View:
United States securities and exchange commission logo
July 16, 2020
Jack Hightower
Chairman and Chief Executive Officer
HighPeak Energy, Inc.
421 W. 3rd Street, Suite 1000
Fort Worth, TX 76102
Re: HighPeak Energy,
Inc.
Amendment No. 3 to
Registration Statement on Form S-4
Filed July 2, 2020
File No. 333-235313
Dear Mr. Hightower:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our May
29, 2020 letter.
Amendment No. 3 to Registration Statement on Form S-4
Questions and Answers About the Proposals for Pure Stockholders
Why is Pure providing its stockholders with the opportunity to vote on
the business
combination?, page xviv
1. We note you disclose
that Pure will not consummate the business combination unless the
Business Combination
Proposal is approved at the special meeting. Please expand your
disclosure to clarify
that the vote is assured. In that regard, we note your disclosure on
page 53 that each of
Sponsor, Pure's officers and its directors own 64.7% of Pure's issued
and outstanding Class A
and Class B common stock and have agreed to vote such shares
in favor of the
business combination.
Jack Hightower
FirstName LastNameJack Hightower
HighPeak Energy, Inc.
Comapany
July NameHighPeak Energy, Inc.
16, 2020
July 16,
Page 2 2020 Page 2
FirstName LastName
Notes to Unaudited Pro Forma Condensed Combined Consolidated Financial
Statements
Pro Forma Adjustment (g), page 79
2. You disclose that pro forma adjustment g represents the net proceeds
of obtaining a $60
million Debt Facility with $30 million drawn down at Closing in the
Illustrative No
Additional Redemption Scenario and a $50 million Debt Facility with
$30 million drawn
down at Closing in the Maximum Redemption Scenario. You disclose on
pages vii and
30 that you have not yet obtained the anticipated financing and the
negotiations
continue. Please address the following:
Unless you secure the debt facility prior to requesting an
effective date for your
registration statement, remove the adjustments from your pro
forma presentation and
revise all related disclosures throughout your filing
accordingly. Refer to Rule 11-
02(b)(6) of Regulation S-X.
Please reconcile the adjustments to note g on the face of your
pro forma balance sheet
as of March 31, 2020 which reflect a $28.8 million drawdown under
the No
Additional Redemption Scenario and an incremental $200 K drawdown
under the
Maximum Redemption Scenario to the amounts disclosed on page 79
in note g.
Pro Form Adjustment (m), page 80
3. We note that pro forma adjustment m is presented net on the face of
the pro forma balance
sheet in the amount of $50 million, without further quantitative
details in the notes. You
include qualitative disclosure on page 80 regarding potential
redemptions, and equity and
debt offerings. Please address the following:
Separately quantify the components of this pro forma adjustment
in the related notes
and reconcile to the $50 million net adjustment.
Please refer to Rule 11-02(b)(6) of Regulation S-X and explain
to us how each of the
components comprising this pro forma balance sheet adjustment is
factually
supportable. Otherwise, please revise the pro forma financial
statements to remove
the adjustments.
Pro Forma Adjustment (l), page 80
4. You disclosed on page 80 that pro forma adjustment l represents the
issuance of 4,987,371
shares of HighPeak Energy common stock of PIPE Investment or Forward
Purchase
Investment for $49.9 million in proceeds in the Illustrative No
Additional Redemption
Scenario. You disclose on pages vii and 30 that you have not yet
obtained the anticipated
financing and negotiations continue. Please refer to Rule 11-02(b)(6)
of Regulation S-X
and explain to us how this pro forma balance sheet adjustment is
factually supportable.
Otherwise, please revise the pro forma financial statements to remove
the adjustment.
Jack Hightower
FirstName LastNameJack Hightower
HighPeak Energy, Inc.
Comapany
July NameHighPeak Energy, Inc.
16, 2020
July 16,
Page 3 2020 Page 3
FirstName LastName
Background of the Business Combination
New Business Combination Transaction, page 121
5. We note your revised disclosure in response to prior comment 7
reflects that the
contributed properties represent $750 million of the transaction's
$900 million equity
enterprise value. Please revise to explain how the Deal Team
determined that the
contributed properties had a value of $750 million.
6. We note your disclosure that the valuation analyses performed by the
Deal Team and
discussed with the Pure Special Committee included an analysis of
estimated transaction
metrics for recent comparable transactions in HighPeak Energy s
areas of operation.
Please disclose these transactions and the transaction metrics implied
by this analysis,
including the financial data relating to the transactions used to
derive the transaction
metrics, and the corresponding metrics applied to HighPeak Energy in
this analysis.
7. We note your revisions in response to our prior comment 6. In this
regard, we note your
disclosure that the Deal Team provided the Pure Special Committee with
additional
comparable company analyses which were provided as forecasted EBITDAX,
enterprise
value to EBITDAX multiples and net debt to EBITDAX multiples in
addition to the
operating margins of the peer group then included in the Investor
Presentation. We
further note your disclosure that the multiple the Deal Team had
applied to HighPeak
Energy s forecasted EBITDAX was still within the range of the
estimated enterprise
multiples of HighPeak Energy s peer set in the updated comparable
company analysis for
the first twelve (12) months following the business combination and
also still substantially
below the enterprise multiples of HighPeak Energy s updated peer set
for 2021. Please
disclose the names of the companies selected for this analysis,
including the updated peer
set for 2021, and explain in further detail how analyst forecasts were
utilized in the
selection criteria as well as the range of enterprise multiples
implied by this analysis,
including the financial data related to these companies used to derive
these ranges. Please
also disclose the corresponding multiples applied to HighPeak Energy
in this analysis.
8. You disclose that the updated investor presentation the Deal Team
provided the Pure
Special Committee on May 2, 2020 included anticipated future cash
flows attributable to
the proved reserve estimates shown in the Deal Team s internal Roll
Forward Report.
Please clarify whether these anticipated future cash flows included
cash flows attributable
to unproved resources.
Unaudited Prospective Financial, Operating and Reserve Information, page 125
9. Expand the disclosure accompanying Cases 1, 2 and 3 on pages 126
through 129 to
clarify, if true, that the percentages disclosed in footnote 2 as
applied to the proved
developed, proved undeveloped and unproved volumes in the referenced
CG&A reserves
report and the percentages disclosed in footnote 3 as applied to the
proved developed,
proved undeveloped and unproved volumes in the referenced internal
reserves report,
respectively, result in separate but identical estimates of the
Total Production as
Jack Hightower
FirstName LastNameJack Hightower
HighPeak Energy, Inc.
Comapany
July NameHighPeak Energy, Inc.
16, 2020
July 16,
Page 4 2020 Page 4
FirstName LastName
presented. If this is not the case, expand your disclosure to explain
why you utilized
information from two separate reserve reports with different effective
dates, e.g. the
CG&A reserves report as of December 31, 2019 and the internal reserves
report as of
March 31, 2020, and aggregated the results to arrive at the single
figure presented in the
line item Total Production.
10. Expand the disclosure preceding Cases 1, 2 and 3 on page 126 to
explain why the
production volumes include only a portion or percentage of the proved
developed, proved
undeveloped and unproved volumes for each of the periods presented and
why these
percentages change from period to period and from reserve category to
reserve category.
For example footnote 2 to Case 1 on page 126 discloses that the
volumes presented
include 14% and 3% of proved developed volumes and 11% and 2% of
proved
undeveloped volumes for the twelve months ending July 31, 2021 and
2022, respectively.
Furthermore, footnote 2 to Case 1 on page 127 discloses that the
volumes presented
include 43%, 6% and 2% of proved developed volumes and 33%, 5% and 2%
of proved
undeveloped volumes for the years ending 2020, 2021 and 2022,
respectively.
11. Disclosure in footnote 1 on page 131 accompanying the presentation of
the Resource
Estimates as of March 31, 2020 indicates that management has not
differentiated
between probable and possible reserves for purposes of these
estimates. If true, expand
the disclosure in footnote 1 to additionally describe the uncertainty
relating to probable
reserves in conjunction with your disclosure of unproved or
resource volumes.
Exhibits
12. We note your response to our prior comment 23. Please ensure your
exclusive forum
provision in your Warrant Agreement clearly states that it will not
apply to actions arising
under the Securities Act or Exchange Act.
13. We note that Section 5.4(b) of your Form of Public Contingent Value
Rights Agreement
filed as Exhibit 4.5 provides that each of the parties irrevocably
agrees that any legal
action or proceeding arising out of or relating to the Agreement
brought by any party or its
Affiliates or brought by any third party beneficiary thereof,
including any CVR Holder
against any other party or its Affiliates, shall be brought and
determined in the Court of
Chancery of the State of Delaware, provided, that if jurisdiction is
not then available in
such court, then any such legal action or proceeding may be brought in
any federal court
located in the State of Delaware or any other Delaware state court. We
further note that
each of the parties and any third party beneficiary bringing a claim
thereunder irrevocably
submits to the jurisdiction of such courts and that each of the
parties agrees not to and no
third party beneficiary shall be permitted to commence any action,
suit or proceeding
relating thereto except in such courts. If this provision requires
investors in this offering
to bring any such action, proceeding or claim in the Court of Chancery
of the State of
Delaware or federal court located in the State of Delaware or any
other Delaware state
court, please disclose such provision in your registration statement,
and disclose whether
this provision applies to actions arising under the Securities Act or
Exchange Act. If the
Jack Hightower
HighPeak Energy, Inc.
July 16, 2020
Page 5
provision applies to actions arising under the Securities or Exchange
Act, please also add
related risk factor disclosure regarding the impact of the provision on
the rights of
investors and any uncertainty about enforceability. If this provision
does not apply to
actions arising under the Securities Act or Exchange Act, please ensure
that the provision
states this clearly.
14. We note that Section 5.4(c) of your Form of Public Contingent Value
Rights Agreement
includes a waiver of the right to jury trial. If this provision requires
investors in this
offering to waive their right to jury trial, please disclose this
provision in your registration
statement and disclose whether it applies to claims under the federal
securities laws. If the
provision applies to claims under the federal securities laws, please
also add related risk
disclosure regarding the impact of the provision on the rights of
investors and any
uncertainty about enforceability. In addition, please clarify whether
purchasers of CVRs
in a secondary transaction would be subject to the waiver of the right to
jury trial. If this
provision does not apply to actions arising under the federal securities
laws, please ensure
that the provision states this clearly.
15. We note you disclose on page vii that you expect your Debt Facility will
be committed
and substantially negotiated prior to the effectiveness of this proxy
statement/prospectus
and in effect at the closing. Please file your Form of Debt Facility as
an exhibit when
available.
You may contact Joseph Klinko, Staff Accountant, at 202-551-3824 or John
Cannarella,
Staff Accountant, at 202-551-3337 if you have questions regarding comments on
the financial
statements and related matters. For questions regarding engineering comments,
you may contact
John Hodgin, Petroleum Engineer, at (202) 551-3699. Please contact Irene
Barberena-Meissner,
Staff Attorney, at 202-551-6548 or Karina Dorin at 202-551-3763 with any other
questions.
Sincerely,
FirstName LastNameJack Hightower
Division of
Corporation Finance
Comapany NameHighPeak Energy, Inc.
Office of Energy
& Transportation
July 16, 2020 Page 5
cc: Taylor Landry, Esq.
FirstName LastName