HighPoint Resources announced today an update to its 2020 development program, liquidity and hedges. Today’s update takes into account the recent significant decrease in crude oil prices, and includes the following:      

• All drilling and completion activity that is currently in progress will be completed, and all new planned activity will be deferred; this will not impact first half of 2020 production volumes
• Maintain flexibility to adjust capital program further based on market conditions
• Strong hedge position protects 2020 cash flow and has a current mark-to-market value of approximately $225 million
• Still anticipate generating positive free cash flow in 2020
• Anticipate reducing bank debt by approximately $45 million during the first quarter of 2020 and have no significant debt maturity before October 2022

Chief Executive Officer and President Scot Woodall commented, 
“Given the rapidly changing dynamics of crude oil prices our top priority is to preserve our balance sheet and liquidity in this lower crude price environment. As such, we have prudently decided to defer any new drilling and completion activity as we continue to monitor the present market environment. Although our hedge portfolio protects the returns of our 2020 investment program, we have elected to slow down activity and preserve liquidity. While this impacts near-term development activity, it is not expected to adversely affect anticipated production volumes for the first half of the year and will maintain our opportunity set for future development. Moreover, we are well positioned financially with a strong hedge portfolio covering over 90% of anticipated 2020 oil volumes at a WTI price of approximately $58.00 per barrel with an estimated mark-to-market value of approximately $225 million based on current WTI strip prices.”

The Company’s current liquidity position is approximately $370 million. This is an increase of approximately $35 million from December 31, 2019, as the Company has reduced borrowings on its credit facility to approximately $115 million with a further reduction of approximately $20 million anticipated by the end of the first quarter of 2020.

The Company plans to provide more comprehensive details and updated 2020 guidance as part of its first quarter earnings conference call in May and, as such, the 2020 guidance issued on February 26th should no longer be relied upon.

KeyFacts Energy Industry Directory: HighPoint Resources