Quarterly / Earnings Reports | First Quarter (1Q) Update | Financial Results | Capital Markets

Battalion Oil Corp. First Quarter 2022 Results

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Battalion Oil Corp. announced financial and operating results for the first quarter 2022.

Key Highlights:

• Meeting or exceeding performance targets on drilling and completion activities year to date
• Mitigating cost increases and material shortages through increased operational and capital efficiencies
• Continued robust commodity pricing offering opportunity to layer on new hedges at attractive prices
• Ample liquidity to execute on 2022 capital program
• Recently began flowing back on first wells of 2022 capital program

Richard Little, the Company's CEO, commented, "As we entered 2022, our goal was clear: ramp up activity and drive significant growth in daily production and cash flow while remaining committed to capital discipline and operational efficiency. I am pleased to say we are delivering on all operational fronts and we are well on our way to achieving our 2022 goals."

Mr. Little continued, "With the first wells from our capital program flowing back, we expect to begin driving significant cash flow growth as we burn off below market hedges and layer on new ones at attractive prices. As we continue to move through 2022 and turn additional wells online, we will continue to prioritize capital discipline and operational efficiency and will remain diligent in our efforts to mitigate risks caused by inflationary pressures, supply chain disruption, or shifts in the geopolitical landscape."

Results of Operations

Average daily net production and total operating revenue during the first quarter 2022 were 14,767 barrels of oil equivalent per day ("Boepd") (50% oil) and $81.6 million, respectively, as compared to production and revenue of 14,333 Boepd (56% oil) and $55.5 million, respectively, during the first quarter 2021. In February 2021, we temporarily shut-in production due to inclement weather. The estimated decrease in average daily oil and natural gas production associated with this temporary shut-in was approximately 1,300 Boe/d in the first three months of 2021. The increase in revenues in the first quarter of 2022 as compared to the first quarter 2021 is primarily attributable to an approximate $18.42 per Boe increase in average realized prices (excluding the impact of hedges).

Excluding the impact of hedges, Battalion realized 99% of the average NYMEX oil price during the first quarter of 2022. Realized hedge losses totaled approximately $32.8 million during the first quarter 2022.

Lease operating and workover expense was $9.32 per Boe in the first quarter of 2022 and $7.77 per Boe in the first quarter of 2021. Adjusted G&A was $3.30 per Boe in the first quarter of 2022 compared to $3.24 per Boe in the first quarter of 2021 (see Selected Operating Data table for additional information).

The Company reported a net loss to common stockholders for the first quarter of 2022 of $92.7 million and a net loss per basic and diluted share of $5.69. After adjusting for selected items, the Company reported a net loss to common stockholders for the first quarter of 2022 of $3.5 million, or a $0.22 loss per basic and diluted share (see Selected Item Review and Reconciliation for additional information). Adjusted EBITDA during the quarter ended March 31, 2022, was $11.8 million as compared to $15.3 million during the quarter ended March 31, 2021 (see Adjusted EBITDA Reconciliation table for additional information).

Liquidity and Balance Sheet

As of March 31, 2022, the Company had $200.0 million of indebtedness outstanding, approximately $1.6 million of letters of credit outstanding and up to $35.0 million in delayed draw term loans available to be drawn under our Term Loan Agreement. Total liquidity on March 31, 2022, inclusive of $43.5 million of cash and cash equivalents, was $78.5 million. On April 29, 2022, the Company borrowed the $20.0 million available under the first delayed draw of the Term Loan Agreement.