What caused HPK's significant earnings miss in Q4?

HighPeak Energy's (HPK) significant earnings miss in Q4 2024 can be attributed to several key factors:

1. **Lower-than-Expected Oil Prices**: HighPeak Energy's revenue fell short of expectations due to a 12% decrease in average realized commodity prices per barrel of oil equivalent, despite a 10% increase in daily sales volumes. This indicates that the company's revenue was negatively impacted by lower oil prices, which directly affect its earnings.
2. **Increased Depreciation, Depletion, and Amortization Expenses**: HighPeak Energy reported higher depreciation, depletion, and amortization expenses, which contributed to the decline in net income compared to the previous year. These expenses are a result of the company's ongoing operations and the depletion of its oil and gas reserves over time.
3. **Significant Loss on Derivative Instruments**: The company incurred a substantial loss on derivative instruments, which is a common practice in the energy sector to hedge against price risks. However, when oil prices fluctuate significantly, as they did in 2024, derivative instruments can result in significant losses.
4. **Increased Interest Expenses**: HighPeak Energy faced higher interest expenses, particularly due to increased borrowings for acquisitions and rental equipment investments. This increase in interest expenses further eroded the company's net income.

In summary, HPK's significant earnings miss in Q4 2024 was primarily caused by lower oil prices, increased depreciation and depletion expenses, significant losses on derivative instruments, and higher interest expenses. These factors combined to negatively impact the company's financial performance in the quarter.