Battalion Oil Corporation — Second Quarter 2026 Earnings Summary

Financial Performance

• Reported total operating revenues of $48.1 million for Q2 2026, an increase from $42.8 million in Q2 2025.
• Net income available to common stockholders was $9.1 million ($0.34 per share) for Q2 2026, compared to a net loss of $3.5 million ($0.21 per share) in Q2 2025.
• Adjusted diluted net loss was $4.9 million ($0.11 per share) for Q2 2026, improving from an adjusted diluted net loss of $10.6 million ($0.65 per share) in Q2 2025.
• Adjusted EBITDA was $12.3 million for Q2 2026, down from $18.1 million in Q2 2025.
• Average daily production was 12,407 Boe/d in Q2 2026, down from 12,989 Boe/d in Q2 2025.
• Average realized prices (excluding hedges) increased by $6.48 per Boe in Q2 2026 compared to Q2 2025; Battalion realized approximately 104% of the average NYMEX oil price.
• Realized hedge losses totaled approximately $7.8 million in Q2 2026.
• Lease operating and workover expense per Boe decreased to $8.69 in Q2 2026 from $10.98 in Q2 2025.
• Gathering and other expenses per Boe increased to $10.87 in Q2 2026 from $9.27 in Q2 2025.
• General and administrative expenses were $3.60 per Boe in Q2 2026 compared to $2.17 per Boe in Q2 2025; adjusted G&A was $2.83 per Boe.
• Ended the quarter with positive equity of $203.1 million.
• Net debt reduced to $74.2 million in Q2 2026 from $108.3 million in Q1 2026.
• Leverage ratio improved to 1.36x in Q2 2026 from 1.79x in Q1 2026.
• Term loan indebtedness outstanding was $162.5 million as of June 30, 2026.
• Total liquidity (cash, cash equivalents, and reinvestment proceeds) was $88.4 million as of June 30, 2026.

Guidance and Future Outlook

• Drilling under a new joint exploration and development agreement is expected to commence prior to the end of August 2026.
• The company plans to judiciously utilize the limited shares available in its ATM program going forward.
• Additional compression secured during the quarter is expected to improve reliability starting in mid-Q3 and support production growth.
• The company intends to transition to a multi-bench development program while deploying capital within cash on hand.

Business Segments and Product Lines

• Monument Draw development program continued with midstream expansion projects completed ahead of schedule and approximately 8% under budget.
• Gas throughput at Monument Draw increased by 20% following midstream expansion, achieving record well productivity.
• Secured an additional 50% of sour gas compression capacity at Monument Draw, increasing gas handling capacity from 35 MMcf/d to over 50 MMcf/d at no capital cost.
• Established a $150 million at-the-market (ATM) equity offering program in May 2026.
• Executed a definitive joint exploration and development agreement for up to eight wells in Monument Draw, with an initial four-well pad targeting the 3rd Bone Spring, Wolfcamp A, and Wolfcamp B formations.
• Completed refinancing of its senior secured credit facility, extending maturity to December 31, 2029.

Market and Competitive Landscape

• Entered into a long-term processing agreement with a publicly traded large-cap midstream provider in January 2026, driving increased gathering and other expenses due to greater throughput volumes.
• The company reported being in its strongest financial and operational position to date.

Risks and Challenges

• Realized hedge losses of $7.8 million occurred in Q2 2026.
• Gathering and other expenses per Boe increased due to new long-term processing agreements.
• General and administrative expenses increased due to higher professional fees (including legal costs) and increased stock compensation expense.
• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, as detailed in the company's Form 10-K and other SEC filings.

Management Commentary and Tone

• CEO Matt Steele described the quarter as "extremely active" with significant progress across all business facets.
• Management highlighted that the company has never previously achieved a leverage ratio under 1.5x.
• Steele noted that the refinancing meaningfully lowers the cost of capital and enhances financial flexibility.
• Management expressed confidence in the company's ability to prudently deploy capital within cash on hand.

Other Key Points

• Placed 17.4 million shares of common stock under the ATM program for net proceeds of $30.3 million during Q2 2026.
• Placed an additional 14.9 million shares under the ATM program for net proceeds of $25.6 million subsequent to quarter end.
• Redeemed and converted a portion of outstanding preferred equity subsequent to quarter end; a preferred liquidation value of $42 million was extinguished for $19 million in cash and 3.5 million common shares.
• The refinancing replaced the prior leverage-based pricing grid with a fixed margin of 6.50% over SOFR.
• The new credit agreement provides access to up to $175.0 million of additional delayed draw capacity.
• Scheduled quarterly principal amortization on the new credit facility commences with the fiscal quarter ending June 30, 2027.