- Battalion has entered into a JV agreement with Caracara Services to develop an acid gas treatment and carbon sequestration facility.
- This is expected to reduce Battalion's gathering and other costs by approximately $3 per BOE starting in early 2023.
- Caracara is providing the remaining capital for the facility, while Battalion is contributing a wellbore approved for acid gas injection and surface land for the facility.
- The reduced costs should help Battalion's competitiveness, although it is still dealing with having a fair amount of debt as well as negative value hedges.
- Given Battalion's large amount of hedges, reducing its costs by $3 per BOE may have the same effect on its cash flow as a $10+ increase in oil prices in 2023 and 2024.
For further details see:
Battalion Oil: Acid Gas Treatment JV Helps Improve Its Cost Structure