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January 24, 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. 1 to Registration Statement on Form S-4
Filed January 10, 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 December 27,
2019 letter.
Amendment No. 1 to Registration Statement on Form S-4
Organizational Structure, page 14
1. We have reviewed the organizational charts that you provided in response
to prior
comment 2 and note that although you indicate HighPeak Energy, LP would
be
accounting for the acquisition of HighPeak Energy II, LP at fair value
because these
entities are not under common control, each appears to be held within a
series of
partnerships having general partners that are controlled ultimately by
the same
individuals. Please further explain how you have formulated your view,
including your
consideration of the guidance in FASB ASC 810-20-25. Please also
describe the
composition of the 99% investor groups for each partnership chain and
the extent of
common ownership by investors in each of these groups.
Jack Hightower
FirstNameEnergy, Inc.
HighPeak LastNameJack Hightower
Comapany NameHighPeak Energy, Inc.
January 24, 2020
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January 24, 2020 Page 2
FirstName LastName
Risk Factors
Risks Related to HighPeak Energy and the Business Combination
The A&R Charter will designate the Court of Chancery of the State of Delaware
as the sole and
exclusive forum, page 53
2. Please revise your disclosure to clarify the basis for your stated
belief that the exclusive
forum provision would apply to actions under the Securities Act in
light of the language
stating that the Court of Chancery of the State of Delaware will be
the sole and exclusive
forum for any derivative action or proceeding "as to which the DGCL
confers jurisdiction
upon the Court of Chancery."
3. We note your response to prior comment 4. Please expand your
disclosure to discuss your
exclusive forum provision in its entirety, including Section B of
Article Eighth of your
A&R Charter and the impact that such provision has on actions arising
under the
Securities Act or Exchange Act. In addition, please tell us how you
will inform investors
in future filings that your exclusive forum provision does not apply
to any actions arising
under the Securities Act or Exchange Act, as applicable.
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet at September
30, 2019,
page 65
4. We note that in response to prior comment 5 you included a tabular
presentation in note f
depicting an adjustment to reflect the acquisition of High Peak Assets
II at fair value.
Within the consideration paid section of the tabulation, you have
included a preliminary
fair value of HighPeak Energy common stock of $423.1 million which is
bifurcated
between the HighPeak entities. However, the related footnote (i) to
this entry specifies
that the preliminary fair value was determined by multiplying the
current fair value of
$10.36 by 87.5 million shares of HighPeak Energy common stock. Please
revise your
disclosure to reconcile the quantitative discrepancy and to clarify
how many of the 87.5
million shares were issued to the HPK Contributors in exchange for
HighPeak II.
5. We note your response to prior comment 7, indicating that the
commitments under the
forward purchase agreement are not finalized, and therefore the
related pro forma
adjustments do not presently meet the factually supportable criteria
described in Rule 11-
02(b)(6) of Regulation S-X. We understand that if these agreements are
not secured in
advance of requesting effectiveness of the registration statement, you
will revise the pro
forma information to remove these adjustments.
6. We note that in response to prior comment 9 you included a maximum
redemption
scenario that contemplates the maximum number of redemptions while
still meeting the
minimum $275 million available liquidity closing condition under the
HPK Business
Combination Agreement. Please expand your disclosure to include the
composition of
the minimum $275 million available liquidity under this scenario,
including the net cash,
any other assets that would be counted towards meeting this
requirement, and the amount
that would be utilized under your expected credit facilities. Further,
please include a
Jack Hightower
FirstNameEnergy, Inc.
HighPeak LastNameJack Hightower
Comapany NameHighPeak Energy, Inc.
January 24, 2020
Page 3
January 24, 2020 Page 3
FirstName LastName
similar analysis of available liquidity with respect to (i) the no
additional redemption
scenario, and (ii) the illustrative redemption scenario.
7. We note that in response to prior comment 10 you made certain
revisions in the notes to
the pro forma financial statements to separately identify the
components of the pro forma
adjustments. On the face of the pro forma financial statements, please
include the total for
each account and for each scenario presented. For example, for cash
and cash equivalents,
you should have totals of the historical balances and the pro forma
adjustments for each
scenario.
8. We note that in response to prior comment 11 your clarified that you
have a pro forma
adjustment to cash of $37.8 million associated with expected
additional investments by
the HPK Contributors. Please expand your disclosure to clarify how you
determined that
this adjustment meets the factually supportable criteria described in
Rule 11-02(b)(6) of
Regulation S-X. Please clarify whether you have a written agreement
that establishes the
amounts and timing and address any uncertainty.
Proposal No. 1 - The Business Combination Proposal
Background of the Business Combination, page 79
9. We note your response to our prior comment 20 and reissue the comment
in part. Please
revise to explain how the Deal Team determined the initial proposed
enterprise value for
the combined company of $1.9 billion. In addition, we note that on
November 6, 2019,
the Pure Special Committee met to discuss a revised three-year
financial model based on a
revised pro forma enterprise value of $1.615 billion. Please revise to
discuss why the
initial proposed enterprise value was reduced to this amount for this
financial model.
10. Please expand your disclosure to describe and discuss the illustrative
and preliminary
financial analysis of the net asset value, selected precedent
transactions and selected
publicly traded companies and any related assumptions that the
financial advisor
discussed with the Pure Special Committee on November 3, 2019 and
November 21,
2019. Please also discuss and quantify as appropriate the impact that
the failure to raise
the assumed debt and equity capital raises underlying such analysis
could have on the
financial forecast of the combined company and, potentially, on the
pro forma enterprise
value as such capital raises were not in place at execution of the
definitive documents for
the proposed business combination. As previously stated in comment 21,
we note the
Pure Special Committee and Pure board consulted with its financial
advisor in approving
the terms and conditions of the Business Combination and recommending
approval of
Pure's Stockholders despite electing not to seek a fairness opinion.
We also note you
disclose on page 26 that HighPeak Energy is currently pursuing the
PIPE Investment and
seeking to finalize the terms of the RBL facility, but no assurance
can be given that
HighPeak Energy will be successful in whole or in part in obtaining
such funding.
11. We note your revised disclosure in response to our prior comment 21
and reissue the
comment in part. Please revise to explain how the Pure Special
Committee determined
Jack Hightower
HighPeak Energy, Inc.
January 24, 2020
Page 4
that this business combination was fair to Pure's stockholders from a
financial point of
view.
Unaudited Prospective Financial, Operating and Reserve Information, page 111
12. Expand the tabular summary of the resource estimates as of December 31,
2019 provided
on page 113 to additionally present the figures for the total proved
undeveloped PV-10
and the proved undeveloped net volumes in MMBoe.
Exhibits
13. Please file an opinion of counsel that also opines that the warrants
constitute a binding
obligation of the company. For guidance, please refer to Section II.B.1.f
of Staff Legal
Bulletin No. 19.
14. We note your response to prior comment 38. However, we also note that
Grenadier's oil
sales represent the majority of the company's revenues on a pro forma
basis and your
revised disclosure states that Grenadier sells all of the oil it produces
pursuant to its long-
term marketing agreement. We also note your disclosure on page 36 the
company expects
to sell it production to a relatively small number of customers and that
the company
cannot ensure it will continue to have ready access to suitable markets
for its future oil
and natural gas production. Please file the agreement as an exhibit.
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
contactJohn Hodgin, Petroleum Engineer, at (202) 551-3699. Please contact Irene
Barberena-
Meissner, Staff Attorney, at 202-551-6548 or Karina Dorin, Staff Attorney, at
202-551-3763
with any other questions.
Sincerely,
FirstName LastNameJack Hightower
Division of
Corporation Finance
Comapany NameHighPeak Energy, Inc.
Office of Energy &
Transportation
January 24, 2020 Page 4
cc: Taylor Landry, Esq.
FirstName LastName