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Battalion Oil Corporation (BATL)

NYSE American - Nasdaq Real Time Price. Currency in USD
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9.93-0.02 (-0.19%)
As of 10:14AM EDT. Market open.
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Neutralpattern detected
Previous Close9.95
Open9.88
Bid9.76 x 900
Ask10.01 x 800
Day's Range9.87 - 9.93
52 Week Range6.50 - 14.82
Volume600
Avg. Volume22,221
Market Cap161.554M
Beta (5Y Monthly)N/A
PE Ratio (TTM)N/A
EPS (TTM)N/A
Earnings DateAug 09, 2021 - Aug 13, 2021
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateN/A
1y Target EstN/A
  • GlobeNewswire

    Battalion Oil Corporation Announces Second Quarter 2021 Results

    HOUSTON, Aug. 09, 2021 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced results of operations for the second quarter 2021. Highlights Completed and put online two new wells in Monument Draw during the quarter2021 capital program largely complete – 6 wells put online at average D&C cost of ~$878 per well per foot despite increasing service costsContinued success in reducing workover expense despite rising service and material prices

  • GlobeNewswire

    Battalion Oil Corporation Announces First Quarter 2021 Results

    HOUSTON, May 17, 2021 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced results of operations for the first quarter 2021. Highlights Completed four DUCs and spud two new wells in Monument Draw during the quarterImproved average completion costs from $575/lateral ft in 2020 down to $395/lateral ft in Q1 2021Production from recent completions outperforming expectationsOn track to deliver on 2021 production guidance despite operational shut-ins due to Winter Storm Uri Management Comments Richard Little, the Company’s CEO, commented, “Battalion delivered a strong first quarter despite the operational disruption caused by Winter Storm Uri and the ongoing challenges faced as a result of the COVID-19 pandemic. Our operations team did a great job keeping us up and running during a historically long cold snap. Their efforts keeping production up combined with strong realized pricing allowed us to outperform our Adjusted EBITDA targets for the first quarter.” “The team continued their exceptional work as we brought four wells online and spud two additional wells during the quarter. Our focus on capital discipline and operational efficiency allowed us to realize historically low drilling and completion costs despite price increases in the service market. These new wells are performing above expectations, and it is just one of the many reasons we’re optimistic about hitting our production targets for 2021 despite the production shut-ins caused by the winter storms.” “Our commitment to capital efficiency, prudent liquidity management, and operational excellence has left us well positioned to execute on our 2021 plan. We are eager to return to growth and are well positioned to take advantage of the opportunities the market offers us regardless of whether those opportunities come through M&A or the drill bit.” Results of Operations Average daily net production and total operating revenue during the first quarter 2021 were 14,333 barrels of oil equivalent per day (“Boepd”) (56% oil) and $55.5 million, respectively, as compared to production and revenue of 18,791 Boepd (55% oil) and $47.4 million, respectively, during the first quarter 2020. The decrease in total production year-over-year was primarily due to production declines in our non-core areas, including the divestiture of properties that produced ~800 Boepd, offset by increased production at Monument Draw as a result of our capital program. Also contributing to the decrease in total production is the temporary shut-in of production in February 2021 as a result of inclement weather during Winter Storm Uri. Despite the reduction in operating volumes, operating revenue increased year-over-year due to high realized natural gas prices during the quarter. As a result of high daily market prices experienced during the winter storm, Battalion was able to realize quarterly gas prices of $4.26 per Million cubic feet (“Mcf”) during the first quarter 2021 as compared to $1.16 per Mcf during the fourth quarter 2020. Excluding the impact of hedges, Battalion realized 99% of the average NYMEX oil price during the first quarter of 2021. Realized hedge losses totaled approximately $9.7 million during the first quarter 2021. Lease operating and workover expense was $7.77 per Boe in the first quarter of 2021 and $8.07 per Boe in the first quarter of 2020. Adjusted G&A was $3.24 per Boe in the first quarter of 2021 compared to $1.50 per Boe in the first quarter of 2020 (see Selected Operating Data table for additional information). The Company reported a net loss to common stockholders for the first quarter of 2021 of $33.4 million and a net loss per basic and diluted share of $2.06. After adjusting for selected items, the Company reported net income to common stockholders for the first quarter of $2.7 million, or $0.17 per basic and diluted share (see Selected Item Review and Reconciliation for additional information). Adjusted EBITDA during the quarter ended March 31, 2021 was $15.3 million as compared to $8.8 million during the quarter ended December 31, 2020 (see Adjusted EBITDA Reconciliation table for additional information). Liquidity and Balance Sheet As of March 31, 2021, Battalion had $155.0 million of borrowings and $2.5 million of outstanding letters of credit issued under the Senior Revolving Credit Facility resulting in unused borrowing capacity of $32.5 million based on a borrowing base of $190.0 million. Total liquidity at March 31, 2021, inclusive of $1.7 million of cash and cash equivalents, was $34.2 million. In May 2021, the Company entered into the Fourth Amendment to its Senior Secured Revolving Credit Agreement which, among other things, reduces the borrowing base to $185.0 million effective June 1, 2021 and further reduces the borrowing base to $175.0 million effective September 1, 2021. Operations Update During the first quarter of 2021, the Company completed and brought on production four drilled but uncompleted wells and spud two additional new wells in Monument Draw. The Company began completing the two new drill wells in May 2021. Conference Call Information Battalion Oil Corporation has scheduled a conference call for Tuesday, May 18, 2021, at 11:00 a.m. EDT (10:00 a.m. CDT). To participate in the conference call, dial +1 720-452-9102 or 800-437-2398 (toll free) a few minutes before the call begins and reference Battalion Oil Corporation confirmation code 5906562. 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, 2020 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 LangManager, Finance (832) 538-0551 BATTALION OIL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)(In thousands, except per share amounts) Three Months Ended March 31, 2021 2020 Operating revenues: Oil, natural gas and natural gas liquids sales: Oil $41,270 $41,917 Natural gas 9,087 354 Natural gas liquids 4,909 4,753 Total oil, natural gas and natural gas liquids sales 55,266 47,024 Other 252 375 Total operating revenues 55,518 47,399 Operating expenses: Production: Lease operating 9,467 12,489 Workover and other 560 1,323 Taxes other than income 3,192 2,915 Gathering and other 13,171 10,547 Restructuring — 418 General and administrative 4,827 3,856 Depletion, depreciation and accretion 10,595 18,030 Total operating expenses 41,812 49,578 Income (loss) from operations 13,706 (2,179) Other income (expenses): Net gain (loss) on derivative contracts (45,711) 118,299 Interest expense and other (1,370) (1,629)Total other income (expenses) (47,081) 116,670 Income (loss) before income taxes (33,375) 114,491 Income tax benefit (provision) — — Net income (loss) $(33,375) $114,491 Net income (loss) per share of common stock: Basic $(2.06) $7.07 Diluted $(2.06) $7.07 Weighted average common shares outstanding: Basic 16,232 16,204 Diluted 16,232 16,204 BATTALION OIL CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)(In thousands, except share and per share amounts) March 31, 2021 December 31, 2020Current assets: Cash and cash equivalents $1,671 $4,295 Accounts receivable, net 39,534 32,242 Assets from derivative contracts 672 8,559 Prepaids and other 2,591 2,740 Total current assets 44,468 47,836 Oil and natural gas properties (full cost method): Evaluated 530,499 509,274 Unevaluated 75,880 75,494 Gross oil and natural gas properties 606,379 584,768 Less - accumulated depletion (305,505) (295,163)Net oil and natural gas properties 300,874 289,605 Other operating property and equipment: Other operating property and equipment 3,524 3,535 Less - accumulated depreciation (1,257) (1,149)Net other operating property and equipment 2,267 2,386 Other noncurrent assets: Assets from derivative contracts 828 4,009 Operating lease right of use assets 195 310 Other assets 1,967 2,351 Total assets $350,599 $346,497 Current liabilities: Accounts payable and accrued liabilities $74,073 $58,928 Liabilities from derivative contracts 42,371 22,125 Current portion of long-term debt 2,123 1,720 Operating lease liabilities 195 403 Total current liabilities 118,762 83,176 Long-term debt 155,086 158,489 Other noncurrent liabilities: Liabilities from derivative contracts 9,029 4,291 Asset retirement obligations 10,711 10,583 Commitments and contingencies Stockholders' equity: Common stock: 100,000,000 shares of $0.0001 par value authorized; 16,267,157 and 16,203,979 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 2 2 Additional paid-in capital 330,551 330,123 Retained earnings (accumulated deficit) (273,542) (240,167)Total stockholders' equity 57,011 89,958 Total liabilities and stockholders' equity $350,599 $346,497 BATTALION OIL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(In thousands) Three Months Ended March 31, 2021 2020 Cash flows from operating activities: Net income (loss) $(33,375) $114,491 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depletion, depreciation and accretion 10,595 18,030 Stock-based compensation, net 594 387 Unrealized loss (gain) on derivative contracts 36,052 (112,378)Reorganization items, net — (4,984)Accrued settlements on derivative contracts 4,568 (4,923)Other income (expense) (117) 7 Cash flows from operations before changes in working capital 18,317 10,630 Changes in working capital (4,959) 1,713 Net cash provided by (used in) operating activities 13,358 12,343 Cash flows from investing activities: Oil and natural gas capital expenditures (13,792) (48,157)Proceeds received from sale of oil and natural gas properties 1,076 — Funds held in escrow and other (3) 509 Net cash provided by (used in) investing activities (12,719) (47,648) Cash flows from financing activities: Proceeds from borrowings 16,000 51,000 Repayments of borrowings (19,000) (25,000)Equity issuance costs and other (263) (32)Net cash provided by (used in) financing activities (3,263) 25,968 Net increase (decrease) in cash and cash equivalents (2,624) (9,337) Cash and cash equivalents at beginning of period 4,295 10,275 Cash and cash equivalents at end of period $1,671 $938 BATTALION OIL CORPORATIONSELECTED OPERATING DATA (Unaudited) Three Months Ended March 31, 2021 2020 Production volumes: Crude oil (MBbls) 719 937 Natural gas (MMcf) 2,133 2,539 Natural gas liquids (MBbls) 215 350 Total (MBoe) 1,290 1,710 Average daily production (Boe/d) 14,333 18,791 Average prices: Crude oil (per Bbl) $57.40 $44.74 Natural gas (per Mcf) 4.26 0.14 Natural gas liquids (per Bbl) 22.83 13.58 Total per Boe 42.84 27.50 Cash effect of derivative contracts: Crude oil (per Bbl) $(13.17) $5.47 Natural gas (per Mcf) (0.09) 0.32 Natural gas liquids (per Bbl) — — Total per Boe (7.49) 3.46 Average prices computed after cash effect of settlement of derivative contracts: Crude oil (per Bbl) $44.23 $50.21 Natural gas (per Mcf) 4.17 0.46 Natural gas liquids (per Bbl) 22.83 13.58 Total per Boe 35.35 30.96 Average cost per Boe: Production: Lease operating $7.34 $7.30 Workover and other 0.43 0.77 Taxes other than income 2.47 1.70 Gathering and other, as adjusted (1) 10.21 6.18 Restructuring — 0.24 General and administrative, as adjusted (1) 3.24 1.50 Depletion 8.02 10.29 (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 $3.74 $2.26 Stock-based compensation: Non-cash (0.46) (0.23)Transaction costs and other: Cash (0.04) (0.53)General and administrative, as adjusted(2) $3.24 $1.50 Gathering and other, as reported 10.21 6.17 Rig termination and stacking charges and other — 0.01 Gathering and other, as adjusted(3) $10.21 $6.18 Total operating costs, as reported 24.19 18.20 Total adjusting items (0.50) (0.75)Total operating costs, as adjusted(4) $23.69 $17.45 ___________________________(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 transaction costs 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) 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. (4) 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 CORPORATIONSELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)(In thousands, except per share amounts) Three Months Ended March 31, 2021 2020 As Reported: Net income (loss), as reported $(33,375) $114,491 Impact of Selected Items: Unrealized loss (gain) on derivatives contracts: Crude oil $34,811 $(111,834)Natural gas 1,241 (544)Natural gas liquids — — Total mark-to-market non-cash charge 36,052 (112,378)Restructuring — 418 Transaction costs, rig termination and stacking charges and other 52 906 Selected items, before income taxes 36,104 (111,054)Income tax effect of selected items — — Selected items, net of tax 36,104 (111,054) As Adjusted: Net income (loss), excluding selected items (1) $2,729 $3,437 Basic net income (loss) per common share, as reported $(2.06) $7.07 Impact of selected items 2.23 (6.86)Basic net income (loss) per common share, excluding selected items (1) $0.17 $0.21 Diluted net income (loss) per common share, as reported $(2.06) $7.07 Impact of selected items 2.23 (6.86)Diluted net income (loss) per common share, excluding selected items (1)(2) $0.17 $0.21 Net cash provided by (used in) operating activities $13,358 $12,343 Changes in working capital 4,959 (1,713)Cash flows from operations before changes in working capital 18,317 10,630 Cash components of selected items (4,516) 11,231 Income tax effect of selected items — — Cash flows from operations before changes in working capital, adjusted for selected items (1) $13,801 $21,861 ____________________________(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, 2021 and 2020 were calculated based upon weighted average diluted shares of 16.4 million and 16.2 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items. BATTALION OIL CORPORATIONADJUSTED EBITDA RECONCILIATION (Unaudited)(In thousands) Three Months Ended March 31, 2021 2020 Net income (loss), as reported $(33,375) $114,491 Impact of adjusting items: Interest expense 1,496 1,714 Depletion, depreciation and accretion 10,595 18,030 Stock-based compensation 594 387 Interest income (125) (97)Restructuring — 418 (Gain) loss on sale of other assets (4) — Unrealized loss (gain) on derivatives contracts 36,052 (112,378)Transaction costs, rig termination and stacking charges and other 52 906 Adjusted EBITDA(1) $15,285 $23,471 __________________________(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 CORPORATIONADJUSTED 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 (Gain) loss on sale of other assets (4) — — 52 Unrealized loss (gain) on derivatives contracts 36,052 30,172 21,128 67,221 Other(1) 52 (658) 210 4,211 Adjusted EBITDA(2)(3) $15,285 $8,812 $14,615 $23,215 Adjusted LTM EBITDA(2)(3) $61,927 _________________________(1) Other adjustments to net income (loss), as reported include rig termination and stacking charges, transaction costs, and other non-recurring professional fees and 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. (3) Adjusted 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. BATTALION OIL CORPORATIONADJUSTED EBITDA RECONCILIATION (Unaudited)(In thousands) Three Months Three Months Three Months Three Months Ended Ended Ended Ended March 31, 2020 December 31, 2019(1) September 30, 2019 June 30. 2019 Net income (loss), as reported $114,491 $(125,826) $(63,284) $(640,844) Impact of adjusting items: Interest expense 1,714 1,430 9,911 14,382 Depletion, depreciation and accretion 18,030 19,996 20,512 40,425 Full cost ceiling impairment — — 45,568 664,383 Income tax provision (benefit) — — — (50,306) Stock-based compensation 387 — (2,278) 1,025 Interest income (97) (128) (13) (17) Reorganization items, net — 118,664 1,758 — Restructuring 418 1,175 3,223 654 (Gain) loss on sale of other assets — (6) 2 — (Gain) loss on sale of Water Assets — (506) (164) 2,897 Unrealized loss (gain) on derivatives contracts (112,378) 18,681 (11,571) (10,764) Other(2) 906 (901) 15,276 3,678 Adjusted EBITDA(3)(4) $23,471 $32,579 $18,940 $25,513 Adjusted LTM EBITDA(1)(3)(4) $100,503 __________________________(1) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for Adjusted EBITDA for the three months ended December 31, 2019 and the Adjusted LTM EBITDA as of March 31, 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 includes 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. (4) Adjusted EBITDA for the three months ended June 30, 2019 includes approximately $4.1 million of net proceeds from hedge monetizations that occurred during the period.

  • GlobeNewswire

    Battalion Oil Corporation Announces Fourth Quarter and Full Year 2020 Results, Provides an Operational Update, and Provides 2021 Guidance

    HOUSTON, March 08, 2021 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced results of operations for the fourth quarter and full year 2020. Highlights Battalion is well positioned to deliver single digit production growth while generating significant free cash flow in FY2021Completed the sale of ~3,700 net acres in the Northern West Quito development area for $26.3 million in cash subject to customary post-closing adjustments. These assets accounted for less than 5% of the Company's average daily net oil production during the quarter ended September 30, 2020.Improved 2020 adjusted operating unit costs by 12% from 2019 to 2020 (see Selected Operating data table for additional information)Improved average well costs from $1,350/lin ft in 2019 down to $850/lin ft in 2020Reduced Adjusted G&A unit cost by 49% from 2019 to 2020 (see Selected Operating data table for additional information)Disciplined hedge strategy provides cash flow assurance on 90% of expected 2021 oil productionStrong balance sheet with attractively priced RBL provides ample liquidity to execute 2021 plan with a reinvestment rate of 70% - 80% of the estimated 2021 EBITDA 2021 Guidance Battalion remains focused on execution and capital discipline as it drives toward growth and positive free cash flow. The Company developed its 2021 plan based on being free cash flow positive at $45 NYMEX WTI. Total capital expenditures are expected to range between $40 - $50 million, with 90% of its capital directed to drilling and completion activities on its Monument Draw assets. This plan will allow Battalion to modestly increase oil production while remaining free cash flow positive. FY 2021 Guidance Low HighOil Production, MBopd 8.8– 9.8Total Production, MBoepd 16.0– 17.0Wells POL 6– 6Total Capex, $MM $40–$50D&C Cost per Well, $/ft $800–$900G&A, $MM $15–$20 Management Comments Richard Little, the Company’s CEO, commented, “2020 proved itself to be one of the most challenging years in the history of our industry, and I am tremendously proud of what our team accomplished in the midst of that. COVID-19 and the unprecedented collapse in commodity prices may have permanently altered the outlook for oil and gas, but I believe our ability to remain nimble and our commitment to excellence and execution sets Battalion up well to succeed regardless of what that future holds. Our plan for 2021 is simple: exercise capital discipline and continue to optimize our operations with an eye towards keeping production flat and improving our cash margins. Given how our team executed despite the various challenges in 2020, we feel optimistic that we can do just that while remaining cash flow positive. While we execute on that plan, we will continue to pursue strategic, deleveraging M&A transactions.” Results of Operations Battalion ended 2020 with 113 gross (107.3 net) horizontal wells producing in the Delaware Basin. Annual net production in 2020 was 16,858 barrels of oil equivalent per day (“Boepd”) (56% oil) as compared to 17,986 Boepd (58% oil) in 2019. Our total operating revenues for the year ended December 31, 2020 were approximately $148.3 million compared to total operating revenues for the period of October 2, 2019 through December 31, 2019 (Successor) and the period of January 1, 2019 through October 1, 2019 (Predecessor) of approximately $65.6 million and $159.1 million, respectively, or $224.7 million combined. The decrease in total operating revenues and average daily production year over year was driven by our temporary shut-in of a portion of producing wells across all our operating areas in May and June 2020 as a consequence of low oil prices as well as average realized prices that were lower by approximately $10.25 per Boe. Additionally, in December 2020, the Company divested properties that produced 600 Boepd during the nine months ended September 30, 2020. Average daily net production and total operating revenue during the fourth quarter 2020 was 17,293 Boepd (54% oil) and $42.6 million, respectively, as compared to production and revenue of 20,293 Boepd (57% oil) and $65.6 million, respectively, during the fourth quarter 2019. Excluding the impact of hedges, Battalion realized 95% of the average NYMEX oil price during the fourth quarter of 2020. Realized hedge gains totaled approximately $1.2 million during the fourth quarter 2020. Adjusted G&A was $3.24 per Boe in the fourth quarter of 2020 compared to $3.22 per Boe in the fourth quarter of 2019 (see Selected Operating Data table for additional information). Lease operating and workover expense was $6.39 per Boe in the fourth quarter of 2020 and $7.75 per Boe in the fourth quarter of 2019. The Company reported a net loss to common stockholders for the fourth quarter of $63.8 million, including a non-cash full cost ceiling test impairment charge of $26.7 million, and a net loss per basic and diluted share of $3.93. Adjusted LTM EBITDA as of December 31, 2020 was $70.1 million, compared to $89.7 million as of December 31, 2019 (see Adjusted EBITDA Reconciliation table for additional information). Liquidity and Balance Sheet As of December 31, 2020, Battalion has cash and cash equivalents of $4.3 million and a borrowing base of $190 million under its Senior Revolving Credit Facility. In addition, Battalion had $158.0 million of borrowings and $4.7 million of outstanding letters of credit issued under the Senior Revolving Credit Facility resulting in unused borrowing capacity of $27.3 million at year-end 2020. Proved Reserves Update Battalion's estimated proved reserves as of December 31, 2020 were approximately 63.4 MMBoe, comprised of 60% oil, 19% NGL and 21% natural gas, with a standardized measure of $209.4 million. Battalion's estimated proved reserves at December 31, 2020 were prepared by Netherland Sewell & Associates, Inc. in accordance with Securities and Exchange Commission guidelines using an average WTI price of $39.54 per barrel for oil and an average Henry Hub spot price of $1.99 per MMBtu for natural gas. Operations Update During the first quarter of 2021, the Company plans to spud two new wells and expects to complete and bring on production four drilled but uncompleted wells. Hedging Activity As of March 8, 2021, Battalion had approximately 8,430 barrels of oil per day (“Bopd”) of oil hedged for in 2021 at a price of $44.98 per barrel. For 2022, the Company has approximately 5,664 Bopd of oil hedged at an average price of $47.73 per barrel. Conference Call Information Battalion Oil Corporation has scheduled a conference call for Tuesday, March 9, 2021, at 11:00 a.m. EDT (10:00 a.m. CDT). To participate in the conference call, dial +1 856-344-9291 or 800-496-3856 (toll free) a few minutes before the call begins and reference Battalion Oil Corporation confirmation code 3115525. 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, 2020 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 LangManager, Finance (832) 538-0551 BATTALION OIL CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)(In thousands, except per share amounts) Successor Predecessor Period from Period from October 2, 2019 October 1, 2019 Three Months Ended through through December 31, 2020 December 31, 2019 October 1, 2019 Operating revenues: Oil, natural gas and natural gas liquids sales: Oil $34,672 $58,325 $— Natural gas 2,716 1,719 — Natural gas liquids 4,886 5,071 — Total oil, natural gas and natural gas liquids sales 42,274 65,115 — Other 292 467 — Total operating revenues 42,566 65,582 — Operating expenses: Production: Lease operating 9,226 12,804 — Workover and other 942 1,655 — Taxes other than income 2,926 3,730 — Gathering and other 16,741 10,812 — Restructuring — 1,175 — General and administrative 5,219 5,111 — Depletion, depreciation and accretion 13,886 19,996 — Full cost ceiling impairment 26,702 — — (Gain) loss on sale of Water Assets — (506) — Total operating expenses 75,642 54,777 — Income (loss) from operations (33,076) 10,805 — Other income (expenses): Net gain (loss) on derivative contracts (28,936) (16,692) — Interest expense and other (1,745) (1,275) — Reorganization items, net — (3,298) (115,366)Total other income (expenses) (30,681) (21,265) (115,366)Income (loss) before income taxes (63,757) (10,460) (115,366)Income tax benefit (provision) — — — Net income (loss) $(63,757) (10,460) (115,366) Net income (loss) per share of common stock: Basic $(3.93) $(0.65) $(0.71)Diluted $(3.93) $(0.65) $(0.71)Weighted average common shares outstanding: Basic 16,204 16,204 161,502 Diluted 16,204 16,204 161,502 BATTALION OIL CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)(In thousands, except per share amounts) Successor Predecessor Period from Period from October 2, 2019 January 1, 2019 Year Ended through through December 31, 2020 December 31, 2019 October 1, 2019 Operating revenues: Oil, natural gas and natural gas liquids sales: Oil $125,985 $58,325 $145,024 Natural gas 5,818 1,719 107 Natural gas liquids 14,972 5,071 13,229 Total oil, natural gas and natural gas liquids sales 146,775 65,115 158,360 Other 1,514 467 743 Total operating revenues 148,289 65,582 159,103 Operating expenses: Production: Lease operating 42,106 12,804 39,617 Workover and other 3,709 1,655 5,580 Taxes other than income 10,056 3,730 9,213 Gathering and other 56,016 10,812 36,057 Restructuring 2,580 1,175 15,148 General and administrative 18,456 5,111 36,550 Depletion, depreciation and accretion 62,053 19,996 90,912 Full cost ceiling impairment 215,145 — 985,190 (Gain) loss on sale of Water Assets — (506) 3,618 Total operating expenses 410,121 54,777 1,221,885 Income (loss) from operations (261,832) 10,805 (1,062,782) Other income (expenses): Net gain (loss) on derivative contracts 38,759 (16,692) (34,332)Interest expense and other (6,634) (1,275) (37,606)Reorganization items, net — (3,298) (117,124)Total other income (expenses) 32,125 (21,265) (189,062)Income (loss) before income taxes (229,707) (10,460) (1,251,844)Income tax benefit (provision) — — 95,791 Net income (loss) $(229,707) $(10,460) $(1,156,053) Net income (loss) per share of common stock: Basic $(14.18) $(0.65) $(7.27)Diluted $(14.18) $(0.65) $(7.27)Weighted average common shares outstanding: Basic 16,204 16,204 158,925 Diluted 16,204 16,204 158,925 BATTALION OIL CORPORATIONCONSOLIDATED BALANCE SHEETS (Unaudited)(In thousands, except share and per share amounts) Successor December 31, 2020 December 31, 2019Current assets: Cash and cash equivalents $4,295 $5,701 Accounts receivable, net 32,242 48,504 Assets from derivative contracts 8,559 4,995 Restricted cash — 4,574 Prepaids and other 2,740 7,379 Total current assets 47,836 71,153 Oil and natural gas properties (full cost method): Evaluated 509,274 420,609 Unevaluated 75,494 105,009 Gross oil and natural gas properties 584,768 525,618 Less - accumulated depletion (295,163) (19,474)Net oil and natural gas properties 289,605 506,144 Other operating property and equipment: Other operating property and equipment 3,535 3,655 Less - accumulated depreciation (1,149) (378)Net other operating property and equipment 2,386 3,277 Other noncurrent assets: Assets from derivative contracts 4,009 224 Operating lease right of use assets 310 3,165 Funds in escrow and other 2,351 703 Total assets $346,497 $584,666 Current liabilities: Accounts payable and accrued liabilities $58,928 $97,333 Liabilities from derivative contracts 22,125 8,069 Current portion of long-term debt 1,720 — Operating lease liabilities 403 923 Asset retirement obligations — 109 Total current liabilities 83,176 106,434 Long-term debt 158,489 144,000 Other noncurrent liabilities: Liabilities from derivative contracts 4,291 4,854 Asset retirement obligations 10,583 10,481 Operating lease liabilities — 2,247 Commitments and contingencies Stockholders' equity: Common stock: 100,000,000 shares of $0.0001 par value authorized; 16,203,979 and 16,203,940 shares issued and outstanding as of December 31, 2020 and 2019, respectively 2 2 Additional paid-in capital 330,123 327,108 Retained earnings (accumulated deficit) (240,167) (10,460)Total stockholders' equity 89,958 316,650 Total liabilities and stockholders' equity $346,497 $584,666 BATTALION OIL CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(In thousands) Successor Predecessor Period from Period from October 2, 2019 October 1, 2019 Three Months Ended through through December 31, 2020 December 31, 2019 October 1, 2019Cash flows from operating activities: Net income (loss) $(63,757) $(10,460) $(115,366)Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depletion, depreciation and accretion 13,886 19,996 — Full cost ceiling impairment 26,702 — — (Gain) loss on sale of Water Assets — (506) — Stock-based compensation, net 785 — — Unrealized loss (gain) on derivative contracts 30,172 18,681 — Reorganization items, net (125) (3,615) 109,170 Other expense (income) (442) 253 — Cash flow from operations before changes in working capital 7,221 24,349 (6,196)Changes in working capital (4,902) (10,695) (302)Net cash provided by (used in) operating activities 2,319 13,654 (6,498) Cash flows from investing activities: Oil and natural gas capital expenditures (5,305) (43,230) — Proceeds received from sales of oil and natural gas assets 25,529 — — Acquisition of oil and natural gas properties (23) — — Other operating property and equipment capital expenditures (54) — — Proceeds received from sale of other operating property and equipment — 6 — Funds held in escrow and other 2 434 — Net cash provided by (used in) investing activities 20,149 (42,790) — Cash flows from financing activities: Proceeds from borrowings 29,000 36,000 130,000 Repayments of borrowings (49,000) (22,000) (258,234)Cash payments to Common Holders, Noteholders and Preferred Holders — — (4)Debt issuance costs — (1,471) (8,764)Common stock issued — — 155,929 Equity issuance costs and other — (2,503) (53)Net cash provided by (used in) financing activities (20,000) 10,026 18,874 Net increase (decrease) in cash, cash equivalents and restricted cash 2,468 (19,110) 12,376 Cash, cash equivalents and restricted cash at beginning of period 1,827 29,385 17,009 Cash, cash equivalents and restricted cash at end of period $4,295 $10,275 $29,385 BATTALION OIL CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(In thousands) Successor Predecessor Period from Period from October 2, 2019 January 1, 2019 Year Ended through through December 31, 2020 December 31, 2019 October 1, 2019Cash flows from operating activities: Net income (loss) $(229,707) $(10,460) $(1,156,053)Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depletion, depreciation and accretion 62,053 19,996 90,912 Full cost ceiling impairment 215,145 — 985,190 (Gain) loss on sale of Water Assets — (506) 3,618 Deferred income tax provision (benefit) — — (95,791)Stock-based compensation, net 2,578 — (8,035)Unrealized loss (gain) on derivative contracts 6,143 18,681 45,834 Amortization and write-off of deferred loan costs — — 1,859 Amortization of discount and premium — — 134 Reorganization items, net (6,565) (3,615) 108,887 Other expense (income) 312 253 535 Cash flow from operations before changes in working capital 49,959 24,349 (22,910)Changes in working capital 238 (10,695) (16,821)Net cash provided by (used in) operating activities 50,197 13,654 (39,731) Cash flows from investing activities: Oil and natural gas capital expenditures (101,788) (43,230) (167,235)Proceeds received from sales of oil and natural gas assets 29,029 — 1,247 Acquisition of oil and natural gas properties (23) — (2,809)Other operating property and equipment capital expenditures (82) — (85,613)Proceeds received from sale of other operating property and equipment — 6 — Funds held in escrow and other 510 434 (7)Net cash provided by (used in) investing activities (72,354) (42,790) (254,417) Cash flows from financing activities: Proceeds from borrowings 148,209 36,000 445,234 Repayments of borrowings (132,000) (22,000) (315,234)Cash payments to Common Holders, Noteholders and Preferred Holders — — (4)Debt issuance costs — (1,471) (8,764)Common stock issued — — 155,929 Equity issuance costs and other (32) (2,503) (494)Net cash provided by (used in) financing activities 16,177 10,026 276,667 Net increase (decrease) in cash, cash equivalents and restricted cash (5,980) (19,110) (17,481) Cash, cash equivalents and restricted cash at beginning of period 10,275 29,385 46,866 Cash, cash equivalents and restricted cash at end of period $4,295 $10,275 $29,385 BATTALION OIL CORPORATIONSELECTED OPERATING DATA (Unaudited) Three Months Ended December 31, Years Ended December 31, 2020 2019 (5) 2020 2019 (5) Production volumes: Crude oil (MBbls) 857 1,057 3,446 3,780 Natural gas (MMcf) 2,332 2,755 8,769 9,136 Natural gas liquids (MBbls) 345 351 1,262 1,262 Total (MBoe) 1,591 1,867 6,170 6,565 Average daily production (Boe/d) 17,293 20,293 16,858 17,986 Average prices: Crude oil (per Bbl) $40.46 $55.18 $36.56 $53.80 Natural gas (per Mcf) 1.16 0.62 0.66 0.20 Natural gas liquids (per Bbl) 14.16 14.45 11.86 14.50 Total per Boe 26.57 34.88 23.79 34.04 Cash effect of derivative contracts: Crude oil (per Bbl) $1.28 $(1.03) $12.31 $(0.96)Natural gas (per Mcf) 0.06 0.19 0.28 0.71 Natural gas liquids (per Bbl) — 7.31 — 8.80 Total per Boe 0.78 1.06 7.28 2.13 Average prices computed after cash effect of settlement of derivative contracts: Crude oil (per Bbl) $41.74 $54.15 $48.87 $52.84 Natural gas (per Mcf) 1.22 0.81 0.94 0.91 Natural gas liquids (per Bbl) 14.16 21.76 11.86 23.30 Total per Boe 27.35 35.94 31.07 36.17 Average cost per Boe: Production: Lease operating $5.80 $6.86 $6.82 $7.98 Workover and other 0.59 0.89 0.60 1.10 Taxes other than income 1.84 2.00 1.63 1.97 Gathering and other, as adjusted (1) 10.52 5.80 8.53 6.88 Restructuring — 0.63 0.42 2.49 General and administrative, as adjusted (1) 3.24 3.22 2.38 4.70 (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 $3.28 $2.74 $2.99 $6.35 Stock-based compensation: Non-cash (0.49) — (0.42) 1.22 Transaction costs and other: Cash 0.45 0.48 (0.19) (2.87)General and administrative, as adjusted(2) $3.24 $3.22 $2.38 $4.70 Gathering and other, as reported $10.52 $5.79 $9.08 $7.14 Rig termination and stacking charges and other — 0.01 (0.55) (0.26)Gathering and other, as adjusted(3) $10.52 $5.80 $8.53 $6.88 Total operating costs, as reported $22.03 $18.28 $21.12 $24.54 Total adjusting items (0.04) 0.49 (1.16) (1.91)Total operating costs, as adjusted(4) $21.99 $18.77 $19.96 $22.63 (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 transaction 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) 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.(4) 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.(5) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three months and the year ended December 31, 2019. 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 financial information preceding the table above provides the Successor and the Predecessor GAAP results for the applicable periods. The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provide meaningful information about, for instance, production, revenues and costs, that assist a reader in understanding the Company’s financial results for the applicable periods. BATTALION OIL CORPORATIONSELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)(In thousands, except per share amounts) Successor Predecessor Period from Period from October 2, 2019 October 1, 2019 Three Months Ended through through December 31, 2020 December 31, 2019 October 1, 2019As Reported: Net income (loss) available to common stockholders, as reported $(63,757) $(10,460) $ (115,366) Impact of Selected Items: Unrealized loss (gain) on derivatives contracts: Crude oil $31,978 $16,751 $— Natural gas (1,806) (1,332) — Natural gas liquids — 3,262 — Total mark-to-market non-cash charge 30,172 18,681 — Full cost ceiling impairment 26,702 — — (Gain) loss on sale of Water Assets — (506) — Reorganization items, net — 3,298 115,366 Restructuring — 1,175 — Other (658) (901) — Selected items, before income taxes 56,216 21,747 115,366 Income tax effect of selected items — — — Selected items, net of tax $56,216 $21,747 $115,366 As Adjusted: Net income (loss), excluding selected items (1)(2) $(7,541) $11,287 $— Basic net income (loss) per common share, as reported $(3.93) $(0.65) $(0.71)Impact of selected items 3.46 1.35 0.71 Basic net income (loss) per common share, excluding selected items (1)(2) $(0.47) $0.70 $— Diluted net income (loss) per common share, as reported $(3.93) $(0.65) $(0.71)Impact of selected items 3.46 1.35 0.71 Diluted net income (loss) per common share, excluding selected items (1)(2)(3) $(0.47) $0.70 $— Net cash provided by (used in) operating activities $2,319 $13,654 $(6,498)Changes in working capital 4,902 10,695 302 Cash flow from operations before changes in working capital 7,221 24,349 (6,196)Cash components of selected items (229) 6,929 5,321 Income tax effect of selected items — — — Cash flows from operations before changes in working capital, adjusted for selected items (1)(2) $6,992 $31,278 $(875) (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) For the period from October 2, 2019 through December 31, 2019 (Successor), net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital include approximately $0.9 million of proceeds from hedge monetizations that occurred during the period.(3) The impact of selected items for the three months ended December 31, 2020 (Successor), October 2, 2019 through December 31, 2019 (Successor) and October 1, 2019 through October 1, 2019 (Predecessor) were calculated based upon weighted average diluted shares of 16.2 million, 16.2 million, and 161.5 million respectively, due to the net income (loss) available to common stockholders, excluding selected items. BATTALION OIL CORPORATIONSELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)(In thousands, except per share amounts) Successor Predecessor Period from Period from October 2, 2019 January 1, 2019 Year Ended through through December 31, 2020 December 31, 2019 October 1, 2019As Reported: Net income (loss), as reported $(229,707) $(10,460) $(1,156,053) Impact of Selected Items: Unrealized loss (gain) on derivatives contracts: Crude oil $5,777 $16,751 $35,967 Natural gas 366 (1,332) 3,753 Natural gas liquids — 3,262 6,114 Total mark-to-market non-cash charge 6,143 18,681 45,834 Full cost ceiling impairment 215,145 — 985,190 (Gain) loss on sale of Water Assets — (506) 3,618 Reorganization items, net — 3,298 117,124 Restructuring 2,580 1,175 15,148 Rig termination and stacking charges and other 4,669 (901) 22,601 Selected items, before income taxes 228,537 21,747 1,189,515 Income tax effect of selected items(1) — — (53,660)Selected items, net of tax $228,537 $21,747 $1,135,855 As Adjusted: Net income (loss), excluding selected items (2)(3) $(1,170) $11,287 $(20,198) Basic net income (loss) per common share, as reported $(14.18) $(0.65) $(7.27)Impact of selected items 14.11 1.35 7.14 Basic net income (loss) per common share, excluding selected items (2)(3) $(0.07) $0.70 $(0.13) Diluted net income (loss) per common share, as reported $(14.18) $(0.65) $(7.27)Impact of selected items 14.11 1.35 7.14 Diluted net income (loss) per common share, excluding selected items (2)(3)(4) $(0.07) $0.70 $(0.13) Net cash provided by (used in) operating activities $50,197 $13,654 $(39,731)Changes in working capital (238) 10,695 16,821 Cash flow from operations before changes in working capital 49,959 24,349 (22,910)Cash components of selected items 13,194 6,929 44,851 Income tax effect of selected items (1) — — (9,419)Cash flows from operations before changes in working capital, adjusted for selected items (2)(3) $63,153 $31,278 $12,522 (1) For the period from January 1, 2019 through October 1, 2019 (Predecessor), this represents the tax impact using an estimated tax rate of 21.0% and includes a $196.1 million adjustment for the net change in valuation allowance and deferred tax asset. (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. (3) For the year ended December 31, 2020 (Successor), the period from October 2, 2019 through December 31, 2019 (Successor), and the period from January 1, 2019 through October 1, 2019 (Predecessor), net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital include approximately $22.9 million, $0.9 million, and $7.8 million, respectively, of net proceeds from hedge monetizations that occurred during the periods.(4) The impact of selected items for the year ended December 31, 2020 (Successor), the period October 2, 2019 through December 31, 2019 (Successor) and January 1, 2019 through October 1, 2019 (Predecessor) were calculated based upon weighted average diluted shares of 16.2 million, 16.2 million, and 158.9 million respectively, due to the net income (loss) available to common stockholders, excluding selected items. BATTALION OIL CORPORATIONADJUSTED EBITDA RECONCILIATION (Unaudited)(In thousands) Three Months Ended December 31, Years Ended December 31, 2020 2019 (3) 2020 2019 (3) Net income (loss), as reported $(63,757) $(125,826) $(229,707) $(1,166,513)Impact of adjusting items: Interest expense 1,853 1,430 7,373 37,695 Depletion, depreciation and accretion 13,886 19,996 62,053 110,908 Full cost ceiling impairment 26,702 — 215,145 985,190 Income tax provision (benefit) — — — (95,791)Stock-based compensation 785 — 2,578 (8,035)Interest income (171) (128) (773) (219)(Gain) loss on sale of other assets — (6) 52 412 Restructuring — 1,175 2,580 16,323 Reorganization items, net — 118,664 — 120,422 (Gain) loss on sale of Water Assets — (506) — 3,112 Unrealized loss (gain) on derivatives contracts 30,172 18,681 6,143 64,515 Rig termination and stacking charges and other (658) (901) 4,669 21,700 Adjusted EBITDA(1)(2) $8,812 $32,579 $70,113 $89,719 (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.(2) Adjusted EBITDA for the three months ended December 31, 2019 includes approximately $0.9 million of net proceeds from hedge monetizations that occurred during the period. Adjusted EBITDA for the years ended December 31, 2020 and 2019 includes approximately $22.9 million and $8.7 million, respectively, of net proceeds related to hedge monetizations that occurred during the year.(3) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the three months and the year ended December 31, 2019. 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 be comparable to those of the Predecessor. The financial information preceding the table above provides the Successor and the Predecessor GAAP results for the applicable periods. The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provide meaningful information about, for instance, production, revenues and costs, that assist a reader in understanding the Company’s financial results for the applicable periods.

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