Battalion Oil Corporation Announces Fourth Quarter 2023 Financial and Operating Results

March 29, 2024

HOUSTON, March 29, 2024 (GLOBE NEWSWIRE) — Battalion Oil Corporation (NYSE American: BATL, “Battalion” or the “Company”) today announced financial and operating results for the fourth quarter of 2023.

Key Highlights

Approximately 41,000 net acres, 91% HBP in three contiguous blocks across Ward, Winkler and Pecos Counties with substantial remaining location inventoryBrought previously announced AGI project online in Q1 2024 treating over 20 MMcf/dRecommenced drilling operations in Monument Draw in Q4 2023 to execute a six well program Completed two wells in Q4 2023, brought online in Q1 2024 under budget with strong initial resultsDrilled two additional wells in Q1 2024, currently completingCommenced drilling operations on two additional wells in Q1 2024, currently drilling ahead Generated full year sales volumes of 13,784 barrels of oil equivalent per day (“Boe/d”) (48% oil)Year-end 2023 reserves of approximately 68.1 million barrels of oil equivalent (“MMBoe”) with a standardized measure of discounted future net cash flows of approximately $598.5 million.Executed a $35.0 million preferred equity raise in December 2023 and an additional $20.0 million preferred equity raise in March 2024 to support drilling programContinuing strategic alternatives initiative and are working toward closing our previously announced merger agreement with Fury Resources

Management Comments
During Q4 2023, following the preferred equity raise, the Company re-commenced its drilling operations in Monument Draw after operating a three-well pad on non-operated acreage adjacent to the asset. The company also prepared additional locations across all three asset areas to support additional activity in Ward, Winkler, and Pecos Counties. Since the quarter close, the two well Glacier pad drilled in Q4 2023 has been completed and is on production. These wells came online below budget, above projected type curve, with substantial pressure support and 30-day IP’s over 1,950 Boe/d and 1,750 Boe/d, respectively. Two additional wells (Rio Bravo pad) have been drilled to total depth and are currently being completed. The drilling rig has moved onto an additional two-well pad (Vermejo pad) in Monument Draw. All operations have been favorable to plan from both a capital and timing perspective.

During the fourth quarter, workover operations for the acid gas injection (“AGI”) project were substantially completed. Since that time, the facility has restarted operations and began taking acid gas from the Company with approximately 200 MMcf being recently treated at AGI and approximately 175 MMcf of sweet gas being returned to the Company for sales to our midstream partner. As the facility continues to come online, the Company will benefit from the return to production of currently curtailed volumes of up to 750Bbl/d. Additionally, when the AGI is operating at full capacity, we expect to save up to $2.0 million per month in gas treating costs.

Matt Steele, Chief Executive Officer, commented “The operations team has performed exceptionally well on our Monument Draw drilling campaign. The most recent Glacier pad wells represent some of the best the Company has ever drilled from both a cost and performance basis. Bringing the AGI back online to treat our gas represents a new era at Battalion. The difficult steps we took last year to right size the Company and focus on operational excellence are beginning to pay dividends.”

Results of Operations
Average daily net production and total operating revenue during the fourth quarter of 2023 were 12,022 Boe/d (46% oil) and $47.2 million, respectively, as compared to production and revenue of 15,696 Boe/d (51% oil) and $76.8 million, respectively, during the fourth quarter of 2022. The decrease in revenues in the fourth quarter of 2023 as compared to the fourth quarter of 2022 is attributable to an approximate 3,674 Boe/d decrease in average daily production and a $10.21 decrease in average realized prices (excluding the impact of hedges). Excluding the impact of hedges, Battalion realized 99.7% of the average NYMEX oil price during the fourth quarter of 2023. Realized hedge losses totaled approximately $3.0 million during the fourth quarter 2023.

Lease operating and workover expense was $11.87 per Boe in the fourth quarter of 2023 versus $9.89 per Boe in the fourth quarter of 2022. The increase in lease operating and workover expense per Boe year-over-year is primarily attributable to a decrease in average daily production as a large portion of our lease operating expenses are fixed costs. Gathering and other expense was $13.31 per Boe in the fourth quarter of 2023 versus $11.31 per Boe in the fourth quarter of 2022. The increase was primarily related to midstream disruptions and plant curtailments and an increased percentage of total production requiring H2S treatment, as well as inflationary impacts on costs associated with our own hydrogen sulfide treating plant. General and administrative expense was $4.93 per Boe in the fourth quarter of 2023 compared to $2.46 per Boe in the fourth quarter of 2022. The increase is primarily due to audit, legal and transaction costs associated with the potential merger with Fury Resources. These costs will be substantially reduced in future quarters.

For the fourth quarter of 2023, the Company reported a net income available to common stockholders of $27.0 million and net income per diluted share available to common shareholders of $1.63 per share available to common stockholders. After adjusting for selected items, the Company reported an adjusted diluted net loss available to common stockholders for the fourth quarter of 2023 of $16.6 million, or an adjusted diluted net loss of $1.01 per common share (see Reconciliation for additional information). Adjusted EBITDA during the quarter ended December 31, 2023 was $10.0 million as compared to $22.7 million during the quarter ended December 31, 2022 (see Adjusted EBITDA Reconciliation table for additional information).

Liquidity and Balance Sheet
As of December 31, 2023, the Company had $200.2 million of indebtedness outstanding and approximately $0.3 million of letters of credit outstanding. Total liquidity on December 31, 2023, made up of cash and cash equivalents, was $57.5 million.

On November 8, 2023, the Company obtained a commitment letter from its existing equity stockholders to purchase additional preferred equity securities in an amount up to $55.0 million. An aggregate of 35,000 shares of preferred stock were sold on December 15, 2023, under such support letter for proceeds of $34.1 million, net of discount. On March 27, 2024, the remaining 20,000 shares under such support letter were sold for proceeds of $19.5 million, net of discount.

For further discussion on our liquidity and balance sheet, as well as recent developments, refer to Management’s Discussion and Analysis and Risk Factors in the Company’s Form 10-K.

Important Information for Investors and Stockholders
This communication is being made in respect of the proposed transaction involving the Company and Fury Resources, Inc., a Delaware corporation. In connection with the proposed transaction, the Company intends to file, or has filed, the relevant materials with the U.S. Securities and Exchange Commission (“SEC”), including a proxy statement on Schedule 14A and a transaction statement on Schedule 13e-3 (the “Schedule 13e-3”). Promptly after filing its definitive proxy statement with the SEC, the Company will mail the definitive proxy statement and a proxy card to each stockholder of the Company entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the proxy statement, the Schedule 13e-3 or any other document that the Company has or may file with the SEC or send to its stockholders in connection with the proposed transaction. The relevant materials filed by the Company will be made available to the Company’s investors and stockholders at no expense to them and copies may be obtained free of charge on the Company’s website at www.battalionoil.com. In addition, all of those materials will be available at no charge on the SEC’s website at www.sec.gov. Investors and stockholders of the Company are urged to read the proxy statement, the Schedule 13e-3 and the other relevant materials as they become available before making any voting or investment decision with respect to the proposed transaction because they contain important information about the Company and the proposed transaction.

Participants in Solicitation
The Company and its directors, executive officers, other members of its management and employees may be deemed to be participants in the solicitation of proxies of the Company stockholders in connection with the proposed transaction under SEC rules. Investors and stockholders may obtain more detailed information regarding the names, affiliations and interests of the Company’s executive officers and directors in the solicitation by reading the Company’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2023, and the proxy statement, the Schedule 13e-3 and other relevant materials that will be, or have been, filed with the SEC in connection with the proposed transaction as they become available. Information concerning the interests of the Company’s participants in the solicitation, which may, in some cases, be different than those of the Company’s stockholders generally, will be set forth in the proxy statement relating to the proposed transaction and the Schedule 13e-3, as they become available.

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, 2023, and other filings submitted by the Company to the 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
Matthew B. Steele
Chief Executive Officer & Principal Financial Officer
832-538-0300

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)   Three Months Ended Years Ended   December 31, December 31,  2023  2022  2023  2022              Operating revenues:            Oil, natural gas and natural gas liquids sales:            Oil $39,562  $60,816  $183,634  $267,690 Natural gas  2,429   6,914   11,057   46,210 Natural gas liquids  4,921   8,267   23,814   43,501 Total oil, natural gas and natural gas liquids sales  46,912   75,997   218,505   357,401 Other  330   805   2,257   1,663 Total operating revenues  47,242   76,802   220,762   359,064              Operating expenses:            Production:            Lease operating  10,656   12,397   44,864   48,095 Workover and other  2,480   1,876   7,149   6,683 Taxes other than income  2,266   2,547   11,943   18,483 Gathering and other  14,718   16,330   63,575   64,117 General and administrative  5,453   3,564   19,025   17,635 Depletion, depreciation and accretion  12,337   15,479   56,624   51,915 Total operating expenses  47,910   52,193   203,180   206,928 (Loss) income from operations  (668)  24,609   17,582   152,136              Other income (expenses):            Net gain (loss) on derivative contracts  42,430   (21,872)  12,689   (110,006)Interest expense and other  (9,074)  (10,389)  (33,319)  (23,591)Total other income expenses  33,356   (32,261)  (20,630)  (133,597)Income (loss) before income taxes  32,688   (7,652)  (3,048)  18,539 Income tax benefit (provision)  —   —   —   — Net income (loss) $32,688  $(7,652) $(3,048) $18,539 Series A preferred dividends  (5,695)  —   (12,047)  — Net income (loss) available to common stockholders $26,993  $(7,652) $(15,095) $18,539              Net income (loss) per share of common stock:            Basic $1.64  $(0.47) $(0.92) $1.14 Diluted $1.63  $(0.47) $(0.92) $1.12 Weighted average common shares outstanding:            Basic  16,457   16,345   16,441   16,331 Diluted  16,517   16,345   16,441   16,510  

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)   December 31, 2023 December 31, 2022Current assets:      Cash and cash equivalents $57,529  $32,726 Accounts receivable, net  23,021   37,974 Assets from derivative contracts  8,992   16,244 Restricted cash  90   90 Prepaids and other  907   1,131 Total current assets  90,539   88,165 Oil and natural gas properties (full cost method):      Evaluated  755,482   713,585 Unevaluated  58,909   62,621 Gross oil and natural gas properties  814,391   776,206 Less – accumulated depletion  (445,975)  (390,796)Net oil and natural gas properties  368,416   385,410 Other operating property and equipment:      Other operating property and equipment  4,640   4,434 Less – accumulated depreciation  (1,817)  (1,209)Net other operating property and equipment  2,823   3,225 Other noncurrent assets:      Assets from derivative contracts  4,877   5,379 Operating lease right of use assets  1,027   352 Other assets  17,656   2,827 Total assets $485,338  $485,358        Current liabilities:      Accounts payable and accrued liabilities $66,525  $100,095 Liabilities from derivative contracts  17,191   29,286 Current portion of long-term debt  50,106   35,067 Operating lease liabilities  594   352 Asset retirement obligations  —   225 Total current liabilities  134,416   165,025 Long-term debt, net  140,276   182,676 Other noncurrent liabilities:      Liabilities from derivative contracts  16,058   33,649 Asset retirement obligations  17,458   15,244 Operating lease liabilities  490   — Other  2,084   4,136 Commitments and contingencies      Temporary equity:      Series A redeemable convertible preferred stock: 98,000 shares of $0.0001  106,535   — par value authorized, issued and outstanding as of December 31, 2023      Stockholders’ equity:      Common stock: 100,000,000 shares of $0.0001 par value authorized;      16,456,563 and 16,344,815 shares issued and outstanding as of      December 31, 2023 and 2022, respectively  2   2 Additional paid-in capital  321,012   334,571 Accumulated deficit  (252,993)  (249,945)Total stockholders’ equity  68,021   84,628 Total liabilities and stockholders’ equity $485,338  $485,358  

BATTALION OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)   Three Months Ended Years Ended   December 31, December 31,  2023 2022 2023 2022Cash flows from operating activities:            Net income (loss) $32,688  $(7,652) $(3,048) $18,539 Adjustments to reconcile net (loss) income to net cash provided by            operating activities:            Depletion, depreciation and accretion  12,337   15,479   56,624   51,915 Stock-based compensation, net  161   670   (1,070)  2,210 Unrealized gain on derivative contracts  (45,403)  3,655   (21,934)  (20,256)Amortization/accretion of financing related costs  1,826   2,722   7,615   5,448 Reorganization items, net  —   —   —   (744)Accrued settlements on derivative contracts  (2,587)  (3,191)  259   4,302 Change in fair value of embedded derivative liability  530   1,224   (2,052)  (1,819)Other expense (income)  214   51   358   (77)Cash flow from operations before changes in working capital  (234)  12,958   36,752   59,518 Changes in working capital  6,758   12,029   (19,163)  19,283 Net cash provided by operating activities  6,524   24,987   17,589   78,801              Cash flows from investing activities:            Oil and natural gas capital expenditures  (16,196)  (38,467)  (46,288)  (125,465)Proceeds received from sales of oil and natural gas assets  3,740   331   4,929   332 Other operating property and equipment capital expenditures  (17)  (211)  (153)  (1,160)Contract asset  (3,705)  —   (10,308)  — Other  1,439   (3)  (25)  163 Net cash used in investing activities  (14,739)  (38,350)  (51,845)  (126,130)             Cash flows from financing activities:            Proceeds from borrowings  —   15,078   –   35,200 Repayments of borrowings  (10,027)  (10)  (35,093)  (95)Payment of deferred financing costs  —   (2,508)  —   (2,887)Proceeds from issuance of preferred stock  33,182   —   94,607   – Other  (1)  60   (455)  (432)Net cash provided by financing activities  23,154   12,620   59,059   31,786              Net increase (decrease) in cash, cash equivalents and restricted cash  14,939   (743)  24,803   (15,543)             Cash, cash equivalents and restricted cash at beginning of period  42,680   33,559   32,816   48,359 Cash, cash equivalents and restricted cash at end of period $57,619  $32,816  $57,619  $32,816  

BATTALION OIL CORPORATION
SELECTED OPERATING DATA (Unaudited)   Three Months Ended December 31, Years Ended December 31,  2023 2022 2023 2022             Production volumes:            Crude oil (MBbls)  510   740   2,415   2,837 Natural gas (MMcf)  2,102   2,315   8,718   9,337 Natural gas liquids (MBbls)  246   318   1,163   1,242 Total (MBoe)  1,106   1,444   5,031   5,635 Average daily production (Boe/d)  12,022   15,696   13,784   15,438              Average prices:            Crude oil (per Bbl) $77.57  $82.18  $76.04  $94.36 Natural gas (per Mcf)  1.16   2.99   1.27   4.95 Natural gas liquids (per Bbl)  20.00   26.00   20.48   35.02 Total per Boe  42.42   52.63   43.43   63.43              Cash effect of derivative contracts:            Crude oil (per Bbl) $(10.43) $(24.73) $(7.76) $(40.82)Natural gas (per Mcf)  1.12   0.04   1.09   (1.55)Natural gas liquids (per Bbl)  —   —   —   — Total per Boe  (2.69)  (12.62)  (1.84)  (23.12)             Average prices computed after cash effect of settlement of derivative contracts:            Crude oil (per Bbl) $67.14  $57.45  $68.28  $53.54 Natural gas (per Mcf)  2.28   3.03   2.36   3.40 Natural gas liquids (per Bbl)  20.00   26.00   20.48   35.02 Total per Boe  39.73   40.01   41.59   40.31              Average cost per Boe:            Production:            Lease operating $9.63  $8.59  $8.92  $8.54 Workover and other  2.24   1.30   1.42   1.19 Taxes other than income  2.05   1.76   2.37   3.28 Gathering and other  13.31   11.31   12.64   11.38 General and administrative, as adjusted (1)  3.63   1.87   3.39   2.52 Depletion  10.80   10.49   10.97   9.05              (1) Represents general and administrative costs per Boe, adjusted for items noted in the reconciliation below:             General and administrative:            General and administrative, as reported $4.93  $2.46  $3.78  $3.13 Stock-based compensation:            Non-cash  (0.15)  (0.46)  0.21   (0.39)Non-recurring (charges) credits and other:            Cash  (1.15)  (0.13)  (0.60)  (0.22)General and administrative, as adjusted(2) $3.63  $1.87  $3.39  $2.52 Total operating costs, as reported $32.16  $25.42  $29.13  $27.52 Total adjusting items  (1.30)  (0.59)  (0.39)  (0.61)Total operating costs, as adjusted(3) $30.86  $24.83  $28.74  $26.91 

___________________(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 plan, as well as other cash charges associated with non-recurring charges and other. 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)Represents lease operating expense, 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
RECONCILIATION (Unaudited)
(In thousands, except per share amounts)   Three Months Ended Years Ended   December 31, December 31,  2023 2022 2023 2022As Reported:            Net income (loss) available to common stockholders – diluted (1) $26,993  $(7,652) $(15,095) $18,539              Impact of Selected Items:            Unrealized (gain) loss on derivatives contracts:            Crude oil $(38,604) $18,156  $(22,601) $(10,730)Natural gas  (6,799)  (14,501)  667   (9,526)Total mark-to-market non-cash charge  (45,403)  3,655   (21,934)  (20,256)Change in fair value of embedded derivative liability  529   1,224   (2,053)  (1,819)Non-recurring charges (credits)  1,268   194   3,042   1,230 Selected items, before income taxes  (43,606)  5,073   (20,945)  (20,845)Income tax effect of selected items  —   —   —   — Selected items, net of tax $(43,606) $5,073  $(20,945) $(20,845)             Net (loss) available to common stockholders, as adjusted (2) $(16,613) $(2,579) $(36,040) $(2,306)                          Diluted net income (loss) per common share, as reported $1.63  $(0.47) $(0.92) $1.12 Impact of selected items  (2.64)  0.31   (1.27)  (1.26)Diluted net (loss) per common share, excluding selected items (2)(3) $(1.01) $(0.16) $(2.19) $(0.14)                          Net cash provided by (used in) operating activities $6,524  $24,987  $17,589  $78,801 Changes in working capital  (6,758)  (12,029)  19,163   (19,283)Cash flow from operations before changes in working capital  (234)  12,958   36,752   59,518 Cash components of selected items  4,707   11,989   3,301   6,276 Income tax effect of selected items  —   —   —   — Cash flows from operations before changes in working capital, adjusted for selected items (1) $4,473  $24,947  $40,053  $65,794 

___________________(1)Amount reflects net (loss) income available to common stockholders on a diluted basis for earnings per share purposes as calculated using the two-class method of computing earnings per share which is further described in Note 14, Earnings Per Share in our Form 10-K for the year ended December 31, 2023.(2)Net (loss) income 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.(3) The impact of selected items for the three and twelve months ended December 31, 2023 were calculated based upon weighted average diluted shares of 16.5 million and 16.4 million shares, respectively, due to the net (loss) income available to common stockholders, excluding selected items. The impact of selected items for the three and twelve months ended December 31, 2022 were calculated based upon weighted average diluted shares of 16.3 million shares, respectively, due to the net (loss) income available to common stockholders, excluding selected items.  

 

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)   Three Months Ended December 31, Years Ended December 31,  2023 2022 2023 2022             Net income (loss), as reported $32,688  $(7,652) $(3,048) $18,539 Impact of adjusting items:            Interest expense  8,917   9,378   36,511   25,725 Depletion, depreciation and accretion  12,337   15,479   56,624   51,915 Stock-based compensation  161   670   (1,070)  2,210 Interest income  (525)  (227)  (1,243)  (369)Loss (gain) on extinguishment of debt  —   —   —   — Unrealized loss (gain) on derivatives contracts  (45,403)  3,655   (21,934)  (20,256)Change in fair value of embedded derivative liability  529   1,224   (2,053)  (1,819)Non-recurring charges (credits) and other  1,268   194   2,728   1,061 Adjusted EBITDA(1) $9,972  $22,721  $66,515  $77,006 

___________________(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.  

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)   Three Months Three Months Three Months Three Months  Ended Ended Ended Ended  December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023             Net income (loss), as reported $32,688  $(53,799) $(4,748) $22,811 Impact of adjusting items:            Interest expense  8,917   9,219   9,366   9,009 Depletion, depreciation and accretion  12,337   13,426   14,713   16,148 Stock-based compensation  161   (686)  (772)  227 Interest income  (525)  (293)  (234)  (191)Unrealized loss (gain) on derivatives contracts  (45,403)  46,805   (2,332)  (21,004)Change in fair value of embedded derivative liability  529   (1,878)  358   (1,062)Non-recurring charges (credits) and other  1,268   831   477   152 Adjusted EBITDA(1) $9,972  $13,625  $16,828  $26,090              Adjusted LTM EBITDA(1) $66,515          

___________________(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.  

BATTALION OIL CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
(In thousands)   Three Months Three Months Three Months Three Months  Ended Ended Ended Ended  December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022             Net income (loss), as reported $(7,652) $105,888  $13,047  $(92,744)Impact of adjusting items:            Interest expense  9,378   6,232   5,394   4,721 Depletion, depreciation and accretion  15,479   13,615   12,601   10,220 Stock-based compensation  670   683   473   384 Interest income  (227)  (141)  (1)  — Unrealized loss (gain) on derivatives contracts  3,655   (102,112)  (12,837)  91,038 Change in fair value of embedded derivative liability  1,224   (449)  (562)  (2,032)Non-recurring charges (credits) and other  194   597   53   217 Adjusted EBITDA(1) $22,721  $24,313  $18,168  $11,804              Adjusted LTM EBITDA(1) $77,006          

___________________(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.  

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