Corporate M&A

Pure SPAC and HighPeak Energy Complete Merger

By Shivangi Jain
August 25, 2020
2 minutes read
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NASDAQ-listed Special Purpose Acquisition Company (SPAC) Pure Acquisition Corp. and HighPeak Energy Inc. have announced the closing of their business combination, which includes the acquisition of the oil and gas assets of HighPeak Energy LP and HighPeak Energy II LP.

In May last year, Pure entered into a business combination agreement with HighPeak Energy, a wholly-owned subsidiary of Pure formed to effect the business combination, and certain affiliates of HighPeak Energy Partners LP (the HighPeak Funds). Pursuant to the agreement, a wholly-owned subsidiary of HighPeak Energy was to merge with and into Pure, with Pure surviving as a wholly-owned subsidiary of HighPeak Energy. The financial terms of the transaction were subsequently amended several times due to the change in market conditions caused by the significant drop in oil prices since the beginning of this year.

The acquired assets include approximately 51,000 net acres located primarily in Howard County, Texas, with current net production of around 2,600 barrels of oil equivalent per day (boe/d) from legacy horizontal wells. HighPeak Energy expects to bring an additional 15 wells onstream by year-end, increasing production to between 10,000 and 12,000 boe/d in Q1-2021.

“We are excited to have completed the business combination and begin building production and cash flow with our development program.  Our initial focus will be bringing our 15 horizontal wells online this year and drilling an additional six wells by year-end” said Jack Hightower, HighPeak Energy’s Chairman & CEO.

“With oil prices stabilizing at $40 or more per barrel for about the last two months and the closing of the business combination, we expect to begin increasing our production throughout the remainder of the year and to begin drilling with a one-rig program,” added Michael L. Hollis, HighPeak Energy’s President.

Pure was formed in November 2017 as an energy-focused SPAC sponsored by Jack Hightower and HighPeak Pure Acquisition LLC, an affiliate of HighPeak Energy Partners, for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. Subsequently, in April 2018, Pure raised US$414 million through an initial public offering on the NASDAQ.

Jefferies acted as financial advisor to Pure for the transaction.

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