Key Highlights
The Company ended the quarter with positive equity of $157.1 million. This provides further basis for the Company to attain compliance with NYSE listing requirements
Reduced net debt (gross debt less cash and reinvestment proceeds) to $108.3 million vs $180.2 million in Q4 2025
Divested West Quito Assets for net proceeds of $60.1 million, utilizing $45.6 million to repay amounts outstanding under our Term Loan
Executed a private placement to an institutional investor for purchase of common stock at $5.50 per share for total gross proceeds of $15.0 million
Converted 7,803 shares of preferred stock to 1.8 million common shares at a conversion price of $6.21 per share
Acquired 7,090 net acres and production directly adjacent to our Monument Draw asset for 485,000 shares of common stock
Generated first quarter 2026 sales volumes of 12,578 barrels of oil equivalent per day ("Boe/d") (47% oil), an increase from 11,207 Boe/d in Q4 2025
Lease operating and workover expense per BOE reduced by ~24% vs Q4 2025
Continued strategic negotiations related to refinancing, a carried drilling venture, and infrastructure to place Monument Draw oil production on a pipeline rather than trucking to sales
"Cube" style development planned in additional proven benches to greatly expand inventory
Management Comments
The Company continues to make significant progress both operationally and strategically. Production volumes continue to benefit from the termination of the gas treating agreement and subsequent entry into a long-term treating agreement with a proven midstream partner. The sale of our West Quito Assets resulted in a substantial reduction of debt. The production impact of selling the assets was more than offset by increased flow in Monument Draw. Ongoing strategic negotiations should further improve the balance sheet, reduce operating costs and create outsized returns for our 2026 development plans.
"We continue to focus on improving our balance sheet and maximizing returns from our holdings in Monument Draw. Q1 2026 was an inflection point for the Company. The sale of our West Quito Assets transformed our leverage profile. Changing our gas midstream partner has been a gamechanger for the operational reliability of the Company. The team continued to improve field operations, lowering unit costs in all categories. Moving forward we are working to execute definitive documents for a refinancing, a carried drilling venture, and oil on pipe infrastructure. A refinancing will lower our cost to service debt as well as give additional flexibility for development of the asset base. The carried drilling deal will move the Company toward multiple bench "cube" style development that has been very successfully employed by offset operators. We expect to execute definitive documents and commence drilling in late Q2 2026. Transporting our crude to sales point via pipeline rather than trucking will both save money and reduce environmental exposure. This project is expected to come online in early Q3 2026 and save the Company up to $6 million annually. 2026 has been and continues to be a very exciting year for the Company," said Matt Steele, Chief Executive Officer of Battalion.
Results of Operations
Average daily net production and total operating revenue during the first quarter of 2026 were 12,578 Boe/d (47% oil) and $39.2 million, respectively, as compared to production and revenue of 11,900 Boe/d (53% oil) and $47.5 million, respectively, during the first quarter of 2025. The decrease in revenues in the first quarter of 2026 as compared to the first quarter of 2025 is primarily attributable to a $9.73 decrease per Boe in average realized prices (excluding the impact of hedges) partially offset by an approximate 678 Boe/d increase in average daily production resulting from more consistent and reliable processing. Excluding the impact of hedges, Battalion realized approximately 97% of the average NYMEX oil price during the first quarter of 2026. Realized hedge losses totaled approximately $1.0 million during the first quarter of 2026.
Lease operating and workover expense was $9.82 per Boe in the first quarter of 2026 versus $11.01 per Boe in the first quarter of 2025. The decrease in lease operating and workover expense per Boe year-over-year is primarily the result of increased production and lower workover activity. Gathering and other expenses were $9.94 per Boe in the first quarter of 2026 versus $11.20 per Boe in the first quarter of 2025. The decrease in gathering and other expenses per Boe is primarily related to realized savings from capital projects and more reliable throughput resulting from entry into a long-term processing agreement with a publicly traded large-cap midstream provider in January 2026. General and administrative expenses were $3.76 per Boe in the first quarter of 2026 compared to $4.12 per Boe in the first quarter of 2025. The decrease in general and administrative expenses for the first quarter of 2026 is primarily due to increased production. Excluding non-recurring charges, general and administrative expenses would have been $3.02 per Boe in the first quarter of 2026 compared to $3.01 per Boe in the first quarter of 2025.
For the first quarter of 2026, the Company reported a net loss available to common stockholders of $64.8 million and a net loss of $3.72 per share available to common stockholders. The majority of this loss is due to unrealized non-cash derivative losses resulting from elevated oil prices at the end of the quarter. Unrealized derivative losses reflect the accounting remeasurement of the Company's derivative portfolio based on changes in the market value of contracts that remain open and do not represent current-period cash inflows or outflows. After adjusting for selected items, the Company reported an adjusted diluted net loss available to common stockholders for the first quarter of 2026 of $16.2 million or an adjusted diluted net loss of $0.93 per common share (see Reconciliation for additional information). Adjusted EBITDA during the quarter ended March 31, 2026 was $10.0 million as compared to $15.1 million during the quarter ended March 31, 2025 (see Adjusted EBITDA Reconciliation table for additional information).
Liquidity and Balance Sheet
As of March 31, 2026, the Company had $162.5 million of term loan indebtedness outstanding and total liquidity made up of cash and cash equivalents and reinvestment proceeds of $54.3 million.
For additional details on liquidity, financial position, and recent developments, please refer to Management's Discussion and Analysis included in Battalion's Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.
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, 2025, and other filings submitted by the Company to the 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
Matthew B. SteeleChief Executive Officer & Principal Financial Officer832-538-0300
BATTALION OIL CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)(In thousands, except per share amounts)
Three Months Ended
March 31,
2026
2025
Operating revenues:
Oil, natural gas and natural gas liquids sales:
Oil
$
36,282
$
39,700
Natural gas
(1,493
)
2,823
Natural gas liquids
4,273
4,862
Total oil, natural gas and natural gas liquids sales
39,062
47,385
Other
112
90
Total operating revenues
39,174
47,475
Operating expenses:
Production:
Lease operating
10,094
10,358
Workover and other
1,018
1,433
Taxes other than income
2,324
2,800
Gathering and other
11,250
12,000
General and administrative
4,260
4,413
Depletion, depreciation and accretion
12,362
13,080
Total operating expenses
41,308
44,084
(Loss) income from operations
(2,134
)
3,391
Other (expenses) income:
Net (loss) gain on derivative contracts
(47,964
)
9,302
Interest expense and other
(5,517
)
(6,670
)
Loss on extinguishment of debt
(862
)
—
Total other (expenses) income
(54,343
)
2,632
(Loss) income before income taxes
(56,477
)
6,023
Income tax benefit (provision)
—
—
Net (loss) income
$
(56,477
)
$
6,023
Preferred dividends
(8,331
)
(11,820
)
Net (loss) income available to common stockholders
$
(64,808
)
$
(5,797
)
Net (loss) income per share of common stock available to common stockholders:
Basic
$
(3.72
)
$
(0.35
)
Diluted
$
(3.72
)
$
(0.35
)
Weighted average common shares outstanding:
Basic
17,415
16,457
Diluted
17,415
16,457
BATTALION OIL CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)(In thousands, except share and per share amounts)
March 31, 2026
December 31, 2025
Current assets:
Cash and cash equivalents
$
46,373
$
27,965
Accounts receivable, net
19,597
12,071
Assets from derivative contracts
7,434
16,145
Restricted cash
7,958
91
Prepaids and other
742
892
Total current assets
82,104
57,164
Oil and natural gas properties (full cost method):
Evaluated
827,996
890,050
Unevaluated
54,334
48,025
Gross oil and natural gas properties
882,330
938,075
Less: accumulated depletion
(560,069
)
(547,982
)
Net oil and natural gas properties
322,261
390,093
Other operating property and equipment:
Other operating property and equipment
4,678
4,678
Less: accumulated depreciation
(2,831
)
(2,807
)
Net other operating property and equipment
1,847
1,871
Other noncurrent assets:
Assets from derivative contracts
2,008
7,350
Operating lease right of use assets
660
840
Other assets
3,488
3,360
Total assets
$
412,368
$
460,678
Current liabilities:
Accounts payable and accrued liabilities
$
43,453
$
39,734
Liabilities from derivative contracts
24,612
633
Current portion of long-term debt
22,500
22,510
Operating lease liabilities
638
764
Total current liabilities
91,203
63,641
Long-term debt, net
135,882
180,955
Other noncurrent liabilities:
Liabilities from derivative contracts
10,597
1,692
Asset retirement obligations
17,514
