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 quarter
- 2021 capital program largely
complete – 6 wells put online at average D&C cost of ~$878 per
well per foot despite increasing service costs
- Continued success in reducing
workover expense despite rising service and material prices due to
33% YTD reduction in failure rates over 2020
- Facility upgrades in Q2 expected to
reduce well downtime and increase flow assurance in 2H 2021
Management Comments
Richard Little, the Company’s CEO, commented,
“The second quarter was in many ways a pivot point for Battalion.
Our team did a great job continuing the trend of capital discipline
as we completed and brought online two wells in our Monument Draw
area. With these two wells online, our 2021 capital program is
substantially complete and I’m proud to be able to say we did so
while remaining under budget despite rising service costs.”
“As our 2021 capital program draws to a close,
we remain focused on our future as we prepare to accelerate in 2022
and beyond. We put significant effort this quarter into upgrading
our central processing facility to allow for improved flow
assurance and reduced downtime across our fields. With the
improvements we’ve made to our facilities, as well as the
improvements made by our midstream partners, we are well positioned
to have a stronger second half of the year despite the completion
of our 2021 development capital program.”
“As we enter the second half of 2021, we remain
optimistic. Well results from our 2021 capital program are
promising, and we feel confident in our ability to execute on our
long-term plan of methodically growing the company.”
Results of Operations
Average daily net production and total operating
revenue during the second quarter 2021 were 15,571 barrels of oil
equivalent per day (“Boepd”) (57% oil) and $64.4 million,
respectively, as compared to production and revenue of 14,264 Boepd
(60% oil) and $18.5 million, respectively, during the second
quarter 2020. The increase in revenues in the second quarter of
2021 as compared to the second quarter 2020 is primarily
attributable to an approximate $31.35 per Boe increase in average
realized prices. Total production increased in the three months
ended June 30, 2021, when compared to the same period in the prior
year due to new production brought online as a result of our 2021
capital program as well as production from wells brought back
online that were shut-in during May and June 2020 when historically
low commodity prices occurred, which was partially offset by
third-party processing curtailments and facility upgrades and
repairs in the current year period.
Excluding the impact of hedges, Battalion
realized 97% of the average NYMEX oil price during the second
quarter of 2021. Realized hedge losses totaled approximately $18.3
million during the second quarter 2021.
Lease operating and workover expense was $7.72
per Boe in the second quarter of 2021 and $8.36 per Boe in the
second quarter of 2020. Adjusted G&A was $2.69 per Boe in the
second quarter of 2021 compared to $2.85 per Boe in the second
quarter of 2020 (see Selected Operating Data table for additional
information).
The Company reported a net loss to common
stockholders for the second quarter of 2021 of $33.9 million and a
net loss per basic and diluted share of $2.09. After adjusting for
selected items, the Company reported net income to common
stockholders for the second quarter of 2021 of $0.6 million, or
$0.04 per basic and diluted share (see Selected Item Review and
Reconciliation for additional information). Adjusted EBITDA during
the quarter ended June 30, 2021, was $14.1 million as compared to
$23.2 million during the quarter ended June 30, 2020 (see Adjusted
EBITDA Reconciliation table for additional information). Adjusted
EBITDA for the quarter ended June 30, 2020, included approximately
$8.2 million of net proceeds from the monetization of hedge
positions associated with the third quarter of 2020.
Liquidity and Balance Sheet
As of June 30, 2021, Battalion had $163.0
million of borrowings and $1.9 million of outstanding letters of
credit issued under the Senior Revolving Credit Facility resulting
in unused borrowing capacity of $20.1 million based on a borrowing
base of $185.0 million. Total liquidity at June 30, 2021, inclusive
of $1.4 million of cash and cash equivalents, was $21.5
million.
In May 2021, the Company entered into the Fourth
Amendment to its Senior Secured Revolving Credit Agreement which,
among other things, reduced the borrowing base to $185.0 million
effective June 1, 2021, and will further reduce the borrowing base
to $175.0 million effective September 1, 2021.
Operations Update
The Company completed and brought on production
two wells in its Monument Draw area during the quarter which
substantially concludes the 2021 capital program.
Conference Call Information
Battalion Oil Corporation has scheduled a
conference call for Tuesday, August 10, 2021, at 11:00 a.m. EDT
(10:00 a.m. CDT). To participate in the conference call, dial +1
334-777-6979 or 800-377-9510 (toll free) a few minutes before the
call begins and reference Battalion Oil Corporation confirmation
code 9932177. 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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Operating
revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Oil, natural gas and natural gas liquids sales: |
|
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
$ |
51,935 |
|
|
$ |
15,758 |
|
|
$ |
93,205 |
|
|
$ |
57,675 |
|
Natural gas |
|
|
5,317 |
|
|
|
836 |
|
|
|
14,404 |
|
|
|
1,190 |
|
Natural gas liquids |
|
|
6,851 |
|
|
|
1,437 |
|
|
|
11,760 |
|
|
|
6,190 |
|
Total oil, natural gas and natural gas liquids sales |
|
|
64,103 |
|
|
|
18,031 |
|
|
|
119,369 |
|
|
|
65,055 |
|
Other |
|
|
263 |
|
|
|
463 |
|
|
|
515 |
|
|
|
838 |
|
Total operating revenues |
|
|
64,366 |
|
|
|
18,494 |
|
|
|
119,884 |
|
|
|
65,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
10,169 |
|
|
|
10,300 |
|
|
|
19,636 |
|
|
|
22,789 |
|
Workover and other |
|
|
767 |
|
|
|
539 |
|
|
|
1,327 |
|
|
|
1,862 |
|
Taxes other than income |
|
|
2,912 |
|
|
|
1,493 |
|
|
|
6,104 |
|
|
|
4,408 |
|
Gathering and other |
|
|
14,331 |
|
|
|
15,228 |
|
|
|
27,502 |
|
|
|
25,775 |
|
Restructuring |
|
|
— |
|
|
|
2,162 |
|
|
|
— |
|
|
|
2,580 |
|
General and administrative |
|
|
4,031 |
|
|
|
5,270 |
|
|
|
8,858 |
|
|
|
9,126 |
|
Depletion, depreciation and accretion |
|
|
11,249 |
|
|
|
14,382 |
|
|
|
21,844 |
|
|
|
32,412 |
|
Full cost ceiling impairment |
|
|
— |
|
|
|
60,107 |
|
|
|
— |
|
|
|
60,107 |
|
Total operating expenses |
|
|
43,459 |
|
|
|
109,481 |
|
|
|
85,271 |
|
|
|
159,059 |
|
Income (loss) from
operations |
|
|
20,907 |
|
|
|
(90,987 |
) |
|
|
34,613 |
|
|
|
(93,166 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on derivative contracts |
|
|
(53,089 |
) |
|
|
(34,761 |
) |
|
|
(98,800 |
) |
|
|
83,538 |
|
Interest expense and other |
|
|
(1,747 |
) |
|
|
(1,568 |
) |
|
|
(3,117 |
) |
|
|
(3,197 |
) |
Total other income (expenses) |
|
|
(54,836 |
) |
|
|
(36,329 |
) |
|
|
(101,917 |
) |
|
|
80,341 |
|
Income (loss) before income taxes |
|
|
(33,929 |
) |
|
|
(127,316 |
) |
|
|
(67,304 |
) |
|
|
(12,825 |
) |
Income tax benefit (provision) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income
(loss) |
|
$ |
(33,929 |
) |
|
$ |
(127,316 |
) |
|
$ |
(67,304 |
) |
|
$ |
(12,825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(2.09 |
) |
|
$ |
(7.86 |
) |
|
$ |
(4.14 |
) |
|
$ |
(0.79 |
) |
Diluted |
|
$ |
(2.09 |
) |
|
$ |
(7.86 |
) |
|
$ |
(4.14 |
) |
|
$ |
(0.79 |
) |
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,268 |
|
|
|
16,204 |
|
|
|
16,250 |
|
|
|
16,204 |
|
Diluted |
|
|
16,268 |
|
|
|
16,204 |
|
|
|
16,250 |
|
|
|
16,204 |
|
BATTALION OIL
CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(In thousands, except share and per
share amounts)
|
|
|
|
|
|
|
|
|
June 30, 2021 |
|
December 31, 2020 |
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,458 |
|
|
$ |
4,295 |
|
Accounts receivable, net |
|
|
37,098 |
|
|
|
32,242 |
|
Assets from derivative contracts |
|
|
1,280 |
|
|
|
8,559 |
|
Prepaids and other |
|
|
2,475 |
|
|
|
2,740 |
|
Total current assets |
|
|
42,311 |
|
|
|
47,836 |
|
Oil and natural gas
properties (full cost method): |
|
|
|
|
|
|
Evaluated |
|
|
544,418 |
|
|
|
509,274 |
|
Unevaluated |
|
|
75,822 |
|
|
|
75,494 |
|
Gross oil and natural gas properties |
|
|
620,240 |
|
|
|
584,768 |
|
Less - accumulated depletion |
|
|
(316,519 |
) |
|
|
(295,163 |
) |
Net oil and natural gas properties |
|
|
303,721 |
|
|
|
289,605 |
|
Other operating
property and equipment: |
|
|
|
|
|
|
Other operating property and equipment |
|
|
3,367 |
|
|
|
3,535 |
|
Less - accumulated depreciation |
|
|
(1,206 |
) |
|
|
(1,149 |
) |
Net other operating property and equipment |
|
|
2,161 |
|
|
|
2,386 |
|
Other noncurrent
assets: |
|
|
|
|
|
|
Assets from derivative contracts |
|
|
563 |
|
|
|
4,009 |
|
Operating lease right of use assets |
|
|
78 |
|
|
|
310 |
|
Other assets |
|
|
2,903 |
|
|
|
2,351 |
|
Total
assets |
|
$ |
351,737 |
|
|
$ |
346,497 |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
65,297 |
|
|
$ |
58,928 |
|
Liabilities from derivative contracts |
|
|
71,443 |
|
|
|
22,125 |
|
Current portion of long-term debt |
|
|
2,209 |
|
|
|
1,720 |
|
Operating lease liabilities |
|
|
78 |
|
|
|
403 |
|
Total current liabilities |
|
|
139,027 |
|
|
|
83,176 |
|
Long-term
debt |
|
|
163,000 |
|
|
|
158,489 |
|
Other noncurrent
liabilities: |
|
|
|
|
|
|
Liabilities from derivative contracts |
|
|
15,117 |
|
|
|
4,291 |
|
Asset retirement obligations |
|
|
10,945 |
|
|
|
10,583 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Stockholders'
equity: |
|
|
|
|
|
|
Common stock: 100,000,000
shares of $0.0001 par value authorized; |
|
|
|
|
|
|
16,268,037 and 16,203,979 shares issued and outstanding as of |
|
|
|
|
|
|
June 30, 2021 and December 31, 2020, respectively |
|
|
2 |
|
|
|
2 |
|
Additional paid-in
capital |
|
|
331,117 |
|
|
|
330,123 |
|
Retained earnings (accumulated
deficit) |
|
|
(307,471 |
) |
|
|
(240,167 |
) |
Total stockholders' equity |
|
|
23,648 |
|
|
|
89,958 |
|
Total liabilities and
stockholders' equity |
|
$ |
351,737 |
|
|
$ |
346,497 |
|
BATTALION OIL
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(33,929 |
) |
|
$ |
(127,316 |
) |
|
$ |
(67,304 |
) |
|
$ |
(12,825 |
) |
Adjustments to reconcile net
income (loss) to net cash |
|
|
|
|
|
|
|
|
|
|
|
|
provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depletion, depreciation and
accretion |
|
|
11,249 |
|
|
|
14,382 |
|
|
|
21,844 |
|
|
|
32,412 |
|
Full cost ceiling
impairment |
|
|
— |
|
|
|
60,107 |
|
|
|
— |
|
|
|
60,107 |
|
Stock-based compensation,
net |
|
|
485 |
|
|
|
786 |
|
|
|
1,079 |
|
|
|
1,173 |
|
Unrealized loss (gain) on
derivative contracts |
|
|
34,817 |
|
|
|
67,221 |
|
|
|
70,869 |
|
|
|
(45,157 |
) |
Reorganization items, net |
|
|
— |
|
|
|
(739 |
) |
|
|
— |
|
|
|
(5,723 |
) |
Accrued settlements on
derivative contracts |
|
|
2,404 |
|
|
|
5,272 |
|
|
|
6,972 |
|
|
|
349 |
|
Other income (expense) |
|
|
(170 |
) |
|
|
457 |
|
|
|
(287 |
) |
|
|
464 |
|
Cash flows from operations
before changes in working capital |
|
|
14,856 |
|
|
|
20,170 |
|
|
|
33,173 |
|
|
|
30,800 |
|
Changes in working
capital |
|
|
886 |
|
|
|
10,591 |
|
|
|
(4,073 |
) |
|
|
12,304 |
|
Net cash provided by (used in)
operating activities |
|
|
15,742 |
|
|
|
30,761 |
|
|
|
29,100 |
|
|
|
43,104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas capital
expenditures |
|
|
(23,801 |
) |
|
|
(43,007 |
) |
|
|
(37,593 |
) |
|
|
(91,164 |
) |
Proceeds received from sale of
oil and natural gas properties |
|
|
(150 |
) |
|
|
500 |
|
|
|
926 |
|
|
|
500 |
|
Funds held in escrow and
other |
|
|
1 |
|
|
|
— |
|
|
|
(2 |
) |
|
|
509 |
|
Net cash provided by (used in)
investing activities |
|
|
(23,950 |
) |
|
|
(42,507 |
) |
|
|
(36,669 |
) |
|
|
(90,155 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
|
66,000 |
|
|
|
30,209 |
|
|
|
82,000 |
|
|
|
81,209 |
|
Repayments of borrowings |
|
|
(58,000 |
) |
|
|
(19,000 |
) |
|
|
(77,000 |
) |
|
|
(44,000 |
) |
Equity issuance costs and
other |
|
|
(5 |
) |
|
|
— |
|
|
|
(268 |
) |
|
|
(32 |
) |
Net cash provided by (used in)
financing activities |
|
|
7,995 |
|
|
|
11,209 |
|
|
|
4,732 |
|
|
|
37,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
|
(213 |
) |
|
|
(537 |
) |
|
|
(2,837 |
) |
|
|
(9,874 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period |
|
|
1,671 |
|
|
|
938 |
|
|
|
4,295 |
|
|
|
10,275 |
|
Cash and cash equivalents at
end of period |
|
$ |
1,458 |
|
|
$ |
401 |
|
|
$ |
1,458 |
|
|
$ |
401 |
|
BATTALION OIL
CORPORATIONSELECTED OPERATING DATA
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Production volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (MBbls) |
|
|
805 |
|
|
|
775 |
|
|
|
1,524 |
|
|
|
1,712 |
|
Natural gas (MMcf) |
|
|
2,055 |
|
|
|
1,632 |
|
|
|
4,188 |
|
|
|
4,171 |
|
Natural gas liquids (MBbls) |
|
|
270 |
|
|
|
251 |
|
|
|
485 |
|
|
|
601 |
|
Total (MBoe) |
|
|
1,417 |
|
|
|
1,298 |
|
|
|
2,707 |
|
|
|
3,008 |
|
Average daily production (Boe/d) |
|
|
15,571 |
|
|
|
14,264 |
|
|
|
14,956 |
|
|
|
16,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average prices: |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (per Bbl) |
|
$ |
64.52 |
|
|
$ |
20.33 |
|
|
$ |
61.16 |
|
|
$ |
33.69 |
|
Natural gas (per Mcf) |
|
|
2.59 |
|
|
|
0.51 |
|
|
|
3.44 |
|
|
|
0.29 |
|
Natural gas liquids (per Bbl) |
|
|
25.37 |
|
|
|
5.73 |
|
|
|
24.25 |
|
|
|
10.30 |
|
Total per Boe |
|
|
45.24 |
|
|
|
13.89 |
|
|
|
44.10 |
|
|
|
21.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash effect of derivative contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (per Bbl) |
|
$ |
(22.55 |
) |
|
$ |
40.67 |
|
|
$ |
(18.13 |
) |
|
$ |
21.40 |
|
Natural gas (per Mcf) |
|
|
(0.06 |
) |
|
|
0.58 |
|
|
|
(0.07 |
) |
|
|
0.42 |
|
Natural gas liquids (per Bbl) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total per Boe |
|
|
(12.89 |
) |
|
|
25.01 |
|
|
|
(10.32 |
) |
|
|
12.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average prices computed after cash effect of settlement of
derivative contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (per Bbl) |
|
$ |
41.97 |
|
|
$ |
61.00 |
|
|
$ |
43.03 |
|
|
$ |
55.09 |
|
Natural gas (per Mcf) |
|
|
2.53 |
|
|
|
1.09 |
|
|
|
3.37 |
|
|
|
0.71 |
|
Natural gas liquids (per Bbl) |
|
|
25.37 |
|
|
|
5.73 |
|
|
|
24.25 |
|
|
|
10.30 |
|
Total per Boe |
|
|
32.35 |
|
|
|
38.90 |
|
|
|
33.78 |
|
|
|
34.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average cost per Boe: |
|
|
|
|
|
|
|
|
|
|
|
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
7.18 |
|
|
$ |
7.94 |
|
|
$ |
7.25 |
|
|
$ |
7.58 |
|
Workover and other |
|
|
0.54 |
|
|
|
0.42 |
|
|
|
0.49 |
|
|
|
0.62 |
|
Taxes other than income |
|
|
2.06 |
|
|
|
1.15 |
|
|
|
2.25 |
|
|
|
1.47 |
|
Gathering and other, as adjusted (1) |
|
|
10.11 |
|
|
|
9.08 |
|
|
|
10.16 |
|
|
|
7.43 |
|
Restructuring |
|
|
— |
|
|
|
1.67 |
|
|
|
— |
|
|
|
0.86 |
|
General and administrative, as adjusted (1) |
|
|
2.69 |
|
|
|
2.85 |
|
|
|
2.95 |
|
|
|
2.08 |
|
Depletion |
|
|
7.77 |
|
|
|
10.79 |
|
|
|
7.89 |
|
|
|
10.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
$ |
2.84 |
|
|
$ |
4.06 |
|
|
$ |
3.27 |
|
|
$ |
3.03 |
|
Stock-based compensation: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash |
|
|
(0.34 |
) |
|
|
(0.61 |
) |
|
|
(0.40 |
) |
|
|
(0.39 |
) |
Non-recurring professional fees and other: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
0.19 |
|
|
|
(0.60 |
) |
|
|
0.08 |
|
|
|
(0.56 |
) |
General and administrative, as adjusted(2) |
|
$ |
2.69 |
|
|
$ |
2.85 |
|
|
$ |
2.95 |
|
|
$ |
2.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering and other, as
reported |
|
|
10.11 |
|
|
|
11.73 |
|
|
|
10.16 |
|
|
|
8.57 |
|
Rig termination and stacking charges and other |
|
|
— |
|
|
|
(2.65 |
) |
|
|
— |
|
|
|
(1.14 |
) |
Gathering and other, as
adjusted(3) |
|
$ |
10.11 |
|
|
$ |
9.08 |
|
|
$ |
10.16 |
|
|
$ |
7.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs, as
reported |
|
|
22.73 |
|
|
|
25.30 |
|
|
|
23.42 |
|
|
|
21.27 |
|
Total adjusting items |
|
|
(0.15 |
) |
|
|
(3.86 |
) |
|
|
(0.32 |
) |
|
|
(2.09 |
) |
Total operating costs, as
adjusted(4) |
|
$ |
22.58 |
|
|
$ |
21.44 |
|
|
$ |
23.10 |
|
|
$ |
19.18 |
|
________________________________
(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 professional fees 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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
As
Reported: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), as reported |
|
$ |
(33,929 |
) |
|
$ |
(127,316 |
) |
|
$ |
(67,304 |
) |
|
$ |
(12,825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of Selected
Items: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss (gain) on
derivatives contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil |
|
$ |
31,591 |
|
|
$ |
66,279 |
|
|
$ |
66,402 |
|
|
$ |
(45,555 |
) |
Natural gas |
|
|
3,226 |
|
|
|
942 |
|
|
|
4,467 |
|
|
|
398 |
|
Total mark-to-market non-cash
charge |
|
|
34,817 |
|
|
|
67,221 |
|
|
|
70,869 |
|
|
|
(45,157 |
) |
Full cost ceiling
impairment |
|
|
— |
|
|
|
60,107 |
|
|
|
— |
|
|
|
60,107 |
|
Restructuring |
|
|
— |
|
|
|
2,162 |
|
|
|
— |
|
|
|
2,580 |
|
Rig termination and stacking
charges |
|
|
— |
|
|
|
3,383 |
|
|
|
— |
|
|
|
3,383 |
|
Other |
|
|
(273 |
) |
|
|
828 |
|
|
|
(221 |
) |
|
|
1,734 |
|
Selected items, before income
taxes |
|
|
34,544 |
|
|
|
133,701 |
|
|
|
70,648 |
|
|
|
22,647 |
|
Income tax effect of selected
items |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Selected items, net of
tax |
|
|
34,544 |
|
|
|
133,701 |
|
|
|
70,648 |
|
|
|
22,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Adjusted: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), excluding
selected items (1)(2) |
|
$ |
615 |
|
|
$ |
6,385 |
|
|
$ |
3,344 |
|
|
$ |
9,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per
common share, as reported |
|
$ |
(2.09 |
) |
|
$ |
(7.86 |
) |
|
$ |
(4.14 |
) |
|
$ |
(0.79 |
) |
Impact of selected items |
|
|
2.13 |
|
|
|
8.25 |
|
|
|
4.35 |
|
|
|
1.40 |
|
Basic net income (loss) per
common share, excluding selected items (1)(2) |
|
$ |
0.04 |
|
|
$ |
0.39 |
|
|
$ |
0.21 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per
common share, as reported |
|
$ |
(2.09 |
) |
|
$ |
(7.86 |
) |
|
$ |
(4.14 |
) |
|
$ |
(0.79 |
) |
Impact of selected items |
|
|
2.13 |
|
|
|
8.25 |
|
|
|
4.34 |
|
|
|
1.40 |
|
Diluted net income (loss) per
common share, excluding selected items (1)(2)(3) |
|
$ |
0.04 |
|
|
$ |
0.39 |
|
|
$ |
0.20 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
operating activities |
|
$ |
15,742 |
|
|
$ |
30,761 |
|
|
$ |
29,100 |
|
|
$ |
43,104 |
|
Changes in working
capital |
|
|
(886 |
) |
|
|
(10,591 |
) |
|
|
4,073 |
|
|
|
(12,304 |
) |
Cash flows from operations
before changes in working capital |
|
|
14,856 |
|
|
|
20,170 |
|
|
|
33,173 |
|
|
|
30,800 |
|
Cash components of selected
items |
|
|
(2,677 |
) |
|
|
1,390 |
|
|
|
(7,193 |
) |
|
|
12,621 |
|
Income tax effect of selected
items |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cash flows from operations
before changes in working capital, adjusted for selected items
(1)(2) |
|
$ |
12,179 |
|
|
$ |
21,560 |
|
|
$ |
25,980 |
|
|
$ |
43,421 |
|
__________________________
(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 three and six months ended June 30, 2020, net income
(loss) and earnings per share excluding selected items and cash
flows from operations before changes in working capital include
approximately $16.4 million and $16.3 million, respectively, of net
proceeds from hedge monetizations that occurred during the periods.
For both periods, approximately $8.2 million of the net proceeds
relate to the monetization of hedge positions associated with the
third quarter of 2020. |
(3) |
|
The impact of selected items for the three months ended June
30, 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. The impact of selected items for the six
months ended June 30, 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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported |
|
$ |
(33,929 |
) |
|
$ |
(127,316 |
) |
|
$ |
(67,304 |
) |
|
$ |
(12,825 |
) |
Impact of adjusting
items: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,838 |
|
|
|
1,842 |
|
|
|
3,334 |
|
|
|
3,556 |
|
Depletion, depreciation and accretion |
|
|
11,249 |
|
|
|
14,382 |
|
|
|
21,844 |
|
|
|
32,412 |
|
Full cost ceiling impairment |
|
|
— |
|
|
|
60,107 |
|
|
|
— |
|
|
|
60,107 |
|
Stock-based compensation |
|
|
485 |
|
|
|
786 |
|
|
|
1,079 |
|
|
|
1,173 |
|
Interest income |
|
|
(84 |
) |
|
|
(232 |
) |
|
|
(209 |
) |
|
|
(329 |
) |
Restructuring |
|
|
— |
|
|
|
2,162 |
|
|
|
— |
|
|
|
2,580 |
|
(Gain) loss on sale of other assets |
|
|
(2 |
) |
|
|
52 |
|
|
|
(6 |
) |
|
|
52 |
|
Unrealized loss (gain) on derivatives contracts |
|
|
34,817 |
|
|
|
67,221 |
|
|
|
70,869 |
|
|
|
(45,157 |
) |
Rig termination and stacking charges |
|
|
— |
|
|
|
3,383 |
|
|
|
— |
|
|
|
3,383 |
|
Other |
|
|
(273 |
) |
|
|
828 |
|
|
|
(221 |
) |
|
|
1,734 |
|
Adjusted EBITDA(1)(2) |
|
$ |
14,101 |
|
|
$ |
23,215 |
|
|
$ |
29,386 |
|
|
$ |
46,686 |
|
_______________
(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 and six months ended June 30,
2020 includes approximately $16.4 million and $16.3 million,
respectively, of net proceeds from hedge monetizations that
occurred during the period. For both periods, approximately $8.2
million of the net proceeds relate to the monetization of hedge
positions associated with the third quarter of 2020. |
BATTALION OIL
CORPORATIONADJUSTED EBITDA RECONCILIATION
(Unaudited)(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
Three Months |
|
Three Months |
|
Three Months |
|
|
Ended |
|
Ended |
|
Ended |
|
Ended |
|
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), as reported |
|
$ |
(33,929 |
) |
|
$ |
(33,375 |
) |
|
$ |
(63,757 |
) |
|
$ |
(153,125 |
) |
Impact of adjusting
items: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,838 |
|
|
|
1,496 |
|
|
|
1,853 |
|
|
|
1,964 |
|
Depletion, depreciation and accretion |
|
|
11,249 |
|
|
|
10,595 |
|
|
|
13,886 |
|
|
|
15,755 |
|
Full cost ceiling impairment |
|
|
— |
|
|
|
— |
|
|
|
26,702 |
|
|
|
128,336 |
|
Stock-based compensation |
|
|
485 |
|
|
|
594 |
|
|
|
785 |
|
|
|
620 |
|
Interest income |
|
|
(84 |
) |
|
|
(125 |
) |
|
|
(171 |
) |
|
|
(273 |
) |
(Gain) loss on sale of other assets |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
Unrealized loss (gain) on derivatives contracts |
|
|
34,817 |
|
|
|
36,052 |
|
|
|
30,172 |
|
|
|
21,128 |
|
Other(1) |
|
|
(273 |
) |
|
|
52 |
|
|
|
(658 |
) |
|
|
210 |
|
Adjusted EBITDA(2)(3) |
|
$ |
14,101 |
|
|
$ |
15,285 |
|
|
$ |
8,812 |
|
|
$ |
14,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted LTM EBITDA(2)(3) |
|
$ |
52,813 |
|
|
|
|
|
|
|
|
|
|
______________________
(1) |
|
Other adjustments to net income (loss), as reported include
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
includes approximately $6.6 million of net proceeds from hedge
monetizations that occurred during the period. |
BATTALION OIL
CORPORATIONADJUSTED EBITDA RECONCILIATION
(Unaudited)(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
Three Months |
|
Three Months |
|
Three Months |
|
|
|
Ended |
|
Ended |
|
Ended |
|
Ended |
|
|
|
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019(1) |
|
September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported |
|
$ |
(127,316 |
) |
|
$ |
114,491 |
|
|
$ |
(125,826 |
) |
|
$ |
(63,284 |
) |
|
Impact of adjusting
items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,842 |
|
|
|
1,714 |
|
|
|
1,430 |
|
|
|
9,911 |
|
|
Depletion, depreciation and accretion |
|
|
14,382 |
|
|
|
18,030 |
|
|
|
19,996 |
|
|
|
20,512 |
|
|
Full cost ceiling impairment |
|
|
60,107 |
|
|
|
— |
|
|
|
— |
|
|
|
45,568 |
|
|
Stock-based compensation |
|
|
786 |
|
|
|
387 |
|
|
|
— |
|
|
|
(2,278 |
) |
|
Interest income |
|
|
(232 |
) |
|
|
(97 |
) |
|
|
(128 |
) |
|
|
(13 |
) |
|
Reorganization items, net |
|
|
— |
|
|
|
— |
|
|
|
118,664 |
|
|
|
1,758 |
|
|
Restructuring |
|
|
2,162 |
|
|
|
418 |
|
|
|
1,175 |
|
|
|
3,223 |
|
|
(Gain) loss on sale of other assets |
|
|
52 |
|
|
|
— |
|
|
|
(6 |
) |
|
|
2 |
|
|
(Gain) loss on sale of Water Assets |
|
|
— |
|
|
|
— |
|
|
|
(506 |
) |
|
|
(164 |
) |
|
Unrealized loss (gain) on derivatives contracts |
|
|
67,221 |
|
|
|
(112,378 |
) |
|
|
18,681 |
|
|
|
(11,571 |
) |
|
Rig termination and stacking charges |
|
|
3,383 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other(2) |
|
|
828 |
|
|
|
906 |
|
|
|
(901 |
) |
|
|
15,276 |
|
|
Adjusted EBITDA(3)(4) |
|
$ |
23,215 |
|
|
$ |
23,471 |
|
|
$ |
32,579 |
|
|
$ |
18,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted LTM
EBITDA(1)(3)(4) |
|
$ |
98,205 |
|
|
|
|
|
|
|
|
|
|
|
________________
(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 June 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 includes
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, 2020
includes approximately $16.4 million of net proceeds from hedge
monetizations that occurred during the period. For this
period, approximately $8.2 million of the net proceeds relate to
the monetization of hedge positions associated with the third
quarter of 2020. |
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