Battalion Oil(BATL) - 2025 Q2 - Quarterly Results

Overview of Second Quarter 2025 Results Key Highlights & Management Comments 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] - Initial production rates from the new wells are outperforming legacy offset wells, which have also seen increased production due to positive frac interference[2] - 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] Financial & Operating Performance 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] 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 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 Condensed Consolidated Statements of Operations 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 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 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 Selected Operating Data 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 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 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 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]