Core Points - Battalion Oil Corporation has received confirmation from NYSE American regarding the acceptance of its compliance plan to regain listing standards, with a plan period extending until November 30, 2026 [1][2] - The company was previously notified of noncompliance with NYSE American listing standards and submitted a detailed plan in response, which was accepted on August 19, 2025 [2] - NYSE American staff will monitor the company's progress during the plan period, and failure to comply may lead to delisting procedures [3] Management Comments - The CEO of Battalion Oil Corporation expressed appreciation for the acceptance of the compliance plan and emphasized the company's commitment to restoring compliance and strengthening operations and financial position [4] - The management remains confident in the long-term strategy and aims to deliver value to shareholders, although there is no assurance of success within the plan period [4]

[Overview of Second Quarter 2025 Results](index=1&type=section&id=Overview%20of%20Second%20Quarter%202025%20Results) [Key Highlights & Management Comments](index=1&type=section&id=Key%20Highlights%20%26%20Management%20Comments) Battalion Oil successfully completed its 2025 six-well drilling plan ahead of schedule and under budget, with new wells showing strong initial production. However, the company faces a significant operational challenge due to the abrupt shutdown of its primary acid gas injection (AGI) facility, forcing a temporary shut-in of production - Completed the 2025 six-well drilling plan, with the final two wells in the West Quito area drilled ahead of schedule and approximately **$1.0 million per well under budget**[2](index=2&type=chunk) - Initial production rates from the new wells are outperforming legacy offset wells, which have also seen increased production due to positive frac interference[2](index=2&type=chunk) - The Acid Gas Injection (AGI) facility, which treated an average of **24 MMcf/d**, ceased operations on August 11, 2025, citing economic non-viability. This has forced the company to temporarily shut in some production and seek alternative gas processing solutions[3](index=3&type=chunk) [Financial & Operating Performance](index=1&type=section&id=Financial%20%26%20Operating%20Performance) Q2 2025 revenue decreased to $42.8 million from $49.1 million year-over-year due to lower realized prices, despite a slight production increase to 12,989 Boe/d, resulting in a $3.5 million net loss to common stockholders Q2 2025 vs Q2 2024 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total Operating Revenue** | $42.8 million | $49.1 million | | **Average Daily Production** | 12,989 Boe/d | 12,857 Boe/d | | **Net Loss to Common Stockholders** | $3.5 million | $8.7 million | | **Adjusted EBITDA** | $18.1 million | $15.6 million | - The decrease in revenue was primarily due to a **$5.93 decrease per Boe** in average realized prices (excluding hedges), partially offset by a **132 Boe/d production increase**[4](index=4&type=chunk) Operating Expenses per Boe (YoY Comparison) | Expense Category | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Lease operating and workover** | $10.98 | $10.22 | | **Gathering and other** | $9.27 | $10.36 | | **General and administrative** | $2.17 | $2.85 | [Liquidity and Balance Sheet](index=3&type=section&id=Liquidity%20and%20Balance%20Sheet) As of June 30, 2025, Battalion Oil reported $44.6 million in cash and cash equivalents, with $219.4 million in outstanding term loan indebtedness Liquidity Position as of June 30, 2025 | Metric | Amount | | :--- | :--- | | **Cash and cash equivalents** | $44.6 million | | **Term loan indebtedness** | $219.4 million | [Financial Statements](index=5&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 total operating revenues were $42.8 million, leading to a net income of $4.8 million, significantly improved from a prior-year net loss, but resulting in a $3.5 million net loss to common stockholders after preferred dividends Q2 2025 Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total operating revenues** | $42,812 | $49,104 | | **(Loss) income from operations** | $(153) | $5,120 | | **Net gain on derivative contracts** | $11,548 | $1,223 | | **Net income (loss)** | $4,796 | $(105) | | **Net loss available to common stockholders** | $(3,474) | $(8,691) | | **Diluted net loss per share** | $(0.21) | $(0.53) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $498.8 million, driven by higher cash and oil/gas properties, while total liabilities rose to $306.4 million, shifting stockholders' equity to a $5.2 million deficit Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $44,621 | $19,712 | | **Total current assets** | $83,462 | $54,052 | | **Net oil and natural gas properties** | $402,327 | $368,005 | | **Total assets** | $498,781 | $431,048 | | **Total current liabilities** | $90,042 | $77,664 | | **Long-term debt, net** | $191,467 | $145,535 | | **Total stockholders' (deficit) equity** | $(5,236) | $4,120 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to $10.2 million in Q2 2025, while investing activities used $33.4 million, and financing activities provided $55.4 million for the first six months Cash Flow Summary for Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $10,205 | $29,824 | | **Net cash used in investing activities** | $(33,362) | $(13,857) | | **Net cash (used in) provided by financing activities** | $(5,790) | $(10,478) | | **Net (decrease) increase in cash** | $(28,947) | $5,489 | [Supplemental Information](index=8&type=section&id=Supplemental%20Information) [Selected Operating Data](index=8&type=section&id=Selected%20Operating%20Data) Q2 2025 average daily production slightly increased to 12,989 Boe/d, while crude oil prices dropped, yet post-hedge total realized price per Boe rose, and adjusted total operating costs per Boe decreased Q2 Production Volumes | Production | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Crude oil (MBbls)** | 584 | 577 | | **Natural gas (MMcf)** | 2,136 | 1,929 | | **Total (MBoe)** | 1,182 | 1,170 | | **Average daily production (Boe/d)** | 12,989 | 12,857 | Q2 Average Prices per Unit | Price | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Crude oil (per Bbl)** | $62.14 | $79.20 | | **Total per Boe (pre-hedge)** | $36.02 | $41.95 | | **Total per Boe (post-hedge)** | $39.66 | $39.21 | Q2 Average Costs per Boe | Cost | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Lease operating** | $9.03 | $9.41 | | **Gathering and other** | $9.27 | $10.36 | | **General and administrative (adjusted)** | $2.11 | $2.49 | | **Total operating costs (adjusted)** | $24.49 | $25.93 | [Non-GAAP Reconciliations](index=9&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP measures, clarifying adjusted net loss and Adjusted EBITDA by removing non-cash and non-recurring items for a clearer operational performance view [Reconciliation of Net Loss to Adjusted Net Loss](index=9&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20Net%20Loss) Q2 2025 reported net loss of $3.5 million was adjusted to a $10.6 million net loss, or ($0.65) per share, primarily by excluding a $7.2 million non-cash unrealized derivative gain Adjusted Net Loss Reconciliation for Q2 2025 (in thousands) | Metric | Amount | | :--- | :--- | | **Net loss available to common stockholders** | $(3,474) | | **Unrealized gain on derivatives** | $(7,248) | | **Non-recurring charges** | $73 | | **Adjusted net loss available to common stockholders** | $(10,649) | | **Adjusted diluted net loss per share** | $(0.65) | [Adjusted EBITDA Reconciliation](index=10&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 increased to $18.1 million, with the Last Twelve Months (LTM) Adjusted EBITDA reaching $64.7 million as of June 30, 2025 Adjusted EBITDA Reconciliation for Q2 (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net income (loss), as reported** | $4,796 | $(105) | | **Interest expense** | $7,341 | $7,610 | | **Depletion, depreciation and accretion** | $13,939 | $13,213 | | **Unrealized (gain) on derivatives** | $(7,248) | $(4,434) | | **Adjusted EBITDA** | $18,137 | $15,634 | - Adjusted Last Twelve Months (LTM) EBITDA as of June 30, 2025 was **$64.7 million**[30](index=30&type=chunk)

Core Insights - Battalion Oil Corporation reported its financial and operational results for Q2 2025, highlighting a net loss of $3.5 million and an adjusted diluted net loss of $10.6 million [6][9][12]. Operational Highlights - The company completed its 2025 six-well drilling plan ahead of schedule and under budget, with initial production rates from the new wells outperforming legacy wells [2][4]. - The acid gas injection facility treated approximately 2.2 Bcf of gas, but ceased operations on August 11, 2025, leading to a temporary shutdown of part of the Monument Draw field [3][8]. Financial Performance - Average daily net production was 12,989 Boe/d (49% oil), with total operating revenue of $42.8 million, a decrease from $49.1 million in Q2 2024 [4][6]. - The decline in revenue was primarily due to a $5.93 decrease per Boe in average realized prices, partially offset by a 132 Boe/d increase in production [4][6]. - Lease operating and workover expenses increased to $10.98 per Boe, while general and administrative expenses decreased to $2.17 per Boe [5][6]. Liquidity and Balance Sheet - As of June 30, 2025, the company had $219.4 million in term loan indebtedness and total liquidity of $44.6 million [9][15]. - Current assets increased to $83.5 million, with cash and cash equivalents at $44.6 million, up from $19.7 million a year earlier [15][9]. Production and Pricing Data - Crude oil production for Q2 2025 was 584 MBbls, with an average price of $62.14 per Bbl, down from $79.20 in Q2 2024 [20][21]. - Total production volumes for the quarter were 1,182 MBoe, with an average daily production of 12,989 Boe/d [20][21].

For the quarterly period ended June 30, 2025 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR WASHINGTON, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 1311 (Primary Standard Industrial Classification Code Number) 20-0700684 (I.R.S. Employer Identification Number) For the transition period from to Commission File Number: 001-35467 8 ...

[PART I: FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section details the company's unaudited financial statements, management's analysis, market risk, and internal controls [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents Q1 2025 unaudited financial statements, showing a net income turnaround to **$6.0 million** from a **$31.2 million** loss [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 net income was **$6.0 million**, a significant improvement from a **$31.2 million** loss, due to a **$9.3 million** derivative gain Summary of Operations | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $47,475 | $49,870 | -4.8% | | Income from Operations | $3,391 | $23 | +14,643% | | Net Gain (Loss) on Derivatives | $9,302 | $(24,187) | Favorable Turnaround | | Net Income (Loss) | $6,023 | $(31,203) | Favorable Turnaround | | Net Income (Loss) to Common Stockholders | $(5,797) | $(36,835) | Improved | | Basic & Diluted EPS | $(0.35) | $(2.24) | Improved | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of **March 31, 2025**, total assets increased to **$506.2 million**, while stockholders' equity shifted to a deficit of **$1.8 million** Key Balance Sheet Items | Balance Sheet Item | March 31, 2025 (in thousands) | Dec 31, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $73,568 | $19,712 | +273.2% | | Total Assets | $506,248 | $431,048 | +17.4% | | Long-term debt, net | $196,833 | $145,535 | +35.2% | | Total Liabilities | $318,656 | $249,393 | +27.8% | | Total Stockholders' (Deficit) Equity | $(1,762) | $4,120 | Turned to Deficit | [Condensed Consolidated Statements of Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased to a deficit of **$1.8 million**, primarily due to **$11.8 million** in deemed preferred stock dividends - Stockholders' equity turned into a deficit of **$1.8 million** at the end of Q1 **2025**, down from a positive **$4.1 million** at the end of **2024**[21](index=21&type=chunk) - The primary drivers for the change in equity during Q1 **2025** were net income of **$6.0 million**, offset by deemed dividends for preferred stock of **$11.8 million**[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to **$12.7 million** in Q1 2025, with new borrowings driving a **$53.9 million** net cash increase Summary of Cash Flows | Cash Flow Activity (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $12,731 | $3,916 | | Net cash used in investing activities | $(20,112) | $(31,848) | | Net cash provided by financing activities | $61,237 | $19,345 | | **Net increase (decrease) in cash** | **$53,856** | **$(8,587)** | - The increase in financing cash flow was driven by **$63.0 million** in proceeds from new borrowings under the amended term loan[23](index=23&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail debt refinancing, derivative contract impact, and accounting for redeemable convertible preferred stock, including paid-in-kind dividends - The company operates as a **single reportable segment** focused on oil and natural gas acquisition, production, exploration, and development in the **Delaware Basin**[25](index=25&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The company's net book value of oil and natural gas properties did not exceed the ceiling test value at **March 31, 2025**, using an average WTI price of **$75.33 per barrel**[47](index=47&type=chunk) - The company has a minimum volume commitment of **20,000 Mcf per day** under a gas treating agreement with Wink Amine Treater, LLC, related to its joint venture for an acid gas treatment facility[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, including production, costs, liquidity, and operational challenges [Recent Developments](index=38&type=section&id=Recent%20Developments) Recent developments include a major debt refinancing with **$63.0 million** in new term loans and ongoing H2S treating joint venture interruptions - The company entered into a new **2024** Amended Term Loan Agreement, refinancing prior debt and incurring an additional **$63.0 million** in Incremental Term Loans on January **9**, **2025**[113](index=113&type=chunk) - The acid gas injection (AGI) facility, a key joint venture, has experienced processing interruptions, resulting in the company paying higher processing rates to other service providers than originally forecasted[120](index=120&type=chunk) [Capital Resources and Liquidity](index=42&type=section&id=Capital%20Resources%20and%20Liquidity) Liquidity improved with **$73.6 million** in cash, but the company faces **$22.5 million** in debt repayments and is exploring NYSE American delisting - As of **March 31, 2025**, the company had **$73.6 million** of cash and cash equivalents, no additional borrowing capacity, and **$22.5 million** in debt repayments due through March **2026**[125](index=125&type=chunk) - The company is considering delisting its common stock from the NYSE American to reduce the ongoing costs of being a reporting company[127](index=127&type=chunk) [Cash Flow Analysis](index=44&type=section&id=Cash%20Flow%20Analysis) Operating cash flow increased to **$12.7 million** in Q1 2025, with reduced investing cash use and significant financing inflows from new debt Summary of Cash Flows | Cash Flow Activity (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash flows provided by operating activities | $12,731 | $3,916 | | Cash flows used in investing activities | $(20,112) | $(31,848) | | Cash flows provided by financing activities | $61,237 | $19,345 | - During Q1 **2025**, the company spent **$19.8 million** on oil and natural gas capital expenditures, primarily on drilling and completion costs[138](index=138&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Operating revenues decreased due to lower production volumes, but gathering expenses improved due to the AGI facility, while depletion rates increased Key Operating Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Average Daily Production (Boe) | 11,900 | 12,989 | | Average Realized Price per Boe | $44.24 | $41.91 | | Lease Operating Expense per Boe | $9.67 | $9.80 | | Gathering and Other Expense per Boe | $11.20 | $14.62 | | Depletion Expense per Boe | $11.83 | $10.68 | - The decrease in gathering and other expenses was primarily due to a full quarter of volumes being treated by the AGI facility in **2025**, which came online in March **2024**[153](index=153&type=chunk) - The increase in the depletion rate per Boe was mainly due to an increase in future development costs combined with a decrease in proved reserves[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details the company's exposure to commodity price and interest rate risks, including hedging requirements and debt sensitivity - The company's term loan agreement requires it to hedge approximately **50% to 85%** of its anticipated oil and natural gas production on a rolling basis for the next four years[160](index=160&type=chunk) - The company has **$225.0 million** in variable-rate debt A **10%** change in market interest rates would impact cash flows by approximately **$2.7 million** per year[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were **effective**, with **no material changes** to internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by this report (**March 31, 2025**)[166](index=166&type=chunk) - There were **no changes** in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[167](index=167&type=chunk) [PART II: OTHER INFORMATION](index=52&type=section&id=PART%20II%20OTHER%20INFORMATION) This part addresses legal proceedings, risk factors, unregistered equity sales, and other required disclosures [Item 1. Legal Proceedings](index=52&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in legal proceedings from former operations in Louisiana, but management expects no material financial impact - The company is a defendant in lawsuits from surface owners in Louisiana, where it formerly operated, concerning claims of environmental damages[90](index=90&type=chunk)[168](index=168&type=chunk) - Management does not believe that the resolution of currently pending legal proceedings will have a material effect on the company's financial position, operating results, or cash flows[89](index=89&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=ITEM%201A.%20Risk%20Factors) There have been **no changes** to the risk factors previously disclosed in the company's Annual Report on Form 10-K for **December 31, 2024** - There have been **no changes** to the risk factors described in the company's Annual Report on Form 10-K for the fiscal year ended **December 31, 2024**[169](index=169&type=chunk) [Other Items (Items 2, 3, 4, & 5)](index=52&type=section&id=Other%20Items%20(2,%203,%204,%20%26%205)) The company reported **"None"** for unregistered equity sales, no defaults on senior securities, and **"Not applicable"** for mine safety - The company reported **"None"** for Unregistered Sales of Equity Securities and Use of Proceeds, Defaults Upon Senior Securities, and Other Information Mine Safety Disclosures were noted as **"Not applicable"**[170](index=170&type=chunk) [Item 6. Exhibits](index=54&type=section&id=ITEM%206.%20Exhibits) Lists documents filed as exhibits, including **Sarbanes-Oxley certifications (31 and 32)** and **Inline XBRL data files (101 series)** - The exhibits filed with this report include **Sarbanes-Oxley certifications (31 and 32)** and **Inline XBRL data files (101 series)**[171](index=171&type=chunk)[173](index=173&type=chunk)

[First Quarter 2025 Financial and Operating Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20and%20Operating%20Results) Battalion Oil Corporation's Q1 2025 results highlight progress in its six-well drilling program, with operations ahead of schedule and under budget, and recently completed wells producing above expectations [Overview and Key Highlights](index=1&type=section&id=Overview%20and%20Key%20Highlights) Battalion Oil Corporation's Q1 2025 highlights include ahead-of-schedule drilling, under-budget capital expenditure, and strong production from new wells, alongside improved AGI facility performance - The company is advancing its 2025 six-well activity plan, having completed four wells and drilling the final two ahead of schedule in the West Quito area[2](index=2&type=chunk) - Capital expenditure on the first well in West Quito was approximately **$1.0 million below** the Authorized for Expenditure (AFE) estimate, and a 10,000-foot lateral well was drilled in record time for the area[2](index=2&type=chunk) - Recently completed wells in the Monument Draw field are producing above type curve and are projected to each achieve an ultimate recovery of over **1,000,000 barrels of oil**[2](index=2&type=chunk) - The Acid Gas Injection (AGI) facility treated an average of **18 MMcf/d** during Q1 2025, with daily rates surpassing **30 MMcf/d** post-quarter due to equipment additions[3](index=3&type=chunk) [Financial and Operating Performance](index=1&type=section&id=Financial%20and%20Operating%20Performance) Q1 2025 saw decreased production and revenue, a net loss, but a significant increase in Adjusted EBITDA, with mixed trends in per-Boe operating costs Q1 Production and Revenue Comparison (YoY) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Average Daily Net Production | 11,900 Boe/d (53% oil) | 12,989 Boe/d (48% oil) | -8.4% | | Total Operating Revenue | $47.5 million | $49.9 million | -4.8% | | Realized Hedge Losses | $2.5 million | N/A | N/A | Operating Expenses per Boe (YoY) | Expense Category | Q1 2025 (/Boe) | Q1 2024 (/Boe) | Key Driver for Change | | :--- | :--- | :--- | :--- | | Lease Operating & Workover | $11.01 | $10.55 | Inflationary increases in maintenance, power, and chemicals | | Gathering and Other | $11.20 | $14.62 | Full quarter of volumes treated by the AGI facility | | General and Administrative | $4.12 | $3.44 | Higher payroll and benefits costs | Q1 2025 Profitability Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Loss available to common stockholders | ($5.8 million) | ($36.8 million) | | Net Loss per share | ($0.35) | ($2.24) | | Adjusted Diluted Net Loss | ($16.5 million) | N/A | | Adjusted Diluted Net Loss per share | ($1.00) | N/A | | Adjusted EBITDA | $15.1 million | $9.4 million | [Financial Position and Liquidity](index=3&type=section&id=Financial%20Position%20and%20Liquidity) As of March 31, 2025, the company reported **$73.6 million** in total liquidity and **$225.0 million** in outstanding term loan indebtedness - As of March 31, 2025, the Company had **$225.0 million** of term loan indebtedness outstanding[9](index=9&type=chunk) - Total liquidity was **$73.6 million**, composed of cash and cash equivalents[9](index=9&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) Unaudited Q1 2025 consolidated financial statements show a shift to net income, increased total assets, and positive cash flow from operations, driven by derivative gains and new debt [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 operations generated **$47.5 million** in revenue and **$3.4 million** in income, with a **$9.3 million** derivative gain leading to **$6.0 million** net income, but a **$5.8 million** net loss for common stockholders Q1 Statement of Operations Highlights (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total operating revenues | $47,475 | $49,870 | | Income from operations | $3,391 | $23 | | Net gain (loss) on derivative contracts | $9,302 | ($24,187) | | Net income (loss) | $6,023 | ($31,203) | | Net loss available to common stockholders | ($5,797) | ($36,835) | | Diluted net loss per share | ($0.35) | ($2.24) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to **$506.2 million**, driven by cash growth, while total liabilities rose to **$318.7 million**, resulting in a **$1.8 million** stockholders' deficit Balance Sheet Comparison (in thousands) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $73,568 | $19,712 | | Total current assets | $111,443 | $54,052 | | Net oil and natural gas properties | $380,359 | $368,005 | | **Total assets** | **$506,248** | **$431,048** | | Total current liabilities | $96,080 | $77,664 | | Long-term debt, net | $196,833 | $145,535 | | **Total liabilities** | **$318,656** | **$249,393** | | Total stockholders' (deficit) equity | ($1,762) | $4,120 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw **$12.7 million** net cash from operations, **$20.1 million** used in investing, and **$61.2 million** provided by financing, resulting in a **$53.9 million** net cash increase Q1 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $12,731 | $3,916 | | Net cash used in investing activities | ($20,112) | ($31,848) | | Net cash provided by financing activities | $61,237 | $19,345 | | **Net increase (decrease) in cash** | **$53,856** | **($8,587)** | | Cash at end of period | $73,659 | $49,032 | [Selected Operating Data](index=8&type=section&id=Selected%20Operating%20Data) Q1 2025 average daily production decreased to **11,900 Boe/d**, while the post-hedge average realized price increased to **$41.88 per Boe**, and total adjusted operating costs decreased to **$27.83 per Boe** Q1 Production Volumes (YoY) | Production | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Crude oil (MBbls) | 569 | 566 | | Natural gas (MMcf) | 1,799 | 2,180 | | Natural gas liquids (MBbls) | 202 | 253 | | **Total (MBoe)** | **1,071** | **1,182** | | **Average daily production (Boe/d)** | **11,900** | **12,989** | Average Prices and Costs per Boe (YoY) | Metric (per Boe) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Average Price (pre-hedge) | $44.24 | $41.91 | | Cash effect of derivatives | ($2.36) | ($3.74) | | **Average Price (post-hedge)** | **$41.88** | **$38.17** | | Lease operating | $9.67 | $9.80 | | Gathering and other | $11.20 | $14.62 | | G&A, as adjusted | $3.01 | $2.57 | | **Total operating costs, as adjusted** | **$27.83** | **$30.27** | [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section reconciles non-GAAP measures, including Adjusted Net Loss and Adjusted EBITDA, to GAAP figures, providing clarity on underlying operational performance [Reconciliation of Net Loss to Adjusted Net Loss](index=9&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20Net%20Loss) Q1 2025 reported net loss of **$5.8 million** was adjusted to a **$16.5 million** net loss, or **($1.00)** per diluted share, primarily by removing an **$11.8 million** unrealized derivative gain Adjusted Net Loss Reconciliation (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss available to common stockholders (reported) | ($5,797) | ($36,835) | | Unrealized (gain) loss on derivatives | ($11,828) | $19,761 | | Non-recurring charges | $1,149 | $937 | | **Net loss available to common stockholders (adjusted)** | **($16,476)** | **($17,065)** | | Diluted net loss per share (adjusted) | ($1.00) | ($1.04) | [Adjusted EBITDA Reconciliation](index=10&type=section&id=Adjusted%20EBITDA%20Reconciliation) Q1 2025 Adjusted EBITDA significantly improved to **$15.1 million** from **$9.4 million** in Q1 2024, with LTM Adjusted EBITDA reaching **$62.2 million** as of March 31, 2025 Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss), as reported | $6,023 | ($31,203) | | Interest expense | $7,189 | $8,391 | | Depletion, depreciation and accretion | $13,080 | $13,025 | | Unrealized (gain) loss on derivatives | ($11,828) | $19,761 | | **Adjusted EBITDA** | **$15,082** | **$9,381** | Quarterly Adjusted EBITDA Trend (in thousands) | Quarter | Adjusted EBITDA | | :--- | :--- | | Q2 2024 | $15,634 | | Q3 2024 | $13,458 | | Q4 2024 | $18,019 | | Q1 2025 | $15,082 | | **LTM Adjusted EBITDA** | **$62,193** |

Key Highlights - Battalion Oil Corporation has continued its drilling operations, completing four wells in the Monument Draw area and drilling ahead of schedule on two additional wells in West Quito [2] - The company reported average daily net production of 11,900 Boe/d (53% oil) and total operating revenue of $47.5 million for Q1 2025, compared to 12,989 Boe/d (48% oil) and $49.9 million in Q1 2024 [4] - The acid gas injection facility treated approximately 18 MMcf/d on average during Q1 2025, with subsequent increases in daily rates to over 30 MMcf/d [3] Management Comments - The company is in the final stages of drilling operations on the last well of its six-well activity plan for 2025, with capital expenditures on the first well in West Quito approximately $1.0 million under AFE [2] - Recently completed wells in the Monument Draw field are expected to deliver over 1,000,000 barrels of oil ultimate recovery each [2] Results of Operations - Battalion reported a net loss available to common stockholders of $5.8 million, or a net loss of $0.35 per share for Q1 2025, compared to a net loss of $36.8 million, or $2.24 per share in Q1 2024 [6][12] - Adjusted EBITDA for Q1 2025 was $15.1 million, an increase from $9.4 million in Q1 2024 [6] Financial Performance - Lease operating and workover expenses increased to $11.01 per Boe in Q1 2025 from $10.55 per Boe in Q1 2024, primarily due to inflationary market increases [5] - General and administrative expenses rose to $4.12 per Boe in Q1 2025 from $3.44 per Boe in Q1 2024, driven by higher payroll and benefits costs [5] Liquidity and Balance Sheet - As of March 31, 2025, the company had $225.0 million in term loan indebtedness and total liquidity of $73.6 million [9] - Current assets increased to $111.4 million as of March 31, 2025, compared to $54.1 million a year earlier [14]

Production and Revenue - Average daily net production for Q4 2024 was 12,750 Boe/d (55% oil), an increase from 12,022 Boe/d (46% oil) in Q4 2023, resulting in total operating revenue of $49.7 million compared to $47.2 million in the prior year[5] - The company generated full-year sales volumes of 12,667 Boe/d (51% oil) for 2024[6] - Crude oil production increased to 643 MBbls in Q4 2024, up from 510 MBbls in Q4 2023, while total production volumes rose to 1,173 MBoe from 1,106 MBoe[26] - Average daily production for the year 2024 was 12,667 Boe/d, a decrease from 13,784 Boe/d in 2023[26] Financial Performance - The company reported a net loss available to common stockholders of $30.9 million, equating to a net loss of $1.88 per share, while adjusted EBITDA increased to $18.0 million from $10.0 million in Q4 2023[8] - Battalion Oil Corporation reported a net loss of $22,202,000 for the three months ended December 31, 2024, compared to a net income of $32,688,000 for the same period in 2023[23] - For the three months ended December 31, 2024, the net loss available to common stockholders was $(30,881) thousand, compared to a net income of $26,993 thousand for the same period in 2023[29] - Adjusted EBITDA for the three months ended December 31, 2024, was $18,019 thousand, an increase from $9,972 thousand in the same period of 2023[34] Expenses and Liabilities - Lease operating and workover expenses decreased to $11.26 per Boe in Q4 2024 from $11.87 per Boe in Q4 2023, primarily due to increased production[7] - The company incurred capital expenditures of $12,847,000 for oil and natural gas in Q4 2024, compared to $16,196,000 in Q4 2023[23] - Battalion Oil Corporation's total liabilities decreased to $431,048,000 as of December 31, 2024, from $485,338,000 in 2023[21] - The company reported a significant increase in liabilities from derivative contracts, which totaled $12,330,000 in current liabilities as of December 31, 2024, compared to $17,191,000 in 2023[21] Cash Flow and Assets - Net cash provided by operating activities for the year 2024 was $35,355,000, compared to $17,589,000 in 2023[23] - The company reported a net cash provided by operating activities of $6,686 thousand for the three months ended December 31, 2024, compared to $6,524 thousand in the same period of 2023[29] - Total current assets decreased to $54,052,000 as of December 31, 2024, down from $90,539,000 a year earlier, primarily due to a reduction in cash and cash equivalents[21] Stockholder Equity and Market Performance - Battalion Oil Corporation's stockholders' equity decreased to $4,120,000 as of December 31, 2024, from $68,021,000 in 2023, reflecting a growing accumulated deficit[21] - The diluted net loss per common share, as reported, was $(1.88) for the three months ended December 31, 2024, compared to $1.63 for the same period in 2023[29] Operational Developments - The company completed its six-well campaign ahead of schedule and under budget, with the newest pad averaging over 811 Boe/d in the first 120 days[3] - The acid gas injection (AGI) facility treated approximately 20 MMcf/d on average, processing over 6.9 Bcf of sour gas to date, leading to significant cost savings[4] - The company commenced drilling operations in Monument Draw as part of its 2025 six-well activity plan, with four wells already drilled[3] Debt and Financing - The company refinanced its term loan, increasing liquidity and resulting in total outstanding borrowings of $225.0 million[12] - The interest expense for the three months ended December 31, 2024, was $6,135 thousand, down from $8,917 thousand in the same period of 2023[34] - The loss on extinguishment of debt for the three months ended December 31, 2024, was $7,489 thousand, with no such loss reported in the same period of 2023[34] Impairments and Non-Cash Charges - The company incurred an impairment of contract asset amounting to $18,511 thousand for the year ended December 31, 2024[29] - The total mark-to-market non-cash charge for the three months ended December 31, 2024, was $1,648 thousand, a significant decrease from $(45,403) thousand in the same period of 2023[29] - The unrealized loss on derivatives contracts for the three months ended December 31, 2024, was $1,648 thousand, compared to a gain of $(45,403) thousand in the same period of 2023[34] Mergers and Acquisitions - The company terminated the previously announced merger agreement with Fury Resources due to unmet funding and closing requirements[11]

Core Insights - Battalion Oil Corporation reported financial and operational results for Q4 2024, highlighting increased production and revenue compared to Q4 2023 [1][5]. Operational Highlights - The company completed its 2024 six-well campaign ahead of schedule and under budget, with final well capital remaining below $950 per lateral foot [3]. - The average production from the newest pad was over 811 Boe/d in the first 120 days, while the first pad exceeded 1,085 Boe/d over 404 days [3]. - The acid gas injection facility treated approximately 20 MMcf/d and processed over 6.9 Bcf of sour gas, leading to significant cost savings [4]. Financial Performance - Average daily net production in Q4 2024 was 12,750 Boe/d (55% oil), up from 12,022 Boe/d (46% oil) in Q4 2023, with total operating revenue increasing to $49.7 million from $47.2 million [5][7]. - The company reported a net loss of $30.9 million for Q4 2024, translating to a net loss of $1.88 per share, while adjusted EBITDA rose to $18.0 million from $10.0 million in Q4 2023 [7][8]. Cost Management - Lease operating and workover expenses decreased to $11.26 per Boe in Q4 2024 from $11.87 per Boe in Q4 2023, attributed to increased production [6]. - Gathering and other expenses also fell to $10.45 per Boe from $13.31 per Boe, primarily due to the AGI facility's startup [6]. Liquidity and Debt Management - As of December 31, 2024, the company had $162.1 million in outstanding debt and total liquidity of $19.7 million [9]. - Battalion successfully refinanced its term loan, increasing liquidity by $61.3 million through incremental term loans [9][12]. Strategic Developments - The company terminated its merger agreement with Fury Resources due to unmet funding requirements [11]. - Year-end 2024 reserves were approximately 64.9 million barrels of oil equivalent (MMBoe), with a discounted future net cash flow measure of about $447.7 million [8].

Core Viewpoint - Battalion Oil Corporation has terminated its merger agreement with Fury Resources due to Fury's inability to meet the obligations required to close the transaction [1][2]. Company Operations - Battalion has initiated a new drilling campaign in the fourth quarter, with the first two-well pad in Monument Draw performing ahead of schedule in terms of cycle time and budget [3]. - The two previously announced Vermejo wells have come online, producing an initial 30-day output of 1,211 barrels of oil equivalent per day (Boe/d), with 84% of this being oil, while capital costs remain below $950 per foot [3]. - The acid gas injection (AGI) facility has treated over 5.1 billion cubic feet (bcf) of sour gas, with daily volumes exceeding 30 million cubic feet per day (MMcf/d) [5]. The company is working towards full inlet capacity and is evaluating next steps for a second AGI well that is already permitted, drilled, and completed [5]. Corporate Actions - In light of the termination of the merger agreement, Battalion has canceled the special meeting of stockholders that was scheduled for December 27, 2024 [4].