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Battalion Oil (BATL) Earnings & Revenues Decline Y/Y in Q2
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Battalion Oil Corporation (BATL - Free Report) faced challenges in second-quarter 2024, with the company's financial results reflecting ongoing pressures from declining production and lower natural gas prices.
Despite these hurdles, BATL has managed to control costs effectively, supported by the operationalization of its new acid gas injection facility. As the company navigates these difficult conditions, its strategic initiatives, including a significant drilling campaign and ongoing merger discussions with Fury Resources, will be key to shaping its outlook.
Battalion Oil Corporation Price, Consensus and EPS Surprise
Battalion Oil reported a second-quarter 2024 loss per share of 80 cents, wider than a loss of 42 cents reported in the year-ago quarter.
Total operating revenues of $49.1 million, down from $54.3 million in the same quarter of 2023.
This decline is mainly attributable to a decrease in average daily production and lower natural gas prices.
Production
In second-quarter 2024, Battalion Oil’s average daily production stood at 12,857 barrels of oil equivalent per day (Boe/d), a decrease from 14,253 Boe/d in the prior-year quarter.
Oil production fell to 577 thousand barrels (MBbls) from 636 MBbls in second-quarter 2023. Natural gas production decreased from 2,155 MMcf in second-quarter 2023 to 1,929 MMcf in second-quarter 2024. NGL production decreased from 302 MBbls in second-quarter 2023 to 271 MBbls in second-quarter 2024.
Prices
The average realized price for crude oil increased to $79.20 per barrel in second-quarter 2024 from $72.59 per barrel in second-quarter 2023.
However, natural gas prices suffered a significant downturn, plummeting to a negative $1.10 per Mcf from 96 cents per Mcf in the prior-year period. The average realized price for NGLs saw a modest increase, reaching $20.31 per barrel from $18.73 per barrel in second-quarter 2023.
Loss
In the second quarter of 2024, Battalion Oil reported a net loss of $8.7 million, widening from the $5.7 million loss in the same quarter of 2023. Adjusted EBITDA declined slightly year over year to $15.6 million from $16.8 million.
The decline in Battalion Oil's profitability in the second quarter of 2024 was primarily led by a decrease in production volumes and challenging market conditions for natural gas.
Costs
Despite these setbacks, the company managed to maintain its lease operating expenses under control, reflecting effective cost management. The acid gas injection facility, which became fully operational in the quarter, played a significant role in reducing operational expenses by $4.26 per Boe from second-quarter 2024. This facility treated 1.82 Bcf of gas in the quarter and provided significant savings in gas treating costs, expected to reach up to $2 million per month as the facility ramps up to full capacity.
General and administrative expenses were also reduced from $4.04 per Boe in second-quarter 2023 to $2.85 per Boe in second-quarter 2024 largely due to a reduction in payroll and benefits following a headcount reduction in 2023. However, these savings were partially offset by higher audit, legal and transaction costs associated with the ongoing merger discussions with Fury Resources.
Cash & Debt
As of Jun 30, 2024, Battalion Oil had cash and cash equivalents totaling $54.4 million, a slight decrease from $57.5 million at the end of 2023. The company's total indebtedness stood at $160.2 million, with $52.6 million classified as current debt.
Management View
Management highlighted ongoing initiatives to reduce costs and enhance production efficiency. The successful completion of a $20-million preferred equity raise in May 2024 to support the drilling program and debt reduction was a strategic move, indicating a focus on maintaining liquidity and financial flexibility.
Other Developments
A notable development in second-quarter 2024 was the continuation of the strategic alternatives initiative, particularly concerning the proposed merger with Fury Resources. The merger agreement, originally announced in December 2024, is under review for a potential amendment that would reduce the purchase price from $9.80 to $7 per share. This revision would also require existing preferred equity holders to roll over 100% of their equity, aiming to support the transaction's viability. The outcome of these discussions could significantly impact the company’s direction and valuation.
Battalion Oil also completed a six-well drilling campaign ahead of schedule and under budget, reflecting operational efficiency. The company plans to continue its drilling activities in Texas’ Ward, Winkler and Pecos Counties, with new wells expected to come online soon.
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Battalion Oil (BATL) Earnings & Revenues Decline Y/Y in Q2
Battalion Oil Corporation (BATL - Free Report) faced challenges in second-quarter 2024, with the company's financial results reflecting ongoing pressures from declining production and lower natural gas prices.
Despite these hurdles, BATL has managed to control costs effectively, supported by the operationalization of its new acid gas injection facility. As the company navigates these difficult conditions, its strategic initiatives, including a significant drilling campaign and ongoing merger discussions with Fury Resources, will be key to shaping its outlook.
Battalion Oil Corporation Price, Consensus and EPS Surprise
Battalion Oil Corporation price-consensus-eps-surprise-chart | Battalion Oil Corporation Quote
Q2 Results
Battalion Oil reported a second-quarter 2024 loss per share of 80 cents, wider than a loss of 42 cents reported in the year-ago quarter.
Total operating revenues of $49.1 million, down from $54.3 million in the same quarter of 2023.
This decline is mainly attributable to a decrease in average daily production and lower natural gas prices.
Production
In second-quarter 2024, Battalion Oil’s average daily production stood at 12,857 barrels of oil equivalent per day (Boe/d), a decrease from 14,253 Boe/d in the prior-year quarter.
Oil production fell to 577 thousand barrels (MBbls) from 636 MBbls in second-quarter 2023. Natural gas production decreased from 2,155 MMcf in second-quarter 2023 to 1,929 MMcf in second-quarter 2024. NGL production decreased from 302 MBbls in second-quarter 2023 to 271 MBbls in second-quarter 2024.
Prices
The average realized price for crude oil increased to $79.20 per barrel in second-quarter 2024 from $72.59 per barrel in second-quarter 2023.
However, natural gas prices suffered a significant downturn, plummeting to a negative $1.10 per Mcf from 96 cents per Mcf in the prior-year period. The average realized price for NGLs saw a modest increase, reaching $20.31 per barrel from $18.73 per barrel in second-quarter 2023.
Loss
In the second quarter of 2024, Battalion Oil reported a net loss of $8.7 million, widening from the $5.7 million loss in the same quarter of 2023. Adjusted EBITDA declined slightly year over year to $15.6 million from $16.8 million.
The decline in Battalion Oil's profitability in the second quarter of 2024 was primarily led by a decrease in production volumes and challenging market conditions for natural gas.
Costs
Despite these setbacks, the company managed to maintain its lease operating expenses under control, reflecting effective cost management. The acid gas injection facility, which became fully operational in the quarter, played a significant role in reducing operational expenses by $4.26 per Boe from second-quarter 2024. This facility treated 1.82 Bcf of gas in the quarter and provided significant savings in gas treating costs, expected to reach up to $2 million per month as the facility ramps up to full capacity.
General and administrative expenses were also reduced from $4.04 per Boe in second-quarter 2023 to $2.85 per Boe in second-quarter 2024 largely due to a reduction in payroll and benefits following a headcount reduction in 2023. However, these savings were partially offset by higher audit, legal and transaction costs associated with the ongoing merger discussions with Fury Resources.
Cash & Debt
As of Jun 30, 2024, Battalion Oil had cash and cash equivalents totaling $54.4 million, a slight decrease from $57.5 million at the end of 2023. The company's total indebtedness stood at $160.2 million, with $52.6 million classified as current debt.
Management View
Management highlighted ongoing initiatives to reduce costs and enhance production efficiency. The successful completion of a $20-million preferred equity raise in May 2024 to support the drilling program and debt reduction was a strategic move, indicating a focus on maintaining liquidity and financial flexibility.
Other Developments
A notable development in second-quarter 2024 was the continuation of the strategic alternatives initiative, particularly concerning the proposed merger with Fury Resources. The merger agreement, originally announced in December 2024, is under review for a potential amendment that would reduce the purchase price from $9.80 to $7 per share. This revision would also require existing preferred equity holders to roll over 100% of their equity, aiming to support the transaction's viability. The outcome of these discussions could significantly impact the company’s direction and valuation.
Battalion Oil also completed a six-well drilling campaign ahead of schedule and under budget, reflecting operational efficiency. The company plans to continue its drilling activities in Texas’ Ward, Winkler and Pecos Counties, with new wells expected to come online soon.