S&P assigns B to HighPeak, B+ to notes

S&P said it preliminarily assigned a B issuer rating to HighPeak Energy Inc. and preliminary B+ and 2 recovery ratings to its planned $575 million of senior unsecured notes. The outlook is stable.

“Our preliminary rating reflects our expectation that HighPeak will use net proceeds from its debt offering to refinance its existing $475 million of senior notes and reduce outstanding borrowings under its credit facility. The preliminary rating on the company reflects the high concentration of liquids in its production and reserves base, which provides an uplift to profitability; its low leverage; and the company's expected growth trajectory.

“HighPeak expects to increase production to approximately 45,000 barrels of oil equivalent per day (boe/d) to 50,000 boe/d in 2023 from 26,000 boe/d in 2022,” S&P said in a press release.

In explaining the stable outlook, S&P noted “Over the next 12 months we expect FFO to debt to average above 60% while debt to EBITDA averages about 1x.” The outlook also considers that HighPeak will refinance its credit facility before it is due on Saturday.

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