Battalion Oil Corporation Announces Second Quarter 2021 Results

Houston, Texas, UNITED STATES


HOUSTON, Aug. 09, 2021 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced results of operations for the second quarter 2021.

Highlights

  • Completed and put online two new wells in Monument Draw during the quarter
  • 2021 capital program largely complete – 6 wells put online at average D&C cost of ~$878 per well per foot despite increasing service costs
  • Continued success in reducing workover expense despite rising service and material prices due to 33% YTD reduction in failure rates over 2020
  • Facility upgrades in Q2 expected to reduce well downtime and increase flow assurance in 2H 2021

Management Comments

Richard Little, the Company’s CEO, commented, “The second quarter was in many ways a pivot point for Battalion. Our team did a great job continuing the trend of capital discipline as we completed and brought online two wells in our Monument Draw area. With these two wells online, our 2021 capital program is substantially complete and I’m proud to be able to say we did so while remaining under budget despite rising service costs.”

“As our 2021 capital program draws to a close, we remain focused on our future as we prepare to accelerate in 2022 and beyond. We put significant effort this quarter into upgrading our central processing facility to allow for improved flow assurance and reduced downtime across our fields. With the improvements we’ve made to our facilities, as well as the improvements made by our midstream partners, we are well positioned to have a stronger second half of the year despite the completion of our 2021 development capital program.”

“As we enter the second half of 2021, we remain optimistic. Well results from our 2021 capital program are promising, and we feel confident in our ability to execute on our long-term plan of methodically growing the company.”

Results of Operations

Average daily net production and total operating revenue during the second quarter 2021 were 15,571 barrels of oil equivalent per day (“Boepd”) (57% oil) and $64.4 million, respectively, as compared to production and revenue of 14,264 Boepd (60% oil) and $18.5 million, respectively, during the second quarter 2020. The increase in revenues in the second quarter of 2021 as compared to the second quarter 2020 is primarily attributable to an approximate $31.35 per Boe increase in average realized prices. Total production increased in the three months ended June 30, 2021, when compared to the same period in the prior year due to new production brought online as a result of our 2021 capital program as well as production from wells brought back online that were shut-in during May and June 2020 when historically low commodity prices occurred, which was partially offset by third-party processing curtailments and facility upgrades and repairs in the current year period.

Excluding the impact of hedges, Battalion realized 97% of the average NYMEX oil price during the second quarter of 2021. Realized hedge losses totaled approximately $18.3 million during the second quarter 2021.

Lease operating and workover expense was $7.72 per Boe in the second quarter of 2021 and $8.36 per Boe in the second quarter of 2020. Adjusted G&A was $2.69 per Boe in the second quarter of 2021 compared to $2.85 per Boe in the second quarter of 2020 (see Selected Operating Data table for additional information).

The Company reported a net loss to common stockholders for the second quarter of 2021 of $33.9 million and a net loss per basic and diluted share of $2.09. After adjusting for selected items, the Company reported net income to common stockholders for the second quarter of 2021 of $0.6 million, or $0.04 per basic and diluted share (see Selected Item Review and Reconciliation for additional information). Adjusted EBITDA during the quarter ended June 30, 2021, was $14.1 million as compared to $23.2 million during the quarter ended June 30, 2020 (see Adjusted EBITDA Reconciliation table for additional information). Adjusted EBITDA for the quarter ended June 30, 2020, included approximately $8.2 million of net proceeds from the monetization of hedge positions associated with the third quarter of 2020.

Liquidity and Balance Sheet

As of June 30, 2021, Battalion had $163.0 million of borrowings and $1.9 million of outstanding letters of credit issued under the Senior Revolving Credit Facility resulting in unused borrowing capacity of $20.1 million based on a borrowing base of $185.0 million. Total liquidity at June 30, 2021, inclusive of $1.4 million of cash and cash equivalents, was $21.5 million.

In May 2021, the Company entered into the Fourth Amendment to its Senior Secured Revolving Credit Agreement which, among other things, reduced the borrowing base to $185.0 million effective June 1, 2021, and will further reduce the borrowing base to $175.0 million effective September 1, 2021.

Operations Update

The Company completed and brought on production two wells in its Monument Draw area during the quarter which substantially concludes the 2021 capital program.

Conference Call Information

Battalion Oil Corporation has scheduled a conference call for Tuesday, August 10, 2021, at 11:00 a.m. EDT (10:00 a.m. CDT). To participate in the conference call, dial +1 334-777-6979 or 800-377-9510 (toll free) a few minutes before the call begins and reference Battalion Oil Corporation confirmation code 9932177. The conference call recording will also be posted to Battalion’s website: www.battalionoil.com.

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, 2020, 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.

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

Chris Lang
Manager, Finance
(832) 538-0551

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)

             
  Three Months Ended Six Months Ended
  June 30, June 30,
     2021  2020  2021  2020 
Operating revenues:            
Oil, natural gas and natural gas liquids sales:            
Oil $51,935  $15,758  $93,205  $57,675 
Natural gas  5,317   836   14,404   1,190 
Natural gas liquids  6,851   1,437   11,760   6,190 
Total oil, natural gas and natural gas liquids sales  64,103   18,031   119,369   65,055 
Other  263   463   515   838 
Total operating revenues  64,366   18,494   119,884   65,893 
             
Operating expenses:            
Production:            
Lease operating  10,169   10,300   19,636   22,789 
Workover and other  767   539   1,327   1,862 
Taxes other than income  2,912   1,493   6,104   4,408 
Gathering and other  14,331   15,228   27,502   25,775 
Restructuring     2,162      2,580 
General and administrative  4,031   5,270   8,858   9,126 
Depletion, depreciation and accretion  11,249   14,382   21,844   32,412 
Full cost ceiling impairment     60,107      60,107 
Total operating expenses  43,459   109,481   85,271   159,059 
Income (loss) from operations  20,907   (90,987)  34,613   (93,166)
             
Other income (expenses):            
Net gain (loss) on derivative contracts  (53,089)  (34,761)  (98,800)  83,538 
Interest expense and other  (1,747)  (1,568)  (3,117)  (3,197)
Total other income (expenses)  (54,836)  (36,329)  (101,917)  80,341 
Income (loss) before income taxes  (33,929)  (127,316)  (67,304)  (12,825)
Income tax benefit (provision)            
Net income (loss) $(33,929) $(127,316) $(67,304) $(12,825)
             
Net income (loss) per share of common stock:            
Basic $(2.09) $(7.86) $(4.14) $(0.79)
Diluted $(2.09) $(7.86) $(4.14) $(0.79)
Weighted average common shares outstanding:            
Basic  16,268   16,204   16,250   16,204 
Diluted  16,268   16,204   16,250   16,204 

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)

       
     June 30, 2021    December 31, 2020
Current assets:      
Cash and cash equivalents $1,458  $4,295 
Accounts receivable, net  37,098   32,242 
Assets from derivative contracts  1,280   8,559 
Prepaids and other  2,475   2,740 
Total current assets  42,311   47,836 
Oil and natural gas properties (full cost method):      
Evaluated  544,418   509,274 
Unevaluated  75,822   75,494 
Gross oil and natural gas properties  620,240   584,768 
Less - accumulated depletion  (316,519)  (295,163)
Net oil and natural gas properties  303,721   289,605 
Other operating property and equipment:      
Other operating property and equipment  3,367   3,535 
Less - accumulated depreciation  (1,206)  (1,149)
Net other operating property and equipment  2,161   2,386 
Other noncurrent assets:      
Assets from derivative contracts  563   4,009 
Operating lease right of use assets  78   310 
Other assets  2,903   2,351 
Total assets $351,737  $346,497 
       
Current liabilities:      
Accounts payable and accrued liabilities $65,297  $58,928 
Liabilities from derivative contracts  71,443   22,125 
Current portion of long-term debt  2,209   1,720 
Operating lease liabilities  78   403 
Total current liabilities  139,027   83,176 
Long-term debt  163,000   158,489 
Other noncurrent liabilities:      
Liabilities from derivative contracts  15,117   4,291 
Asset retirement obligations  10,945   10,583 
Commitments and contingencies      
Stockholders' equity:      
Common stock: 100,000,000 shares of $0.0001 par value authorized;      
16,268,037 and 16,203,979 shares issued and outstanding as of      
June 30, 2021 and December 31, 2020, respectively  2   2 
Additional paid-in capital  331,117   330,123 
Retained earnings (accumulated deficit)  (307,471)  (240,167)
Total stockholders' equity  23,648   89,958 
Total liabilities and stockholders' equity $351,737  $346,497 

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

             
  Three Months Ended Six Months Ended
  June 30, June 30,
     2021  2020  2021  2020 
Cash flows from operating activities:            
Net income (loss) $(33,929) $(127,316) $(67,304) $(12,825)
Adjustments to reconcile net income (loss) to net cash            
provided by (used in) operating activities:            
Depletion, depreciation and accretion  11,249   14,382   21,844   32,412 
Full cost ceiling impairment     60,107      60,107 
Stock-based compensation, net  485   786   1,079   1,173 
Unrealized loss (gain) on derivative contracts  34,817   67,221   70,869   (45,157)
Reorganization items, net     (739)     (5,723)
Accrued settlements on derivative contracts  2,404   5,272   6,972   349 
Other income (expense)  (170)  457   (287)  464 
Cash flows from operations before changes in working capital  14,856   20,170   33,173   30,800 
Changes in working capital  886   10,591   (4,073)  12,304 
Net cash provided by (used in) operating activities  15,742   30,761   29,100   43,104 
             
Cash flows from investing activities:            
Oil and natural gas capital expenditures  (23,801)  (43,007)  (37,593)  (91,164)
Proceeds received from sale of oil and natural gas properties  (150)  500   926   500 
Funds held in escrow and other  1      (2)  509 
Net cash provided by (used in) investing activities  (23,950)  (42,507)  (36,669)  (90,155)
             
Cash flows from financing activities:            
Proceeds from borrowings  66,000   30,209   82,000   81,209 
Repayments of borrowings  (58,000)  (19,000)  (77,000)  (44,000)
Equity issuance costs and other  (5)     (268)  (32)
Net cash provided by (used in) financing activities  7,995   11,209   4,732   37,177 
             
Net increase (decrease) in cash and cash equivalents  (213)  (537)  (2,837)  (9,874)
             
Cash and cash equivalents at beginning of period  1,671   938   4,295   10,275 
Cash and cash equivalents at end of period $1,458  $401  $1,458  $401 

BATTALION OIL CORPORATION
SELECTED OPERATING DATA (Unaudited)

             
  Three Months Ended Six Months Ended
  June 30, June 30,
  2021  2020  2021  2020 
Production volumes:            
Crude oil (MBbls)  805   775   1,524   1,712 
Natural gas (MMcf)  2,055   1,632   4,188   4,171 
Natural gas liquids (MBbls)  270   251   485   601 
Total (MBoe)  1,417   1,298   2,707   3,008 
Average daily production (Boe/d)  15,571   14,264   14,956   16,527 
             
Average prices:            
Crude oil (per Bbl) $64.52  $20.33  $61.16  $33.69 
Natural gas (per Mcf)  2.59   0.51   3.44   0.29 
Natural gas liquids (per Bbl)  25.37   5.73   24.25   10.30 
Total per Boe  45.24   13.89   44.10   21.63 
             
Cash effect of derivative contracts:            
Crude oil (per Bbl) $(22.55) $40.67  $(18.13) $21.40 
Natural gas (per Mcf)  (0.06)  0.58   (0.07)  0.42 
Natural gas liquids (per Bbl)            
Total per Boe  (12.89)  25.01   (10.32)  12.76 
             
Average prices computed after cash effect of settlement of derivative contracts:            
Crude oil (per Bbl) $41.97  $61.00  $43.03  $55.09 
Natural gas (per Mcf)  2.53   1.09   3.37   0.71 
Natural gas liquids (per Bbl)  25.37   5.73   24.25   10.30 
Total per Boe  32.35   38.90   33.78   34.39 
             
Average cost per Boe:            
Production:            
Lease operating $7.18  $7.94  $7.25  $7.58 
Workover and other  0.54   0.42   0.49   0.62 
Taxes other than income  2.06   1.15   2.25   1.47 
Gathering and other, as adjusted (1)  10.11   9.08   10.16   7.43 
Restructuring     1.67      0.86 
General and administrative, as adjusted (1)  2.69   2.85   2.95   2.08 
Depletion  7.77      10.79   7.89   10.51 
             
(1)   Represents gathering and other and general and administrative costs per Boe, adjusted for items noted in the reconciliation below:
             
General and administrative:            
General and administrative, as reported $2.84  $4.06  $3.27  $3.03 
Stock-based compensation:            
Non-cash  (0.34)  (0.61)  (0.40)  (0.39)
Non-recurring professional fees and other:            
Cash  0.19   (0.60)  0.08   (0.56)
General and administrative, as adjusted(2) $2.69  $2.85  $2.95  $2.08 
             
Gathering and other, as reported  10.11   11.73   10.16   8.57 
Rig termination and stacking charges and other     (2.65)     (1.14)
Gathering and other, as adjusted(3) $10.11  $9.08  $10.16  $7.43 
             
Total operating costs, as reported  22.73   25.30   23.42   21.27 
Total adjusting items  (0.15)  (3.86)  (0.32)  (2.09)
Total operating costs, as adjusted(4) $22.58  $21.44  $23.10  $19.18 

________________________________

(2) General and administrative, as adjusted, is a non-GAAP measure that excludes non-cash stock-based compensation charges relating to equity awards under our incentive stock plan, as well as other cash charges associated with non-recurring professional fees and other. The Company believes that it is useful to understand the effects that these charges have on general and administrative expenses and total operating costs and that exclusion of such charges is useful for comparison to prior periods.
(3) Gathering and other, as adjusted, is a non-GAAP measure that excludes rig termination and stacking charges and other costs. The Company believes that it is useful to understand the effects that these charges have on gathering and other expense and total operating costs and that exclusion of such charges is useful for comparative purposes.
(4) Represents lease operating expense, workover and other expense, taxes other than income, gathering and other expense and general and administrative costs per Boe, adjusted for items noted in the reconciliation above.



BATTALION OIL CORPORATION
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)
(In thousands, except per share amounts)

             
  Three Months Ended Six Months Ended
  June 30, June 30,
  2021  2020  2021  2020 
As Reported:            
Net income (loss), as reported $(33,929) $(127,316) $(67,304) $(12,825)
             
Impact of Selected Items:            
Unrealized loss (gain) on derivatives contracts:            
Crude oil $31,591  $66,279  $66,402  $(45,555)
Natural gas  3,226   942   4,467   398 
Total mark-to-market non-cash charge  34,817   67,221   70,869   (45,157)
Full cost ceiling impairment     60,107      60,107 
Restructuring     2,162      2,580 
Rig termination and stacking charges     3,383      3,383 
Other  (273)  828   (221)  1,734 
Selected items, before income taxes  34,544   133,701   70,648   22,647 
Income tax effect of selected items            
Selected items, net of tax  34,544   133,701   70,648   22,647 
             
As Adjusted:            
Net income (loss), excluding selected items (1)(2) $615  $6,385  $3,344  $9,822 
             
Basic net income (loss) per common share, as reported $(2.09) $(7.86) $(4.14) $(0.79)
Impact of selected items  2.13   8.25   4.35   1.40 
Basic net income (loss) per common share, excluding selected items (1)(2) $0.04  $0.39  $0.21  $0.61 
             
             
Diluted net income (loss) per common share, as reported $(2.09) $(7.86) $(4.14) $(0.79)
Impact of selected items  2.13   8.25   4.34   1.40 
Diluted net income (loss) per common share, excluding selected items (1)(2)(3) $0.04  $0.39  $0.20  $0.61 
             
             
Net cash provided by (used in) operating activities $15,742  $30,761  $29,100  $43,104 
Changes in working capital  (886)  (10,591)  4,073   (12,304)
Cash flows from operations before changes in working capital  14,856   20,170   33,173   30,800 
Cash components of selected items  (2,677)  1,390   (7,193)  12,621 
Income tax effect of selected items            
Cash flows from operations before changes in working capital, adjusted for selected items (1)(2) $12,179  $21,560  $25,980  $43,421 

__________________________

(1) Net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital adjusted for selected items are non-GAAP measures presented based on management's belief that they will enable a user of the financial information to understand the impact of these items on reported results. These financial measures are not measures of financial performance under GAAP and should not be considered as an alternative to net income, earnings per share and cash flows from operations, as defined by GAAP. These financial measures may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance.
(2) For the three and six months ended June 30, 2020, net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital include approximately $16.4 million and $16.3 million, respectively, of net proceeds from hedge monetizations that occurred during the periods. For both periods, approximately $8.2 million of the net proceeds relate to the monetization of hedge positions associated with the third quarter of 2020.
(3) The impact of selected items for the three months ended June 30, 2021 and 2020 were calculated based upon weighted average diluted shares of 16.4 million and 16.2 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items. The impact of selected items for the six months ended June 30, 2021 and 2020 were calculated based upon weighted average diluted shares of 16.4 million and 16.2 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items.


BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)

             
  Three Months Ended Six Months Ended
  June 30, June 30,
  2021  2020  2021  2020 
             
Net income (loss), as reported $(33,929) $(127,316) $(67,304) $(12,825)
Impact of adjusting items:            
Interest expense  1,838   1,842   3,334   3,556 
Depletion, depreciation and accretion  11,249   14,382   21,844   32,412 
Full cost ceiling impairment     60,107      60,107 
Stock-based compensation  485   786   1,079   1,173 
Interest income  (84)  (232)  (209)  (329)
Restructuring     2,162      2,580 
(Gain) loss on sale of other assets  (2)  52   (6)  52 
Unrealized loss (gain) on derivatives contracts  34,817   67,221   70,869   (45,157)
Rig termination and stacking charges     3,383      3,383 
Other  (273)  828   (221)  1,734 
Adjusted EBITDA(1)(2) $14,101  $23,215  $29,386  $46,686 

_______________

(1) Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP measures, including net income (loss). This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance.
(2) Adjusted EBITDA for the three and six months ended June 30, 2020 includes approximately $16.4 million and $16.3 million, respectively, of net proceeds from hedge monetizations that occurred during the period. For both periods, approximately $8.2 million of the net proceeds relate to the monetization of hedge positions associated with the third quarter of 2020.


BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)

             
  Three Months Three Months Three Months Three Months
  Ended Ended Ended Ended
  June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020
             
Net income (loss), as reported $(33,929) $(33,375) $(63,757) $(153,125)
Impact of adjusting items:            
Interest expense  1,838   1,496   1,853   1,964 
Depletion, depreciation and accretion  11,249   10,595   13,886   15,755 
Full cost ceiling impairment        26,702   128,336 
Stock-based compensation  485   594   785   620 
Interest income  (84)  (125)  (171)  (273)
(Gain) loss on sale of other assets  (2)  (4)      
Unrealized loss (gain) on derivatives contracts  34,817   36,052   30,172   21,128 
Other(1)  (273)  52   (658)  210 
Adjusted EBITDA(2)(3) $14,101  $15,285  $8,812  $14,615 
             
Adjusted LTM EBITDA(2)(3) $52,813          

______________________

(1) Other adjustments to net income (loss), as reported include transaction costs and other non-recurring professional fees and costs.
(2) Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP measures, including net income (loss). This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance.
(3) Adjusted EBITDA for the three months ended September 30, 2020 includes approximately $6.6 million of net proceeds from hedge monetizations that occurred during the period.



BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)

              
  Three Months Three Months Three Months Three Months 
  Ended Ended Ended Ended 
  June 30, 2020 March 31, 2020 December 31, 2019(1) September 30, 2019 
              
Net income (loss), as reported $(127,316) $114,491  $(125,826) $(63,284) 
Impact of adjusting items:             
Interest expense  1,842   1,714   1,430   9,911  
Depletion, depreciation and accretion  14,382   18,030   19,996   20,512  
Full cost ceiling impairment  60,107         45,568  
Stock-based compensation  786   387      (2,278) 
Interest income  (232)  (97)  (128)  (13) 
Reorganization items, net        118,664   1,758  
Restructuring  2,162   418   1,175   3,223  
(Gain) loss on sale of other assets  52      (6)  2  
(Gain) loss on sale of Water Assets        (506)  (164) 
Unrealized loss (gain) on derivatives contracts  67,221   (112,378)  18,681   (11,571) 
Rig termination and stacking charges  3,383           
Other(2)  828   906   (901)  15,276  
Adjusted EBITDA(3)(4) $23,215  $23,471  $32,579  $18,940  
              
Adjusted LTM EBITDA(1)(3)(4) $98,205           

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(1) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for Adjusted EBITDA for the three months ended December 31, 2019 and the Adjusted LTM EBITDA as of June 30, 2020. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor are not comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provides meaningful information about Adjusted LTM EBITDA that assists a reader in understanding the Company’s financial results for the applicable periods.
(2) Other adjustments to net income (loss), as reported includes prepetition reorganization costs and other non-recurring professional fees and costs.
(3)  Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP measures, including net income (loss). This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance.
(4) Adjusted EBITDA for the three months ended June 30, 2020 includes approximately $16.4 million of net proceeds from hedge monetizations that occurred during the period.   For this period, approximately $8.2 million of the net proceeds relate to the monetization of hedge positions associated with the third quarter of 2020.