10q10k10q10k.net

What changed in BATTALION OIL CORP's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of BATTALION OIL CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+328 added−302 removedSource: 10-K (2026-03-23) vs 10-K (2025-03-31)

Top changes in BATTALION OIL CORP's 2025 10-K

328 paragraphs added · 302 removed · 216 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

71 edited+29 added−30 removed84 unchanged
Biggest changeShut-in wells currently not capable of production are excluded from the well information below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2024 ​ 2023 ​ Gross Net Gross Net Oil ​ 108 ​ 86.9 ​ 109 ​ 86.2 Natural Gas ​ — ​ — ​ — ​ — Total ​ 108 ​ 86.9 ​ 109 ​ 86.2 ​ The table below sets forth the results of our drilling activities for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2024 ​ 2023 ​ ​ Gross Net Gross Net Development Wells: ​ ​ ​ ​ ​ ​ ​ ​ ​ Productive (1) ​ 4 ​ 3.9 ​ 3 ​ 3.0 ​ Total Development ​ 4 ​ 3.9 ​ 3 ​ 3.0 ​ Total Wells: ​ ​ ​ ​ ​ ​ ​ ​ ​ Productive (1) ​ 4 ​ 3.9 ​ 3 ​ 3.0 ​ Total ​ 4 ​ 3.9 ​ 3 ​ 3.0 ​ (1) Although a well may be classified as productive upon completion, future changes in oil and natural gas prices, operating costs and production may result in the well becoming uneconomical, particularly extension or exploratory wells where there is no production history.
Biggest changeThe table below sets forth the results of our drilling activities for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ Gross ​ ​ ​ Net ​ ​ ​ Gross ​ ​ ​ Net ​ ​ ​ Development Wells: ​ ​ ​ ​ ​ ​ ​ ​ ​ Productive (1) (2) ​ 6 ​ 5.6 ​ 4 ​ 3.9 ​ Total Development ​ 6 ​ 5.6 ​ 4 ​ 3.9 ​ Total Wells: ​ ​ ​ ​ ​ ​ ​ ​ ​ Productive (1) (2) ​ 6 ​ 5.6 ​ 4 ​ 3.9 ​ Total ​ 6 ​ 5.6 ​ 4 ​ 3.9 ​ (1) Although a well may be classified as productive upon completion, future changes in oil and natural gas prices, operating costs and production may result in the well becoming uneconomical, particularly extension or exploratory wells where there is no production history.
It is our policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. As of December 31, 2024, we did not post collateral under any of our derivative contracts as they are secured under our 2024 Amended Term Loan Agreement.
It is our policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. As of December 31, 2025, we did not post collateral under any of our derivative contracts as they are secured under our 2024 Amended Term Loan Agreement.
Under the 2024 Amended Term Loan Agreement, we are required to hedge approximately 85% to 50% of our anticipated oil and natural gas production, in varying percentages by year, on a rolling basis for the next four years.
We are required under our 2024 Amended Term Loan Agreement, to hedge approximately 85% to 50% of our anticipated oil and natural gas production, respectively, in varying percentages by year, and on a rolling basis for the next four years.
We will continue to evaluate the benefit of employing derivatives in the future. See Item 7A. Quantitative and Qualitative Disclosures about Market Risk and Item 8. Consolidated Financial Statements and Supplementary Data— Note 9 , “Derivative and Hedging Activities,” for additional information.
We will continue to evaluate the benefit of employing derivatives in the future. See Item 7A. Quantitative and Qualitative Disclosures about Market Risk and Item 8. Consolidated Financial Statements and Supplementary Data— Note 8 , “Derivative and Hedging Activities,” for additional information.
Oil and Natural Gas Reserves The proved reserves estimates reported herein for the years ended December 31, 2024 and 2023, have been independently evaluated by NSAI, our independent reserve engineering firm. Within NSAI, the technical persons primarily responsible for preparing the estimates set forth in their reserves reports incorporated herein each have over 20 years of industry experience.
Oil and Natural Gas Reserves The proved reserves estimates reported herein for the years ended December 31, 2025 and 2024, have been independently evaluated by NSAI, our independent reserve engineering firm. Within NSAI, the technical persons primarily responsible for preparing the estimates set forth in their reserves reports incorporated herein each have over 20 years of industry experience.
Except to the extent we acquire additional properties containing proved reserves or conduct successful exploration and development activities or both, our proved reserves will decline as reserves are produced. Proved reserve estimates are based on the unweighted arithmetic average prices on the first day of each month for the 12-month period ended December 31, 2024.
Except to the extent we acquire additional properties containing proved reserves or conduct successful exploration and development activities or both, our proved reserves will decline as reserves are produced. Proved reserve estimates are based on the unweighted arithmetic average prices on the first day of each month for the 12-month period ended December 31, 2025.
In such areas, this data demonstrated consistent, continuous reservoir characteristics in addition to significant quantities of economic estimated ultimate recoveries from individual 12 Table of Contents producing wells. We relied only on production flow tests and historical production data, along with the reliable geologic data mentioned above to estimate proved reserves.
In such areas, this data demonstrated consistent, continuous 11 Table of Contents reservoir characteristics in addition to significant quantities of economic estimated ultimate recoveries from individual producing wells. We relied only on production flow tests and historical production data, along with the reliable geologic data mentioned above to estimate proved reserves.
In the ordinary course of our operations, we do handle materials that may be subject to extensive existing RCRA regulations or that may be classified as hazardous substances under CERCLA. From time to time, releases of those materials have occurred at locations we own or at which we have operations.
In the ordinary course of our operations, we handle some materials that may be subject to extensive existing RCRA regulations or that may be classified as hazardous substances under CERCLA. From time to time, releases of those materials have occurred at locations we own or at which we have operations.
As operator, we are able to evaluate industry drilling results and implement improved operating practices that may enhance our initial production rates, ultimate recovery factors and rate of return on invested capital. We continue to focus on cost-saving measures including reducing corporate administrative expenses and pursuing operational efficiencies. ​ 7 Table of Contents ● Maintain Adequate Liquidity.
As operator, we are able to evaluate industry drilling results and implement improved operating practices that may enhance our initial production rates, ultimate recovery factors and rate of return on invested capital. We continue to focus on cost-saving measures including reducing corporate administrative expenses and pursuing operational efficiencies. ​ ● Maintain Adequate Liquidity.
In 2024 and 2023, two individual purchasers of our production, Western Refining Company L.P. and Sunoco Inc., each accounted for more than 10% of total sales, collectively representing 86% and 79%, respectively, of our total sales for the year.
In 2025 and 2024, two individual purchasers of our production, Western Refining Company L.P. and Sunoco Inc., each accounted for more than 10% of total sales, collectively representing 86% and 79%, respectively, of our total sales for the year.
As of December 31, 2024, we have no additional borrowing capacity under our current 2024 Amended Term Loan Agreement, and as such, we will continue to pursue additional sources of liquidity and cost-saving opportunities further described in Item 7, Management’s Discussion and Analysis, “Capital Resources and Liquidity”. ● Attain Growth Through Strategic Business Combinations.
As of December 31, 2025, we have no additional borrowing capacity under our current 2024 Amended Term Loan Agreement (defined below), and as such, we will continue to pursue additional sources of liquidity and cost-saving opportunities further described in Item 7, Management’s Discussion and Analysis, “Capital Resources and Liquidity”. ● Attain Growth Through Strategic Business Combinations.
In the U.S., many states, either individually or through multi-state regional initiatives, have been implementing legal measures to reduce emissions of greenhouse gases, primarily through emission inventories, emissions targets, product bans, greenhouse gas cap and trade programs or incentives for renewable energy generation, while others have considered adopting such greenhouse gas programs.
In the U.S., many states, either individually or through multi-state regional initiatives, have been implementing legal measures to reduce emissions of greenhouse gases, primarily through emission inventories, emissions targets, product bans, greenhouse gas cap and trade programs or incentives for renewable energy generation, while others have considered adopting such greenhouse gas 17 Table of Contents programs.
Under CERCLA, RCRA and analogous state laws, we have been and may be required to remove or remediate such materials. Further, we do generate solid wastes that are subject to regulation. The Texas Railroad Commission, for example, has adopted new oilfield waste management rules that take effect on July 1, 2025.
Under CERCLA, RCRA and analogous state laws, we have been and may be required to remove or remediate such materials. Further, we generate solid wastes that are subject to regulation. The Texas Railroad Commission, for example, has adopted new oilfield waste management rules that took effect on July 1, 2025.
Realized prices differ from the applicable spot prices due to lease or field quality, energy content, transportation fees and market differentials. 14 Table of Contents Competitive Conditions in the Business The oil and natural gas industry is highly competitive and we compete with a substantial number of other companies that have greater financial and other resources.
Realized prices differ from the applicable spot prices due to lease or field quality, energy content, transportation fees and market differentials. Competitive Conditions in the Business The oil and natural gas industry is highly competitive and we compete with a substantial number of other companies that have greater financial and other resources.
In such event, substantial liabilities to third parties or governmental entities may be incurred, the satisfaction of which could substantially reduce available cash and possibly result in loss of oil and natural gas properties. Such hazards may also cause damage to or destruction of wells, producing formations, production facilities and pipeline or other processing facilities.
In such event, substantial liabilities to third parties or governmental entities may 14 Table of Contents be incurred, the satisfaction of which could substantially reduce available cash and possibly result in loss of oil and natural gas properties. Such hazards may also cause damage to or destruction of wells, producing formations, production facilities and pipeline or other processing facilities.
In addition, our reports, proxy 20 Table of Contents and information statements, and our other filings are also available to the public over the internet at the SEC’s website at www.sec .gov . Unless specifically incorporated by reference in this Annual Report on Form 10-K, information that you may find on our website is not part of this report.
In addition, our reports, proxy and information statements, and our other filings are also available to the public over the internet at the SEC’s website at www.sec .gov . Unless specifically incorporated by reference in this Annual Report on Form 10-K, information that you may find on our website is not part of this report.
Consolidated Financial Statements and Supplementary Data —Note 6, “Oil and Natural Gas Properties.” Wells and Acreage Our principal properties consist of leasehold interests in developed and undeveloped oil and natural gas properties and the reserves associated with these properties.
Consolidated Financial Statements and Supplementary Data —Note 5, “Oil and Natural Gas Properties.” Wells and Acreage Our principal properties consist of leasehold interests in developed and undeveloped oil and natural gas properties and the reserves associated with these properties.
Various members of Congress likewise occasionally have introduced bills that would result in more stringent control or outright bans of the hydraulic fracturing process. 17 Table of Contents In addition, the Department of the Interior promulgated 2015 regulations concerning the use of hydraulic fracturing on lands under its jurisdiction, which includes lands on which we conduct or plan to conduct operations.
Various members of Congress likewise occasionally have introduced bills that would result in more stringent control or outright bans of the hydraulic fracturing process. In addition, the Department of the Interior promulgated 2015 regulations concerning the use of hydraulic fracturing on lands under its jurisdiction, which includes lands on which we conduct or plan to conduct operations.
The following table sets forth the number of productive oil and natural gas wells in which we owned an interest as of December 31, 2024 and 2023.
The following table sets forth the number of productive oil and natural gas wells in which we owned an interest as of December 31, 2025 and 2024.
In the course of such evaluations, an agency will prepare an Environmental Assessment that assesses the potential direct, indirect and cumulative impacts of a proposed project and, if necessary, will prepare a more detailed Environmental Impact Statement that may be made available for public review and comment.
In the course of such evaluations, an agency will prepare an Environmental Assessment that assesses the potential impacts of a proposed project and, if necessary, will prepare a more detailed Environmental Impact Statement that may be made available for public review and comment.
We also engage the services of 19 Table of Contents independent contractors and consultants along with certain professional service firms to support our work in specific areas. We have no collective bargaining agreements with our employees. We believe that we have good relations with our employees.
We also engage the services of independent contractors and consultants along with certain professional service firms to support our work in specific areas. We have no collective bargaining agreements with our employees. We believe that we have good relations with our employees.
Hydraulic fracturing involves the injection of water, sand and additives under pressure, usually down casing that is cemented in the wellbore, into prospective rock formations at depths to stimulate oil and natural gas production.
Hydraulic fracturing involves the injection of water, sand and additives under pressure, usually down casing that is cemented in the wellbore, into prospective rock formations at depths to 16 Table of Contents stimulate oil and natural gas production.
Our team is comprised of individuals with extensive technical, industry and other professional experience. By recruiting, hiring and retaining an experienced and diverse team, we are able to leverage years of experience, new ideas and problem solving in a collaborative environment. As of December 31, 2024, we had 38 full-time employees.
Our team is comprised of individuals with extensive technical, industry and other professional experience. By recruiting, hiring and retaining an experienced and diverse team, we are able to leverage years of experience, new ideas and problem solving in a collaborative environment. As of December 31, 2025, we had 40 full-time employees.
Risk Factors . 15 Table of Contents Regulations All of the jurisdictions in which we own or operate producing oil and natural gas properties have statutory provisions regulating the exploration for and production of oil and natural gas, including provisions related to permits for the drilling of wells, bonding requirements to drill or operate wells, the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, sourcing and disposal of water used in the drilling and completion process, and the plugging and abandonment of wells.
Regulations All of the jurisdictions in which we own or operate producing oil and natural gas properties have statutory provisions regulating the exploration for and production of oil and natural gas, including provisions related to permits for the drilling of wells, bonding requirements to drill or operate wells, the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, sourcing and disposal of water used in the drilling and completion process, and the plugging and abandonment of wells.
Risk Management We have designed a risk management policy for the use of derivative instruments to provide initial protection against certain risks relating to our ongoing business operations, such as commodity price declines and price differentials between the NYMEX commodity price and the index price at the location where our production is sold.
Management’s Discussion and Analysis, “Recent Developments”. Risk Management We have designed a risk management policy for the use of derivative instruments to provide initial protection against certain risks relating to our ongoing business operations, such as commodity price declines and price differentials between the NYMEX commodity price and the index price at the location where our production is sold.
Our working interests in 40,476 net acres in the Delaware Basin as of December 31, 2024 are in Pecos, Reeves, Ward and Winkler Counties, Texas. This resource play is characterized by high oil and liquids-rich natural gas content in thick, continuous sections of source rock that can provide repeatable drilling opportunities and significant initial production rates.
Our working interests in 39,968 net acres in the Delaware Basin as of December 31, 2025 are in Pecos, Reeves, Ward and Winkler Counties, Texas. This resource play is characterized by high oil and liquids-rich natural gas content in thick, continuous sections of source rock that can provide repeatable drilling opportunities and significant initial production rates.
In addition, it is not 16 Table of Contents uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment.
In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment.
All of our PUD reserves are planned to be developed within five years from the date they were initially recorded. During 2024, approximately $28.0 million in capital expenditures went toward the development of PUD reserves, which includes drilling, completion and other facility costs associated with developing PUD wells.
All of our PUD reserves are planned to be developed within five years from the date they were initially recorded. During 2025, approximately $61.7 million in capital expenditures went toward the development of PUD reserves, which includes drilling, completion and other facility costs associated with developing PUD wells.
GAAP financial measure as defined by the SEC. We believe that the presentation of the PV-10 is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves before taking into account future corporate income taxes and our current tax structure.
We believe that the presentation of the PV-10 is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves before taking into account future corporate income taxes and our current tax structure.
Our primary targets in this area are the Wolfcamp and Bone Spring formations. As of December 31, 2024, we had 91 operated wells producing in this area in addition to minor working interests in 13 non-operated wells. Our average daily net production for the year ended December 31, 2024 was 12,667 Boe/d.
Our primary targets in this area are the Wolfcamp and Bone Spring formations. As of December 31, 2025, we had 82 operated wells producing in this area in addition to minor working interests in 22 non-operated wells. Our average daily net production for the year ended December 31, 2025 was 12,096 Boe/d.
Reserves were prepared using a crude oil price of West Texas Intermediate (“WTI”) of $76.32 per Bbl and a Henry Hub natural gas price of $2.13 per MMBtu, based on the preceding 12-month first day of the month average spot prices as required by the Securities and Exchange Commission (the “SEC”).
Reserves were prepared using a crude oil price of West Texas Intermediate (“WTI”) of $66.01 per Bbl and a Henry Hub natural gas price of $3.39 per MMBtu, based on the preceding 12-month first day of the month average spot prices as required by the Securities and Exchange Commission (the “SEC”).
For further discussion on risks see Item 1A.
For further discussion on risks see Item 1A. Risk Factors .
Average prices for the 12-month period were as follows: WTI crude oil spot price of $76.32 per Bbl, adjusted by lease or field for quality, transportation fees, and market differentials and a Henry Hub natural gas spot price of $2.13 per MMBtu, adjusted by lease or field for energy content, transportation fees, 11 Table of Contents and market differentials.
Average prices for the 12-month period were as follows: WTI crude oil 10 Table of Contents spot price of $66.01 per Bbl, adjusted by lease or field for quality, transportation fees, and market differentials and a Henry Hub natural gas spot price of $3.39 per MMBtu, adjusted by lease or field for energy content, transportation fees, and market differentials.
Proved developed reserves of 36.3 MMBoe decreased approximately 3.8 MMBoe from December 31, 2023 primarily as a result of negative revisions of 2.1 MMBoe due primarily to the decrease in pricing and changes in differentials, deducts and marketing expenses and production of 4.6 MMBoe offset by proved undeveloped (“PUD”) reserve development of 2.9 MMBoe.
Proved developed reserves of 35.6 MMBoe decreased approximately 0.7 MMBoe from December 31, 2024 primarily as a result of negative revisions of 1.8 MMBoe due to the decrease in pricing and changes in differentials, deducts and marketing expenses and production of 4.4 MMBoe offset by proved undeveloped (“PUD”) reserve development of 5.5 MMBoe.
PUD reserves of 28.6 MMBoe increased approximately 0.7 MMBoe from December 31, 2023 as a result of extensions of 4.0 MMBoe primarily associated with infill drilling activity offset by the transfer of 2.9 MMBoe to proved developed producing reserves and downward revisions of 0.4 MMBoe due to decreased SEC prices.
PUD reserves of 24.1 MMBoe decreased approximately 4.6 MMBoe from December 31, 2024 as a result of downward revisions of 1.2 MMBoe due to decreased SEC prices and transfer of 5.5 MMBoe to proved developed producing reserves offset by extensions of 2.1 primarily associated with infill drilling activity .
The estimates of quantities of proved reserves contained in this report were made in accordance with the definitions contained in SEC Release No. 33-8995, Modernization of Oil and Gas Reporting .
No other alternative methods or technologies were used to estimate proved reserves. The estimates of quantities of proved reserves contained in this report were made in accordance with the definitions contained in SEC Release No. 33-8995, Modernization of Oil and Gas Reporting .
That statute imposes a fee on certain 18 Table of Contents excess methane emissions from oil and gas facilities of $900 per metric ton of methane for 2024, $1,200 per metric ton for 2025, and $1,500 per metric ton each year thereafter.
That statute required the EPA to impose a fee on certain excess methane emissions from oil and gas facilities of $900 per metric ton of methane for 2024, $1,200 per metric ton for 2025, and $1,500 per metric ton each year thereafter.
Management’s Discussion and Analysis, “Capital Resources and Liquidity”. ● H 2 S Treating Joint Venture. In May 2022, we entered into a joint venture agreement with Caracara Services, LLC (“Caracara”) to develop a strategic acid gas treatment and carbon sequestration facility (the “AGI Facility”) in Winkler County, Texas.
In May 2022, we entered into a joint venture agreement with Caracara Services, LLC (“Caracara”) to develop a strategic acid gas treatment and carbon sequestration facility (the “AGI Facility”) in Winkler County, Texas.
Of our 4,714 net undeveloped acres at December 31, 2024, approximately 4,246 acres are subject to continuous development clauses and 468 acres are “held by production.” We continually review our acreage subject to these clauses or agreements when determining our drilling program. ​ Production Volumes, Sales Prices, and Average Costs The following table summarizes our oil, natural gas and NGLs production volumes, average sales price per unit and average costs per unit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 Production: ​ ​ ​ ​ ​ ​ ​ Crude oil - MBbls ​ ​ 2,363 ​ ​ 2,415 ​ Natural gas - MMcf ​ ​ 7,814 ​ ​ 8,718 ​ Natural gas liquids - MBbls ​ ​ 971 ​ ​ 1,163 ​ Total MBoe (1) ​ ​ 4,636 ​ ​ 5,031 ​ Average daily production - Boe (1) ​ ​ 12,667 ​ ​ 13,784 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average price per unit (excluding impact of settled derivatives) : ​ ​ ​ ​ ​ ​ ​ Crude oil price - Bbl ​ $ 73.89 ​ $ 76.04 ​ Natural gas price - Mcf (3) ​ ​ (0.28) ​ ​ 1.27 ​ Natural gas liquids price - Bbl ​ ​ 21.44 ​ ​ 20.48 ​ Barrel of oil equivalent price - Boe (1) ​ ​ 41.68 ​ ​ 43.43 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average price per unit ( including impact of settled derivatives) (2) : ​ ​ ​ ​ ​ ​ ​ Crude oil price - Bbl ​ $ 62.57 ​ $ 68.28 ​ Natural gas price - Mcf ​ ​ 2.02 ​ ​ 2.36 ​ Natural gas liquids price - Bbl ​ ​ 21.44 ​ ​ 20.48 ​ Barrel of oil equivalent price - Boe (1) ​ ​ 39.78 ​ ​ 41.59 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average cost per Boe: ​ ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ ​ Lease operating ​ $ 9.77 ​ $ 8.92 ​ Workover and other ​ ​ 1.12 ​ ​ 1.42 ​ Taxes other than income ​ ​ 2.42 ​ ​ 2.37 ​ Gathering and other ​ ​ 11.67 ​ ​ 12.64 ​ Total average cost ​ ​ 24.98 ​ ​ 25.35 ​ (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
Of our 2,389 net undeveloped acres at December 31, 2025, approximately 1,921 acres are subject to continuous development clauses and 468 acres are “held by production.” We continually review our acreage subject to these clauses or agreements when determining our drilling program. ​ Production Volumes, Sales Prices, and Average Costs The following table summarizes our oil, natural gas and NGLs production volumes, average sales price per unit and average costs per unit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2025 ​ 2024 ​ Production: ​ ​ ​ ​ ​ ​ ​ Crude oil - MBbls ​ ​ 2,251 ​ ​ 2,363 ​ Natural gas - MMcf ​ ​ 7,452 ​ ​ 7,814 ​ Natural gas liquids - MBbls ​ ​ 922 ​ ​ 971 ​ Total MBoe (1)(2) ​ ​ 4,415 ​ ​ 4,636 ​ Average daily production - Boe (1) ​ ​ 12,096 ​ ​ 12,667 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average price per unit (excluding impact of settled derivatives) : ​ ​ ​ ​ ​ ​ ​ Crude oil price - Bbl ​ $ 63.51 ​ $ 73.89 ​ Natural gas price - Mcf (4) ​ ​ 0.49 ​ ​ (0.28) ​ Natural gas liquids price - Bbl ​ ​ 19.90 ​ ​ 21.44 ​ Barrel of oil equivalent price - Boe (1) ​ ​ 37.36 ​ ​ 41.68 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average price per unit ( including impact of settled derivatives) (3) : ​ ​ ​ ​ ​ ​ ​ Crude oil price - Bbl ​ $ 63.20 ​ $ 62.57 ​ Natural gas price - Mcf ​ ​ 2.71 ​ ​ 2.02 ​ Natural gas liquids price - Bbl ​ ​ 19.90 ​ ​ 21.44 ​ Barrel of oil equivalent price - Boe (1) ​ ​ 40.95 ​ ​ 39.78 ​ ​ ​ ​ ​ ​ ​ ​ ​ Average cost per Boe: ​ ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ ​ Lease operating ​ $ 10.15 ​ $ 9.77 ​ Workover and other ​ ​ 1.46 ​ ​ 1.12 ​ Taxes other than income ​ ​ 2.23 ​ ​ 2.42 ​ Gathering and other ​ ​ 9.91 ​ ​ 11.67 ​ Total average cost ​ ​ 23.75 ​ ​ 24.98 ​ (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
Approximately 56% of our estimated proved reserves were classified as proved developed and we maintain operational control of 99.9% of our estimated proved reserves as of December 31, 2024.
Approximately 60% of our estimated proved reserves were classified as proved developed and we maintain operational control of 99.8% of our estimated proved reserves as of December 31, 2025.
All of our current exploration and production activities, as well as proposed exploration and development plans, on federal lands require governmental permits that are subject to the requirements of NEPA. This process has the potential to delay the development of oil and natural gas projects.
All of our current exploration and production activities, as well as proposed exploration and development plans, on federal lands require governmental permits that are subject to the requirements of NEPA.
Reserve evaluation is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment.
The reserves information in this Annual Report on Form 10-K represents only estimates. Reserve evaluation is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment.
In exchange for contributing to the joint venture a wellbore with an approved permit for the injection of acid gas and surface land , we retained a 5% equity interest in WAT, an equity investment.
The GTA had a tiered-rate structure based on actual volumes delivered. In exchange for contributing to the joint venture a wellbore with an approved permit for the injection of acid gas and surface land , we retained a 5% equity interest in WAT, an equity investment.
Leases on our undeveloped oil and natural gas acreage are either categorized as “held by production” or perpetuated by continuous development clauses contained in our leases or tolling agreements.
Generally, our oil and natural gas leases remain in force as long as production in paying quantities is maintained. Leases on our undeveloped oil and natural gas acreage are either categorized as “held by production” or perpetuated by continuous development clauses contained in our leases or tolling agreements.
Those rules were rescinded in 2017, but that decision was challenged in court, and the parties recently have been involved in settlement discussions. Regardless of how the federal issues are eventually resolved, states have been imposing new restrictions or bans on hydraulic fracturing.
Those rules were rescinded in 2017, but that decision was challenged in court, and regulations could possibly be re-issued in the future. Regardless of how the federal issues are eventually resolved, states have been imposing new restrictions or bans on hydraulic fracturing.
A critical habitat designation could result in further material restrictions on federal or private land use and could delay or prohibit land access or development.
A critical habitat designation could result in further material restrictions on federal or 18 Table of Contents private land use and could delay or prohibit land access or development. Further, the EPA and U.S.
At December 31, 2024, our estimated total proved oil and natural gas reserves were approximately 64.9 MMBoe, consisting of 34.8 MMBbls of oil, 12.6 MMBbls of NGLs and 105.4 Bcf of natural gas, as prepared by our independent reserve engineering firm, Netherland, Sewell & Associates, Inc. (“NSAI”).
At December 31, 2025, our estimated total proved oil and natural gas reserves were approximately 59.7 MMBoe, consisting of 31.8 MMBbls of oil, 11.6 MMBbls of NGLs and 97.5 Bcf of natural gas, as prepared by our independent reserve engineering firm, Netherland, Sewell & Associates, Inc. (“NSAI”).
We do not enter into derivative contracts for speculative trading purposes. 10 Table of Contents While there are many different types of derivatives available, we typically use fixed-price swaps, costless collars, basis swaps and WTI NYMEX roll agreements to attempt to manage price risk.
While there are many different types of derivatives available, we typically use fixed-price swaps, costless collars, basis swaps and WTI NYMEX roll agreements to attempt to manage price risk.
We had no exploratory or extension wells drilled for the years ended December 31, 2024 and 2023. We own interests in developed and undeveloped oil and natural gas acreage in the locations set forth in the table below. These ownership interests generally take the form of working interests in oil and natural gas leases that have varying provisions.
We had no exploratory or extension wells drilled for the years ended December 31, 2025 and 2024. 12 Table of Contents We own interests in developed and undeveloped oil and natural gas acreage in the locations set forth in the table below.
The following table presents certain proved reserve information as of December 31, 2024 (dollars in thousands): ​ ​ ​ Proved Reserves (MBoe) (1) ​ Developed ​ 36,304 Undeveloped ​ 28,643 Total ​ 64,947 PV-10 (2) $ 458,496 Discounted Future Income Taxes ​ (10,793) Standardized measure of discounted future net cash flows $ 447,703 (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
The following table presents certain proved reserve information as of December 31, 2025 (dollars in thousands): ​ ​ ​ Proved Reserves (MBoe) (1)(2) ​ ​ ​ ​ Developed ​ 35,649 Undeveloped ​ 24,053 Total ​ 59,702 PV-10 (3) $ 351,730 Discounted Future Income Taxes ​ (8,212) Standardized measure of discounted future net cash flows $ 343,518 (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
He has approximately 15 years of oil and natural gas operations experience and has earned a Bachelor of Science degree in Petroleum Engineering from Texas A&M University, a Master of Business Administration degree from Rice University and is an active member of the Society of Petroleum Engineers. The reserves information in this Annual Report on Form 10-K represents only estimates.
He has more than 16 years of oil and natural gas operations experience and has earned a Bachelor of Science degree in Petroleum Engineering from Texas A&M University, a Master of Business Administration degree from Rice University and is an active member of the Society of Petroleum Engineers.
Additional information regarding our risks can be found in Item 1A. Risk Factors. Recent Developments ● 2024 Amended Term Loan Agreement.
Additional information regarding our risks can be found in Item 1A. Risk Factors. Recent Developments ● Monument Draw Acquisition.
Internationally, the United Nations Framework Convention on Climate Change, the Kyoto Protocol and the Paris Agreement address greenhouse gas emissions, and several countries, including those comprising the European Union, have established greenhouse gas regulatory systems.
Methane, a primary component of natural gas, and carbon dioxide, a byproduct of burning oil, natural gas and refined petroleum products, are considered greenhouse gases. Internationally, the United Nations Framework Convention on Climate Change, the Kyoto Protocol and the Paris Agreement address greenhouse gas emissions, and several countries, including those comprising the European Union, have established greenhouse gas regulatory systems.
We believe our internally-generated cash flows from operations, cash on hand, and preferred equity funding and commitments during 2024 as further described below will provide us with sufficient liquidity to execute our capital and operating program over the next twelve months, address near-term debt maturities of approximately $16.9 million in 2025, and maintain compliance with our debt covenants.
We believe our internally-generated cash flows from operations, cash on hand, proceeds from the West Quito Divestiture and the private placement equity offering, and existing preferred equity commitments under support letters from our largest investors will provide us with sufficient liquidity to execute our capital and operating program over the next twelve months, address near-term debt maturities of $22.5 million in 2026, and maintain compliance with our debt covenants.
Diversity of thoughts and experiences allows us to identify the best solutions within our company. All Battalion employees must act in accordance with our Employee Handbook, which is inclusive of our Code of Conduct. The Employee Handbook covers various topics including, among others, policies prohibiting harassment, discrimination and retaliation and policies covering workplace anti-violence, cybersecurity, confidential information and conduct.
Diversity of thoughts and experiences allows us to identify the best solutions within our company. All Battalion employees must act in accordance 19 Table of Contents with our Employee Handbook, which is inclusive of our Code of Conduct.
This is an energy content correlation and does not reflect the value or price relationship between the commodities. (2) PV-10 represents the discounted future net cash flows attributable to our proved oil and natural gas reserves before income tax, discounted at 10%. PV-10 of our total year-end proved reserves is considered a non-U.S.
(3) PV-10 represents the discounted future net cash flows attributable to our proved oil and natural gas reserves before income tax, discounted at 10%. PV-10 of our total year-end proved reserves is considered a non-U.S. GAAP financial measure as defined by the SEC.
In addition, the federal Bureau of Land Management (“BLM”) promulgated new rules in 2024 to reduce venting, flaring and leaks from oil and gas production on public lands. Aside from new controls, the 2022 Inflation Reduction Act creates incentives designed to increase use of electric cars and fuels other than oil and natural gas.
In addition, the federal Bureau of Land Management (“BLM”) promulgated new rules in 2024 to reduce venting, flaring and leaks from oil and gas production on public lands. The U.S.
Hazardous Substances and Wastes The federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or the “Superfund law”) and comparable state laws impose liability, without regard to fault, on certain classes of persons that are considered to be responsible for the release of a hazardous substance into the environment.
The following is a summary of the more significant existing environmental, health and safety laws and regulations to which our business operations are subject and for which compliance in the future may have a material adverse impact on our capital expenditures, earnings and competitive position. 15 Table of Contents Hazardous Substances and Wastes The federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or the “Superfund law”) and comparable state laws impose liability, without regard to fault, on certain classes of persons that are considered to be responsible for the release of a hazardous substance into the environment.
Employees are required to acknowledge and agree to abide by these policies upon employment. Principal Office As of December 31, 2024, we lease corporate office space in Houston, Texas at 820 Gessner Road.
The Employee Handbook covers various topics including, among others, policies prohibiting harassment, discrimination and retaliation and policies covering workplace anti-violence, cybersecurity, confidential information and conduct. Employees are required to acknowledge and agree to abide by these policies upon employment. Principal Office As of December 31, 2025, we lease corporate office space in Houston, Texas at 820 Gessner Road.
Our near-term development plans are focused on acreage preservation primarily in our liquids-rich Monument Draw area, maintaining production levels, and developing through the drilling and completion of new wells.
Our near-term development plans are focused on acreage preservation in our liquids-rich Monument Draw and Hackberry areas, maintaining production levels, and developing through the drilling and completion of new wells. We currently plan to commence drilling two wells in January 2027. ​ 7 Table of Contents ● Enhance Returns Through Continued Improvements in Operational and Cost Efficiencies.
As a general matter, recent Democratic Presidential Administrators have been spearheading the development of federal climate policies and controls. With President Trump’s return to office in 2025, however, the White House issued executive orders that, among other things, directed the U.S.
With President Trump’s return to office in 2025, however, the White House issued executive orders that, among other things, directed the U.S.
Our future performance is subject to commodity price risks and our future cash flows from operations may be volatile.
Our future performance is subject to commodity price risks and our 9 Table of Contents future cash flows from operations may be volatile. We do not enter into derivative contracts for speculative trading purposes.
The rules included the first federal air standards for oil and natural gas wells that are hydraulically fractured, or refractured, as well as requirements for other processes and equipment, including storage tanks. Compliance has imposed, and will impose, additional requirements and costs on our operations.
The rules included the first federal air standards for oil and natural gas wells that are hydraulically fractured, or refractured, as well as requirements for other processes and equipment, including storage tanks. In 2025, the EPA proposed discrete technical changes to its oil and gas emission standards and extended various compliance deadlines (a decision being challenged in court).
The following table presents estimated proved reserves at December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Proved ​ Proved ​ Total ​ Developed Undeveloped Proved Oil (MBbls) ​ 17,661 ​ 17,124 ​ 34,785 Natural Gas Liquids (MBbls) ​ 7,916 ​ 4,677 ​ 12,593 Natural Gas (MMcf) ​ 64,361 ​ 41,052 ​ 105,413 Equivalent (MBoe) (1) ​ 36,304 ​ 28,643 ​ 64,947 (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
The following table presents estimated proved reserves at December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ Proved ​ Proved ​ Total ​ ​ ​ ​ Developed ​ ​ ​ Undeveloped ​ ​ ​ Proved (2) Oil (MBbls) ​ 17,119 ​ 14,681 ​ 31,800 Natural Gas Liquids (MBbls) ​ 7,615 ​ 4,029 ​ 11,644 Natural Gas (MMcf) ​ 65,488 ​ 32,060 ​ 97,548 Equivalent (MBoe) (1) ​ 35,649 ​ 24,053 ​ 59,702 (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
The joint venture, operating as Wink Amine Treater, LLC (“WAT”) (previously Brazos Amine Treater, LLC (“BAT”)), has also entered into a Gas Treating Agreement (“GTA”) with us for natural gas production from our Monument Draw area.
The joint venture, operating as Wink Amine Treater, LLC (“WAT”) also entered into a Gas Treating Agreement (“GTA”) with us for natural gas production from our Monument Draw area. Under the GTA, we paid a treating rate that varied based on volumes delivered to the AGI Facility and had a minimum volume commitment of 20 MMcf per day.
This is an energy content correlation and does not reflect the value or price relationship between the commodities. At December 31, 2024, total estimated proved reserves were approximately 64.9 MMBoe, a 3.2 MMBoe net decrease from the previous year’s estimate of 68.1 MMBoe.
At December 31, 2025, total estimated proved reserves were approximately 59.7 MMBoe, a 5.2 MMBoe net decrease from the previous year’s estimate of 64.9 MMBoe.
This is an energy content correlation and does not reflect the value or price relationship between the commodities. (2) Cash paid on, or cash received from, settled derivative contracts are reflected as “Net gain (loss) on derivative contracts” in the consolidated statements of operations, consistent with our decision not to elect hedge accounting.
(3) Cash paid on, or cash received from, settled derivative contracts are reflected as “Net gain (loss) on derivative contracts” in the consolidated statements of operations, consistent with our decision not to elect hedge accounting. (4) Negative realized natural gas pricing for the year ended December 31, 2024 resulted from increased deduct and differential costs exceeding natural gas index prices.
In October 2015, the EPA announced that it was lowering the primary national ambient air quality standard for ozone from 75 parts per billion to 70 parts per billion. Implementation of the 2015 standard has been ongoing and has resulted in expansion of ozone nonattainment areas across the U.S., including areas in which we operate.
Nonetheless, federal air standards have imposed, and will impose, additional requirements and costs on our operations. In October 2015, the EPA announced that it was lowering the primary national ambient air quality standard for ozone from 75 parts per billion to 70 parts per billion.
Oil and natural gas operations in ozone nonattainment areas could be subject to increased regulatory burdens in the form of more stringent emission controls, emission offset requirements, and increased permitting delays and costs. Climate Change Various studies over recent years have indicated that emissions of certain gases may be contributing to warming of the Earth’s atmosphere.
Implementation of the 2015 standard has been ongoing and has resulted in expansion of ozone nonattainment areas across the U.S., including areas in which we operate. Oil and natural gas operations in ozone nonattainment areas could be subject to increased regulatory burdens in the form of more stringent emission controls, emission offset requirements, and increased permitting delays and costs.
In response, governments increasingly have been adopting domestic and international climate change regulations that require reporting and reductions of the emission of such greenhouse gases. Methane, a primary component of natural gas, and carbon dioxide, a byproduct of burning oil, natural gas and refined petroleum products, are considered greenhouse gases.
Climate Change Various studies over recent years have indicated that emissions of certain gases may be contributing to warming of the Earth’s atmosphere. In response, governments increasingly have been adopting domestic and international climate change regulations that require reporting and reductions of the emission of such greenhouse gases.
The AGI Facility has been processing gas since March 9, 2024 and continues to process gas currently. In addition to general facility downtime, the AGI Facility has experienced interruption in processing due to the completion of improvement and maintenance projects, including pump and other facility equipment replacement.
After significant complications and delays, the AGI Facility began processing gas on March 9, 2024 and treated volumes from March 2024 to August 11, 2025. In addition to general facility downtime, the AGI Facility experienced interruptions in processing due to failure to complete necessary improvement and maintenance projects.
Removed
On January 21, 2020, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Delaware Secretary of State to effect a change of our corporate name from Halcón Resources Corporation to Battalion Oil Corporation.
Added
On December 18, 2025, we entered into an agreement of sale and purchase with MCM Delaware Resources, LLC (“MCM”) to sell substantially all of our oil and natural gas properties and related assets in the West Quito Draw area located in the Southern Delaware Basin in Ward County, Texas (the “West Quito Assets”) for a total sales price of approximately $62.6 million, subject to adjustment for accounting between the effective date of December 1, 2025 and the closing date and other customary adjustments (the “West Quito Divestiture”).
Removed
In December 2024, we entered into a drilling contract and have begun a six-well campaign scheduled to conclude before the end of the second quarter 2025 that will bring new production online across our assets. ​ ● Enhance Returns Through Continued Improvements in Operational and Cost Efficiencies.
Added
The West Quito Divestiture closed on February 24, 2026 for an adjusted sales price of $60.1 million.
Removed
On December 26, 2024, we and our wholly-owned subsidiary Halcón Holdings, LLC (the “Borrower”) entered into the Second Amended and Restated Senior Secured Credit Agreement (the “2024 Term Loan Agreement”) with Fortress Credit Corp., as administrative agent, and certain other financial institutions party thereto, as lenders.
Added
The West Quito Assets include approximately 6,100 net acres in Ward County, Texas which contributed approximately 15% of our annual production for the year ended December 31, 2025 and accounted for approximately 6.0 MMboe, or approximately 10%, of our proved reserves at December 31, 2025.
Removed
Pursuant to the 2024 Term Loan Agreement, the lenders agreed to provide us with (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million, of which such incremental borrowings in the amount of $63.0 million were incurred on January 9, 2025 pursuant to a first amendment (the “First Amendment”) to our 2024 Term Loan Agreement (as amended, the “2024 Amended Term Loan Agreement”).
Added
On March 10, 2026, we entered into a purchase and sale agreement to acquire certain oil and natural gas assets, comprising 7,090 net acres located in Ward County, Texas, from RoadRunner Resource Holding LLC (formerly, Sundown Energy LP) (“RoadRunner”), effective March 1, 2026, in an all-stock transaction.
Removed
The 2024 Amended Term Loan Agreement matures on December 26, 2028. ​ All obligations under the 2021 Amended Term Loan Agreement (as defined in Item 8.

… 50 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

66 edited+41 added−11 removed134 unchanged
Biggest changeOur 2024 Amended Term Loan Agreement contains the following financial covenants (as defined), including the maintenance of the following ratios: ● Asset Coverage Ratio not to fall below 1.70x as of March 31, 2025 through and including June 30, 2025, 1.85x as of September 30, 2025 through and including December 31, 2025 and 2.00x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Total Net Leverage Ratio not to exceed 2.75x as of March 31, 2025 through and including June 30, 2025 and 2.50x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Current Ratio not to fall below 1.00x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025 ; and ● Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three month period, determined as of the last day of any fiscal quarter. ​ In the past, we have periodically sought amendments to the covenants under our revolving credit agreements, including the financial covenants, where we have anticipated difficulty in maintaining compliance.
Biggest changeBusiness – Recent Developments for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Current Ratio not to fall below 1.00x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025 ; and ● Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three month period, determined as of the last day of any fiscal quarter. ​ In the past, we have periodically sought amendments to the covenants under our revolving credit agreements, including the financial covenants, where we have anticipated difficulty in maintaining compliance.
We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget.
We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes, tariffs or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget.
Such risks and hazards include: ● human error, accidents and other events beyond our control that may cause personal injuries or death to persons and destruction or damage to equipment and facilities; ● blowouts, fires, adverse weather events, pollution and equipment failures that may result in damage to or destruction of wells, producing formations, production facilities and equipment; ● accidental releases of natural gas, including gas with high levels of hydrogen sulfide (H2S), and other hydrocarbons or toxic or hazardous materials into the environment as a result of human error or the malfunction of equipment or facilities, which can result in personal injury and loss of life, pollution, damage to equipment and suspension of operations; ● well-on-well interference that may reduce recoveries; ● unavailability of materials and equipment; ● engineering and construction delays; ● unanticipated transportation costs and delays; ● unfavorable weather conditions; ● hazards resulting from unusual or unexpected geological or environmental conditions; ● changes in laws and regulations, including laws and regulations applicable to oil and natural gas activities or markets for the oil and natural gas produced; ● fluctuations in supply and demand for oil and natural gas causing variations of the prices we receive for our oil and natural gas production; and ● the availability of alternative fuels and the price at which they become available.
Such risks and hazards include: ● human error, accidents and other events beyond our control that may cause personal injuries or death to persons and destruction or damage to equipment and facilities; ● blowouts, fires, adverse weather events, pollution and equipment failures that may result in damage to or destruction of wells, producing formations, production facilities and equipment; 30 Table of Contents ● accidental releases of natural gas, including gas with high levels of hydrogen sulfide (H2S), and other hydrocarbons or toxic or hazardous materials into the environment as a result of human error or the malfunction of equipment or facilities, which can result in personal injury and loss of life, pollution, damage to equipment and suspension of operations; ● well-on-well interference that may reduce recoveries; ● unavailability of materials and equipment; ● engineering and construction delays; ● unanticipated transportation costs and delays; ● unfavorable weather conditions; ● hazards resulting from unusual or unexpected geological or environmental conditions; ● changes in laws and regulations, including laws and regulations applicable to oil and natural gas activities or markets for the oil and natural gas produced; ● fluctuations in supply and demand for oil and natural gas causing variations of the prices we receive for our oil and natural gas production; and ● the availability of alternative fuels and the price at which they become available.
In particular, the 2024 Amended Term Loan Agreement limits our and our subsidiaries’ ability to, among other things: ● pay dividends on, redeem or repurchase shares of our common stock and any other capital stock we may issue; ● make loans to others; ● make investments; ● incur additional indebtedness; ● create certain liens; ● sell assets; ● enter into agreements that restrict dividends or other payments from our restricted subsidiaries to us; ● consolidate, merge or transfer all or substantially all of our assets and those of our restricted subsidiaries taken as a whole; ● engage in transactions with affiliates; ● increase our exposure to commodity price fluctuations; ● create unrestricted subsidiaries; and ● enter into sale and leaseback transactions.
In particular, the 2024 Amended Term Loan Agreement limits our and our subsidiaries’ ability to, among other things: ● pay dividends on, redeem or repurchase shares of our common stock and any other capital stock we may issue; ● make loans to others; ● make investments; ● incur additional indebtedness; ● create certain liens; ● sell assets; ● enter into agreements that restrict dividends or other payments from our restricted subsidiaries to us; ● consolidate, merge or transfer all or substantially all of our assets and those of our restricted subsidiaries taken as a whole; 25 Table of Contents ● engage in transactions with affiliates; ● increase our exposure to commodity price fluctuations; ● create unrestricted subsidiaries; and ● enter into sale and leaseback transactions.
In particular, in accordance with SEC requirements, estimates of oil and gas reserves, future net revenue from proved reserves and the present value of our oil and gas properties are based on the assumption that future oil and gas prices remain the same as the 12-month first-day-of-the-month average oil and gas prices for the year ended December 31, 2024.
In particular, in accordance with SEC requirements, estimates of oil and gas reserves, future net revenue from proved reserves and the present value of our oil and gas properties are based on the assumption that future oil and gas prices remain the same as the 12-month first-day-of-the-month average oil and gas prices for the year ended December 31, 2025.
Among the factors that affect volatility are: ● domestic and foreign supplies of oil, natural gas and NGLs and natural gas; ● the ability of members of the Organization of Petroleum Exporting Countries and other oil exporting countries, including Russia, to agree upon and maintain production quotas; ● social unrest and political instability, particularly in major oil and natural gas producing regions outside the U.S., such as the Middle East, and armed conflict or terrorist attacks; ● the level of consumer demand for oil and natural gas, including demand growth in developing countries, such as China and India; 22 Table of Contents ● labor unrest in oil and natural gas producing regions; ● weather conditions, including hurricanes and other natural occurrences that affect the supply and/or demand for oil and natural gas; ● the price and availability of alternative fuels and energy sources; ● the price and availability of foreign imports and domestic exports; and ● worldwide and regional economic and political conditions impacting the global supply and demand for oil and natural gas, which may be driven by many factors, including sanctions, import and export restrictions, climate change initiatives and environmental protection affects, health epidemics (such as the global COVID-19 coronavirus outbreak) and numerous other factors.
Among the factors that affect volatility are: ● domestic and foreign supplies of oil, natural gas and NGLs and natural gas; ● the ability of members of the Organization of Petroleum Exporting Countries and other oil exporting countries, including Russia, to agree upon and maintain production quotas; ● social unrest and political instability, particularly in major oil and natural gas producing regions outside the U.S., such as Venezuela, Russia and Ukraine and the Middle East, and armed conflict or terrorist attacks; ● the level of consumer demand for oil and natural gas, including demand growth in developing countries, such as China and India; ● labor unrest in oil and natural gas producing regions; ● weather conditions, including hurricanes and other natural occurrences that affect the supply and/or demand for oil and natural gas; ● the price and availability of alternative fuels and energy sources; ● the price and availability of foreign imports and domestic exports; and ● worldwide and regional economic and political conditions impacting the global supply and demand for oil and natural gas, which may be driven by many factors, including sanctions, import and export restrictions, climate change initiatives and environmental protection affects, health epidemics (such as the global COVID-19 coronavirus outbreak) and numerous other factors.
Macroeconomic Risk Factors Our business could be adversely impacted by events beyond our control, including economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events such as the conflict in Ukraine and the Middle East, or other macroeconomic conditions, which have in the past and may in the future result in adverse operating and financial results.
Macroeconomic Risk Factors Our business could be adversely impacted by events beyond our control, including economic downturns, inflation, tariffs, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events such as the conflict in Venezuela, Russia and Ukraine and the Middle East, or other macroeconomic conditions, which have in the past and may in the future result in adverse operating and financial results.
Failure to comply with the covenants in our 2024 Amended Term Loan Agreement may limit our ability to borrow, result in an event of default and cause amounts outstanding under our 2024 Amended Term Loan Agreement to become immediately due and payable. ​ Unless we replace our reserves, our reserves and production will decline, which would adversely affect our financial condition, results of operations and cash flows.
Failure to comply with the covenants in our 2024 Amended Term Loan Agreement may limit our ability to borrow, result in an event of default and cause amounts outstanding under our 2024 Amended Term Loan Agreement to become immediately due and payable. 23 Table of Contents ​ Unless we replace our reserves, our reserves and production will decline, which would adversely affect our financial condition, results of operations and cash flows.
That study led to calls for additional federal regulatory control. 34 Table of Contents Certain states, including Texas where we conduct our operations, likewise are considering or have adopted more stringent requirements for various aspects of hydraulic fracturing operations, such as permitting, disclosure, air emissions, well construction, seismic monitoring, waste disposal and water use.
That study led to calls for additional federal regulatory control. Certain states, including Texas where we conduct our operations, likewise are considering or have adopted more stringent requirements for various aspects of hydraulic fracturing operations, such as permitting, disclosure, air emissions, well construction, seismic monitoring, waste disposal and water use.
Similar rules and limitations may apply for state income tax purposes. As of December 31, 2024, no additional ownership change has occurred. We may be required to take non-cash asset write-downs.
Similar rules and limitations may apply for state income tax purposes. As of December 31, 2025, no additional ownership change has occurred. We may be required to take non-cash asset write-downs.
The estimates of our reserves as of December 31, 2024 are based upon various assumptions about future production levels, prices and costs that may not prove to be correct over time.
The estimates of our reserves as of December 31, 2025 are based upon various assumptions about future production levels, prices and costs that may not prove to be correct over time.
If a substantial amount of our production is interrupted at the same time, it could adversely affect our cash flow. Our strategy involves drilling in shale formations, using horizontal drilling and modern completion techniques. The results of our drilling program using these techniques may be subject to more uncertainties than conventional drilling programs.
If a substantial amount of our production is interrupted at the same time, it could adversely affect our cash flow. 31 Table of Contents Our strategy involves drilling in shale formations, using horizontal drilling and modern completion techniques. The results of our drilling program using these techniques may be subject to more uncertainties than conventional drilling programs.
Matters subject to regulation include: ● water discharge and disposal permits for drilling operations; ● drilling bonds; ● drilling permits; 33 Table of Contents ● reports concerning operations; ● air quality, air emissions, noise levels and related permits; ● spacing of wells; ● rights-of-way and easements; ● unitization and pooling of properties; ● pipeline construction; ● gathering, transportation and marketing of oil and natural gas; ● taxation; and ● waste transport and disposal permits and requirements.
Matters subject to regulation include: ● water discharge and disposal permits for drilling operations; ● drilling bonds; ● drilling permits; ● reports concerning operations; ● air quality, air emissions, noise levels and related permits; ● spacing of wells; ● rights-of-way and easements; ● unitization and pooling of properties; ● pipeline construction; ● gathering, transportation and marketing of oil and natural gas; ● taxation; and ● waste transport and disposal permits and requirements.
Negative economic conditions could also 36 Table of Contents adversely affect the collectability of our trade receivables or performance by our vendors and suppliers or cause our commodity hedging arrangements to be ineffective if our counterparties are unable to perform their obligations. All of the foregoing may adversely affect our business, financial condition, results of operations and cash flows.
Negative economic conditions could also adversely affect the collectability of our trade receivables or performance by our vendors and suppliers or cause our commodity hedging arrangements to be ineffective if our counterparties are unable to perform their obligations. All of the foregoing may adversely affect our business, financial condition, results of operations and cash flows.
Accordingly, a significant change in these factors, many of which are 27 Table of Contents beyond our control, may shift a significant amount of cost from unevaluated properties into the full cost pool that is subject to depletion and the ceiling test limitation. Hedging transactions may limit our potential gains and increase our potential losses.
Accordingly, a significant change in these factors, many of which are beyond our control, may shift a significant amount of cost from unevaluated properties into the full cost pool that is subject to depletion and the ceiling test limitation. Hedging transactions may limit our potential gains and increase our potential losses.
In order to manage our exposure to price risks in the marketing of our oil, natural gas, and natural gas liquids production and comply with the requirements of our 2024 Amended Term Loan Agreement, we have entered into oil and natural gas hedging arrangements with respect to a portion of our anticipated production and we may enter into additional hedging transactions in the future.
In order to manage our exposure to price risks in the marketing of our oil, natural gas, and natural gas liquids production and comply with the requirements of our 2024 Amended Term Loan Agreement, we have entered into oil and natural gas hedging arrangements with respect to a portion of our anticipated production and we may enter into 27 Table of Contents additional hedging transactions in the future.
We may incur substantially more debt in the future. Our ability to meet our debt obligations and other expenses will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors, many of which we are unable to control.
We may incur substantially more debt in the future. Our ability to meet our debt obligations and other expenses will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors, 24 Table of Contents many of which we are unable to control.
Competition for qualified personnel can be intense, particularly in the oil and 31 Table of Contents natural gas industry, and there are a limited number of people with the requisite knowledge and experience. Under these conditions, we could be unable to attract and retain these personnel.
Competition for qualified personnel can be intense, particularly in the oil and natural gas industry, and there are a limited number of people with the requisite knowledge and experience. Under these conditions, we could be unable to attract and retain these personnel.
Such developments, including environmental activism and initiatives aimed at limiting climate change and reducing air pollution, could potentially result in a reduction of available capital funding for development projects, thus impacting future financial results.
Such developments, including environmental 22 Table of Contents activism and initiatives aimed at limiting climate change and reducing air pollution, could potentially result in a reduction of available capital funding for development projects, thus impacting future financial results.
Any significant variance in the actual future prices from these assumptions could materially affect the estimated quantity and value of our reserves set forth in this report. In addition, at December 31, 2024, approximately 44% of our estimated proved reserves were classified as proved undeveloped. Recovery of proved undeveloped reserves requires significant capital expenditures and successful drilling operations.
Any significant variance in the actual future prices from these assumptions could materially affect the estimated quantity and value of our reserves set forth in this report. In addition, at December 31, 2025, approximately 40% of our estimated proved reserves were classified as proved undeveloped. Recovery of proved undeveloped reserves requires significant capital expenditures and successful drilling operations.
Higher levels of indebtedness make us more vulnerable to economic downturns and adverse developments in our business. ● Estimates of proved oil and natural gas reserves involve assumptions and any material inaccuracies in these assumptions will materially affect the quantities and the value of our reserves. ● We are subject to various contractual limitations that affect the discretion of our management in operating our business. ● Federal legislation and rulemaking could have an adverse impact on our ability to use derivative instruments to reduce the effects of commodity prices, interest rates and other risks associated with our business. ● We cannot be certain that the insurance coverage maintained by us will be adequate to cover all losses that may be sustained in connection with all oil and natural gas activities. ● Our ability to use net operating loss carryforwards and realized built in losses to offset future taxable income for U.S. federal income tax purposes is subject to limitation. ● We may be required to take non-cash asset write-downs. ● Hedging transactions may limit our potential gains and increase our potential losses. ● We are substantially dependent upon our drilling success on our Delaware Basin properties. ● Our exploration and development drilling efforts and the operation of our wells may not be profitable or achieve our targeted rates of return. ● Increasing attention to environmental, social and corporate governance (“ESG”) matters may impact our business. ● We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget. ● We may not be able to drill wells on a substantial portion of our acreage. ● Certain of our undeveloped leasehold acreage could expire if we are unable to meet continuous development clauses or similar provisions in our leases requiring development of our undeveloped acreage and/or maintaining production on units containing the acreage. ● Our oil and natural gas activities are subject to various risks that are beyond our control. ● Our ability to sell our production and/or receive market prices for our production may be adversely affected by transportation capacity constraints and interruptions. ● Our strategy involves drilling in shale formations, using horizontal drilling and modern completion techniques.
Higher levels of indebtedness make us more vulnerable to economic downturns and adverse developments in our business. ● Estimates of proved oil and natural gas reserves involve assumptions and any material inaccuracies in these assumptions will materially affect the quantities and the value of our reserves. ● We are subject to various contractual limitations that affect the discretion of our management in operating our business. ● Federal legislation and rulemaking could have an adverse impact on our ability to use derivative instruments to reduce the effects of commodity prices, interest rates and other risks associated with our business. ● We cannot be certain that the insurance coverage maintained by us will be adequate to cover all losses that may be sustained in connection with all oil and natural gas activities. ● Our ability to use net operating loss carryforwards and realized built in losses to offset future taxable income for U.S. federal income tax purposes is subject to limitation. ● We may be required to take non-cash asset write-downs. ● Hedging transactions may limit our potential gains and increase our potential losses. 20 Table of Contents ● We are substantially dependent upon our drilling success on our Delaware Basin properties. ● Our exploration and development drilling efforts and the operation of our wells may not be profitable or achieve our targeted rates of return. ● Our financial results following the sale of our West Quito Assets may not be comparable to our historical financial results and historical trends may not be indicative of our future results. ● Our ability to complete dispositions of assets, or interests in assets, may be subject to factors beyond our control, and in certain cases, we may be required to retain liabilities for certain matters. ● Increasing attention to environmental, social and corporate governance (“ESG”) matters may impact our business. ● We could experience periods of higher costs for various reasons, including due to higher commodity prices, increased drilling activity in the Delaware Basin and trade disputes, tariffs or inflation that affect the costs of steel and other raw materials that we and our vendors rely upon, which could adversely affect our ability to execute our exploration and development plans on a timely basis and within budget. ● We may not be able to drill wells on a substantial portion of our acreage. ● Certain of our undeveloped leasehold acreage could expire if we are unable to meet continuous development clauses or similar provisions in our leases requiring development of our undeveloped acreage and/or maintaining production on units containing the acreage. ● Our oil and natural gas activities are subject to various risks that are beyond our control. ● Our ability to sell our production and/or receive market prices for our production may be adversely affected by transportation capacity constraints and interruptions. ● Our strategy involves drilling in shale formations, using horizontal drilling and modern completion techniques.
As a result, our production, revenues, operating costs and liabilities and expenses may be materially and adversely affected and may differ materially from those anticipated by us. 30 Table of Contents Our ability to sell our production and/or receive market prices for our production may be adversely affected by transportation capacity constraints and interruptions.
As a result, our production, revenues, operating costs and liabilities and expenses may be materially and adversely affected and may differ materially from those anticipated by us. Our ability to sell our production and/or receive market prices for our production may be adversely affected by transportation capacity constraints and interruptions.
Increasing levels of exploration and production, particularly in the Delaware Basin, likewise may increase demand for oilfield services and equipment, and the costs of these services and equipment may increase, while the quality of these services and equipment may suffer.
Increasing levels of exploration and production, particularly in the Delaware Basin, likewise may increase demand for oilfield services and equipment, and the costs of these services and 29 Table of Contents equipment may increase, while the quality of these services and equipment may suffer.
As of March 27, 2025, we have also reserved an additional 1.2 million shares for future issuance to our directors, officers and employees under our 2020 Long-Term Incentive Plan. The potential issuance of such additional shares of common stock may create downward pressure on the trading price of our common stock.
As of March 18, 2026, we have also reserved an additional 1.3 million shares for future issuance to our directors, officers and employees under our 2020 Long-Term Incentive Plan. The potential issuance of such additional shares of common stock may create downward pressure on the trading price of our common stock.
Our operations substantially depend on the availability of water. Restrictions on our ability to obtain, dispose of or recycle water may impact our ability to execute our drilling and development plans in a timely or cost-effective manner. Water is an essential component of our drilling and hydraulic fracturing processes.
Restrictions on our ability to obtain, dispose of or recycle water may impact our ability to execute our drilling and development plans in a timely or cost-effective manner. Water is an essential component of our drilling and hydraulic fracturing processes.
We expect to use proceeds from the sales of redeemable convertible preferred stock, if necessary, and which may be difficult or limited to access, to fund capital expenditures that are in excess of our operating cash flow and cash on hand.
We expect to use a portion of the proceeds from the sale of our West Quito Assets and from the sales of redeemable convertible preferred stock, if necessary, and which may be difficult or limited to access, to fund capital expenditures that are in excess of our operating cash flow and cash on hand.
Average prices for oil and natural gas for the 12-month period were as follows: WTI crude oil spot price of $76.32 per Bbl, adjusted by lease or field for quality, transportation fees, and market differentials and a Henry Hub natural gas spot price of $2.13 per MMBtu, adjusted by lease or field for energy content, transportation fees, and market differentials.
Average prices for oil and natural gas for the 12-month period were as follows: WTI crude oil spot price of $66.01 per Bbl, adjusted by lease or field for quality, transportation fees, and market differentials and a Henry Hub natural gas spot price of $3.39 per MMBtu, adjusted by lease or field for energy content, transportation fees, and market differentials.
Estimated proved reserves as of December 31, 2024 assume that we will make future capital expenditures of approximately $319.6 million in the aggregate primarily from 2025 through 2028, which are necessary to develop and realize the value of proved reserves on our properties.
Estimated proved reserves as of December 31, 2025 assume that we will make future capital expenditures of approximately $270.3 million in the aggregate primarily from 2026 through 2029, which are necessary to develop and realize the value of proved reserves on our properties.
These uncertainties could result in an inability to meet our expectations for reserves and production. ● Title to the properties in which we have an interest may be impaired by title defects. 21 Table of Contents ● We depend substantially on the continued presence of key personnel for critical management decisions and industry contacts. ● There may be circumstances in which the interests of our significant stockholders could be in conflict with the interests of our other stockholders. ● Future sales of our common stock in the public market or the issuance of securities senior to our common stock, or the perception that these sales may occur, could adversely affect the trading price of our common stock and our ability to raise funds in stock offerings. ● We may choose to delist our securities from NYSE American and deregister our common stock under the Exchange Act, which could negatively affect the liquidity and trading prices of our common stock and would result in less disclosure about the Company. ● Our failure to meet the continued listing standards of NYSE American could result in a delisting of our common stock. ● We may be unable to either redeem or pay cash dividends on the outstanding shares of our Redeemable Preferred Stock, resulting in increases in the liquidation preference of the Redeemable Preferred Stock and the right of the holders of Redeemable Preferred Stock to receive a greater number of shares of our common stock in the event such holders elect to exercise their conversion rights.
These uncertainties could result in an inability to meet our expectations for reserves and production. ● Title to the properties in which we have an interest may be impaired by title defects. ● We depend substantially on the continued presence of key personnel for critical management decisions and industry contacts. ● There may be circumstances in which the interests of our significant stockholders could be in conflict with the interests of our other stockholders. ● Future sales of our common stock in the public market or the issuance of securities senior to our common stock, or the perception that these sales may occur, could adversely affect the trading price of our common stock and our ability to raise funds in stock offerings. ● Our stock price has been volatile, and you may not be able to resell our common stock at or above the price you paid. ● Our failure to meet the continued listing standards of NYSE American could result in a delisting of our common stock. ● We may be unable to either redeem or pay cash dividends on the outstanding shares of our Redeemable Preferred Stock, resulting in increases in the liquidation preference of the Redeemable Preferred Stock and the right of the holders of Redeemable Preferred Stock to receive a greater number of shares of our common stock in the event such holders elect to exercise their conversion rights.
Costs associated with unevaluated properties, which were approximately $49.1 million at December 31, 2024, are not initially subject to the ceiling test limitation.
Costs associated with unevaluated properties, which were approximately $48.0 million at December 31, 2025, are not initially subject to the ceiling test limitation.
Failure to comply with the covenants in our 2024 Amended Term Loan Agreement may limit our ability to borrow, result in an event of default and cause amounts outstanding under our 2024 Amended Term Loan Agreement to become immediately due and payable.
Failure to comply with the covenants in our 2024 Amended Term Loan Agreement may limit our ability to borrow, result in an event of default and cause amounts outstanding under our 2024 Amended Term Loan Agreement to become immediately due and payable. On December 26, 2024, we entered into the 2024 Term Loan Agreement with Fortress Credit Corp.
As of March 27, 2025, we had approximately 16.5 million shares of common stock outstanding and options and restricted stock units to purchase or receive an aggregate of 0.3 million shares of our common stock.
As of March 18, 2026, we had approximately 18.3 million shares of common stock outstanding and options and restricted stock units to purchase or receive an aggregate of 0.1 million shares of our common stock.
Investment in Securities Risk Factors There may be circumstances in which the interests of our significant stockholders could be in conflict with the interests of our other stockholders. Funds advised by Luminus Management, LLC, Oaktree Capital Management, LP, and LSP Investment Advisors, LLC held approximately 37.4%, 24.2% and 14.4%, respectively, of our common stock as of March 27, 2025.
Investment in Securities Risk Factors There may be circumstances in which the interests of our significant stockholders could be in conflict with the interests of our other stockholders. Funds advised by Luminus Management, LLC, Oaktree Capital Management, LP, and LSP Investment Advisors, LLC held approximately 34%, 22% and 13%, respectively, of our common stock as of March 18, 2026.
If our leases on acreage subject to these provisions are not maintained by production in paying quantities or continuous development, our leases could expire and we would lose our right to develop the related properties.
We continually review our leases on acreage subject to these clauses or agreements when planning for our future drilling programs. If our leases on acreage subject to these provisions are not maintained by production in paying quantities or continuous development, our leases could expire and we would lose our right to develop the related properties.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) establishes, among other provisions, federal oversight and regulation of the over-the-counter (“OTC”) derivatives market and entities that participate in that market. The Dodd-Frank Act also establishes margin requirements and certain transaction clearing and trade execution requirements.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) established, among other provisions, federal oversight and regulation of the over-the-counter (“OTC”) derivatives market and entities that participate in that market.
Additionally, our 2024 Amended Term Loan Agreement contains certain covenants 23 Table of Contents as well as a mandatory repayment schedule requiring us to make scheduled amortization payments in the aggregate amount of $16.9 million in 2025 and $22.5 million in 2026.
Additionally, our 2024 Amended Term Loan Agreement contains certain covenants as well as a mandatory repayment schedule requiring us to make scheduled amortization payments in the aggregate amount of $22.5 million in both 2026 and 2027. The 2024 Amended Term Loan Agreement matures on December 26, 2028.
The estimates of these oil and natural gas reserves and the costs associated with development of these reserves have been prepared in accordance with SEC regulations; however, actual capital expenditures will likely vary from estimated capital expenditures, development may not occur as scheduled and actual results may not be as estimated. 25 Table of Contents We are subject to various contractual limitations that affect the discretion of our management in operating our business.
The estimates of these oil and natural gas reserves and the costs associated with development of these reserves have been prepared in accordance with SEC regulations; however, actual capital expenditures will likely vary from estimated capital expenditures, development may not occur as scheduled and actual results may not be as estimated.
As of December 31, 2024, we had approximately $162.0 million of indebtedness outstanding under the 2024 Amended Term Loan Agreement. As of December 31, 2024, we have no additional borrowing capacity under the 2024 Amended Term Loan Agreement.
Business – Recent Developments . As of December 31, 2025, we had approximately $208.1 million of indebtedness outstanding under the 2024 Amended Term Loan Agreement and no additional borrowing capacity under the 2024 Amended Term Loan Agreement.
While historically we have largely been successful in obtaining modifications of our covenants as needed, there can be no assurance that we will be successful in the future.
While historically we have largely been successful in obtaining modifications of our covenants as needed, as evidenced most recently by the Second Amendment to our 2024 Amended Term Loan Agreement, there can be no assurance that we will be successful in the future.
A rise in interest rates could impact on our borrowing costs and could have an adverse effect on our cash flows. Borrowings under the 2024 Amended Term Loan Agreement bear interest at a rate per annum equal to the Secured Overnight Financing Rate (“SOFR”) (with a credit spread of adjustment of 0.15% per annum) plus an applicable margin of 7.75%.
Borrowings under the 2024 Amended Term Loan Agreement initially bore interest at a rate per annum equal to the Secured Overnight Financing Rate (“SOFR”) (with a credit spread of adjustment of 0.15% per annum) plus an applicable margin of 7.75%.
Future sales of our common stock in the public market or the issuance of securities senior to our common stock, or the perception that these sales may occur, could adversely affect the trading price of our common stock and our ability to raise funds in stock offerings.
In addition, our significant concentration of share ownership may adversely affect the trading price of our common shares because investors may perceive disadvantages in owning shares in companies with significant stockholders. 32 Table of Contents Future sales of our common stock in the public market or the issuance of securities senior to our common stock, or the perception that these sales may occur, could adversely affect the trading price of our common stock and our ability to raise funds in stock offerings.
In the courts, several decisions have been issued that may increase the risk of claims being filed by governments and private parties against companies that cause or contribute to significant greenhouse gas emissions.
In the courts, several decisions have been issued that may increase the risk of claims being filed by governments and private parties against companies that cause or contribute to significant greenhouse gas emissions. Such cases may seek emissions reductions, challenge air emissions or other permits or request damages for alleged climate change impacts to the environment, people, and property.
By way of example, in 2015 the EPA lowered the primary national ambient air quality standard for ozone from 75 parts per billion to 70 parts per billion. Implementation eventually could result in more stringent emissions controls and additional permitting obligations for our operations.
By way of example, in 2015 the EPA lowered the primary national ambient air quality standard for ozone from 75 parts per billion to 70 parts per billion.
Restrictions on our ability to obtain, dispose of or recycle water may impact our ability to execute our drilling and development plans in a timely or cost-effective manner. ● Events beyond our control, including a global or domestic health crisis, may result in unexpected adverse operating and financial results. ● A financial downturn could negatively affect our business, results of operations, financial condition and liquidity. ● We depend on computer, telecommunications and information technology systems to conduct our business, and failures, disruptions, cyber-attacks or other breaches in data security could significantly disrupt our business operations, create liability and increase our costs.
Restrictions on our ability to obtain, dispose of or recycle water may impact our ability to execute our drilling and development plans in a timely or cost-effective manner. ● Our business could be adversely impacted by events beyond our control, including economic downturns, inflation, tariffs, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events such as the conflict in Venezuela, Russia and Ukraine and the Middle East, or other 21 Table of Contents macroeconomic conditions, which have in the past and may in the future result in adverse operating and financial results. ● A financial downturn could negatively affect our business, results of operations, financial condition and liquidity. ● We depend on computer, telecommunications and information technology systems to conduct our business, and failures, disruptions, cyber-attacks or other breaches in data security could significantly disrupt our business operations, create liability and increase our costs.
A financial downturn could negatively affect our business, results of operations, financial condition and liquidity.
The ultimate impact of a public health crisis is highly uncertain. A financial downturn could negatively affect our business, results of operations, financial condition and liquidity.
As a result of our indebtedness, we will need to use a portion of our cash flow to pay interest, and outstanding principal during 2025, which will reduce the amount of cash flow we will have available to finance our operations and other business activities and could limit our flexibility in planning for or reacting to changes or adverse developments in our business or economic downturns impacting the industry in which we operate. 24 Table of Contents Indebtedness under our 2024 Amended Term Loan Agreement is at a variable interest rate, and so a rise in interest rates will generate greater interest expense to the extent we do not have hedging arrangements that are effective in offsetting interest rate fluctuations.
As a result of our indebtedness, we will need to use a portion of our cash flow to pay interest, and outstanding principal during 2026, which will reduce the amount of cash flow we will have available to finance our operations and other business activities and could limit our flexibility in planning for or reacting to changes or adverse developments in our business or economic downturns impacting the industry in which we operate.
Federal, state and local governments have been adopting or considering restrictions on or prohibitions of fracturing in areas where we currently conduct operations, or may in the future, plan to conduct operations.
We engage third parties to provide hydraulic fracturing or other well stimulation services to us in connection with many of the wells for which we are the operator. Federal, state and local governments have been adopting or considering restrictions on or prohibitions of fracturing in areas where we currently conduct operations, or may in the future, plan to conduct operations.
Such cases may seek emissions reductions, challenge air emissions or other permits or request damages for alleged climate change impacts to the environment, people, and property. 35 Table of Contents Any new initiatives that may be adopted to reduce emissions of greenhouse gases could require us to incur additional operating costs, such as costs to purchase and operate emissions controls, to obtain emission allowances or to pay emission taxes, and reduce demand for our products.
Any new initiatives that may be adopted to reduce emissions of greenhouse gases could require us to incur additional operating costs, such as costs to purchase and operate emissions controls, to obtain emission allowances or to pay emission taxes, and reduce demand for our products. Our operations substantially depend on the availability of water.
If we are unable to accurately predict and control the costs of drilling and completing a well, we may be forced to limit, delay or cancel drilling operations. 28 Table of Contents Increasing attention to ESG matters may impact our business.
If we are unable to accurately predict and control the costs of drilling and completing a well, we may be forced to limit, delay or cancel drilling operations. 28 Table of Contents Our financial results following the sale of our West Quito Assets may not be comparable to our historical financial results and historical trends may not be indicative of our future results.
That statute imposes a fee on certain excess methane emissions from oil and gas facilities of $900 per metric ton of methane for 2024, $1,200 per metric ton for 2025, and $1,500 per metric ton each year thereafter. As a general matter, recent Democratic Presidential Administrations have been spearheading the development of federal climate policies and controls.
That statute required the EPA to impose a fee on certain excess methane emissions from oil and gas facilities of $900 per metric ton of methane for 2024, $1,200 per metric ton for 2025, and $1,500 per metric ton each year thereafter.
Our ability to use net operating loss carryforwards and realized built in losses to offset future taxable income for U.S. federal income tax purposes is subject to limitation.
A loss not fully covered by insurance could have a material effect on our financial position, results of operations and cash flows. Our ability to use net operating loss carryforwards and realized built in losses to offset future taxable income for U.S. federal income tax purposes is subject to limitation.
Our 2024 Amended Term Loan Agreement contains various provisions that may limit our management’s discretion in certain respects.
We are subject to various contractual limitations that affect the discretion of our management in operating our business. Our 2024 Amended Term Loan Agreement contains various provisions that may limit our management’s discretion in certain respects.
Accordingly, if the Company is unable to redeem the Redeemable Preferred Stock or is unable to pay, or elects not to pay, dividends on the Redeemable Preferred Stock in cash, the liquidation preference of the Redeemable Preferred Stock will continue to increase, thereby diluting the financial interests of the holders of our common stock in our Company and diluting the voting interests of the holders of our common stock to the extent holders of the Redeemable Preferred Stock elect to convert such shares into shares of our common stock.
Accordingly, if the Company is unable to redeem the Redeemable Preferred Stock or is unable to pay, or elects not to pay, dividends on the Redeemable Preferred Stock in cash, the liquidation preference of the Redeemable Preferred Stock will continue to increase, thereby diluting the financial interests of the holders of our common stock in our Company and diluting the voting interests of the holders of our common stock to the extent holders of the Redeemable Preferred Stock elect to convert such shares into shares of our common stock. 34 Table of Contents Regulatory Risk Factors We are subject to complex federal, state, local and other laws and regulations that frequently are amended to impose more stringent requirements that could adversely affect the cost, manner or feasibility of doing business.
In addition, BLM promulgated new rules in 2024 to reduce venting, flaring and leaks from oil and gas production on public lands. Aside from new controls, the 2022 Inflation Reduction Act creates incentives designed to increase use of electric cars and fuels other than oil and natural gas.
Aside from new controls, the 2022 36 Table of Contents Inflation Reduction Act created incentives designed to increase use of electric cars and fuels other than oil and natural gas.
In addition, a recession or market correction resulting from the effects of public health crises could materially affect our business and the value of our common stock.
A widespread public health crisis such as a pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity. In addition, a recession or market correction resulting from the effects of public health crises could materially affect our business and the value of our common stock.
We have substantial indebtedness and we may incur substantially more debt in the future. Higher levels of indebtedness make us more vulnerable to economic downturns and adverse developments in our business.
We have substantial indebtedness and we may incur substantially more debt in the future. Higher levels of indebtedness make us more vulnerable to economic downturns and adverse developments in our business. We had $208.1 million principal amount of debt, including current portions, as of December 31, 2025 and as of the date of this Annual Report on Form 10-K.
On January 9, 2025, the Borrower entered into a first amendment (the “First Amendment”) to its 2024 Term Loan Agreement (as amended, the “2024 Amended Term Loan Agreement”). Pursuant to the First Amendment, the Borrower incurred incremental term loans in the aggregate principal amount of $63.0 million (the “Incremental Term Loans”).
On January 9, 2025, we entered into the First Amendment to our 2024 Term Loan Agreement and incurred incremental term loans in the aggregate principal amount of $63.0 million. On November 12, 2025, we entered into the Second Amendment to the 2024 Amended Term Loan Agreement to amend certain financial covenants, as described in more detail in Item 1.
Currently, our leases on undeveloped oil and natural gas properties are either categorized as “held by production” or perpetuated by continuous development clauses contained in our leases or tolling agreements. We continually review our leases on acreage subject to these clauses or agreements 29 Table of Contents when planning for our future drilling programs.
Generally, our oil and natural gas leases remain in force as long as production in paying quantities is maintained. Currently, our leases on undeveloped oil and natural gas properties are either categorized as “held by production” or perpetuated by continuous development clauses contained in our leases or tolling agreements.
Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our common stock.
You may not realize any return on your investment in us and may lose some or all of your investment. 33 Table of Contents Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our common stock.
These policies generally cover: ● personal injury; ● bodily injury; 26 Table of Contents ● third party property damage; ● medical expenses; ● legal defense costs; ● pollution in some cases; ● well blowouts in some cases; and ● workers compensation.
These policies generally cover: ● personal injury; ● bodily injury; ● third party property damage; ● medical expenses; ● legal defense costs; ● pollution in some cases; ● well blowouts in some cases; and ● workers compensation. 26 Table of Contents As is common in the oil and natural gas industry, we will not insure fully against all risks associated with our business either because such insurance is not available or because we believe the premium costs are prohibitive.
Further, the loss or corruption of sensitive information could have a material adverse effect on our reputation, financial position, results of operations or cash flows. In addition, as cyber-attacks continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber-attacks.
In addition, as cyber-attacks continue to evolve, we may be required to 38 Table of Contents expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber-attacks. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Pursuant to the 2024 Term Loan Agreement, the lenders party thereto agreed to provide the Borrower with (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million to be made available to the Borrower from January 3, 2025 until the date that is the earliest to occur of (x) the date on which such incremental term facility is fully drawn, (y) the date on which such incremental term facility is terminated and (z) January 11, 2025, subject to the satisfaction of certain conditions.
Pursuant to the 2024 Term Loan Agreement, we were provided (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability. ​ A widespread public health crisis such as a pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates and tariffs, higher interest rates and uncertainty about economic stability. ​ 37 Table of Contents In order to manage the inflation risk present in the U.S.’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis.
Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays. We engage third parties to provide hydraulic fracturing or other well stimulation services to us in connection with many of the wells for which we are the operator.
Implementation eventually could result in more stringent emissions controls and additional permitting obligations for our operations. 35 Table of Contents Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.
The ultimate impact of a public health crisis is highly uncertain. ​ The Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending.
While inflationary pressures in the U.S.’ economy have begun to subside, it is uncertain what impact recent tariff activity by the U.S. and foreign governments will have on inflation. Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending.
As of December 31, 2024, we owned leasehold interests in approximately 40,500 net acres in the Delaware Basin in West Texas of which approximately 4,700 net acres are undeveloped. Generally, our oil and natural gas leases remain in force as long as production in paying quantities is maintained.
As of December 31, 2025, we owned leasehold interests in approximately 37,600 net acres in the Delaware Basin in West Texas of which approximately 2,400 net acres are undeveloped and approximately 6,100 net acres are to be divested in the West Quito Divestiture.
Removed
On December 26, 2024, the Company and its wholly owned subsidiary, Halcón Holdings, LLC (the “Borrower”) entered into a Second Amended and Restated Senior Secured Credit Agreement (the “2024 Term Loan Agreement”) with Fortress Credit Corp., as administrative agent, and certain other financial institutions party thereto, as lenders.
Added
Our 2024 Amended Term Loan Agreement contains the following financial covenants (as defined), including the maintenance of the following ratios: ● Asset Coverage Ratio not to fall below 1.85x as of December 31, 2025 through and including December 31, 2026 and 2.00x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Total Net Leverage Ratio not to exceed 3.20x as of December 31, 2025, 3.25x as of March 31, 2026 and not to exceed the levels set forth in Item 1.
Removed
We had $162.0 million principal amount of debt, including current portions, as of December 31, 2024 and incurred incremental borrowings of $63.0 million in January 2025, resulting in total principal debt outstanding of $225.0 million as of the date of this Annual Report on Form 10-K.
Added
Indebtedness under our 2024 Amended Term Loan Agreement is at a variable interest rate, and so a rise in interest rates will generate greater interest expense to the extent we do not have hedging arrangements that are effective in offsetting interest rate fluctuations.
Removed
The Dodd-Frank Act may require us to comply with margin requirements in our derivative activities, although the application of those provisions to us is uncertain at this time. The counterparties to our derivative instruments may also spin off some of their derivatives activities to separate entities, which may not be as creditworthy as the current counterparties.
Added
A rise in interest rates could impact on our borrowing costs and could have an adverse effect on our cash flows.
Removed
As is common in the oil and natural gas industry, we will not insure fully against all risks associated with our business either because such insurance is not available or because we believe the premium costs are prohibitive. A loss not fully covered by insurance could have a material effect on our financial position, results of operations and cash flows.
Added
Under the Second Amendment, the Applicable Margin (as defined in the 2024 Amended Term Loan Agreement) is to be the rate per annum set forth below under the caption “SOFR Loans Spread” or “ABR Loans Spread”, as the case may be, based on the Total Net Leverage Ratio set forth in the table above in Item 1.
Removed
In addition, our significant concentration of share ownership may adversely affect the trading price of our common shares because investors may perceive disadvantages in owning shares in companies with significant stockholders.
Added
Business – Recent Developments ; provided that (a) until the Adjustment Date (the date of delivery of financial statements pursuant to the 2024 Amended Term Loan Agreement) following the Second Amendment effective date, the Applicable Margin shall be the applicable rate per annum set forth below in Category 1 and (b) the Applicable Margin shall be the applicable rate per annum set forth in Category 4 below at any time that an Event of Default (as defined in the 2024 Amended Term Loan Agreement) exists: ​ ​ ​ Total Net Leverage Ratio SOFR Loans Spread ABR Loans Spread Category 1 ≤ 2.50 to 1.00 7.75% 6.75% Category 2 > 2.50 to 1.00 ≤ 3.00 to 1.00 8.00% 7.00% Category 3 > 3.00 to 1.00 ≤ 3.25 to 1.00 8.25% 7.25% Category 4 > 3.25 to 1.00 8.50% 7.50% The Applicable Margin shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Net Leverage Ratio in accordance with the table above.
Removed
We may choose to delist our securities from NYSE American and deregister our common stock under the Exchange Act, which could negatively affect the liquidity and trading prices of our common stock and would result in less disclosure about the Company. As further discussed in Item 7.
Added
Among other things, the Dodd-Frank Act established margin requirements and requires clearing and trade execution practices for certain categories of swaps and may result in certain market participants needing to curtail or alter their derivative activities..
Removed
Management’s Discussion and Analysis, “Capital Resources and Liquidity,” we are exploring strategic transactions and looking at opportunities to significantly reduce expenses in the near term to bolster liquidity.
Added
The Dodd-Frank Act also created new categories of regulated market participants, such as "swap dealers" and "security-based swap dealers" that are subject to significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and other regulatory requirements, a large number of which have been implemented.

… 38 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed8 unchanged
Biggest changeWith the assistance and advice of our expert consultants, responsibility for the identification and assessment of risks and the recommendation of upgrades to our systems resides with our Director of Information Technology, who reports to our Chief Executive Officer. 37 Table of Contents Governance Our Board oversees the risks involved in our operations as part of its general oversight function, integrating risk management into our compliance policies and procedures.
Biggest changeWith the assistance and advice of our expert consultants, responsibility for the identification and assessment of risks and the recommendation of upgrades to our systems resides with our Director of Information Technology, who reports to our Chief Executive Officer. Our Director of Information Technology has more than 16 years of information technology experience.
With respect to cybersecurity, the Board has the ultimate oversight responsibility, with the Audit Committee of the Board having certain responsibilities relating to risk management of cybersecurity.
Governance Our Board oversees the risks involved in our operations as part of its general oversight function, integrating risk management into our compliance policies and procedures. With respect to cybersecurity, the Board has the ultimate oversight responsibility, with the Audit Committee of the Board having certain responsibilities relating to risk management of cybersecurity.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed1 unchanged
Biggest changeWe are not party to any such proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 38 Table of Contents PART II
Biggest changeWe are not party to any such proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
ITEM 3. LEGAL PROCEEDINGS A description of our legal proceedings is included in Item 8. Consolidated Financial Statements and Supplementary Data— Note 11 , “Commitments and Contingencies,” and is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS A description of our legal proceedings is included in Item 8. Consolidated Financial Statements and Supplementary Data— Note 10 , “Commitments and Contingencies,” and is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+3 added−3 removed2 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On February 20, 2020, our common stock commenced trading on the NYSE American exchange under the symbol “BATL.” Approximately 50 registered stockholders of record as of March 27, 2025 held our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On February 20, 2020, our common stock commenced trading on the NYSE American exchange under the symbol “BATL.” Approximately 50 registered stockholders of record as of March 18, 2026 held our common stock.
Removed
During 2024, we sold, in private placements, an aggregate of 40,000 shares of redeemable convertible preferred stock, par value $0.0001 per share, for total net proceeds of $39.0 million to certain funds managed by Luminus Management, LLC, Oaktree Capital Management, LP, and LSP Investment Advisors, LLC, the Company’s largest three existing stockholders (collectively, the “Investors”) that represent 50 percent of our board of directors.
Added
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities None.
Removed
Proceeds from such sales were used to fund operations and meet debt payment requirements. The private placements of the redeemable convertible preferred stock were undertaken in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. For additional information and a description of conversion, see Part I. Item 8.
Added
Recent Sales of Unregistered Securities On March 3, 2026, we entered into a definitive agreement to sell in a private placement to an institutional investor 1,800,000 shares of our common stock and 927,273 prefunded warrants for the purchase of common stock at $5.50 per share for total proceeds of $15.0 million.
Removed
Consolidated Financial Statements and Supplementary Data— Note 12, “Redeemable Convertible Preferred Stock” to this Annual Report on Form 10-K. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities None. ITEM 6. RESERVE D ​ 39 Table of Contents
Added
The offering closed on March 4, 2026, on satisfaction of customary closing conditions. ITEM 6. RESERVE D ​ 40 Table of Contents

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 6. ​ Reserved ​ 39 ITEM 7. ​ Management’s discussion and analysis of financial condition and results of operations ​ 40 ITEM 7A. ​ Quantitative and qualitative disclosures about market risk ​ 53 ITEM 8. ​ Consolidated financial statements and supplementary data ​ 54
Biggest changeITEM 6. ​ Reserved ​ 40 ITEM 7. ​ Management’s discussion and analysis of financial condition and results of operations ​ 41 ITEM 7A. ​ Quantitative and qualitative disclosures about market risk ​ 54 ITEM 8. ​ Consolidated financial statements and supplementary data ​ 55

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+38 added−42 removed64 unchanged
Biggest changePursuant to the First Amendment, the Borrower incurred $63.0 million of Incremental Term Loans. ​ The maturity date of the 2024 Amended Term Loan Agreement is December 26, 2028. ​ All obligations under the 2021 Amended Term Loan Agreement were refunded, refinanced and repaid in full by the loans under the 2024 Term Loan Agreement as the net proceeds of the 2024 Term Loan Agreement were used to repay all outstanding indebtedness under the 2021 Amended Term Loan Agreement in an aggregate amount of approximately $152.1 million, including accrued and unpaid interest, and to pay related fees and expenses related to the new credit agreement. ​ Borrowings under the 2024 Amended Term Loan Agreement bear interest at a rate per annum equal to a forward-looking term rate based on SOFR for a tenor of three months (with a credit spread adjustment of 0.15% per annum) (or another applicable reference rate, as determined pursuant to the terms of the 2024 Amended Term Loan Agreement) plus an applicable margin of 7.75%. ​ 45 Table of Contents We may elect, at our option, to prepay any borrowing outstanding under the 2024 Amended Term Loan Agreement.
Biggest changePursuant to the First Amendment, the Borrower incurred $63.0 million of Incremental Term Loans. ​ The maturity date of the 2024 Amended Term Loan Agreement is December 26, 2028. ​ All obligations under the 2021 Amended Term Loan Agreement were refunded, refinanced and repaid in full by the loans under the 2024 Term Loan Agreement as the net proceeds of the 2024 Term Loan Agreement were used to repay all outstanding indebtedness under the 2021 Amended Term Loan Agreement in an aggregate amount of approximately $152.1 million, including accrued and unpaid interest, and to pay related fees and expenses related to the new credit agreement. ​ Borrowings under the 2024 Amended Term Loan Agreement initially bore interest at a rate per annum equal to a forward-looking term rate based on SOFR for a tenor of three months (with a credit spread adjustment of 0.15% per annum) (or another applicable reference rate, as determined pursuant to the terms of the 2024 Amended Term Loan Agreement) plus an applicable margin of 7.75%. 45 Table of Contents On November 12, 2025, we entered into the Second Amendment, which amended the Applicable Margin (as defined in the 2024 Amended Term Loan Agreement) to be the rate per annum set forth below under the caption “SOFR Loans Spread” or “ABR Loans Spread”, as the case may be, based on the Total Net Leverage Ratio; provided that (a) until the Adjustment Date (the date of delivery of financial statements pursuant to the 2024 Amended Term Loan Agreement) following the Second Amendment effective date, the Applicable Margin shall be the applicable rate per annum set forth below in Category 1 and (b) the Applicable Margin shall be the applicable rate per annum set forth in Category 4 below at any time that an Event of Default (as defined in the 2024 Amended Term Loan Agreement) exists: ​ ​ ​ Total Net Leverage Ratio SOFR Loans Spread ABR Loans Spread Category 1 ≤ 2.50 to 1.00 7.75% 6.75% Category 2 > 2.50 to 1.00 ≤ 3.00 to 1.00 8.00% 7.00% Category 3 > 3.00 to 1.00 ≤ 3.25 to 1.00 8.25% 7.25% Category 4 > 3.25 to 1.00 8.50% 7.50% The Applicable Margin shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Net Leverage Ratio in accordance with the table above.
As revenues or volumes from oil and natural gas sales increase or decrease, production taxes on these sales also increase or decrease, as such, taxes other than income decreased due to the decrease in revenues.
As revenues or volumes from oil and natural gas sales increase or decrease, production taxes on these sales also increase or decrease, as such, taxes other than income decreased due to the decrease in production volumes and revenues.
The AGI Facility’s injection well also experienced pressure communication between the tubing and annular space after an injection procedure. We commenced workover operations to remediate this issue. During the third quarter of 2023, additional complications were encountered with the workover operation at the AGI Facility causing higher than expected costs.
The AGI Facility’s injection well also experienced pressure communication between the tubing and annular space after an injection procedure. Workover operations commenced to remediate this issue. During the third quarter of 2023, additional complications were encountered with the workover operation at the AGI Facility causing higher than expected costs.
The 2024 Amended Term Loan Agreement also contains certain events of default, including non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy. ​ Changes in the level and timing of our production, drilling and completion costs, the cost and availability of transportation for our production and other factors varying from our expectations can affect our ability to comply with 46 Table of Contents the covenants under our 2024 Amended Term Loan Agreement.
The 2024 Amended Term Loan Agreement also contains certain events of default, including non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy. ​ Changes in the level and timing of our production, drilling and completion costs, the cost and availability of transportation for our production and other factors varying from our expectations can affect our ability to comply with 47 Table of Contents the covenants under our 2024 Amended Term Loan Agreement.
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect our reported results of operations and the amount of reported assets, liabilities and proved oil and natural gas reserves.
GAAP”). The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect our reported results of operations and the amount of reported assets, liabilities and proved oil and natural gas reserves.
We will, however, continue to consider alternative liquidity sources which could include entering into other financing arrangements (e.g. future equity raises), a sale of a portion of our non-core assets, seeking capital partners for our drilling program, pursuing strategic merger opportunities or joint ventures, the sale of the Company, or pursuing additional general and administrative or other cost reduction opportunities.
We will, however, continue to consider alternative liquidity sources which could include entering into other financing arrangements (e.g. future equity raises), a sale of a portion of our assets, seeking capital partners for our drilling program, pursuing strategic merger opportunities or joint ventures, the sale of the Company, or pursuing additional general and administrative or other cost reduction opportunities.
Some accounting policies involve judgments and uncertainties to such an extent that there is reasonable 47 Table of Contents likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. Actual results may differ from the estimates and assumptions used in the preparation of our consolidated financial statements.
Some accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. Actual results may differ from the estimates and assumptions used in the preparation of our 48 Table of Contents consolidated financial statements.
Changes in oil and natural gas prices, operating costs and expected performance from a given reservoir also will result in revisions to the amount of our estimated proved reserves. Our estimated proved reserves for the years ended December 31, 2024 and 2023 were prepared by NSAI, an independent oil and natural gas reservoir engineering consulting firm.
Changes in oil and natural gas prices, operating costs and expected performance from a given reservoir also will result in revisions to the amount of our estimated proved reserves. Our estimated proved reserves for the years ended December 31, 2025 and 2024 were prepared by NSAI, an independent oil and natural gas reservoir engineering consulting firm.
This is an energy content correlation and does not reflect the value or price relationship between the commodities. (2) Amounts exclude the impact of cash paid/received on settled contracts as we did not elect to apply hedge accounting. 51 Table of Contents Operating Revenues .
This is an energy content correlation and does not reflect the value or price relationship between the commodities. (2) Amounts exclude the impact of cash paid/received on settled contracts as we did not elect to apply hedge accounting. 52 Table of Contents Operating Revenues .
During the fourth quarter of 2024, Caracara delivered a demand notice disputing our claims, indicating that the carrying value of the contract asset may not be recoverable and as a result, we recognized $18.5 million of impairment of charges to reduce the carrying value of the contract asset to zero as of December 31, 2024.
During the fourth quarter of 2024, Caracara delivered a demand notice disputing our claims, indicating that the carrying value of the previously recorded contract asset may not be recoverable and as a result, we recognized $18.5 million of impairment of charges to reduce the carrying value of the contract asset to zero as of December 31, 2024.
During the year ended December 31, 2024, we spent $64.6 million on oil and natural gas capital expenditures, of which $57.8 million related to drilling and completion costs and $5.7 million related to the development of our treating equipment and gathering support infrastructure.
During the year ended December 31, 2024, we spent $64.6 million on oil and natural gas capital expenditures, of which $57.8 million related to drilling and completion costs and $5.7 million related to the development of our treating equipment and gathering support infrastructure. Financing Activities.
The increase in operating cash flows in 2024 were partially offset by decreased oil and natural gas revenues as a result of lower realized commodity prices and lower production volumes than the comparable prior year period. Investing Activities.
The increase in operating cash flows in 2025 were partially offset by decreased oil and natural gas revenues as a result of lower realized commodity prices and lower production volumes than the comparable prior year period. Investing Activities.
Applying these first quarter 2025 prices and holding all other inputs constant to those used in the calculation of our December 31, 2024 ceiling test, no full cost ceiling limitation impairment is indicated for March 31, 2025.
Applying these first quarter 2026 prices and holding all other inputs constant to those used in the calculation of our December 31, 2025 ceiling test, no full cost ceiling limitation impairment is indicated for March 31, 2026.
Caracara provided the initial capital for the construction of the Facility, which is expected to have an initial capacity of approximately 30 MMcf per day, and a design capacity to treat up to 10% combined concentrations for H 2 S and CO 2 .
Caracara provided the initial capital for the construction of the Facility, which was expected to have an initial capacity of approximately 30 MMcf per day, and a design capacity to treat up to 10% combined concentrations for H 2 S and CO 2 .
All of the foregoing may adversely affect our business, financial condition, results of operations, cash flows and, potentially, compliance with the covenants contained in our 2024 Amended Term Loan Agreement. Capital Expenditures . During 2024, we spent approximately $64.6 million in capital expenditures, including drilling, completion, support infrastructure and other capital costs.
All of the foregoing may adversely affect our business, financial condition, results of operations, cash flows and, potentially, compliance with the covenants contained in our 2024 Amended Term Loan Agreement. Capital Expenditures . During 2025, we spent approximately $74.6 million in capital expenditures, including drilling, completion, support infrastructure and other capital costs.
Depletion for oil and natural gas properties is calculated using the unit-of-production method, which depletes the capitalized costs of evaluated properties plus future development costs based on the ratio of production for the current period to total reserve volumes of evaluated properties as of the beginning of the period.
Depletion for oil and natural gas 53 Table of Contents properties is calculated using the unit-of-production method, which depletes the capitalized costs of evaluated properties plus future development costs based on the ratio of production for the current period to total reserve volumes of evaluated properties as of the beginning of the period.
Consolidated Financial Statements and Supplementary Data —Note 1, “ Summary of Significant Events and Accounting Policies,” for a discussion of additional accounting policies and estimates made by management. Oil and Natural Gas Activities Full Cost Method We use the full cost method of accounting for our oil and natural gas activities.
Consolidated Financial Statements and Supplementary Data —Note 1, “ Financial Statement Presentation and Summary of Significant Accounting Policies,” for a discussion of additional accounting policies and estimates made by management. Oil and Natural Gas Activities Full Cost Method We use the full cost method of accounting for our oil and natural gas activities.
Taxes other than income were $11.2 million and $11.9 million for the years ended December 31, 2024 and 2023, respectively. Most production taxes are based on production volumes and realized prices at the wellhead.
Taxes other than income were $9.8 million and $11.2 million for the years ended December 31, 2025 and 2024, respectively. Most production taxes are based on production volumes and realized prices at the wellhead.
We consider all available evidence (both positive and negative) in determining whether a valuation allowance is required. Based upon the evaluation of available evidence, a valuation allowance of $317.4 million has been applied against our deferred tax asset balance as of December 31, 2024.
We consider all available evidence (both positive and negative) in determining whether a valuation allowance is required. Based upon the evaluation of available evidence, a valuation allowance of $316.4 million has been applied against our deferred tax asset balance as of December 31, 2025.
Consolidated Financial Statements and Supplementary Date – Note 7, Debt for the next 12 months from the issuance of these consolidated financial statements.
Consolidated Financial Statements and Supplementary Date – Note 6 Debt for the next 12 months from the issuance of these consolidated financial statements.
Pursuant to the terms of the agreement governing the joint venture, we believe we have multiple remedies to recover such advance, including (1) declaring such payment a loan, which pursuant to the agreement would have an interest rate of the lesser of 15% or the maximum rate permitted by law, (2) recoupment from distributions from the joint venture and (3) reallocation of equity of the joint venture based on the relative level of total capital contributions by the parties after taking into account the advance.
Pursuant to the terms of the agreement governing the joint venture, we believed that we had multiple remedies to recover such advance, including (1) declaring such payment a loan, which pursuant to the agreement would have an interest rate of the lesser of 15% or the maximum rate permitted by law, (2) recoupment from distributions from the joint venture and (3) 42 Table of Contents reallocation of equity of the joint venture based on the relative level of total capital contributions by the parties after taking into account the advance.
At December 31, 2024, a five percent positive revision to proved reserves would decrease the depletion rate by approximately $0.54 per Boe and a five percent negative revision to proved reserves would increase the depletion rate by approximately $0.61 per Boe. 48 Table of Contents Full Cost Ceiling Test Limitation Under the full cost method, we are subject to quarterly calculations of a ceiling or limitation on the amount of our oil and natural gas properties that can be capitalized on our balance sheet.
At December 31, 2025, a five percent positive revision to proved reserves would decrease the depletion rate by approximately $0.52 per Boe and a five percent negative revision to proved reserves would increase the depletion rate by approximately $0.56 per Boe. 49 Table of Contents Full Cost Ceiling Test Limitation Under the full cost method, we are subject to quarterly calculations of a ceiling or limitation on the amount of our oil and natural gas properties that can be capitalized on our balance sheet.
Net cash flows used in financing activities for the year ended December 31, 2024 were $7.7 million compared to net cash flows provided by financing activities for the year ended December 31, 2023 of $59.1 million.
Net cash flows provided by financing activities for the year ended December 31, 2025 were $44.1 million compared to net cash flows used in financing activities for the year ended December 31, 2024 of $7.7 million.
Using the first-day-of-the-month average for the 12-months ended December 31, 2024 of the WTI crude oil spot price of $76.32 per barrel, adjusted by lease or field for quality, transportation fees, and regional price differentials, and the first-day-of-the-month average for the 12-months ended December 31, 2024 of the Henry Hub natural gas price of $2.13 per MMBtu, adjusted by lease or field for energy content, transportation fees, and regional price differentials, our ceiling test calculation did not generate an impairment at December 31, 2024, holding all other inputs and factors constant.
Using the first-day-of-the-month average for the 12-months ended December 31, 2025 of the WTI crude oil spot price of $66.01 per barrel, adjusted by lease or field for quality, transportation fees, and regional price differentials, and the first-day-of-the-month average for the 12-months ended December 31, 2025 of the Henry Hub natural gas price of $3.39 per MMBtu, adjusted by lease or field for energy content, transportation fees, and regional price differentials, our ceiling test calculation did not generate an impairment at December 31, 2025, holding all other inputs and factors constant.
The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement), including the maintenance of the following ratios. ● Asset Coverage Ratio not to fall below 1.70x as of March 31, 2025 through and including June 30, 2025, 1.85x as of September 30, 2025 through and including December 31, 2025 and 2.00x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Total Net Leverage Ratio not to exceed 2.75x as of March 31, 2025 through and including June 30, 2025 and 2.50x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Current Ratio not to fall below 1.00x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025; and ● Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three month period, determined as of the last day of any fiscal quarter.
The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement), including the maintenance of the following ratios. ● Asset Coverage Ratio not to fall below 1.85x as of December 31, 2025 through and including December 31, 2026 and 2.00x for each fiscal quarter thereafter (see above), determined as of the last day of each fiscal quarter; ● Total Net Leverage Ratio not to exceed 3.20x as of December 31, 2025 and not to exceed the levels set forth in the table above for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Current Ratio not to fall below 1.00x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025; and ● Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three month period, determined as of the last day of any fiscal quarter.
The increase in our depletion rate for the year ended December 31, 2024 compared to 2023 is primarily due to 52 Table of Contents decreased proved reserves relative to the change in future development costs associated with those reserves when comparing 2024 to 2023. Impairment of contract asset.
The increase in our depletion rate for the year ended December 31, 2025 compared to the year ended December 31, 2024 is primarily due to decreased proved reserves relative to the change in future development costs associated with those reserves when comparing 2025 to 2024. Asset impairment.
On a per unit basis, depletion expense was $11.06 per Boe and $10.97 per Boe for the years ended December 31, 2024 and 2023, respectively.
On a per unit basis, depletion expense was $11.49 per Boe and $11.06 per Boe for the years ended December 31, 2025 and 2024, respectively.
At December 31, 2024, a five percent increase in future development and abandonment costs would increase the depletion rate by approximately $0.34 per Boe and a five percent decrease in future development and abandonment costs would decrease the depletion rate by $0.33 per Boe.
At December 31, 2025, a five percent increase in future development and abandonment costs would increase the depletion rate by approximately $0.25 per Boe and a five percent decrease in future development and abandonment costs would decrease the depletion rate by $0.26 per Boe.
Sufficient levels of available cash are required to fund capital expenditures necessary to offset inherent declines in our production and proven reserves. We generated a net loss of $64.1 million for the year ended December 31, 2024 and had negative working capital of $23.6 million as of December 31, 2024.
Sufficient levels of available cash are required to fund capital expenditures necessary to offset inherent declines in our production and proven reserves. We generated a net loss available to common stockholders of $36.8 million for the year ended December 31, 2025 and had negative working capital of $6.5 million as of December 31, 2025.
Net cash flows used in investing activities for the years ended December 31, 2024 and 2023 were approximately $65.4 million and $51.8 million, respectively.
Net cash flows used in investing activities for the years ended December 31, 2025 and 2024 were approximately $75.0 million and $65.4 million, respectively.
On a per unit basis, gathering and other expenses were $11.67 per Boe and $12.64 per Boe for the years ended December 31, 2024 and 2023, respectively.
On a per unit basis, gathering and other expenses were $9.91 per Boe and $11.67 per Boe for the years ended December 31, 2025 and 2024, respectively.
On a per unit basis, taxes other than income were $2.42 per Boe and $2.37 per Boe for the years ended December 31, 2024 and 2023, respectively. Gathering and Other Expenses. Gathering and other expenses were $54.1 million and $63.6 million for the years ended December 31, 2024 and 2023, respectively.
On a per unit basis, taxes other than income were $2.23 per Boe and $2.42 per Boe for the years ended December 31, 2025 and 2024, respectively. Gathering and Other Expenses. Gathering and other expenses were $43.7 million and $54.1 million for the years ended December 31, 2025 and 2024, respectively.
On a per unit basis, general and administrative expense were $3.93 per Boe and $3.99 per Boe for the years ended December 31, 2024 and 2023, respectively. Depletion, Depreciation, and Amortization Expense. Depletion expense was $51.3 million and $55.2 million for the years ended December 31, 2024 and 2023, respectively.
On a per unit basis, general and administrative expense were $3.30 per Boe and $3.93 per Boe for the years ended December 31, 2025 and 2024, respectively. Depletion, Depreciation, and Amortization Expense. Depletion expense was $50.7 million and $51.3 million for the years ended December 31, 2025 and 2024, respectively.
Oil, natural gas and NGLs revenues were $193.2 million and $218.5 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $25.3 million in revenue is primarily attributable to a $7.6 million decrease resulting from lower average realized prices and a $17.7 million decrease due to lower production volumes in 2024 compared to 2023.
Oil, natural gas and NGLs revenues were $165.0 million and $193.2 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $28.3 million in revenue is primarily attributable to a $19.6 million decrease resulting from lower average realized prices and an $8.7 million decrease due to lower production volumes in 2025 compared to 2024.
We believe that, based upon our operational forecasts, cash and cash equivalents on hand and cost reduction measures, it is probable that we will have sufficient liquidity to fund our operations, meet our debt requirements and maintain compliance with our future debt covenants as described in Item 8.
We believe that, based upon our operational forecasts, cash and cash equivalents on hand, proceeds from the sale of our West Quito Assets and from the private placement equity offering, and cost reduction measures, it is probable that we will have sufficient liquidity to fund our operations, meet our debt requirements and maintain compliance with our future debt covenants as described in Item 8.
During the year ended December 31, 2023, we spent $46.3 million on oil and natural gas capital expenditures, of which $40.4 million related to drilling and completion costs and $4.7 million related to the development of our treating equipment and gathering support infrastructure. Financing Activities.
During the year ended December 31, 2025, we spent $74.6 million on oil and natural gas capital expenditures, of which $61.7 million related to drilling and completion costs and $11.4 million related to the development of our treating equipment and gathering support infrastructure.
During 2024, we ran one operated rig in the Delaware Basin. We drilled and cased 4.0 gross (3.95 net) operated wells, completed 4.0 gross (3.95 net), and put online 4.0 gross (3.88 net) operated wells during the year. Debt Obligations .
During 2025, we ran one operated rig in the Delaware Basin. We drilled and cased 6.0 gross (5.6 net) operated wells, completed 6.0 gross (5.6 net), and put online 6.0 gross (5.6 net) operated wells during the year. Debt Obligations .
Based on SEC prices as of March 1, 2025, the prices utilized in the first quarter 2025 full cost ceiling test limitation calculation will be $75.33 per barrel of oil and $2.44 per MMBtu of natural gas.
Based on SEC prices as of March 1, 2026, the prices utilized in the first quarter 2026 full cost ceiling test limitation calculation will be $63.80 per barrel of oil and $3.72 per MMBtu of natural gas.
We recorded a net derivative gain of $2.3 million ($11.1 million net gain on unsettled contracts and $8.8 million net loss on settled contracts) for the year ended December 31, 2024 and a net derivative gain of $12.7 million ($21.9 million net gain on unsettled contracts and $9.2 million net loss on settled contracts) for the year ended December 31, 2023.
We recorded a net derivative gain of $45.3 million ($29.5 million net gain on unsettled contracts and $15.8 million net gain on settled contracts) for the year ended December 31, 2025 and a net derivative gain of $2.3 million ($11.1 million net gain on unsettled contracts and $8.8 million net loss on settled contracts) for the year ended December 31, 2024.
The increase year over year in lease operating expenses and on a per unit basis is primarily a result of an inflationary market increase in maintenance, power, and chemical costs. Workover and Other Expenses . Workover and other expenses were $5.2 million and $7.2 million for the years ended December 31, 2024 and 2023, respectively.
On a per unit basis, lease operating expenses were $10.15 per Boe and $9.77 per Boe for the years ended December 31, 2025 and 2024, respectively. The increase year over year in lease operating expenses and on a per unit basis is primarily a result of an inflationary market increase in maintenance, power, and chemical costs.
The tax position is measured at the largest amount of benefit/expense that is more likely than not of being realized upon ultimate settlement. ​ ​ 50 Table of Contents Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The table below set forth financial information for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, In thousands (except per unit and per Boe amounts) 2024 2023 Operating revenues: ​ ​ ​ ​ ​ ​ Oil ​ $ 174,607 ​ $ 183,634 Natural gas ​ ​ (2,213) ​ ​ 11,057 Natural gas liquids ​ ​ 20,822 ​ ​ 23,814 Other ​ ​ 677 ​ ​ 2,257 Total operating revenues ​ ​ 193,893 ​ ​ 220,762 Operating expenses: ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ Lease operating ​ ​ 45,275 ​ ​ 44,864 Workover and other ​ ​ 5,215 ​ ​ 7,149 Taxes other than income ​ ​ 11,238 ​ ​ 11,943 Gathering and other ​ ​ 54,117 ​ ​ 63,575 General and administrative: ​ ​ ​ ​ ​ ​ General and administrative ​ ​ 18,204 ​ ​ 20,095 Stock-based compensation ​ ​ 152 ​ ​ (1,070) Depletion, depreciation and accretion: ​ ​ ​ ​ ​ ​ Depletion – Full cost ​ ​ 51,297 ​ ​ 55,179 Depreciation – Other ​ ​ 638 ​ ​ 652 Accretion expense ​ ​ 991 ​ ​ 793 Impairment of contract asset ​ ​ 18,511 ​ ​ — Other income (expenses): ​ ​ ​ ​ ​ ​ Net gain on derivative contracts ​ ​ 2,308 ​ ​ 12,689 Interest expense and other ​ ​ (14,956) ​ ​ (33,319) Loss on extinguishment of debt ​ ​ (7,489) ​ ​ — Net loss ​ $ (31,882) ​ $ (3,048) ​ ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ Crude oil – MBbls ​ ​ 2,363 ​ ​ 2,415 Natural gas – MMcf ​ ​ 7,814 ​ ​ 8,718 Natural gas liquids – MBbls ​ ​ 971 ​ ​ 1,163 Total MBoe (1) ​ ​ 4,636 ​ ​ 5,031 Average daily production – Boe (1) ​ ​ 12,667 ​ ​ 13,784 ​ ​ ​ ​ ​ ​ ​ Average price per unit (2) : ​ ​ ​ ​ ​ ​ Crude oil price - Bbl ​ $ 73.89 ​ $ 76.04 Natural gas price - Mcf ​ ​ (0.28) ​ ​ 1.27 Natural gas liquids price - Bbl ​ ​ 21.44 ​ ​ 20.48 Total per Boe (1) ​ ​ 41.68 ​ ​ 43.43 ​ ​ ​ ​ ​ ​ ​ Average cost per Boe: ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ Lease operating ​ $ 9.77 ​ $ 8.92 Workover and other ​ ​ 1.12 ​ ​ 1.42 Taxes other than income ​ ​ 2.42 ​ ​ 2.37 Gathering and other ​ ​ 11.67 ​ ​ 12.64 General and administrative: ​ ​ ​ ​ ​ ​ General and administrative ​ ​ 3.93 ​ ​ 3.99 Stock-based compensation ​ ​ 0.03 ​ ​ (0.21) Depletion ​ ​ 11.06 ​ ​ 10.97 (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
The tax position is measured at the largest amount of benefit/expense that is more likely than not of being realized upon ultimate settlement. ​ ​ 51 Table of Contents Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The table below set forth financial information for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, In thousands (except per unit and per Boe amounts) ​ ​ ​ 2025 ​ 2024 Operating revenues: ​ ​ ​ ​ ​ ​ Oil ​ $ 142,951 ​ $ 174,607 Natural gas ​ ​ 3,665 ​ ​ (2,213) Natural gas liquids ​ ​ 18,346 ​ ​ 20,822 Other ​ ​ 1,081 ​ ​ 677 Total operating revenues ​ ​ 166,043 ​ ​ 193,893 Operating expenses: ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ Lease operating ​ ​ 44,804 ​ ​ 45,275 Workover and other ​ ​ 6,454 ​ ​ 5,215 Taxes other than income ​ ​ 9,842 ​ ​ 11,238 Gathering and other ​ ​ 43,742 ​ ​ 54,117 General and administrative: ​ ​ ​ ​ ​ ​ General and administrative ​ ​ 14,574 ​ ​ 18,204 Stock-based compensation ​ ​ 48 ​ ​ 152 Depletion, depreciation and accretion: ​ ​ ​ ​ ​ ​ Depletion – Full cost ​ ​ 50,710 ​ ​ 51,297 Depreciation – Other ​ ​ 351 ​ ​ 638 Accretion expense ​ ​ 1,083 ​ ​ 991 Asset impairment ​ ​ 1,072 ​ ​ 18,511 Other income (expenses): ​ ​ ​ ​ ​ ​ Net gain on derivative contracts ​ ​ 45,263 ​ ​ 2,308 Interest expense and other ​ ​ (26,747) ​ ​ (14,956) Loss on extinguishment of debt ​ ​ — ​ ​ (7,489) Net income (loss) ​ $ 11,879 ​ $ (31,882) ​ ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ Crude oil – MBbls ​ ​ 2,251 ​ ​ 2,363 Natural gas – MMcf ​ ​ 7,452 ​ ​ 7,814 Natural gas liquids – MBbls ​ ​ 922 ​ ​ 971 Total MBoe (1) ​ ​ 4,415 ​ ​ 4,636 Average daily production – Boe (1) ​ ​ 12,096 ​ ​ 12,667 ​ ​ ​ ​ ​ ​ ​ Average price per unit (2) : ​ ​ ​ ​ ​ ​ Crude oil price - Bbl ​ $ 63.51 ​ $ 73.89 Natural gas price - Mcf ​ ​ 0.49 ​ ​ (0.28) Natural gas liquids price - Bbl ​ ​ 19.90 ​ ​ 21.44 Total per Boe (1) ​ ​ 37.36 ​ ​ 41.68 ​ ​ ​ ​ ​ ​ ​ Average cost per Boe: ​ ​ ​ ​ ​ ​ Production: ​ ​ ​ ​ ​ ​ Lease operating ​ $ 10.15 ​ $ 9.77 Workover and other ​ ​ 1.46 ​ ​ 1.12 Taxes other than income ​ ​ 2.23 ​ ​ 2.42 Gathering and other ​ ​ 9.91 ​ ​ 11.67 General and administrative: ​ ​ ​ ​ ​ ​ General and administrative ​ ​ 3.30 ​ ​ 3.93 Stock-based compensation ​ ​ 0.01 ​ ​ 0.03 Depletion ​ ​ 11.49 ​ ​ 11.06 (1) Determined using a ratio of six Mcf of natural gas to one barrel of oil, condensate, or NGLs based on approximate energy equivalency.
The decrease of $3.9 million in depletion expense for the year ended December 31, 2024 compared to 2023 is primarily due to the decrease in production when comparing 2024 to 2023 .
The decrease of $0.6 million in depletion expense for the year ended December 31, 2025 compared to 2024 is primarily due to the decrease in production .
Such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable: ​ ​ ​ ​ Period ​ ​ Premium Months 0 - 12 ​ ​ Make-whole amount equal to 12 months of interest plus 4.00% Months 13 - 30 ​ ​ 2.00% Thereafter ​ ​ 0.00% ​ In the event we shall receive a disapproval notice (as defined in the 2024 Term Loan Agreement) from the required lenders under the 2024 Amended Term Loan Agreement rejecting or otherwise disqualifying a proposed buyer in connection with a permitted change in control thereunder to be consummated within 12 months following the Initial Closing Date, such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable: ​ ​ ​ ​ Period ​ ​ Premium Months 0 - 9 ​ ​ Make-whole amount equal to 9 months of interest plus 2.00% Months 10 - 30 ​ ​ 2.00% Thereafter ​ ​ 0.00% ​ We may be required to make mandatory prepayments of the loans under the 2024 Amended Term Loan Agreement in connection with the incurrence of non-permitted debt, certain asset sales and with excess cash on hand in excess of certain maximum levels.
Such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable: ​ ​ ​ ​ Period ​ ​ Premium Months 0 - 12 ​ ​ Make-whole amount equal to 12 months of interest plus 4.00% Months 13 - 30 ​ ​ 2.00% Thereafter ​ ​ 0.00% ​ 46 Table of Contents In the event we shall receive a disapproval notice (as defined in the 2024 Term Loan Agreement) from the required lenders under the 2024 Amended Term Loan Agreement rejecting or otherwise disqualifying a proposed buyer in connection with a permitted change in control thereunder to be consummated within 12 months following the Initial Closing Date, such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable: ​ ​ ​ ​ Period ​ ​ Premium Months 0 - 9 ​ ​ Make-whole amount equal to 9 months of interest plus 2.00% Months 10 - 30 ​ ​ 2.00% Thereafter ​ ​ 0.00% ​ We are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding commencing with the fiscal quarter ending June 30, 2025.
At December 31, 2024, we had a $11.0 million derivative asset, $7.0 million of which was classified as current, and we had a $19.3 million derivative liability, $12.3 million of which was classified as current. Interest Expense and Other. Interest expense and other was $15.0 million and $33.3 million for the years ended December 31, 2024 and 2023, respectively.
At December 31, 2025, we had a $23.5 million derivative asset, $16.1 million of which was classified as current, and we had a $2.3 million derivative liability, $0.6 million of which was classified as current. Interest Expense and Other. Interest expense and other was $26.7 million and $15.0 million for the years ended December 31, 2025 and 2024, respectively.
Our gathering and other expenses are primarily driven by the amount and location of natural gas production, the concentration of H 2 S in our sour gas produced and the amounts paid to treat our sour gas volumes, either through the AGI Facility or through third parties.
Our gathering and other expenses are primarily driven by the amount and location of natural gas production, the concentration of H2S in our sour gas produced and the amounts paid to treat our sour gas volumes.
Net (decrease) increase in cash, cash equivalents and restricted cash is summarized as follows for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 Cash flows provided by operating activities ​ $ 35,355 ​ $ 17,589 Cash flows used in investing activities ​ ​ (65,443) ​ ​ (51,845) Cash flows (used in) provided by financing activities ​ ​ (7,728) ​ ​ 59,059 Net (decrease) increase in cash, cash equivalents and restricted cash ​ $ (37,816) ​ $ 24,803 ​ Operating Activities.
Net (decrease) increase in cash, cash equivalents and restricted cash is summarized as follows for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ 2025 ​ 2024 Cash flows provided by operating activities ​ $ 39,090 ​ $ 35,355 Cash flows used in investing activities ​ ​ (74,951) ​ ​ (65,443) Cash flows provided by (used in) financing activities ​ ​ 44,114 ​ ​ (7,728) Net increase (decrease) in cash, cash equivalents and restricted cash ​ $ 8,253 ​ $ (37,816) ​ Operating Activities.
The decrease in general and administrative expense for 2024 is primarily associated with a decrease in payroll and employee benefits, partially offset by an increase in professional fees and nonrecurring costs related to the terminated merger.
General and administrative expense was $14.6 million and $18.2 million for the years ended December 31, 2025 and 2024, respectively. The decrease in general and administrative expense for 2025 compared to 2024 is primarily associated with a decrease in nonrecurring costs related to the terminated merger and lower professional fees offset by an increase payroll and employee benefits costs.
Under the 2024 Amended Term Loan Agreement, we are required to hedge approximately 85% to 50% of our anticipated oil and natural gas production, in varying percentages by year, on a rolling basis for the next four years.
We may retain the remaining net cash proceeds received from the West Quito Divestiture, subject to certain reinvestment requirements, set forth in the Third Amendment Under the 2024 Amended Term Loan Agreement, we are required to hedge approximately 85% to 50% of our anticipated oil and natural gas production, in varying percentages by year, on a rolling basis for the next four years.
During the year ended December 31, 2024, prior to the refinancing transaction, we made principal payments of $52.4 million under our 2021 Amended Term Loan Agreement.
During the year ended December 31, 2025, we received net proceeds of $61.1 million from the incurrence of the Incremental Term Loans and repaid $16.9 million under our 2024 Amended Term Loan Agreement. During the year ended December 31, 2024, prior to the refinancing transaction, we made principal payments of $52.4 million under our 2021 Amended Term Loan Agreement.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”).
We received $38.8 million in proceeds from the sales and issuance of preferred stock during the year ended December 31, 2024. Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S.
Production for the years ended December 31, 2024 and 2023 averaged 12,667 Boe/d and 13,784 Boe/d, respectively. Production is lower in 2024 compared with 2023 in total due largely to the timing of capital expenditures spent to bring new wells online and natural production declines on our existing producing wells.
Production for the years ended December 31, 2025 and 2024 averaged 12,096 Boe/d and 12,667 Boe/d, respectively. Production is lower in 2025 compared with 2024 in total due largely to natural production declines on our existing producing wells and curtailed production resulting from the AGI Facility complications.
At December 31, 2023, $20.0 million remained available for issuance under the support letter from the Investors.
At December 31, 2025, $30.0 million remained available for issuance on or before August 31, 2026 under a support letter from the Investors.
Accordingly, we record the net change in the mark-to-market valuation of these positions, as well as payments and receipts on settled contracts, in “Net gain (loss) on derivative contracts” on the consolidated statements of operations. 49 Table of Contents Income Taxes Our provision for income taxes includes both state and federal taxes.
Accordingly, we record the net change in the mark-to-market valuation of these positions, as well as payments and receipts on settled contracts, in “Net gain (loss) on derivative contracts” on the consolidated statements of operations. 50 Table of Contents The Company’s purchaser, gathering and/or processing, or transportation contracts have no net settlement provisions and no market mechanism to facilitate net settlement.
The joint venture, operating as WAT, also entered into a GTA with us for natural gas production from our Monument Draw area. In exchange for contributing to the joint venture a wellbore with an approved permit for the injection of acid gas and surface land , we retained a 5% equity interest in WAT, an unconsolidated subsidiary.
The GTA had a tiered-rate structure based on actual volumes delivered. In exchange for contributing to the joint venture a wellbore with an approved permit for the injection of acid gas and surface land , we retained a 5% equity interest in WAT, an unconsolidated subsidiary.
Recently Issued Accounting Pronouncements We discuss recently adopted and issued accounting standards in Item 8. Consolidated Financial Statements and Supplementary Data —Note 1, “ Summary of Significant Events and Accounting Policies .”
For the first quarter of 2026, we anticipate our interest rate will be 11.57% on outstanding borrowings. Recently Issued Accounting Pronouncements We discuss recently adopted and issued accounting standards in Item 8. Consolidated Financial Statements and Supplementary Data —Note 1, “ Financial Statement Presentation and Summary of Significant Accounting Policies .”
However, there can be no assurance that, absent additional capital, reducing costs or other material favorable developments, the company will not experience liquidity and covenant compliance issues in the future. Other Risks and Uncertainties.
We have been, and continue to, explore strategic transactions to address these concerns, while also looking at opportunities to significantly reduce expenses in the near term. However, there can be no assurance that, absent additional capital, reducing costs or other material favorable developments, the company will not experience liquidity and covenant compliance issues in the future.
Consolidated Financial Statements and Supplementary Date – Note 7, Debt ) and a total of $12.2 million in debt repayments due under our 2024 Term Loan Agreement through December 2025.
As of December 31, 2025, we had $28.0 million of cash and cash equivalents, no borrowing capacity remaining under our 2024 Amended Term Loan Agreement (see Item 8. Consolidated Financial Statements and Supplementary Date – Note 6, Debt ) and a total of $22.5 million in debt repayments due under our 2024 Term Loan Agreement through December 2026.
Operating cash flows for the year ended December 31, 2024 increased from the prior year primarily due to lower gathering and transportation expense, decreased interest expense associated with lower outstanding debt balance during the year, the inclusion of the merger termination payment of $10.0 million and changes in working capital.
Net cash flows provided by operating activities for the years ended December 31, 2025 and 2024 were $39.1 million and $35.4 million, respectively. Operating cash flows for the year ended December 31, 2025 increased from the prior year primarily due to lower gathering and transportation expense and changes in working capital.
The AGI Facility has been processing gas since March 9, 2024 and continues to process gas currently. In addition to general facility downtime, the AGI Facility has experienced interruption in processing due to the completion of improvement and maintenance projects, including pump and other facility equipment replacement.
After significant complications and delays, the AGI Facility began processing gas on March 9, 2024 and treated volumes from March 2024 to August 11, 2025. In addition to general facility downtime, the AGI Facility experienced interruptions in processing due to failure to complete necessary improvement and maintenance projects, including pump and other facility equipment replacement.
On a per unit basis, workover and other expenses were $1.12 per Boe and $1.42 per Boe for the years ended December 31, 2024 and 2023, respectively. The decreased workover and other expenses in 2024 relate to fewer significant workover projects undertaken in the current year compared to 2023. Taxes Other than Income .
Workover and Other Expenses . Workover and other expenses were $6.5 million and $5.2 million for the years ended December 31, 2025 and 2024, respectively. On a per unit basis, workover and other expenses were $1.46 per Boe and $1.12 per Boe for the years ended December 31, 2025 and 2024, respectively.
We are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding commencing with the fiscal quarter ending June 30, 2025.
We are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the total loans outstanding. 43 Table of Contents We continue to execute on a plan to reduce operating and capital costs to improve cash flow.
The continued processing delays and interruptions in 2024 have resulted in higher processing fees than forecasted as we pay higher processing rates with other service providers. Under the GTA, we pay a treating rate that varies based on volumes delivered to the AGI Facility and have a minimum volume commitment of 20 MMcf per day.
The joint venture, operating as WAT, also entered into a GTA with us for natural gas production from our Monument Draw area. Under the GTA, we were to pay a treating rate that varied based on volumes delivered to the AGI Facility and we had a minimum volume commitment of 20 MMcf per day.
Lease operating expenses were $45.3 million and $44.9 million for the years ended December 31, 2024 and 2023, respectively. On a per unit basis, lease operating expenses were $9.77 per Boe and $8.92 per Boe for the years ended December 31, 2024 and 2023, respectively.
In 2025, we put online 6.0 gross (5.6 net) operated wells while in 2024 we put online 4.0 gross (3.88 net) operated wells. Lease Operating Expenses . Lease operating expenses were $44.8 million and $45.3 million for the years ended December 31, 2025 and 2024, respectively.
For additional information, see Item 8. Consolidated Financial Statements and Supplementary Date – Note 12, Redeemable Convertible Preferred Stock. H 2 S Treating Joint Venture In May 2022, we entered into a joint venture agreement with Caracara to develop the AGI Facility in Winkler County, Texas.
We may retain the remaining net cash proceeds received from the West Quito Divestiture, subject to certain reinvestment requirements, set forth in the Third Amendment H 2 S Treating Joint Venture In May 2022, we entered into a joint venture agreement with Caracara to develop the AGI Facility in Winkler County, Texas.
Interest expense and other primarily decreased in the current year period compared to the same period in the prior year due to receipt of a $10.0 million payment for the merger termination combined with a $7.5 million decrease in interest expense resulting from lower average debt balances from repayment of borrowings associated with our 2021 Amended Term Loan Agreement .
Interest expense and other was higher for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to interest expense and other including the receipt of a $10.0 million payment during 2024 for the merger termination. Our weighted average interest rate for the year ended December 31, 2025, was approximately 12.05%.
Removed
Recent Developments Term Loan Credit Facility On December 26, 2024, we and our wholly-owned subsidiary Halcón Holdings, LLC entered into the 2024 Term Loan Agreement with Fortress Credit Corp., as administrative agent, and certain other financial institutions party thereto, as lenders.
Added
Recent Developments Monument Draw Acquisition On March 10, 2026, we entered into a purchase and sale agreement to acquire certain oil and natural gas assets, comprising 7,090 net acres located in Ward County, Texas, from RoadRunner Resource Holding LLC (formerly, Sundown Energy LP) (“RoadRunner”), effective March 1, 2026, in an all-stock transaction.
Removed
Pursuant to the 2024 Term Loan Agreement, the lenders agreed to provide us with (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million, of which such incremental borrowings in the amount of $63.0 million were incurred on January 9, 2025 pursuant to the First Amendment to our 2024 Term Loan Agreement.
Added
Under the terms of the agreement, upon closing on March 19, 2026, we issued 485,000 shares of our common stock to RoadRunner in exchange for the assets. The acquired acreage is directly adjacent to our existing Monument Draw acreage. The transaction is subject to customary post-closing adjustments.
Removed
The 2024 Amended Term Loan Agreement matures on December 26, 2028. ​ All obligations under the 2021 Amended Term Loan Agreement were refunded, refinanced and repaid in full by the loans under the 2024 Term Loan Agreement as the net proceeds of the 2024 Term Loan Agreement were used to repay all outstanding indebtedness under the 2021 Amended Term Loan Agreement in an aggregate amount of approximately $152.1 million, including accrued and unpaid interest, and to pay related fees and expenses related to the new credit agreement. 40 Table of Contents ​ Borrowings under the 2024 Amended Term Loan Agreement bear interest at a rate per annum equal to a forward-looking term rate based on the SOFR for a tenor of three months (with a credit spread adjustment of 0.15% per annum) (or another applicable reference rate, as determined pursuant to the terms of the 2024 Amended Term Loan Agreement) plus an applicable margin of 7.75%. ​ The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement), including maintenance of the following ratios. ● Asset Coverage Ratio not to fall below 1.70x as of March 31, 2025 through and including June 30, 2025, 1.85x as of September 30, 2025 through and including December 31, 2025 and 2.00x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Total Net Leverage Ratio not to exceed 2.75x as of March 31, 2025 through and including June 30, 2025 and 2.50x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter; ● Current Ratio not to fall below 1.00x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025; and ● Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three-month period, determined as of the last day of any fiscal quarter.
Added
Private Placement Equity Offering On March 3, 2026, we entered into a definitive agreement to sell in a private placement to an institutional investor 1,800,000 shares of our common stock and 927,273 prefunded warrants for the purchase of common stock at $5.50 per share for total proceeds of $15.0 million.
Removed
The 2024 Amended Term Loan Agreement also contains certain events of default, including non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy. ​ We are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding on the Initial Closing Date, and subsequently on the amount of the loans outstanding on the Initial Closing Date plus the Incremental Term Loans, commencing with the fiscal quarter ending June 30, 2025.
Added
The offering closed on March 4, 2026, on satisfaction of customary closing 41 Table of Contents conditions. We intend to use the net proceeds received from the offering for working capital and general corporate purposes.
Removed
Under the 2024 Amended Term Loan Agreement, we must make scheduled amortization payments in the aggregate amount of $16.9 million in 2025 and $22.5 million in 2026.
Added
West Quito Divestiture On December 18, 2025, we entered into an agreement of sale and purchase with MCM Delaware Resources, LLC (“MCM”) to sell substantially all of our oil and natural gas properties and related assets in the West Quito Draw area located in the Southern Delaware Basin in Ward County, Texas (the “West Quito Assets”) for a total sales price of approximately $62.6 million, subject to adjustment for accounting between the effective date of December 1, 2025 and the closing date and other customary adjustments (the “West Quito Divestiture”).
Removed
For the year ended December 31, 2024, we recognized a loss on extinguishment of debt in the amount of $7.5 million resulting from the credit agreement refinancing on December 26, 2024 which includes a $3.6 million non-cash write-off of deferred financing costs, original issue discounts and embedded derivatives associated with the extinguished debt and $3.9 million in fees and debt issuance costs paid for the new debt.
Added
The West Quito Divestiture closed on February 24, 2026 for an adjusted sales price of $60.1 million. The West Quito Assets include approximately 6,100 net acres in Ward County, Texas and proved reserves for these properties accounted for approximately 6.0 MMboe, or approximately 10%, of our proved reserves at December 31, 2025.
Removed
Merger with Fury Resources On December 14, 2023, we entered into the Merger Agreement with Parent and Merger Sub, a Delaware corporation and a direct, wholly owned subsidiary of Parent.
Added
We used $45.6 million of the net proceeds from closing to repay amounts outstanding under the 2024 Amended Term Loan Agreement on February 24, 2026 - $40.0 million pursuant to the Third Amendment and prepayment of $5.6 million for the scheduled quarterly amortization payment for the quarterly period ending March 31, 2026.
Removed
The Merger Agreement provided, that upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub would merge with and into us, with us surviving as a wholly owned subsidiary of Parent.

… 65 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed5 unchanged
Biggest changeIt is our policy to enter into derivative contracts only with counterparties that are creditworthy institutions deemed by management as competitive market makers. As of December 31, 2024, we did not post collateral under any of our derivative contracts as they are secured under our 2024 Amended Term Loan Agreement.
Biggest changeWe are exposed to market risk on our open derivative contracts related to potential non-performance by our counterparties. It is our policy to enter into derivative contracts only with counterparties that are creditworthy institutions deemed by management as competitive market makers.
The estimated fair value of cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximates their carrying value due to their short-term nature. See Item 8. Consolidated Financial Statements and Supplementary Data —Note 8, “ Fair Value Measurements,” for additional information. Interest Rate Sensitivity We are also exposed to market risk related to adverse changes in interest rates.
The estimated fair value of cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximates their carrying value due to their short-term nature. See Item 8. Consolidated Financial Statements and Supplementary Data —Note 7, “ Fair Value Measurements,” for additional information. Interest Rate Sensitivity We are also exposed to market risk related to adverse changes in interest rates.
We expect energy prices to remain volatile and unpredictable, therefore we have designed a risk management policy which provides for the use of derivative instruments to provide partial protection against declines in oil and natural gas prices 53 Table of Contents by reducing the risk of price volatility and the affect it could have on our operations.
We expect energy prices to remain volatile and unpredictable, therefore we have designed a risk management policy which provides for the use of derivative instruments to provide partial protection against declines in oil and natural gas prices by reducing the risk of price volatility and the affect it could have on our operations.
At December 31, 2024, the weighted average interest rate on our variable rate debt was 12.88% per year. If the balance of our variable interest rate debt at December 31, 2024 were to remain constant, a 10% change in market interest rates would impact our cash flows by approximately $2.0 million per year.
At December 31, 2025, the weighted average interest rate on our variable rate debt was 12.05% per year. If the balance of our variable interest rate debt at December 31, 2025 were to remain constant, a 10% change in market interest rates would impact our cash flows by approximately $2.5 million per year.
At December 31, 2024, the principal amount of our debt was $162.00 million, of which substantially all bears interest at floating and variable interest rates that are tied to SOFR. Fluctuations in market interest rates will cause our annual interest costs to fluctuate.
At December 31, 2025, the principal amount of our debt was $208.1 million, of which substantially all bears interest at floating and variable interest rates that are tied to SOFR. Fluctuations in market interest rates will cause our annual interest costs to fluctuate.
Consolidated Financial Statements and Supplementary Data —Note 9, “Derivative and Hedging Activities,” for more details. Fair Market Value of Financial Instruments The estimated fair values for financial instruments under ASC 825, Financial Instruments , (ASC 825) are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision.
Fair Market Value of Financial Instruments The estimated fair values for financial instruments under ASC 825, Financial Instruments , (ASC 825) are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision.
Our hedge policies and objectives may change significantly as our operational profile and contractual obligations change but remain consistent with the requirements in effect under our 2024 Amended Term Loan Agreement. We do not enter into derivative contracts for speculative trading purposes. We are exposed to market risk on our open derivative contracts related to potential non-performance by our counterparties.
Our hedge policies and objectives may change significantly 54 Table of Contents as our operational profile and contractual obligations change but remain consistent with the requirements in effect under our 2024 Amended Term Loan Agreement. We do not enter into derivative contracts for speculative trading purposes.
We account for our derivative activities under the provisions of ASC Topic 815, Derivatives and Hedging , (ASC 815). ASC 815 establishes accounting and reporting that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at fair value. See Item 8.
ASC 815 establishes accounting and reporting that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at fair value. See Item 8. Consolidated Financial Statements and Supplementary Data —Note 8, “Derivative and Hedging Activities,” for more details.
Added
As of December 31, 2025, we did not post collateral under any of our derivative contracts as they are secured under our 2024 Amended Term Loan Agreement. We account for our derivative activities under the provisions of ASC Topic 815, Derivatives and Hedging , (ASC 815).

Other BATL 10-K year-over-year comparisons