Battalion Oil (BATL) Earnings & Revenues Decline Y/Y in Q2

Core Viewpoint - Battalion Oil Corporation (BATL) is facing challenges in Q2 2024 due to declining production and lower natural gas prices, but has effectively controlled costs and is pursuing strategic initiatives to improve its outlook [1]. Financial Performance - Battalion Oil reported a Q2 2024 loss per share of 80 cents, compared to a loss of 42 cents in the same quarter of 2023 [2]. - Total operating revenues decreased to $49.1 million from $54.3 million year-over-year, primarily due to reduced average daily production and lower natural gas prices [2]. Production Metrics - Average daily production in Q2 2024 was 12,857 barrels of oil equivalent per day (Boe/d), down from 14,253 Boe/d in Q2 2023 [3]. - Oil production fell to 577 thousand barrels (MBbls) from 636 MBbls, while natural gas production decreased from 2,155 MMcf to 1,929 MMcf [3]. Pricing Trends - The average realized price for crude oil increased to $79.20 per barrel from $72.59 per barrel year-over-year [4]. - Natural gas prices dropped significantly to a negative $1.10 per Mcf from 96 cents per Mcf in the prior-year period [4]. - The average realized price for NGLs rose modestly to $20.31 per barrel from $18.73 per barrel [4]. Loss and EBITDA - Battalion Oil reported a net loss of $8.7 million in Q2 2024, widening from a $5.7 million loss in Q2 2023 [5]. - Adjusted EBITDA slightly declined to $15.6 million from $16.8 million year-over-year [5]. Cost Management - The company maintained lease operating expenses effectively, aided by the operationalization of its acid gas injection facility, which reduced operational expenses by $4.26 per Boe [6]. - General and administrative expenses decreased from $4.04 per Boe to $2.85 per Boe due to payroll reductions [6]. Cash and Debt Position - As of June 30, 2024, Battalion Oil had cash and cash equivalents of $54.4 million, down from $57.5 million at the end of 2023 [7]. - Total indebtedness was $160.2 million, with $52.6 million classified as current debt [7]. Management Initiatives - Management emphasized ongoing cost reduction and production efficiency initiatives, including a successful $20 million preferred equity raise to support drilling and debt reduction [8]. Strategic Developments - The company is pursuing a merger with Fury Resources, with discussions ongoing to amend the purchase price from $9.80 to $7 per share [9]. - Battalion Oil completed a six-well drilling campaign ahead of schedule and under budget, with plans for continued drilling in Texas [9].