BATL - Battalion Oil Corporation Announces First Quarter 2022 Financial and Operating Results

May, 09 2022 05:00 PM Battalion Oil Corp (New)

HOUSTON, May 09, 2022 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced financial and operating results for the first quarter 2022.

Key Highlights

Meeting or exceeding performance targets on drilling and completion activities year to date
Mitigating cost increases and material shortages through increased operational and capital efficiencies
Continued robust commodity pricing offering opportunity to layer on new hedges at attractive prices
Ample liquidity to execute on 2022 capital program
Recently began flowing back on first wells of 2022 capital program

Management Comments

Richard Little, the Company’s CEO, commented, “As we entered 2022, our goal was clear: ramp up activity and drive significant growth in daily production and cash flow while remaining committed to capital discipline and operational efficiency. I am pleased to say we are delivering on all operational fronts and we are well on our way to achieving our 2022 goals.”

Mr. Little continued, “With the first wells from our capital program flowing back, we expect to begin driving significant cash flow growth as we burn off below market hedges and layer on new ones at attractive prices. As we continue to move through 2022 and turn additional wells online, we will continue to prioritize capital discipline and operational efficiency and will remain diligent in our efforts to mitigate risks caused by inflationary pressures, supply chain disruption, or shifts in the geopolitical landscape.”

Results of Operations

Average daily net production and total operating revenue during the first quarter 2022 were 14,767 barrels of oil equivalent per day (“Boepd”) (50% oil) and $81.6 million, respectively, as compared to production and revenue of 14,333 Boepd (56% oil) and $55.5 million, respectively, during the first quarter 2021. In February 2021, we temporarily shut-in production due to inclement weather. The estimated decrease in average daily oil and natural gas production associated with this temporary shut-in was approximately 1,300 Boe/d in the first three months of 2021. The increase in revenues in the first quarter of 2022 as compared to the first quarter 2021 is primarily attributable to an approximate $18.42 per Boe increase in average realized prices (excluding the impact of hedges).

Excluding the impact of hedges, Battalion realized 99% of the average NYMEX oil price during the first quarter of 2022. Realized hedge losses totaled approximately $32.8 million during the first quarter 2022.

Lease operating and workover expense was $9.32 per Boe in the first quarter of 2022 and $7.77 per Boe in the first quarter of 2021. Adjusted G&A was $3.30 per Boe in the first quarter of 2022 compared to $3.24 per Boe in the first quarter of 2021 (see Selected Operating Data table for additional information).

The Company reported a net loss to common stockholders for the first quarter of 2022 of $92.7 million and a net loss per basic and diluted share of $5.69. After adjusting for selected items, the Company reported a net loss to common stockholders for the first quarter of 2022 of $3.5 million, or a $0.22 loss per basic and diluted share (see Selected Item Review and Reconciliation for additional information). Adjusted EBITDA during the quarter ended March 31, 2022, was $11.8 million as compared to $15.3 million during the quarter ended March 31, 2021 (see Adjusted EBITDA Reconciliation table for additional information).

Liquidity and Balance Sheet

As of March 31, 2022, the Company had $200.0 million of indebtedness outstanding, approximately $1.6 million of letters of credit outstanding and up to $35.0 million in delayed draw term loans available to be drawn under our Term Loan Agreement. Total liquidity on March 31, 2022, inclusive of $43.5 million of cash and cash equivalents, was $78.5 million. On April 29, 2022, the Company borrowed the $20.0 million available under the first delayed draw of the Term Loan Agreement.

Conference Call Information

Battalion Oil Corporation has scheduled a conference call for Tuesday, May 10, 2022, at 10:00 a.m. Central Time. To access the live conference call, local participants may dial +1 (646) 828-8193. All other participants may dial (888) 220-8474 for toll free. The confirmation code for the live conference call is 2126195. The live conference call will also be available through the Company’s website at www.battalionoil.com on the Events and Presentations page under the Investors tab. The replay for the event will be available on the Company’s website at www.battalionoil.com on the Events and Presentations page under the Investors tab through June 30, 2022.

Forward Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not strictly historical statements constitute forward-looking statements. Forward-looking statements include, among others, statements about anticipated production, liquidity, capital spending, drilling and completion plans, and forward guidance. Forward-looking statements may often, but not always, be identified by the use of such words such as “expects”, “believes”, “intends”, “anticipates”, “plans”, “estimates”, “projects”, “potential”, “possible”, or “probable” or statements that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved. Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and other filings submitted by the Company to the U.S. Securities and Exchange Commission (“SEC”), copies of which may be obtained from the SEC’s website at www.sec.gov or through the Company’s website at www.battalionoil.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company’s expectations.

About Battalion

Battalion Oil Corporation is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)










Three Months Ended


March 31,


2022

2021
Operating revenues:






Oil, natural gas and natural gas liquids sales:






Oil

$
62,524


$
41,270

Natural gas


8,881



9,087

Natural gas liquids


10,003



4,909

Total oil, natural gas and natural gas liquids sales


81,408



55,266

Other


194



252

Total operating revenues


81,602



55,518








Operating expenses:






Production:






Lease operating


11,524



9,467

Workover and other


865



560

Taxes other than income


4,951



3,192

Gathering and other


15,255



13,171

General and administrative


4,985



4,827

Depletion, depreciation and accretion


10,220



10,595

Total operating expenses


47,800



41,812

Income (loss) from operations


33,802



13,706








Other income (expenses):






Net gain (loss) on derivative contracts


(123,858
)


(45,711
)
Interest expense and other


(2,688
)


(1,370
)
Total other income (expenses)


(126,546
)


(47,081
)
Income (loss) before income taxes


(92,744
)


(33,375
)
Income tax benefit (provision)


—



—

Net income (loss)

$
(92,744
)

$
(33,375
)







Net income (loss) per share of common stock:






Basic

$
(5.69
)

$
(2.06
)
Diluted

$
(5.69
)

$
(2.06
)
Weighted average common shares outstanding:






Basic


16,303



16,232

Diluted


16,303



16,232

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)










March 31, 2022

December 31, 2021
Current assets:






Cash and cash equivalents

$
43,487


$
46,864

Accounts receivable, net


43,375



36,806

Assets from derivative contracts


3,596



1,383

Restricted cash


150



1,495

Prepaids and other


1,268



1,366

Total current assets


91,876



87,914

Oil and natural gas properties (full cost method):






Evaluated


593,525



569,886

Unevaluated


64,885



64,305

Gross oil and natural gas properties


658,410



634,191

Less - accumulated depletion


(349,843
)


(339,776
)
Net oil and natural gas properties


308,567



294,415

Other operating property and equipment:






Other operating property and equipment


3,627



3,467

Less - accumulated depreciation


(1,079
)


(1,035
)
Net other operating property and equipment


2,548



2,432

Other noncurrent assets:






Assets from derivative contracts


5,195



2,515

Operating lease right of use assets


631



721

Other assets


1,973



2,270

Total assets

$
410,790


$
390,267








Current liabilities:






Accounts payable and accrued liabilities

$
81,370


$
62,826

Liabilities from derivative contracts


103,232



58,322

Current portion of long-term debt


5,000



85

Operating lease liabilities


373



369

Total current liabilities


189,975



121,602

Long-term debt, net


177,463



181,565

Other noncurrent liabilities:






Liabilities from derivative contracts


58,166



7,144

Asset retirement obligations


12,005



11,896

Operating lease liabilities


258



352

Other


1,971



4,003

Commitments and contingencies






Stockholders’ equity:






Common stock: 100,000,000 shares of $0.0001 par value authorized;






16,337,030 and 16,273,913 shares issued and outstanding as of






March 31, 2022 and December 31, 2021, respectively


2



2

Additional paid-in capital


332,178



332,187

Retained earnings (accumulated deficit)


(361,228
)


(268,484
)
Total stockholders’ equity


(29,048
)


63,705

Total liabilities and stockholders’ equity

$
410,790


$
390,267

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)










Three Months Ended


March 31,


2022

2021
Cash flows from operating activities:






Net income (loss)

$
(92,744
)

$
(33,375
)
Adjustments to reconcile net income (loss) to net cash






provided by (used in) operating activities:






Depletion, depreciation and accretion


10,220



10,595

Stock-based compensation, net


384



594

Unrealized loss (gain) on derivative contracts


91,038



36,052

Amortization of deferred loan costs


899



—

Reorganization items


(744
)


—

Accrued settlements on derivative contracts


12,809



4,568

Change in fair value of Change of Control Call Option


(2,032
)


—

Other income (expense)


—



(117
)
Cash flows from operations before changes in working capital


19,830



18,317

Changes in working capital


(7,783
)


(4,959
)
Net cash provided by (used in) operating activities


12,047



13,358








Cash flows from investing activities:






Oil and natural gas capital expenditures


(15,684
)


(13,792
)
Proceeds received from sale of oil and natural gas properties


—



1,076

Funds held in escrow and other


(160
)


(3
)
Net cash provided by (used in) investing activities


(15,844
)


(12,719
)







Cash flows from financing activities:






Proceeds from borrowings


—



16,000

Repayments of borrowings


(85
)


(19,000
)
Debt issuance costs


(379
)


—

Other


(461
)


(263
)
Net cash provided by (used in) financing activities


(925
)


(3,263
)







Net increase (decrease) in cash, cash equivalents and restricted cash


(4,722
)


(2,624
)







Cash, cash equivalents and restricted cash at beginning of period


48,359



4,295

Cash, cash equivalents and restricted cash at end of period

$
43,637


$
1,671

BATTALION OIL CORPORATION
SELECTED OPERATING DATA (Unaudited)










Three Months Ended


March 31,


2022

2021
Production volumes:






Crude oil (MBbls)


670



719

Natural gas (MMcf)


2,315



2,133

Natural gas liquids (MBbls)


273



215

Total (MBoe)


1,329



1,290

Average daily production (Boe/d)


14,767



14,333








Average prices:






Crude oil (per Bbl)

$
93.32


$
57.40

Natural gas (per Mcf)


3.84



4.26

Natural gas liquids (per Bbl)


36.64



22.83

Total per Boe


61.26



42.84








Cash effect of derivative contracts:






Crude oil (per Bbl)

$
(46.64
)

$
(13.17
)
Natural gas (per Mcf)


(0.68
)


(0.09
)
Natural gas liquids (per Bbl)


—



—

Total per Boe


(24.70
)


(7.49
)







Average prices computed after cash effect of settlement of derivative contracts:






Crude oil (per Bbl)

$
46.68


$
44.23

Natural gas (per Mcf)


3.16



4.17

Natural gas liquids (per Bbl)


36.64



22.83

Total per Boe


36.56



35.35








Average cost per Boe:






Production:






Lease operating

$
8.67


$
7.34

Workover and other


0.65



0.43

Taxes other than income


3.73



2.47

Gathering and other


11.48



10.21

General and administrative, as adjusted ⁽¹⁾


3.30



3.24

Depletion


7.57



8.02








(1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:







General and administrative:






General and administrative, as reported

$
3.75


$
3.74

Stock-based compensation:






Non-cash


(0.29
)


(0.46
)
Non-recurring charges and other:






Cash


(0.16
)


(0.04
)
General and administrative, as adjusted ⁽²⁾

$
3.30


$
3.24








Total operating costs, as reported

$
28.28


$
24.19

Total adjusting items


(0.45
)


(0.50
)
Total operating costs, as adjusted ⁽³⁾

$
27.83


$
23.69

(2) General and administrative, as adjusted, is a non-GAAP measure that excludes non-cash stock-based compensation charges relating to equity awards under our incentive stock plan, as well as other cash charges associated with non-recurring charges and other. The Company believes that it is useful to understand the effects that these charges have on general and administrative expenses and total operating costs and that exclusion of such charges is useful for comparison to prior periods.
(3) Represents lease operating expense, workover and other expense, taxes other than income, gathering and other expense and general and administrative costs per Boe, adjusted for items noted in the reconciliation above.

BATTALION OIL CORPORATION
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)
(In thousands, except per share amounts )










Three Months Ended


March 31,


2022

2021
*As Reported:*






Net income (loss), as reported

$
(92,744
)

$
(33,375
)







*Impact of Selected Items:*






Unrealized loss (gain) on derivatives contracts:






Crude oil

$
82,901


$
34,811

Natural gas


8,137



1,241

Total mark-to-market non-cash charge


91,038



36,052

Change in fair value of Change of Control Call Option


(2,032
)


—

Non-recurring charges and other


217



52

Selected items, before income taxes


89,223



36,104

Income tax effect of selected items


—



—

Selected items, net of tax


89,223



36,104








*As Adjusted:*






Net income (loss), excluding selected items ⁽¹⁾

$
(3,521
)

$
2,729








Basic net income (loss) per common share, as reported

$
(5.69
)

$
(2.06
)
Impact of selected items


5.47



2.23

Basic net income (loss) per common share, excluding selected items ⁽¹⁾

$
(0.22
)

$
0.17















Diluted net income (loss) per common share, as reported

$
(5.69
)

$
(2.06
)
Impact of selected items


5.47



2.23

Diluted net income (loss) per common share, excluding selected items ⁽¹⁾⁽²⁾

$
(0.22
)

$
0.17















Net cash provided by (used in) operating activities

$
12,047


$
13,358

Changes in working capital


7,783



4,959

Cash flows from operations before changes in working capital


19,830



18,317

Cash components of selected items


(11,848
)


(4,516
)
Income tax effect of selected items


—



—

Cash flows from operations before changes in working capital, adjusted for selected items ⁽¹⁾

$
7,982


$
13,801

(1) Net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital adjusted for selected items are non-GAAP measures presented based on management’s belief that they will enable a user of the financial information to understand the impact of these items on reported results. These financial measures are not measures of financial performance under GAAP and should not be considered as an alternative to net income, earnings per share and cash flows from operations, as defined by GAAP. These financial measures may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion’s performance.

(2) The impact of selected items for the three months ended March 31, 2022 and 2021 were calculated based upon weighted average diluted shares of 16.3 million and 16.4 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items.

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)










Three Months Ended


March 31,


2022

2021







Net income (loss), as reported

$
(92,744
)

$
(33,375
)
Impact of adjusting items:






Interest expense


4,721



1,496

Depletion, depreciation and accretion


10,220



10,595

Stock-based compensation


384



594

Interest income


—



(125
)
Unrealized loss (gain) on derivatives contracts


91,038



36,052

Change in fair value of Change of Control Call Option


(2,032
)


—

Non-recurring charges and other


217



48

Adjusted EBITDA ⁽¹⁾

$
11,804


$
15,285

(1) Adjusted EBITDA is a non-GAAP measure, which is presented based on management’s belief that it will enable a user of the financial information to understand the impact of these items on reported results. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP measures, including net income (loss). This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion’s performance.

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)
















Three Months

Three Months

Three Months

Three Months


Ended

Ended

Ended

Ended


March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021













Net income (loss), as reported

$
(92,744
)

$
25,935


$
13,052


$
(33,929
)
Impact of adjusting items:












Interest expense


4,721



3,215



1,904



1,838

Depletion, depreciation and accretion


10,220



12,679



10,885



11,249

Stock-based compensation


384



450



481



485

Interest income


—



(1
)


(3
)


(84
)
Loss (gain) on extinguishment of debt


—



122



(2,068
)


—

Unrealized loss (gain) on derivatives contracts


91,038



(21,332
)


(1,816
)


34,817

Change in fair value of Change of Control Call Option


(2,032
)


—



—



—

Non-recurring charges (credits) and other


217



(718
)


559



(275
)
Adjusted EBITDA ⁽¹⁾

$
11,804


$
20,350


$
22,994


$
14,101














Adjusted LTM EBITDA ⁽¹⁾

$
69,249

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)
















Three Months

Three Months

Three Months

Three Months


Ended

Ended

Ended

Ended


March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020













Net income (loss), as reported

$
(33,375
)

$
(63,757
)

$
(153,125
)

$
(127,316
)
Impact of adjusting items:












Interest expense


1,496



1,853



1,964



1,842

Depletion, depreciation and accretion


10,595



13,886



15,755



14,382

Full cost ceiling impairment


—



26,702



128,336



60,107

Stock-based compensation


594



785



620



786

Interest income


(125
)


(171
)


(273
)


(232
)
Restructuring


—



—



—



2,162

Unrealized loss (gain) on derivatives contracts


36,052



30,172



21,128



67,221

Rig termination and stacking charges


—



—



—



3,383

Non-recurring charges (credits) and other


48



(658
)


210



880

Adjusted EBITDA ⁽¹⁾⁽²⁾

$
15,285


$
8,812


$
14,615


$
23,215














Adjusted LTM EBITDA ⁽¹⁾⁽²⁾

$
61,927

(2) A djusted EBITDA for the three months ended September 30,2020 and June 30,2020 includes approximately $6.6 million and $16.4 million of net proceeds, respectively, from hedge monetizations that occurred during the periods.

ContactChris LangManager, Finance(832) 538-0551

Company Name:	Battalion Oil Corp (New)
Stock Symbol:	BATL
Market:	NYSE
Website:	battalionoil.com

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