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BO

BATTALION OIL CORP (BATL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered steady volumes and stable revenue despite processing disruptions: 12,293 Boe/d (53% oil) and $43.5M revenue vs. 12,076 Boe/d (52% oil) and $45.3M in Q3 2024; Adjusted EBITDA improved to $18.9M from $13.5M YoY .
  • Reported net loss to common was $(15.0)M or $(0.91) per share, pressured by preferred dividends and lower realized commodity prices YoY; realized hedge gains were ~$4.1M .
  • Operations mitigated an AGI plant shutdown (effective Aug 11): most wells were restored via third-party treatment, but ~1,600 bopd remain shut-in and “ready to flow to sales” pending resolution .
  • Balance sheet/liquidity improved with $50.5M cash and an amendment providing total net leverage and asset coverage covenant relief through Q2 2027, reducing near-term financing risk; term debt was $213.8M at quarter-end .
  • Near-term catalysts: (1) incremental volumes from returning ~1,600 bopd, (2) ongoing M&A review, and (3) operational cost progress (lower gathering per Boe YoY) .

What Went Well and What Went Wrong

  • What Went Well

    • Strong well results and cost control: “two wells coming online and producing an average of 883 Boe/d over the first 120 days,” with “more than $1.1 million in savings per well” vs AFE in West Quito Draw .
    • Cost structure progress: gathering and other expenses fell to $9.02/Boe (vs $11.20/Boe a year ago), aided by central facility improvements and AGI throughput earlier in 2025 .
    • Resilient cash generation: Adjusted EBITDA rose to $18.9M from $13.5M YoY; cash from operations was $28.0M, reflecting working capital tailwinds .

  • What Went Wrong

    • Processing disruption: AGI facility ceased operations on Aug 11; although gas was redirected to third-party treatment, ~1,600 bopd remain shut-in, impacting oil sales and revenue .
    • Price headwind: total revenue declined YoY due to a $2.24/Boe drop in realized prices (ex-hedges) despite slight volume growth; oil realized 98.3% of NYMEX .
    • EPS pressured by capital structure: preferred dividends of $14.3M drove a $(15.0)M net loss to common and $(0.91) diluted EPS .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($M)$45.266 $47.475 $42.812 $43.482
Diluted EPS ($)$0.34 $(0.35) $(0.21) $(0.91)
Net (Loss) Income to Common ($M)$5.575 $(5.797) $(3.474) $(15.014)
Adjusted EBITDA ($M, non‑GAAP)$13.458 $15.082 $18.137 $18.882
Oil & Gas Capex ($M, cash flow)$6.929 $19.800 $33.290 $16.483
Operating KPIsQ3 2024Q1 2025Q2 2025Q3 2025
Average Production (Boe/d)12,076 11,900 12,989 12,293
Oil Mix (%)52% 53% 49% 53%
LOE ($/Boe)$10.44 $9.67 $9.03 $10.95
Gathering & Other ($/Boe)$11.20 $11.20 $9.27 $9.02
G&A, as adjusted ($/Boe)$2.58 $3.01 $2.11 $2.44
Total Operating Costs, as reported ($/Boe)$28.50 $28.94 $24.55 $25.76

Notes: Adjusted EBITDA is non-GAAP; see company reconciliation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Credit facility covenants (total net leverage ratio and asset coverage ratio)Through fiscal quarter ended June 30, 2027Prior covenant levelsAmended to provide covenant reliefAmended
Operational processing status (AGI)Q3 2025AGI in service through Aug 11, 2025AGI out of service; gas treated by third party; ~1,600 bopd shut-in “ready to flow to sales”Operational update (no quantitative production guidance)

No formal quantitative production, capex, cost, or margin guidance ranges were provided in the Q3 2025 materials .

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was available in our document set; themes below are synthesized from quarterly disclosures.

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend/Context
Processing/AGIQ1: AGI online (~18 MMcf/d avg; later >30 MMcf/d) . Q2: AGI treated ~2.2 Bcf (~24 MMcf/d avg); ceased ops Aug 11 .AGI remains out; third-party treatment secured; ~1,600 bopd still shut-in pending resolution .From in-service to outage; partial mitigation via third-party treatment .
Drilling/completions efficiencyQ1: Under AFE; record 10k-ft lateral time; Monument Draw wells above type curve . Q2: Two West Quito wells under AFE by ~$1.0M each .Two West Quito wells averaging 883 Boe/d (first 120 days); >$1.1M savings per well vs AFE .Continued execution with unit cost savings .
Costs per BoeQ1: Gathering improved YoY (AGI throughput); LOE ~flat YoY . Q2: Gathering down YoY; G&A/Boe declined .Gathering down YoY to $9.02/Boe; LOE up YoY to $10.95/Boe; G&A/Boe down YoY .Mixed: structural progress on gathering; LOE modestly higher YoY .
Liquidity/capital structureQ1: $73.6M cash; $225M term loan . Q2: $44.6M cash; $219.4M term loan .$50.5M cash; $213.8M term loan; covenant relief through Q2 2027 .Liquidity stable; lower debt; improved covenant runway .
Strategic alternatives——Company “continues to pursue potential merger, acquisition and divestiture opportunities” .

Management Commentary

  • “Drilling and completion operations concluded in the West Quito Draw with two wells coming online and producing an average of 883 Boe/d over the first 120 days of production. Well operations yielded more than $1.1 million in savings per well across all phases compared to AFE.”
  • “The acid gas injection (AGI) facility ceased operations on August 11, 2025 and remains out of service…Approximately 1,600 barrels of oil per day remain shut-in across Monument Draw ready to flow to sales.”
  • Liquidity/covenants: “Second Amendment…provides total net leverage ratio and asset coverage ratio covenant relief through the fiscal quarter ended June 30, 2027.”

Q&A Highlights

No Q3 2025 earnings call transcript was available in our document set; therefore, there are no Q&A highlights to report for the period searched (we scanned for an earnings-call-transcript and found none) [ListDocuments: earnings-call-transcript returned 0].

Estimates Context

  • Wall Street (S&P Global) consensus for Q3 2025 was not available for EPS or revenue (no estimates returned), so a beat/miss vs. consensus cannot be determined at this time. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Operational resilience: Despite the AGI outage, volumes remained broadly stable (12,293 Boe/d) with third-party processing; ~1,600 bopd represent near-term upside if brought back online .
  • Improving cash earnings power: Adjusted EBITDA rose YoY to $18.9M even with softer realized prices, underscoring cost progress and hedge protection .
  • Cost structure progress where controllable: Gathering/other costs per Boe declined YoY to $9.02; continued central facility benefits offset part of the processing disruption .
  • Capital and liquidity: $50.5M in cash and covenant relief through Q2 2027 reduce near-term financing risk as the company navigates processing constraints and evaluates strategic options .
  • Watch the AGI path forward: The speed/terms of restoring shut-in oil volumes are the key near-term stock drivers, with every incremental barrel directly impacting revenue and cash flow .
  • Strategic optionality: Management continues to pursue merger/acquisition/divestiture opportunities, which could re-rate the equity depending on terms and balance sheet outcomes .
  • Sequential setup: With wells online and per-well cost savings, execution readiness is high; resolution of processing constraints is the primary gating factor for sequential revenue expansion .

Citations

  • Q3 2025 results and financial statements:
  • Q3 2025 8-K and exhibit references:
  • Q2 2025:
  • Q1 2025:

S&P Global disclaimer

  • Estimates data and unavailability statement are based on S&P Global consensus. Values retrieved from S&P Global.*