Battalion Oil Corporation Announces Fourth Quarter 2023 Financial and Operating

HOUSTON, March 29, 2024 (GLOBE NEWSWIRE) — Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced financial and operating results for the fourth quarter of 2023.

Key Highlights

• Approximately 41,000 net acres, 91% HBP in three contiguous blocks across Ward, Winkler and Pecos Counties with substantial remaining location inventory
• Brought previously announced AGI project online in Q1 2024 treating over 20 MMcf/d
• Recommenced drilling operations in Monument Draw in Q4 2023 to execute a six well program
  • Completed two wells in Q4 2023, brought online in Q1 2024 under budget with strong initial results
  • Drilled two additional wells in Q1 2024, currently completing
  • Commenced drilling operations on two additional wells in Q1 2024, currently drilling ahead
• Generated full year sales volumes of 13,784 barrels of oil equivalent per day (“Boe/d”) (48% oil)
• Year-end 2023 reserves of approximately 68.1 million barrels of oil equivalent (“MMBoe”) with a standardized measure of discounted future net cash flows of approximately $598.5 million.
• Executed a $35.0 million preferred equity raise in December 2023 and an additional $20.0 million preferred equity raise in March 2024 to support drilling program
• Continuing strategic alternatives initiative and are working toward closing our previously announced merger agreement with Fury Resources

Management CommentsDuring Q4 2023, following the preferred equity raise, the Company re-commenced its drilling operations in Monument Draw after operating a three-well pad on non-operated acreage adjacent to the asset. The company also prepared additional locations across all three asset areas to support additional activity in Ward, Winkler, and Pecos Counties. Since the quarter close, the two well Glacier pad drilled in Q4 2023 has been completed and is on production. These wells came online below budget, above projected type curve, with substantial pressure support and 30-day IP’s over 1,950 Boe/d and 1,750 Boe/d, respectively. Two additional wells (Rio Bravo pad) have been drilled to total depth and are currently being completed. The drilling rig has moved onto an additional two-well pad (Vermejo pad) in Monument Draw. All operations have been favorable to plan from both a capital and timing perspective.

During the fourth quarter, workover operations for the acid gas injection (“AGI”) project were substantially completed. Since that time, the facility has restarted operations and began taking acid gas from the Company with approximately 200 MMcf being recently treated at AGI and approximately 175 MMcf of sweet gas being returned to the Company for sales to our midstream partner. As the facility continues to come online, the Company will benefit from the return to production of currently curtailed volumes of up to 750Bbl/d. Additionally, when the AGI is operating at full capacity, we expect to save up to $2.0 million per month in gas treating costs.

Matt Steele, Chief Executive Officer, commented “The operations team has performed exceptionally well on our Monument Draw drilling campaign. The most recent Glacier pad wells represent some of the best the Company has ever drilled from both a cost and performance basis. Bringing the AGI back online to treat our gas represents a new era at Battalion. The difficult steps we took last year to right size the Company and focus on operational excellence are beginning to pay dividends.”

Results of OperationsAverage daily net production and total operating revenue during the fourth quarter of 2023 were 12,022 Boe/d (46% oil) and $47.2 million, respectively, as compared to production and revenue of 15,696 Boe/d (51% oil) and $76.8 million, respectively, during the fourth quarter of 2022. The decrease in revenues in the fourth quarter of 2023 as compared to the fourth quarter of 2022 is attributable to an approximate 3,674 Boe/d decrease in average daily production and a $10.21 decrease in average realized prices (excluding the impact of hedges). Excluding the impact of hedges, Battalion realized 99.7% of the average NYMEX oil price during the fourth quarter of 2023. Realized hedge losses totaled approximately $3.0 million during the fourth quarter 2023.

Lease operating and workover expense was $11.87 per Boe in the fourth quarter of 2023 versus $9.89 per Boe in the fourth quarter of 2022. The increase in lease operating and workover expense per Boe year-over-year is primarily attributable to a decrease in average daily production as a large portion of our lease operating expenses are fixed costs. Gathering and other expense was $13.31 per Boe in the fourth quarter of 2023 versus $11.31 per Boe in the fourth quarter of 2022. The increase was primarily related to midstream…