HighPeak Energy has entered into a $1.2 billion loan credit agreement to refinance its debt in what the Midland Basin E&P said is one of the largest privately arranged financings for an independent producer.

The refinanced debt, which represents more than 50% of the company’s $2 billion market capitalization, comes after the company said in January it would explore “certain strategic alternatives to maximize shareholder value” up to and including a sale.

HighPeak Energy officials declined to say if the Fort Worth, Texas-based company is positioning itself for a transaction. They also declined to name their lenders and say how many there are.

“I can just say that it’s a broad group, mostly of a lot of energy experience,” HighPeak Vice President Ryan Hightower told Hart Energy.

The senior secured term loan credit agreement includes Texas Capital Bank as the administrative agent and Chambers Energy Management as the collateral agent, according to the HighPeak statement, which did not name other lenders.

RELATED

HighPeak Plans $135.5MM Stock Offering to Stave Off Liquidity Crunch

A portion of the new loan was used to fully repay senior notes due in February 2024 and November 2024 and to pay outstanding borrowings under its reserve-base credit facility.

Fitch Ratings affirmed HighPeak’s issuer default rating at ‘B’ on Sept. 15, the same day HighPeak announced the loan, and Ciaran Fingleton, a Fitch Ratings analyst, told Hart Energy the loan is viewed favorably.

“There’s no debt mature in the next year, so that’s positive, and the company has grown substantially. They’re up to 50,000 barrels per day” of production, Fingleton said. “They have returned to positive free cash flow. … They have enough money to keep operations going in the short term.”

The aggregate principal amount of $1.2 billion has a maturity date of September 2026.

HighPeak CFO Steven Tholen told Hart Energy the company is now moving into the second step of its refinancing.

“We put the term loan in place, and we are working on putting a super priority revolver in place for up to $100 million. … We anticipate that will be done in more or less the next 30 days, plus or minus,” Tholen said.

The HighPeak statement identified the revolver as a “super senior revolving credit facility.”

Comments