Key Highlights

  • Second quarter net income was $15.5 million, including a $13.1 million derivative gain; the six-month net loss was $41.0 million.
  • The company sold 17.4 million shares through its ATM in the second quarter and 14.9 million more after quarter end.
  • A June 30 credit agreement refinanced the term loan at SOFR plus 6.50% with a December 31, 2029 maturity.
  • Battalion eliminated Gen IV's preferred holdings for $19 million in cash and 3.5 million common shares.

Battalion Oil (NYSE American:BATL) shares were trading near their 52-week low at USD 1.01 on October 19, 2026, down 3.81%. The Delaware Basin oil and gas producer reported second quarter net income of $15.5 million on August 12, alongside a net loss of $41.0 million for the first half. On September 16, NYSE American said the company had regained compliance with its continued listing standards.

Second quarter results and the first-half loss

Total operating revenues were $48.1 million in the second quarter of 2026, up from $42.8 million a year earlier. Net income was $15.5 million, including a $13.1 million net gain on derivative contracts. Net income available to common stockholders was $9.1 million, or $0.34 per share, after $6.4 million of undistributed earnings allocated to preferred stockholders, compared with a loss of $0.21 per share a year earlier.

For the first six months, the company recorded a $34.9 million net loss on derivative contracts, a net loss of $41.0 million and a loss of $2.25 per common share. Adjusted EBITDA, a non-GAAP measure, was $12.3 million in the quarter, against $18.1 million.

Sales volumes averaged 12,407 barrels of oil equivalent per day, about 45% oil, compared with 12,989 a year earlier. The realized oil price before hedges was $96.38 per barrel, against $62.14, while the realized natural gas price was negative $3.43 per thousand cubic feet.

Share sales, preferred stock and the new credit agreement

Cash was $83.1 million at June 30, and total liquidity, including reinvestment proceeds, was $88.4 million. The company reported net debt of $74.2 million, down from $108.3 million at March 31, and a leverage ratio of 1.36 times, down from 1.79 times. A West Quito Draw divestiture brought $60.1 million of net proceeds, with $45.6 million repaying the earlier term loan.

Battalion sold 17.4 million shares through the at-the-market program in the second quarter and 14.9 million more afterward for net proceeds of $25.6 million. Common shares outstanding rose to 38.9 million at June 30 from 16.5 million at December 31, 2025.

Under an August 7 agreement, the company repurchased 5,138 Series A and 6,578.11 Series A-1 preferred shares from Gen IV Investment Opportunities for $19.0 million, and Gen IV converted its other preferred series into 3,494,258 common shares. The company said this removed $42 million of liquidation value. Preferred stock was carried at $221.2 million at June 30, before the transaction, with a liquidation preference of $198.3 million.

The Third Amended and Restated Senior Secured Credit Agreement, dated June 30, 2026, covers a $162.5 million term loan at SOFR plus 6.50%, down from a margin of 7.75% to 8.50%. It matures December 31, 2029, and amortization starts with the quarter ending June 30, 2027. Leverage, current ratio, asset coverage and minimum liquidity covenants are tested from the quarter ending September 30, 2026.

NYSE American first notified the company on May 30, 2025 that it fell short of stockholders' equity standards. On September 16, 2026, the exchange said it had regained compliance, ahead of its November 30, 2026 plan deadline.

Outlook: Monument Draw drilling and 2027 targets

The joint exploration and development agreement, signed May 27, 2026, covers up to eight Monument Draw wells. The initial four-well pad targets the 3rd Bone Spring, Wolfcamp A and Wolfcamp B, drilling began in mid-August, and the company projects first sales in the first quarter of 2027. The second quarter release gave no numeric guidance. A September investor presentation showed 2026 EBITDA of $44 million to $48 million and 2027 EBITDA of $75 million to $85 million, which the company described as funded by ATM proceeds, with year-end 2027 leverage of 1.00 to 1.25 times. EBITDA is a non-GAAP measure.