HOUSTON, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Battalion Oil Corporation (NYSEA: BATL, “Battalion” or the “Company”) today announced its third quarter 2020 results.

Third Quarter Results

Average daily net production for the quarter ended September 30, 2020 was 17,076 Boe per day, of which oil represented 56%. Total revenue for the third quarter was $39.8 million, of which 84% related to crude oil. Realized gains on derivative settlements totaled $5.3 million for the third quarter.

Richard Little, the Company’s CEO, commented, “It’s hard to imagine that Q3 is a reflection of a return to ‘normal,’ however as prices recovered from lows in April, I’m pleased Battalion has had a chance to get back to optimizing production of hydrocarbons. With production back online, I’m proud of our team for demonstrating that we can continue to lower costs in this environment and prepare for whatever comes next. We’ve also used this opportunity to take proactive measures to improve our product pricing, which we are now benefiting from.”

Adjusted G&A was $2.09 per Boe in the third quarter of 2020 compared to $4.92 per Boe in the third quarter of 2019 (see Selected Operating Data table for additional information). Lease operating and workover expense was $7.00 per Boe in the third quarter of 2020 and $8.91 per Boe in the third quarter of 2019.

The Company reported a net loss to common stockholders for the third quarter of 2020 of $153.1 million, including a full cost ceiling test impairment of $128.3 million, which was associated almost entirely with a significant decline in the SEC trailing twelve month price deck used to calculate reserves value. The Company reported a net loss per basic and diluted share of $9.45, and Adjusted LTM EBITDA of $93.9 million, compared to $61.6 million in the third quarter of 2019 (see Adjusted EBITDA Reconciliation table for additional information).

As of November 6, 2020, Battalion had 8,500 Bopd of oil hedged for the remainder of 2020 at an average price of $42.53 per barrel.  For 2021, the Company has 7,000 Bopd of oil hedged at an average price of $45.51 per barrel. For the first half of 2022, the Company has 4,000 Bopd of oil hedged at an average price of $52.38 per barrel. As of September 30, 2020, the mark-to-market value of derivative contracts was approximately $16.3 million.

Conference Call Information
Battalion Oil Corporation has scheduled a conference call for Tuesday, November 10, 2020, at 11:00 a.m. EDT (10:00 a.m. CDT). To participate in the conference call, dial 720-452-9102 or 866-248-8441 (toll free) a few minutes before the call begins and reference Battalion Oil Corporation confirmation code 3866208.  The conference call recording will also be posted to Battalion’s website: www.battalionoil.com.

Forward Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not strictly historical statements constitute forward-looking statements. Forward-looking statements include, among others, statements about anticipated production, liquidity, capital spending, drilling and completion plans, and forward guidance. Forward-looking statements may often, but not always, be identified by the use of such words such as "expects", "believes", "intends", "anticipates", "plans", "estimates", “projects”, "potential", "possible", or "probable" or statements that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved. Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (“SEC”), copies of which may be obtained from the SEC's website at www.sec.gov or through the Company's website at www.battalionoil.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company's expectations.

About Battalion
Battalion Oil Corporation is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.

Contact
John-Davis Rutkauskas
Director, Corporate Finance & IR
(832) 538-0551

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)

               
  Successor  Predecessor Successor  Predecessor
  Three Months  Three Months Nine Months  Nine Months
  Ended  Ended Ended  Ended
  September 30, 2020  September 30, 2019 September 30, 2020  September 30, 2019
Operating revenues:              
Oil, natural gas and natural gas liquids sales:              
Oil $33,638   $46,275  $91,313   $145,024 
Natural gas  1,912    301   3,102    107 
Natural gas liquids  3,896    3,987   10,086    13,229 
Total oil, natural gas and natural gas liquids sales  39,446    50,563   104,501    158,360 
Other  384    246   1,222    743 
Total operating revenues  39,830    50,809   105,723    159,103 
               
Operating expenses:              
Production:              
Lease operating  10,091    11,958   32,880    39,617 
Workover and other  905    1,566   2,767    5,580 
Taxes other than income  2,722    3,012   7,130    9,213 
Gathering and other  13,500    10,147   39,275    36,057 
Restructuring  —    3,223   2,580    15,148 
General and administrative  4,111    19,423   13,237    36,550 
Depletion, depreciation and accretion  15,755    20,512   48,167    90,912 
Full cost ceiling impairment  128,336    45,568   188,443    985,190 
(Gain) loss on sale of Water Assets  —    (164)  —    3,618 
Total operating expenses  175,420    115,245   334,479    1,221,885 
Income (loss) from operations  (135,590)   (64,436)  (228,756)   (1,062,782)
               
Other income (expenses):              
Net gain (loss) on derivative contracts  (15,843)   13,457   67,695    (34,332)
Interest expense and other` (1,692)   (10,547)  (4,889)   (37,606)
Reorganization items, net  —    (1,758)  —    (1,758)
Total other income (expenses)  (17,535)   1,152   62,806    (73,696)
Income (loss) before income taxes  (153,125)   (63,284)  (165,950)   (1,136,478)
Income tax benefit (provision)  —    —   —    95,791 
Net income (loss) $(153,125)  $(63,284) $(165,950)  $(1,040,687)
               
Net income (loss) per share of common stock:              
Basic $(9.45)  $(0.40) $(10.24)  $(6.55)
Diluted $(9.45)  $(0.40) $(10.24)  $(6.55)
Weighted average common shares outstanding:              
Basic  16,204    159,143   16,204    158,916 
Diluted  16,204    159,143   16,204    158,916 
                   

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)

  Successor
  September 30, 2020 December 31, 2019
Current assets:      
Cash and cash equivalents $1,827  $5,701 
Accounts receivable, net  26,053   48,504 
Assets from derivative contracts  18,996   4,995 
Restricted cash  —   4,574 
Prepaids and other  2,326   7,379 
Total current assets  49,202   71,153 
Oil and natural gas properties (full cost method):      
Evaluated  520,453   420,609 
Unevaluated  80,540   105,009 
Gross oil and natural gas properties  600,993   525,618 
Less - accumulated depletion  (254,849)  (19,474)
Net oil and natural gas properties  346,144   506,144 
Other operating property and equipment:      
Other operating property and equipment  3,490   3,655 
Less - accumulated depreciation  (1,020)  (378)
Net other operating property and equipment  2,470   3,277 
Other noncurrent assets:      
Assets from derivative contracts  9,675   224 
Operating lease right of use assets  424   3,165 
Other assets  5,178   703 
Total assets $413,093  $584,666 
       
Current liabilities:      
Accounts payable and accrued liabilities $56,130  $97,333 
Liabilities from derivative contracts  9,055   8,069 
Current portion of long-term debt  1,401   — 
Operating lease liabilities  657   923 
Asset retirement obligations  —   109 
Total current liabilities  67,243   106,434 
Long-term debt, net  178,808   144,000 
Other noncurrent liabilities:      
Liabilities from derivative contracts  3,292   4,854 
Asset retirement obligations  10,960   10,481 
Operating lease liabilities  —   2,247 
Commitments and contingencies      
Stockholders' equity:      
Common stock: 100,000,000 shares of $0.0001 par value authorized; 16,203,967 and 16,203,940 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively  2   2 
Additional paid-in capital  329,198   327,108 
Retained earnings (accumulated deficit)  (176,410)  (10,460)
Total stockholders' equity  152,790   316,650 
Total liabilities and stockholders' equity $413,093  $584,666 
         

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

  Successor  Predecessor Successor  Predecessor
  Three Months  Three Months Nine Months  Nine Months
  Ended  Ended Ended  Ended
  September 30, 2020  September 30, 2019 September 30, 2020  September 30, 2019
Cash flows from operating activities:              
Net income (loss) $(153,125)  $(63,284) $(165,950)  $(1,040,687)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:              
Depletion, depreciation and accretion  15,755    20,512   48,167    90,912 
Full cost ceiling impairment  128,336    45,568   188,443    985,190 
(Gain) loss on sale of Water Assets  —    (164)  —    3,618 
Deferred income tax provision (benefit)  —    —   —    (95,791)
Stock-based compensation, net  620    (2,278)  1,793    (8,035)
Unrealized loss (gain) on derivative contracts  21,128    (11,571)  (24,029)   45,834 
Amortization and write-off of deferred loan costs  —    882   —    1,859 
Amortization of discount and premium  —    23   —    134 
Reorganization items, net  (717)   (283)  (6,440)   (283)
Accrued settlements on derivative contracts  125    574   474    168 
Other income (expense)  (184)   (4)  280    367 
Cash flows from operations before changes in working capital  11,938    (10,025)  42,738    (16,714)
Changes in working capital  (7,164)   3,690   5,140    (16,519)
Net cash provided by (used in) operating activities  4,774    (6,335)  47,878    (33,233)
               
Cash flows from investing activities:              
Oil and natural gas capital expenditures  (5,319)   (28,075)  (96,483)   (167,235)
Proceeds received from sale of oil and natural gas properties  3,000    —   3,500    1,247 
Acquisition of oil and natural gas properties  —    —   —    (2,809)
Other operating property and equipment capital expenditures  (28)   (21,037)  (28)   (85,613)
Funds held in escrow and other  (1)   (2)  508    (7)
Net cash provided by (used in) investing activities  (2,348)   (49,114)  (92,503)   (254,417)
               
Cash flows from financing activities:              
Proceeds from borrowings  38,000    71,234   119,209    315,234 
Repayments of borrowings  (39,000)   (1,000)  (83,000)   (57,000)
Equity issuance costs and other  —    (14)  (32)   (441)
Net cash provided by (used in) financing activities  (1,000)   70,220   36,177    257,793 
               
Net increase (decrease) in cash, cash equivalents and restricted cash  1,426    14,771   (8,448)   (29,857)
               
Cash, cash equivalents and restricted cash at beginning of period  401    2,238   10,275    46,866 
Cash, cash equivalents and restricted cash at end of period $1,827   $17,009  $1,827   $17,009 
                   

BATTALION OIL CORPORATION
SELECTED OPERATING DATA
(Unaudited)

               
  Successor  Predecessor Successor  Predecessor
  Three Months  Three Months Nine Months  Nine Months
  Ended  Ended Ended  Ended
  September 30, 2020  September 30, 2019 September 30, 2020  September 30, 2019
Production volumes:              
Crude oil (MBbls)  877    863   2,589    2,723 
Natural gas (MMcf)  2,266    1,924   6,437    6,381 
Natural gas liquids (MBbls)  316    333   917    911 
Total (MBoe)  1,571    1,517   4,579    4,698 
Average daily production (Boe/d)  17,076    16,489   16,712    17,209 
               
Average prices:              
Crude oil (per Bbl) $38.36   $53.62  $35.27   $53.26 
Natural gas (per Mcf)  0.84    0.16   0.48    0.02 
Natural gas liquids (per Bbl)  12.33    11.97   11.00    14.52 
Total per Boe  25.11    33.33   22.82    33.71 
               
Cash effect of derivative contracts:              
Crude oil (per Bbl) $5.33   $(3.04) $15.96   $(0.93)
Natural gas (per Mcf)  0.27    0.78   0.37    0.94 
Natural gas liquids (per Bbl)  —    10.48   —    9.38 
Total per Boe  3.36    1.56   9.54    2.55 
               
Average prices computed after cash effect of settlement of derivative contracts:              
Crude oil (per Bbl) $43.69   $50.58  $51.23   $52.33 
Natural gas (per Mcf)  1.11    0.94   0.85    0.96 
Natural gas liquids (per Bbl)  12.33    22.45   11.00    23.90 
Total per Boe  28.47    34.89   32.36    36.26 
               
Average cost per Boe:              
Production:              
Lease operating $6.42   $7.88  $7.18   $8.43 
Workover and other  0.58    1.03   0.60    1.19 
Taxes other than income  1.73    1.99   1.56    1.96 
Gathering and other, as adjusted (1)  8.59    6.47   7.83    7.30 
Restructuring  -    2.12   0.56    3.22 
General and administrative, as adjusted (1)  2.09    4.92   2.09    5.29 
               
(1) Represents gathering and other and general and administrative costs per Boe, adjusted for items noted in the reconciliation below:
               
General and administrative:              
General and administrative, as reported $2.61   $12.81  $2.89   $7.78 
Stock-based compensation:              
Non-cash  (0.39)   1.50   (0.39)   1.71 
Non-recurring professional fees and other:              
Cash  (0.13)   (9.39)  (0.41)   (4.20)
General and administrative, as adjusted(2) $2.09   $4.92  $2.09   $5.29 
               
Gathering and other, as reported  8.59    6.69   8.58    7.67 
Rig termination and stacking charges and other(3)  -    (0.22)  (0.75)   (0.37)
Gathering and other, as adjusted(4) $8.59   $6.47  $7.83   $7.30 
               
Total operating costs, as reported  19.93    30.40   20.81    27.03 
Total adjusting items  (0.52)   (8.11)  (1.55)   (2.86)
Total operating costs, as adjusted(5) $19.41   $22.29  $19.26   $24.17 
                   

_______________
(2) General and administrative, as adjusted, is a non-GAAP measure that excludes non-cash stock-based compensation charges relating to equity awards under our incentive stock plans, as well as other cash charges associated with non-recurring professional fees and other costs. The Company believes that it is useful to understand the effects that these charges have on general and administrative expenses and total operating costs and that exclusion of such charges is useful for comparison to prior periods.
(3) Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees.
(4) Gathering and other, as adjusted, is a non-GAAP measure that excludes rig termination and stacking charges and other costs.  The Company believes that it is useful to understand the effects that these charges have on gathering and other expense and total operating costs and that exclusion of such charges is useful for comparative purposes.
(5) Represents lease operating, workover and other expense, taxes other than income, gathering and other expense and general and administrative costs per Boe, adjusted for items noted in the reconciliation above.

BATTALION OIL CORPORATION
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)
(In thousands, except per share amounts)

               
  Successor  Predecessor Successor  Predecessor
  Three Months  Three Months Nine Months  Nine Months
  Ended  Ended Ended  Ended
  September 30, 2020  September 30, 2019 September 30, 2020  September 30, 2019
As Reported:              
Net income (loss), as reported $(153,125)  $(63,284) $(165,950)  $(1,040,687)
               
Impact of Selected Items:              
Unrealized loss (gain) on derivatives contracts:              
Crude oil $19,354   $(14,873) $(26,201)  $35,967 
Natural gas  1,774    1,269   2,172    3,753 
Natural gas liquids  —    2,033   —    6,114 
Total mark-to-market non-cash charge  21,128    (11,571)  (24,029)   45,834 
Full cost ceiling impairment  128,336    45,568   188,443    985,190 
(Gain) loss on sale of Water Assets  —    (164)  —    3,618 
Reorganization items  —    1,758   —    1,758 
Restructuring  —    3,223   2,580    15,148 
Rig termination and stacking charges and other  210    15,276   5,327    22,601 
Selected items, before income taxes  149,674    54,090   172,321    1,074,149 
Income tax effect of selected items (1)  —    —   —    (91,741)
Selected items, net of tax  149,674    54,090   172,321    982,408 
               
As Adjusted:              
Net income (loss), excluding selected items (2)(3) $(3,451)  $(9,194) $6,371   $(58,279)
               
Basic net income (loss) per common share, as reported $(9.45)  $(0.40) $(10.24)  $(6.55)
Impact of selected items  9.24    0.34   10.63    6.18 
Basic net income (loss) per common share, excluding selected items (2)(3) $(0.21)  $(0.06) $0.39   $(0.37)
               
               
Diluted net income (loss) per common share, as reported $(9.45)  $(0.40) $(10.24)  $(6.55)
Impact of selected items  9.24    0.34   10.63    6.18 
Diluted net income (loss) per common share, excluding selected items (2)(3)(4) $(0.21)  $(0.06) $0.39   $(0.37)
               
               
Net cash provided by (used in) operating activities $4,774   $(6,335) $47,878   $(33,233)
Changes in working capital  7,164    (3,690)  (5,140)   16,519 
Cash flows from operations before changes in working capital  11,938    (10,025)  42,738    (16,714)
Cash components of selected items  802    19,966   13,423    39,530 
Income tax effect of selected items (1)  —    —   —    (8,301)
Cash flows from operations before changes in working capital, adjusted for selected items (2)(3) $12,740   $9,941  $56,161   $14,515 
                   

_______________
(1) For the nine months ended September 30, 2019 (Predecessor), this represents the tax impact using an estimated tax rate of 21.0% and includes a $133.8 million adjustment for the net change in valuation allowance.
(2) Net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital adjusted for selected items are non-GAAP measures presented based on management's belief that they will enable a user of the financial information to understand the impact of these items on reported results.  These financial measures are not measures of financial performance under GAAP and should not be considered as an alternative to net income, earnings per share and cash flows from operations, as defined by GAAP. These financial measures may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance.  Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(3) For the three and nine months ended September 30, 2020 (Successor), net income (loss), earnings per share excluding selected items and cash flow from operations before changes in working capital include approximately $6.6 million and $22.9 million, respectively, of net proceeds from hedge monetizations.  For the three and nine months ended September 30, 2019 (Predecessor), net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital include approximately $0.1 million and $7.8 million, respectively, of proceeds related to hedge monetizations.
(4) The impact of selected items for the three months ended September 30, 2020 (Successor) and 2019 (Predecessor) were calculated based upon weighted average diluted shares of 16.2 million and 159.1 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items.  The impact of selected items for the nine months ended September 30, 2020 (Successor) and 2019 (Predecessor) were calculated based upon weighted average diluted shares of 16.2 million and 158.9 million, respectively, due to the net income (loss) available to common stockholders, excluding selected items.

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)

  Successor  Predecessor Successor  Predecessor
  Three Months  Three Months Nine Months  Nine Months
  Ended  Ended Ended  Ended
  September 30, 2020  September 30, 2019 September 30, 2020  September 30, 2019
               
Net income (loss), as reported $(153,125)  $(63,284) $(165,950)  $(1,040,687)
Impact of adjusting items:              
Interest expense  1,964    9,911   5,520    36,265 
Depletion, depreciation and accretion  15,755    20,512   48,167    90,912 
Full cost ceiling impairment  128,336    45,568   188,443    985,190 
Income tax provision (benefit)  —    —   —    (95,791)
Stock-based compensation  620    (2,278)  1,793    (8,035)
Interest income  (273)   (13)  (602)   (91)
Reorganization items  —    1,758   —    1,758 
Restructuring  —    3,223   2,580    15,148 
(Gain) loss on sale of other assets  —    2   52    418 
(Gain) loss on sale of Water Assets  —    (164)  —    3,618 
Unrealized loss (gain) on derivatives contracts  21,128    (11,571)  (24,029)   45,834 
Rig termination and stacking charges and other  210    15,276   5,327    22,601 
Adjusted EBITDA(1)(2) $14,615   $18,940  $61,301   $57,140 
                   

_______________
(1) Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP measures, including net income (loss). This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance. Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(2) Adjusted EBITDA for the three and nine months ended September 30, 2020 (Successor) includes approximately $6.6 million and $22.9 million, respectively, of net proceeds from hedge monetizations.  Adjusted EBITDA for the three and nine months ended September 30, 2019 (Predecessor) includes approximately $0.1 million and $7.8 million, respectively, of proceeds related to hedge monetizations.

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)

  Three Months Three Months Three Months Three Months
  Ended Ended Ended Ended
  September 30, 2020 June 30. 2020 March 31, 2020 December 31, 2019(1)
             
Net income (loss), as reported $(153,125) $(127,316) $114,491  $(125,826)
Impact of adjusting items:            
Interest expense  1,964   1,842   1,714   1,430 
Depletion, depreciation and accretion  15,755   14,382   18,030   19,996 
Full cost ceiling impairment  128,336   60,107   —   — 
Stock-based compensation  620   786   387   — 
Interest income  (273)  (232)  (97)  (128)
Reorganization items, net  —   —   —   118,664 
Restructuring  —   2,162   418   1,175 
(Gain) loss on sale of other assets  —   52   —   (6)
(Gain) loss on sale of Water Assets  —   —   —   (506)
Unrealized loss (gain) on derivatives contracts  21,128   67,221   (112,378)  18,681 
Other(2)  210   4,211   906   (901)
Adjusted EBITDA(3)(4) $14,615  $23,215  $23,471  $32,579 
             
Adjusted LTM EBITDA(1)(3)(4) $93,880          
              

_______________
(1) For illustrative purposes, the Company has combined the Successor and Predecessor results to derive combined results for the Adjusted LTM EBITDA ended September 30, 2020. The combination was generated by addition of comparable financial statement line items. However, because of various adjustments to the consolidated financial statements in connection with the application of fresh-start reporting, including asset valuation adjustments and liability adjustments, the results of operations for the Successor are not comparable to those of the Predecessor. The Company believes that subject to consideration of the impact of fresh-start reporting, combining the results of the Predecessor and Successor provides meaningful information about Adjusted LTM EBITDA that assists a reader in understanding the Company’s financial results for the applicable periods.
(2) Other adjustments to net income (loss), as reported include rig termination and stacking charges, prepetition reorganization costs and other non-recurring professional fees and costs.
(3) Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP measures, including net income (loss). This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance. Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(4) Adjusted EBITDA for the three months ended September 30, 2020, June 30, 2020, March 31, 2020, and December 31,2019 includes approximately $6.6 million of proceeds, $16.4 million of proceeds, $0.1 million of charges, and $0.9 million of proceeds, respectively, for hedge monetizations. 

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)

  Three Months Three Months Three Months Three Months
  Ended Ended Ended Ended
  September 30, 2019 June 30. 2019 March 31, 2019 December 31, 2018
             
Net income (loss), as reported $(63,284) $(640,844) $(336,559) $146,668 
Impact of adjusting items:            
Interest expense  9,911   14,382   11,972   12,610 
Depletion, depreciation and accretion  20,512   40,425   29,975   25,130 
Full cost ceiling impairment  45,568   664,383   275,239   — 
Income tax provision (benefit)  —   (50,306)  (45,485)  95,791 
Stock-based compensation  (2,278)  1,025   (6,782)  3,025 
Interest income  (13)  (17)  (61)  (117)
Reorganization items, net  1,758   —   —   — 
Restructuring  3,223   654   11,271   — 
(Gain) loss on sale of other assets  2   —   416   290 
(Gain) loss on sale of Water Assets  (164)  2,897   885   (119,003)
Unrealized loss (gain) on derivatives contracts  (11,571)  (10,764)  68,169   (161,798)
Other(1)  15,276   3,678   3,647   1,827 
Adjusted EBITDA(2)(3) $18,940  $25,513  $12,687  $4,423 
             
Adjusted LTM EBITDA(2)(3) $61,563          
              

_______________
(1) Other adjustments to net income (loss), as reported include rig stacking charges, transaction costs, prepetition reorganization costs and other non-recurring costs.
(2) Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP measures, including net income (loss). This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Battalion's performance. Amounts for periods prior to 2020 have been revised to conform to the current presentation by eliminating adjustments for gas treating fees. Management believes that conforming the presentation of this information facilitates comparisons across periods.
(3) Adjusted EBITDA for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018 includes approximately $0.1 million, $4.1 million, $3.6 million, and $4.4 million, respectively, of proceeds from hedge monetizations. 


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Source: Battalion Oil Corporation

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