Battalion Oil Corp 10-Q for FY2023 Q3

Battalion Oil Corp (BATL)

10-Q 2023-11-15 For: 2023-09-30

Added on April 10, 2026

About this 10-Q

Battalion Oil Corp filed this 10-Q on November 15, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $54.11M; down 45.4% from $99.15M a year earlier
Net loss: $53.8M; compared with net income of $105.89M a year earlier
Diluted EPS: -$3.50; compared with $6.42 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
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, 2023 and 2022	5
	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2023 and December 31, 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Nine Months Ended September 30, 2023 and the Year Ended December 31, 2022	7
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2023 and 2022	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	38
ITEM 4.	Controls and Procedures	38

PART II	OTHER INFORMATION
ITEM 1.	Legal Proceedings	39
ITEM 1A.	Risk Factors	39
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
ITEM 3.	Defaults Upon Senior Securities	39
ITEM 4.	Mine Safety Disclosures	39
ITEM 5.	Other Information	39
ITEM 6.	Exhibits	40
Signatures		41


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Operating revenues:
Oil, natural gas and natural gas liquids sales:
Oil	$	43,689	$	70,406	$	144,072	$	206,874
Natural gas		3,668		15,656		8,628		39,296
Natural gas liquids		6,078		12,644		18,893		35,234
Total oil, natural gas and natural gas liquids sales		53,435		98,706		171,593		281,404
Other		671		443		1,927		858
Total operating revenues		54,106		99,149		173,520		282,262

Operating expenses:
Production:
Lease operating		11,152		12,265		34,208		35,698
Workover and other		700		2,559		4,669		4,807
Taxes other than income		3,307		5,613		9,677		15,936
Gathering and other		15,512		16,663		48,857		47,787
General and administrative		3,192		4,498		13,572		14,071
Depletion, depreciation and accretion		13,426		13,615		44,287		36,436
Total operating expenses		47,289		55,213		155,270		154,735
Income from operations		6,817		43,936		18,250		127,527

Other income (expenses):
Net (loss) gain on derivative contracts		(53,687)		67,634		(29,741)		(88,134)
Interest expense and other		(6,929)		(5,682)		(24,245)		(13,202)
Total other (expenses) income		(60,616)		61,952		(53,986)		(101,336)
(Loss) income before income taxes		(53,799)		105,888		(35,736)		26,191
Income tax benefit (provision)		—		—		—		—
Net (loss) income	$	(53,799)	$	105,888	$	(35,736)	$	26,191
Series A preferred dividends		(3,863)		—		(6,352)		—
Net (loss) income available to common stockholders	$	(57,662)	$	105,888	$	(42,088)	$	26,191

Net (loss) income per share of common stock available to common stockholders:
Basic	$	(3.50)	$	6.48	$	(2.56)	$	1.60
Diluted	$	(3.50)	$	6.42	$	(2.56)	$	1.59
Weighted average common shares outstanding:
Basic		16,457		16,340		16,436		16,327
Diluted		16,457		16,483		16,436		16,496


	September 30, 2023		December 31, 2022
Current assets:
Cash and cash equivalents	$	42,590	$	32,726
Accounts receivable, net		27,177		37,974
Assets from derivative contracts		4,649		16,244
Restricted cash		90		90
Prepaids and other		786		1,131
Total current assets		75,292		88,165
Oil and natural gas properties (full cost method):
Evaluated		736,205		713,585
Unevaluated		62,649		62,621
Gross oil and natural gas properties		798,854		776,206
Less: accumulated depletion		(434,034)		(390,796)
Net oil and natural gas properties		364,820		385,410
Other operating property and equipment:
Other operating property and equipment		4,623		4,434
Less: accumulated depreciation		(1,653)		(1,209)
Net other operating property and equipment		2,970		3,225
Other noncurrent assets:
Assets from derivative contracts		2,022		5,379
Operating lease right of use assets		889		352
Other assets		10,768		2,827
Total assets	$	456,761	$	485,358

Current liabilities:
Accounts payable and accrued liabilities	$	59,417	$	100,095
Liabilities from derivative contracts		36,363		29,286
Current portion of long-term debt		45,106		35,067
Operating lease liabilities		513		352
Asset retirement obligations		—		225
Total current liabilities		141,399		165,025
Long-term debt, net		153,476		182,676
Other noncurrent liabilities:
Liabilities from derivative contracts		35,089		33,649
Asset retirement obligations		17,202		15,244
Operating lease liabilities		375		—
Other		1,554		4,136
Commitments and contingencies (Note 9)
Temporary equity:
Series A redeemable convertible preferred stock: 63,000 shares of $0.0001		66,834		—
par value authorized, issued and outstanding as of September 30, 2023
Stockholders' equity:
Common stock: 100,000,000 shares of $0.0001 par value authorized;
16,456,563 and 16,344,815 shares issued and outstanding as of
September 30, 2023 and December 31, 2022, respectively		2		2
Additional paid-in capital		326,511		334,571
Retained earnings (accumulated deficit)		(285,681)		(249,945)
Total stockholders' equity		40,832		84,628
Total liabilities, temporary equity and stockholders' equity	$	456,761	$	485,358


						Retained
				Additional		Earnings
	Common Stock			Paid-In		(Accumulated		Stockholders'
	Shares	Amount		Capital		Deficit)		Equity
Balances at December 31, 2022	16,345	$	2	$	334,571	$	(249,945)	$	84,628
Net income	—		—		—		22,811		22,811
Deemed dividends for Series A preferred stock	—		—		(1,492)		—		(1,492)
Long-term incentive plan vestings	159		—		—		—		—
Tax withholding on vesting of restricted stock units	(47)		—		(454)		—		(454)
Stock-based compensation	—		—		327		—		327
Balances at March 31, 2023	16,457		2		332,952		(227,134)		105,820
Net loss	—		—		—		(4,748)		(4,748)
Deemed dividends for Series A preferred stock	—		—		(997)		—		(997)
Stock-based compensation	—		—		(754)		—		(754)
Balances at June 30, 2023	16,457		2		331,201		(231,882)		99,321
Net loss	—		—		—		(53,799)		(53,799)
Deemed dividends for Series A preferred stock	—		—		(3,863)		—		(3,863)
Stock-based compensation	—		—		(827)		—		(827)
Balances at September 30, 2023	16,457	$	2	$	326,511	$	(285,681)	$	40,832


	September 30, 2023
Remaining period in 2023	$	196
2024		522
2025		261
Thereafter		—
Total operating lease payments		979
Less: discount to present value		91
Total operating lease liabilities		888
Less: current operating lease liabilities		513
Noncurrent operating lease liabilities	$	375


	September 30, 2023		December 31, 2022
Term loan credit facility	$	210,001	$	235,000
Other		241		190
Total debt (Face Value)		210,242		235,190
Less:
Current portion of long-term debt⁽¹⁾		(45,106)		(35,067)
Other⁽²⁾		(11,660)		(17,447)
Long-Term Debt, net	$	153,476	$	182,676


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, 2023
	Level 1		Level 2		Level 3		Total
Assets
Assets from commodity-based derivative contracts	$	—	$	6,671	$	—	$	6,671

Liabilities
Liabilities from commodity-based derivative contracts	$	—	$	71,452	$	—	$	71,452


	Change of Control
	Call Option
Balance at December 31, 2022	$	4,136
Change in fair value		(2,582)
Balance at September 30, 2023	$	1,554


Balance sheet location	September 30, 2023		December 31, 2022		Balance sheet location	September 30, 2023		December 31, 2022
Current assets	$	4,649	$	16,244	Current liabilities	$	(36,363)	$	(29,286)
Other noncurrent assets		2,022		5,379	Other noncurrent liabilities		(35,089)		(33,649)
	$	6,671	$	21,623		$	(71,452)	$	(62,935)


	Location of net gain (loss)	Three Months Ended				Nine Months Ended
	on derivative contracts on	September 30,				September 30,
Type	Statement of Operations	2023		2022		2023		2022
Commodity derivative contracts:
Unrealized gain (loss)	Other income (expenses)	$	(46,805)	$	102,112	$	(23,469)	$	23,911
Realized gain (loss)	Other income (expenses)		(6,882)		(34,478)		(6,272)		(112,045)
Total net gain (loss)		$	(53,687)	$	67,634	$	(29,741)	$	(88,134)


Instrument		2023		2024		2025		2026		2027
Crude oil:
Fixed-price swap:
Total volumes (Bbls)		462,580		1,840,894		1,370,321		1,002,223		442,887
Weighted average price	$	67.85	$	63.58	$	61.32	$	63.43	$	61.47
Basis swap:
Total volumes (Bbls)		461,603		1,840,274		1,370,321		1,002,223		442,887
Weighted average price	$	0.41	$	0.27	$	0.20	$	0.02	$	0.41
WTI NYMEX roll:
Total volumes (Bbls)		445,995		1,837,851		1,370,321		1,002,223		442,887
Weighted average price	$	0.50	$	0.27	$	0.13	$	(0.01)	$	0.01
Natural gas:
Fixed-price swap:
Total volumes (MMBtu)		874,211		4,442,234		3,969,413		2,174,383		459,650
Weighted average price	$	3.72	$	3.54	$	3.36	$	3.97	$	3.53
Two-way collar:
Total volumes (MMBtu)		1,082,869		2,610,639		1,651,321		2,063,812		1,355,000
Weighted average price (call)	$	5.21	$	5.08	$	5.12	$	5.26	$	3.53
Weighted average price (put)	$	3.76	$	3.67	$	3.72	$	3.70	$	5.57
Basis swap:
Total volumes (MMBtu)		1,957,080		7,052,822		5,602,178		4,238,195		1,814,650
Weighted average price	$	(0.86)	$	(0.87)	$	(0.68)	$	(0.77)	$	3.66


	Derivative Assets				Derivative Liabilities
Offsetting of Derivative Assets and Liabilities	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022

Gross Amounts - Consolidated Balance Sheet	$	6,671	$	21,623	$	(71,452)	$	(62,935)
Amounts Not Offset - Consolidated Balance Sheet		(6,671)		(20,997)		6,671		20,997
Net Amount	$	—	$	626	$	(64,781)	$	(41,938)


Smaller reporting company ☒	Emerging growth company ◻


	Nine Months Ended
	September 30,
	2023			2022
Lease cost
Operating lease costs	$	381		$	294
Short-term lease costs		1,022			6,112
Total lease costs	$	1,403		$	6,406

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	381		$	294
Weighted-average remaining lease term - operating leases		1.6	years		1.2	years
Weighted-average discount rate - operating leases		12.13	%		4.29	%


Liability for asset retirement obligations as of December 31, 2022	$	15,469
Accretion expense		561
Liabilities incurred		11
Liabilities settled		(112)
Revisions to estimate		1,273
Liability for asset retirement obligations as of September 30, 2023		17,202


	September 30, 2023		December 31, 2022
Accounts receivable, net:
Oil, natural gas and natural gas liquids revenues	$	24,571	$	33,980
Joint interest accounts		1,668		3,201
Other		938		793
	$	27,177	$	37,974
Prepaids and other:
Prepaids	$	347	$	715
Funds in escrow		344		341
Other		95		75
	$	786	$	1,131
Other assets (Non-current):
Investment in unconsolidated affiliate	$	1,435	$	1,561
Contract asset		8,050		—
Funds in escrow		545		527
Other		738		739
	$	10,768	$	2,827
Accounts payable and accrued liabilities:
Trade payables	$	16,256	$	42,919
Accrued oil and natural gas capital costs		12,353		19,911
Revenues and royalties payable		21,016		26,759
Accrued employee compensation		1,548		2,300
Accrued lease operating expenses		8,059		8,005
Other		185		201
	$	59,417	$	100,095


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-1 Redeemable Convertible Preferred Stock dated effective September 6, 2023 (Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed September 7, 2023).
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		Second Amendment to Amended and Restated Senior Secured Credit Agreement dated as of November 14, 2022, 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 10.1.1 of our Quarterly Report on Form 10-Q filed November 14, 2022).
10.2		Purchase Agreement, dated September 6, 2023, 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 September 7, 2023).
10.3		Second Amendment to Registration Rights Agreement dated September 6, 2023, by and among Battalion Oil Corporation and each of the parties thereto, as investors (Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed September 7, 2023).
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 15, 2023	By:	/s/ MATTHEW B. STEELE
	Name:	Matthew B. Steele
	Title:	Chief Executive Officer
	(Principal Executive Officer and Principal Financial Officer)