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Battalion Oil Corp. First Quarter 2020 Results

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Battalion Oil Corp. announced its first quarter 2020 results.

Production

Average daily net production for the quarter ended March 31, 2020 was 18,791 barrels of oil equivalent per day ("Boepd"), of which oil represented 10,297 barrels of oil per day ("Bopd"), compared to 10,233 Bopd and 11,489 Bopd for the first and fourth quarters of 2019, respectively. The Company earned $47.4 million of total revenue for the first quarter of 2020, of which 88% was from oil sales, excluding the impact of hedge settlements. Excluding the realized gain on crude oil derivative contracts of $5.1 million, the Company realized 98% of NYMEX WTI during the first quarter of 2020.

Financials

Total operating costs were $18.20 per Boe compared to $25.49 per Boe for the first quarter of 2019. Adjusted G&A was $1.50 per Boe in the first quarter of 2020 compared to $5.99 per Boe in the first quarter of 2019 (see Selected Operating Data table for additional information). Lease operating and workover expense was $8.07 per Boe in the first quarter of 2020 and $10.94 per Boe in the first quarter of 2019.

The Company reported net income to common stockholders of $114.5 million or net income per basic and diluted share of $7.07 for the first quarter of 2020 and reported adjusted EBITDA of $23.5 million, compared to $12.7 million in the first quarter of 2019 (see Adjusted EBITDA Reconciliation table for additional information).

Liquidity and Capital Spending

During the first quarter of 2020, Battalion incurred capital expenditures of $65.1 million, and placed online 6 new wells.

As of March 31, 2020, Battalion's liquidity was $26.5 million consisting of $0.9 million in cash on hand plus availability under its revolving credit facility less letters of credit outstanding, pro forma for the April 30, 2020 redetermination of its borrowing base under its revolving credit facility.

As of May 11, 2020, Battalion had 9,000 Bopd of oil hedged for the second half of 2020 at an average price of $50.28 per barrel. For 2021, the Company has 7,000 Bopd of oil hedged at an average price of $45.51 per barrel. For 2022, the Company has 4,000 Bopd of oil hedged at an average price of $52.38 per barrel. As of March 31, 2020, the mark-to-market value of derivative contracts was approximately $105 million.

Richard Little, the Company's Chief Executive Officer commented, "We had already planned to suspend our capital program at the end of Q1 2020 and as the market continued to deteriorate, the decisions we had to make required agility and an even greater level of capital discipline. I'm proud of our team's ability to drive down costs and for their quick response time to thoughtfully shut in production across all of our fields.

"We're certainly far more accustomed to bringing new wells online than we are to strategically shutting in over half of our production. Nevertheless, while these times are challenging, they reinforce the notion that sound business principles, such as long term business planning, remain the best way to make what could otherwise be difficult near-term decisions. Our team has done a commendable job of preparing us for circumstances such as the ones we find ourselves in building long-term relationships with key stakeholders such as mineral owners and vendors, proactively creating optionality in our development strategies and simply treating each other with respect. I am hopeful that the market will turn around before the end of the year, but regardless, we will continue to look for more ways to enhance our competitive advantage and further strengthen our balance sheet."