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Battalion Oil Corporation Announces Third Quarter 2020 Results

Halcon Resources Corporation
·23 min read

HOUSTON, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSEA: BATL, “Battalion” or the “Company”) today announced its third quarter 2020 results.

Third Quarter Results

Average daily net production for the quarter ended September 30, 2020 was 17,076 Boe per day, of which oil represented 56%. Total revenue for the third quarter was $39.8 million, of which 84% related to crude oil. Realized gains on derivative settlements totaled $5.3 million for the third quarter.

Richard Little, the Company’s CEO, commented, “It’s hard to imagine that Q3 is a reflection of a return to ‘normal,’ however as prices recovered from lows in April, I’m pleased Battalion has had a chance to get back to optimizing production of hydrocarbons. With production back online, I’m proud of our team for demonstrating that we can continue to lower costs in this environment and prepare for whatever comes next. We’ve also used this opportunity to take proactive measures to improve our product pricing, which we are now benefiting from.”

Adjusted G&A was $2.09 per Boe in the third quarter of 2020 compared to $4.92 per Boe in the third quarter of 2019 (see Selected Operating Data table for additional information). Lease operating and workover expense was $7.00 per Boe in the third quarter of 2020 and $8.91 per Boe in the third quarter of 2019.

The Company reported a net loss to common stockholders for the third quarter of 2020 of $153.1 million, including a full cost ceiling test impairment of $128.3 million, which was associated almost entirely with a significant decline in the SEC trailing twelve month price deck used to calculate reserves value. The Company reported a net loss per basic and diluted share of $9.45, and Adjusted LTM EBITDA of $93.9 million, compared to $61.6 million in the third quarter of 2019 (see Adjusted EBITDA Reconciliation table for additional information).

As of November 6, 2020, Battalion had 8,500 Bopd of oil hedged for the remainder of 2020 at an average price of $42.53 per barrel. For 2021, the Company has 7,000 Bopd of oil hedged at an average price of $45.51 per barrel. For the first half of 2022, the Company has 4,000 Bopd of oil hedged at an average price of $52.38 per barrel. As of September 30, 2020, the mark-to-market value of derivative contracts was approximately $16.3 million.

Conference Call Information
Battalion Oil Corporation has scheduled a conference call for Tuesday, November 10, 2020, at 11:00 a.m. EDT (10:00 a.m. CDT). To participate in the conference call, dial 720-452-9102 or 866-248-8441 (toll free) a few minutes before the call begins and reference Battalion Oil Corporation confirmation code 3866208. The conference call recording will also be posted to Battalion’s website: www.battalionoil.com.

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, 2019 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
John-Davis Rutkauskas
Director, Corporate Finance & IR
(832) 538-0551

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

Successor

Predecessor

Successor

Predecessor

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Operating revenues:

Oil, natural gas and natural gas liquids sales:

Oil

$

33,638

$

46,275

$

91,313

$

145,024

Natural gas

1,912

301

3,102

107

Natural gas liquids

3,896

3,987

10,086

13,229

Total oil, natural gas and natural gas liquids sales

39,446

50,563

104,501

158,360

Other

384

246

1,222

743

Total operating revenues

39,830

50,809

105,723

159,103

Operating expenses:

Production:

Lease operating

10,091

11,958

32,880

39,617

Workover and other

905

1,566

2,767

5,580

Taxes other than income

2,722

3,012

7,130

9,213

Gathering and other

13,500

10,147

39,275

36,057

Restructuring

3,223

2,580

15,148

General and administrative

4,111

19,423

13,237

36,550

Depletion, depreciation and accretion

15,755

20,512

48,167

90,912

Full cost ceiling impairment

128,336

45,568

188,443

985,190

(Gain) loss on sale of Water Assets

(164

)

3,618

Total operating expenses

175,420

115,245

334,479

1,221,885

Income (loss) from operations

(135,590

)

(64,436

)

(228,756

)

(1,062,782

)

Other income (expenses):

Net gain (loss) on derivative contracts

(15,843

)

13,457

67,695

(34,332

)

Interest expense and other

`

(1,692

)

(10,547

)

(4,889

)

(37,606

)

Reorganization items, net

(1,758

)

(1,758

)

Total other income (expenses)

(17,535

)

1,152

62,806

(73,696

)

Income (loss) before income taxes

(153,125

)

(63,284

)

(165,950

)

(1,136,478

)

Income tax benefit (provision)

95,791

Net income (loss)

$

(153,125

)

$

(63,284

)

$

(165,950

)

$

(1,040,687

)

Net income (loss) per share of common stock:

Basic

$

(9.45

)

$

(0.40

)

$

(10.24

)

$

(6.55

)

Diluted

$

(9.45

)

$

(0.40

)

$

(10.24

)

$

(6.55

)

Weighted average common shares outstanding:

Basic

16,204

159,143

16,204

158,916

Diluted

16,204

159,143

16,204

158,916

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

Successor

September 30, 2020

December 31, 2019

Current assets:

Cash and cash equivalents

$

1,827

$

5,701

Accounts receivable, net

26,053

48,504

Assets from derivative contracts

18,996

4,995

Restricted cash

4,574

Prepaids and other

2,326

7,379

Total current assets

49,202

71,153

Oil and natural gas properties (full cost method):

Evaluated

520,453

420,609

Unevaluated

80,540

105,009

Gross oil and natural gas properties

600,993

525,618

Less - accumulated depletion

(254,849

)

(19,474

)

Net oil and natural gas properties

346,144

506,144

Other operating property and equipment:

Other operating property and equipment

3,490

3,655

Less - accumulated depreciation

(1,020

)

(378

)

Net other operating property and equipment

2,470

3,277

Other noncurrent assets:

Assets from derivative contracts

9,675

224

Operating lease right of use assets

424

3,165

Other assets

5,178

703

Total assets

$

413,093

$

584,666

Current liabilities:

Accounts payable and accrued liabilities

$

56,130

$

97,333

Liabilities from derivative contracts

9,055

8,069

Current portion of long-term debt

1,401

Operating lease liabilities

657

923

Asset retirement obligations

109

Total current liabilities

67,243

106,434

Long-term debt, net

178,808

144,000

Other noncurrent liabilities:

Liabilities from derivative contracts

3,292

4,854

Asset retirement obligations

10,960

10,481

Operating lease liabilities

2,247

Commitments and contingencies

Stockholders' equity:

Common stock: 100,000,000 shares of $0.0001 par value authorized; 16,203,967 and 16,203,940 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

2

2

Additional paid-in capital

329,198

327,108

Retained earnings (accumulated deficit)

(176,410

)

(10,460

)

Total stockholders' equity

152,790

316,650

Total liabilities and stockholders' equity

$

413,093

$

584,666

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

Successor

Predecessor

Successor

Predecessor

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Cash flows from operating activities:

Net income (loss)

$

(153,125

)

$

(63,284

)

$

(165,950

)

$

(1,040,687

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depletion, depreciation and accretion

15,755

20,512

48,167

90,912

Full cost ceiling impairment

128,336

45,568

188,443

985,190

(Gain) loss on sale of Water Assets

(164

)

3,618

Deferred income tax provision (benefit)

(95,791

)

Stock-based compensation, net

620

(2,278

)

1,793

(8,035

)

Unrealized loss (gain) on derivative contracts

21,128

(11,571

)

(24,029

)

45,834

Amortization and write-off of deferred loan costs

882

1,859

Amortization of discount and premium

23

134

Reorganization items, net

(717

)

(283

)

(6,440

)

(283

)

Accrued settlements on derivative contracts

125

574

474

168

Other income (expense)

(184

)

(4

)

280

367

Cash flows from operations before changes in working capital

11,938

(10,025

)

42,738

(16,714

)

Changes in working capital

(7,164

)

3,690

5,140

(16,519

)

Net cash provided by (used in) operating activities

4,774

(6,335

)

47,878

(33,233

)

Cash flows from investing activities:

Oil and natural gas capital expenditures

(5,319

)

(28,075

)

(96,483

)

(167,235

)

Proceeds received from sale of oil and natural gas properties

3,000

3,500

1,247

Acquisition of oil and natural gas properties

(2,809

)

Other operating property and equipment capital expenditures

(28

)

(21,037

)

(28

)

(85,613

)

Funds held in escrow and other

(1

)

(2

)

508

(7

)

Net cash provided by (used in) investing activities

(2,348

)

(49,114

)

(92,503

)

(254,417

)

Cash flows from financing activities:

Proceeds from borrowings

38,000

71,234

119,209

315,234

Repayments of borrowings

(39,000

)

(1,000

)

(83,000

)

(57,000

)

Equity issuance costs and other

(14

)

(32

)

(441

)

Net cash provided by (used in) financing activities

(1,000

)

70,220

36,177

257,793

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

1,426

14,771

(8,448

)

(29,857

)

Cash, cash equivalents and restricted cash at beginning of period

401

2,238

10,275

46,866

Cash, cash equivalents and restricted cash at end of period

$

1,827

$

17,009

$

1,827

$

17,009

BATTALION OIL CORPORATION
SELECTED OPERATING DATA
(Unaudited)

Successor

Predecessor

Successor

Predecessor

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Production volumes:

Crude oil (MBbls)

877

863

2,589

2,723

Natural gas (MMcf)

2,266

1,924

6,437

6,381

Natural gas liquids (MBbls)

316

333

917

911

Total (MBoe)

1,571

1,517

4,579

4,698

Average daily production (Boe/d)

17,076

16,489

16,712

17,209

Average prices:

Crude oil (per Bbl)

$

38.36

$

53.62

$

35.27

$

53.26

Natural gas (per Mcf)

0.84

0.16

0.48

0.02

Natural gas liquids (per Bbl)

12.33

11.97

11.00

14.52

Total per Boe

25.11

33.33

22.82

33.71

Cash effect of derivative contracts:

Crude oil (per Bbl)

$

5.33

$

(3.04

)

$

15.96

$

(0.93

)

Natural gas (per Mcf)

0.27

0.78

0.37

0.94

Natural gas liquids (per Bbl)

10.48

9.38

Total per Boe

3.36

1.56

9.54

2.55

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

Crude oil (per Bbl)

$

43.69

$

50.58

$

51.23

$

52.33

Natural gas (per Mcf)

1.11

0.94

0.85

0.96

Natural gas liquids (per Bbl)

12.33

22.45

11.00

23.90

Total per Boe

28.47

34.89

32.36

36.26

Average cost per Boe:

Production:

Lease operating

$

6.42

$

7.88

$

7.18

$

8.43

Workover and other

0.58

1.03

0.60

1.19

Taxes other than income

1.73

1.99

1.56

1.96

Gathering and other, as adjusted (1)

8.59

6.47

7.83

7.30

Restructuring

-

2.12

0.56

3.22

General and administrative, as adjusted (1)

2.09

4.92

2.09

5.29

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

General and administrative:

General and administrative, as reported

$

2.61

$

12.81

$

2.89

$

7.78

Stock-based compensation:

Non-cash

(0.39

)

1.50

(0.39

)

1.71

Non-recurring professional fees and other:

Cash

(0.13

)

(9.39

)

(0.41

)

(4.20

)

General and administrative, as adjusted(2)

$

2.09

$

4.92

$

2.09

$

5.29

Gathering and other, as reported

8.59

6.69

8.58

7.67

Rig termination and stacking charges and other(3)

-

(0.22

)

(0.75

)

(0.37

)

Gathering and other, as adjusted(4)

$

8.59

$

6.47

$

7.83

$

7.30

Total operating costs, as reported

19.93

30.40

20.81

27.03

Total adjusting items

(0.52

)

(8.11

)

(1.55

)

(2.86

)

Total operating costs, as adjusted(5)

$

19.41

$

22.29

$

19.26

$

24.17

_______________
(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 plans, as well as other cash charges associated with non-recurring professional fees and other costs. 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) Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees.
(4) Gathering and other, as adjusted, is a non-GAAP measure that excludes rig termination and stacking charges and other costs. The Company believes that it is useful to understand the effects that these charges have on gathering and other expense and total operating costs and that exclusion of such charges is useful for comparative purposes.
(5) Represents lease operating, 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)

Successor

Predecessor

Successor

Predecessor

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

As Reported:

Net income (loss), as reported

$

(153,125

)

$

(63,284

)

$

(165,950

)

$

(1,040,687

)

Impact of Selected Items:

Unrealized loss (gain) on derivatives contracts:

Crude oil

$

19,354

$

(14,873

)

$

(26,201

)

$

35,967

Natural gas

1,774

1,269

2,172

3,753

Natural gas liquids

2,033

6,114

Total mark-to-market non-cash charge

21,128

(11,571

)

(24,029

)

45,834

Full cost ceiling impairment

128,336

45,568

188,443

985,190

(Gain) loss on sale of Water Assets

(164

)

3,618

Reorganization items

1,758

1,758

Restructuring

3,223

2,580

15,148

Rig termination and stacking charges and other

210

15,276

5,327

22,601

Selected items, before income taxes

149,674

54,090

172,321

1,074,149

Income tax effect of selected items (1)

(91,741

)

Selected items, net of tax

149,674

54,090

172,321

982,408

As Adjusted:

Net income (loss), excluding selected items (2)(3)

$

(3,451

)

$

(9,194

)

$

6,371

$

(58,279

)

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

$

(9.45

)

$

(0.40

)

$

(10.24

)

$

(6.55

)

Impact of selected items

9.24

0.34

10.63

6.18

Basic net income (loss) per common share, excluding selected items (2)(3)

$

(0.21

)

$

(0.06

)

$

0.39

$

(0.37

)

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

$

(9.45

)

$

(0.40

)

$

(10.24

)

$

(6.55

)

Impact of selected items

9.24

0.34

10.63

6.18

Diluted net income (loss) per common share, excluding selected items (2)(3)(4)

$

(0.21

)

$

(0.06

)

$

0.39

$

(0.37

)

Net cash provided by (used in) operating activities

$

4,774

$

(6,335

)

$

47,878

$

(33,233

)

Changes in working capital

7,164

(3,690

)

(5,140

)

16,519

Cash flows from operations before changes in working capital

11,938

(10,025

)

42,738

(16,714

)

Cash components of selected items

802

19,966

13,423

39,530

Income tax effect of selected items (1)

(8,301

)

Cash flows from operations before changes in working capital, adjusted for selected items (2)(3)

$

12,740

$

9,941

$

56,161

$

14,515

_______________
(1) For the nine months ended September 30, 2019 (Predecessor), this represents the tax impact using an estimated tax rate of 21.0% and includes a $133.8 million adjustment for the net change in valuation allowance.
(2) 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. Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(3) For the three and nine months ended September 30, 2020 (Successor), net income (loss), earnings per share excluding selected items and cash flow from operations before changes in working capital include approximately $6.6 million and $22.9 million, respectively, of net proceeds from hedge monetizations. For the three and nine months ended September 30, 2019 (Predecessor), net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital include approximately $0.1 million and $7.8 million, respectively, of proceeds related to hedge monetizations.
(4) The impact of selected items for the three months ended September 30, 2020 (Successor) and 2019 (Predecessor) were calculated based upon weighted average diluted shares of 16.2 million and 159.1 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items. The impact of selected items for the nine months ended September 30, 2020 (Successor) and 2019 (Predecessor) were calculated based upon weighted average diluted shares of 16.2 million and 158.9 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items.

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

Successor

Predecessor

Successor

Predecessor

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net income (loss), as reported

$

(153,125

)

$

(63,284

)

$

(165,950

)

$

(1,040,687

)

Impact of adjusting items:

Interest expense

1,964

9,911

5,520

36,265

Depletion, depreciation and accretion

15,755

20,512

48,167

90,912

Full cost ceiling impairment

128,336

45,568

188,443

985,190

Income tax provision (benefit)

(95,791

)

Stock-based compensation

620

(2,278

)

1,793

(8,035

)

Interest income

(273

)

(13

)

(602

)

(91

)

Reorganization items

1,758

1,758

Restructuring

3,223

2,580

15,148

(Gain) loss on sale of other assets

2

52

418

(Gain) loss on sale of Water Assets

(164

)

3,618

Unrealized loss (gain) on derivatives contracts

21,128

(11,571

)

(24,029

)

45,834

Rig termination and stacking charges and other

210

15,276

5,327

22,601

Adjusted EBITDA(1)(2)

$

14,615

$

18,940

$

61,301

$

57,140

_______________
(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. Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(2) Adjusted EBITDA for the three and nine months ended September 30, 2020 (Successor) includes approximately $6.6 million and $22.9 million, respectively, of net proceeds from hedge monetizations. Adjusted EBITDA for the three and nine months ended September 30, 2019 (Predecessor) includes approximately $0.1 million and $7.8 million, respectively, of proceeds related to hedge monetizations.

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

Three Months

Three Months

Three Months

Three Months

Ended

Ended

Ended

Ended

September 30, 2020

June 30. 2020

March 31, 2020

December 31, 2019(1)

Net income (loss), as reported

$

(153,125

)

$

(127,316

)

$

114,491

$

(125,826

)

Impact of adjusting items:

Interest expense

1,964

1,842

1,714

1,430

Depletion, depreciation and accretion

15,755

14,382

18,030

19,996

Full cost ceiling impairment

128,336

60,107

Stock-based compensation

620

786

387

Interest income

(273

)

(232

)

(97

)

(128

)

Reorganization items, net

118,664

Restructuring

2,162

418

1,175

(Gain) loss on sale of other assets

52

(6

)

(Gain) loss on sale of Water Assets

(506

)

Unrealized loss (gain) on derivatives contracts

21,128

67,221

(112,378

)

18,681

Other(2)

210

4,211

906

(901

)

Adjusted EBITDA(3)(4)

$

14,615

$

23,215

$

23,471

$

32,579

Adjusted LTM EBITDA(1)(3)(4)

$

93,880

_______________
(1) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the Adjusted LTM EBITDA ended September 30, 2020. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor are not comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provides meaningful information about Adjusted LTM EBITDA that assists a reader in understanding the Company’s financial results for the applicable periods.
(2) Other adjustments to net income (loss), as reported include rig termination and stacking charges, prepetition reorganization costs and other non-recurring professional fees and costs.
(3) 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. Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(4) Adjusted EBITDA for the three months ended September 30, 2020, June 30, 2020, March 31, 2020, and December 31,2019 includes approximately $6.6 million of proceeds, $16.4 million of proceeds, $0.1 million of charges, and $0.9 million of proceeds, respectively, for hedge monetizations.

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

Three Months

Three Months

Three Months

Three Months

Ended

Ended

Ended

Ended

September 30, 2019

June 30. 2019

March 31, 2019

December 31, 2018

Net income (loss), as reported

$

(63,284

)

$

(640,844

)

$

(336,559

)

$

146,668

Impact of adjusting items:

Interest expense

9,911

14,382

11,972

12,610

Depletion, depreciation and accretion

20,512

40,425

29,975

25,130

Full cost ceiling impairment

45,568

664,383

275,239

Income tax provision (benefit)

(50,306

)

(45,485

)

95,791

Stock-based compensation

(2,278

)

1,025

(6,782

)

3,025

Interest income

(13

)

(17

)

(61

)

(117

)

Reorganization items, net

1,758

Restructuring

3,223

654

11,271

(Gain) loss on sale of other assets

2

416

290

(Gain) loss on sale of Water Assets

(164

)

2,897

885

(119,003

)

Unrealized loss (gain) on derivatives contracts

(11,571

)

(10,764

)

68,169

(161,798

)

Other(1)

15,276

3,678

3,647

1,827

Adjusted EBITDA(2)(3)

$

18,940

$

25,513

$

12,687

$

4,423

Adjusted LTM EBITDA(2)(3)

$

61,563

_______________
(1) Other adjustments to net income (loss), as reported include rig stacking charges, transaction costs, prepetition reorganization costs and other non-recurring costs.
(2) 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. Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(3) Adjusted EBITDA for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018 includes approximately $0.1 million, $4.1 million, $3.6 million, and $4.4 million, respectively, of proceeds from hedge monetizations.