Battalion Oil Corp 10-Q for FY2024 Q3

Battalion Oil Corp (BATL)

10-Q 2024-11-12 For: 2024-09-30

Added on April 10, 2026

About this 10-Q

Battalion Oil Corp filed this 10-Q on November 12, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $45.27M; down 16.3% from $54.11M a year earlier
Net income: $21.63M; compared with a net loss of $53.8M a year earlier
Diluted EPS: $0.34; compared with -$3.50 a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001	BATL	NYSE American


		PAGE
PART I	FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	5
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023	5
	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2024 and December 31, 2023	6
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2024 and the Year Ended December 31, 2023	7
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2024 and 2023	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	38
ITEM 4.	Controls and Procedures	39

PART II	OTHER INFORMATION
ITEM 1.	Legal Proceedings	40
ITEM 1A.	Risk Factors	40
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
ITEM 3.	Defaults Upon Senior Securities	40
ITEM 4.	Mine Safety Disclosures	40
ITEM 5.	Other Information	40
ITEM 6.	Exhibits	41
Signatures		42


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Operating revenues:
Oil, natural gas and natural gas liquids sales:
Oil	$	42,545	$	43,689	$	130,673	$	144,072
Natural gas		(2,588)		3,668		(2,660)		8,628
Natural gas liquids		5,145		6,078		15,704		18,893
Total oil, natural gas and natural gas liquids sales		45,102		53,435		143,717		171,593
Other		164		671		523		1,927
Total operating revenues		45,266		54,106		144,240		173,520

Operating expenses:
Production:
Lease operating		11,602		11,152		34,193		34,208
Workover and other		1,249		700		3,088		4,669
Taxes other than income		2,532		3,307		8,872		9,677
Gathering and other		12,442		15,512		41,854		48,857
General and administrative		3,854		3,192		11,265		13,572
Depletion, depreciation and accretion		12,533		13,426		38,771		44,287
Total operating expenses		44,212		47,289		138,043		155,270
Income from operations		1,054		6,817		6,197		18,250

Other income (expenses):
Net gain (loss) on derivative contracts		26,896		(53,687)		3,932		(29,741)
Interest expense and other		(6,322)		(6,929)		(19,809)		(24,245)
Total other (expenses) income		20,574		(60,616)		(15,877)		(53,986)
Income (loss) before income taxes		21,628		(53,799)		(9,680)		(35,736)
Income tax benefit (provision)		—		—		—		—
Net income (loss)	$	21,628	$	(53,799)	$	(9,680)	$	(35,736)
Preferred dividends		(9,321)		(3,863)		(23,539)		(6,352)
Undistributed earnings allocable to preferred stockholders		(6,732)		—		—		—
Net income (loss) available to common stockholders	$	5,575	$	(57,662)	$	(33,219)	$	(42,088)

Net income (loss) per share of common stock available to common stockholders:
Basic	$	0.34	$	(3.50)	$	(2.02)	$	(2.56)
Diluted	$	0.34	$	(3.50)	$	(2.02)	$	(2.56)
Weighted average common shares outstanding:
Basic		16,457		16,457		16,457		16,436
Diluted		16,523		16,457		16,457		16,436


	September 30, 2024		December 31, 2023
Current assets:
Cash and cash equivalents	$	29,834	$	57,529
Accounts receivable, net		21,057		23,021
Assets from derivative contracts		5,701		8,992
Restricted cash		91		90
Prepaids and other		890		907
Total current assets		57,573		90,539
Oil and natural gas properties (full cost method):
Evaluated		801,099		755,482
Unevaluated		51,895		58,909
Gross oil and natural gas properties		852,994		814,391
Less: accumulated depletion		(483,534)		(445,975)
Net oil and natural gas properties		369,460		368,416
Other operating property and equipment:
Other operating property and equipment		4,659		4,640
Less: accumulated depreciation		(2,303)		(1,817)
Net other operating property and equipment		2,356		2,823
Other noncurrent assets:
Assets from derivative contracts		7,197		4,877
Operating lease right of use assets		604		1,027
Other assets		20,833		17,656
Total assets	$	458,023	$	485,338

Current liabilities:
Accounts payable and accrued liabilities	$	61,621	$	66,525
Liabilities from derivative contracts		9,799		17,191
Current portion of long-term debt		50,106		50,106
Operating lease liabilities		522		594
Total current liabilities		122,048		134,416
Long-term debt, net		92,668		140,276
Other noncurrent liabilities:
Liabilities from derivative contracts		9,714		16,058
Asset retirement obligations		18,868		17,458
Operating lease liabilities		124		490
Other		10,761		2,084
Commitments and contingencies (Note 8)
Temporary equity:
Redeemable convertible preferred stock: 138,000 shares and 98,000 shares		168,856		106,535
of $0.0001 par value authorized, issued and outstanding as of
September 30, 2024 and December 31, 2023, respectively
Stockholders' equity:
Common stock: 100,000,000 shares of $0.0001 par value authorized;
16,456,563 shares issued and outstanding as of September 30, 2024 and
December 31, 2023		2		2
Additional paid-in capital		297,655		321,012
Accumulated deficit		(262,673)		(252,993)
Total stockholders' equity		34,984		68,021
Total liabilities, temporary equity and stockholders' equity	$	458,023	$	485,338


						Retained
				Additional		Earnings
	Common Stock			Paid-In		(Accumulated		Stockholders'
	Shares	Amount		Capital		Deficit)		Equity
Balances at December 31, 2023	16,457	$	2	$	321,012	$	(252,993)	$	68,021
Net loss	—		—		—		(31,203)		(31,203)
Deemed dividends for preferred stock	—		—		(5,632)		—		(5,632)
Stock-based compensation	—		—		127		—		127
Balances at March 31, 2024	16,457		2		315,507		(284,196)		31,313
Net loss	—		—		—		(105)		(105)
Deemed dividends for preferred stock	—		—		(8,586)		—		(8,586)
Stock-based compensation	—		—		48		—		48
Balances at June 30, 2024	16,457	$	2	$	306,969	$	(284,301)	$	22,670
Net income	—		—		—		21,628		21,628
Deemed dividends for preferred stock	—		—		(9,321)		—		(9,321)
Stock-based compensation	—		—		7		—		7
Balances at September 30, 2024	16,457	$	2	$	297,655	$	(262,673)	$	34,984


	September 30, 2024		December 31, 2023
Term loan credit facility	$	147,700	$	200,000
Other		132		215
Total debt (Face Value)		147,832		200,215
Less:
Current portion of long-term debt⁽¹⁾		(50,106)		(50,106)
Other⁽²⁾		(5,058)		(9,833)
Long-Term Debt, net	$	92,668	$	140,276


Period (after applicable borrowing date⁽¹⁾)			Premium
Months 0-12			Make-whole amount equal to 12 months of interest plus 2.00%
Months 13-24			2.00%
Months 25-36			1.00%
Months 37-48			0.00%


	September 30, 2024
	Level 1		Level 2		Level 3		Total
Assets
Assets from commodity-based derivative contracts	$	—	$	12,898	$	—	$	12,898

Liabilities
Liabilities from commodity-based derivative contracts	$	—	$	19,513	$	—	$	19,513


	Change of Control
	Call Option
Balance at December 31, 2023	$	2,084
Change in fair value		(1,323)
Balance at September 30, 2024	$	761


Balance sheet location	September 30, 2024		December 31, 2023		Balance sheet location	September 30, 2024		December 31, 2023
Current assets	$	5,701	$	8,992	Current liabilities	$	(9,799)	$	(17,191)
Other noncurrent assets		7,197		4,877	Other noncurrent liabilities		(9,714)		(16,058)
	$	12,898	$	13,869		$	(19,513)	$	(33,249)


	Location of net gain (loss)	Three Months Ended				Nine Months Ended
	on derivative contracts on	September 30,				September 30,
Type	Statement of Operations	2024		2023		2024		2023
Commodity derivative contracts:
Unrealized gain (loss)	Other income (expenses)	$	28,091	$	(46,805)	$	12,764	$	(23,469)
Realized (loss) gain	Other income (expenses)		(1,195)		(6,882)		(8,832)		(6,272)
Total net gain (loss)		$	26,896	$	(53,687)	$	3,932	$	(29,741)


Instrument		2024		2025		2026		2027		2028
Crude oil:
Fixed-price swap:
Total volumes (Bbls)		415,133		1,523,706		1,134,085		820,619		346,433
Weighted average price	$	62.14	$	62.08	$	63.72	$	61.95	$	61.45
Basis swap:
Total volumes (Bbls)		415,133		1,539,789		1,141,113		824,735		346,433
Weighted average price	$	0.23	$	0.28	$	0.13	$	0.46	$	0.69
WTI NYMEX roll:
Total volumes (Bbls)		415,133		1,539,789		1,141,113		824,735		346,433
Weighted average price	$	0.14	$	0.13	$	(0.01)	$	(0.03)	$	(0.28)
Natural gas:
Fixed-price swap:
Total volumes (MMBtu)		808,709		4,326,712		2,431,053		2,135,815		1,342,378
Weighted average price	$	3.32	$	3.42	$	3.96	$	3.71	$	3.35
Two-way collar:
Total volumes (MMBtu)		875,400		1,651,321		2,063,812		1,355,000		—
Weighted average price (call)	$	4.81	$	5.12	$	5.26	$	5.57	$	0.00
Weighted average price (put)	$	3.48	$	3.72	$	3.70	$	3.66	$	0.00
Basis swap:
Total volumes (MMBtu)		1,684,109		5,950,283		4,455,681		3,472,222		1,342,378
Weighted average price	$	(0.78)	$	(0.68)	$	(0.77)	$	(0.73)	$	(0.89)


	Derivative Assets				Derivative Liabilities
Offsetting of Derivative Assets and Liabilities	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023

Gross Amounts - Consolidated Balance Sheet	$	12,898	$	13,869	$	(19,513)	$	(33,249)
Amounts Not Offset - Consolidated Balance Sheet		(11,166)		(13,218)		11,166		13,218
Net Amount	$	1,732	$	651	$	(8,347)	$	(20,031)


Liability for asset retirement obligations as of December 31, 2023	$	17,458
Accretion expense		726
Liabilities incurred		200
Revisions to estimate		484
Liability for asset retirement obligations as of September 30, 2024		18,868


Smaller reporting company ☒	Emerging growth company ◻


Preferred Stock ⁽¹⁾	Issuance Date	Shares	Conversion Price		Net Equity Recorded ⁽²⁾ (in thousands)		Deemed Dividend Date	Cumulative Non-cash Deemed Dividends (²⁾ (in thousands)
Series A	March 28, 2023	25,000	$	9.03	$	23,541	March 31, 2023	$	10,687
Series A-1	September 6, 2023	38,000	$	7.63	$	36,941	September 30, 2023	$	11,596
Series A-2	December 15, 2023	35,000	$	6.21	$	34,006	December 31, 2023	$	7,657
Series A-3	March 27, 2024	20,000	$	6.83	$	19,397	March 31, 2024	$	3,362
Series A-4	May 13, 2024	20,000	$	6.42	$	19,385	June 30, 2024	$	2,284
		138,000			$	133,270		$	35,586


	September 30, 2024		December 31, 2023
Accounts receivable, net:
Oil, natural gas and natural gas liquids revenues	$	16,689	$	19,802
Joint interest accounts		2,141		2,138
Other		2,227		1,081
	$	21,057	$	23,021
Prepaids and other:
Prepaids	$	492	$	490
Funds in escrow		348		345
Other		50		72
	$	890	$	907
Other assets (Non-current):
Investment in unconsolidated affiliate	$	991	$	1,283
Contract asset		18,511		15,062
Funds in escrow		572		552
Other		759		759
	$	20,833	$	17,656
Accounts payable and accrued liabilities:
Trade payables	$	21,356	$	24,915
Accrued oil and natural gas capital costs		8,468		15,337
Revenues and royalties payable		23,864		18,986
Accrued employee compensation		866		520
Accrued lease operating expenses		6,839		6,418
Other		228		349
	$	61,621	$	66,525


2.1		Agreement and Plan of Merger, dated as of December 14, 2023, by and among the Company, Fury Resources, Inc. (“Fury”) and San Jacinto Merger Sub, Inc. (“Merger Sub”) (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed December 18, 2023).
2.1.1		First Amendment to Agreement and Plan of Merger, dated as of January 24, 2024, by and among the Company, Fury and Merger Sub (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed January 24, 2024).
2.1.2		Second Amendment to Agreement and Plan of Merger, dated as of February 6, 2024, by and among the Company, Fury and Merger Sub (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed February 6, 2024).
2.1.3		Third Amendment to Agreement and Plan of Merger, dated as of February 16, 2024, by and among the Company, Fury and Merger Sub (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed February 16, 2024).
2.1.4		Fourth Amendment to Agreement and Plan of Merger, dated April 16, 2024, by and among the Company, Fury and Merger Sub (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed April 17, 2024).
2.1.5		Fifth Amendment to Agreement and Plan of Merger, dated June 10, 2024, by and among the Company, Fury and Merger Sub (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed June 11, 2024).
2.1.6		Sixth Amendment to Agreement and Plan of Merger, dated September 11, 2024, by and among the Company, Fury and Merger Sub (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed September 11, 2024).
2.1.7		Seventh Amendment to Agreement and Plan of Merger, dated September 19, 2024, by and among the Company, Fury and Merger Sub (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed September 19, 2024).
3.1		Amended and Restated Certificate of Incorporation of Battalion Oil Corporation dated October 8, 2019, as amended by the Certificate of Amendment, dated January 21, 2020 (Incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-K filed March 25, 2020).
3.2		Seventh Amended and Restated Bylaws of Battalion Oil Corporation (Incorporated by reference to Exhibit 3.2 of our Current Report on Form 8-K filed January 27, 2020).
10.1		Fourth Amendment to Amended and Restated Senior Secured Credit Agreement dated as of August 23, 2024, by and among Halcón Holdings, LLC, as borrower, Macquarie Bank Limited, as administrative agent and the lenders party thereto, the guarantors party thereto and the Company, as holdings. (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed August 28, 2024).
10.2	*†	Merger Incentive Plan, adopted as of September 19, 2024.
31	*	Sarbanes-Oxley Section 302 certification of Principal Executive Officer and Principal Financial Officer
32	*	Sarbanes-Oxley Section 906 certification of Principal Executive Officer and Principal Financial Officer
101.INS	*	Inline XBRL Instance Document
101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
101.CAL	*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	Inline XBRL Taxonomy Extension Definition Document
101.LAB	*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	BATTALION OIL CORPORATION


November 12, 2024	By:	/s/ MATTHEW B. STEELE

	Name:	Matthew B. Steele
	Title:	Chief Executive Officer
		(Principal Executive Officer and Principal Financial Officer)


Employee	% COC shares
CEO	22.00%
Other Employees	68.00%
Other employees @CEO Discretion prior to Close	10.00%
	100.00%