HOUSTON, Nov. 08, 2021 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced results of operations for the third quarter 2021 and provided an update on 2021 guidance for capital expenditures.
Highlights
- Reported average daily production of 17,728 Boepd during third quarter 2021, a 14% increase over second quarter 2021, due largely to facility upgrades at Monument Draw and reduced well downtime
- Adjusted EBITDA of $23.0 million, a 63% increase over second quarter 2021
- Strong organic deleveraging, reducing net debt by >$10 million during the quarter
- Increasing 2021 guidance for total capital expenditures; anticipate spudding first well of 2022 capital program in December 2021
Management Comments
Richard Little, the Company’s CEO, commented, “The third quarter of 2021 was an exceptional quarter for Battalion as we reported quarter-over-quarter production growth despite the completion of our 2021 capital program in the first half of the year. Our team put a significant amount of effort into facility upgrades in the first half of 2021, and it’s that improved flow assurance and reduced downtime that allowed us to maintain robust production through the quarter. Those strong operational results allowed us to take advantage of an improving commodity price environment as we generated substantial free cash flow and meaningfully paid down debt.”
Mr. Little continued, “As we enter the last quarter of 2021, our focus is clear: continue to optimize our operations as we prepare to accelerate activity in 2022 and beyond. On the production front, our field team remains diligent in their efforts to improve flow assurance and manage operating expenses despite a rising service cost environment. On the development side, as we work to finalize our 2022 capital program, we are taking important steps to mitigate cost increases by advance purchasing materials and protecting our cash flows through increased hedging activity. Additionally, we recently secured a rig contract as we aim to accelerate our 2022 capital program by spudding in December. As such, we have increased our 2021 capex guidance by $5 million.”
Mr. Little continued, “We are proud of our recent results, and our goal is to build on this momentum as we move forward.”
Results of Operations
Average daily net production and total operating revenue during the third quarter 2021 were 17,728 barrels of oil equivalent per day (“Boepd”) (53% oil) and $80.8 million, respectively, as compared to production and revenue of 17,076 Boepd (56% oil) and $39.8 million, respectively, during the third quarter 2020. The increase in revenues in the third quarter of 2021 as compared to the third quarter 2020 is primarily attributable to an approximate $24.25 per Boe increase in average realized prices (excluding the impact of hedges).
Excluding the impact of hedges, Battalion realized 98% of the average NYMEX oil price during the third quarter of 2021. Realized hedge losses totaled approximately $22.4 million during the third quarter 2021.
Lease operating and workover expense was $7.95 per Boe in the third quarter of 2021 and $7.00 per Boe in the third quarter of 2020. Adjusted G&A was $2.11 per Boe in the third quarter of 2021 compared to $2.09 per Boe in the third quarter of 2020 (see Selected Operating Data table for additional information).
The Company reported net income to common stockholders for the third quarter of 2021 of $13.1 million and net income per basic and diluted share of $0.80 and $0.79, respectively. After adjusting for selected items, the Company reported net income to common stockholders for the third quarter of 2021 of $9.7 million, or $0.60 per basic share and $0.59 per diluted share (see Selected Item Review and Reconciliation for additional information). Adjusted EBITDA during the quarter ended September 30, 2021, was $23.0 million as compared to $14.6 million during the quarter ended September 30, 2020 (see Adjusted EBITDA Reconciliation table for additional information).
Liquidity and Balance Sheet
As of September 30, 2021, Battalion had $155.0 million of borrowings and $2.0 million of outstanding letters of credit issued under the Senior Revolving Credit Facility resulting in unused borrowing capacity of $18.0 million based on a borrowing base of $175.0 million. Total liquidity at September 30, 2021, inclusive of $1.9 million of cash and cash equivalents, was $19.9 million.
In September 2021, the Company entered into the Fifth Amendment to its Senior Secured Revolving Credit Agreement which, among other things, modified the limits on swap agreements. Additionally, redeterminations of the borrowing base occur semi-annually on May 1 and November 1, with the lenders and the Company each having the right to one interim unscheduled redetermination between any two consecutive semi-annual redeterminations. The lenders have agreed to postpone the fall redetermination until December 2021.
Paycheck Protection Program Loan
Effective August 13, 2021, the principal amount of the Company’s Paycheck Protection Program Loan was reduced to approximately $0.2 million by the Small Business Administration and the Company recorded a gain on the extinguishment of the forgiven portion of the PPP Loan and related accrued interest of $2.1 million. The gain is presented in “Gain (loss) on extinguishment of debt” in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021.
2021 Guidance
Total capital expenditures guidance has been increased to $45.0 to $55.0 million as Battalion anticipates spudding the first well of its 2022 capital program in December 2021.
Hedging Update
As of November 8, 2021, Battalion had 7,837 barrels per day (Bbl/d) of oil hedged for the fourth quarter of 2021 at an average price of $43.96 per barrel. Battalion also had basis and roll swaps in place for 7,837 Bbl/d in the fourth quarter of 2021 at ($0.25) per barrel and ($0.39) per barrel, respectively.
As of November 8, 2021, Battalion had 11,391 million British thermal units per day (MMBtu/d) of natural gas hedged for the fourth quarter of 2021 at an average price of $2.71 per MMBtu. The Company also had WAHA basis differential swaps in place for 11,391 MMBtu/d for the fourth quarter of 2021 at an average swap price of ($0.24) per MMBtu/d.
The Company has also entered into a significant amount of crude oil and natural gas hedges for 2022 – 2025 during the fourth quarter 2021, details of which may be found in our recently filed Quarterly Report on Form 10-Q.
Conference Call Information
Battalion Oil Corporation has scheduled a conference call for Tuesday, November 9, 2021, at 11:00 a.m. EDT (10:00 a.m. CDT). To participate in the conference call, dial +1 334-323-0501 or 800-353-6461 (toll free) a few minutes before the call begins and reference Battalion Oil Corporation confirmation code 2692329. 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.
BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Operating revenues: | ||||||||||||||||
| Oil, natural gas and natural gas liquids sales: | ||||||||||||||||
| Oil | $ | 60,023 | $ | 33,638 | $ | 153,228 | $ | 91,313 | ||||||||
| Natural gas | 9,435 | 1,912 | 23,839 | 3,102 | ||||||||||||
| Natural gas liquids | 11,046 | 3,896 | 22,806 | 10,086 | ||||||||||||
| Total oil, natural gas and natural gas liquids sales | 80,504 | 39,446 | 199,873 | 104,501 | ||||||||||||
| Other | 312 | 384 | 827 | 1,222 | ||||||||||||
| Total operating revenues | 80,816 | 39,830 | 200,700 | 105,723 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Production: | ||||||||||||||||
| Lease operating | 11,979 | 10,091 | 31,615 | 32,880 | ||||||||||||
| Workover and other | 990 | 905 | 2,317 | 2,767 | ||||||||||||
| Taxes other than income | 3,082 | 2,722 | 9,186 | 7,130 | ||||||||||||
| Gathering and other | 15,934 | 13,500 | 43,436 | 39,275 | ||||||||||||
| Restructuring | — | — | — | 2,580 | ||||||||||||
| General and administrative | 4,491 | 4,111 | 13,349 | 13,237 | ||||||||||||
| Depletion, depreciation and accretion | 10,885 | 15,755 | 32,729 | 48,167 | ||||||||||||
| Full cost ceiling impairment | — | 128,336 | — | 188,443 | ||||||||||||
| Total operating expenses | 47,361 | 175,420 | 132,632 | 334,479 | ||||||||||||
| Income (loss) from operations | 33,455 | (135,590 | ) | 68,068 | (228,756 | ) | ||||||||||
| Other income (expenses): | ||||||||||||||||
| Net gain (loss) on derivative contracts | (20,571 | ) | (15,843 | ) | (119,371 | ) | 67,695 | |||||||||
| Interest expense and other | (1,900 | ) | (1,692 | ) | (5,017 | ) | (4,889 | ) | ||||||||
| Gain (loss) on extinguishment of debt | 2,068 | — | 2,068 | — | ||||||||||||
| Total other income (expenses) | (20,403 | ) | (17,535 | ) | (122,320 | ) | 62,806 | |||||||||
| Income (loss) before income taxes | 13,052 | (153,125 | ) | (54,252 | ) | (165,950 | ) | |||||||||
| Income tax benefit (provision) | — | — | — | — | ||||||||||||
| Net income (loss) | $ | 13,052 | $ | (153,125 | ) | $ | (54,252 | ) | $ | (165,950 | ) | |||||
| Net income (loss) per share of common stock: | ||||||||||||||||
| Basic | $ | 0.80 | $ | (9.45 | ) | $ | (3.34 | ) | $ | (10.24 | ) | |||||
| Diluted | $ | 0.79 | $ | (9.45 | ) | $ | (3.34 | ) | $ | (10.24 | ) | |||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 16,270 | 16,204 | 16,257 | 16,204 | ||||||||||||
| Diluted | 16,428 | 16,204 | 16,257 | 16,204 | ||||||||||||
BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
| September 30, 2021 | December 31, 2020 | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,868 | $ | 4,295 | ||||
| Accounts receivable, net | 40,162 | 32,242 | ||||||
| Assets from derivative contracts | 813 | 8,559 | ||||||
| Prepaids and other | 1,195 | 2,740 | ||||||
| Total current assets | 44,038 | 47,836 | ||||||
| Oil and natural gas properties (full cost method): | ||||||||
| Evaluated | 550,522 | 509,274 | ||||||
| Unevaluated | 76,136 | 75,494 | ||||||
| Gross oil and natural gas properties | 626,658 | 584,768 | ||||||
| Less - accumulated depletion | (327,233 | ) | (295,163 | ) | ||||
| Net oil and natural gas properties | 299,425 | 289,605 | ||||||
| Other operating property and equipment: | ||||||||
| Other operating property and equipment | 3,106 | 3,535 | ||||||
| Less - accumulated depreciation | (1,012 | ) | (1,149 | ) | ||||
| Net other operating property and equipment | 2,094 | 2,386 | ||||||
| Other noncurrent assets: | ||||||||
| Assets from derivative contracts | 110 | 4,009 | ||||||
| Operating lease right of use assets | 811 | 310 | ||||||
| Other assets | 2,737 | 2,351 | ||||||
| Total assets | $ | 349,215 | $ | 346,497 | ||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 60,403 | $ | 58,928 | ||||
| Liabilities from derivative contracts | 74,287 | 22,125 | ||||||
| Current portion of long-term debt | 149 | 1,720 | ||||||
| Operating lease liabilities | 365 | 403 | ||||||
| Total current liabilities | 135,204 | 83,176 | ||||||
| Long-term debt | 155,000 | 158,489 | ||||||
| Other noncurrent liabilities: | ||||||||
| Liabilities from derivative contracts | 9,536 | 4,291 | ||||||
| Asset retirement obligations | 11,786 | 10,583 | ||||||
| Operating lease liabilities | 446 | — | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock: 100,000,000 shares of $0.0001 par value authorized; | ||||||||
| 16,273,913 and 16,203,979 shares issued and outstanding as of | ||||||||
| September 30, 2021 and December 31, 2020, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 331,660 | 330,123 | ||||||
| Retained earnings (accumulated deficit) | (294,419 | ) | (240,167 | ) | ||||
| Total stockholders' equity | 37,243 | 89,958 | ||||||
| Total liabilities and stockholders' equity | $ | 349,215 | $ | 346,497 | ||||
BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income (loss) | $ | 13,052 | $ | (153,125 | ) | $ | (54,252 | ) | $ | (165,950 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash | ||||||||||||||||
| provided by (used in) operating activities: | ||||||||||||||||
| Depletion, depreciation and accretion | 10,885 | 15,755 | 32,729 | 48,167 | ||||||||||||
| Full cost ceiling impairment | — | 128,336 | — | 188,443 | ||||||||||||
| Stock-based compensation, net | 481 | 620 | 1,560 | 1,793 | ||||||||||||
| Unrealized loss (gain) on derivative contracts | (1,816 | ) | 21,128 | 69,053 | (24,029 | ) | ||||||||||
| Reorganization items, net | — | (717 | ) | — | (6,440 | ) | ||||||||||
| Loss (gain) on extinguishment of debt | (2,068 | ) | — | (2,068 | ) | — | ||||||||||
| Accrued settlements on derivative contracts | (203 | ) | 125 | 6,769 | 474 | |||||||||||
| Other income (expense) | 58 | (184 | ) | (229 | ) | 280 | ||||||||||
| Cash flows from operations before changes in working capital | 20,389 | 11,938 | 53,562 | 42,738 | ||||||||||||
| Changes in working capital | (2,357 | ) | (7,164 | ) | (6,430 | ) | 5,140 | |||||||||
| Net cash provided by (used in) operating activities | 18,032 | 4,774 | 47,132 | 47,878 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Oil and natural gas capital expenditures | (9,611 | ) | (5,319 | ) | (47,204 | ) | (96,483 | ) | ||||||||
| Proceeds received from sale of oil and natural gas properties | 21 | 3,000 | 947 | 3,500 | ||||||||||||
| Funds held in escrow and other | 11 | (29 | ) | 9 | 480 | |||||||||||
| Net cash provided by (used in) investing activities | (9,579 | ) | (2,348 | ) | (46,248 | ) | (92,503 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from borrowings | 63,000 | 38,000 | 145,000 | 119,209 | ||||||||||||
| Repayments of borrowings | (71,021 | ) | (39,000 | ) | (148,021 | ) | (83,000 | ) | ||||||||
| Other | (22 | ) | — | (290 | ) | (32 | ) | |||||||||
| Net cash provided by (used in) financing activities | (8,043 | ) | (1,000 | ) | (3,311 | ) | 36,177 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 410 | 1,426 | (2,427 | ) | (8,448 | ) | ||||||||||
| Cash and cash equivalents at beginning of period | 1,458 | 401 | 4,295 | 10,275 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 1,868 | $ | 1,827 | $ | 1,868 | $ | 1,827 | ||||||||
BATTALION OIL CORPORATION
SELECTED OPERATING DATA (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Production volumes: | ||||||||||||||||
| Crude oil (MBbls) | 872 | 877 | 2,396 | 2,589 | ||||||||||||
| Natural gas (MMcf) | 2,589 | 2,266 | 6,777 | 6,437 | ||||||||||||
| Natural gas liquids (MBbls) | 327 | 316 | 812 | 917 | ||||||||||||
| Total (MBoe) | 1,631 | 1,571 | 4,338 | 4,579 | ||||||||||||
| Average daily production (Boe/d) | 17,728 | 17,076 | 15,890 | 16,712 | ||||||||||||
| Average prices: | ||||||||||||||||
| Crude oil (per Bbl) | $ | 68.83 | $ | 38.36 | $ | 63.95 | $ | 35.27 | ||||||||
| Natural gas (per Mcf) | 3.64 | 0.84 | 3.52 | 0.48 | ||||||||||||
| Natural gas liquids (per Bbl) | 33.78 | 12.33 | 28.09 | 11.00 | ||||||||||||
| Total per Boe | 49.36 | 25.11 | 46.07 | 22.82 | ||||||||||||
| Cash effect of derivative contracts: | ||||||||||||||||
| Crude oil (per Bbl) | $ | (24.19 | ) | $ | 5.33 | $ | (20.33 | ) | $ | 15.96 | ||||||
| Natural gas (per Mcf) | (0.50 | ) | 0.27 | (0.24 | ) | 0.37 | ||||||||||
| Natural gas liquids (per Bbl) | — | — | — | — | ||||||||||||
| Total per Boe | (13.73 | ) | 3.36 | (11.60 | ) | 9.54 | ||||||||||
| Average prices computed after cash effect of settlement of derivative contracts: | ||||||||||||||||
| Crude oil (per Bbl) | $ | 44.64 | $ | 43.69 | $ | 43.62 | $ | 51.23 | ||||||||
| Natural gas (per Mcf) | 3.14 | 1.11 | 3.28 | 0.85 | ||||||||||||
| Natural gas liquids (per Bbl) | 33.78 | 12.33 | 28.09 | 11.00 | ||||||||||||
| Total per Boe | 35.63 | 28.47 | 34.47 | 32.36 | ||||||||||||
| Average cost per Boe: | ||||||||||||||||
| Production: | ||||||||||||||||
| Lease operating | $ | 7.34 | $ | 6.42 | $ | 7.29 | $ | 7.18 | ||||||||
| Workover and other | 0.61 | 0.58 | 0.53 | 0.60 | ||||||||||||
| Taxes other than income | 1.89 | 1.73 | 2.12 | 1.56 | ||||||||||||
| Gathering and other, as adjusted (1) | 9.77 | 8.59 | 10.01 | 7.83 | ||||||||||||
| Restructuring | — | — | — | 0.56 | ||||||||||||
| General and administrative, as adjusted (1) | 2.11 | 2.09 | 2.64 | 2.09 | ||||||||||||
| Depletion | 6.57 | 9.76 | 7.39 | 10.25 | ||||||||||||
| (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 | $ | 2.75 | $ | 2.61 | $ | 3.08 | $ | 2.89 | ||||||||
| Stock-based compensation: | ||||||||||||||||
| Non-cash | (0.29 | ) | (0.39 | ) | (0.36 | ) | (0.39 | ) | ||||||||
| Non-recurring professional fees and other: | ||||||||||||||||
| Cash | (0.35 | ) | (0.13 | ) | (0.08 | ) | (0.41 | ) | ||||||||
| General and administrative, as adjusted(2) | $ | 2.11 | $ | 2.09 | $ | 2.64 | $ | 2.09 | ||||||||
| Gathering and other, as reported | $ | 9.77 | $ | 8.59 | $ | 10.01 | $ | 8.58 | ||||||||
| Rig termination and stacking charges and other | — | — | — | (0.75 | ) | |||||||||||
| Gathering and other, as adjusted(3) | $ | 9.77 | $ | 8.59 | $ | 10.01 | $ | 7.83 | ||||||||
| Total operating costs, as reported | $ | 22.36 | $ | 19.93 | $ | 23.03 | $ | 20.81 | ||||||||
| Total adjusting items | (0.64 | ) | (0.52 | ) | (0.44 | ) | (1.55 | ) | ||||||||
| Total operating costs, as adjusted(4) | $ | 21.72 | $ | 19.41 | $ | 22.59 | $ | 19.26 | ||||||||
(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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| As Reported: | ||||||||||||||||
| Net income (loss), as reported | $ | 13,052 | $ | (153,125 | ) | $ | (54,252 | ) | $ | (165,950 | ) | |||||
| Impact of Selected Items: | ||||||||||||||||
| Unrealized loss (gain) on derivatives contracts: | ||||||||||||||||
| Crude oil | $ | (7,416 | ) | $ | 19,354 | $ | 58,986 | $ | (26,201 | ) | ||||||
| Natural gas | 5,600 | 1,774 | 10,067 | 2,172 | ||||||||||||
| Total mark-to-market non-cash charge | (1,816 | ) | 21,128 | 69,053 | (24,029 | ) | ||||||||||
| Full cost ceiling impairment | — | 128,336 | — | 188,443 | ||||||||||||
| Loss (gain) on extinguishment of debt | (2,068 | ) | — | (2,068 | ) | — | ||||||||||
| Restructuring | — | — | — | 2,580 | ||||||||||||
| Rig termination and stacking charges | — | — | — | 3,383 | ||||||||||||
| Non-recurring professional fees and other | 568 | 210 | 347 | 1,944 | ||||||||||||
| Selected items, before income taxes | (3,316 | ) | 149,674 | 67,332 | 172,321 | |||||||||||
| Income tax effect of selected items | — | — | — | — | ||||||||||||
| Selected items, net of tax | (3,316 | ) | 149,674 | 67,332 | 172,321 | |||||||||||
| As Adjusted: | ||||||||||||||||
| Net income (loss), excluding selected items (1)(2) | $ | 9,736 | $ | (3,451 | ) | $ | 13,080 | $ | 6,371 | |||||||
| Basic net income (loss) per common share, as reported | $ | 0.80 | $ | (9.45 | ) | $ | (3.34 | ) | $ | (10.24 | ) | |||||
| Impact of selected items | (0.20 | ) | 9.24 | 4.14 | 10.63 | |||||||||||
| Basic net income (loss) per common share, excluding selected items (1)(2) | $ | 0.60 | $ | (0.21 | ) | $ | 0.80 | $ | 0.39 | |||||||
| Diluted net income (loss) per common share, as reported | $ | 0.79 | $ | (9.45 | ) | $ | (3.34 | ) | $ | (10.24 | ) | |||||
| Impact of selected items | (0.20 | ) | 9.24 | 4.14 | 10.63 | |||||||||||
| Diluted net income (loss) per common share, excluding selected items (1)(2)(3) | $ | 0.59 | $ | (0.21 | ) | $ | 0.80 | $ | 0.39 | |||||||
| Net cash provided by (used in) operating activities | $ | 18,032 | $ | 4,774 | $ | 47,132 | $ | 47,878 | ||||||||
| Changes in working capital | 2,357 | 7,164 | 6,430 | (5,140 | ) | |||||||||||
| Cash flows from operations before changes in working capital | 20,389 | 11,938 | 53,562 | 42,738 | ||||||||||||
| Cash components of selected items | 771 | 802 | (6,422 | ) | 13,423 | |||||||||||
| Income tax effect of selected items | — | — | — | — | ||||||||||||
| Cash flows from operations before changes in working capital, adjusted for selected items (1)(2) | $ | 21,160 | $ | 12,740 | $ | 47,140 | $ | 56,161 | ||||||||
(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 nine months ended September 30, 2020, net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital include approximately $6.6 million and $22.9 million, respectively, of net proceeds from hedge monetizations that occurred during the periods.
(3) The impact of selected items for the three months ended September 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 nine months ended September 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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net income (loss), as reported | $ | 13,052 | $ | (153,125 | ) | $ | (54,252 | ) | $ | (165,950 | ) | |||||
| Impact of adjusting items: | ||||||||||||||||
| Interest expense | 1,904 | 1,964 | 5,238 | 5,520 | ||||||||||||
| Depletion, depreciation and accretion | 10,885 | 15,755 | 32,729 | 48,167 | ||||||||||||
| Full cost ceiling impairment | — | 128,336 | — | 188,443 | ||||||||||||
| Stock-based compensation | 481 | 620 | 1,560 | 1,793 | ||||||||||||
| Interest income | (3 | ) | (273 | ) | (212 | ) | (602 | ) | ||||||||
| Restructuring | — | — | — | 2,580 | ||||||||||||
| Loss (gain) on extinguishment of debt | (2,068 | ) | — | (2,068 | ) | — | ||||||||||
| (Gain) loss on sale of other assets | (9 | ) | — | (15 | ) | 52 | ||||||||||
| Unrealized loss (gain) on derivatives contracts | (1,816 | ) | 21,128 | 69,053 | (24,029 | ) | ||||||||||
| Rig termination and stacking charges | — | — | — | 3,383 | ||||||||||||
| Non-recurring professional fees and other | 568 | 210 | 347 | 1,944 | ||||||||||||
| Adjusted EBITDA(1)(2) | $ | 22,994 | $ | 14,615 | $ | 52,380 | $ | 61,301 | ||||||||
(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 nine months ended September 30, 2020 includes approximately $6.6 million and $22.9 million, respectively, 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 | |||||||||||||
| September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | |||||||||||||
| Net income (loss), as reported | $ | 13,052 | $ | (33,929 | ) | $ | (33,375 | ) | $ | (63,757 | ) | |||||
| Impact of adjusting items: | ||||||||||||||||
| Interest expense | 1,904 | 1,838 | 1,496 | 1,853 | ||||||||||||
| Depletion, depreciation and accretion | 10,885 | 11,249 | 10,595 | 13,886 | ||||||||||||
| Full cost ceiling impairment | — | — | — | 26,702 | ||||||||||||
| Stock-based compensation | 481 | 485 | 594 | 785 | ||||||||||||
| Interest income | (3 | ) | (84 | ) | (125 | ) | (171 | ) | ||||||||
| Loss (gain) on extinguishment of debt | (2,068 | ) | — | — | — | |||||||||||
| (Gain) loss on sale of other assets | (9 | ) | (2 | ) | (4 | ) | — | |||||||||
| Unrealized loss (gain) on derivatives contracts | (1,816 | ) | 34,817 | 36,052 | 30,172 | |||||||||||
| Non-recurring professional fees and other | 568 | (273 | ) | 52 | (658 | ) | ||||||||||
| Adjusted EBITDA(1) | $ | 22,994 | $ | 14,101 | $ | 15,285 | $ | 8,812 | ||||||||
| Adjusted LTM EBITDA(1) | $ | 61,192 | ||||||||||||||
(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.
BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)
| Three Months | Three Months | Three Months | Three Months | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019(1) | |||||||||||||
| Net income (loss), as reported | $ | (153,125 | ) | $ | (127,316 | ) | $ | 114,491 | $ | (125,826 | ) | |||||
| Impact of adjusting items: | ||||||||||||||||
| Interest expense | 1,964 | 1,842 | 1,714 | 1,430 | ||||||||||||
| Depletion, depreciation and accretion | 15,755 | 14,382 | 18,030 | 19,996 | ||||||||||||
| Full cost ceiling impairment | 128,336 | 60,107 | — | — | ||||||||||||
| Stock-based compensation | 620 | 786 | 387 | — | ||||||||||||
| Interest income | (273 | ) | (232 | ) | (97 | ) | (128 | ) | ||||||||
| Reorganization items, net | — | — | — | 118,664 | ||||||||||||
| Restructuring | — | 2,162 | 418 | 1,175 | ||||||||||||
| (Gain) loss on sale of other assets | — | 52 | — | (6 | ) | |||||||||||
| (Gain) loss on sale of Water Assets | — | — | — | (506 | ) | |||||||||||
| Unrealized loss (gain) on derivatives contracts | 21,128 | 67,221 | (112,378 | ) | 18,681 | |||||||||||
| Rig termination and stacking charges | — | 3,383 | — | — | ||||||||||||
| Non-recurring professional fees and other | 210 | 828 | 906 | (901 | ) | |||||||||||
| Adjusted EBITDA(2)(3) | $ | 14,615 | $ | 23,215 | $ | 23,471 | $ | 32,579 | ||||||||
| Adjusted LTM EBITDA(1)(2)(3) | $ | 93,880 | ||||||||||||||
(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 September 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) 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 and June 30,2020 includes approximately $6.6 million and $16.4 million of net proceeds, respectively, from hedge monetizations that occurred during the period.
