# EDGAR Filing Document

**Accession Number:** 0001282648
**File Stem:** 0001104659-25-111422
**Filing Date:** 2025-11
**Character Count:** 195122
**Document Hash:** 1d76ecd99a631eae4f6eadc7b5c0c758
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-25-111422.hdr.sgml**: 20251113

**ACCESSION NUMBER**: 0001104659-25-111422

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 71

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251113

**DATE AS OF CHANGE**: 20251113

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BATTALION OIL CORP
- **CENTRAL INDEX KEY:** 0001282648
- **STANDARD INDUSTRIAL CLASSIFICATION:** CRUDE PETROLEUM & NATURAL GAS [1311]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 200700684
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-35467
- **FILM NUMBER:** 251479387

**BUSINESS ADDRESS:**
- **STREET 1:** 820 GESSNER ROAD
- **STREET 2:** SUITE 1100
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77024
- **BUSINESS PHONE:** 832-538-0300

**MAIL ADDRESS:**
- **STREET 1:** 820 GESSNER ROAD
- **STREET 2:** SUITE 1100
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77024

**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='ASCII'? Battalion Oil Corp_September 30, 2025

[**Table of Contents**](#TOC)

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q**

---

| | |
|:---|:---|
| ☒ | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| **For the quarterly period ended September 30, 2025** | **For the quarterly period ended September 30, 2025** |
| **OR** | **OR** |
| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| **For the transition period from to**  | **For the transition period from to**  |

---

**Commission File Number: 001-35467**

**Battalion Oil Corporation**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware**<br>(State or other jurisdiction of<br>incorporation or organization) | **1311**<br>(Primary Standard Industrial<br>Classification Code Number) | **20-0700684**<br>(I.R.S. Employer<br>Identification Number) |

---

**820 Gessner Road, Suite 1100, Houston, TX 77024**

(Address of principal executive offices)

**(832) 538-0300**

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, 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 |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻ Accelerated filer ◻ Non-accelerated filer ☒

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Smaller reporting company ☒ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities made under a plan confirmed by a court. Yes ⌧ No ◻

At November 6, 2025, 16,456,563 shares of the Registrant's Common Stock were outstanding.

------

[**Table of Contents**](#TOC)

#### **TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | PAGE |
| [**PART I**](#Part_I) | [**FINANCIAL INFORMATION**](#Part_I) |  |
| &nbsp;&nbsp;&nbsp;[ITEM 1](#Item1CondensedConsolidatedFinancial). | [Condensed Consolidated Financial Statements (Unaudited)](#Item1CondensedConsolidatedFinancial) | 5 |
|  | [Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2025 and 2024](#CONSOLIDATEDSTATEMENTSOFOPERATIONS_23069) | 5 |
|  | [Condensed Consolidated Balance Sheets (Unaudited) at September 30, 2025 and December 31, 2024](#CONSOLIDATEDBALANCESHEETS_537138) | 6 |
|  | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the Three and Nine Months Ended September 30, 2025 and the Year Ended December 31, 2024](#CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUI) | 7 |
|  | [Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2025 and 2024](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_456693) | 8 |
|  | [Notes to Unaudited Condensed Consolidated Financial Statements](#NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENT) | 9 |
| &nbsp;&nbsp;&nbsp;[ITEM 2.](#ITEM2MANAGEMENTSDISCUSSIONANDANALYSISOFF) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#ITEM2MANAGEMENTSDISCUSSIONANDANALYSISOFF) | 26 |
| &nbsp;&nbsp;&nbsp;[ITEM 3.](#Item_3_Qauntative_and_Qualitative) | [Quantitative and Qualitative Disclosures about Market Risk](#Item_3_Qauntative_and_Qualitative) | 35 |
| &nbsp;&nbsp;&nbsp;[ITEM 4.](#Item_4_Controls_and_Procedures) | [Controls and Procedures](#Item_4_Controls_and_Procedures) | 35 |
| [**PART II**](#Part_II) | [**OTHER INFORMATION**](#Part_II) |  |
| &nbsp;&nbsp;[ITEM 1.](#Item_1_Legal_Proceedings) | [Legal Proceedings](#Item_1_Legal_Proceedings) | 36 |
| &nbsp;&nbsp;[ITEM 1A.](#ITEM1ARISKFACTORS_102925) | [Risk Factors](#ITEM1ARISKFACTORS_102925) | 36 |
| &nbsp;&nbsp;[ITEM 2.](#Item_2_Unregistered_Sales) | [Unregistered Sales of Equity Securities and Use of Proceeds](#Item_2_Unregistered_Sales) | 36 |
| &nbsp;&nbsp;[ITEM 3.](#Item_3_Defaults_Upon_Senior_Securities) | [Defaults Upon Senior Securities](#Item_3_Defaults_Upon_Senior_Securities) | 36 |
| &nbsp;&nbsp;[ITEM 4.](#Item_4_Mine_Safety_Disclosures) | [Mine Safety Disclosures](#Item_4_Mine_Safety_Disclosures) | 36 |
| &nbsp;&nbsp;[ITEM 5.](#Item_5_Other_Information) | [Other Information](#Item_5_Other_Information) | 36 |
| &nbsp;&nbsp;[ITEM 6.](#ITEM6EXHIBITS_3750) | [Exhibits](#ITEM6EXHIBITS_3750) | 38 |
| [**Signatures**](#SIGNATURES) |  | 39 |

---

[**Table of Contents**](#TOC)

#### Special note regarding forward-looking statements
**This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, may be forward-looking statements, should be evaluated as such and may concern, among other things, planned capital expenditures, potential increases in oil and natural gas production, potential costs to be incurred, future cash flows and borrowings, our financial position, business strategy and other plans and objectives for future operations. These forward-looking statements may be identified by their use of terms and phrases such as "may," "expect," "estimate," "project," "plan," "objective," "believe," "predict," "intend," "achievable," "anticipate," "will," "continue," "potential," "should," "could" and similar terms and phrases. Although we believe that the expectations reflected in forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. Readers should consider carefully the risks described under the "Risk Factors" section of our previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as the other disclosures contained herein and therein, which describe factors that could cause our actual results to differ from those anticipated in forward-looking statements, which include, but are not limited to, the following factors:**

● volatility in prices for oil, natural gas and natural gas liquids ("NGLs");

● our ability to generate sufficient cash flows from operations, borrowings or other sources to enable us to fund our operations, satisfy our obligations and develop our undeveloped acreage positions;

● contractual limitations that affect our management's discretion in managing our business, including covenants that, among other things, limit our ability to incur debt, make investments and pay cash dividends;

● our indebtedness, which may increase in the future, and higher levels of indebtedness can make us more vulnerable to economic downturns and adverse developments in our business;

● our ability to replace our oil and natural gas reserves and production;

● the presence or recoverability of estimated oil and natural gas reserves attributable to our properties and the actual future production rates and associated costs of producing those oil and natural gas reserves;

● our ability to successfully develop our large inventory of undeveloped acreage;

● the cost and availability of goods and services, such as drilling rigs, fracture stimulation services and tubulars, which may be subject to inflation caused by labor shortages, supply shortages and increased demand, tariffs and other inflationary pressures;

● our ability to secure adequate sour gas treating and/or sour gas take-away capacity, including the acid gas treatment facility for our Monument Draw area attaining targeted production volumes and costs in treating our sour gas;

● drilling and operating risks, including accidents, equipment failures, fires, and releases of toxic or hazardous materials, such as hydrogen sulfide (H <sub>2</sub> S), which can result in injury, loss of life, pollution, property damage and suspension of operations;

● senior management's ability to execute our plans to meet our goals;

● access to and availability of water, sand and other treatment materials to carry out fracture stimulations in our completion operations;

● the possibility that our industry may be subject to future regulatory or legislative actions (including, but not limited to, additional taxes and changes in environmental regulations);

● access to adequate gathering systems, processing and treating facilities and transportation take-away capacity to move our production to marketing outlets to sell our production at market prices;

● our ability to pursue and integrate strategic mergers and acquisitions;

● the potential for production decline rates for our wells to be greater than we expect;

● competition, including competition for acreage in our resource play;

● environmental risks, such as accidental spills of toxic or hazardous materials, and the potential for environmental liabilities;

● exploration and development risks;

● our ability to retain key members of senior management, the board of directors and key technical employees;

● social unrest, political instability or armed conflict in major oil and natural gas producing regions outside the United States ("U.S."), such as the conflict between Ukraine and Russia, and acts of terrorism or sabotage;

● impacts of climate regulations or lawsuits;

[**Table of Contents**](#TOC)

● general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business, may be less favorable than expected, including the possibility that economic conditions in the U.S. will worsen and that capital markets are disrupted, which could adversely affect demand for oil and natural gas and make it difficult to access capital;

● changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs and their related impacts on the economy;

● impacts and potential risks related to actual or anticipated pandemics, including any associated impact to our operations, financial results, liquidity, contractors, customers, employees and vendors;

● impacts and potential risks of extreme weather;

● other economic, competitive, governmental, regulatory, legislative, including federal and state regulations and laws, geopolitical and technological factors that may negatively impact our business, operations or oil and natural gas prices;

● our insurance coverage may not adequately cover all losses that we may sustain; and

● title to the properties in which we have an interest that may be impaired by title defects.

All forward-looking statements are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this document. Other than as required under the securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

[**Table of Contents**](#TOC)

**PART I. FINANCIAL INFORMATION**

**Item 1. Condensed Consolidated Financial Statements (Unaudited)**

**BATTALION OIL CORPORATION**

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

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30,** | **September 30,** | **September 30,** | **September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Operating revenues:** |  |  |  |  |
| &nbsp;&nbsp;Oil, natural gas and natural gas liquids sales: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Oil  | $38325 | $42545 | $114316 | $130673 |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas | 853 | (2588) | 4611 | (2660) |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas liquids | 4208 | 5145 | 14420 | 15704 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total oil, natural gas and natural gas liquids sales | 43386 | 45102 | 133347 | 143717 |
| &nbsp;&nbsp;Other | 96 | 164 | 422 | 523 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating revenues | 43482 | 45266 | 133769 | 144240 |
| **Operating expenses:** |  |  |  |  |
| &nbsp;&nbsp;Production: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease operating | 12389 | 11602 | 33417 | 34193 |
| &nbsp;&nbsp;&nbsp;&nbsp;Workover and other | 839 | 1249 | 4581 | 3088 |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxes other than income | 2622 | 2532 | 7944 | 8872 |
| &nbsp;&nbsp;Gathering and other | 10199 | 12442 | 33157 | 41854 |
| &nbsp;&nbsp;General and administrative | 3085 | 3854 | 10065 | 11265 |
| &nbsp;&nbsp;Depletion, depreciation and accretion | 13522 | 12533 | 40541 | 38771 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 42656 | 44212 | 129705 | 138043 |
| **Income from operations** | 826 | 1054 | 4064 | 6197 |
| **Other income (expenses):** |  |  |  |  |
| &nbsp;&nbsp;Net gain on derivative contracts | 5180 | 26896 | 26030 | 3932 |
| &nbsp;&nbsp;Interest expense and other | (6741) | (6322) | (20010) | (19809) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other (expenses) income  | (1561) | 20574 | 6020 | (15877) |
| &nbsp;&nbsp;&nbsp;&nbsp;(Loss) income before income taxes | (735) | 21628 | 10084 | (9680) |
| &nbsp;&nbsp;Income tax benefit (provision) |  |  |  |  |
| **Net (loss) income** | $(735) | $21628 | $10084 | $(9680) |
| &nbsp;&nbsp;Preferred dividends | (14279) | (9321) | (34369) | (23539) |
| &nbsp;&nbsp;Undistributed earnings allocable to preferred stockholders |  | (6732) |  |  |
| **Net (loss) income available to common stockholders** | $(15014) | $5575 | $(24285) | $(33219) |
| **Net (loss) income per share of common stock available to common stockholders:** |  |  |  |  |
| &nbsp;&nbsp;Basic | $(0.91) | $0.34 | $(1.48) | $(2.02) |
| &nbsp;&nbsp;Diluted | $(0.91) | $0.34 | $(1.48) | $(2.02) |
| **Weighted average common shares outstanding:** |  |  |  |  |
| &nbsp;&nbsp;Basic | 16457 | 16457 | 16457 | 16457 |
| &nbsp;&nbsp;Diluted | 16457 | 16523 | 16457 | 16457 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)**

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

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **December 31, 2024** |
| **Current assets:** |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $50455 | $19712 |
| &nbsp;&nbsp;Accounts receivable, net | 17948 | 26298 |
| &nbsp;&nbsp;Assets from derivative contracts | 15077 | 6969 |
| &nbsp;&nbsp;Restricted cash | 91 | 91 |
| &nbsp;&nbsp;Prepaids and other | 698 | 982 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 84269 | 54052 |
| **Oil and natural gas properties (full cost method):** |  |  |
| &nbsp;&nbsp;Evaluated | 885656 | 816186 |
| &nbsp;&nbsp;Unevaluated | 48024 | 49091 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross oil and natural gas properties | 933680 | 865277 |
| &nbsp;&nbsp;Less: accumulated depletion | (536664) | (497272) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net oil and natural gas properties | 397016 | 368005 |
| **Other operating property and equipment:** |  |  |
| &nbsp;&nbsp;Other operating property and equipment | 4677 | 4663 |
| &nbsp;&nbsp;Less: accumulated depreciation | (2766) | (2455) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net other operating property and equipment | 1911 | 2208 |
| **Other noncurrent assets:** |  |  |
| &nbsp;&nbsp;Assets from derivative contracts | 3394 | 4052 |
| &nbsp;&nbsp;Operating lease right of use assets | 1014 | 453 |
| &nbsp;&nbsp;Other assets | 4089 | 2278 |
| **Total assets** | $491693 | $431048 |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | $63037 | $52682 |
| &nbsp;&nbsp;Liabilities from derivative contracts | 1863 | 12330 |
| &nbsp;&nbsp;Current portion of long-term debt | 22526 | 12246 |
| &nbsp;&nbsp;Operating lease liabilities | 730 | 406 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 88156 | 77664 |
| **Long-term debt, net** | 186230 | 145535 |
| **Other noncurrent liabilities:** |  |  |
| &nbsp;&nbsp;Liabilities from derivative contracts | 4752 | 6954 |
| &nbsp;&nbsp;Asset retirement obligations | 20592 | 19156 |
| &nbsp;&nbsp;Operating lease liabilities | 309 | 84 |
| **Commitments and contingencies (Note 9)** |  |  |
| **Temporary equity:** |  |  |
| Redeemable convertible preferred stock: 138,000 shares  | 211904 | 177535 |
| &nbsp;&nbsp;of $0.0001 par value authorized, issued and outstanding |  |  |
| &nbsp;&nbsp;at September 30, 2025 and December 31, 2024 |  |  |
| **Stockholders' equity:** |  |  |
| Common stock: 100,000,000 shares of $0.0001 par value authorized;  |  |  |
| &nbsp;&nbsp;16,456,563 shares issued and outstanding at September 30, 2025 and  |  |  |
| &nbsp;&nbsp;December 31, 2024 | 2 | 2 |
| Additional paid-in capital | 254539 | 288993 |
| Accumulated deficit | (274791) | (284875) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' (deficit) equity | (20250) | 4120 |
| **Total liabilities, temporary equity and stockholders' equity** | $491693 | $431048 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)**

**(In thousands)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | <br>**Additional**<br>**Paid-In**<br>**Capital** | **Retained** <br>**Earnings**<br>**(Accumulated**<br>**Deficit)** | <br>**Stockholders'**<br>**Equity** |
| **Balances at December 31, 2023** | 16457 | $2 | $321012 | $(252993) | $68021 |
| Net loss |  |  |  | (31203) | (31203) |
| Deemed dividends for preferred stock |  |  | (5632) |  | (5632) |
| Stock-based compensation and other |  |  | 127 |  | 127 |
| **Balances at March 31, 2024** | 16457 | 2 | 315507 | (284196) | 31313 |
| Net loss |  |  |  | (105) | (105) |
| Deemed dividends for preferred stock |  |  | (8586) |  | (8586) |
| Stock-based compensation and other |  |  | 48 |  | 48 |
| **Balances at June 30, 2024** | 16457 | 2 | 306969 | (284301) | 22670 |
| Net income |  |  |  | 21628 | 21628 |
| Deemed dividends for preferred stock |  |  | (9321) |  | (9321) |
| Stock-based compensation and other |  |  | 7 |  | 7 |
| **Balances at September 30, 2024** | 16457 | 2 | 297655 | (262673) | 34984 |
| Net loss |  |  |  | (22202) | (22202) |
| Deemed dividends for preferred stock |  |  | (8680) |  | (8680) |
| Stock-based compensation and other |  |  | 18 |  | 18 |
| **Balances at December 31, 2024** | 16457 | 2 | 288993 | (284875) | 4120 |
| Net income |  |  |  | 6023 | 6023 |
| Deemed dividends for preferred stock |  |  | (11820) |  | (11820) |
| Stock-based compensation and other |  |  | (85) |  | (85) |
| **Balances at March 31, 2025** | 16457 | 2 | 277088 | (278852) | (1762) |
| Net income |  |  |  | 4796 | 4796 |
| Deemed dividends for preferred stock |  |  | (8270) |  | (8270) |
| **Balances at June 30, 2025** | 16457 | 2 | 268818 | (274056) | (5236) |
| Net loss |  |  |  | (735) | (735) |
| Deemed dividends for preferred stock |  |  | (14279) |  | (14279) |
| **Balances at September 30, 2025** | 16457 | $2 | $254539 | $(274791) | $(20250) |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

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

**(In thousands)**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| Net income (loss) | $10084 | $(9680) |
| Adjustments to reconcile net income (loss) to net cash |  |  |
| provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depletion, depreciation and accretion | 40541 | 38771 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation, net | (109) | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized (gain) loss on derivative contracts | (20120) | (12764) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization/accretion of financing related costs | 1180 | 4949 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued settlements on derivative contracts | 76 | (1102) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of embedded derivative liability |  | (1323) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other  | 193 | 278 |
| Change in assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 7201 | 4155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaids and other | 284 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 11579 | 5228 |
| Net cash provided by operating activities | 50909 | 28669 |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oil and natural gas capital expenditures | (69573) | (51778) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds received from sale of oil and natural gas assets |  | 7015 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of oil and natural gas properties |  | (47) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract asset |  | (7737) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating property and equipment capital expenditures | (14) | (19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | (375) | (20) |
| Net cash used in investing activities | (69962) | (52586) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings | 63000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of borrowings | (11329) | (52383) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt issuance costs | (1875) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of debt financing costs |  | (175) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of preferred stock  |  | 38781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merger deposit |  | 10000 |
| Net cash provided by (used in) financing activities | 49796 | (3777) |
| **Net increase (decrease) in cash, cash equivalents and restricted cash** | 30743 | (27694) |
| Cash, cash equivalents and restricted cash at beginning of period | 19803 | 57619 |
| Cash, cash equivalents and restricted cash at end of period | $50546 | $29925 |
| **Supplemental cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $20729 | $17943 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**1. FINANCIAL STATEMENT PRESENTATION**

**Basis of Presentation and Principles of Consolidation**

Battalion Oil Corporation ("Battalion" or the "Company") is an independent energy company focused on the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets in the United States ("U.S."). The consolidated financial statements include the accounts of all majority-owned, controlled subsidiaries. The Company operates in one segment which focuses on oil and natural gas acquisition, production, exploration and development. Allocation of capital is made across the Company's entire portfolio without regard to operating area. All intercompany accounts and transactions have been eliminated.

These unaudited condensed consolidated financial statements reflect, in the opinion of the Company's management, all adjustments, consisting of normal and recurring adjustments, necessary to present fairly the financial position as of, and the results of operations for, the periods presented. Interim period results are not necessarily indicative of results of operations or cash flows for the full year and accordingly, certain information normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"), has been condensed or omitted. During interim periods, Battalion follows the accounting policies disclosed in its Annual Report on Form 10-K, as filed with the U.S. Securities and Exchange Commission (the "SEC") on March 31, 2025. Please refer to the notes in the Annual Report on Form 10-K for the year ended December 31, 2024 when reviewing interim financial results. The Company has evaluated events or transactions through the date of issuance of these unaudited condensed consolidated financial statements.

**Liquidity and Cash Requirements**

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company's ability to execute its operating strategy is dependent on its ability to maintain adequate liquidity and continue to access capital, as needed. The Company generated net income of $10.1 million for the nine months ended September 30, 2025 and had negative working capital of $3.9 million as of September 30, 2025. At September 30, 2025, the Company had $50.5 million of cash and cash equivalents, no additional borrowing capacity under the 2024 Amended Term Loan Agreement (as defined in Note 5, "*Debt*" to the unaudited condensed consolidated financial statements) and a total of $22.5 million in debt repayments due through September 30, 2026 under its 2024 Amended Term Loan Agreement. The Company's current business estimates and forecasts indicate that it is at risk of potential non-compliance with its debt covenant requirements for the next 12 months from the issuance of these unaudited condensed consolidated financial statements. In response to these events and conditions, the Company continues to rely on a support letter from its three largest current related party investors to purchase additional preferred equity securities in an amount up to $30.0 million on or before August 31, 2026. Management believes that based upon its commitment of the investors to purchase up to $30.0 million in additional preferred equity, it is probable the Company will have sufficient liquidity to maintain compliance with its debt covenants, as described in Note 5, "*Debt*," for the next 12 months from the issuance of these unaudited condensed consolidated financial statements.

**Use of Estimates**

The preparation of the Company's unaudited condensed consolidated financial statements in conformity with GAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Estimates and assumptions that, in the opinion of management of the Company, are significant include oil and natural gas revenue accruals, capital and operating expense accruals, oil and natural gas reserves, depletion relating to oil and

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

natural gas properties, asset retirement obligations ("AROs"), and fair value estimates. The Company bases its estimates and judgments on historical experience and on various other assumptions and information believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. Actual results may differ from the estimates and assumptions used in the preparation of the Company's unaudited condensed consolidated financial statements.

**Cash, Cash Equivalents and Restricted Cash**

The Company considers all highly liquid short-term investments with a maturity of three months or less at the time of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. Amounts in the unaudited condensed consolidated balance sheets included in *"Cash and cash equivalents"* and *"Restricted cash"* reconcile to the Company's unaudited condensed statements of cash flows as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;Cash and cash equivalents | $50455 | $19712 |
| &nbsp;&nbsp;Restricted cash | 91 | 91 |
| &nbsp;&nbsp;**Total cash, cash equivalents and restricted cash** | $50546 | $19803 |

---

Restricted cash consists of funds to collateralize company credit cards.

**Accounts Receivable and Allowance for Doubtful Accounts**

The Company's accounts receivable are primarily receivables from joint interest owners and oil and natural gas purchasers. Accounts receivable are recorded at the amount due, less an allowance for doubtful accounts, when applicable. Payment of the Company's accounts receivable is typically received within 30-60 days. The Company's historical credit losses have been de minimis and are expected to remain so in the future assuming no substantial changes to the business or creditworthiness of the Company's counterparties.

**Concentrations of Credit Risk**

The Company's primary concentrations of credit risk are the risks of uncollectible accounts receivable and of nonperformance by counterparties under the Company's derivative contracts. Each reporting period, the Company assesses the recoverability of material receivables using historical data, current market conditions and reasonable and supportable forecasts of future economic conditions to determine expected collectability of its material receivables.

At September 30, 2025, the Company's exposure to credit risk under its derivative contracts is currently limited to two counterparties – a major financial institution that is a lender under the 2024 Amended Term Loan Agreement (as defined in Note 5, "*Debt*") and a large multi-strategy alternative investment manager, both of which have investment grade credit ratings. The Company has master netting agreements with both counterparties which provide for offsetting of amounts payable or receivable between the Company and the counterparty. To manage counterparty risk associated with derivative contracts, the Company selects and monitors counterparties based on an assessment of their financial strength and/or credit ratings.

**Recently Issued Accounting Pronouncements and Legislation**

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures* ("ASU 2023-09"), which

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

focuses on the income tax rate reconciliation and income taxes paid. ASU 2023-09 requires an entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories, with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign, and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in ASU 2023-09 prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company is currently evaluating the impact of adopting ASU 2023-09 but does not expect it to have a material impact on its disclosures, with no impact to its results of operations, cash flows, or financial condition.

In November 2024, the FASB issued ASU 2024-03, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)* ("ASU 2024-03"), which requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within the fiscal year beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These provisions had no impact on the Company's consolidated financial statements for the three and nine months ended September 30, 2025.

**2. SEGMENTS**

The Company has determined that it operates as one reportable segment which focuses on oil and natural gas acquisition, production, exploration and development. The Company evaluates performance based on consolidated income or loss from operations. The Company's chief executive officer and chief operating officer together function as the Company's chief operating decision maker (the "CODM"). The CODM evaluates and manages performance and resource allocation based on consolidated production and operating expenses. Significant expenses provided to the CODM for review consist of lease operating, workover and other, and gathering and other expenses. The Company's significant segment expenses are derived from and can be found within the unaudited condensed consolidated statement of operations. The measure of segment assets for the Company's single reportable segment is "Total assets" as reported on the unaudited condensed consolidated balance sheets.

**3. OPERATING REVENUES**

Substantially all of the Company's oil, natural gas and natural gas liquids ("NGLs") revenues are derived from the Delaware Basin in Pecos, Reeves, Ward and Winkler Counties, Texas. Revenue is presented disaggregated in the unaudited condensed consolidated statements of operations by major product, and depicts how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors in the Company's single basin operations.

Revenue is recognized when the following five steps are completed: (1) identify the contract with the customer, (2) identify the performance obligation (promise) in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when the performance obligation is satisfied. Revenues from the sale of crude oil, natural gas and NGLs are recognized at a point in time when a performance obligation is satisfied by the transfer of control of each unit (e.g. barrel of oil, Mcf of gas) of commodity

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

to the customer. Revenue is measured based on contract consideration allocated to each unit of commodity and excludes amounts collected on behalf of third parties. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.

Because the Company's performance obligations have been satisfied and an unconditional right to consideration exists as of the balance sheet date, the Company recognized amounts due from contracts with customers for sales of oil, natural gas and NGLs of $14.4 million and $23.5 million at September 30, 2025 and December 31, 2024, respectively, as *"Accounts receivable, net"* on the unaudited condensed consolidated balance sheets. The Company utilizes the practical expedient exempting the disclosure of the transaction price of unsatisfied performance obligations for (i) contracts with an original expected duration of one year or less and (ii) contracts where variable consideration is allocated entirely to a wholly unsatisfied performance obligation (each unit of product typically represents a separate performance obligation, and therefore, future volumes under the Company's long-term contracts are wholly unsatisfied).

For additional information regarding the Company's operating revenues, refer to its Annual Report on Form 10-K for the year ended December 31, 2024.

**4. OIL AND NATURAL GAS PROPERTIES**

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas reserves (including such costs as leasehold acquisition costs, geological expenditures, treating equipment and gathering support facilities costs, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depletion, exceed the discounted future net revenues of proved oil and natural gas reserves, net of deferred taxes, such excess capitalized costs are charged to expense.

Additionally, the Company assesses all properties classified as unevaluated property on a quarterly basis for possible impairment. The Company assesses properties on an individual basis or as a group, if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and the full cost ceiling test limitation.

At September 30, 2025 and 2024, using first-day-of-the-month average West Texas Intermediate ("WTI") crude oil spot prices and Henry Hub natural gas prices for the respective prior 12-month periods, the Company's net book value of oil and natural gas properties at September 30, 2025 and 2024, did not exceed the ceiling test value of the Company's reserves. Oil and natural gas prices utilized for the ceiling test calculations at September 30, 2025 and 2024 were $68.07 per barrel and $79.40 per barrel of oil, respectively, and $3.10 per MMBtu and $2.21 per MMBtu for natural gas, respectively.

Changes in commodity prices, production rates, levels of reserves, future development costs, transfers of unevaluated properties to the full cost pool, capital spending, and other factors will determine the Company's ceiling test calculation and impairment analyses in future periods. Additionally, because oil and natural gas prices are inherently volatile, sustained lower commodity prices would reduce the calculated first-day-of-the-month average prices which could result in non-cash impairment charges of the Company's oil and natural gas properties under its full cost ceiling test calculation, negatively impacting earnings and financial position.

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**5. DEBT**

The Company's debt consisted of the following for the periods presented (in thousands):

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **December 31, 2024** |
| Term loan credit facility | $213750 | $162000 |
| Other | 26 | 106 |
| &nbsp;&nbsp;Total debt (Face Value) | 213776 | 162106 |
| Less: |  |  |
| &nbsp;&nbsp;Current portion of long-term debt<sup>(1)</sup> | (22526) | (12246) |
| &nbsp;&nbsp;Other<sup>(2)</sup> | (5020) | (4325) |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-Term Debt, net | $186230 | $145535 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Amounts primarily reflect amortization payments of $22.5 million and $12.2 million due under the Company's 2024 Amended Term Loan Agreement within one year at September 30, 2025 and December 31, 2024, respectively.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Amounts reflect unamortized debt discount and issuance costs of approximately $5.0 million and $4.3 million at September 30, 2025 and December 31, 2024, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded approximately $1.2 million and $4.9 million, respectively, in interest expense reflecting the amortization/accretion of deferred financing costs and debt discount.*  

**Amended and Restated Credit Agreement**

On December 26, 2024 (the "Initial Closing Date"), Halcón Holdings, LLC (the "Borrower"), a wholly-owned subsidiary of the Company, entered into a Second Amended and Restated Senior Secured Credit Agreement (the "2024 Term Loan Agreement") with Fortress Credit Corp., as administrative agent, and certain other financial institutions party thereto, as lenders. The 2024 Term Loan Agreement amends and restates in its entirety the Company's 2021 Amended Term Loan Agreement (as defined below). Pursuant to the 2024 Term Loan Agreement, the lenders party thereto agreed to provide the Borrower with (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million to be made available to the Borrower from January 3, 2025 until the date that was the earliest to occur of (x) the date on which such incremental term facility is fully drawn, (y) the date on which such incremental term facility is terminated and (z) January 11, 2025, subject to the satisfaction of certain conditions. On January 9, 2025, the Borrower entered into a first amendment (the "First Amendment") to its 2024 Term Loan Agreement (as amended, the "2024 Amended Term Loan Agreement"). Pursuant to the First Amendment, the Borrower incurred incremental term loans in the aggregate principal amount of $63.0 million (the "Incremental Term Loans").

The net proceeds of the 2024 Term Loan Agreement were used to repay all outstanding indebtedness under the 2021 Amended Term Loan Agreement, including accrued and unpaid interest, in an aggregate amount of approximately $152.1 million and to pay related fees and expenses. For the year ended December 31, 2024, the Company recognized a loss on extinguishment of debt in the amount of $7.5 million resulting from the credit agreement refinancing on December 26, 2024 which included a $3.6 million non-cash write-off of deferred financing costs, original issue discounts and embedded derivatives associated with the extinguished debt and $3.9 million in fees and debt issuance costs paid for the new debt. Additionally, the Company deferred $4.3 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet at December 31, 2024 in conjunction with entry into the 2024 Term Loan Agreement and deferred an additional $1.8 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet at September 30, 2025 in conjunction with the issuance of the Incremental Term Loans in January 2025.

The maturity date of the 2024 Amended Term Loan Agreement is December 26, 2028.

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

Borrowings under the 2024 Amended Term Loan Agreement initially bore interest at a rate per annum equal to a forward-looking term rate based on the Secured Overnight Financing Rate ("SOFR") for a tenor of three months (with a credit spread adjustment of 0.15% per annum) (or another applicable reference rate, as determined pursuant to the terms of the 2024 Amended Term Loan Agreement) plus an applicable margin of 7.75%. The weighted average interest rate on the Company's borrowings under the 2024 Amended Term Loan Agreement for the quarter ended September 30, 2025 was 12.19%.

The Borrower may elect, at its option, to prepay any borrowing outstanding under the 2024 Amended Term Loan Agreement. Such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable:

---

| | |
|:---|:---|
| **Period** | **Premium** |
| Months 0 - 12 | Make-whole amount equal to 12 months of interest plus 4.00% |
| Months 13 - 30 | 2.00% |
| Thereafter | 0.00% |

---

In the event the Borrower shall receive a disapproval notice (as defined in the 2024 Term Loan Agreement) from the required lenders under the 2024 Amended Term Loan Agreement rejecting or otherwise disqualifying a proposed buyer in connection with a permitted change in control thereunder to be consummated within 12 months following the Initial Closing Date, such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable:

---

| | |
|:---|:---|
| **Period** | **Premium** |
| Months 0 - 9 | Make-whole amount equal to 9 months of interest plus 2.00% |
| Months 10 - 30 | 2.00% |
| Thereafter | 0.00% |

---

The Borrower may be required to make mandatory prepayments of the loans under the 2024 Amended Term Loan Agreement in connection with the incurrence of non-permitted debt, certain asset sales and with excess cash on hand in excess of certain maximum levels. The Borrower is required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the total aggregate principal amount of the loans outstanding and such payments commenced the fiscal quarter ending June 30, 2025. In accordance with the terms of the 2024 Amended Term Loan Agreement, the Company made repayments totaling $5.6 million and $11.3 million, respectively, for the three and nine months ended September 30, 2025.

Amounts outstanding under the 2024 Amended Term Loan Agreement are guaranteed by certain of the Borrower's direct and indirect subsidiaries and secured by a security interest in substantially all of the assets of the Borrower and such direct and indirect subsidiaries, and of the equity interests of the Borrower held by the Company.

The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement and as amended in the Second Amendment), including the maintenance of the following ratios:

● Asset Coverage Ratio not to fall below 1.85 x as of September 30, 2025 through and including December 31, 2026 and 2.00 x for each fiscal quarter thereafter (see Note 13, "*Subsequent Events*") , determined as of the last day of each fiscal quarter;

● Total Net Leverage Ratio not to exceed 2.50 x as of September 30, 2025 and not to exceed the levels set forth in the table in Note 13, "*Subsequent Events*" for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;

● Current Ratio not to fall below 1.00 x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025; and

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

● Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three-month period, determined as of the last day of any fiscal quarter.

At September 30, 2025, the Company was in compliance with all financial covenants under the 2024 Amended Term Loan Agreement.

Under the 2024 Amended Term Loan Agreement, the Company is required to hedge approximately 85% to 50% of its anticipated oil and natural gas production, in varying percentages by year, on a rolling basis for the next four years. Entry into the 2024 Term Loan Agreement did not result in any material changes to the Company's hedges. The 2024 Amended Term Loan Agreement also contains certain events of default, including non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy.

In conjunction with entering into the 2024 Term Loan Agreement, the Company agreed to pay an exit fee equal to the amount resulting from multiplying 3.50% by the difference, if any, of (x) Total proved developed producing ("PDP") PV-10 (the "PDP PV-10") as of the date that is the earlier of (i) Payment in Full, (ii) the Maturity Date, or (iii) the loans and other obligations otherwise becoming immediately due and payable pursuant to Section 10.02 of the 2024 Term Loan Agreement (including whether, in the case of clauses (i) or (iii), such Payment in Full or acceleration, respectively, may be made in connection with a refinancing transaction or a disposition of all or substantially all of the assets of the Company) (such earlier date, the "Exit Fee Determination Date"), less (y) the Total PDP PV-10 reflected in the Initial Reserve Report (as defined in the 2024 Term Loan Agreement) (the "Exit Fee"). Upon evaluation of the payoff profiles associated with the Exit Fee, the Company concluded that such embedded features resulting from the application of this fee were not clearly and closely related to the host debt instrument. The fair value analysis for such derivative was performed and the fair value was deemed to be zero at commencement, at December 31, 2024 and at September 30, 2025. Refer to Note 6, "*Fair Value Measurements*," for a discussion of the valuation approach used and the significant inputs to the valuation for the Exit Fee derivative.

**Term Loan Credit Facility**

On November 24, 2021, the Company and Borrower entered into an Amended and Restated Senior Secured Credit Agreement (the "2021 Term Loan Agreement") with Macquarie Bank Limited, as administrative agent, and certain other financial institutions party thereto, as lenders, having a maturity date of November 24, 2025 (as subsequently amended, the "2021 Amended Term Loan Agreement").

All obligations under the 2021 Amended Term Loan Agreement were refunded, refinanced and repaid in full by the loans under the 2024 Term Loan Agreement on December 26, 2024.

Borrowings under the 2021 Amended Term Loan Agreement bore interest at a variable interest rate based on SOFR plus an applicable margin of 7.5%. The weighted average interest rate on the Company's term loan borrowings under the 2021 Amended Term Loan Agreement for the quarter ended September 30, 2024 was approximately 12.98%.

**6. FAIR VALUE MEASUREMENTS**

The Company's determination of fair value incorporates not only the credit standing of the counterparties involved in transactions with the Company resulting in receivables on the Company's unaudited condensed consolidated balance sheets, but also the impact of the Company's nonperformance risk on its own liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company separates the fair value of its financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy assigns the highest

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 measurements are inputs that are observable for assets or liabilities, either directly or indirectly, other than quoted prices included within Level 1. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs.

A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There were no transfers between fair value hierarchy levels for any period presented. The following tables set forth by level within the fair value hierarchy the Company's financial assets and liabilities associated with commodity-based derivative contracts that were accounted for at fair value at September 30, 2025 and December 31, 2024 (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Assets from derivative contracts | $— | $18471 | $— | $18471 |
| Liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Liabilities from derivative contracts | $— | $6615 | $— | $6615 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Assets from derivative contracts | $— | $11021 | $— | $11021 |
| Liabilities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Liabilities from derivative contracts | $— | $19284 | $— | $19284 |

---

Derivative contracts listed above as Level 2 include fixed-price swaps, collars, basis swaps and WTI NYMEX rolls that are carried at fair value. The Company records the net change in the fair value of these positions in *"Net gain (loss) on derivative contracts"* in the Company's unaudited condensed consolidated statements of operations. The Level 2 observable data includes the forward curves for commodity prices based on quoted market prices and implied volatility factors related to changes in the forward curves. See Note 7, *"Derivative and Hedging Activities,"* for additional discussion of derivatives.

The Company's derivative contracts are with major financial institutions and large multi-strategy alternative investment managers with investment grade credit ratings which are believed to have minimal credit risk. As such, the Company is exposed to credit risk to the extent of nonperformance by the counterparties in the derivative contracts; however, the Company does not anticipate such nonperformance.

As discussed in Note 5, "*Debt*," the Company evaluated the 2024 Term Loan Agreement and identified the Exit Fee to be an embedded derivative not clearly and closely related to the host debt instrument. The fair value analysis for such derivative was performed and the fair value was deemed to be zero at commencement, at December 31, 2024 and at September 30, 2025. The fair value of the Exit Fee derivative is remeasured each reporting period with fair value changes recorded in *"Interest Expense and other"* on the unaudited condensed consolidated statement of operations. The valuation of the Exit Fee derivative includes significant inputs such as the timing of potential exit scenarios, forward

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**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

NYMEX strip pricing, forecasted capital and other expenditures and discount rates. The fair value of the Exit Fee derivative is classified as Level 3 in the fair value hierarchy.

Estimated fair value amounts have been determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, cash equivalents and restricted cash, accounts receivable, and accounts payable approximates their carrying value due to their short-term nature. The estimated fair value of borrowings under the Company's Amended Term Loan Agreement approximates carrying value because the variable interest rates approximate current market rates.

The Company follows the provisions of the FASB's Accounting Standards Codification ("ASC") 820, *Fair Value Measurement* for nonfinancial assets and liabilities measured at fair value on a non-recurring basis. These provisions apply to the Company's initial recognition of AROs for which fair value is used. The ARO estimates are derived from historical costs and management's expectation of future cost environments; and therefore, the Company has designated these liabilities as Level 3. See Note 8, *"Asset Retirement Obligations,"* for a reconciliation of the beginning and ending balances of the liability for the Company's AROs.

**7. DERIVATIVE AND HEDGING ACTIVITIES**

The Company is exposed to commodity price risks relating to its ongoing business operations. In accordance with the Company's policy and the requirements under the Amended Term Loan Agreement, it generally hedges a substantial, but varying, portion of anticipated oil and natural gas production for future periods. Derivatives are carried at fair value on the unaudited condensed consolidated balance sheets as assets or liabilities, with the changes in the fair value included in the unaudited condensed consolidated statements of operations for the period in which the change occurs. The Company has elected not to designate any of its derivative contracts for hedge accounting. Accordingly, the Company records the net change in the mark-to-market valuation of these derivative contracts, as well as all payments and receipts on settled derivative contracts, in *"Net gain (loss) on derivative contracts"* on the unaudited condensed consolidated statements of operations. The Company's hedge policies and objectives may change significantly as its operational profile changes. The Company does not enter into derivative contracts for speculative trading purposes.

It is the Company's policy to enter into derivative contracts only with counterparties that are creditworthy financial or commodity hedging institutions deemed by management as competent and competitive market makers. At September 30, 2025, the Company did not post collateral under any of its derivative contracts as they are secured under the Company's Term Loan Agreement.

The Company's crude oil and natural gas derivative positions at any point in time may consist of fixed-price swaps, costless put/call collars, basis swaps and WTI NYMEX rolls further described as follows:

● *Fixed-price swaps* are designed so that the Company receives or makes payments based on a differential between fixed and variable prices for crude oil and natural gas.

● *Costless collars* consist of a sold call, which establishes a maximum price the Company will receive for the volumes under contract and a purchased put that establishes a minimum price and are generally utilized less frequently by the Company than fixed-price swaps.

● *Basis swaps* effectively lock in a price differential between regional prices (i.e., Midland) where the product is sold and the relevant pricing index under which the oil production is hedged (i.e., Cushing).

● *WTI NYMEX roll agreements* account for pricing adjustments to the trade month versus the delivery month for contract pricing.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

The following table summarizes the location and fair value amounts of all commodity derivative contracts in the unaudited condensed consolidated balance sheets at September 30, 2025 and December 31, 2024 (in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Balance sheet location** | **September 30, 2025** | **December 31, 2024** | **Balance sheet location** | **September 30, 2025** | **December 31, 2024** |
| Current assets | $15077 | $6969 | Current liabilities | $(1863) | $(12330) |
| Other noncurrent assets  | 3394 | 4052 | Other noncurrent liabilities  | (4752) | (6954) |
|  | $18471 | $11021 |  | $(6615) | $(19284) |

---

The following table summarizes the location and amounts of the Company's realized and unrealized gains and losses on derivative contracts in the Company's unaudited condensed consolidated statements of operations (in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
| | | **September 30,** | **September 30,** | **September 30,** | **September 30,** |
| <br>**Type** | **Location of gain (loss)**<br>**on derivative contracts on**<br>**Statement of Operations** | **2025** | **2024** | **2025** | **2024** |
| ***Commodity contracts:*** |  |  |  |  |  |
| &nbsp;&nbsp;Unrealized gain | Other income (expenses)  | $1044 | $28091 | $20120 | $12764 |
| &nbsp;&nbsp;Realized gain (loss) | Other income (expenses) | 4136 | (1195) | 5910 | (8832) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total net gain (loss)** |  | $5180 | $26896 | $26030 | $3932 |

---

At September 30, 2025, the Company had the following open crude oil and natural gas derivative contracts:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Instrument** | **2025** | **2026** | **2027** | **2028** | **2029** |
| **Crude oil:** |  |  |  |  |  |
| &nbsp;&nbsp;*Fixed-price swap:* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total volumes (Bbls) | 412283 | 1497884 | 1054223 | 750020 | 299544 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average price | $63.74 | $64.59 | $62.26 | $62.37 | $61.40 |
| &nbsp;&nbsp;*Basis swap:* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total volumes (Bbls) | 501043 | 1459912 | 980339 | 692020 | 140544 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average price | $0.42 | $0.50 | $0.55 | $0.66 | $0.68 |
| &nbsp;&nbsp;*WTI NYMEX roll:* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total volumes (Bbls) | 501043 | 1459912 | 980339 | 692020 | 140544 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average price | $0.41 | $0.03 | $(0.04) | $(0.23) | $(0.29) |
| **Natural gas:** |  |  |  |  |  |
| &nbsp;&nbsp;*Fixed-price swap:* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total volumes (MMBtu) | 716351 | 1098125 | 1739001 | 2010469 | 527049 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average price | $3.21 | $3.97 | $3.77 | $3.36 | $3.84 |
| &nbsp;&nbsp;*Two-way collar:* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total volumes (MMBtu) | 743144 | 4424627 | 2304553 | 995931 | 604000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average price (call) | $6.10  | $4.44  | $4.71  | $4.08  | $4.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average price (put) | $3.64  | $3.55  | $3.52  | $3.32  | $2.57 |
| &nbsp;&nbsp;*Basis swap:* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total volumes (MMBtu) | 1311203 | 4839568 | 3531961 | 2550400 | 527049 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average price | $(0.91) | $(1.01) | $(0.84) | $(0.86) | $(0.89) |

---

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

The Company presents the fair value of its derivative contracts at the gross amounts in the unaudited condensed consolidated balance sheets. The following table shows the potential effects of master netting arrangements on the fair value of the Company's derivative contracts at September 30, 2025 and December 31, 2024 (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Assets from Derivative Contracts** | **Assets from Derivative Contracts** | **Liabilities from Derivative Contracts** | **Liabilities from Derivative Contracts** |
| <br>**Offsetting of Derivative Assets and Liabilities** | **September 30, 2025** | **December 31, 2024** | **September 30, 2025** | **December 31, 2024** |
| Gross amounts recognized in the Unaudited Condensed Consolidated Balance Sheet | $18471 | $11021 | $(6615) | $(19284) |
| Amounts not offset in the Unaudited Condensed Consolidated Balance Sheet | (5153) | (11021) | 5153 | 11021 |
| Net amount | $13318 | $— | $(1462) | $(8263) |

---

The Company enters into an International Swap Dealers Association Master Agreement ("ISDA") with each counterparty prior to a derivative contract with such counterparty. The ISDA is a standard contract that governs all derivative contracts entered into between the Company and the respective counterparty. The ISDA allows for offsetting of amounts payable or receivable between the Company and the counterparty, at the election of both parties, for transactions that occur on the same date and in the same currency.

**8. ASSET RETIREMENT OBLIGATIONS**

The Company records an ARO on oil and natural gas properties when it can reasonably estimate the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon costs. The Company records the ARO liability on the unaudited condensed consolidated balance sheets and capitalizes the cost in *"Oil and natural gas properties"* during the period in which the obligation is incurred. The Company records the accretion of its ARO liabilities in *"Depletion, depreciation and accretion"* expense in the unaudited condensed consolidated statements of operations. The additional capitalized costs are depreciated on a unit-of-production basis.

The Company recorded the following activity related to its ARO liability (in thousands):

---

| | |
|:---|:---|
| Liability for asset retirement obligations at December 31, 2024 | $19156 |
| &nbsp;&nbsp;Accretion expense | 838 |
| &nbsp;&nbsp;Liabilities incurred  | 118 |
| &nbsp;&nbsp;Revisions to estimate | 480 |
| Liability for asset retirement obligations at September 30, 2025 | $20592 |

---

**9. COMMITMENTS AND CONTINGENCIES**

**Commitments**

In May 2022, the Company entered into a joint venture agreement with Caracara Services, LLC ("Caracara") to develop a strategic acid gas treatment and carbon sequestration facility and entered into a gas treating agreement with Wink Amine Treater, LLC ("WAT"). The Company has a minimum volume commitment of 20,000 Mcf per day under the gas treating agreement, with certain rollover rights and start-up flexibility, for an initial term of five years from the in-service date of the facility. Under the gas treating agreement, the Company is to pay a treating rate that begins at $1.44/Mcf and varies based on volumes delivered to the facility. On August 11, 2025, the Company received notice from WAT that it ceased taking deliveries of gas and ceased operations effective immediately. At September 30, 2025 and as of the date of this filing, the facility remains out of service. The cessation of operations has resulted in increased processing costs and decreased production and revenue. Management continues to actively work to identify and execute

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

on plans for alternative gas processing. For additional information on this joint venture, see Note 12, "*Additional Financial Statement Information".*

The Company has entered into various long-term gathering, transportation and sales contracts with respect to its oil and natural gas production from the Delaware Basin in West Texas. At September 30, 2025, the Company had in place multiple long-term crude oil and natural gas contracts in this area and the sales prices under these contracts are based on posted market rates. Under the terms of these contracts, the Company has committed a substantial portion of its production from this area for periods ranging from one to twenty years from the date of first production.

**Contingencies**

The Company may be a plaintiff or defendant in a pending or threatened legal proceeding arising in the normal course of its business. While the outcome and impact of currently pending legal proceedings cannot be determined, the Company's management and legal counsel believe that the resolution of these proceedings through settlement or adverse judgment will not have a material effect on the Company's unaudited condensed consolidated operating results, financial position or cash flows.

Surface owners of properties in Louisiana, where the Company formerly operated, often file lawsuits or assert claims against oil and natural gas companies claiming that operators and working interest owners are liable for environmental damages arising from operations conducted on the leased properties. These damages are frequently measured by the cost to restore the leased properties to their original condition. Currently and in the past, the Company has been party to such matters in Louisiana. With regard to pending matters, the overall exposure is not currently determinable. The Company intends to vigorously oppose these claims.

**10. REDEEMABLE CONVERTIBLE PREFERRED STOCK**

The table below summarizes the Company's Redeemable Convertible Preferred Stock issuances at September 30, 2025:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Preferred Stock** <sup>(1)</sup> | **Issuance Date** | **Shares** | **Conversion Price** | **Net Equity Recorded** <sup>(2)</sup>**(in thousands)** | **Cumulative** <br>**Non-cash Deemed Dividends (**<sup>2)</sup><br>**(in thousands)** | **Total Net Equity & Cumulative Deemed Dividends(in thousands)** | **Initial Deemed Dividend Date** |
| Series A | March 28, 2023 | 25000  | $9.03 | $23541 | $20950 | $44491 | March 31, 2023 |
| Series A-1 | September 6, 2023 | 38000  | $7.63 | 36941 | 26149 | 63090 | September 30, 2023 |
| Series A-2 | December 15, 2023 | 35000  | $6.21 | 34006 | 16091 | 50097 | December 31, 2023 |
| Series A-3 | March 27, 2024 | 20000  | $6.83 | 19397 | 7987 | 27384 | March 31, 2024 |
| Series A-4 | May 13, 2024 | 20000  | $6.42 | 19385 | 7457 | 26842 | June 30, 2024 |
|  |  | 138000  |  | $133270 | $78634 | $211904 |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *At the option of the Company, Series A through A-4 receive either annual dividends paid in cash at a fixed rate of 14.5% or accrued annually at a fixed PIK rate of 16.0% .* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *The preferred stock is originally recorded net of original issue discount and accrued offering costs as mezzanine equity (temporary equity) and subsequently a non-cash deemed dividend is recorded to increase the carrying value of the preferred stock to its redemption amount.*  

For accounting purposes, upon issuance of the preferred stock (collectively, the "Redeemable Convertible Preferred Stock"), the Company recorded the net proceeds as mezzanine equity (temporary equity) on the unaudited condensed consolidated balance sheets because it is not mandatorily redeemable but does contain a redemption feature at the option of the preferred holders that is considered not solely within the Company's control.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

For the three and nine months ended September 30, 2025, the Company paid-in-kind dividends on the preferred stock of $14.3 million and $34.4 million, respectively. For the three and nine months ended September 30, 2024, the Company paid-in-kind dividends on the preferred stock of $9.3 million and $22.3 million, respectively. At September 30, 2025, the carrying value of the preferred stock, inclusive of PIK dividends, is approximately $211.9 million.

*Voting Rights.* Holders of shares of the Redeemable Convertible Preferred Stock have no voting rights with respect to the shares of Redeemable Convertible Preferred stock.

*Dividends.* Holders of Redeemable Convertible Preferred Stock are entitled to receive cumulative dividends at a fixed rate of 14.5% per annum on the Liquidation Preference ($1,000 per share, or $138.0 million, increased for any PIK accruals), compounding and accruing quarterly in arrears. Dividends may be paid in cash or, if not declared and paid in cash, the amount of any such dividend shall automatically accrue at a fixed rate of 16.0% per annum on the Liquidation Preference and be added to the Liquidation Preference (a "PIK Accrual"). Currently, the Company's 2024 Amended Term Loan Agreement prohibits the payment of cash dividends. Additionally, while the Company has not declared or paid dividends on its common stock since its inception, holders of preferred stock will be entitled to participate in any dividends or permitted distributions to holders of common stock on an as-converted basis should they occur.

*Conversion Features.* In addition to the conversion rights noted in "*Redemption Features (Change of Control)*" below, Holders of Redeemable Convertible Preferred Stock may convert their shares into common stock at a conversion ratio (the "Conversion Ratio") equal to the then applicable Liquidation Preference at the time of conversion divided by the then applicable Conversion Price (initially equal to an 18% premium to the volume weighted average price of common stock for the 20 trading days immediately preceding the closing date). Additionally, the Company has the right, at its option, to convert outstanding shares of Redeemable Convertible Preferred Stock into common stock at the Conversion Ratio should the Company meet certain calculated valuation metrics which when divided by the number of outstanding shares of common stock equals or exceeds 130% of the Conversion Price.

*Redemption Features (Issuer).* The Company has the option to redeem the Redeemable Convertible Preferred Stock in cash for an amount per share of Preferred Stock equal to (the "Redemption Price"):

● at any time after the first anniversary of the closing date but on or prior to the second anniversary of the closing date, 108% of the Liquidation Preference at such time; and

● at any time after the second anniversary of the closing date, 120% of the Liquidation Preference at such time.

*Redemption Features (Change of Control)*. In the event of a change of control, holders have the right to receive:

● at any time after the one hundred fiftieth (150 th) day following the issuance date, the Company shall offer each Holder a cash payment equal to the Redemption Price. Holders shall also have the ability to elect conversion into common stock at the Conversion Ratio. Until (i) a termination of or certain amendments to the Amended Term Loan Agreement or (ii) one year past the maturity date of the Amended Term Loan Agreement, an election of the cash payment option by holders in a change of control scenario is not permitted.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**11. EARNINGS PER SHARE**

The following represents the calculation of earnings (loss) per share (in thousands, except per share amounts):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30,** | **September 30,** | **September 30,** | **September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Basic:** |  |  |  |  |
| Net (loss) income | $(735) | $21628 | $10084 | $(9680) |
| Less: Preferred stock dividend | (14279) | (9321) | (34369) | (23539) |
| Less: Undistributed earnings allocable to preferred stockholders |  | (6732) |  |  |
| &nbsp;&nbsp;Net (loss) income available to common stockholders | $(15014) | $5575 | $(24285) | $(33219) |
| &nbsp;&nbsp;Weighted average basic number of common shares outstanding basic | 16457 | 16457 | 16457 | 16457 |
| Basic net (loss) income per share of common stock | $(0.91) | $0.34 | $(1.48) | $(2.02) |
| **Diluted:** |  |  |  |  |
| Net (loss) income available to common stockholders basic | $(15014) | $5575 | $(24285) | $(33219) |
| Reallocation of undistributed earnings |  | 12 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net (loss) income available to common stockholders diluted | $(15014) | $5587 | $(24285) | $(33219) |
| Weighted average basic number of common shares outstanding basic | 16457 | 16457 | 16457 | 16457 |
| Common stock equivalent shares representing shares issuable upon: |  |  |  |  |
| &nbsp;&nbsp;Exercise of stock options | Anti-dilutive | Anti-dilutive | Anti-dilutive | Anti-dilutive |
| &nbsp;&nbsp;Vesting of restricted stock units | Anti-dilutive | 66 | Anti-dilutive | Anti-dilutive |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average diluted number of common shares outstanding diluted | 16457 | 16523 | 16457 | 16457 |
| Diluted net (loss) income per share of common stock | $(0.91) | $0.34 | $(1.48) | $(2.02) |

---

The Company computes earnings per share in accordance with ASC Topic 260, *Earnings per Share* ("ASC 260"), which requires earnings per share for each class of stock (common stock and participating preferred stock) to be calculated using the two-class method which allocates earnings for the reporting period between common shareholders and other security holders based on their respective participation rights in undistributed earnings. Diluted earnings per share was calculated using the two-class method, as this computation was more dilutive than the calculation using the if-converted method. For additional information on the Company's preferred stock, which is considered a participating security, see Note 10, *"Redeemable Convertible Preferred Stock"*.

For the three and nine months ended September 30, 2025, common stock equivalents, including options and restricted stock units ("RSUs"), totaling 0.1 million were anti-dilutive and not included in the computation of diluted earnings per share of common stock. For the three and nine months ended September 30, 2024, common stock equivalents, including options and RSUs, totaling 0.1 million and 0.3 million, respectively, were anti-dilutive and not included in the computation of diluted earnings per share of common stock.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

**12. ADDITIONAL FINANCIAL STATEMENT INFORMATION**

Certain balance sheet amounts are comprised of the following (in thousands):

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **December 31, 2024** |
| **Accounts receivable, net:** |  |  |
| Oil, natural gas and natural gas liquids revenues  | $14439 | $23516 |
| Joint interest accounts  | 3155 | 2140 |
| Other  | 354 | 642 |
|  | $17948 | $26298 |
| **Prepaids and other:** |  |  |
| Prepaids | $482 | $572 |
| Funds in escrow | 170 | 349 |
| Other  | 46 | 61 |
|  | $698 | $982 |
| **Other assets (Non-current):** |  |  |
| Investment in unconsolidated affiliate | $1235 | $940 |
| Funds in escrow | 594 | 578 |
| Other  | 2260 | 760 |
|  | $4089 | $2278 |
| **Accounts payable and accrued liabilities:** |  |  |
| Trade payables  | $23985 | $15663 |
| Accrued oil and natural gas capital costs | 6256 | 7800 |
| Revenues and royalties payable  | 21514 | 19816 |
| Accrued interest expense  | 71 | 330 |
| Accrued employee compensation  | 884 | 1472 |
| Accrued lease operating expenses | 6464 | 7597 |
| Other  | 3863 | 4 |
|  | $63037 | $52682 |

---

*Investment in Unconsolidated Affiliate.* In May 2022, the Company entered into a joint venture with Caracara to develop an acid gas treatment facility to remove hydrogen sulfide and carbon dioxide from its produced natural gas. Caracara provided the initial capital for the construction of the treatment facility. The Company contributed certain full cost pool assets to the related party joint venture in a non-cash exchange for a retained 5% equity interest in WAT (previously Brazos Amine Treater, LLC ("BAT")), an unconsolidated subsidiary. For accounting purposes, since the Company does not control the key activities (e.g. operating and maintaining the facility) which most significantly impact economic performance, the Company is not the primary beneficiary of WAT. Accordingly, the Company accounts for its investment in WAT (a related party) using the equity method of accounting based on its ability to exercise significant influence, but not control, over the key activities of the joint venture. For more information related to this joint venture, see Note 9, "*Commitments and Contingencies*".

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

Certain income statement amounts are comprised of the following (in thousands) for the periods presents:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months EndedSeptember 30,** | **Three Months EndedSeptember 30,** | **Nine Months EndedSeptember 30,** | **Nine Months EndedSeptember 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| **Interest expense and other** |  |  |  |  |
| Interest expense | $7318 | $6873 | $21848 | $22874 |
| Interest income | (503) | (509) | (1846) | (1844) |
| Mark-to-market of derivatives - change of control call option |  | 42 |  | (1323) |
| Other | (74) | (84) | 8 | 102 |
|  | $6741 | $6322 | $20010 | $19809 |

---

**13. SUBSEQUENT EVENTS**

On November 12, 2025, the Company entered into the Second Amendment to the Second Amended and Restated Senior Secured Credit Agreement (the "Second Amendment"), effective November 12, 2025, which amended the Applicable Margin (as defined in the 2024 Amended Term Loan Agreement) to be the rate per annum set forth below under the caption "SOFR Loans Spread" or "ABR Loans Spread", as the case may be, based on the Total Net Leverage Ratio; provided, that (a) until the Adjustment Date (the date of delivery of financial statements pursuant to the 2024 Amended Term Loan Agreement) following the Second Amendment effective date, the Applicable Margin shall be the applicable rate per annum set forth below in Category 1 and (b) the Applicable Margin shall be the applicable rate per annum set forth in Category 4 below at any time that an Event of Default (as defined in the 2024 Amended Term Loan Agreement) exists:

---

| | | |
|:---|:---|:---|
| **Total Net Leverage Ratio** | **SOFR Loans Spread** | **ABR Loans Spread** |
| Category 1<br>≤ 2.50 to 1.00 | 7.75% | 6.75% |
| Category 2<br>> 2.50 to 1.00 ≤ 3.00 to 1.00 | 8.00% | 7.00% |
| Category 3<br>> 3.00 to 1.00 ≤ 3.25 to 1.00 | 8.25% | 7.25% |
| Category 4<br> > 3.25 to 1.00  | 8.50% | 7.50% |

---

The Applicable Margin shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Net Leverage Ratio in accordance with the table above.

[**Table of Contents**](#TOC)

**BATTALION OIL CORPORATION**

**NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)**

The Second Amendment provides that the Borrower shall not permit the Total Net Leverage Ratio, as of the last day of each fiscal quarter (commencing with the fiscal quarter ending March 31, 2025), to be greater than the levels set forth in the following table for the applicable fiscal quarter:

---

| | |
|:---|:---|
| **Fiscal Quarter** | **Total Net Leverage Ratio** |
| Fiscal quarters ending March 31, 2025 through and including June 30, 2025 | 2.75 to 1.00 |
| Fiscal quarter ending September 30, 2025 | 2.50 to 1.00 |
| Fiscal quarter ending December 31, 2025 | 3.20 to 1.00 |
| Fiscal quarter ending March 31, 2026 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending September 30, 2026 | 3.50 to 1.00 |
| Fiscal quarter ending December 31, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending March 31, 2027 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2027 | 3.00 to 1.00 |
| Fiscal quarter ending September 30, 2027 and each fiscal quarter thereafter | 2.50 to 1.00 |

---

Additionally, the Second Amendment provides that the Borrower shall not permit the Asset Coverage Ratio, as of the last day of any fiscal quarter (commencing with the fiscal quarter ending March 31, 2025) to be less than the applicable level set forth in the following table for the applicable fiscal quarter:

---

| | |
|:---|:---|
| **Fiscal Quarter** | **Asset Coverage Ratio** |
| Fiscal quarters ending March 31, 2025 through and including December 31, 2026 | 1.85 to 1.00 |
| Each fiscal quarter thereafter | 2.00 to 1.00 |

---

The Company is currently evaluating the accounting implications of the Second Amendment and any resulting impacts will be reflected in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

[**Table of Contents**](#TOC)

**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

The following discussion is intended to assist in understanding our results of operations for the three and nine months ended September 30, 2025 and 2024 and should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and with the consolidated financial statements, notes and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The results presented in this Form 10-Q are not necessarily indicative of future operating results.

Statements in this discussion may be forward-looking. These forward-looking statements involve risks and uncertainties, including those discussed below, which could cause actual results to differ from those expressed. For more information, see "*Special note regarding forward-looking statements*."

#### Overview
We are an independent energy company focused on the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets in the United States. Our properties and drilling activities are currently focused in the Delaware Basin, where we have an extensive drilling inventory that we believe offers attractive long-term economics.

Our financial results depend upon many factors, but are largely driven by the volume of our oil and natural gas production and the price that we receive for that production. Our production volumes will decline as reserves are depleted unless we expend capital in successful development and exploration activities or acquire properties with existing production. The amount we realize for our production depends predominantly upon commodity prices, which are affected by changes in market demand and supply, as impacted by overall economic activity, attempts by foreign oil and natural gas producers to control the global supply, weather, transportation take-away capacity constraints, inventory storage levels, basis differentials and other factors. Accordingly, finding, developing and producing oil and natural gas reserves at economical costs are critical to our long-term success.

When commodity prices decline significantly our ability to finance our capital budget and operations may be adversely impacted. While we use derivative instruments to provide partial protection against declines in oil and natural gas prices, the total volumes we hedge are less than our expected production, vary from period to period based on our view of current and future market conditions, remain consistent with the requirements in effect under our Amended Term Loan Agreement and extend, on a rolling basis, for a limited period of time (generally, four years). These limitations result in our liquidity being susceptible to commodity price declines. Additionally, while intended to reduce the effects of volatile commodity prices, derivative transactions may limit our potential gains and increase our potential losses if commodity prices were to rise substantially over the price established by the hedge. Our hedge policies and objectives may change significantly as our operational profile changes and/or commodities prices change. We do not enter into derivative contracts for speculative trading purposes.

#### Recent Developments
*Term Loan Credit Facility.* On December 26, 2024 (the "Initial Closing Date"), we and our wholly-owned subsidiary Halcón Holdings, LLC entered into the Second Amended and Restated Senior Secured Credit Agreement (the "2024 Term Loan Agreement") with Fortress Credit Corp., as administrative agent, and certain other financial institutions party thereto, as lenders. Pursuant to the 2024 Term Loan Agreement, the lenders agreed to provide us with (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million (the "Incremental Term Loans"), of which such incremental borrowings in the amount of $63.0 million were incurred on January 9, 2025 pursuant to a first amendment to our 2024 Term Loan Agreement (as amended, the "2024 Amended Term Loan Agreement"). The 2024 Amended Term Loan Agreement matures on December 26, 2028.

All obligations under the 2021 Amended Term Loan Agreement were refunded, refinanced and repaid in full by the loans under the 2024 Term Loan Agreement as the net proceeds of the 2024 Term Loan Agreement were used to repay

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all outstanding indebtedness under the 2021 Amended Term Loan Agreement in an aggregate amount of approximately $152.1 million, including accrued and unpaid interest, and to pay related fees and expenses related to the new credit agreement.

Borrowings under the 2024 Amended Term Loan Agreement initially bore interest at a rate per annum equal to a forward-looking term rate based on the SOFR for a tenor of three months (with a credit spread adjustment of 0.15% per annum) (or another applicable reference rate, as determined pursuant to the terms of the 2024 Amended Term Loan Agreement) plus an applicable margin of 7.75%.

On November 12, 2025, we entered into the Second Amendment to the Second Amended and Restated Senior Secured Credit Agreement (the "Second Amendment"), effective November 12, 2025, which amended the Applicable Margin (as defined in the 2024 Amended Term Loan Agreement) to be the rate per annum set forth below under the caption SOFR Loans Spread or ABR Loans Spread, as the case may be, based on the Total Net Leverage Ratio; provided, that until the Adjustment Date (the date of delivery of financial statements pursuant to the 2024 Amended Term Loan Agreement) following the Second Amendment effective date, the Applicable Margin shall be the rate per annum set forth below in Category 1:

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| | | |
|:---|:---|:---|
| **Total Net Leverage Ratio** | **SOFR Loans Spread** | **ABR Loans Spread** |
| Category 1<br>≤ 2.50 to 1.00 | 7.75% | 6.75% |
| Category 2<br>> 2.50 to 1.00 ≤ 3.00 to 1.00 | 8.00% | 7.00% |
| Category 3<br>> 3.00 to 1.00 ≤ 3.25 to 1.00 | 8.25% | 7.25% |
| Category 4<br> > 3.25 to 1.00  | 8.50% | 7.50% |

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The Applicable Margin shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Net Leverage Ratio in accordance with the table above.

The Second Amendment provides that the Borrower shall not permit the Total Net Leverage Ratio, as of the last day of each fiscal quarter (commencing with the fiscal quarter ending March 31, 2025), to be greater than the levels set forth in the following table for the applicable fiscal quarter:

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| | |
|:---|:---|
| **Fiscal Quarter** | **Total Net Leverage Ratio** |
| Fiscal quarters ending March 31, 2025 through and including June 30, 2025 | 2.75 to 1.00 |
| Fiscal quarter ending September 30, 2025 | 2.50 to 1.00 |
| Fiscal quarter ending December 31, 2025 | 3.20 to 1.00 |
| Fiscal quarter ending March 31, 2026 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending September 30, 2026 | 3.50 to 1.00 |
| Fiscal quarter ending December 31, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending March 31, 2027 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2027 | 3.00 to 1.00 |
| Fiscal quarter ending September 30, 2027 and each fiscal quarter thereafter | 2.50 to 1.00 |

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Additionally, the Second Amendment provides that the Borrower shall not permit the Asset Coverage Ratio, as of the last day of any fiscal quarter (commencing with the fiscal quarter ending March 31, 2025) to be less than the applicable level set forth in the following table for the applicable fiscal quarter:

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| | |
|:---|:---|
| **Fiscal Quarter** | **Asset Coverage Ratio** |
| Fiscal quarters ending March 31, 2025 through and including December 31, 2026 | 1.85 to 1.00 |
| Each fiscal quarter thereafter | 2.00 to 1.00 |

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The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement and as amended in the Second Amendment), including maintenance of the following ratios.

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● Asset Coverage Ratio not to fall below 1.85x as of September 30, 2025 through and including December 31, 2026 and 2.00x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;

● Total Net Leverage Ratio not to exceed 2.50x as of September 30, 2025 and not to exceed the levels set forth in the table above for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;

● Current Ratio not to fall below 1.00x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025; and

● Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three-month period, determined as of the last day of any fiscal quarter.

Under the 2024 Amended Term Loan Agreement, we are required to hedge approximately 85% to 50% of our anticipated oil and natural gas production, in varying percentages by year, on a rolling basis for the next four years. The 2024 Amended Term Loan Agreement also contains certain events of default, including non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy.

We are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding on the Initial Closing Date plus the Incremental Term Loans, commencing with the fiscal quarter ending June 30, 2025. Under the 2024 Amended Term Loan Agreement, we must make scheduled amortization payments in the aggregate amount of $5.6 million for the remainder of 2025 and $22.5 million in 2026. During the quarter and nine months ended September 30, 2025, we made scheduled amortization payments in the amount of $5.6 million and $11.3 million, respectively.

We recognized a loss on extinguishment of debt for the year ended December 31, 2024 in the amount of $7.5 million resulting from the credit agreement refinancing on December 26, 2024 which included a $3.6 million non-cash write-off of deferred financing costs, original issue discounts and embedded derivatives associated with the extinguished debt and $3.9 million in fees and debt issuance costs paid for the new debt. Additionally, the Company deferred $4.3 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet at December 31, 2024 in conjunction with entry into the 2024 Term Loan Agreement and deferred an additional $1.8 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet in conjunction with the issuance of the Incremental Term Loans in January 2025.

*H2S Treating Joint Venture.* The acid gas injection facility ("AGI Facility") to which we are a party to a joint venture has been processing gas since March 9, 2024. On August 11, 2025, we received notice from WAT that it decided to cease taking deliveries of gas and to cease operations effective immediately. In response, we temporarily shut-in a portion of our Monument Draw field production. As of September 30, 2025 and as of the date of this filing, the WAT facility remains out of service. The cessation of operations has increased processing costs as we pay higher processing rates with other service providers and resulted in decreased production and revenue for the quarter ended September 30, 2025. Management continues to actively work to identify and execute on a plan for alternative gas processing.

Under a gas treating agreement ("GTA") with the AGI Facility, we paid a treating rate that varied based on volumes delivered to the AGI Facility and had a minimum volume commitment of 20 MMcf per day. The GTA has a tiered-rate structure based on actual volumes delivered.

#### Capital Resources and Liquidity
*Overview.* Our ability to execute our operating strategy is dependent on our ability to maintain adequate liquidity and access additional capital, as needed. Our future capital resources and liquidity depend, in part, on our success in developing our leasehold interests, growing our reserves and production and finding additional reserves. Sufficient levels of available cash are required to fund capital expenditures necessary to offset inherent declines in our production and proven reserves. We generated net income of $10.1 million for the nine months ended September 30, 2025 and had negative working capital of $3.9 million at September 30, 2025. At September 30, 2025, we had $50.5 million of cash and cash equivalents, no additional borrowing capacity under the 2024 Amended Term Loan Agreement (as defined in

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Note 5, "*Debt*" to the unaudited condensed consolidated financial statements) and a total of $22.5 million in debt repayments due through September 2026 under our 2024 Amended Term Loan Agreement. At September 30, 2025, $30.0 million remained available for issuance on or before August 31, 2026 under a support letter from our investors.

We continue to execute on a plan to reduce operating and capital costs to improve cash flows. Changes to our current business estimates and forecasts, based primarily on recent commodity prices and modifications to our planned drilling schedule to achieve better overall well economics, indicate that we are at risk of potential non-compliance with our debt covenant requirements for the next 12 months from the issuance of these unaudited condensed consolidated financial statements. In response to these events and conditions, we have continued to execute on a plan to reduce operating and capital costs to improve cash flows. The Company also continues to have a support letter from its three largest current related party investors to purchase additional preferred equity securities in an amount up to $30.0 million on or before August 31, 2026. We believe that, based upon our operational forecasts, cash and cash equivalents on hand, cost reduction measures, and the support letter for the sale of $30.0 million in additional preferred equity, it is probable that we will have sufficient liquidity to maintain compliance with our future debt covenants as described in Note 5, "*Debt,*" for the next 12 months from the issuance of these unaudited condensed consolidated financial statements. We will, however, continue to consider alternative liquidity sources which could include a sale of a portion of our non-core assets, seeking capital partners for our drilling program, pursuing strategic merger opportunities or joint ventures, the sale of the Company, or pursuing additional general and administrative or other cost reduction opportunities. Our estimates and forecasts are based upon assumptions that may prove to be incorrect due to many factors that are currently unknown, such as prevailing economic conditions, many of which are beyond our control.

In the event the assumptions underlying our estimates and forecasts prove to be incorrect, our operating plans, capital requirements, and covenant compliance may be adversely impacted. In the event our cash flows are materially less than anticipated or our costs are materially greater than anticipated and other sources of capital we historically have utilized are not available on acceptable terms, we may be required to curtail drilling, development, land acquisitions and other activities to reduce our capital spending. However, significant or prolonged reductions in capital spending will adversely impact our production and may negatively affect our future cash flows.

We continuously monitor changes in market conditions and will continue to adapt our operational plans as necessary to strive to maintain sufficient liquidity, facilitate drilling on our undeveloped acreage position and permit us to selectively expand our acreage, as well as meet our debt obligations and restrictive covenants. We continue to explore strategic transactions to address these concerns, while also looking at opportunities to significantly reduce expenses in the near term. In this regard, we have considered whether it is advisable to continue to bear the ongoing costs of the listing of our common stock on the NYSE American and of being a reporting company under the Securities Exchange Act of 1934. We believe that we currently qualify to suspend these obligations should we elect to do so. While such a determination has not yet been made, we expect that the cost savings, particularly over the longer term, would be significant. Accordingly, we will continue to consider the matter while we simultaneously pursue strategic and financial alternatives that may render it unnecessary.

On May 30, 2025, we received written notice (the "Notice") on behalf of the NYSE American indicating that we are no longer in compliance with NYSE American's continued listing standards. Specifically, the letter stated that we are not in compliance with the continued listing standards set forth in Sections 1003(a)(i) and 1003(a)(ii) of the NYSE American Company Guide (the "Company Guide"). Section 1003(a)(i) requires a listed company to have stockholders' equity of $2 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years. Section 1003(a)(ii) requires a listed company to have stockholders' equity of $4 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. Our noncompliance resulted from our reporting stockholders' equity of $(1.8) million as of March 31, 2025, and losses from continuing operations and/or net losses in three of our four most recent fiscal years ended December 31, 2024. We continue to report negative stockholders' equity at September 30, 2025 of $(20.3) million and additional losses from continuing operations. The Notice further provided that we must submit a plan of compliance (the "Plan") by June 30, 2025 addressing how we intend to regain compliance with the continued listing standards by November 30, 2026. Such Plan was submitted by the required deadline and our Plan was accepted by the NYSE. The Notice has no immediate impact on the listing of our shares of common stock, which will continue to be listed and traded under the symbol "BATL" on the NYSE American during this period, subject to our compliance with the other

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listing requirements of the NYSE American. The notice does not affect our ongoing business operations or our reporting requirements with the Securities and Exchange Commission.

*Other Risks and Uncertainties.* Our ability to complete transactions and maintain or increase our liquidity is subject to a number of variables, including our level of oil and natural gas production, proved reserves and commodity prices, the amount and cost of our indebtedness, as well as various economic and market conditions that have historically affected the oil and natural gas industry. Even if we are otherwise successful in growing our proved reserves and production, if oil and natural gas prices decline for a sustained period of time, our ability to fund our capital expenditures, complete acquisitions, reduce debt, meet our financial obligations and become profitable may be materially impacted.

Additionally, in periods of increasing commodity prices, we continue to be at risk to supply chain issues, including, but not limited to, labor shortages, pipe restrictions and potential delays in obtaining frac and/or drilling related equipment that could impact our business. During these periods, the costs and delivery times of rigs, equipment and supplies may also be substantially greater. The unavailability or high cost of drilling rigs and/or frac crews, pressure pumping equipment, tubulars and other supplies, and of qualified personnel can materially and adversely affect our operations and profitability.

Lastly, actual or anticipated declines in domestic or foreign economic activity or growth rates, regional or worldwide increases in tariffs or other trade restrictions, turmoil affecting the United States or global financial system and markets and a severe economic contraction either regionally or worldwide, resulting from international conflicts, efforts to contain pandemics or other factors, could materially affect our business and financial condition and impact our ability to finance operations by worsening the actual or anticipated future drop in worldwide oil demand, negatively impacting the price received for oil and natural gas production or adversely impacting our ability to comply with covenants in our Amended Term Loan Agreement. Negative economic conditions could also adversely affect the collectability of our trade receivables or performance by our vendors and suppliers or cause our commodity hedging arrangements to be ineffective if our counterparties are unable to perform their obligations. All of the foregoing may adversely affect our business, financial condition, results of operations, cash flows and, potentially, compliance with the covenants contained in our Amended Term Loan Agreement.

*Debt Obligations.* Under our 2024 Amended Term Loan, we are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding commencing with the fiscal quarter ending June 30, 2025. We must make a total of $22.5 million in debt repayments through September 2026 under our 2024 Amended Term Loan Agreement.

Changes in the level and timing of our production, drilling and completion costs, the cost and availability of transportation for our production and other factors varying from our expectations can affect our ability to comply with the covenants under our 2024 Amended Term Loan Agreement. As a consequence, we endeavor to anticipate potential covenant compliance issues and work with our lenders to address any such issues ahead of time.

While we have largely been successful in obtaining modifications of our covenants as needed, there can be no assurance that we will be successful in the future. In the event we are not successful in obtaining covenant modifications, if needed, there is no assurance that we will be successful in implementing alternatives that allow us to maintain compliance with our covenants or that we will be successful in obtaining alternative financing that provides us with the liquidity that we need to operate our business. Even if successful, alternative sources of financing could prove more expensive than borrowings under our 2024 Amended Term Loan Agreement.

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#### Cash Flows

#### Net increase in cash and cash equivalents is summarized as follows (in thousands):

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| | | |
|:---|:---|:---|
|  | **Nine Months Ended** | **Nine Months Ended** |
|  | **September 30,** | **September 30,** |
|  | **2025** | **2024** |
| Cash flows provided by operating activities  | $50909 | $28669 |
| Cash flows used in investing activities  | (69962) | (52586) |
| Cash flows provided by (used in) financing activities  | 49796 | (3777) |
| Net increase (decrease) in cash, cash equivalents and restricted cash | $30743 | $(27694) |

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*Operating Activities*. Net cash flows provided by operating activities for the nine months ended September 30, 2025 and 2024, were $50.9 million and $28.7 million, respectively. Items impacting the increase in operating cash flows were primarily driven by changes in working capital for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

*Investing Activities.* Net cash flows used in investing activities for the nine months ended September 30, 2025 and 2024 were approximately $70.0 million and $52.6 million, respectively, primarily for drilling and completion activities.

During the nine months ended September 30, 2025, we spent $69.6 million on oil and natural gas capital expenditures, of which $59.9 million related to drilling and completion costs and $8.5 million related to the development of our treating equipment and gathering support infrastructure. In the first nine months of 2025, we ran one operated rig in the Delaware Basin, drilled, cased, completed and put online six gross (5.5 net) operated wells.

During the nine months ended September 30, 2024, we spent $51.8 million on oil and natural gas capital expenditures, of which $46.8 million related to drilling and completion costs and $4.1 million related to the development of our treating equipment and gathering support infrastructure. During the first half of 2024, our cash capital expenditures included amounts related to the drilling and completion activities that occurred in the fourth quarter of 2023. In the first nine months of 2024, we ran one 1 operated rig in the Delaware Basin, drilled and cased four 4 gross (3.73 net), and completed and put online two 2 gross (1.925 net) operated wells. We also received $7.0 million in proceeds from the sale of oil and natural gas assets that were deemed to be unnecessary for future operations.

*Financing Activities.* Net cash flows provided by financing activities for the nine months ended September 30, 2025 were $49.8 million compared to net cash flows used in financing activities for the nine months ended September 30, 2024 of $3.8 million. During the nine months ended September 30, 2025, we received net proceeds of $61.1 million from the incurrence of the Incremental Term Loans and repaid $11.3 million under our 2024 Amended Term Loan Agreement. During the nine months ended September 30, 2024, we repaid $52.3 million under our Amended Term Loan Agreement and received $38.8 million from our preferred stock equity issuances. Our net cash flows provided by financing activities during the nine months ended September 30, 2024 also reflect the receipt of the $10.0 million distributed from the Merger escrow account to the Company.

#### Critical Accounting Policies and Estimates
**Our discussion and analysis of our financial condition and results of operations are based upon the unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. There have been no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.**

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**Results of Operations**

#### The table below sets forth financial information for the periods presented.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
| | **September 30,** | **September 30,** | **September 30,** | **September 30,** |
| <br>**In thousands (except per unit and per Boe amounts)** | **2025** | **2024** | **2025** | **2024** |
| Operating revenues: |  |  |  |  |
| &nbsp;&nbsp;Oil  | $38325 | $42545 | $114316 | $130673 |
| &nbsp;&nbsp;Natural gas | 853 | (2588) | 4611 | (2660) |
| &nbsp;&nbsp;Natural gas liquids | 4208 | 5145 | 14420 | 15704 |
| &nbsp;&nbsp;Other | 96 | 164 | 422 | 523 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;Production: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Lease operating | 12389 | 11602 | 33417 | 34193 |
| &nbsp;&nbsp;&nbsp;&nbsp;Workover and other | 839 | 1249 | 4581 | 3088 |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxes other than income | 2622 | 2532 | 7944 | 8872 |
| &nbsp;&nbsp;Gathering and other | 10199 | 12442 | 33157 | 41854 |
| &nbsp;&nbsp;General and administrative: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 3085 | 3849 | 10017 | 11125 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation |  | 5 | 48 | 140 |
| &nbsp;&nbsp;Depletion, depreciation and accretion: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depletion – Full cost | 13165 | 12121 | 39393 | 37559 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation – Other | 69 | 163 | 310 | 486 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accretion expense | 288 | 249 | 838 | 726 |
| &nbsp;&nbsp;Other income (expenses): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain on derivative contracts | 5180 | 26896 | 26030 | 3932 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense and other | (6741) | (6322) | (20010) | (19809) |
| Net (loss) income | $(735) | $21628 | $10084 | $(9680) |
| **Production:** |  |  |  |  |
| Oil – MBbls | 599 | 577 | 1752 | 1720 |
| Natural Gas - MMcf | 1778 | 1844 | 5713 | 5953 |
| Natural gas liquids – MBbls | 236 | 227 | 680 | 751 |
| Total MBoe<sup>(1)</sup> | 1131 | 1111 | 3384 | 3463 |
| Average daily production – Boe<sup>(1)</sup> | 12293 | 12076 | 12396 | 12639 |
| **Average price per unit** <sup>(2)</sup>**:** |  |  |  |  |
| Oil price - Bbl | $63.98 | $73.73 | $65.25 | $75.97 |
| Natural gas price - Mcf | 0.48 | (1.40) | 0.81 | (0.45) |
| Natural gas liquids price - Bbl | 17.83 | 22.67 | 21.21 | 20.91 |
| Total per Boe<sup>(1)</sup> | 38.36 | 40.60 | 39.41 | 41.50 |
| **Average cost per Boe:** |  |  |  |  |
| Production: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease operating | $10.95 | $10.44 | $9.88 | $9.87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Workover and other | 0.74 | 1.12 | 1.35 | 0.89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes other than income | 2.32 | 2.28 | 2.35 | 2.56 |
| Gathering and other | 9.02 | 11.20 | 9.80 | 12.09 |
| General and administrative:  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 2.73 | 3.46 | 2.96 | 3.21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation |  |  | 0.01 | 0.04 |
| Depletion | 11.64 | 10.91 | 11.64 | 10.85 |

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&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Determined using a ratio of nine Mcf of natural gas to one barrel of oil, condensate, or natural gas liquids ("NGLs") based on approximate energy equivalency. This is an energy content correlation and does not reflect the value or price relationship between the commodities.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Amounts exclude the impact of cash paid/received on settled contracts as we did not elect to apply hedge accounting.* 

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*Operating Revenues.* Oil, natural gas and NGLs revenues were $43.4 million and $45.1 million for the three months ended September 30, 2025 and 2024, respectively. The decrease in revenues is primarily attributable to a decrease in average realized prices. Production averaged 12,293 Boe per day for the three months ended September 30, 2025 compared to 12,076 Boe per day for the three months ended September 30, 2024. Average realized prices (excluding the effects of hedging arrangements) decreased approximately $2.24 per Boe for three months ended September 30, 2025 when compared with the same period in 2024.

Oil, natural gas and NGLs revenues were $133.3 million and $143.7 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease in revenues is primarily attributable to a combination of a decrease in our average realized prices and lower production volumes in 2025 compared to 2024. Production averaged 12,396 Boe per day for the nine months ended September 30, 2025 compared to 12,639 Boe per day for the nine months ended September 30, 2024. Average realized prices (excluding the effects of hedging arrangements) decreased approximately $2.09 per Boe for the nine months ended September 30, 2025 when compared with the same period in 2024. The amount we realize for our production depends predominantly upon commodity prices, which are affected by changes in market demand and supply, as impacted by overall economic activity, weather, transportation take-away capacity constraints, inventory storage levels, quality of production, basis differentials and other factors.

*Lease Operating Expenses.* Lease operating expenses were $12.4 million and $11.6 million for the three months ended September 30, 2025 and 2024, respectively, and $33.4 million and $34.2 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, lease operating expenses were $10.95 per Boe and $10.44 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $9.88 per Boe and $9.87 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The increase in lease operating expenses for the three months ended September 30, 2025 compared to the same period of 2024 is primarily a result of increased water production from new wells yielding higher disposal costs. The decrease in lease operating expenses for the nine months ended September 30, 2025 compared to the same period in 2024 primarily results from contract negotiations with service providers in all fields resulting in lower water production costs, lower chemical costs and aggressive preventative maintenance programs yielding decreased reactive repairs and maintenance costs.

*Workover and Other Expenses.* Workover and other expenses were $0.8 million and $1.2 million for the three months ended September 30, 2025 and 2024, respectively, and $4.6 million and $3.1 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, workover and other expenses were $0.74 per Boe and $1.12 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $1.35 per Boe and $0.89 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The decrease in workover and other expenses for the three months ended September 30, 2025 compared to the same period in 2024 is the result of less workover activity during the third quarter of 2025. The increase in workover and other expenses for the nine months ended September 30, 2025 compared to the same periods of 2024 relates to increased workover activity during 2025 and includes costs related to a non-recurring well cleanout program that meaningfully increased production combined with a higher volume of ESP maintenance.

*Taxes Other than Income.* Taxes other than income were $2.6 million and $2.5 million for the three months ended September 30, 2025 and 2024, respectively, and $7.9 million and $8.9 million for the nine months ended September 30, 2025 and 2024, respectively. Severance taxes are based on realized prices and volumes at the wellhead, while ad valorem taxes are tied to the annual valuation of our properties. As revenues or volumes from oil and natural gas sales increase or decrease, severance taxes on these sales also increase or decrease. On a per unit basis, taxes other than income were $2.32 per Boe and $2.28 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $2.35 per Boe and $2.56 per Boe for the nine months ended September 30, 2025 and 2024, respectively.

*Gathering and Other Expenses.* Gathering and other expenses were $10.2 million and $12.4 million for the three months ended September 30, 2025 and 2024, respectively, and $33.2 million and $41.9 million for the nine months ended September 30, 2025 and 2024, respectively. Gathering and other expenses include gathering fees paid to third parties on our oil and natural gas production and operating expenses of our gathering support infrastructure. Our gathering and other expenses are primarily driven by the amount and location of natural gas production, the concentration of H2S in our sour gas produced, and the amounts paid to treat our sour gas volumes, either through our own hydrogen sulfide treating plant or through third parties. On a per unit basis, gathering and other expenses were

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$9.02 per Boe and $11.20 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $9.80 per Boe and $12.09 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The decrease in gathering and other expenses per Boe for the three and nine months ended September 30, 2025 compared to the same periods of 2024 is primarily related to progress made at the central production facilities yielding lower labor and repair costs as well as increased throughput and overall production volumes being treated by the AGI facility during 2025. Although the AGI facility ceased operations on August 11, 2025, we were able to secure favorable treating rates at alternative facilities. The AGI facility treated natural gas production from March 2024 to August 11, 2025.

*General and Administrative Expense.* General and administrative expense was $3.1 million and $3.8 million for the three months ended September 30, 2025 and 2024, respectively, and $10.0 million and $11.1 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, general and administrative expenses were $2.73 per Boe and $3.46 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $2.96 per Boe and $3.21 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The decrease in general and administrative expense for the three and nine months ended September 30, 2025 compared with the same prior year periods is primarily due to lower merger costs.

*Depletion, Depreciation, and Amortization Expense.* Depletion for oil and natural gas properties is calculated using the unit of production method, which depletes the capitalized costs of evaluated properties plus future development costs based on the ratio of production for the current period to total reserve volumes of evaluated properties as of the beginning of the period.

Depletion expense was $13.2 million and $12.1 million for the three months ended September 30, 2025 and 2024, respectively, and $39.4 million and $37.6 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, depletion expense was $11.64 per Boe and $10.91 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $11.64 per Boe and $10.85 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The increase in our depletion rate per Boe is primarily due to a period over period increase in net oil and natural gas properties combined with the associated period over period decrease in proved reserves.

*Net gain on derivative contracts.* We enter into derivative commodity instruments to hedge our exposure to price fluctuations on our anticipated oil, natural gas and NGLs production. Consistent with prior years, we have elected not to designate any positions as cash flow hedges for accounting purposes, and accordingly, we recorded the net change in the mark-to-market value of these derivative contracts in the unaudited condensed consolidated statements of operations.

For the three months ended September 30, 2025, we recorded a net derivative gain of $5.2 million ($1.1 million net unrealized gain on unsettled contracts and $4.1 million net realized gain on settled contracts). For the three months ended September 30, 2024, we recorded a net derivative gain of $26.9 million ($28.1 million net gain on unsettled contracts and $1.2 million net realized loss on settled contracts). For the nine months ended September 30, 2025, we recorded a net derivative gain of $26.0 million ($20.1 million net unrealized gain on unsettled contracts and $5.9 million net realized gain on settled contracts). For the nine months ended September 30, 2024, we recorded a net derivative gain of $3.9 million ($12.7 million net gain on unsettled contracts and $8.8 million net realized loss on settled contracts). At September 30, 2025, we had a $18.5 million derivative asset ($15.1 million current) and a $6.6 million derivative liability ($1.9 million current).

*Interest Expense and Other.* Interest expense and other totaled $6.7 million and $6.3 million for the three months ended September 30, 2025 and 2024, respectively and $20.0 million and $19.8 million for the nine months ended September 30, 2025 and 2024, respectively. Our weighted average interest rate was approximately 12.19% and 12.20% for the three and nine months ended September 30, 2025, respectively. Comparatively, our weighted average interest rate was approximately 12.98% for the quarter ended September 30, 2024 and 12.97% for the nine months ended September 30, 2024. For the fourth quarter of 2025, our interest rate will be approximately 11.90% on outstanding borrowings.

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#### ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

#### Derivative Instruments and Hedging Activity
We are exposed to various risks, including energy commodity price risk, such as price differentials between the NYMEX commodity price and the index price at the location where our production is sold. When oil and natural gas prices decline, our ability to finance our capital budget and operations may be adversely impacted. We expect energy prices to remain volatile and unpredictable, therefore we have designed a risk management policy which provides for the use of derivative instruments to provide partial protection against declines in oil and natural gas prices by reducing the risk of price volatility and the affect it could have on our operations. The types of derivative instruments that we typically utilize include fixed-price swaps, costless collars, basis swaps and WTI NYMEX rolls. The total volumes that we hedge through the use of our derivative instruments varies from period to period; however, our requirement under our Term Loan Agreement, as amended, is to hedge approximately 50% to 85% of our anticipated oil and natural gas production, in varying percentages by year, on a rolling basis for the next four years. Our hedge policies and objectives may change significantly as our operational profile and contractual obligations change but remain consistent with the requirements in effect under our Term Loan Agreement, as amended. We do not enter into derivative contracts for speculative trading purposes.

We are exposed to market risk on our open derivative contracts related to potential non-performance by our counterparties. It is our policy to enter into derivative contracts only with counterparties that are creditworthy institutions deemed by management as competitive market makers. At September 30, 2025, we did not post collateral under any of our derivative contracts as they are secured under our Term Loan Agreement, as amended. We account for our derivative activities on the balance sheet as either an asset or liability measured at fair value. See Item 1. *Condensed Consolidated Financial Statements (Unaudited)*—Note 7, *"Derivative and Hedging Activities,"* for more details.

#### Fair Market Value of Financial Instruments
The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information, involve uncertainties, and cannot be determined with precision. The estimated fair value of cash, cash equivalents and restricted cash, accounts receivable and accounts payable approximates their carrying value due to their short-term nature. See Item 1. *Condensed Consolidated Financial Statements (Unaudited)*—Note 6, "*Fair Value Measurements,"* for additional information.

#### Interest Rate Sensitivity
We are also exposed to market risk related to adverse changes in interest rates. Our interest rate risk exposure results primarily from fluctuations in short-term rates, which are SOFR (and previously, the London Interbank Offered Rate or "LIBOR") based and may result in reductions of earnings or cash flows due to increases in the interest rates we pay on these obligations.

**At September 30, 2025, the principal amount of our term loan debt was $213.8 million, which bears interest at floating and variable interest rates that are tied to SOFR. Fluctuations in market interest rates will cause our annual interest costs to fluctuate. At September 30, 2025, the weighted average interest rate on our variable rate debt was 12.20% per year. If the balance of our variable interest rate debt at September 30, 2025 were to remain constant, a 10% change in market interest rates would impact our cash flows by approximately $2.6 million per year.**

#### ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our Chief Executive Officer and our Principal Financial Officer, we evaluated the design and operation of our disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act) as of September 30, 2025. On the basis of this review, our management, including our Chief Executive Officer and Principal Financial Officer, concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded,

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processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission and to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, in a manner that allows timely decisions regarding required disclosure.

We did not have any change in our internal controls over financial reporting during the nine months ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**PART II. OTHER INFORMATION**

#### ITEM 1. LEGAL PROCEEDINGS
Information regarding legal proceedings to which we are a party is set forth in Item 1. *Condensed Consolidated Financial Statements (Unaudited)*—Note 9, "*Commitments and Contingencies*," which is incorporated herein by reference.

**ITEM 1A. RISK FACTORS**

There have been no changes to the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

#### ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

#### ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

#### ITEM 5. OTHER INFORMATION
On November 12, 2025, the Company entered into the Second Amendment to the Second Amended and Restated Senior Secured Credit Agreement (the "Second Amendment"), effective November 12, 2025, which amended the Applicable Margin (as defined in the 2024 Amended Term Loan Agreement) to be the rate per annum set forth below under the caption "SOFR Loans Spread" or "ABR Loans Spread", as the case may be, based on the Total Net Leverage Ratio; provided, that (a) until the Adjustment Date (the date of delivery of financial statements pursuant to the 2024 Amended Term Loan Agreement) following the Second Amendment effective date, the Applicable Margin shall be the applicable rate per annum set forth below in Category 1 and (b) the Applicable Margin shall be the applicable rate per annum set forth in Category 4 below at any time that an Event of Default (as defined in the 2024 Amended Term Loan Agreement) exists:

---

| | | |
|:---|:---|:---|
| **Total Net Leverage Ratio** | **SOFR Loans Spread** | **ABR Loans Spread** |
| Category 1<br>≤ 2.50 to 1.00 | 7.75% | 6.75% |
| Category 2<br>> 2.50 to 1.00 ≤ 3.00 to 1.00 | 8.00% | 7.00% |
| Category 3<br>> 3.00 to 1.00 ≤ 3.25 to 1.00 | 8.25% | 7.25% |
| Category 4<br> > 3.25 to 1.00  | 8.50% | 7.50% |

---

The Applicable Margin shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the

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Total Net Leverage Ratio in accordance with the table above.

The Second Amendment provides that the Borrower shall not permit the Total Net Leverage Ratio, as of the last day of each fiscal quarter (commencing with the fiscal quarter ending March 31, 2025), to be greater than the levels set forth in the following table for the applicable fiscal quarter:

---

| | |
|:---|:---|
| **Fiscal Quarter** | **Total Net Leverage Ratio** |
| Fiscal quarters ending March 31, 2025 through and including June 30, 2025 | 2.75 to 1.00 |
| Fiscal quarter ending September 30, 2025 | 2.50 to 1.00 |
| Fiscal quarter ending December 31, 2025 | 3.20 to 1.00 |
| Fiscal quarter ending March 31, 2026 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending September 30, 2026 | 3.50 to 1.00 |
| Fiscal quarter ending December 31, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending March 31, 2027 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2027 | 3.00 to 1.00 |
| Fiscal quarter ending September 30, 2027 and each fiscal quarter thereafter | 2.50 to 1.00 |

---

Additionally, the Second Amendment provides that the Borrower shall not permit the Asset Coverage Ratio, as of the last day of any fiscal quarter (commencing with the fiscal quarter ending March 31, 2025) to be less than the applicable level set forth in the following table for the applicable fiscal quarter:

---

| | |
|:---|:---|
| **Fiscal Quarter** | **Asset Coverage Ratio** |
| Fiscal quarters ending March 31, 2025 through and including December 31, 2026 | 1.85 to 1.00 |
| Each fiscal quarter thereafter | 2.00 to 1.00 |

---

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#### ITEM 6. EXHIBITS
The following documents are included as exhibits to this Quarterly Report on Form 10-Q. Those exhibits incorporated by reference are so indicated by the information supplied with respect thereto. Those exhibits which are not incorporated by reference are attached hereto.

---

| | |
|:---|:---|
| 3.1 | [Ninth Amended and Restated Certificate of Incorporation of Battalion Oil Corporation, dated June 12, 2025 (Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed June 18, 2025).](https://www.sec.gov/Archives/edgar/data/1282648/000155837025008731/batl-20250612xex3d1.htm) |
| 3.2 | [Seventh Amended and Restated Bylaws of Battalion Oil Corporation (Incorporated by reference to Exhibit 3.2 of our Current Report on Form 8-K filed January 27, 2020).](http://www.sec.gov/Archives/edgar/data/1282648/000110465920007138/tm205859d1_ex3-2.htm) |
| 10.1 | [Second Amended and Restated Senior Secured Credit Agreement dated as of December 26, 2024, by and among Battalion Oil Corporation, as holdings, Halcón Holdings LLC, as borrower, the subsidiary guarantors party thereto, Fortress Credit Corp., as administrative agent, and the lenders party thereto (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed December 27, 2024).](https://www.sec.gov/Archives/edgar/data/1282648/000155837024016480/batl-20241226xex10d1.htm) |
| 10.1.1 | [First Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of January 9, 2025, by and among Battalion Oil Corporation, as holdings, Halcón Holdings LLC, as borrower, the subsidiary guarantors party thereto, Fortress Credit Corp., as administrative agent, and the lenders party thereto (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed January 10, 2025).](https://www.sec.gov/Archives/edgar/data/1282648/000155837025000091/batl-20250109xex10d1.htm) |
| 10.1.2<br> \* | [Second Amendment to Second Amended and Restated Senior Secured Credit Agreement dated as of November 12, 2025, by and among Battalion Oil Corporation, as holdings, Halcón Holdings LLC, as borrower, the subsidiary guarantors party thereto, Fortress Credit Corp., as administrative agent, and the lenders party thereto.](batl-20250930xex10d12.htm) |
| 31<br> \* | [Sarbanes-Oxley Section 302 certification of Principal Executive Officer and Principal Financial Officer](batl-20250930xex31.htm) |
| 32<br> \* | [Sarbanes-Oxley Section 906 certification of Principal Executive Officer and Principal Financial Officer](batl-20250930xex32.htm) |
| 101.INS<br> \* | Inline XBRL Instance Document |
| 101.SCH<br> \* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL<br> \* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF<br> \* | Inline XBRL Taxonomy Extension Definition Document |
| 101.LAB<br> \* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE<br> \* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104<br> \* | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

*\** *Attached hereto.*

&nbsp;&nbsp;&nbsp;&nbsp;*†* *Indicates management contract or compensatory plan or arrangement.* 

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

---

| | | |
|:---|:---|:---|
|  | **BATTALION OIL CORPORATION** | **BATTALION OIL CORPORATION** |
| November 13, 2025 | By: | /s/ MATTHEW B. STEELE |
|  | Name: | Matthew B. Steele |
|  | Title: | Chief Executive Officer |
|  |  | *(Principal Executive Officer and Principal Financial Officer)* |

---

## Exhibit 10.1

**Exhibit 10.1.2**

***Execution Version***

#### SECOND AMENDMENT TO <br> SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT
This SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SENIOR SECURED CREDIT AGREEMENT (this "<u>Second Amendment</u>") is entered into as of November 12, 2025, by and among HALCÓN HOLDINGS, LLC, a Delaware limited liability company (the "<u>Borrower</u>"), the other Loan Parties party hereto, the Lenders to the Existing Credit Agreement (as defined below) constituting the Required Lenders, FORTRESS CREDIT CORP., a Delaware corporation (in its individual capacity, "<u>Fortress</u>"), and as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the "<u>Administrative Agent</u>") and, solely with respect to Article IX-A of the Existing Credit Agreement, BATTALION OIL CORPORATION, a Delaware corporation ("<u>Holdings</u>").

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.The Borrower, Holdings, the other Loan Parties party thereto, the Administrative Agent, and the Lenders are parties to that certain Second Amended and Restated Senior Secured Credit Agreement, dated as of December 26, 2024 (as amended by that certain First Amendment thereto, dated as of January 9, 2025, the "<u>Existing Credit Agreement</u>"; and as amended by this Second Amendment and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the "<u>Amended Credit Agreement</u>"), pursuant to which the Lenders made certain Loans and certain other accommodations to the Borrower; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.The Borrower has requested that the Administrative Agent and the Lenders amend certain provisions of the Existing Credit Agreement as set forth in this Second Amendment, and the Administrative Agent and the Lenders party hereto (constituting the Required Lenders) are willing to do so subject to the satisfaction of the terms and conditions set forth herein.

#### AGREEMENTS
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth in this Second Amendment and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Defined Terms</u>. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Existing Credit Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Amendments to Existing Credit Agreement</u>. Upon the Second Amendment Effective Date (as defined below), each of the parties hereto agrees that the Existing Credit Agreement shall be amended to read as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Section 1.01 of the Existing Credit Agreement shall be amended to add the following definitions in their respective proper alphabetical order:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)"<u>Adjustment Date</u>" means the first Business Day following the delivery of financial statements required to be delivered pursuant to <u>Section 8.01(a)</u> or <u>Section 8.01(b)</u> for the most recently completed fiscal period, as applicable, and the applicable Compliance Certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)"<u>Applicable Period</u>" has the meaning assigned to such term in the definition of "Applicable Margin".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)"<u>Corrected Financials Date</u>" has the meaning assigned to such term in the definition of "Applicable Margin".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)"<u>Second Amendment Effective Date</u>" means November 12, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)"<u>Specified Lender Meeting</u>" has the meaning assigned to such term in <u>Section 8.17</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)"<u>Specified Lender Meeting Deliverable</u>" means a certificate, in form and substance acceptable to the Administrative Agent in its sole discretion, signed by a Financial Officer of the Borrower (a) certifying to the Administrative Agent and the Lenders as to whether the Borrower is in projected compliance with the financial covenants set forth in <u>Sections 9.01(a)</u>, <u>(b)</u> and <u>(c)</u> (but, for the avoidance of doubt, without giving effect to any prospective exercise of cure rights under <u>Section 9.01(e)</u>) as of December 31, 2026 and each of the next succeeding three (3) consecutive fiscal quarter periods thereafter, and (b) including projected financial statements of the Borrower and its Consolidated Subsidiaries for each fiscal quarter specified in the foregoing <u>clause (a)</u> all in reasonable detail and in form and substance as required by <u>Section 8.01(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The definition of "Applicable Margin" in Section 1.01 of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:

'"<u>Applicable Margin</u>" means the rate per annum set forth below under the caption "SOFR Loans Spread" or "ABR Loans Spread", as the case may be, based upon the Total Net Leverage Ratio; <u>provided</u>, that (a) until the first Adjustment Date following the Second Amendment Effective Date, the "Applicable Margin" shall be the rate per annum set forth in <u>Category 1</u> and (b) the "Applicable Margin" shall be the applicable rate per annum set forth in <u>Category 4</u> below at any time that an Event of Default exists:

---

| | | |
|:---|:---|:---|
| **Total Net Leverage Ratio**<br><BORDER_TOP> | **SOFR Loans Spread**<br><BORDER_TOP> | **ABR Loans Spread**<br><BORDER_TOP> |
| <u>Category 1</u><br>≤ 2.50 to 1.00 | 7.75% | 6.75% |
| <u>Category 2</u><br>> 2.50 to 1.00 ≤ 3.00 to 1.00 | 8.00% | 7.00% |

---

------

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| | | |
|:---|:---|:---|
| **Total Net Leverage Ratio**<br><BORDER_TOP> | **SOFR Loans Spread**<br><BORDER_TOP> | **ABR Loans Spread**<br><BORDER_TOP> |
| <u>Category 3</u><br>> 3.00 to 1.00 ≤ 3.25 to 1.00 | 8.25% | 7.25% |
| <u>Category 4</u><br>> 3.25 to 1.00 | 8.50% | 7.50% |

---

For purposes of the foregoing, the Applicable Margin shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Net Leverage Ratio in accordance with the table above. In the event that the information contained in any financial statement delivered pursuant to <u>Section 8.01(a)</u> or <u>Section 8.01(b)</u> or in the applicable Compliance Certificate is shown to be inaccurate, and such inaccuracy, if corrected, would have led to the application of (i) a higher Applicable Margin for any period (an "<u>Applicable Period</u>") than the Applicable Margin actually applied for such Applicable Period, then (x) the Borrower shall immediately (in any event within five (5) Business Days of the earlier to occur of (A) the Borrower becoming aware of such inaccuracy or (B) notice from the Administrative Agent of such inaccuracy) deliver to the Administrative Agent a correct financial statement and a corrected Compliance Certificate for such Applicable Period (such later date, the "<u>Corrected Financials Date</u>"), (y) such higher Applicable Margin shall be deemed to have been in effect for such Applicable Period, and (z) Borrower shall immediately deliver to the Administrative Agent full payment in respect of the accrued additional interest on the Loans and any additional fees required under this Agreement as a result of such increased Applicable Margin for such Applicable Period, which payment shall be promptly applied by the Administrative Agent to the Lenders entitled thereto or in accordance with <u>Section 10.02</u> (it being understood that this definition shall in no way limit the rights of the Administrative Agent and the other Secured Parties to exercise their rights under <u>Section 10.01</u> as and to the extent set forth therein); *provided* that, for the avoidance of doubt, (A) such deficiency shall be due and payable at such Corrected Financials Date and (B) no Default or Event of Default under <u>Section 10.01(b)</u> shall be deemed to have occurred with respect to such deficiency so long as full payment is made on or before the Corrected Financials Date and such inaccuracy resulted from a good faith mistake on the part of the Borrower or (ii) a lower Applicable Margin for any Applicable Period, then (x) the Borrower shall deliver to the Administrative Agent a correct financial statement and a corrected Compliance Certificate for such Applicable Period on or before the Corrected Financials Date, (y) such lower Applicable Margin shall be deemed to have been in effect for such Applicable Period, and (z) the Administrative Agent shall credit the Borrower the amount of surplus interest paid as a result of the lower Applicable Margin for such Applicable Period by deducting such surplus amount from the interest amount due on the next Interest Payment Date (or, if applicable, any subsequent relevant Interest Payment Date)."

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Section 8.17 of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:

"Section 8.17<u>Lender Meetings</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Within ten (10) Business Days after request from the Administrative Agent or any Lender (but in any event, not more than once per fiscal quarter), the Borrower shall be available at a mutually agreed time to go over earnings, the results of its operations and other reasonably requested matters concerning Borrower and the other Loan Parties with the Lenders by way of a teleconference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On any day following December 1, 2026, the Borrower, the other Loan Parties, the Administrative Agent and the Required Lenders agree to be available for a meeting via teleconference on a mutually acceptable Business Day (the " <u>Specified Lender Meeting</u> "). At such Specified Lender Meeting (i) the Borrower shall (x) deliver to the Administrative Agent (for the benefit of the Lenders) the Specified Lender Meeting Deliverable satisfying the certification set forth therein, together with the attachments thereto and (y) discuss in detail with the Administrative Agent and the Lenders in attendance the Borrower's current and going-forward business operations and other reasonably requested matters concerning the Borrower and each other Loan Party and their respective assets and financial outlook, including the Borrower's ability or inability to satisfy the financial covenants requirements set forth in the Specified Lender Meeting Deliverable, (ii) in the event the Borrower is unable to satisfy and deliver the Specified Lender Meeting Deliverable, then at such Specified Lender Meeting (x) the Borrower shall request in writing a waiver of, or modification to, any applicable financial covenant in <u>Section 9.01</u> and/or such other terms of this Agreement, in any case, as may be reasonably required by the Borrower in order to satisfy and deliver such Specified Lender Meeting Deliverable and (y) the Administrative Agent and the Lenders in attendance shall confer and determine the nature and extent of such potential waiver or modification, if any, to this Agreement acceptable to the Administrative Agent and such Lenders."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Section 9.01(a) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

"The Borrower shall not permit the Total Net Leverage Ratio, as of the last day of each fiscal quarter (commencing with the fiscal quarter ending March 31, 2025), to be greater than the levels set forth in the following table for the applicable fiscal quarter:

------

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| | |
|:---|:---|
| **Fiscal Quarter**<br><BORDER_TOP> | **Total Net Leverage Ratio**<br><BORDER_TOP> |
| Fiscal quarters ending March 31, 2025 through and including June 30, 2025 | 2.75 to 1.00 |
| Fiscal quarter ending September 30, 2025 | 2.50 to 1.00 |
| Fiscal quarter ending December 31, 2025 | 3.20 to 1.00 |
| Fiscal quarter ending March 31, 2026 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending September 30, 2026 | 3.50 to 1.00 |
| Fiscal quarter ending December 31, 2026 | 3.40 to 1.00 |
| Fiscal quarter ending March 31, 2027 | 3.25 to 1.00 |
| Fiscal quarter ending June 30, 2027 | 3.00 to 1.00 |
| Fiscal quarter ending September 30, 2027 and each fiscal quarter thereafter | 2.50 to 1.00" |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)Section 9.01(c) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

"The Borrower shall not permit the Asset Coverage Ratio, as of the last day of any fiscal quarter (commencing with the fiscal quarter ending March 31, 2025), to be less than the applicable level set forth in the following table for the applicable fiscal quarter:

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| | |
|:---|:---|
| **Fiscal Quarter**<br><BORDER_TOP> | **Asset Coverage Ratio**<br><BORDER_TOP> |
| Fiscal quarters ending March 31, 2025 through and including December 31, 2026 | 1.85 to 1.00 |
| Each fiscal quarter thereafter | 2.00 to 1.00" |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)Section 10.01(d) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

"The Borrower, Holdings or any other Loan Party, as applicable, shall fail to observe or perform any covenant, condition or agreement contained in <u>Section 8.02(a)</u> or <u>(c)</u>, <u>Section 8.03</u> (with respect to Borrower's or any other Loan Party's existence only), <u>Section 8.06(e)</u>, <u>Section 8.07</u> (with respect to the

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post-closing proviso only), <u>Section 8.14</u>, <u>Section 8.16</u>, <u>Section 8.17(b)</u>, <u>Section 8.21</u>, <u>Section 8.23</u>, <u>Section 8.24</u> or in <u>ARTICLE IX</u> or <u>ARTICLE IX-A</u>."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Conditions to Effectiveness</u>. This Second Amendment shall not be effective until the satisfaction or waiver of the following conditions precedent (the "<u>Second Amendment Effective Date</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)the Administrative Agent shall have received counterparts of this Second Amendment duly executed by each Loan Party, Holdings, the Administrative Agent and each Lender party hereto (constituting the Required Lenders);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Fortress Credit Opportunities VI CLO Limited, Fortress Credit Opportunities VIII CLO Limited, Fortress Credit Opportunities IX CLO Limited, Fortress Credit Opportunities XV CLO Limited, Fortress Credit Opportunities XIX CLO LLC, Fortress Credit Opportunities XXI CLO LLC, Fortress Credit Opportunities XXIII CLO LLC, Fortress Credit Opportunities XXV CLO LLC, Fortress Credit Opportunities XXXI CLO LLC, Fortress Credit Opportunities XXXV CLO LLC, Fortress Credit Opportunities XXXVII CLO LLC, FLF III AB Holdings Finance L.P., FLF IV Holdings Finance L.P., Fortress Private Lending Fund, FLF III GMS Holdings Finance L.P., FLF III Holdings Finance L.P., FLF IV AB Holdings Finance L.P., FLF IV GMS Holdings Finance L.P., and FLF III-IV MA-CRPTF Holdings Finance L.P. shall have received a Note (or an amendment and restatement of any previously issued Note) duly executed by the Borrower; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)the Borrower shall have paid on or before the Second Amendment Effective Date, all interest, fees, costs and expenses then due and payable to the Administrative Agent or the Lenders under and in accordance with the Existing Credit Agreement or <u>Section 4</u> of this Amendment (including, but not limited to, (i) the Amendment Fee (as defined below) and (ii) all reasonable and documented out-of-pocket legal expenses required to be paid by the Borrower pursuant to <u>Section 12.03</u> of the Existing Credit Agreement to the extent invoiced one Business Day prior to the Second Amendment Effective Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Amendment Fee</u>. On or before the Second Amendment Effective Date, the Borrower shall pay to the Administrative Agent, for the *pro rata* benefit of each Lender, an amount equal to $50,000 (the "<u>Amendment Fee</u>"). The entire amount of the Amendment Fee shall be (a) fully earned and due and payable in full in cash on the Second Amendment Effective Date and (b) non-refundable upon payment thereof. The Amendment Fee shall be payable in U.S. Dollars in immediately available funds and shall be subject to <u>Section 5.03(a)</u> of the Existing Credit Agreement. The Borrower agrees that any Lender may, in its sole discretion, share all or a portion of the Amendment Fee with any of the other Lenders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Representations and Warranties</u>. Each Loan Party hereby represents and warrants to the Administrative Agent and the Lenders as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)The representations and warranties made by such Loan Party contained in the Loan Documents are true and correct in all material respects on and as of the Second Amendment Effective Date, except in the case of any representation and warranty which (i) expressly relates to a given date, such representation and warranty shall be true and correct in

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all material respects as of the respective date and (ii) is qualified by a materiality or Material Adverse Effect standard, in which case such representation and warranty shall be true and correct in all respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)such Loan Party is a limited liability company or corporation (as applicable), duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, as applicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)the execution, delivery and performance by such Loan Party of this Second Amendment have been duly authorized by all necessary limited liability company or corporate action;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)this Second Amendment constitutes the legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject general principles of equity, regardless of whether considered in a proceeding in equity or at law; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)no Default or Event of Default has occurred and is continuing or will exist immediately after giving effect to this Second Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>No Modification</u>. Nothing contained herein shall be deemed to constitute a waiver of compliance with any term or condition contained in the Existing Credit Agreement or any of the other Loan Documents or constitute a course of conduct or dealing among the parties. The Administrative Agent and the Lenders reserve all rights, privileges and remedies under the Loan Documents. Except as amended hereby, the Existing Credit Agreement and other Loan Documents remain unmodified and in full force and effect. All references in the Loan Documents to the Existing Credit Agreement shall be deemed to be references to the Existing Credit Agreement as amended hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Counterparts</u>. This Second Amendment may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Subject to <u>Section 3</u> hereof, this Second Amendment shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Second Amendment by telecopy, emailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Second Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>Successors and Assigns</u>. The provisions of this Second Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns pursuant to the Existing Credit Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.<u>Indemnity</u>. Each Loan Party hereby ratifies the indemnification provisions contained in the Loan Documents, including, without limitation, <u>Section 12.03</u> of the Existing

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Credit Agreement, and agrees that this Second Amendment and losses, claims, damages and expenses related thereto shall be covered by such indemnities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.<u>Incorporation of Certain Terms</u>. The provisions of <u>Sections 8.11</u> and <u>12.09(b)-(d)</u> of the Existing Credit Agreement are hereby incorporated by reference, *mutatis mutandis*, as if set forth in full herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.<u>Severability</u>. Any provision of this Second Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.<u>Release</u>. Each of the Loan Parties, on behalf of itself and each of its Subsidiaries and its or their respective successors and assigns (collectively, the "<u>Releasing Parties</u>"), in consideration of the Administrative Agent's and the Lenders' execution and delivery of this Second Amendment and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, unconditionally, freely, voluntarily and, after consultation with counsel and becoming fully and adequately informed as to the relevant facts, circumstances and consequences, hereby expressly and forever releases, waives and discharges (and further agrees not to allege, claim or pursue) any and all claims (including, without limitation, cross-claims, counterclaims, and rights of setoff and recoupment), rights, causes of action (whether direct or derivative in nature), demands, suits, costs, expenses, and damages, of any nature, description, or kind whatsoever, whether arising in contract, in tort, in law, in equity or otherwise, based in whole or in part on facts or otherwise, whether known, unknown or subsequently discovered, fixed or contingent, direct or indirect, joint and/or several, secured or unsecured, due or not due, liquidated or unliquidated, asserted or unasserted, or foreseen or unforeseen, which any of the Releasing Parties might otherwise have or may have against the Administrative Agent, the Lenders or each

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of the foregoing's affiliates, principals, managers, managing members, members, controlling persons (within the meaning of the United States federal securities or bankruptcy laws), directors, officers, employees or other representatives (collectively, the "<u>Releasees</u>"), in each case on account of any conduct, condition, act, omission, event, contract, liability, obligation, demand, covenant, promise, indebtedness, claim, right, cause of action, suit, damage, judgment, circumstance or matter of any kind whatsoever which existed, arose or occurred at any time prior to the date of this Second Amendment in connection with the Loan Documents and/or the transactions contemplated thereby, including any actual or alleged performance or non-performance of any of the Releasees (any of the foregoing, a "<u>Claim</u>" and collectively, the "<u>Claims</u>"). Each of the Releasing Parties hereby expressly acknowledges and agrees that the agreements in this paragraph are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the Claims, and that with respect to the Claims, that it waives, to the fullest extent permitted by applicable law, any and all provisions, rights, and benefits conferred by any applicable U.S. federal or state law, or any principle of U.S. common law, that would otherwise limit a release or discharge of any unknown Claims pursuant to this <u>Section 13</u>. Furthermore, each of the Releasing Parties hereby absolutely, unconditionally and irrevocably covenants and agrees with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released and/or discharged by the Releasing Parties pursuant to this <u>Section 13</u>. Notwithstanding anything to the contrary, the provisions of this paragraph shall survive and remain in full force and effect regardless of the repayment or prepayment of any of the Loans or Secured Obligations, or the termination of the Existing Credit Agreement, this Second Amendment, any other Loan Document or any provision hereof or thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.<u>Integration; Entire Agreement</u>. Nothing in this Second Amendment, express or implied is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Second Amendment. **THIS SECOND AMENDMENT, THE AMENDED CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.<u>Governing Law</u>. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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IN WITNESS WHEREOF, each of the undersigned has executed this Second Amendment as of the Second Amendment Effective Date.

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| | | |
|:---|:---|:---|
| **HALCÓN HOLDINGS, LLC**,<br>as Borrower | **HALCÓN HOLDINGS, LLC**,<br>as Borrower | **HALCÓN HOLDINGS, LLC**,<br>as Borrower |
| By: | /s/ Matthew B. Steele | /s/ Matthew B. Steele |
| Name: | Name: | Matthew B. Steele |
| Title: | Title: | Chief Executive Officer |

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| | | |
|:---|:---|:---|
| **HALCON OPERATING CO., INC.**,<br>as a Loan Party | **HALCON OPERATING CO., INC.**,<br>as a Loan Party | **HALCON OPERATING CO., INC.**,<br>as a Loan Party |
| By: | /s/ Matthew B. Steele | /s/ Matthew B. Steele |
| Name: | Name: | Matthew B. Steele |
| Title: | Title: | Chief Executive Officer |

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| | | |
|:---|:---|:---|
| **HALCÓN ENERGY PROPERTIES, INC.**,<br>as a Loan Party | **HALCÓN ENERGY PROPERTIES, INC.**,<br>as a Loan Party | **HALCÓN ENERGY PROPERTIES, INC.**,<br>as a Loan Party |
| By: | /s/ Matthew B. Steele | /s/ Matthew B. Steele |
| Name: | Name: | Matthew B. Steele |
| Title: | Title: | Chief Executive Officer |

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| | | |
|:---|:---|:---|
| **HALCÓN FIELD SERVICES, LLC**,<br>as a Loan Party | **HALCÓN FIELD SERVICES, LLC**,<br>as a Loan Party | **HALCÓN FIELD SERVICES, LLC**,<br>as a Loan Party |
| By: | /s/ Matthew B. Steele | /s/ Matthew B. Steele |
| Name: | Name: | Matthew B. Steele |
| Title: | Title: | Chief Executive Officer |

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| | | |
|:---|:---|:---|
| **HALCÓN PERMIAN, LLC**,<br>as a Loan Party | **HALCÓN PERMIAN, LLC**,<br>as a Loan Party | **HALCÓN PERMIAN, LLC**,<br>as a Loan Party |
| By: | /s/ Matthew B. Steele | /s/ Matthew B. Steele |
| Name: | Name: | Matthew B. Steele |
| Title: | Title: | Chief Executive Officer |

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| | | |
|:---|:---|:---|
| **BATTALION OIL MANAGEMENT, INC.**,<br>as a Loan Party | **BATTALION OIL MANAGEMENT, INC.**,<br>as a Loan Party | **BATTALION OIL MANAGEMENT, INC.**,<br>as a Loan Party |
| By: | /s/ Matthew B. Steele | /s/ Matthew B. Steele |
| Name: | Name: | Matthew B. Steele |
| Title: | Title: | Chief Executive Officer |

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[Signature Page to Second Amendment to Second Amended and Restated Senior Secured Credit Agreement]

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<u>Solely with respect to Article IX-A of the Existing Credit Agreement</u>:

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| | | |
|:---|:---|:---|
| **BATTALION OIL CORPORATION**,<br>as Holdings | **BATTALION OIL CORPORATION**,<br>as Holdings | **BATTALION OIL CORPORATION**,<br>as Holdings |
| By: | /s/ Matthew B. Steele | /s/ Matthew B. Steele |
| Name: | Name: | Matthew B. Steele |
| Title: | Title: | Chief Executive Officer |

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[Signature Page to Second Amendment to Second Amended and Restated Senior Secured Credit Agreement]

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IN WITNESS WHEREOF, each of the undersigned has executed this Second Amendment as of the Second Amendment Effective Date.

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT CORP.**,<br>as Administrative Agent | **FORTRESS CREDIT CORP.**,<br>as Administrative Agent | **FORTRESS CREDIT CORP.**,<br>as Administrative Agent |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES IX CLO LIMITED**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES IX CLO LIMITED**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES IX CLO LIMITED**,<br>as a Lender |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XV CLO LIMITED**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XV CLO LIMITED**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XV CLO LIMITED**,<br>as a Lender  |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XIX CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XIX CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XIX CLO LLC**,<br>as a Lender  |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XXI CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XXI CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XXI CLO LLC**,<br>as a Lender  |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

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[Signature Page to Second Amendment to Second Amended and Restated Senior Secured Credit Agreement]

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XXIII CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XXIII CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XXIII CLO LLC**,<br>as a Lender  |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XXV CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XXV CLO LLC**,<br>as a Lender  | **FORTRESS CREDIT OPPORTUNITIES XXV CLO LLC**,<br>as a Lender  |
| By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager | By: FCOD CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

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| | | |
|:---|:---|:---|
| **FLF IV AB HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF IV AB HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF IV AB HOLDINGS FINANCE L.P.**,<br>as a Lender  |
| By: FLF IV AB Holdings Finance CM LLC, as Servicer | By: FLF IV AB Holdings Finance CM LLC, as Servicer | By: FLF IV AB Holdings Finance CM LLC, as Servicer |
| By: Fortress Lending IV Holdings L.P., its Sole Member | By: Fortress Lending IV Holdings L.P., its Sole Member | By: Fortress Lending IV Holdings L.P., its Sole Member |
| By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FLF IV GMS HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF IV GMS HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF IV GMS HOLDINGS FINANCE L.P.**,<br>as a Lender  |
| By: FLF IV GMS Holdings Finance CM LLC, as Servicer | By: FLF IV GMS Holdings Finance CM LLC, as Servicer | By: FLF IV GMS Holdings Finance CM LLC, as Servicer |
| By: Fortress Lending IV Holdings L.P., its Sole Member | By: Fortress Lending IV Holdings L.P., its Sole Member | By: Fortress Lending IV Holdings L.P., its Sole Member |
| By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

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[Signature Page to Second Amendment to Second Amended and Restated Senior Secured Credit Agreement]

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| | | |
|:---|:---|:---|
| **FLF IV HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF IV HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF IV HOLDINGS FINANCE L.P.**,<br>as a Lender  |
| By: FLF IV Holdings Finance CM LLC, as Servicer | By: FLF IV Holdings Finance CM LLC, as Servicer | By: FLF IV Holdings Finance CM LLC, as Servicer |
| By: Fortress Lending IV Holdings L.P., its Sole Member | By: Fortress Lending IV Holdings L.P., its Sole Member | By: Fortress Lending IV Holdings L.P., its Sole Member |
| By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager | By: Fortress Lending Advisors IV LLC, its investment manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FLF III-IV MA-CRPTF HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III-IV MA-CRPTF HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III-IV MA-CRPTF HOLDINGS FINANCE L.P.**,<br>as a Lender  |
| By: FLF III-IV MA-CRPTF CM LLC, as Servicer | By: FLF III-IV MA-CRPTF CM LLC, as Servicer | By: FLF III-IV MA-CRPTF CM LLC, as Servicer |
| By: Fortress Lending Fund III-IV MA-CRPTF LP, its Sole Member | By: Fortress Lending Fund III-IV MA-CRPTF LP, its Sole Member | By: Fortress Lending Fund III-IV MA-CRPTF LP, its Sole Member |
| By: FLF III-IV MA-CRPTF Advisors LLC, its investment manager | By: FLF III-IV MA-CRPTF Advisors LLC, its investment manager | By: FLF III-IV MA-CRPTF Advisors LLC, its investment manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Deputy Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FORTRESS PRIVATE LENDING FUND**<br>as a Lender | **FORTRESS PRIVATE LENDING FUND**<br>as a Lender | **FORTRESS PRIVATE LENDING FUND**<br>as a Lender |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES VI CLO LIMITED**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES VI CLO LIMITED**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES VI CLO LIMITED**,<br>as a Lender |
| By: FCOO CLO Management LLC, its collateral manager | By: FCOO CLO Management LLC, its collateral manager | By: FCOO CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

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[Signature Page to Second Amendment to Second Amended and Restated Senior Secured Credit Agreement]

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| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES VIII CLO LIMITED**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES VIII CLO LIMITED**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES VIII CLO LIMITED**,<br>as a Lender |
| By: FCOO CLO Management LLC, its collateral manager | By: FCOO CLO Management LLC, its collateral manager | By: FCOO CLO Management LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

---

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| | | |
|:---|:---|:---|
| **FLF III AB HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III AB HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III AB HOLDINGS FINANCE L.P.**,<br>as a Lender  |
| By: FLF III AB Holdings Finance CM LLC, as Servicer | By: FLF III AB Holdings Finance CM LLC, as Servicer | By: FLF III AB Holdings Finance CM LLC, as Servicer |
| By: Fortress Lending III Holdings L.P., its Sole Member | By: Fortress Lending III Holdings L.P., its Sole Member | By: Fortress Lending III Holdings L.P., its Sole Member |
| By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

---

---

| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XXXVII CLO LLC**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES XXXVII CLO LLC**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES XXXVII CLO LLC**,<br>as a Lender |
| By: FCO XXXVII CLO CM LLC, its collateral manager | By: FCO XXXVII CLO CM LLC, its collateral manager | By: FCO XXXVII CLO CM LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

---

---

| | | |
|:---|:---|:---|
| **FLF III GMS HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III GMS HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III GMS HOLDINGS FINANCE L.P.**,<br>as a Lender  |
| By: FLF III GMS Holdings Finance CM LLC, as Servicer | By: FLF III GMS Holdings Finance CM LLC, as Servicer | By: FLF III GMS Holdings Finance CM LLC, as Servicer |
| By: Fortress Lending III Holdings L.P., its Sole Member | By: Fortress Lending III Holdings L.P., its Sole Member | By: Fortress Lending III Holdings L.P., its Sole Member |
| By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

---

[Signature Page to Second Amendment to Second Amended and Restated Senior Secured Credit Agreement]

------

---

| | | |
|:---|:---|:---|
| **FLF III HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III HOLDINGS FINANCE L.P.**,<br>as a Lender  | **FLF III HOLDINGS FINANCE L.P.**,<br>as a Lender  |
| By: FLF III Holdings Finance CM LLC, as Servicer | By: FLF III Holdings Finance CM LLC, as Servicer | By: FLF III Holdings Finance CM LLC, as Servicer |
| By: Fortress Lending III Holdings L.P., its Sole Member | By: Fortress Lending III Holdings L.P., its Sole Member | By: Fortress Lending III Holdings L.P., its Sole Member |
| By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager | By: Fortress Lending Advisors III LLC, its investment manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
|  | Name: | Avraham Dreyfuss |
|  | Title: | Chief Financial Officer |

---

---

| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XXXI CLO LLC**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES XXXI CLO LLC**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES XXXI CLO LLC**,<br>as a Lender |
| By: FCO XXXI CLO CM LLC, its collateral manager | By: FCO XXXI CLO CM LLC, its collateral manager | By: FCO XXXI CLO CM LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

---

---

| | | |
|:---|:---|:---|
| **FORTRESS CREDIT OPPORTUNITIES XXXV CLO LLC**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES XXXV CLO LLC**,<br>as a Lender | **FORTRESS CREDIT OPPORTUNITIES XXXV CLO LLC**,<br>as a Lender |
| By: FCO XXXV CLO CM LLC, its collateral manager | By: FCO XXXV CLO CM LLC, its collateral manager | By: FCO XXXV CLO CM LLC, its collateral manager |
| By: | /s/ Avraham Dreyfuss | /s/ Avraham Dreyfuss |
| Name: | Name: | Avraham Dreyfuss |
| Title: | Title: | Chief Financial Officer |

---

---

| | | |
|:---|:---|:---|
| **NONGHYUP BANK, as Trustee of AIP Upstream Specialized Privately Placed Fund Trust No. 3**,<br>as a Lender | **NONGHYUP BANK, as Trustee of AIP Upstream Specialized Privately Placed Fund Trust No. 3**,<br>as a Lender | **NONGHYUP BANK, as Trustee of AIP Upstream Specialized Privately Placed Fund Trust No. 3**,<br>as a Lender |
| By: | /s/ Park So Hyun | /s/ Park So Hyun |
| Name: | Name: | Park So Hyun |
| Title: | Title: | Manager |

---

[Signature Page to Second Amendment to Second Amended and Restated Senior Secured Credit Agreement]

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## Ex-31

**Exhibit 31**

**Certification Pursuant to<br>Section 302 of the Sarbanes Oxley Act of 2002**

I, Matthew B. Steele, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of Battalion Oil Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| on<br>|  |  |
|  | **BATTALION OIL CORPORATION** | **BATTALION OIL CORPORATION** |
| November 13, 2025 | By: | /s/ Matthew B. Steele |
|  | Name: | Matthew B. Steele |
|  | Title: | Chief Executive Officer  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(Principal Executive Officer and Principal Financial Officer)* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(Principal Executive Officer and Principal Financial Officer)* |

---

------

## Ex-32

**Exhibit 32**

**Certification Pursuant to <br>Section 906 of the Sarbanes-Oxley Act of 2002 <br>(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)**

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), Matthew B. Steele, *Chief Executive Officer* of Battalion Oil Corporation (the "***Company***"), hereby certifies that, to the best of his knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (the "  ***Report***") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
|  | /s/ Matthew B. Steele |
| November 13, 2025 | Matthew B. Steele |
|  | Chief Executive Officer |
|  | *(Principal Executive Officer and Principal Financial Officer)* |

---

This certification accompanies this Form 10-Q and shall not be deemed "*filed*" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section.

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, the Company and furnished to the Securities and Exchange Commission or its staff upon request.

------