A blank-check acquisition corporation will combine with HighPeak Energy and Grenadier Energy Partners II in what amounts to a shrewd workaround of the market’s stonewalling of upstream IPOs.

HighPeak and blank-check company Pure Acquisition Corp. share board members and are both led by CEO Jack D. Hightower.

The Nov. 27 deal, expected to close in first-quarter 2020, would create the largest pure-play northern Midland Basin E&P with a 73,000-net-acre position. The company said pro forma production of about 12,000 barrels of oil equivalent per day (boe/d) would more than double through 2020.

Hightower, a veteran energy leader who previously led Titan Exploration and Bluestem Energy Partners, said the transaction creates an unlevered company with one of the best onshore domestic opportunities for cash flow growth and single-well economics due to high oil content. “The HighPeak management team is confident in our ability to successfully implement the proposed development drilling program and achieve the anticipated growth profile of the company,” he said.

In an interview, HighPeak’s CFO Steven Tholen said that while the transaction partly involves related parties the Pure Acquisition special purpose acquisition corporation “looked at a lot of different [deals] throughout the U.S.”

“In the end we were unable to bring any of those to completion,” he said.

At the time Pure Acquisition was formed, the assets High Peak had accumulated to that point also would not have justified a deal, he said.

HighPeak Energy itself was created through the combination of two HighPeak entities backed by a combined $650 million from high-net worth individuals and management, Tholen said. 

The companies estimated the combined entity will generate 2020 EBITDA of about $430 million and have no debt on its balance sheet at closing.

Over the past two years, HighPeak has assembled a 50,000-acre position, largely in Howard County, Texas.

In April 2018, Pure Acquisition closed a $414 million upsized IPO.

Pure Acquisition was not barred from pursuing a combination with a business affiliated with board members. Its prospectus said that it did not have any specific business combination under consideration at the launch of its IPO, according to regulatory filings. Three of the board’s six members were independent and a committee of those members unanimously approved the transaction.

As part of the combination, Grenadier will be acquired for nearly 16 million shares of HighPeak Energy common stock and $465 million cash.

To fund working capital and a portion of the Grenadier purchase price, HighPeak said it is seeking to raise $200 million in the form of a private placement of shares. About $378 million in funding will come from Pure Acquisition.

“We are excited to reach this agreement with HighPeak Energy in the current market and help form a new strategic pure-play company focused on a key area of the Midland Basin,” Grenadier CEO Patrick Noyes said. “Our Grenadier team has performed exceptionally well in both executing on our active drilling and completion program along with supporting this key transaction with HighPeak. As a significant shareholder going forward, we are excited about the continued growth and upside potential of this combined asset.”

HighPeak said its inventory includes 7,254 net operated drilling locations.

A November HighPeak presentation said the company believes co‐development of the Lower Spraberry and Wolfcamp A is the optimal method for developing the asset. The company plans to begin pad development in 2020 with four operated rigs and projects it will produce 82% oil.

HighPeak Energy Combination



Net Acres


Gross/Net Operated Locations


Net Production (boe/d)


2020E EBITDA ($MM)

$430 million

2021E EBITDA ($MM)

$935 million

Source: HighPeak Energy

Jefferies LLC acted as financial adviser on the business combination agreement, and Hunton Andrews Kurth LLP acted as legal counsel to the special committee of the board of directors of Pure Acquisition. Vinson & Elkins LLP acted as legal counsel to the HighPeak Funds, and Latham & Watkins LLP acted as legal counsel to Jefferies LLC. Jefferies LLC served as financial adviser for Grenadier transaction, and Thompson & Knight LLP acted as legal counsel to the HighPeak Funds. Vinson & Elkins acted as legal counsel to Grenadier.