Battalion Oil Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total operating revenue for the quarter ended September 30, 2026, was $45.6 million, compared to $43.5 million in the same period in 2025.
• Average daily net production was 11,359 Boe/d (43% oil), down from 12,293 Boe/d (53% oil) in Q3 2025.
• Net loss available to common stockholders was $41.1 million ($0.75 per diluted share), compared to a net loss of $15.0 million ($0.91 per diluted share) in Q3 2025.
• Adjusted diluted net loss was $2.4 million ($0.04 per share), improving from an adjusted diluted net loss of $15.7 million ($0.96 per share) in Q3 2025.
• Adjusted EBITDA was $10.1 million, down from $18.9 million in Q3 2025.
• Net cash flows from operating activities were $1.6 million, compared to $28.0 million in Q3 2025.
• Lease operating and workover expense decreased to $10.40 per Boe from $11.69 per Boe in Q3 2025.
• Gathering and other expenses increased to $12.57 per Boe from $9.02 per Boe in Q3 2025.
• General and administrative expenses were $3.71 per Boe, compared to $2.73 per Boe in Q3 2025; adjusted G&A was $3.29 per Boe.
• Realized hedge losses totaled approximately $6.5 million for the quarter.
• Cash and cash equivalents ended the quarter at $92.1 million; net debt was $70.4 million, down from $74.2 million at June 30, 2026 and $163.3 million at September 30, 2025.
• Term loan indebtedness outstanding was $162.5 million as of September 30, 2026.

Guidance and Future Outlook:

• No specific forward guidance for production, capital spending, or financial results was provided in the press release.
• Completions for the four-well JEDA pad are expected to commence in late Q4 2026 or early Q1 2027.
• The Company plans to maintain a judicious use of the ATM facility following the completion of the balance sheet transformation.

Business Segments and Product Lines:

• The Company returned to active drilling operations in Q3 2026.
• Drilling on the first four wells of the JEDA exceeded expectations; the rig is mobilizing to drill an additional four wells, with the JEDA partner indicating a desire to participate.
• Oil production averaged 4,915 net barrels per day, exceeding the internal target of 4,835 net barrels per day.
• A transformative midstream transaction executed on November 11, 2026, will enable crude transport via pipeline instead of trucking to lower gathering costs and mitigate EHS risks.
• The Company entered a long-term processing agreement with a publicly traded large-cap midstream provider in January 2026, contributing to higher gathering expenses.

Market and Competitive Landscape:

• Battalion realized approximately 98% of the average NYMEX oil price in Q3 2026, excluding hedges.
• Average realized prices per Boe (excluding hedges) increased by $5.13 year-over-year, primarily due to higher commodity prices.
• Production volumes were impacted by the disposition of volumes associated with the West Quito sale.

Risks and Challenges:

• The press release notes that actual results may differ materially from forward-looking statements due to risks and uncertainties, including those detailed in the Company's Form 10-K for the year ended December 31, 2025.
• Significant unrealized mark-to-market losses on derivative contracts ($38.4 million non-cash) impacted reported net loss.
• Increased gathering and other expenses due to new processing agreements.
• Higher general and administrative expenses driven by increased professional and legal fees.

Management Commentary and Tone:

• Daniel Rohling, COO, stated, "Our commitment to operational excellence has shown in our third quarter results. I'm proud of the team and look forward to continued execution."
• Management described the transition from trucking to pipeline transportation as a "gamechanger" and the culmination of years of negotiations.
• Management noted that financing activities under the ATM program have completed the transformation of the balance sheet.
• The tone regarding operational execution was positive, citing drilling performance exceeding expectations by significant margins.

Other Key Points:

• The Company placed 17.1 million shares of common stock under its ATM program for net proceeds of $28.4 million during the quarter; 25,000 additional shares were placed subsequent to September 30, 2026.
• John "Brad" Juneau was appointed to the board of directors effective September 30, 2026.
• The Company repurchased preferred stock, resulting in a $19.05 million cash outflow for the quarter.
• Proceeds from the sale of oil and natural gas assets were $58.8 million for the nine months ended September 30, 2026.
• The Company ceased nearly all trading under the ATM program following the close of the third quarter.