BATL - Battalion Oil Corporation Announces Third Quarter 2022 Financial and Operating Results
HOUSTON, Nov. 14, 2022 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced financial and operating results for the third quarter 2022.
Key Highlights
- New volumes from 2022 capital program driving production growth – ~8% increase in average daily production over second quarter 2022
- Approximately 34% increase in Adjusted EBITDA over second quarter 2022
- Improved realized pricing – ~11% increase in realized crude oil prices despite ~15% decline in average crude oil prices over second quarter 2022
- Most recent three well pad began flowing back during second week of October, raising total to 8 wells put online in 2022
- Completed Third Bone Spring test with promising early results – production in line with Wolfcamp well performance
- Construction of acid gas treating facility on track with an expected facility in-service date during 1Q23
- Revised FY 2022 guidance for oil production; reiterating guidance on total production, total capital expenditures, and wells put online
Management Comments
Richard Little, the Company’s CEO, commented, “As we continue to build on our strong drilling and completion performance in 2022, our third quarter results begin to reflect the benefits of our return to development. With our capital program driving production growth and realized pricing improving as we outproduce our legacy hedges, Battalion delivered an approximate 34% increase in Adjusted EBITDA over second quarter despite an overall decline in benchmark prices. This is a significant achievement for Battalion as we continue to build momentum towards 2023.”
“We are also excited to announce that we recently completed a test of the Third Bone Spring at Monument Draw, and early results are promising with production in line with our Wolfcamp well performance. With several producing Bone Spring wells around our acreage, a successful test would significantly de-risk that zone across our footprint and could unlock the potential for multi-zone development. We will continue to closely monitor these results and expect to provide a more complete update at year end.”
“With much of our capital program behind us, we also want to take this opportunity to provide revised guidance expectations for 2022. While we are reiterating our original guidance for capital activity, capex and total production, we do anticipate a slight reduction to our oil cut and, as such, have reduced estimates for total oil production.”
“As we move into the fourth quarter, we remain focused on efficient and disciplined operations as we close out our 2022 capital program. With new wells continuing to come online, a Bone Spring test underway, and growing cash flows, we feel well positioned for success in the fourth quarter and beyond.”
Results of Operations
Average daily net production and total operating revenue during the third quarter 2022 were 16,228 barrels of oil equivalent per day (“Boepd”) (50% oil) and $99.1 million, respectively, as compared to production and revenue of 17,728 Boepd (53% oil) and $80.8 million, respectively, during the third quarter 2021. The increase in revenues year-over-year is primarily attributable to an approximate $16.75 per Boe increase in average prices (excluding the impact of hedges). Excluding the impact of hedges, Battalion realized 102% of the average NYMEX oil price during the third quarter of 2022. Realized hedge losses totaled approximately $34.5 million during the third quarter 2022.
Lease operating and workover expense was $9.93 per Boe in the third quarter of 2022 and $7.95 per Boe in the third quarter of 2021. Adjusted G&A was $2.11 per Boe in the third quarter of 2022 compared to $2.11 per Boe in the third quarter of 2021 (see Selected Operating Data table for additional information).
The Company reported net income to common stockholders for the third quarter of 2022 of $105.9 million and net income per diluted share of $6.42. After adjusting for selected items, the Company reported adjusted net income to common stockholders for the third quarter of 2022 of $4.0 million, or adjusted net income of $0.24 per diluted share (see Selected Item Review and Reconciliation for additional information). Adjusted EBITDA during the quarter ended September 30, 2022 was $24.3 million as compared to $23.0 million during the quarter ended September 30, 2021 (see Adjusted EBITDA Reconciliation table for additional information).
Liquidity and Balance Sheet
As of September 30, 2022, the Company had $220.1 million of indebtedness outstanding, approximately $1.3 million of letters of credit outstanding and up to $15.0 million in delayed draw term loans available to be drawn under our Term Loan Agreement. Total liquidity on September 30, 2022, inclusive of $33.5 million of cash and cash equivalents, was $48.5 million.
At September 30, 2022, the Company was not in compliance with Current Ratio requirements under the Term Loan Agreement. On November 10, 2022, the Term Loan Agreement was amended to modify certain provisions including, but not limited to, decreasing the Current Ratio requirement to 0.9 to 1.00 as of September 30, 2022. As a result of the amendment, we were in compliance with the amended Current Ratio covenant for the quarter ended September 30, 2022. A further explanation of the revisions to the term loan credit facility can be found in Note 5 of the Company’s Form 10-Q.
Revised 2022 Guidance
The Company is providing updated FY 2022 guidance for oil production, which has been reduced to a range of 7.5 – 8.5 MBopd. The Company is maintaining all other FY 2022 Guidance.
| Revised FY 2022 Guidance |
| Low |
| High |
| Oil Production, MBopd |
| 7.5 |
| – |
| 8.5 |
| Total Production, MBoepd |
| 14.0 |
| – |
| 17.0 |
| Wells POL |
| 8 |
| – |
| 12 |
| Total Capex, |
| $ |
| 130 |
| – |
| $ |
| 150 |
Conference Call Information
Battalion Oil Corporation has scheduled a conference call for Wednesday, November 16, 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 888-394-8218 for toll free. The confirmation code for the live conference call is 5533000. 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.
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.
Contact
Chris Lang
Director, Finance & Investor Relations
(832) 538-0551
| BATTALION OIL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) |
| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| Operating revenues: |
| Oil, natural gas and natural gas liquids sales: |
| Oil |
| $ |
| 70,406 |
| $ |
| 60,023 |
| $ |
| 206,874 |
| $ |
| 153,228 |
| Natural gas |
| 15,656 |
| 9,435 |
| 39,296 |
| 23,839 |
| Natural gas liquids |
| 12,644 |
| 11,046 |
| 35,234 |
| 22,806 |
| Total oil, natural gas and natural gas liquids sales |
| 98,706 |
| 80,504 |
| 281,404 |
| 199,873 |
| Other |
| 443 |
| 312 |
| 858 |
| 827 |
| Total operating revenues |
| 99,149 |
| 80,816 |
| 282,262 |
| 200,700 |
| Operating expenses: |
| Production: |
| Lease operating |
| 12,265 |
| 11,979 |
| 35,698 |
| 31,615 |
| Workover and other |
| 2,559 |
| 990 |
| 4,807 |
| 2,317 |
| Taxes other than income |
| 5,613 |
| 3,082 |
| 15,936 |
| 9,186 |
| Gathering and other |
| 16,663 |
| 15,934 |
| 47,787 |
| 43,436 |
| General and administrative |
| 4,498 |
| 4,491 |
| 14,071 |
| 13,349 |
| Depletion, depreciation and accretion |
| 13,615 |
| 10,885 |
| 36,436 |
| 32,729 |
| Total operating expenses |
| 55,213 |
| 47,361 |
| 154,735 |
| 132,632 |
| Income (loss) from operations |
| 43,936 |
| 33,455 |
| 127,527 |
| 68,068 |
| Other income (expenses): |
| Net gain (loss) on derivative contracts |
| 67,634 |
| (20,571 |
| ) |
| (88,134 |
| ) |
| (119,371 |
| ) |
| Interest expense and other |
| (5,682 |
| ) |
| (1,900 |
| ) |
| (13,202 |
| ) |
| (5,017 |
| ) |
| Gain (loss) on extinguishment of debt |
| — |
| 2,068 |
| — |
| 2,068 |
| Total other income (expenses) |
| 61,952 |
| (20,403 |
| ) |
| (101,336 |
| ) |
| (122,320 |
| ) |
| Income (loss) before income taxes |
| 105,888 |
| 13,052 |
| 26,191 |
| (54,252 |
| ) |
| Income tax benefit (provision) |
| — |
| — |
| — |
| — |
| Net income (loss) |
| $ |
| 105,888 |
| $ |
| 13,052 |
| $ |
| 26,191 |
| $ |
| (54,252 |
| ) |
| Net income (loss) per share of common stock: |
| Basic |
| $ |
| 6.48 |
| $ |
| 0.80 |
| $ |
| 1.60 |
| $ |
| (3.34 |
| ) |
| Diluted |
| $ |
| 6.42 |
| $ |
| 0.79 |
| $ |
| 1.59 |
| $ |
| (3.34 |
| ) |
| Weighted average common shares outstanding: |
| Basic |
| 16,340 |
| 16,270 |
| 16,327 |
| 16,257 |
| Diluted |
| 16,483 |
| 16,428 |
| 16,496 |
| 16,257 |
| BATTALION OIL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share amounts) |
| September 30, 2022 |
| December 31, 2021 |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 33,499 |
| $ |
| 46,864 |
| Accounts receivable, net |
| 39,867 |
| 36,806 |
| Assets from derivative contracts |
| 18,225 |
| 1,383 |
| Restricted cash |
| 60 |
| 1,495 |
| Prepaids and other |
| 958 |
| 1,366 |
| Total current assets |
| 92,609 |
| 87,914 |
| Oil and natural gas properties (full cost method): |
| Evaluated |
| 680,202 |
| 569,886 |
| Unevaluated |
| 65,021 |
| 64,305 |
| Gross oil and natural gas properties |
| 745,223 |
| 634,191 |
| Less - accumulated depletion |
| (375,648 |
| ) |
| (339,776 |
| ) |
| Net oil and natural gas properties |
| 369,575 |
| 294,415 |
| Other operating property and equipment: |
| Other operating property and equipment |
| 4,223 |
| 3,467 |
| Less - accumulated depreciation |
| (1,072 |
| ) |
| (1,035 |
| ) |
| Net other operating property and equipment |
| 3,151 |
| 2,432 |
| Other noncurrent assets: |
| Assets from derivative contracts |
| 8,789 |
| 2,515 |
| Operating lease right of use assets |
| 446 |
| 721 |
| Other assets |
| 2,933 |
| 2,270 |
| Total assets |
| $ |
| 477,503 |
| $ |
| 390,267 |
| Current liabilities: |
| Accounts payable and accrued liabilities |
| $ |
| 100,198 |
| $ |
| 62,826 |
| Liabilities from derivative contracts |
| 41,088 |
| 58,322 |
| Current portion of long-term debt |
| 25,041 |
| 85 |
| Operating lease liabilities |
| 381 |
| 369 |
| Asset retirement obligations |
| 222 |
| — |
| Total current liabilities |
| 166,930 |
| 121,602 |
| Long-term debt, net |
| 179,372 |
| 181,565 |
| Other noncurrent liabilities: |
| Liabilities from derivative contracts |
| 23,583 |
| 7,144 |
| Asset retirement obligations |
| 15,250 |
| 11,896 |
| Operating lease liabilities |
| 65 |
| 352 |
| Other |
| 960 |
| 4,003 |
| Commitments and contingencies |
| Stockholders' equity: |
| Common stock: 100,000,000 shares of $0.0001 par value authorized; 16,343,814 and 16,273,913 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively |
| 2 |
| 2 |
| Additional paid-in capital |
| 333,634 |
| 332,187 |
| Retained earnings (accumulated deficit) |
| (242,293 |
| ) |
| (268,484 |
| ) |
| Total stockholders' equity |
| 91,343 |
| 63,705 |
| Total liabilities and stockholders' equity |
| $ |
| 477,503 |
| $ |
| 390,267 |
| BATTALION OIL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) |
| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| Cash flows from operating activities: |
| Net income (loss) |
| $ |
| 105,888 |
| $ |
| 13,052 |
| $ |
| 26,191 |
| $ |
| (54,252 |
| ) |
| Adjustments to reconcile net income (loss) to net cash |
| provided by (used in) operating activities: |
| Depletion, depreciation and accretion |
| 13,615 |
| 10,885 |
| 36,436 |
| 32,729 |
| Stock-based compensation, net |
| 683 |
| 481 |
| 1,540 |
| 1,560 |
| Unrealized loss (gain) on derivative contracts |
| (102,112 |
| ) |
| (1,816 |
| ) |
| (23,911 |
| ) |
| 69,053 |
| Amortization of deferred loan costs |
| 919 |
| — |
| 2,726 |
| — |
| Reorganization items |
| — |
| — |
| (744 |
| ) |
| — |
| Loss (gain) on extinguishment of debt |
| — |
| (2,068 |
| ) |
| — |
| (2,068 |
| ) |
| Accrued settlements on derivative contracts |
| (7,159 |
| ) |
| (203 |
| ) |
| 7,493 |
| 6,769 |
| Change in fair value of Change of Control Call Option |
| (448 |
| ) |
| — |
| (3,043 |
| ) |
| — |
| Other income (expense) |
| (32 |
| ) |
| 58 |
| (128 |
| ) |
| (229 |
| ) |
| Cash flows from operations before changes in working capital |
| 11,354 |
| 20,389 |
| 46,560 |
| 53,562 |
| Changes in working capital |
| 14,127 |
| (2,357 |
| ) |
| 7,254 |
| (6,430 |
| ) |
| Net cash provided by (used in) operating activities |
| 25,481 |
| 18,032 |
| 53,814 |
| 47,132 |
| Cash flows from investing activities: |
| Oil and natural gas capital expenditures |
| (35,621 |
| ) |
| (9,611 |
| ) |
| (86,998 |
| ) |
| (47,204 |
| ) |
| Proceeds received from sale of oil and natural gas properties |
| 1 |
| 21 |
| 1 |
| 947 |
| Other operating property and equipment capital expenditures |
| (244 |
| ) |
| (7 |
| ) |
| (949 |
| ) |
| (7 |
| ) |
| Other |
| 70 |
| 18 |
| 166 |
| 16 |
| Net cash provided by (used in) investing activities |
| (35,794 |
| ) |
| (9,579 |
| ) |
| (87,780 |
| ) |
| (46,248 |
| ) |
| Cash flows from financing activities: |
| Proceeds from borrowings |
| 122 |
| 63,000 |
| 20,122 |
| 145,000 |
| Repayments of borrowings |
| — |
| (71,021 |
| ) |
| (85 |
| ) |
| (148,021 |
| ) |
| Debt issuance costs |
| — |
| — |
| (379 |
| ) |
| — |
| Other |
| (25 |
| ) |
| (22 |
| ) |
| (492 |
| ) |
| (290 |
| ) |
| Net cash provided by (used in) financing activities |
| 97 |
| (8,043 |
| ) |
| 19,166 |
| (3,311 |
| ) |
| Net increase (decrease) in cash, cash equivalents and restricted cash |
| (10,216 |
| ) |
| 410 |
| (14,800 |
| ) |
| (2,427 |
| ) |
| Cash, cash equivalents and restricted cash at beginning of period |
| 43,775 |
| 1,458 |
| 48,359 |
| 4,295 |
| Cash, cash equivalents and restricted cash at end of period |
| $ |
| 33,559 |
| $ |
| 1,868 |
| $ |
| 33,559 |
| $ |
| 1,868 |
| BATTALION OIL CORPORATION SELECTED OPERATING DATA (Unaudited) |
| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| Production volumes: |
| Crude oil (MBbls) |
| 753 |
| 872 |
| 2,097 |
| 2,396 |
| Natural gas (MMcf) |
| 2,352 |
| 2,589 |
| 7,022 |
| 6,777 |
| Natural gas liquids (MBbls) |
| 348 |
| 327 |
| 924 |
| 812 |
| Total (MBoe) |
| 1,493 |
| 1,631 |
| 4,191 |
| 4,338 |
| Average daily production (Boe/d) |
| 16,228 |
| 17,728 |
| 15,352 |
| 15,890 |
| Average prices: |
| Crude oil (per Bbl) |
| $ |
| 93.50 |
| $ |
| 68.83 |
| $ |
| 98.65 |
| $ |
| 63.95 |
| Natural gas (per Mcf) |
| 6.66 |
| 3.64 |
| 5.60 |
| 3.52 |
| Natural gas liquids (per Bbl) |
| 36.33 |
| 33.78 |
| 38.13 |
| 28.09 |
| Total per Boe |
| 66.11 |
| 49.36 |
| 67.14 |
| 46.07 |
| Cash effect of derivative contracts: |
| Crude oil (per Bbl) |
| $ |
| (36.07 |
| ) |
| $ |
| (24.19 |
| ) |
| $ |
| (46.50 |
| ) |
| $ |
| (20.33 |
| ) |
| Natural gas (per Mcf) |
| (3.11 |
| ) |
| (0.50 |
| ) |
| (2.07 |
| ) |
| (0.24 |
| ) |
| Natural gas liquids (per Bbl) |
| — |
| — |
| — |
| — |
| Total per Boe |
| (23.09 |
| ) |
| (13.73 |
| ) |
| (26.73 |
| ) |
| (11.60 |
| ) |
| Average prices computed after cash effect of settlement of derivative contracts: |
| Crude oil (per Bbl) |
| $ |
| 57.43 |
| $ |
| 44.64 |
| $ |
| 52.15 |
| $ |
| 43.62 |
| Natural gas (per Mcf) |
| 3.55 |
| 3.14 |
| 3.53 |
| 3.28 |
| Natural gas liquids (per Bbl) |
| 36.33 |
| 33.78 |
| 38.13 |
| 28.09 |
| Total per Boe |
| 43.02 |
| 35.63 |
| 40.41 |
| 34.47 |
| Average cost per Boe: |
| Production: |
| Lease operating |
| $ |
| 8.22 |
| $ |
| 7.34 |
| $ |
| 8.52 |
| $ |
| 7.29 |
| Workover and other |
| 1.71 |
| 0.61 |
| 1.15 |
| 0.53 |
| Taxes other than income |
| 3.76 |
| 1.89 |
| 3.80 |
| 2.12 |
| Gathering and other |
| 11.16 |
| 9.77 |
| 11.40 |
| 10.01 |
| General and administrative, as adjusted (1) |
| 2.11 |
| 2.11 |
| 2.74 |
| 2.64 |
| Depletion |
| 8.97 |
| 6.57 |
| 8.56 |
| 7.39 |
| (1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below: |
| General and administrative: |
| General and administrative, as reported |
| $ |
| 3.02 |
| $ |
| 2.75 |
| $ |
| 3.36 |
| $ |
| 3.08 |
| Stock-based compensation: |
| Non-cash |
| (0.46 |
| ) |
| (0.29 |
| ) |
| (0.37 |
| ) |
| (0.36 |
| ) |
| Non-recurring charges and other: |
| Cash |
| (0.45 |
| ) |
| (0.35 |
| ) |
| (0.25 |
| ) |
| (0.08 |
| ) |
| General and administrative, as adjusted ( 2) |
| $ |
| 2.11 |
| $ |
| 2.11 |
| $ |
| 2.74 |
| $ |
| 2.64 |
| Total operating costs, as reported |
| $ |
| 27.87 |
| $ |
| 22.36 |
| $ |
| 28.23 |
| $ |
| 23.03 |
| Total adjusting items |
| (0.91 |
| ) |
| (0.64 |
| ) |
| (0.62 |
| ) |
| (0.44 |
| ) |
| Total operating costs, as adjusted ( 3) |
| $ |
| 26.96 |
| $ |
| 21.72 |
| $ |
| 27.61 |
| $ |
| 22.59 |
________________________________
(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 RECONCILIATION (Unaudited) (In thousands, except per share amounts) |
| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| As Reported: |
| Net income (loss), as reported |
| $ |
| 105,888 |
| $ |
| 13,052 |
| $ |
| 26,191 |
| $ |
| (54,252 |
| ) |
| Impact of Selected Items: |
| Unrealized loss (gain) on derivatives contracts: |
| Crude oil |
| $ |
| (99,848 |
| ) |
| $ |
| (7,416 |
| ) |
| $ |
| (28,886 |
| ) |
| $ |
| 58,986 |
| Natural gas |
| (2,264 |
| ) |
| 5,600 |
| 4,975 |
| 10,067 |
| Total mark-to-market non-cash charge |
| (102,112 |
| ) |
| (1,816 |
| ) |
| (23,911 |
| ) |
| 69,053 |
| Loss (gain) on extinguishment of debt |
| — |
| (2,068 |
| ) |
| — |
| (2,068 |
| ) |
| Change in fair value of Change of Control Call Option |
| (449 |
| ) |
| — |
| (3,043 |
| ) |
| — |
| Non-recurring charges |
| 670 |
| 568 |
| 1,036 |
| 347 |
| Selected items, before income taxes |
| (101,891 |
| ) |
| (3,316 |
| ) |
| (25,918 |
| ) |
| 67,332 |
| Income tax effect of selected items |
| — |
| — |
| — |
| — |
| Selected items, net of tax |
| (101,891 |
| ) |
| (3,316 |
| ) |
| (25,918 |
| ) |
| 67,332 |
| Net income (loss), as adjusted (1) |
| $ |
| 3,997 |
| $ |
| 9,736 |
| $ |
| 273 |
| $ |
| 13,080 |
| Diluted net income (loss) per common share, as reported |
| $ |
| 6.42 |
| $ |
| 0.79 |
| $ |
| 1.59 |
| $ |
| (3.34 |
| ) |
| Impact of selected items |
| (6.18 |
| ) |
| (0.20 |
| ) |
| (1.57 |
| ) |
| 4.14 |
| Diluted net income (loss) per common share, excluding selected items (1)(2) |
| $ |
| 0.24 |
| $ |
| 0.59 |
| $ |
| 0.02 |
| $ |
| 0.80 |
| Net cash provided by (used in) operating activities |
| $ |
| 25,481 |
| $ |
| 18,032 |
| $ |
| 53,814 |
| $ |
| 47,132 |
| Changes in working capital |
| (14,127 |
| ) |
| 2,357 |
| (7,254 |
| ) |
| 6,430 |
| Cash flows from operations before changes in working capital |
| 11,354 |
| 20,389 |
| 46,560 |
| 53,562 |
| Cash components of selected items |
| 7,829 |
| 771 |
| (5,713 |
| ) |
| (6,422 |
| ) |
| Income tax effect of selected items |
| — |
| — |
| — |
| — |
| Cash flows from operations before changes in working capital, adjusted for selected items (1) |
| $ |
| 19,183 |
| $ |
| 21,160 |
| $ |
| 40,847 |
| $ |
| 47,140 |
___________________________
(1) Net income (loss) 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 and nine months ended September 30, 2022 were calculated based upon weighted average diluted shares of 16.5 million shares, respectively, due to the net income (loss) available to common stockholders, excluding selected items. The impact of selected items for the three and nine months ended September 30, 2021 were calculated based upon weighted average diluted shares of 16.4 million shares, 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 |
| Nine Months Ended |
| September 30, |
| September 30, |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| Net income (loss), as reported |
| $ |
| 105,888 |
| $ |
| 13,052 |
| $ |
| 26,191 |
| $ |
| (54,252 |
| ) |
| Impact of adjusting items: |
| Interest expense |
| 6,232 |
| 1,904 |
| 16,347 |
| 5,238 |
| Depletion, depreciation and accretion |
| 13,615 |
| 10,885 |
| 36,436 |
| 32,729 |
| Stock-based compensation |
| 683 |
| 481 |
| 1,540 |
| 1,560 |
| Interest income |
| (141 |
| ) |
| (3 |
| ) |
| (142 |
| ) |
| (212 |
| ) |
| Loss (gain) on extinguishment of debt |
| — |
| (2,068 |
| ) |
| — |
| (2,068 |
| ) |
| Unrealized loss (gain) on derivatives contracts |
| (102,112 |
| ) |
| (1,816 |
| ) |
| (23,911 |
| ) |
| 69,053 |
| Change in fair value of Change of Control Call Option |
| (449 |
| ) |
| - |
| (3,043 |
| ) |
| — |
| Non-recurring charges and other |
| 597 |
| 559 |
| 867 |
| 332 |
| Adjusted EBITDA ( 1) |
| $ |
| 24,313 |
| $ |
| 22,994 |
| $ |
| 54,285 |
| $ |
| 52,380 |
____________________________
(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 |
| September 30, 2022 |
| June 30, 2022 |
| March 31, 2022 |
| December 31, 2022 |
| Net income (loss), as reported |
| $ |
| 105,888 |
| $ |
| 13,047 |
| $ |
| (92,744 |
| ) |
| $ |
| 25,935 |
| Impact of adjusting items: |
| Interest expense |
| 6,232 |
| 5,394 |
| 4,721 |
| 3,215 |
| Depletion, depreciation and accretion |
| 13,615 |
| 12,601 |
| 10,220 |
| 12,679 |
| Stock-based compensation |
| 683 |
| 473 |
| 384 |
| 450 |
| Interest income |
| (141 |
| ) |
| (1 |
| ) |
| — |
| (1 |
| ) |
| Loss (gain) on extinguishment of debt |
| — |
| — |
| — |
| 122 |
| Unrealized loss (gain) on derivatives contracts |
| (102,112 |
| ) |
| (12,837 |
| ) |
| 91,038 |
| (21,332 |
| ) |
| Change in fair value of Change of Control Call Option |
| (449 |
| ) |
| (562 |
| ) |
| (2,032 |
| ) |
| — |
| Non-recurring charges (credits) and other |
| 597 |
| 53 |
| 217 |
| (718 |
| ) |
| Adjusted EBITDA ( 1) |
| $ |
| 24,313 |
| $ |
| 18,168 |
| $ |
| 11,804 |
| $ |
| 20,350 |
| Adjusted LTM EBITDA ( 1) |
| $ |
| 74,635 |
__________________________
(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 |
| September 30, 2021 |
| June 30, 2021 |
| March 31, 2021 |
| December 31, 2021 |
| Net income (loss), as reported |
| $ |
| 13,052 |
| $ |
| (33,929 |
| ) |
| $ |
| (33,375 |
| ) |
| $ |
| (63,757 |
| ) |
| Impact of adjusting items: |
| Interest expense |
| 1,904 |
| 1,838 |
| 1,496 |
| 1,853 |
| Depletion, depreciation and accretion |
| 10,885 |
| 11,249 |
| 10,595 |
| 13,886 |
| Full cost ceiling impairment |
| — |
| - |
| - |
| 26,702 |
| Stock-based compensation |
| 481 |
| 485 |
| 594 |
| 785 |
| Interest income |
| (3 |
| ) |
| (84 |
| ) |
| (125 |
| ) |
| (171 |
| ) |
| Loss (gain) on extinguishment of debt |
| (2,068 |
| ) |
| — |
| — |
| — |
| Unrealized loss (gain) on derivatives contracts |
| (1,816 |
| ) |
| 34,817 |
| 36,052 |
| 30,172 |
| Non-recurring charges (credits) and other |
| 559 |
| (275 |
| ) |
| 48 |
| (658 |
| ) |
| Adjusted EBITDA ( 1) |
| $ |
| 22,994 |
| $ |
| 14,101 |
| $ |
| 15,285 |
| $ |
| 8,812 |
| Adjusted LTM EBITDA ( 1) |
| $ |
| 61,192 |
__________________________
(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.