BATTALION OIL CORP Annual Report - How They Did This Year

Hey there! Thinking about BATTALION OIL CORP? This guide is for you. We'll break down their past year's performance. You'll understand what's going on and if it fits your investments. No fancy jargon, just the facts you need. This report covers their fiscal year ending December 31, 2025.

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What BATTALION OIL CORP Does & How They've Been Doing:

BATTALION OIL CORP is an independent energy company. They find, produce, explore, and develop oil and natural gas on U.S. land. They target areas rich in liquids, like oil and natural gas liquids. The company succeeded Halcón Resources Corporation.

Their main focus is Texas's Delaware Basin. This includes Pecos, Reeves, Ward, and Winkler Counties. As of December 31, 2025, they held 39,968 net acres there. Of these, 37,579 net acres are developed, with wells or infrastructure. The remaining 2,389 net acres are undeveloped, for future drilling. They primarily drill into the Wolfcamp and Bone Spring formations. These are known for high oil and liquids-rich natural gas.

By year-end 2025, they had 104 gross (77.5 net) productive oil wells. This was down from 108 gross (86.9 net) productive oil wells in 2024. They had no natural gas wells. They also held minor ownership in 22 wells run by other companies. A strategic sale of West Quito Draw properties partly caused this decrease. This sale happened in early 2026 but affected 2025 year-end figures.

For the fiscal year ending December 31, 2025, their average daily production was 12,096 barrels of oil equivalent (Boe/d). They produced 2,251 thousand barrels (MBbls) of crude oil. This was down from 2,363 MBbls in 2024. They also produced 7,452 million cubic feet (MMcf) of natural gas, down from 7,814 MMcf in 2024. Plus, they produced 922 MBbls of natural gas liquids (NGLs). This shows their operational output.

They reported total proved oil and natural gas reserves of about 59.7 million barrels of oil equivalent (MMBoe) at year-end 2025. This includes 31.8 million barrels of oil, 11.6 million barrels of natural gas liquids (NGLs), and 97.5 billion cubic feet (Bcf) of natural gas. About 60% of these reserves are "proved developed." This means they can recover them from existing wells. The company controls almost all (99.8%) of these estimated reserves. An independent firm, NSAI, evaluates these reserve estimates. Their board has a special committee to ensure the process is sound.

From 2024, their proved developed reserves fell by about 0.7 MMBoe. Lower oil and gas prices caused this. Changes in sales prices (differentials) and production also contributed. New wells helped offset some of this. The West Quito asset sale also reduced these reserves. Their proved undeveloped (PUD) reserves also fell by about 4.6 MMBoe from 2024. This was mainly due to lower SEC-mandated reserve prices. Also, some PUDs became proved developed as they started producing. They did add new PUDs through infill drilling, which means drilling new wells in existing areas. All their PUD reserves should be developed within five years.

The company is a "smaller reporting company" and a "non-accelerated filer." This means they are not one of the biggest companies. They follow slightly different reporting rules than larger corporations.

Show Me the Money! (Financial Performance):

• Production: They produced an average of 12,096 barrels of oil equivalent per day in 2025. They produced 2,251 MBbls of crude oil, down from 2,363 MBbls in 2024. They also produced 7,452 MMcf of natural gas, down from 7,814 MMcf in 2024. Plus, they produced 922 MBbls of natural gas liquids. These figures show how much product they brought to market.
• Reserves: Their estimated proved reserves were 59.7 MMBoe at year-end. They valued these reserves using specific oil and natural gas prices. WTI crude oil was $66.01 per barrel. Henry Hub natural gas was $3.39 per MMBtu. This shows the potential value of their underground assets.
• Capital Spending on Future Production: They invested about $61.7 million in big projects during 2025. This money went to develop their proved undeveloped (PUD) reserves. This covered drilling, completing wells, and other facility costs. This shows they are actively investing in future production.
• Asset Sale: The company agreed to sell most of its West Quito Draw oil and natural gas properties. The price was about $62.6 million. This adjusted to $60.1 million at closing in February 2026. This sale brought in a lot of cash. They used $45.6 million of the cash to pay down debt.
• Capital Raised: After year-end, in March 2026, they raised $15.0 million. They did this by selling stock and warrants to a select group of investors. This new cash will fund day-to-day operations and general business needs.

Big Wins & Tough Times This Year:

Every company has its ups and downs. Here's what stood out for BATTALION OIL CORP:

• Strategic Asset Sale & Debt Reduction: They sold their West Quito Assets for over $60 million. This brought in significant cash. They immediately used $45.6 million to pay down existing debt. However, they gave up about 15% of their 2025 annual production. They also gave up roughly 10% of their year-end proved reserves. This sale involved 13 gross (11.5 net) productive oil wells and 7,608 gross (6,134 net) acres as of December 31, 2025. So, while it was a cash boost, it shrank their operations. It also lowered their proved developed reserves from 2024.
• Increased Drilling Activity: They drilled 6 gross (5.6 net) productive development wells in 2025. This was up from 4 gross (3.9 net) wells in 2024. This shows ongoing operations and investment in their properties. Two of these 2025 wells were in the West Quito area, which they later sold.
• Capital Raising: After year-end, in March 2026, the company raised $15.0 million. They did this by selling stock and warrants to a select group of investors. This is a positive sign for growth or to strengthen finances.
• Expanding Core Acreage: Also after year-end, in March 2026, they acquired an additional 7,090 net acres. This land is in the Monument Draw area of Ward County, Texas. It sits directly next to their existing holdings. This offers good opportunities for future drilling and development. This was an all-stock deal, meaning they issued new shares to pay for it.
• Solid Production & Reserves (Despite Challenges): Despite the asset sale and some reserve changes, the company maintained strong production. They averaged 12,096 Boe/d. They also reported substantial proved reserves of 59.7 MMBoe. This shows their core business remains active.
• Operational Headache with Gas Processing: They faced a big challenge when their joint venture, Wink Amine Treater, LLC (WAT), failed. This facility was meant to process natural gas from their Monument Draw area. It faced big problems and delays, then stopped operating on August 11, 2025. This forced BATTALION OIL CORP to temporarily stop some Monument Draw production. They had to quickly find another gas processing solution. They ended their agreement with WAT in January 2026 and secured a new provider. This was a clear operational setback.

Are They Healthy? (Cash, Debt, & How Easily They Can Pay Bills):

Understanding their financial strength is key. Here's what we know:

• Debt: The company has a Term Loan Credit Agreement from 2024, meaning they've borrowed money. They currently cannot borrow more under this loan. This means they can't easily get more money from this source.
• Debt Repayment: They made a big positive move by using $45.6 million from the West Quito asset sale. This paid down debt in February 2026. It included a required $40.0 million principal prepayment. It also covered a $5.6 million scheduled quarterly payment.
• Liquidity Focus: Management focuses on having enough cash to operate. They plan to do this using cash from operations. They will also use cash they already have. The cash from the West Quito sale ($60.1 million) is another source. Of this, $12.9 million is set aside for new investments or drilling in Monument Draw. Otherwise, it will repay debt. The recent $15.0 million stock sale to select investors and investor commitments will also fund operations. This will help pay off $22.5 million in debt due in 2026. They also use hedging to protect against price swings.
• Upcoming Debt Payments: They still need to address $22.5 million in debt payments due in 2026.
• Investment in Future Production: They spent a significant $61.7 million in 2025 on big projects. This money developed their proved undeveloped (PUD) reserves. This shows their commitment to future growth. However, it was also a big cash outflow.
• Hedging: They use a hedging program, like an insurance policy for prices. This reduces wild swings in their cash flow from changing oil and gas prices. Their loan agreement requires them to hedge much of their future production. This means 85% of expected oil production and 50% of expected natural gas production. They do this on a rolling basis for the next four years. This strategy helps provide more predictable cash flow. This is especially important given their debt. They use tools like fixed-price swaps and costless collars to do this.

This picture suggests they are actively managing their cash and debt. However, the lack of additional borrowing capacity and upcoming debt maturities highlight a need for careful financial management. The recent asset sale and capital raise have definitely helped their cash position.

What Could Go Wrong? (Risks to Your Investment):

Investing in BATTALION OIL CORP, like any company, comes with risks. Here are some of the key things that could impact your investment, according to the company itself:

• Oil & Gas Price Swings: Oil, natural gas, and natural gas liquids (NGLs) prices can swing wildly. This directly affects their profit. Their proved reserves fell in 2025 partly due to lower pricing. Changes in sales prices (differentials) also showed this risk. Their hedging program helps, but it doesn't eliminate all price risk.
• Cash Flow Challenges: They might struggle to bring in enough cash. This includes cash from operations, borrowing, or other sources. They need this cash to pay bills, fund projects, and pay what they owe. The recent stock sale and asset sale were important steps to address this.
• Debt Restrictions: The company has debt agreements. These can limit what management can do. For example, they might restrict taking on more debt, making new investments, or paying cash to shareholders. The requirement to hedge production is one such restriction.
• High Debt Levels: If their debt increases, it makes them more vulnerable if the economy slows down or if their business faces problems.
• Replacing Reserves: They need to constantly find and develop new oil and gas reserves to replace what they produce. If they can't, their business could shrink. The decrease in both proved developed and proved undeveloped reserves from 2024 highlights this ongoing challenge.
• Reserve Estimates: The amount of oil and gas they think they have (their estimated reserves) might not be what they actually find or can recover. Also, the costs to get it out could be higher than expected.
• Developing New Areas: They have much undeveloped land. Developing these areas successfully is key to their future, but it's not guaranteed. They spent $61.7 million in 2025 developing proved undeveloped reserves. They plan to develop all PUDs within five years. This needs significant ongoing investment and successful execution.
• Rising Costs: The cost of things they need, like drilling rigs, fracking services, and pipes, can go up due to inflation, labor shortages, supply issues, or tariffs.
• Drilling Dangers: Oil and gas operations come with risks. These include accidents, equipment failures, fires, and toxic material spills, like hydrogen sulfide. These can lead to injuries, deaths, pollution, property damage, and shutdowns.
• Management Execution: Whether the company succeeds depends on how well their senior management team can carry out their plans. Issues with the Wink Amine Treater highlight that operational plans don't always go smoothly.
• Water & Sand Access: They need access to water, sand, and other materials for fracking operations. If these become scarce or expensive, it could hurt their operations.
• Government Rules: New laws or regulations, including additional taxes or stricter environmental rules, could negatively impact their business.
• Getting Products to Market: They need good systems, like pipelines and processing plants. These move their oil and gas to buyers at good prices. Problems with the Wink Amine Treater show how critical this is. If these systems are limited, it could affect their sales.
• Mergers & Acquisitions: While they might pursue buying or merging with other companies, these deals can be complex. They might not always work out as planned. The recent Monument Draw acquisition is an example of this strategy.
• Selling Assets: If they sell off parts of their business, it could negatively impact their overall operations if not managed well. The West Quito sale reducing their production and reserves shows this.
• Production Declines: The rate at which their wells produce oil and gas might drop faster than they expect. Their overall crude oil and natural gas production decreased from 2024 to 2025.
• Competition: They face competition for land and resources in the areas where they operate.
• Environmental Concerns: Accidental spills or other environmental issues could lead to significant costs and liabilities.
• Exploration & Development Risks: Finding and developing new oil and gas fields is inherently risky and expensive. They did not drill any exploratory or extension wells in 2025 or 2024.
• Keeping Key People: Losing important senior managers, board members, or technical staff could hurt the company.
• Global Events: Big events like social unrest, political instability, or armed conflicts in major oil-producing regions can affect global oil prices and their business. Acts of terrorism or sabotage are also risks.
• Climate Change Rules: Regulations or lawsuits related to climate change could impact their operations and costs.
• Economic Downturns: General economic conditions, whether globally or locally, can affect the demand for oil and gas. This can also make it harder for the company to get funding.
• Pandemic Impacts: Past or future pandemics could affect their operations, finances, employees, and suppliers.
• Extreme Weather: Severe weather events can disrupt operations and cause damage.
• Insurance Coverage: Their insurance might not cover all potential losses. This leaves them exposed to significant costs.
• Title Defects: Issues with the legal ownership of their properties could cause problems.
• Stock Price Volatility: Their stock price has been quite unpredictable. This means it can go up and down a lot. You might not sell your shares for the same price, or higher, than you paid.
• Risk of Delisting: BATTALION OIL CORP lists on the NYSE American stock exchange. If they don't meet the exchange's rules, like keeping a certain stock price or market value, their stock could be removed. If this happens, selling your shares would likely become much harder.

Who's Running the Show & Any Big Changes?:

BATTALION OIL CORP succeeded Halcón Resources Corporation. As of March 18, 2026, the company had 18,256,563 shares of stock available. The market value of publicly traded shares was about $5.0 million as of June 30, 2025. This gives you a sense of the company's size.

They made a big strategic change by acquiring 7,090 net acres in Monument Draw in March 2026. This expands their main operating area. This was an all-stock transaction. They also increased drilling activity. They completed 6 gross (5.6 net) productive development wells in 2025, up from 4 gross (3.9 net) in 2024.

What's Next for BATTALION OIL CORP?:

The company has a clear strategy for the future, aiming to increase shareholder value. Here are their main plans:

• Develop Key Acreage: They plan to drill and develop their liquids-rich land. This is especially true in their Monument Draw and Hackberry areas. The goal is to get the most value and grow production and reserves. This includes the newly acquired 7,090 net acres in Monument Draw. They plan to start drilling two new wells in January 2027. They also commit to developing all proved undeveloped (PUD) reserves within five years. This is a significant ongoing investment. They spent $61.7 million on PUD development in 2025.
• Improve Efficiency: They want to improve profits by always improving operations and cutting costs. They operate most of their wells. This means they control spending and can adjust based on results and market conditions. They focus on cutting administrative costs and finding better ways to operate.
• Maintain Financial Stability: A big focus is keeping enough cash (liquidity). They plan to use their own cash flow. They will also use cash from the West Quito asset sale. This includes $12.9 million in "Reinvestment Proceeds." They must use this for new acquisitions or drilling in Monument Draw within 180 days. Otherwise, it will repay debt. The recent $15.0 million stock sale to select investors and investor commitments will also fund operations. This will help pay off $22.5 million in debt due in 2026. They also use hedging to protect against price swings.
• Strategic Growth through Deals: They are open to buying or merging with other companies. This helps them buy good assets, expand drilling, and grow their business. The recent Monument Draw acquisition shows this strategy.
• Ensuring Gas Processing: After issues with the Wink Amine Treater, they secured an agreement. A large, publicly traded company that handles energy transport will process most of their Monument Draw natural gas. This is crucial for their operations.

Big Picture Stuff: Industry Trends & Rules:

The oil and gas industry is heavily influenced by external factors. For BATTALION OIL CORP, this includes:

• Global Energy Markets: Oil and natural gas prices are a major factor. Global supply, demand, and geopolitical events affect them. Examples include conflicts in the Middle East, Ukraine/Russia, or political situations in Venezuela. Their proved reserves fell in 2025 due to lower prices and market changes. This clearly shows how sensitive their business is to these factors.
• Operational & Conservation Rules: Beyond environmental rules, state laws dictate how much oil and gas wells can produce. They generally forbid venting or burning off natural gas (flaring). Local authorities can temporarily stop drilling. They do this while investigating potential impacts. These rules limit how much BATTALION OIL CORP can produce and where they can drill. Not following them can lead to big penalties. This all adds to the cost of doing business.
• Environmental Regulations & Political Climate: This is a big one. BATTALION OIL CORP must follow strict federal, state, and local laws. These cover environmental releases and general health and safety. The U.S. Environmental Protection Agency (EPA) creates and enforces these rules. They are even considering methane fees. This could mean extra costs for companies like BATTALION. Politics also plays a huge role. Previous administrations pushed for more federal climate policies. President Trump's return in 2025 shifted things. His administration ordered reviews of actions that might burden domestic energy production. They even signaled withdrawal from the Paris Agreement. This means new federal climate regulations will likely slow down, at least for now. However, stricter future laws to reduce greenhouse gas emissions could still require more spending. This includes emissions control systems. It could also reduce demand for their products. If they mess up, they could face huge fines, civil or criminal penalties, or even be forced to stop operations. Sometimes these laws can hold them responsible for cleanup costs even without fault. This is called "strict liability." These rules always change. New ones, like those about radioactive materials, air emissions, or waste disposal, could raise costs. This would impact their profits and ability to compete.
• Environmental Review Process (NEPA): When BATTALION OIL CORP explores or produces oil and gas, especially on federal lands, they often follow the National Environmental Policy Act (NEPA) process. Federal agencies, like the Department of the Interior, must check their plans. They look for significant environmental impacts. They conduct an "Environmental Assessment." Sometimes, they do a more detailed "Environmental Impact Statement" for public review. All BATTALION activities on federal lands need permits. This process adds time and complexity to their projects.
• Economic Health: A strong economy generally means higher demand for energy. A weak one can reduce demand and make it harder for the company to get funding.
• Extreme Weather: Increasingly, extreme weather events can disrupt operations, damage infrastructure, and increase costs.