HOUSTON, Aug. 14, 2024 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE:BATL, "Battalion" or the "Company")) today announced financial and operating results for the second quarter of 2024. Key Highlights AGI facility online and treated 1.82 Bcf for the second quarter 2024 reducing operating expenses by $4.26/Boe compared to the first quarter 2024 On August 12, 2024, the AGI facility processed 26.6 MMcf/d which allowed the Company to return wells to production and realize approximately 7,500 Bbls of oil per day (approximately 13,500 Boe/d) net production Drilled and brought two additional wells on production in Monument Draw in the second quarter 2024 with the next two-well pad to be completed in late third quarter or early fourth quarter 2024 Generated second quarter 2024 sales volumes of 12,857 Boe/d Executed a $20.0 million preferred equity raise in May 2024 to support drilling program and debt reduction Continuing strategic alternatives initiative and reviewing a requested amendment to the previously announced Merger Agreement with Fury that would reduce the purchase price to $7.00 per share and require all of the existing preferred equity holders to roll over 100% of their preferred equity Management Comments The Company concluded its current six-well campaign ahead of planned timing and under budget on each well. The Vermejo two-well pad in Monument Draw is currently a drilled but uncompleted well and is currently scheduled to be fracked in the third quarter of 2024. New pad locations and permits are being prepared in all asset areas to support additional activity in Ward, Winkler and Pecos Counties. Capital costs continue to trend lower in the field with latest Monument Draw wells estimated below $950/lateral foot for drilling, completion and wellsite facilities while maintaining completions over 2,000 lbs/ft proppant. The previously announced Glacier and Rio pads saw strong performance with IP's reaching over 2,000 Boe/d and sustained production above the company's type curve. During the second quarter 2024, the acid gas injection ("AGI") facility treated approximately 20 MMcf/d average and returned approximately 17 MMcf/d of sweet gas to the Company for sales to its midstream partner. To date, the AGI facility has processed more than 2.7 Bcf of sour gas and allowed the Company to realize substantial savings compared to treating alternatives. The Company and its JV partner continued to ramp toward full inlet capacity, with expected savings up to $2.0 million per month in gas treating costs. Results of Operations Average daily net production and total operating revenue during the second quarter of 2024 were 12,857 Boe/d (49% oil) and $49.1 million, respectively, as compared to production and revenue of 14,253 Boe/d (49% oil) and $54.3 million, respectively, during the second quarter of 2023. The decrease in revenues in the second quarter of 2024 as compared to the second quarter of 2023 is primarily attributable to an approximate 1,396 Boe/d decrease in average daily production. Excluding the impact of hedges, Battalion realized 98.4% of the average NYMEX oil price during the second quarter of 2024. Realized hedge losses totaled approximately $3.2 million during the second quarter of 2024. Lease operating and workover expense was $10.22 per Boe in the second quarter of 2024 versus $10.79 per Boe in the second quarter of 2023. The decrease in lease operating and workover expense per Boe year-over-year is primarily a result of savings on chemicals and lower SWD costs. Gathering and other expense was $10.36 per Boe in the second quarter of 2024 versus $12.97 per Boe in the second quarter of 2023. The decrease in gathering and other expenses per Boe is primarily related to the start-up of the AGI facility and lower treating fees associated versus the Valkyrie (liquid redox) plant. General and administrative expenses were $2.85 per Boe in the second quarter of 2024 compared to $4.04 per Boe in the second quarter of 2023. The decrease in general and administrative expense is primarily attributable to a decrease in payroll and benefits compared with the prior year period as a result of the headcount reduction in 2023 partially offset by an increase in audit, legal and transaction costs associated with the potential merger with Fury Resources. For the second quarter of 2024, the Company reported a net loss available to common stockholders of $8.7 million or a net loss of $0.53 per share available to common stockholders. After adjusting for selected items, the Company reported an adjusted diluted net loss available to common stockholders for the second quarter of 2024 of $13.2 million or an adjusted diluted net loss of $0.80 per common share (see Reconciliation for additional information). Adjusted EBITDA during the quarter ended June 30, 2024 was $15.6 million as compared to $16.8 million during the quarter ended June 30, 2023 (see Adjusted EBITDA Reconciliation table for additional information). Liquidity and Balance Sheet As of June 30, 2024, the Company had $160.2 million of indebtedness outstanding and approximately $0.3 million of letters of credit outstanding. Total liquidity on June 30, 2024, made up of cash and cash equivalents, was $54.4 million. On May 13, 2024, 20,000 shares of preferred equity were sold for proceeds of $19.5 million, net of discount. On May 14, 2024, the Company used $17.3 million of the proceeds from the sale of the preferred equity to pay down debt. For further discussion on our liquidity and balance sheet, as well as recent developments, refer to Management's Discussion and Analysis and Risk Factors in the Company's Form 10-Q. Merger Agreement with Fury Resources Fury Resources, Inc. ("Fury") has requested a further amendment of the previously disclosed Agreement and Plan of Merger dated December 14, 2024, as amended (the "Merger Agreement"), such that the amount of merger consideration payable to the Company's stockholders in connection with the transaction contemplated by the Merger Agreement would be reduced from $9.80 per share to $7.00 per share. The modified offer is contingent on the existing holders of the Company's Series A through Series A-4 preferred equity rolling 100% of their preferred equity into new preferred equity in the surviving company following the merger in order to help support the transaction. The Company's Special Committee and its Board of Directors are reviewing Fury's proposal. The Company has been advised by the holders of the Company's preferred stock that they are also reviewing Fury's proposal. The Company does not intend to comment further on this matter until such reviews are complete. Important Information for Investors and Stockholders This communication is being made in respect of the proposed transaction involving the Company and Fury Resources, Inc., a Delaware corporation. In connection with the proposed transaction, the Company intends to file, or has filed, the relevant materials with the U.S. Securities and Exchange Commission ("SEC"), including a proxy statement on Schedule 14A and a transaction statement on Schedule 13e-3 (the "Schedule 13e-3"). Promptly after filing its definitive proxy statement with the SEC, the Company will mail the definitive proxy statement and a proxy card to each stockholder of the Company entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement, the Schedule 13e-3 or any other document that the Company has or may file with the SEC or send to its stockholders in connection with the proposed transaction. The relevant materials filed by the Company will be made available to the Company's investors and stockholders at no expense to them and copies may be obtained free of charge on the Company's website at www.battalionoil.com. In addition, all of those materials will be available at no charge on the SEC's website at www.sec.gov. Investors and stockholders of the Company are urged to read the proxy statement, the Schedule 13e-3 and the other relevant materials as they become available before making any voting or investment decision with respect to the proposed transaction because they contain important information about the Company and the proposed transaction. Participants in Solicitation The Company and its directors, executive officers, other members of its management and employees may be deemed to be participants in the solicitation of proxies of the Company stockholders in connection with the proposed transaction under SEC rules. Investors and stockholders may obtain more detailed information regarding the names, affiliations and interests of the Company's executive officers and directors in the solicitation by reading the Company's Annual Report on Form 10-K, for the fiscal year ended December 31, 2023, and the proxy statement, the Schedule 13e-3 and other relevant materials that will be, or have been, filed with the SEC in connection with the proposed transaction as they become available. Information concerning the interests of the Company's participants in the solicitation, which may, in some cases, be different than those of the Company's stockholders generally, will be set forth in the proxy statement relating to the proposed transaction and the Schedule 13e-3, as they become available. 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, 2023, 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   Six Months Ended   June 30,   June 30,     2024       2023       2024       2023   Operating revenues:                       Oil, natural gas and natural gas liquids sales:                       Oil $ 45,699     $ 46,168     $ 88,128     $ 100,383   Natural gas   (2,119 )     2,060       (72 )     4,960   Natural gas liquids   5,503       5,657       10,559       12,815   Total oil, natural gas and natural gas liquids sales   49,083       53,885       98,615       118,158   Other   21       387       359       1,256   Total operating revenues   49,104       54,272       98,974       119,414                           Operating expenses:                       Production:                       Lease operating   11,005       11,365       22,591       23,056   Workover and other   951       2,634       1,839       3,969   Taxes other than income   3,349       3,180       6,340       6,370   Gathering and other   12,126       16,828       29,412       33,345   General and administrative   3,340       5,243       7,411       10,380   Depletion, depreciation and accretion   13,213       14,713       26,238       30,861   Total operating expenses   43,984       53,963       93,831       107,981   Income from operations   5,120       309       5,143       11,433                           Other income (expenses):                       Net gain (loss) on derivative contracts   1,223       4,473       (22,964 )     23,946   Interest expense and other   (6,448 )     (9,530 )     (13,486 )     (17,316 ) Total other (expenses) income   (5,225 )     (5,057 )     (36,450 )     6,630   (Loss) income before income taxes   (105 )     (4,748 )     (31,307 )     18,063   Income tax benefit (provision)   —       —       —       —   Net (loss) income $ (105 )   $ (4,748 )   $ (31,307 )   $ 18,063   Preferred dividends   (8,586 )     (997 )     (14,218 )     (2,489 ) Net (loss) income available to common stockholders $ (8,691 )   $ (5,745 )   $ (45,525 )   $ 15,574                           Net (loss) income per share of common stock available to common stockholders:                       Basic $ (0.53 )   $ (0.35 )   $ (2.77 )   $ 0.87   Diluted $ (0.53 )   $ (0.35 )   $ (2.77 )   $ 0.86   Weighted average common shares outstanding:                       Basic   16,457       16,457       16,457       16,425   Diluted   16,457       16,457       16,457       16,520   BATTALION OIL CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)(In thousands, except share and per share amounts)               June 30, 2024   December 31, 2023 Current assets:           Cash and cash equivalents $ 54,430     $ 57,529   Accounts receivable, net   24,894       23,021   Assets from derivative contracts   5,869       8,992   Restricted cash   91       90   Prepaids and other   821       907   Total current assets   86,105       90,539   Oil and natural gas properties (full cost method):           Evaluated   791,908       755,482   Unevaluated   51,896       58,909   Gross oil and natural gas properties   843,804       814,391   Less: accumulated depletion   (471,413 )     (445,975 ) Net oil and natural gas properties   372,391       368,416   Other operating property and equipment:           Other operating property and equipment   4,657       4,640   Less: accumulated depreciation   (2,141 )     (1,817 ) Net other operating property and equipment   2,516       2,823   Other noncurrent assets:           Assets from derivative contracts   4,614       4,877   Operating lease right of use assets   749       1,027   Other assets   20,916       17,656   Total assets $ 487,291     $ 485,338               Current liabilities:           Accounts payable and accrued liabilities $ 76,456     $ 66,525   Liabilities from derivative contracts   25,554       17,191   Current portion of long-term debt   52,606       50,106   Operating lease liabilities   634       594   Total current liabilities   155,250       134,416   Long-term debt, net   101,185       140,276   Other noncurrent liabilities:           Liabilities from derivative contracts   19,635       16,058   Asset retirement obligations   18,135       17,458   Operating lease liabilities   162       490   Other   10,719       2,084   Commitments and contingencies           Temporary equity:           Redeemable convertible preferred stock: 138,000 shares and 98,000 shares   159,535