ended December 31, 2024.

Downward revisions of previous estimates of 26,311 MBoe for the year ended December 31, 2025 were the result of negative revisions of approximately 10,767 MBoe primarily due to technical revisions attributable to decreased well performance and adjustments to our estimates, approximately 8,970 MBoe primarily related to decreases in crude oil and NGL realized prices, 6,488 MBoe of reserves that were reclassified to unproved reserves due to changes made to our development plan and approximately 86 MBoe primarily due to increased forecasted operating expenses.

In addition to the aforementioned net decrease in proved reserves was 17,628 MBoe in production during the year ended December 31, 2025.

The Company also sold small interests in a few old vertical wells outside of its core area during the year ended December 31, 2025 further reducing proved reserves by 22 Mboe.

The Company’s current development plan reflects allocation of capital with a focus on efficiencies, recoveries and rates of return.

2 unchanged sentences

(i) drilling 18 gross ( 14.6 net) exploratory/extension wells that were on production as of December 31, 2024, (ii) 5 gross ( 5.0 net) exploratory/extension wells that were in the final stages of completion as of December 31, 2024, and (iii) the addition of 79 gross ( 68.9 net) PUDs.

The Company also acquired 171 MBoe of reserves as part of its acquisition activities and divested of 1,387 MBoe of reserves in a farm out to another operator in return for a carried interest during the year ended December 31, 2023.

Downward revisions of previous estimates of 16,093 MBoe for the year ended December 31, 2023 were the result of negative revisions of approximately 13,729 MBoe primarily due to technical revisions attributable to decreased well performance and adjustments to our estimates, approximately 1,775 MBoe primarily related to decreases in crude oil, NGL and natural gas realized prices and approximately 589 MBoe primarily due to increased forecasted operating expenses.

The aforementioned net increase in proved reserves was partially offset by 18,285 MBoe in production during the year ended December 31, 2024.

3 unchanged sentences

(i) drilling 63 gross ( 56.4 net) exploratory/extension wells that were on production as of December 31, 2023, (ii) 7 gross ( 6.6 net) exploratory/extension wells that were in the final stages of completion as of December 31, 2023, and (iii) the addition of 117 gross ( 102.4 net) PUDs.

The Company also acquired 18,906 MBoe of reserves as part of its acquisition activities during the year ended December 31, 2022.

Downward revisions of previous estimates of 9,211 MBoe for the year ended December 31, 2022 were primarily the result of negative revisions of 10,418 MBoe due to technical revisions attributable to decreased well performance and adjustments to our PUD estimates, partially offset by positive revisions of approximately 1,116 MBoe related to increases in crude oil, NGL and natural gas realized prices and positive revisions of approximately 91 MBoe primarily due to decreased forecasted operating expenses.

The aforementioned net increase in proved reserves was partially offset by 16,635 MBoe in production during the year ended December 31, 2023.

11 unchanged sentences

As of December 31, 2025, 2024 and 2023, proved developed reserves includes proved developed non-producing reserves of 5,554 , 6,239 and 4,598 MBbl of crude oil, 1,101 , 1,044 and 534 MBbl of NGL and 6,349 , 5,668 and 1,889 MMcf of natural gas, respectively.

On December 31, 2024, the Company’s estimated PUD reserves were approximately 90,879 MBoe, a 16,310 MBoe increase over the reserve estimate at December 31, 2023 of 74,569 MBoe.

On December 31, 2025, the Company’s estimated PUD reserves were approximately 77,764 MBoe, a 13,115 MBoe decrease over the reserve estimate at December 31, 2024 of 90,879 MBoe.

The following table includes the changes in PUD reserves for 2025 (in MBoe):

2 unchanged sentences

Extensions and discoveries

Sales of reserves-in-place

Ending proved undeveloped reserves on December 31, 2025

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data