Battalion Oil Corp 10-Q for FY2024 Q2

Battalion Oil Corp (BATL)

10-Q 2024-08-14 For: 2024-06-30

Added on April 10, 2026

About this 10-Q

Battalion Oil Corp filed this 10-Q on August 14, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

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

Revenue: $49.1M; down 9.5% from $54.27M a year earlier
Net loss: $105K; compared with a net loss of $4.75M a year earlier
Diluted EPS: -$0.53; compared with -$0.35 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 June 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 Six Months Ended June 30, 2024 and 2023	5
	Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2024 and December 31, 2023	6
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2024 and the Year Ended December 31, 2023	7
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 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	26
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	37
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		40


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Operating revenues:
Oil, natural gas and natural gas liquids sales:
Oil	$	45,699	$	46,168	$	88,128	$	100,383
Natural gas		(2,119)		2,060		(72)		4,960
Natural gas liquids		5,503		5,657		10,559		12,815
Total oil, natural gas and natural gas liquids sales		49,083		53,885		98,615		118,158
Other		21		387		359		1,256
Total operating revenues		49,104		54,272		98,974		119,414

Operating expenses:
Production:
Lease operating		11,005		11,365		22,591		23,056
Workover and other		951		2,634		1,839		3,969
Taxes other than income		3,349		3,180		6,340		6,370
Gathering and other		12,126		16,828		29,412		33,345
General and administrative		3,340		5,243		7,411		10,380
Depletion, depreciation and accretion		13,213		14,713		26,238		30,861
Total operating expenses		43,984		53,963		93,831		107,981
Income from operations		5,120		309		5,143		11,433

Other income (expenses):
Net gain (loss) on derivative contracts		1,223		4,473		(22,964)		23,946
Interest expense and other		(6,448)		(9,530)		(13,486)		(17,316)
Total other (expenses) income		(5,225)		(5,057)		(36,450)		6,630
(Loss) income before income taxes		(105)		(4,748)		(31,307)		18,063
Income tax benefit (provision)		—		—		—		—
Net (loss) income	$	(105)	$	(4,748)	$	(31,307)	$	18,063
Preferred dividends		(8,586)		(997)		(14,218)		(2,489)
Net (loss) income available to common stockholders	$	(8,691)	$	(5,745)	$	(45,525)	$	15,574

Net (loss) income per share of common stock available to common stockholders:
Basic	$	(0.53)	$	(0.35)	$	(2.77)	$	0.87
Diluted	$	(0.53)	$	(0.35)	$	(2.77)	$	0.86
Weighted average common shares outstanding:
Basic		16,457		16,457		16,457		16,425
Diluted		16,457		16,457		16,457		16,520


	June 30, 2024		December 31, 2023
Current assets:
Cash and cash equivalents	$	54,430	$	57,529
Accounts receivable, net		24,894		23,021
Assets from derivative contracts		5,869		8,992
Restricted cash		91		90
Prepaids and other		821		907
Total current assets		86,105		90,539
Oil and natural gas properties (full cost method):
Evaluated		791,908		755,482
Unevaluated		51,896		58,909
Gross oil and natural gas properties		843,804		814,391
Less: accumulated depletion		(471,413)		(445,975)
Net oil and natural gas properties		372,391		368,416
Other operating property and equipment:
Other operating property and equipment		4,657		4,640
Less: accumulated depreciation		(2,141)		(1,817)
Net other operating property and equipment		2,516		2,823
Other noncurrent assets:
Assets from derivative contracts		4,614		4,877
Operating lease right of use assets		749		1,027
Other assets		20,916		17,656
Total assets	$	487,291	$	485,338

Current liabilities:
Accounts payable and accrued liabilities	$	76,456	$	66,525
Liabilities from derivative contracts		25,554		17,191
Current portion of long-term debt		52,606		50,106
Operating lease liabilities		634		594
Total current liabilities		155,250		134,416
Long-term debt, net		101,185		140,276
Other noncurrent liabilities:
Liabilities from derivative contracts		19,635		16,058
Asset retirement obligations		18,135		17,458
Operating lease liabilities		162		490
Other		10,719		2,084
Commitments and contingencies (Note 8)
Temporary equity:
Redeemable convertible preferred stock: 138,000 shares and 98,000 shares		159,535		106,535
of $0.0001 par value authorized, issued and outstanding as of
June 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 June 30, 2024 and
December 31, 2023		2		2
Additional paid-in capital		306,969		321,012
Accumulated deficit		(284,301)		(252,993)
Total stockholders' equity		22,670		68,021
Total liabilities, temporary equity and stockholders' equity	$	487,291	$	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


	June 30, 2024		December 31, 2023
Term loan credit facility	$	160,201	$	200,000
Other		162		215
Total debt (Face Value)		160,363		200,215
Less:
Current portion of long-term debt⁽¹⁾		(52,606)		(50,106)
Other⁽²⁾		(6,572)		(9,833)
Long-Term Debt, net	$	101,185	$	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%


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets
Assets from commodity-based derivative contracts	$	—	$	10,483	$	—	$	10,483

Liabilities
Liabilities from commodity-based derivative contracts	$	—	$	45,189	$	—	$	45,189


	Change of Control
	Call Option
Balance at December 31, 2023	$	2,084
Change in fair value		(1,365)
Balance at June 30, 2024	$	719


Balance sheet location	June 30, 2024		December 31, 2023		Balance sheet location	June 30, 2024		December 31, 2023
Current assets	$	5,869	$	8,992	Current liabilities	$	(25,554)	$	(17,191)
Other noncurrent assets		4,614		4,877	Other noncurrent liabilities		(19,635)		(16,058)
	$	10,483	$	13,869		$	(45,189)	$	(33,249)


	Location of net (loss) gain	Three Months Ended				Six Months Ended
	on derivative contracts on	June 30,				June 30,
Type	Statement of Operations	2024		2023		2024		2023
Commodity derivative contracts:
Unrealized (loss) gain	Other income (expenses)	$	4,434	$	2,332	$	(15,327)	$	23,336
Realized (loss) gain	Other income (expenses)		(3,211)		2,141		(7,637)		610
Total net (loss) gain		$	1,223	$	4,473	$	(22,964)	$	23,946


Instrument		2024		2025		2026		2027
Crude oil:
Fixed-price swap:
Total volumes (Bbls)		861,244		1,435,236		1,029,685		786,989
Weighted average price	$	62.78	$	61.77	$	63.59	$	61.87
Basis swap:
Total volumes (Bbls)		862,178		1,451,319		1,036,713		791,105
Weighted average price	$	0.26	$	0.25	$	0.05	$	0.44
WTI NYMEX roll:
Total volumes (Bbls)		850,708		1,451,319		1,036,713		791,105
Weighted average price	$	0.21	$	0.13	$	(0.01)	$	(0.03)
Natural gas:
Fixed-price swap:
Total volumes (MMBtu)		2,537,743		4,326,712		2,431,053		2,135,815
Weighted average price	$	3.48	$	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)		3,412,284		5,950,283		4,455,681		3,472,222
Weighted average price	$	(0.84)	$	(0.68)	$	(0.77)	$	(0.73)


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

Gross Amounts - Consolidated Balance Sheet	$	10,483	$	13,869	$	(45,189)	$	(33,249)
Amounts Not Offset - Consolidated Balance Sheet		(10,483)		(13,218)		10,483		13,218
Net Amount	$	—	$	651	$	(34,706)	$	(20,031)


Liability for asset retirement obligations as of December 31, 2023	$	17,458
Accretion expense		477
Liabilities incurred		200
Liability for asset retirement obligations as of June 30, 2024		18,135


Smaller reporting company ☒	Emerging growth company ◻


Preferred Stock ⁽¹⁾	Issuance Date	Shares	Conversion Price		Net Equity Recorded ⁽²⁾ (in thousands)		Deemed Dividend Date	Non-cash Deemed Dividends ⁽²⁾ (in thousands)
Series A	March 28, 2023	25,000	$	9.03	$	23,541	March 31, 2023	$	1,459
Series A-1	September 6, 2023	38,000	$	7.63	$	36,941	September 30, 2023	$	1,059
Series A-2	December 15, 2023	35,000	$	6.21	$	34,006	December 31, 2023	$	994
Series A-3	March 27, 2024	20,000	$	6.83	$	19,397	March 31, 2024	$	603
Series A-4	May 13, 2024	20,000	$	6.42	$	19,385	June 30, 2024	$	615


	June 30, 2024		December 31, 2023
Accounts receivable, net:
Oil, natural gas and natural gas liquids revenues	$	21,243	$	19,802
Joint interest accounts		2,095		2,138
Other		1,556		1,081
	$	24,894	$	23,021
Prepaids and other:
Prepaids	$	396	$	490
Funds in escrow		347		345
Other		78		72
	$	821	$	907
Other assets (Non-current):
Investment in unconsolidated affiliate	$	1,093	$	1,283
Contract asset		18,498		15,062
Funds in escrow		565		552
Other		760		759
	$	20,916	$	17,656
Accounts payable and accrued liabilities:
Trade payables	$	34,522	$	24,915
Accrued oil and natural gas capital costs		6,694		15,337
Revenues and royalties payable		26,345		18,986
Accrued employee compensation		1,052		520
Accrued lease operating expenses		7,512		6,418
Other		331		349
	$	76,456	$	66,525


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).
2.1.5		Fifth Amendment to Agreement and Plan of Merger, dated June 10, 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 June 11, 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).
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


August 14, 2024	By:	/s/ MATTHEW B. STEELE

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