Battalion Oil Corporation Announces Operations and Financial Update

Rhea-AI Summary

Battalion Oil Corporation (BATL) announces financial and operating updates, including the completion of AGI well, drilling and completions operations in Monument Draw, liquidity and balance sheet details, and updates on the merger with Fury Resources Inc. The company has $61MM cash on hand and an equity commitment of $20MM. The merger with Fury is anticipated to close in Q1 2024.

Insights

Financial Analyst

The announcement by Battalion Oil Corporation regarding their financial and operating updates presents a multifaceted picture of the company's current standing and future prospects. The report of drilling and completion operations coming under budget and wells producing above the type curve is a positive indicator of operational efficiency and geological success. This could lead to increased investor confidence, as it suggests that Battalion is capable of extracting resources at a lower cost while yielding higher outputs than anticipated.

In terms of liquidity, Battalion's significant cash position of approximately $61 million, coupled with an additional $20 million equity commitment, underscores a robust balance sheet. This liquidity is crucial as it may provide the company with the flexibility to navigate market volatility, fund ongoing operations and potentially finance future expansion without immediate pressure to seek additional capital. However, the $200.2 million of indebtedness should be monitored, as it could affect the company's financial leverage and interest obligations.

The merger with Fury Resources Inc. is another critical aspect, as mergers and acquisitions can lead to synergies, increased market share and improved economies of scale. However, the success of such transactions hinges on seamless integration and realization of the anticipated benefits. Investors should closely follow the SEC filings and the outcome of the special meeting for any changes that might affect the valuation of the combined entity.

Oil & Gas Industry Analyst

The operational updates from Battalion Oil Corporation, particularly regarding the AGI well and the drilling completions in the Delaware Basin, are significant for stakeholders in the energy sector. AGI wells are a method of managing acid gas, a byproduct of hydrocarbon extraction, which can enhance environmental compliance and potentially reduce operational costs. The company's ability to bring the AGI well online by the end of the first quarter could be seen as a positive step towards responsible resource management.

The mention of wells producing above the type curve is particularly noteworthy. The 'type curve' refers to a graphical representation of expected production over time for a well or set of wells and exceeding it implies that Battalion's wells are outperforming expectations. This can be an indicator of high-quality assets and technical proficiency in extraction techniques, which might lead to a re-evaluation of the company's reserves and future earnings potential.

Furthermore, the strategic location of Battalion's operations in the Delaware Basin, known for its rich oil and natural gas deposits, is a competitive advantage. The basin is a sub-basin of the larger Permian Basin, one of the most prolific oil-producing areas in the United States. The company's successful drilling results in this region suggest a promising outlook on its ability to sustain and potentially increase production levels, which is a key driver of revenue growth in the oil and gas industry.

Mergers & Acquisitions Expert

The proposed merger between Battalion Oil Corporation and Fury Resources Inc. is poised to reshape the competitive landscape within the energy sector. Mergers in this industry are often pursued to achieve operational synergies, expand geographic reach and consolidate market positions. The combined entity could benefit from shared expertise, diversified assets and a stronger financial foundation.

However, the success of any merger is contingent upon thorough due diligence and the ability to integrate differing corporate cultures and systems. It is essential to consider how the merger will affect Battalion's debt profile, as the assumption of Fury's liabilities could alter the company's risk profile. Additionally, the post-merger integration process will be critical in realizing cost savings and ensuring a smooth transition that does not disrupt ongoing operations.

From an investor's perspective, the preliminary proxy statement and Schedule 13e-3 filings with the SEC are documents of interest, as they will contain detailed information about the merger terms, the financial health of both companies and the strategic rationale behind the transaction. It is also important to note that the finalization of the merger is subject to stockholder approval, which adds a layer of uncertainty to the process. The outcome of the special meeting will be a decisive moment for both Battalion and Fury, with potential implications for their stock prices and future strategic direction.

Houston, Texas, Jan. 29, 2024 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced certain financial and operating updates.

Key Highlights

• Acid gas injection (“AGI”) well is projected to be injecting by end of the first quarter 2024
• Recent two well pad was drilled and completed under budget and the wells have IP’d above type curve at 1,964 BOEPD and 1,711 BOEPD respectively (71% oil) with production still inclining
• Approximately $61MM cash on hand to fund operations
• Additional equity commitment of $20MM uncalled at current time
• Recently announced merger with Fury anticipated to close as outlined in the Merger Agreement
  
  

Operations Update

The Company continues its drilling and completions operations in Monument Draw while preparing additional locations in Ward, Winkler, Reeves and Pecos counties. Recent drilling and completions on the Company’s two well “Glacier” pad finished ahead of plan from both a capital and time perspective. The Glacier pad wells averaged $11.5 million for 10,000’ laterals and are currently producing above type curve with high pressure supporting sustained increasing rates. The Company is currently drilling an additional two well pad in Monument Draw and expects production from those wells to be online before the end of Q2.

The previously announced workover operation on the Company’s AGI is substantially complete. The Company is currently waiting for delivery of a specialty packer to finalize the installation and return the well to injection. It is expected to be online in the first quarter as previously discussed by management.

Matt Steele, Chief Executive Officer, commented “We continue to see great results from our drilling and completions operations and have once again shown well performance in Monument Draw stacks up against some of the best in the Delaware Basin.”

Liquidity and Balance Sheet

Currently, the Company has $200.2 million of indebtedness outstanding and $0.3 million of letters of credit outstanding. In November 2023, the Company obtained a commitment letter from its existing equity shareholders to purchase additional preferred equity securities in an amount up to $55 million and still has over $20 million undrawn under this commitment. Additionally, the Company has cash on hand of approximately $61 million providing ample liquidity based on the Company’s current operating budget.

Fury Resources Inc. Merger Transaction

The Company has filed a preliminary proxy statement and Schedule 13e-3 with the Securities and Exchange Commission (“SEC”) for the proposed merger and is awaiting comments. The Company continues to work with Fury to close the transaction in the first quarter of 2024.

Important Information for Investors and Stockholders

This communication is being made in connection with the proposed transaction involving the Company and Fury Resources, Inc., a Delaware corporation (“Fury”). In connection with the proposed transaction, the Company intends to file the relevant materials with the SEC, including a proxy statement on Schedule 14A and a transaction statement on Schedule 13e-3 (the “Schedule 13e-3”). Promptly after filing its definitive proxy statement with the SEC, the Company will mail the definitive proxy statement and a proxy card to each stockholder of the Company entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement, the Schedule 13e-3 or any other document that the Company may file with the SEC or send to its stockholders in connection with the proposed transaction. The materials to be filed by the Company will be made available to the Company’s investors and stockholders at no expense to them and copies may be obtained free of charge on the Company’s website at http://www.battalionoil.com. In addition, all of those materials will be available at no charge on the SEC’s website at www.sec.gov. Investors and stockholders of the Company are urged to read the proxy statement, the Schedule 13e-3 and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction because they contain important information about the Company and the proposed transaction.

The Company and its directors, executive officers, other members of its management and employees may be deemed to be participants in the solicitation of proxies of the Company stockholders in connection with the proposed transaction under SEC rules. Investors and stockholders may obtain more detailed information regarding the names, affiliations and interests of the Company’s executive officers and directors in the solicitation by reading the Company’s Annual Report on Form 10-K, as amended on Form 10-K/A, for the fiscal year ended December 31, 2022, and the proxy statement, the Schedule 13e-3 and other relevant materials that will be filed with the SEC in connection with the proposed transaction when they become available. Information concerning the interests of the Company’s participants in the solicitation, which may, in some cases, be different than those of the Company’s stockholders generally, will be set forth in the proxy statement relating to the proposed transaction and the Schedule 13e-3 when they become available.

Forward Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not strictly historical statements constitute forward-looking statements. Forward-looking statements include, among others, statements about anticipated production, liquidity, capital spending, drilling and completion plans, forward guidance and the ability of the parties to complete the proposed transaction and the expected timing of completion of the proposed transaction; as well as any assumptions underlying any of the foregoing. Forward-looking statements may often, but not always, be identified by the use of such words such as "expects", "believes", "intends", "anticipates", "plans", "estimates", “projects,” "potential", "possible", or "probable" or statements that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved. Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements, including (i) the risk that the proposed transaction may not be completed in a timely manner or at all; (ii) the failure to receive, on a timely basis or otherwise, the required approvals of the proposed transaction by the Company’s stockholders; (iii) the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); (iv) the possibility that competing offers or acquisition proposals for the Company will be made; (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including in circumstances, which would require the Company to pay a termination fee; (vi) the effect of the announcement or pendency of the proposed transaction on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with its customers, suppliers and other business counterparties, or its operating results and business generally; (vii) risks related to the proposed transaction diverting management’s attention from the Company’s ongoing business operations; (viii) the amount of costs, fees and expenses related to the proposed transaction; (ix) the risk that the Company’s stock price may decline significantly if the Merger is not consummated; (x) the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; and (xi) other factors as set forth from time to time in the Company’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and other filings submitted by the Company to the SEC, copies of which may be obtained from the SEC's website at www.sec.gov or through the Company's website at www.battalionoil.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company's expectations.

About Battalion

Battalion Oil Corporation is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.

FAQ

What is the ticker symbol for Battalion Oil Corporation?

The ticker symbol for Battalion Oil Corporation is BATL.

What are the key highlights of the financial and operating updates announced by Battalion Oil Corporation?

Battalion Oil Corporation announced that the AGI well is projected to be injecting by the end of the first quarter of 2024, recent two well pad was drilled and completed under budget, and the wells have IP’d above type curve at 1,964 BOEPD and 1,711 BOEPD respectively.

What is the cash on hand for Battalion Oil Corporation?

Battalion Oil Corporation has approximately $61 million cash on hand to fund operations.

What is the equity commitment amount for Battalion Oil Corporation?

Battalion Oil Corporation has an additional equity commitment of $20 million uncalled at the current time.

What is the status of the merger between Battalion Oil Corporation and Fury Resources Inc.?

The merger between Battalion Oil Corporation and Fury Resources Inc. is anticipated to close in the first quarter of 2024.

What is the amount of indebtedness outstanding for Battalion Oil Corporation?

Battalion Oil Corporation has $200.2 million of indebtedness outstanding and $0.3 million of letters of credit outstanding.

What are the details of the merger transaction between Battalion Oil Corporation and Fury Resources Inc.?

Battalion Oil Corporation has filed a preliminary proxy statement and Schedule 13e-3 with the SEC for the proposed merger and is awaiting comments. The company continues to work with Fury to close the transaction in the first quarter of 2024.