# EDGAR Filing Document

**Accession Number:** 0001282648
**File Stem:** 0001558370-23-005109
**Filing Date:** 2023-3
**Character Count:** 38905
**Document Hash:** 4bc182172b343f2287c292242e4ed497
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001558370-23-005109.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0001558370-23-005109

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230330

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BATTALION OIL CORP
- **CENTRAL INDEX KEY:** 0001282648
- **STANDARD INDUSTRIAL CLASSIFICATION:** CRUDE PETROLEUM & NATURAL GAS [1311]
- **IRS NUMBER:** 200700684
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35467
- **FILM NUMBER:** 23781343

**BUSINESS ADDRESS:**
- **STREET 1:** 3505 WEST SAM HOUSTON PARKWAY NORTH
- **STREET 2:** SUITE 300
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77043
- **BUSINESS PHONE:** 832-538-0300

**MAIL ADDRESS:**
- **STREET 1:** 3505 WEST SAM HOUSTON PARKWAY NORTH
- **STREET 2:** SUITE 300
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77043

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** HALCON RESOURCES CORP
- **DATE OF NAME CHANGE:** 20120209

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** RAM ENERGY RESOURCES INC
- **DATE OF NAME CHANGE:** 20060518

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TREMISIS ENERGY ACQUISITION CORP
- **DATE OF NAME CHANGE:** 20040304

?xml version='1.0' encoding='UTF-8'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K** 

**CURRENT REPORT**

**Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): **March 30, 2023** 

**Battalion Oil Corporation**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware** | **001-35467** | **20-0700684** |
| (State or other jurisdiction<br>of incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |

---

---

| | |
|:---|:---|
| **3505 West Sam Houston Parkway North, Suite 300**<br>**Houston, Texas** | **77043** |
| (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code: **(832) 538-0300**

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol** | **Name of each exchange on which registered** |
| Common Stock par value $0.0001 | BATL | NYSE American |

---

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

◻&nbsp;&nbsp;&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

◻&nbsp;&nbsp;&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

◻&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

◻&nbsp;&nbsp;&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

**Item 2.02 Results of Operations and Financial Condition.**

On March 30, 2023, Battalion Oil Corporation (the "Company") issued a press release with respect to the Company's fourth quarter 2022 financial results. The press release is furnished as Exhibit 99.1 to this Current Report. The press release contains certain measures discussed below that may be deemed "non-GAAP financial measures" as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In each case, the most directly comparable GAAP financial measure and information reconciling the GAAP and non-GAAP measures is also included in the press release.

Exhibit 99.1 shall not be deemed to be "filed" for the purposes of Section 18 of the Exchange Act, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

From time to time management discloses net income (loss) and earnings per share excluding selected items as well as EBITDA, LTM EBITDA, cash flow from operations, general and administrative expenses adjusted for selected items. These measures are presented based on management's belief that these non-GAAP measures enable a user of the financial information to understand the impact of these items on reported results. Additionally, this presentation provides a beneficial comparison to similarly adjusted measurements of prior periods. These 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 flow from operations, as defined by GAAP. These measures may not be comparable to similarly named non-GAAP measures that other companies may use and may not be useful in comparing the performance of those companies to our performance.

**Item 9.01 Financial Statements and Exhibits.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits. The following exhibits are furnished as part of this Current Report on Form 8-K:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Press release issued by Battalion Oil Corporation dated March 30, 2023.](batl-20230330xex99d1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit Number** | **Exhibit Description** |
| &nbsp;&nbsp;&nbsp;&nbsp;99.1 | [Press release issued by Battalion Oil Corporation dated March 30, 2023.](batl-20230330xex99d1.htm) |
| &nbsp;&nbsp;&nbsp;104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | BATTALION OIL CORPORATION | BATTALION OIL CORPORATION |
| March 30, 2023 | By: | /s/ KRISTEN MCWATTERS |
|  | Name: | Kristen McWatters |
|  | Title: | Executive Vice President, Chief Financial Officer and Treasurer |

---

## Exhibit 99.1

**Exhibit 99.1**

![Graphic](batl-20230330xex99d1001.jpg)<br>

**Battalion Oil Corporation Announces Fouth Quarter 2022 Financial and Operating Results** 

HOUSTON, TEXAS – March 30, 2023 – Battalion Oil Corporation (NYSE American: BATL, "Battalion" or the "Company") today announced financial and operating results for the fourth quarter 2022.

**Key Highlights**

● Generated full year 2022 sales volumes of 15,438 barrels of oil equivalent per day ("Boe/d")

● Year-end 2022 reserves of approximately 92.0 million barrels of oil equivalent ("MMBoe") with a standardized measure of discounted future net cash flows of approximately $1.5 billion

● Tenth well of 2022 capital program put online in January 2023 with one of the strongest IP30's of the program

● Strengthened hedge book – weighted average strike price on crude oil swaps of $69.17 in 2023, a 36% increase over 2022 average

● Substantial progress on acid gas treating facility with expectation of being mechanically complete in early April – anticipate significant decrease in gas treating costs in 2023

● Recently completed issuance of preferred shares for $24.4 million of proceeds to enhance liquidity

**Management Comments** 

Richard Little, the Company's CEO, commented, "2022 was a year of transformation for Battalion. We entered the year with our development program underway having recently completed a strategic refinancing. The plan was simple: drive production growth while remaining committed to capital discipline and operational efficiency. We addressed the challenges we faced including increases in service costs, scarcity in key supplies and equipment, and issues with labor and service provider continuity to close out 2022 within the guidance range on all operating metrics – a testament to the exceptional work our team has done."

"Our drilling program has underscored the prolific nature and economic viability of our Wolfcamp and Bone Spring resource, even at current oil prices. Our hedge book is healthier, and it is driving improved realized pricing. Our acid gas treating facility is expected to be mechanically complete in early April and is anticipated to become fully operational in the second quarter of 2023; this is expected to significantly reduce gas processing and treating expenses. We intend to continue our focus on improving operational efficiencies to drive meaningful improvements in our operating margins."

"Though we have a sizable inventory of high-performance drilling locations, the vast majority of our acreage position is held by production, giving us flexibility on how and when we develop the acreage. As such, we are continuing to evaluate our development program and will not be providing a 2023 capital budget at this time."

"As we move forward, we are prioritizing free cash flow generation and the strengthening of our balance sheet."

------

**Results of Operations**

Average daily net production and total operating revenue during the fourth quarter 2022 were 15,696 Boe/d (51% oil) and $76.8 million, respectively, as compared to production and revenue of 17,283 Boe/d (50% oil) and $84.5 million, respectively, during the fourth quarter 2021. The decrease in revenues year-over-year is primarily attributable to an approximate 1,587 Boe/d decrease in average daily production. Excluding the impact of hedges, Battalion realized 100% of the average NYMEX oil price during the fourth quarter of 2022; however, realized hedge losses totaled approximately $18.2 million during the fourth quarter 2022.

Lease operating and workover expense was $9.89 per Boe in the fourth quarter of 2022 and $8.34 per Boe in the fourth quarter of 2021. The increase in lease operating and workover expense per Boe year-over-year is primarily attributable to an increase in workover expenses as well as the decrease in average daily production during the quarter. Gathering and other expense was $11.31 per Boe in the fourth quarter 2022 as compared to $10.67 per Boe in the fourth quarter of 2021. The increase was due primarily to the decrease in average daily production during the quarter. General and administrative expense was $2.46 per Boe in the fourth quarter of 2022 and $1.99 per Boe in the fourth quarter of 2021. After adjusting for selected items, Adjusted G&A was $1.87 per Boe in the fourth quarter of 2022 compared to $2.03 per Boe in the fourth quarter of 2021. The decrease in Adjusted G&A year-over-year was primarily attributable to a decrease in employee-related costs.

The Company reported a net loss to common stockholders for the fourth quarter of 2022 of $7.7 million and a net loss per diluted share of $0.47. After adjusting for selected items, the Company reported an adjusted net loss to common stockholders for the fourth quarter of 2022 of $2.6 million, or an adjusted net loss of $0.16 per diluted share (see Reconciliation for additional information). Adjusted EBITDA during the quarter ended December 31, 2022 was $22.7 million as compared to $20.4 million during the quarter ended December 31, 2021 (see Adjusted EBITDA Reconciliation table for additional information).

**Liquidity and Balance Sheet**

As of December 31, 2022, the Company had $235.2 million of indebtedness outstanding and approximately $1.4 million of letters of credit outstanding. Total liquidity on December 31, 2022, made up of cash and cash equivalents, was $32.7 million.

In March 2023, the Company issued 25,000 shares of redeemable convertible preferred stock to certain of its existing equity shareholders and received approximately $24.4 million in net proceeds to improve liquidity and address concerns around future covenant compliance. For further discussion on our liquidity and balance sheet, refer to Management's Discussion and Analysis and Risk Factors in the Company's Form 10-K.

**2022 Proved Reserves**

Battalion's estimated total proved oil and natural gas reserves, as prepared by our independent reserve engineering firm, Netherland, Sewell & Associates, Inc., were 92.0 MMBoe (54% oil, 50% developed) at December 31, 2022. Our reserves had a standardized measure of discounted future cash flows of $1.5 billion based on SEC benchmark pricing of $94.14 per barrel for oil and $6.36 per MMBtu for natural gas.

**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, 2022, 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<br>Director, Finance & Investor Relations

(832) 538-0551

------

**BATTALION OIL CORPORATION**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)**

**(In thousands, except per share amounts)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Years Ended**  | **Years Ended**  |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| **Operating revenues:** |  |  |  |  |
| &nbsp;&nbsp;Oil, natural gas and natural gas liquids sales: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Oil  | $60816 | $60284 | $267690 | $213512 |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas | 6914 | 11409 | 46210 | 35248 |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas liquids | 8267 | 12588 | 43501 | 35394 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total oil, natural gas and natural gas liquids sales | 75997 | 84281 | 357401 | 284154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 805 | 224 | 1663 | 1051 |
| &nbsp;&nbsp;Total operating revenues | 76802 | 84505 | 359064 | 285205 |
| **Operating expenses:** |  |  |  |  |
| &nbsp;&nbsp;Production: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease operating | 12397 | 12362 | 48095 | 43977 |
| &nbsp;&nbsp;&nbsp;&nbsp;Workover and other | 1876 | 907 | 6683 | 3224 |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxes other than income | 2547 | 3126 | 18483 | 12312 |
| &nbsp;&nbsp;Gathering and other | 16330 | 16960 | 64117 | 60396 |
| &nbsp;&nbsp;General and administrative | 3564 | 3165 | 17635 | 16514 |
| &nbsp;&nbsp;Depletion, depreciation and accretion | 15479 | 12679 | 51915 | 45408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 52193 | 49199 | 206928 | 181831 |
| **Income (loss) from operations** | 24609 | 35306 | 152136 | 103374 |
| **Other income (expenses):** |  |  |  |  |
| &nbsp;&nbsp;Net gain (loss) on derivative contracts | (21872) | (6248) | (110006) | (125619) |
| &nbsp;&nbsp;Interest expense and other | (10389) | (3001) | (23591) | (8018) |
| &nbsp;&nbsp;Gain (loss) on extinguishment of debt |  | (122) |  | 1946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expenses) | (32261) | (9371) | (133597) | (131691) |
| Income (loss) before income taxes | (7652) | 25935 | 18539 | (28317) |
| Income tax benefit (provision) |  |  |  |  |
| **Net income (loss)** | $(7652) | 25935 | $18539 | $(28317) |
| **Net income (loss) per share of common stock:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $(0.47) | $1.59 | $1.14 | $(1.74) |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $(0.47) | $1.58 | $1.12 | $(1.74) |
| **Weighted average common shares outstanding:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 16345 | 16274 | 16331 | 16261 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 16345 | 16448 | 16510 | 16261 |

---

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**BATTALION OIL CORPORATION**

**CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)**

**(In thousands, except share and per share amounts)**

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
| **Current assets:** |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $32726 | $46864 |
| &nbsp;&nbsp;Accounts receivable, net | 37974 | 36806 |
| &nbsp;&nbsp;Assets from derivative contracts | 16244 | 1383 |
| &nbsp;&nbsp;Restricted cash | 90 | 1495 |
| &nbsp;&nbsp;Prepaids and other | 1131 | 1366 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 88165 | 87914 |
| **Oil and natural gas properties (full cost method):** |  |  |
| &nbsp;&nbsp;Evaluated | 713585 | 569886 |
| &nbsp;&nbsp;Unevaluated | 62621 | 64305 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross oil and natural gas properties | 776206 | 634191 |
| &nbsp;&nbsp;Less - accumulated depletion | (390796) | (339776) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net oil and natural gas properties | 385410 | 294415 |
| **Other operating property and equipment:** |  |  |
| &nbsp;&nbsp;Other operating property and equipment | 4434 | 3467 |
| &nbsp;&nbsp;Less - accumulated depreciation | (1209) | (1035) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net other operating property and equipment | 3225 | 2432 |
| **Other noncurrent assets:** |  |  |
| &nbsp;&nbsp;Assets from derivative contracts | 5379 | 2515 |
| &nbsp;&nbsp;Operating lease right of use assets | 352 | 721 |
| &nbsp;&nbsp;Other assets | 2827 | 2270 |
| **Total assets** | $485358 | $390267 |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | $100095 | $62826 |
| &nbsp;&nbsp;Liabilities from derivative contracts | 29286 | 58322 |
| &nbsp;&nbsp;Current portion of long-term debt | 35067 | 85 |
| &nbsp;&nbsp;Operating lease liabilities | 352 | 369 |
| &nbsp;&nbsp;Asset retirement obligations | 225 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 165025 | 121602 |
| **Long-term debt, net** | 182676 | 181565 |
| **Other noncurrent liabilities:** |  |  |
| &nbsp;&nbsp;Liabilities from derivative contracts | 33649 | 7144 |
| &nbsp;&nbsp;Asset retirement obligations | 15244 | 11896 |
| &nbsp;&nbsp;Operating lease liabilities |  | 352 |
| &nbsp;&nbsp;Other | 4136 | 4003 |
| **Commitments and contingencies**  |  |  |
| **Stockholders' equity:** |  |  |
| &nbsp;&nbsp;Common stock: 100,000,000 shares of $0.0001 par value authorized; |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;16,344,815 and 16,273,913 shares issued and outstanding as of  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;December 31, 2022 and 2021, respectively | 2 | 2 |
| &nbsp;&nbsp;Additional paid-in capital | 334571 | 332187 |
| &nbsp;&nbsp;Retained earnings (accumulated deficit) | (249945) | (268484) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 84628 | 63705 |
| **Total liabilities and stockholders' equity** | $485358 | $390267 |

---

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**BATTALION OIL CORPORATION**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)**

**(In thousands)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Years Ended**  | **Years Ended**  |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| **Cash flows from operating activities:** |  |  |  |  |
| Net income (loss) | $(7652) | $25935 | $18539 | $(28317) |
| Adjustments to reconcile net income (loss) to net cash provided by (used |  |  |  |  |
| &nbsp;&nbsp;in) operating activities: |  |  |  |  |
| &nbsp;&nbsp;Depletion, depreciation and accretion | 15479 | 12679 | 51915 | 45408 |
| &nbsp;&nbsp;Stock-based compensation, net | 670 | 450 | 2210 | 2010 |
| &nbsp;&nbsp;Unrealized loss (gain) on derivative contracts | 3655 | (21332) | (20256) | 47721 |
| &nbsp;&nbsp;Amortization/accretion of financing related costs | 2722 | 379 | 5448 | 379 |
| &nbsp;&nbsp;Reorganization items, net |  |  | (744) |  |
| &nbsp;&nbsp;Loss (gain) on extinguishment of debt |  | 122 |  | (1946) |
| &nbsp;&nbsp;Accrued settlements on derivative contracts | (3191) | 261 | 4302 | 7030 |
| &nbsp;&nbsp;Change in fair value of embedded derivative liability | 1224 |  | (1819) |  |
| &nbsp;&nbsp;Other expense (income) | 51 | (338) | (77) | (567) |
| Cash flow from operations before changes in working capital | 12958 | 18156 | 59518 | 71718 |
| &nbsp;&nbsp;Changes in working capital | 12029 | 3284 | 19283 | (3146) |
| Net cash provided by (used in) operating activities | 24987 | 21440 | 78801 | 68572 |
| **Cash flows from investing activities:** |  |  |  |  |
| &nbsp;&nbsp;Oil and natural gas capital expenditures | (38467) | (5353) | (125465) | (52557) |
| &nbsp;&nbsp;Proceeds received from sales of oil and natural gas assets | 331 |  | 332 | 947 |
| &nbsp;&nbsp;Other operating property and equipment capital expenditures | (211) | (364) | (1160) | (371) |
| &nbsp;&nbsp;Other | (3) | 52 | 163 | 68 |
| Net cash provided by (used in) investing activities | (38350) | (5665) | (126130) | (51913) |
| **Cash flows from financing activities:** |  |  |  |  |
| &nbsp;&nbsp;Proceeds from borrowings | 15078 | 229000 | 35200 | 374000 |
| &nbsp;&nbsp;Repayments of borrowings | (10) | (184064) | (95) | (332085) |
| &nbsp;&nbsp;Payment of deferred financing costs | (2508) | (14220) | (2887) | (14220) |
| &nbsp;&nbsp;Other | 60 |  | (432) | (290) |
| Net cash provided by (used in) financing activities | 12620 | 30716 | 31786 | 27405 |
| **Net increase (decrease) in cash, cash equivalents and restricted cash** | (743) | 46491 | (15543) | 44064 |
| Cash, cash equivalents and restricted cash at beginning of period | 33559 | 1868 | 48359 | 4295 |
| Cash, cash equivalents and restricted cash at end of period | $32816 | $48359 | $32816 | $48359 |

---

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**BATTALION OIL CORPORATION**

**SELECTED OPERATING DATA (Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Production volumes: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Crude oil (MBbls) | 740 | 800 | 2837 | 3196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas (MMcf) | 2315 | 2670 | 9337 | 9447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas liquids (MBbls) | 318 | 345 | 1242 | 1157 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total (MBoe) | 1444 | 1590 | 5635 | 5928 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Average daily production (Boe/d) | 15696 | 17283 | 15438 | 16241 |
| Average prices: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Crude oil (per Bbl) | $82.18 | $75.36 | $94.36 | $66.81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas (per Mcf) | 2.99 | 4.27 | 4.95 | 3.73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas liquids (per Bbl) | 26.00 | 36.49 | 35.02 | 30.59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total per Boe | 52.63 | 53.01 | 63.43 | 47.93 |
| Cash effect of derivative contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Crude oil (per Bbl) | $(24.73) | $(31.06) | $(40.82) | $(23.02) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas (per Mcf) | 0.04 | (1.02) | (1.55) | (0.46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas liquids (per Bbl) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total per Boe | (12.62) | (17.35) | (23.12) | (13.14) |
| Average prices computed after cash effect of settlement of derivative contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Crude oil (per Bbl) | $57.45 | $44.30 | $53.54 | $43.79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas (per Mcf) | 3.03 | 3.25 | 3.40 | 3.27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas liquids (per Bbl) | 26.00 | 36.49 | 35.02 | 30.59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total per Boe | 40.01 | 35.66 | 40.31 | 34.79 |
| Average cost per Boe: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Production: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease operating | $8.59 | $7.77 | $8.54 | $7.42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Workover and other | 1.30 | 0.57 | 1.19 | 0.54 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes other than income | 1.76 | 1.97 | 3.28 | 2.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gathering and other | 11.31 | 10.67 | 11.38 | 10.19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative, as adjusted <sup>(1)</sup> | 1.87 | 2.03 | 2.52 | 2.48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depletion | 10.49 | 7.89 | 9.05 | 7.53 |
| *(1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:* | *(1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:* | *(1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:* | *(1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:* | *(1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:* |
| General and administrative: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative, as reported | $2.46 | $1.99 | $3.13 | $2.79 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-cash | (0.46) | (0.28) | (0.39) | (0.34) |
| &nbsp;&nbsp;&nbsp;Non-recurring (charges) credits and other: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash  | (0.13) | 0.32 | (0.22) | 0.03 |
| &nbsp;&nbsp;&nbsp;General and administrative, as adjusted<sup>(2)</sup> | $1.87 | $2.03 | $2.52 | $2.48 |
| Total operating costs, as reported | $25.42 | $22.97 | $27.52 | $23.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total adjusting items | (0.59) | 0.04 | (0.61) | (0.31) |
| Total operating costs, as adjusted<sup>(3)</sup> | $24.83 | $23.01 | $26.91 | $22.71 |

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&nbsp;&nbsp;&nbsp;&nbsp;*(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 charges 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.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *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.* 

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**BATTALION OIL CORPORATION**

**RECONCILIATION (Unaudited)**

**(In thousands, except per share amounts***)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Years Ended**  | **Years Ended**  |
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| ***As Reported:*** |  |  |  |  |
| Net income (loss), as reported | $(7652) | $25935 | $18539 | $(28317) |
| ***Impact of Selected Items:*** |  |  |  |  |
| Unrealized loss (gain) on derivatives contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Crude oil | $18156 | $(13525) | $(10730) | $45461 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural gas  | (14501) | (7807) | (9526) | 2260 |
| Total mark-to-market non-cash charge | 3655 | (21332) | (20256) | 47721 |
| Loss (gain) on extinguishment of debt |  | 122 |  | (1946) |
| Change in fair value of embedded derivative liability | 1224 | (213) | (1819) | (213) |
| Non-recurring charges (credits)  | 194 | (502) | 1230 | (155) |
| Selected items, before income taxes | 5073 | (21925) | (20845) | 45407 |
| Income tax effect of selected items |  |  |  |  |
| Selected items, net of tax | $5073 | $(21925) | $(20845) | $45407 |
| ***As Adjusted:*** |  |  |  |  |
| Net income (loss), as adjusted <sup>(1)</sup> | $(2579) | $4010 | $(2306) | $17090 |
| Diluted net income (loss) per common share, as reported | $(0.47) | $1.58 | $1.12 | $(1.74) |
| Impact of selected items | 0.31 | (1.34) | (1.26) | 2.78 |
| Diluted net income (loss) per common share, excluding selected items <sup>(1)(2)</sup> | $(0.16) | $0.24 | $(0.14) | $1.04 |
| Net cash provided by (used in) operating activities | $24987 | $21440 | $78801 | $68572 |
| Changes in working capital | (12029) | (3284) | (19283) | 3146 |
| Cash flow from operations before changes in working capital | 12958 | 18156 | 59518 | 71718 |
| Cash components of selected items | 11989 | (1213) | 6276 | (7635) |
| Income tax effect of selected items |  |  |  |  |
| Cash flows from operations before changes in working capital, adjusted for selected items <sup>(1)(2)</sup> | $24947 | $16943 | $65794 | $64083 |

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&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Net income (loss) 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.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *The impact of selected items for the three months ended December 31, 2022 and 2021 were calculated based upon weighted average diluted shares of 16.3 million and 16.4 million shares, respectively, due to the net income (loss) available to common stockholders, excluding selected items. The impact of selected items for the years ended December 31, 2022 and 2021 were calculated based upon weighted average diluted shares of 16.3 and 16.4 million shares, respectively, due to the net income (loss) available to common stockholders, excluding selected items.* 

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**BATTALION OIL CORPORATION**

**ADJUSTED EBITDA RECONCILIATION (Unaudited)**

**(In thousands)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| Net income (loss), as reported | $(7652) | $25935 | $18539 | $(28317) |
| *Impact of adjusting items:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense  | 9378 | 3215 | 25725 | 8453 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depletion, depreciation and accretion | 15479 | 12679 | 51915 | 45408 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 670 | 450 | 2210 | 2010 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | (227) | (1) | (369) | (213) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on extinguishment of debt |  | 122 |  | (1946) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss (gain) on derivatives contracts | 3655 | (21332) | (20256) | 47721 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of embedded derivative liability | 1224 | (213) | (1819) | (213) |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-recurring charges (credits) and other | 194 | (505) | 1061 | (173) |
| Adjusted EBITDA<sup>(1)</sup> | $22721 | $20350 | $77006 | $72730 |

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&nbsp;&nbsp;&nbsp;&nbsp;*(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.* 

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**BATTALION OIL CORPORATION**

**ADJUSTED EBITDA RECONCILIATION (Unaudited)**

**(In thousands)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months**<br>**Ended**<br>**December 31, 2022** | **Three Months**<br>**Ended**<br>**September 30, 2022** | **Three Months**<br>**Ended**<br>**June 30, 2022** | **Three Months**<br>**Ended**<br>**March 31, 2022** |
| Net income (loss), as reported | $(7652) | $105888 | $13047 | $(92744) |
| *Impact of adjusting items:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense  | 9378 | 6232 | 5394 | 4721 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depletion, depreciation and accretion | 15479 | 13615 | 12601 | 10220 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 670 | 683 | 473 | 384 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | (227) | (141) | (1) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss (gain) on derivatives contracts | 3655 | (102112) | (12837) | 91038 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of embedded derivative liability | 1224 | (449) | (562) | (2032) |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-recurring charges (credits) and other | 194 | 597 | 53 | 217 |
| Adjusted EBITDA<sup>(1)</sup> | $22721 | $24313 | $18168 | $11804 |
| Adjusted LTM EBITDA<sup>(1)</sup> | $77006 |  |  |  |

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&nbsp;&nbsp;&nbsp;&nbsp;*(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.* 

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**BATTALION OIL CORPORATION**

**ADJUSTED EBITDA RECONCILIATION (Unaudited)**

**(In thousands)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months**<br>**Ended**<br>**December 31, 2021** | **Three Months**<br>**Ended**<br>**September 30, 2021** | **Three Months**<br>**Ended**<br>**June 30, 2021** | **Three Months**<br>**Ended**<br>**March 31, 2021** |
| Net income (loss), as reported | $25935 | $13052 | $(33929) | $(33375) |
| *Impact of adjusting items:* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense  | 3215 | 1904 | 1838 | 1496 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depletion, depreciation and accretion | 12679 | 10885 | 11249 | 10595 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 450 | 481 | 485 | 594 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | (1) | (3) | (84) | (125) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on extinguishment of debt | 122 | (2068) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss (gain) on derivatives contracts | (21332) | (1816) | 34817 | 36052 |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of embedded derivative liability | (213) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-recurring charges (credits) and other | (505) | 559 | (275) | 48 |
| Adjusted EBITDA<sup>(1)</sup> | $20350 | $22994 | $14101 | $15285 |
| Adjusted LTM EBITDA<sup>(1)</sup> | $72730 |  |  |  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(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.* 

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