• Battalion Oil Corp (BATL) announces a net loss of $57.7 million in Q3 2023.

• Production decreased to 12,717 Boe/d from 16,228 Boe/d year-over-year.

• Adjusted EBITDA stood at $13.6 million, down from $24.3 million in Q3 2022.

• Drilling operations ahead of plan, with new wells expected online in early 2024.

Battalion Oil Corp (BATL) released its 8-K filing on November 15, 2023, detailing its financial and operating results for the third quarter of 2023. The company reported a significant net loss available to common stockholders of $57.7 million, or $3.50 per share, compared to a net income of $105.9 million in the same period last year. This loss is primarily attributed to a decrease in production and a substantial drop in average realized prices for oil, natural gas, and natural gas liquids.

Operational Highlights and Financial Performance

• Warning! GuruFocus has detected 6 Warning Signs with BATL.

Battalion Oil Corp's average daily net production for the quarter was 12,717 barrels of oil equivalent per day (Boe/d), a decrease from the 16,228 Boe/d reported in the third quarter of 2022. The company's total operating revenue for the quarter was $54.1 million, a stark contrast to the $99.1 million reported in the previous year's corresponding quarter. The decrease in revenue is primarily due to an approximate $20.44 decrease in average realized prices, excluding the impact of hedges. Despite the challenges, Battalion realized 100.3% of the average NYMEX oil price during the quarter.

Lease operating and workover expenses increased slightly to $10.13 per Boe, up from $9.93 per Boe in Q3 2022. General and administrative expenses per Boe decreased to $2.72, down from $3.02 per Boe in the same quarter last year, primarily due to stock-based compensation forfeitures.

Liquidity and Balance Sheet

As of September 30, 2023, Battalion Oil Corp had $210.2 million of indebtedness outstanding and a total liquidity of $42.6 million, including cash and cash equivalents. In November 2023, the company secured a commitment from its existing equity stockholders to purchase additional preferred equity securities up to $55.0 million.

Future Outlook

CEO Matt Steele expressed optimism about the company's drilling activity in Monument Draw, which is ahead of plan. The company anticipates the new wells to be online in early 2024, coinciding with the completion of the acid gas injection (AGI) project. This is expected to enhance the cost structure and benefit production.

Drilling activity in Monument Draw is underway and ahead of plan on all metrics after the team stood up a new rig and new crews. We look forward to entering 2024 in position to benefit from producing our existing and new wells into the enhanced cost structure associated with AGI coming online.