Battalion Oil Corp 10-Q for FY2024 Q1

Battalion Oil Corp (BATL)

10-Q 2024-05-15 For: 2024-03-31

Added on April 10, 2026

About this 10-Q

Battalion Oil Corp filed this 10-Q on May 15, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $49.87M; down 23.4% from $65.14M a year earlier
Net loss: $31.2M; compared with net income of $22.81M a year earlier
Diluted EPS: -$2.24; compared with $1.28 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 March 31, 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 Months Ended March 31, 2024 and 2023	5
	Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2024 and December 31, 2023	6
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2024 and the Year Ended December 31, 2023	7
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 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	26
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	36
ITEM 4.	Controls and Procedures	37

PART II	OTHER INFORMATION
ITEM 1.	Legal Proceedings	38
ITEM 1A.	Risk Factors	38
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
ITEM 3.	Defaults Upon Senior Securities	38
ITEM 4.	Mine Safety Disclosures	38
ITEM 5.	Other Information	38
ITEM 6.	Exhibits	39
Signatures		41


	Three Months Ended
	March 31,
	2024		2023
Operating revenues:
Oil, natural gas and natural gas liquids sales:
Oil	$	42,429	$	54,215
Natural gas		2,047		2,900
Natural gas liquids		5,056		7,158
Total oil, natural gas and natural gas liquids sales		49,532		64,273
Other		338		869
Total operating revenues		49,870		65,142

Operating expenses:
Production:
Lease operating		11,586		11,691
Workover and other		888		1,335
Taxes other than income		2,991		3,190
Gathering and other		17,286		16,517
General and administrative		4,071		5,137
Depletion, depreciation and accretion		13,025		16,148
Total operating expenses		49,847		54,018
Income from operations		23		11,124

Other income (expenses):
Net (loss) gain on derivative contracts		(24,187)		19,473
Interest expense and other		(7,039)		(7,786)
Total other (expenses) income		(31,226)		11,687
(Loss) income before income taxes		(31,203)		22,811
Income tax benefit (provision)		—		—
Net (loss) income	$	(31,203)	$	22,811
Series A preferred dividends		(5,632)		(1,492)
Net (loss) income available to common stockholders	$	(36,835)	$	21,319

Net (loss) income per share of common stock available to common stockholders:
Basic	$	(2.24)	$	1.29
Diluted	$	(2.24)	$	1.28
Weighted average common shares outstanding:
Basic		16,457		16,393
Diluted		16,457		16,535


	March 31, 2024		December 31, 2023
Current assets:
Cash and cash equivalents	$	48,941	$	57,529
Accounts receivable, net		25,987		23,021
Assets from derivative contracts		7,633		8,992
Restricted cash		91		90
Prepaids and other		919		907
Total current assets		83,571		90,539
Oil and natural gas properties (full cost method):
Evaluated		776,504		755,482
Unevaluated		58,909		58,909
Gross oil and natural gas properties		835,413		814,391
Less: accumulated depletion		(458,604)		(445,975)
Net oil and natural gas properties		376,809		368,416
Other operating property and equipment:
Other operating property and equipment		4,648		4,640
Less: accumulated depreciation		(1,979)		(1,817)
Net other operating property and equipment		2,669		2,823
Other noncurrent assets:
Assets from derivative contracts		3,898		4,877
Operating lease right of use assets		890		1,027
Other assets		20,780		17,656
Total assets	$	488,617	$	485,338

Current liabilities:
Accounts payable and accrued liabilities	$	63,117	$	66,525
Liabilities from derivative contracts		28,764		17,191
Current portion of long-term debt		55,106		50,106
Operating lease liabilities		614		594
Total current liabilities		147,601		134,416
Long-term debt, net		126,821		140,276
Other noncurrent liabilities:
Liabilities from derivative contracts		21,907		16,058
Asset retirement obligations		17,866		17,458
Operating lease liabilities		329		490
Other		11,156		2,084
Commitments and contingencies (Note 8)
Temporary equity:
Series A redeemable convertible preferred stock: 118,000 shares and 98,000 shares		131,624		106,535
of $0.0001 par value authorized, issued and outstanding as of March 31, 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 March 31, 2024 and
December 31, 2023		2		2
Additional paid-in capital		315,507		321,012
Accumulated deficit		(284,196)		(252,993)
Total stockholders' equity		31,313		68,021
Total liabilities, temporary equity and stockholders' equity	$	488,617	$	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 income	—		—		—		(31,203)		(31,203)
Deemed dividends for Series A 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


	March 31, 2024		December 31, 2023
Term loan credit facility	$	190,000	$	200,000
Other		188		215
Total debt (Face Value)		190,188		200,215
Less:
Current portion of long-term debt⁽¹⁾		(55,106)		(50,106)
Other⁽²⁾		(8,261)		(9,833)
Long-Term Debt, net	$	126,821	$	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%


	March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Assets from commodity-based derivative contracts	$	—	$	11,531	$	—	$	11,531

Liabilities
Liabilities from commodity-based derivative contracts	$	—	$	50,671	$	—	$	50,671


	Change of Control
	Call Option
Balance at December 31, 2023	$	2,084
Change in fair value		(928)
Balance at March 31, 2024	$	1,156


Balance sheet location	March 31, 2024		December 31, 2023		Balance sheet location	March 31, 2024		December 31, 2023
Current assets	$	7,633	$	8,992	Current liabilities	$	(28,764)	$	(17,191)
Other noncurrent assets		3,898		4,877	Other noncurrent liabilities		(21,907)		(16,058)
	$	11,531	$	13,869		$	(50,671)	$	(33,249)


	Location of net (loss) gain	Three Months Ended
	on derivative contracts on	March 31,
Type	Statement of Operations	2024		2023
Commodity derivative contracts:
Unrealized (loss) gain	Other income (expenses)	$	(19,761)	$	21,004
Realized loss	Other income (expenses)		(4,426)		(1,531)
Total net (loss) gain		$	(24,187)	$	19,473


Instrument		2024		2025		2026		2027
Crude oil:
Fixed-price swap:
Total volumes (Bbls)		1,335,277		1,435,236		1,029,685		786,989
Weighted average price	$	63.50	$	61.77	$	63.59	$	61.87
Basis swap:
Total volumes (Bbls)		1,337,833		1,451,319		1,036,713		791,105
Weighted average price	$	0.27	$	0.25	$	0.05	$	0.44
WTI NYMEX roll:
Total volumes (Bbls)		1,323,220		1,451,319		1,036,713		791,105
Weighted average price	$	0.25	$	0.13	$	(0.01)	$	(0.03)
Natural gas:
Fixed-price swap:
Total volumes (MMBtu)		4,316,091		4,326,712		2,431,053		2,135,815
Weighted average price	$	3.52	$	3.42	$	3.96	$	3.71
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
Weighted average price (put)	$	3.48	$	3.72	$	3.70	$	3.66
Basis swap:
Total volumes (MMBtu)		5,184,315		5,950,283		4,455,681		3,472,222
Weighted average price	$	(0.87)	$	(0.68)	$	(0.77)	$	(0.73)


	Derivative Assets				Derivative Liabilities
Offsetting of Derivative Assets and Liabilities	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023

Gross Amounts - Consolidated Balance Sheet	$	11,531	$	13,869	$	(50,671)	$	(33,249)
Amounts Not Offset - Consolidated Balance Sheet		(11,531)		(13,218)		11,531		13,218
Net Amount	$	—	$	651	$	(39,140)	$	(20,031)


Liability for asset retirement obligations as of December 31, 2023	$	17,458
Accretion expense		234
Liabilities incurred		174
Liability for asset retirement obligations as of March 31, 2024		17,866


Smaller reporting company ☒	Emerging growth company ◻


Preferred Stock	Issuance Date	Shares	Cash Dividend Rate	PIK Dividend Rate	Conversion Price		Net Proceeds Received (in thousands)
Series A	28-Mar-23	25,000	14.50%	16.00%	$	9.03	$	24,400
Series A-1	6-Sep-23	38,000	14.50%	16.00%	$	7.63	$	37,100
Series A-2	15-Dec-23	35,000	14.50%	16.00%	$	6.21	$	34,100
Series A-3	27-Mar-24	20,000	14.50%	16.00%	$	6.83	$	19,500


	March 31, 2024		December 31, 2023
Accounts receivable, net:
Oil, natural gas and natural gas liquids revenues	$	22,298	$	19,802
Joint interest accounts		2,108		2,138
Other		1,581		1,081
	$	25,987	$	23,021
Prepaids and other:
Prepaids	$	532	$	490
Funds in escrow		346		345
Other		41		72
	$	919	$	907
Other assets (Non-current):
Investment in unconsolidated affiliate	$	1,007	$	1,283
Contract asset		18,454		15,062
Funds in escrow		558		552
Other		761		759
	$	20,780	$	17,656
Accounts payable and accrued liabilities:
Trade payables	$	21,689	$	24,915
Accrued oil and natural gas capital costs		11,730		15,337
Revenues and royalties payable		21,491		18,986
Accrued employee compensation		509		520
Accrued lease operating expenses		7,360		6,418
Other		338		349
	$	63,117	$	66,525


	Three Months Ended
	March 31,
In thousands (except per unit and per Boe amounts)	2024		2023
Operating revenues:
Oil	$	42,429	$	54,215
Natural gas		2,047		2,900
Natural gas liquids		5,056		7,158
Other		338		869
Operating expenses:
Production:
Lease operating		11,586		11,691
Workover and other		888		1,335
Taxes other than income		2,991		3,190
Gathering and other		17,286		16,517
General and administrative:
General and administrative		3,972		4,910
Stock-based compensation		99		227
Depletion, depreciation and accretion:
Depletion – Full cost		12,629		15,807
Depreciation – Other		162		155
Accretion expense		234		186
Other income (expenses):
Net (loss) gain on derivative contracts		(24,187)		19,473
Interest expense and other		(7,039)		(7,786)
Reorganization items, net		—		—
Gain (loss) on extinguishment of debt		—		—
Net (loss) income	$	(31,203)	$	22,811

Production:
Oil – MBbls		566		730
Natural Gas - MMcf		2,180		2,407
Natural gas liquids – MBbls		253		327
Total MBoe⁽¹⁾		1,182		1,458
Average daily production – Boe⁽¹⁾		12,989		16,200

Average price per unit ⁽²⁾:
Oil price - Bbl	$	74.96	$	74.27
Natural gas price - Mcf		0.94		1.20
Natural gas liquids price - Bbl		19.98		21.89
Total per Boe⁽¹⁾		41.91		44.08

Average cost per Boe:
Production:
Lease operating	$	9.80	$	8.02
Workover and other		0.75		0.92
Taxes other than income		2.53		2.19
Gathering and other		14.62		11.33
General and administrative:
General and administrative		3.36		3.37
Stock-based compensation		0.08		0.16
Depletion		10.68		10.84


2.1		Agreement and Plan of Merger, dated as of December 14, 2023, by and among the Battalion Oil Corporation, Fury Resources, Inc. and San Jacinto Merger Sub, Inc. (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 Battalion Oil Corporation, Fury Resources, Inc. and San Jacinto Merger Sub, Inc. (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 Battalion Oil Corporation, Fury Resources, Inc. and San Jacinto Merger Sub, Inc. (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 Battalion Oil Corporation, Fury Resources, Inc. and San Jacinto Merger Sub, Inc. (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 Battalion Oil Corporation, Fury Resources, Inc. and San Jacinto Merger Sub, Inc. (Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K filed April 17, 2024).
2.2		Limited Guarantee, dated February 6, 2024, by Abraham Mirman in favor of Battalion Oil Corporation (Incorporated by reference to Exhibit 2.2 of our Current Report on Form 8-K filed February 6, 2024).
2.2.1		Amended and Restated Limited Guarantee, dated April 16, 2024, by and between Battalion Oil Corporation and Abraham Mirman (Incorporated by reference to Exhibit 2.2 of our Current Report on Form 8-K filed April 17, 2024).
2.3		Limited Guarantee, dated April 16, 2024, by and between Battalion Oil Corporation and Abraham Mirman (Incorporated by reference to Exhibit 2.3 of our Current Report on Form 8-K filed April 17, 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).
3.1.1		Certificate of Designations of Series A-3 Redeemable Convertible Preferred Stock dated effective March 27, 2024 (Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed March 28, 2024).
3.1.2		Certificate of Designations of Series A-4 Redeemable Convertible Preferred Stock dated effective May 13, 2024 (Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed May 14, 2024).
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		Amended and Restated Senior Secured Credit Agreement dated as of November 24, 2021, by and among Battalion Oil Corporation, as holdings, Halcón Holdings LLC, as borrower, the subsidiary guarantors party thereto, Macquarie Bank Limited, as administrative agent, and the lenders party thereto (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed November 29, 2021).
10.1.1		Third Amendment to Amended and Restated Senior Secured Credit Agreement dated as of March 28, 2024, by and among Halcón Holdings, LLC, as borrower, Macquarie Bank Limited, as administrative agent and the lenders party hereto, the guarantors party hereto and Battalion Oil Corporation, as holdings (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed March 28, 2024).
10.2		Registration Rights Agreement, dated as of October 8, 2019, by and among Halcón Resources Corporation (now Battalion Oil Corporation) and each of the parties thereto, as investors (Incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed October 8, 2019).

10.2.1		Fourth Amendment to Registration Rights Agreement dated March 27, 2024, by and among Battalion Oil Corporation and each of the other parties thereto, as investors. (Incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed March 28, 2024).
10.2.2		Fifth Amendment to Registration Rights Agreement dated May 13, 2024, by and among Battalion Oil Corporation and each of the other parties thereto, as investors. (Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed May 14, 2024).
10.3		Purchase Agreement (Series A-3 Preferred Stock), dated March 27, 2024, by and among Battalion Oil Corporation and each of the purchasers set forth on Schedule A thereto. (Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed March 28, 2024).
10.4		Purchase Agreement (Series A-4 Preferred Stock), dated May 13, 2024, by and among Battalion Oil Corporation and each of the purchasers set forth on Schedule A thereto. (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed May 14, 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


May 15, 2024	By:	/s/ MATTHEW B. STEELE

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