Indonesia's sovereign fund backs HighPeak Energy in $450 million refinancing

Indonesia's sovereign wealth fund is putting money into a West Texas oil producer. HighPeak Energy said on Tuesday that Danantara and Jakarta-listed Energi Mega Persada will buy $450 million of new convertible preferred stock, cash that the company plans to combine with a new $800 million bank facility to pay off its $1.17 billion term loan.

The agreements were signed on Tuesday and have not closed. HighPeak expects the investment to close in the fourth quarter, and either side can terminate the agreements if they have not closed by December 31 unless the parties agree otherwise.

How the preferred stock works

A Danantara subsidiary, PT Danantara Energy International, agreed to buy 250,000 preferred shares and an Energi Mega Persada subsidiary agreed to buy 200,000, each with a face value of $1,000, according to HighPeak's filing with the Securities and Exchange Commission. The shares never mature.

The dividend climbs over time. For the first two years HighPeak pays 6% a year in cash, or 7.5% if it pays in kind rather than cash. From the second to the fifth anniversary the rates rise to 7.5% in cash or 9% in kind, and after that the rate is 10%.

HighPeak has two ways out after three years. It can redeem the stock for cash at a price that, together with cash dividends, gives the investors a 10% annual return, or force conversion if its shares trade above 150% of the conversion price, or $14.25, for 30 of 40 trading days.

Each investor gets to nominate one director, and the board will grow by two seats when the deal closes. The investors generally cannot sell the preferred stock for two years and have agreed to a two-year standstill.

Swapping expensive debt

The money is aimed at a loan HighPeak took on in September 2023, when it borrowed $1.2 billion under a term loan agreement with Texas Capital Bank as administrative agent. The loan charges interest at the secured overnight financing rate plus 7.5 percentage points, according to HighPeak's latest quarterly report. Interest expense was $71 million in the first half of 2026.

In August 2025 HighPeak pushed the loan's maturity out to September 30, 2028, and put off $30 million quarterly principal payments until September 30, 2026. The balance was $1.2 billion at the end of June, and HighPeak put it at $1.17 billion on Tuesday.

Under the purchase agreements, most of the $450 million must go toward repaying that debt and the rest toward working capital. The new reserve-based credit facility, committed by Citibank and Fifth Third, is expected to start with an $800 million borrowing base and commitments, though the final amount available depends on the banks' assessment of HighPeak's reserves.

"This comprehensive refinancing will materially strengthen our balance sheet, significantly reduce our financing burden and enhance our ability to generate long-term value for shareholders," Michael Hollis, HighPeak's chief executive, said in the release. He said the deal should "materially reduce our annual interest expense," but the company did not put a figure on the savings.

The refinancing comes as HighPeak's output shrinks. Sales volumes averaged 45,285 barrels of oil equivalent a day in the second quarter, down 7% from a year earlier, which the company attributed to less drilling and natural decline. Higher prices cushioned that drop: its realized crude price before hedging rose to $98.82 a barrel from $63.74.

Who is buying in

Danantara manages about $900 billion of assets and oversees about 50 Indonesian state-owned companies. Its chief investment officer, Pandu Sjahrir, said in June 2025 that U.S. energy was a possible target for its overseas money. "So why not own a foreign oil company and buy from ourselves?" he said, noting that Indonesia imports crude from the United States, The Business Times reported. In April he said the fund planned to deploy about $14 billion this year and that there would probably be "a bias towards energy security."

Energi Mega Persada is an Indonesian oil and gas producer. HighPeak said the deal gives both investors exposure to its acreage, drilling locations and infrastructure in the Midland Basin, part of the Permian. Barclays advised Danantara and Citigroup Global Markets Singapore advised Energi Mega Persada.

What it means for shareholders

HighPeak closed Monday at $8.09, up 3.1%, giving it a market value of about $1.02 billion, so the preferred issue equals roughly 44% of the company's equity value.

The investors can convert into common stock at $9.50 a share. That is about 17% above Monday's close and above the stock's 52-week high of $9.13. Full conversion of the face amount would create about 47.4 million new shares, equal to about 37% of the 126.45 million shares HighPeak had outstanding in August, or about 27% of the enlarged total, by TickerGrove's calculation. Danantara's piece would convert into about 26.3 million shares and Energi Mega Persada's into about 21.1 million.

For common shareholders, the trade is lower interest costs once the deal closes against a much larger share count later if the stock climbs past $9.50.