Battalion Oil Corporation First Quarter 2023 Results

Average daily net production and total operating revenue during the first quarter of 2023 were 16,200 Boe/d (50% oil) and $65.1 million, respectively, as compared to production and revenue of 14,767 Boe/d (50% oil) and $81.6 million, respectively, during the first quarter of 2022. The decrease in revenues in the first quarter of 2023 as compared to the first quarter of 2022 is primarily attributable to an approximate $17.18 decrease in average realized prices (excluding the impact of hedges), partially offset by an increase in average production volumes over the periods. Excluding the impact of hedges, Battalion realized 95% of the average NYMEX oil price during the first quarter of 2023. Realized hedge losses totaled approximately $1.5 million during the first quarter 2023.

Lease operating and workover expense was $8.94 per Boe in the first quarter of 2023 versus $9.32 per Boe in the first quarter of 2022. The decrease in lease operating and workover expense per Boe year-over-year is primarily attributable to an increase in average daily production as a large portion of our lease operating expenses are fixed costs. Gathering and other expense was $11.33 per Boe in the first quarter of 2023 versus $11.48 per Boe in the first quarter of 2022. The decrease was due primarily to streamlining the Valkyrie facility and increasing throughput to our lower cost gas takeaway option. General and administrative expense was $3.53 per Boe in the first quarter of 2023 and $3.75 per Boe in the first quarter of 2022. After adjusting for selected items, Adjusted G&A was $3.24 per Boe in the first quarter of 2023 compared to $3.30 per Boe in the first quarter of 2022.

The Company reported net income for the first quarter of 2023 of $22.8 million and a net income per diluted share available to common stockholders of $1.28. After adjusting for selected items, the Company reported an adjusted net loss available to common stockholders for the first quarter of 2023 of $0.7 million, or an adjusted net loss of $0.04 per diluted common share (see Reconciliation for additional information). Adjusted EBITDA during the quarter ended March 31, 2023 was $26.1 million as compared to $11.8 million during the quarter ended March 31, 2022 (see Adjusted EBITDA Reconciliation table for additional information).

Liquidity and Balance Sheet

As of March 31, 2023, the Company had $230.3 million of indebtedness outstanding and approximately $1.4 million of letters of credit outstanding. Total liquidity on March 31, 2023, made up of cash and cash equivalents, was $23.2 million.

In March 2023, the Company issued 25,000 shares of redeemable convertible preferred stock to certain of its existing equity shareholders and received approximately $24.4 million in net proceeds to improve liquidity and address concerns around covenant compliance. For further discussion on our liquidity and balance sheet, refer to Management's Discussion and Analysis and Risk Factors in the Company's Form 10-K.

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, 2022, 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.