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]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 Commission File Number: 001-35467 Battalion Oil Corporation (Exact name of registrant as specified in its charter) Delaware 20-0700684 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 820 Gessner Road, Suite 1100, Houston, TX 770 ...

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].

Merger and Acquisition - The company entered into a merger agreement with Fury Resources, with a total transaction value of approximately $450.0 million, converting each share of common stock into $9.80 in cash[112][113] - As of September 19, 2024, the merger consideration was amended to $7.00 per share of common stock, reflecting a significant reduction[117] - The company has incurred approximately $4.6 million in costs related to the merger as of November 8, 2024, with ongoing expenses expected[122] Financing Activities - The company raised $19.5 million from the sale of 20,000 shares of Series A-3 Convertible Preferred Stock in March 2024, net of $0.5 million in original issue discount[123] - An additional $19.5 million was raised from the sale of 20,000 shares of Series A-4 Redeemable Convertible Preferred Stock in May 2024, also net of $0.5 million in original issue discount[124] - The company issued $95.6 million in preferred equity funding during 2023 and an additional $19.5 million in Q1 2024 from its three largest existing stockholders[137] - The company received $38.8 million from preferred stock equity issuances during the nine months ended September 30, 2024[167] Operational Performance - The AGI Facility has processed over 3.7 Bcf of gas since its operation began on March 9, 2024, despite facing delays and higher costs[132] - The company advanced approximately $18.5 million for workover operations at the AGI Facility, with multiple remedies available for recovery[131] - The company generated a net loss of $33.2 million for the nine months ended September 30, 2024, with negative working capital of $64.5 million[134] - Operating revenues for the nine months ended September 30, 2024 were $143.7 million, down from $171.6 million in 2023, primarily due to lower average realized prices and production volumes[173] - Production averaged 12,639 Boe/d for the nine months ended September 30, 2024, down from 14,377 Boe/d in 2023, attributed to capital expenditure timing and natural production declines[174] Cash Flow and Liquidity - As of September 30, 2024, the company had $29.8 million in cash and cash equivalents and $50.0 million in debt repayments due through September 2025[134] - The company’s liquidity is susceptible to commodity price declines, despite using derivative instruments for partial protection[111] - Net cash flows provided by operating activities for the nine months ended September 30, 2024 were $28.7 million, an increase from $11.1 million for the same period in 2023[161] - Net cash flows used in investing activities for the nine months ended September 30, 2024 were approximately $52.6 million, compared to $37.1 million in 2023, primarily for drilling and completion activities[162] - Net cash flows used in financing activities for the nine months ended September 30, 2024 were $3.8 million, a decrease from $35.9 million provided in 2023[167] Debt and Interest - As of September 30, 2024, the company had $147.7 million in outstanding indebtedness under the Amended Term Loan Agreement, with a maturity date of November 24, 2025[151] - The weighted average interest rate on borrowings for the quarter ended September 30, 2024, was approximately 12.98%[151] - The company is required to make a final payment of $97.7 million at maturity on November 24, 2025[134] - The principal amount of term loan debt was $147.7 million as of September 30, 2024, with a weighted average interest rate of 12.79%[192] Cost Management - The company plans to reduce operating and capital costs to improve cash flow, having issued preferred stock totaling $134.6 million as of September 30, 2024[139] - Lease operating expenses for the nine months ended September 30, 2024 were $34.2 million, consistent with the same period in 2023, but per unit costs increased due to inflationary pressures[175] Compliance and Covenants - The Amended Term Loan Agreement includes financial covenants such as a Current Ratio of not less than 0.90 to 1.00 for the fiscal quarter ending September 30, 2024[155] - The company is not in compliance with the Total Net Leverage Ratio covenant as of March 31, 2024, but cured this noncompliance with a prepayment of $17.3 million[138] Strategic Initiatives - The company is exploring strategic transactions and alternative liquidity sources, including potential asset sales and refinancing options[141] - The company has a joint venture with Caracara Services, LLC to develop an acid gas treatment and carbon sequestration facility in Texas[128] Market Sensitivity - The company’s financial results are significantly influenced by oil and natural gas production volumes and commodity prices, which are subject to market fluctuations[110] - A 10% change in market interest rates would impact cash flows by approximately $2.5 million per year based on the current variable interest rate debt[192] - The company expects to hedge approximately 50% to 85% of anticipated oil and natural gas production over the next four years[188] Expense Management - Workover and other expenses decreased to $1.2 million for Q3 2024 from $0.7 million in Q3 2023, and for the nine months, they decreased to $3.1 million from $4.7 million[176] - Taxes other than income decreased to $2.5 million for Q3 2024 from $3.3 million in Q3 2023, and for the nine months, they decreased to $8.9 million from $9.7 million[177] - Gathering and other expenses decreased to $12.4 million for Q3 2024 from $15.5 million in Q3 2023, and for the nine months, they decreased to $41.9 million from $48.9 million[178] - General and administrative expenses decreased to $3.8 million for Q3 2024 from $3.9 million in Q3 2023, and for the nine months, they decreased to $11.1 million from $14.8 million[180] - Depletion expense decreased to $12.1 million for Q3 2024 from $13.1 million in Q3 2023, and for the nine months, it decreased to $37.6 million from $43.2 million[182] Derivative Gains and Interest Expense - The company recorded a net derivative gain of $26.9 million for Q3 2024 compared to a net derivative loss of $53.7 million in Q3 2023[184] - Interest expense decreased to $6.3 million for Q3 2024 from $6.9 million in Q3 2023, and for the nine months, it decreased to $19.8 million from $24.2 million[185]

Production Performance - Average daily net production for Q3 2024 was 12,076 Boe/d (52% oil), a decrease from 12,717 Boe/d (46% oil) in Q3 2023[4] - Crude oil production increased to 577 MBbls in Q3 2024 from 539 MBbls in Q3 2023, representing a growth of 7.1%[18] - Natural gas production decreased to 1,844 MMcf in Q3 2024 from 2,054 MMcf in Q3 2023, a decline of 10.2%[18] - Total production volumes for Q3 2024 were 1,111 MBoe, down from 1,170 MBoe in Q3 2023, a decrease of 5.0%[18] - The Glacier and Rio pads continue to perform above expectations, with cumulative production averaging 370 Mboe (64% oil) and 132 Mboe (86% oil) respectively[3] Financial Performance - Total operating revenue for Q3 2024 was $45.3 million, down from $54.1 million in Q3 2023, primarily due to a $5.07 decrease in average realized prices[4] - The company reported a net income of $5.6 million or $0.34 per share for Q3 2024, with an adjusted diluted net loss of $21.5 million or $1.31 per share[5] - Net income for the three months ended September 30, 2024, was $21,628, compared to a net loss of $53,799 for the same period in 2023[15] - Net income available to common stockholders for Q3 2024 was $5.587 million, compared to a net loss of $57.662 million in Q3 2023[19] - The company reported a basic net income per share of $0.34 for the three months ended September 30, 2024, compared to a loss of $3.50 per share in the same period of 2023[15] Expenses and Costs - Lease operating and workover expense increased to $11.56 per Boe in Q3 2024 from $10.13 per Boe in Q3 2023, attributed to inflationary market increases[5] - Total operating expenses for the three months ended September 30, 2024, were $44,212, down from $47,289 in the same period of 2023, a decrease of 4.6%[15] - Total operating costs, as reported, were $28.50 per Boe in Q3 2024, slightly down from $28.94 per Boe in Q3 2023[18] - The company experienced a decrease in depletion, depreciation, and accretion expenses, which were $12,533 for the three months ended September 30, 2024, compared to $13,426 in the same period of 2023[21] Cash Flow and Liquidity - Total liquidity as of September 30, 2024, was $29.8 million, with $147.8 million of indebtedness outstanding[6] - Cash flows from operating activities showed a net cash used of $5,072 thousand for the three months ended September 30, 2024, compared to a net cash provided of $2,416 thousand in the same period last year[17] - The company reported a net decrease in cash, cash equivalents, and restricted cash of $(24,596) thousand for the three months ended September 30, 2024, compared to an increase of $24,076 thousand in the same period last year[17] - Cash, cash equivalents, and restricted cash at the end of the period were $29,925 thousand, down from $42,680 thousand at the end of the same period in 2023[17] Derivative Contracts and Unrealized Losses - The company reported a net gain on derivative contracts of $26,896 for the three months ended September 30, 2024, compared to a loss of $53,687 in the same period of 2023[15] - The company experienced a significant unrealized loss on derivative contracts of $(28,091) thousand for the three months ended September 30, 2024, compared to a gain of $46,805 thousand in the same period of 2023[17] - Unrealized losses on derivatives contracts were reported at $28,091 for the three months ended September 30, 2024, a significant improvement from unrealized gains of $46,805 in the same period of 2023[21] Strategic Developments - Battalion amended its merger agreement with Fury Resources, reducing the purchase price to $7.00 per share and requiring preferred equity holders to roll over 100% of their equity[2] - The company plans to hold a special meeting of stockholders on November 19, 2024, to vote on the merger agreement with Fury Resources[8] - Battalion Oil Corporation continues to focus on strategic adjustments to enhance financial performance, as indicated by the adjustments made in their EBITDA calculations[21] Adjusted EBITDA - Adjusted EBITDA for Q3 2024 was $13.5 million, slightly down from $13.6 million in Q3 2023[5] - Adjusted EBITDA for the three months ended September 30, 2024, was $13,458, slightly down from $13,625 in the same period of the previous year[21] - For the nine months ended September 30, 2024, Battalion reported an adjusted EBITDA of $38,473, down from $56,543 in the same period of 2023[21] - The company’s adjusted LTM EBITDA was reported at $48,445, indicating a focus on improving operational efficiency[23]

Core Insights - Battalion Oil Corporation reported its financial and operational results for Q3 2024, highlighting a decrease in production and revenue compared to the same period in 2023 [1][5]. Financial Performance - Average daily net production for Q3 2024 was 12,076 Boe/d (52% oil), down from 12,717 Boe/d (46% oil) in Q3 2023 [5][21]. - Total operating revenue for Q3 2024 was $45.3 million, a decrease from $54.1 million in Q3 2023, primarily due to a $5.07 drop in average realized prices and a decrease in production [5][6]. - The company reported a net income available to common stockholders of $5.6 million, or $0.34 per share, compared to a net loss of $57.7 million, or $(3.50) per share, in Q3 2023 [7][24]. Operational Highlights - The acid gas injection (AGI) facility treated approximately 18 MMcf/d on average and processed over 4.6 Bcf of sour gas, leading to expected savings of up to $2 million per month in gas treating costs [4][6]. - The company completed its six-well campaign ahead of schedule and under budget, with capital costs trending lower [3][5]. - The Vermejo two-well pad has been completed and is currently flowing back, with initial rates meeting company expectations [2][3]. Merger Agreement - Battalion amended its merger agreement with Fury Resources, reducing the purchase price to $7.00 per share and requiring existing preferred equity holders to roll over 100% of their preferred equity [2][9]. - A special meeting of stockholders is scheduled for November 19, 2024, to vote on the merger agreement [10]. Liquidity and Balance Sheet - As of September 30, 2024, the company had $147.8 million in outstanding indebtedness and total liquidity of $29.8 million [8][17]. - Current assets decreased to $57.6 million from $90.5 million at the end of 2023, while total assets were reported at $458 million [17][18].

Market Overview - U.S. stocks showed mixed performance with the Nasdaq Composite down more than 0.2% on Friday [1] - The Dow increased by 0.09% to 42,064.34, while the S&P 500 fell by 0.22% to 5,701.29 [1] Company Performance - Lennar Corporation reported better-than-expected financial results for Q3, projecting new orders between 19,000 to 19,300 and deliveries between 22,500 to 23,000 for Q4, with an average sales price of approximately $425,000 [2] - Banzai International, Inc. shares surged 131% to $6.62 following a 1-for-50 reverse stock split [2] - Battalion Oil Corporation shares increased by 120% to $6.48 after amending its merger agreement with Fury Resources for a cash acquisition at $7.00 per share [2] - Constellation Energy Corporation shares rose by 13% to $235.54 after signing a 20-year power purchase agreement with Microsoft [2] Declining Stocks - Corbus Pharmaceuticals Holdings, Inc. shares dropped 59% to $21.12 despite an Outperform rating and a price target of $82 from RBC Capital [3] - Sable Offshore Corp. shares fell 19% to $22.79 after announcing a $150 million private placement [3] - FedEx Corporation shares decreased by 15% to $254.45 due to weaker-than-expected Q1 results and lowered full-year guidance [3] Commodities - Oil prices increased by 0.1% to $72.03, while gold rose by 1.3% to $2,649.40 [4] - Silver prices were up 0.1% to $31.455, and copper fell by 0.4% to $4.33 [4] European Market Insights - European shares declined, with the eurozone's STOXX 600 down 1.34% and Germany's DAX down 1.43% [4] - Spain's trade deficit narrowed to EUR 3.2 billion in July from EUR 4.9 billion year-over-year [4] - The manufacturing climate indicator in France decreased to 98.6 in September from 98.9 [4] Asia Pacific Market Performance - Asian markets closed higher, with Japan's Nikkei 225 gaining 1.53% and Hong Kong's Hang Seng Index up 1.36% [5] - The Reserve Bank of India's foreign exchange reserves reached $689.5 billion as of September 13 [5] - The Bank of Japan maintained its key short-term interest rate at around 0.25% [5]

Core Insights - Two stocks in the energy sector are showing signs of being overbought, which may concern momentum-focused investors [1] Group 1: Brooge Energy Ltd (BROG) - Brooge Energy received a Nasdaq non-compliance letter on June 5 [2] - The stock has increased approximately 82% over the past month, reaching a 52-week high of $6.66 [2] - The RSI value for Brooge Energy is 83.55, indicating it is overbought [2] - On the latest trading day, shares gained 14.9% to close at $1.77 [2] Group 2: Battalion Oil Corp (BATL) - Battalion Oil amended its merger agreement with Fury Resources for an acquisition at $7.00 per share in cash [3] - The stock has risen around 17% over the past month, with a 52-week high of $9.69 [3] - The RSI value for Battalion Oil is 83.48, also indicating it is overbought [3] - On the latest trading day, shares fell 3.6% to close at $2.94 [3]