Battalion Oil Corporation

What they do

Battalion acquires, produces, explores and develops onshore oil and natural gas properties in the United States. Its operations are concentrated in the Delaware Basin, primarily at its Monument Draw acreage, where it holds an extensive drilling inventory. Revenue comes from selling crude oil, natural gas and natural gas liquids, with production volumes and realized commodity prices the main drivers of results.

Revenue drivers

• Crude oil production — Oil sales are the largest revenue component; second quarter 2026 production was 12,407 Boe/d, of which about 45% was oil.
• Natural gas and NGLs — The remaining production is natural gas and liquids, making the company about 70% liquids overall; gas handling capacity at Monument Draw was expanded from 35 MMcf/d to more than 50 MMcf/d in 2026.
• Delaware Basin acreage — The company's producing properties and drilling inventory are in the Delaware Basin, with the Monument Draw area the focus of current development.

Recent performance

Revenue rose to $48.0 million in the second quarter of 2026 from $43.4 million in the third quarter of 2025 and $31.6 million in the fourth quarter of 2025. Full-year revenue declined from $284.2 million in 2021 to $165.0 million in 2025, while net income swung from a $31.9 million loss in 2024 to $11.9 million of income in 2025. As of June 30, 2026, total assets were $432.6 million, shareholder equity was $203.1 million, cash was $83.1 million and long-term debt was $156.2 million. Second quarter 2026 sales volumes were 12,407 Boe/d (about 45% oil, 70% liquids), with lease operating and workover expense per BOE down about 12% versus the first quarter of 2026.

Strategy

The company is developing its Monument Draw acreage, including a joint exploration and development agreement for up to eight wells, with an initial four-well pad targeting the 3rd Bone Spring, Wolfcamp A and Wolfcamp B formations expected to spud in August 2026. It completed midstream expansion projects at Monument Draw in April 2026, adding gas throughput capacity and sour gas compression. It refinanced its senior secured credit facility on June 30, 2026, extending maturity to December 31, 2029 and replacing leverage-based pricing with a fixed 6.50% margin over SOFR. It raised $30.3 million net from an at-the-market equity program in the second quarter and $25.6 million more after quarter end, and used proceeds to reduce net debt to $74.2 million and redeem a portion of preferred equity.

Risks

• Commodity price volatility — Revenue and cash flow depend heavily on oil, natural gas and NGL prices, and the company hedges only a portion of expected production.
• Indebtedness and covenants — The company has $156.2 million of long-term debt and contractual limitations on management discretion, and failure to comply with credit agreement covenants could cause defaults.
• Reserve replacement — Production and reserves decline unless the company successfully develops undeveloped acreage or acquires producing properties.
• Drilling and operational risk — Delaware Basin operations are subject to drilling hazards, equipment failures, potential hydrogen sulfide releases, and cost inflation for rigs and services.

Outlook

Management says the company is positioned for continued Monument Draw development, with drilling under the joint exploration and development agreement expected to begin before the end of August 2026. It expects additional compression secured in the second quarter to improve reliability starting in mid-third quarter 2026 and support production growth. Management also said it plans to use the limited shares remaining in its at-the-market program judiciously now that leverage is below 1.5x.