Battalion Oil (BATL) 9 Aug 222022 Q2 Earnings call transcript

Welcome to the Battalion Oil Q2 2022 Earnings Call.

As a reminder, today's conference is being recorded.

Now I'll turn it over to Battalion Oil Corporation's Director, Finance and Investor Relations, Chris Lang, to open the call. Mr. Lang, you may begin.

morning. Good and a Battalion's colleagues Little; Chief Financial Kevin by like that our of Officer, Officer, introduce: Operating to Executive Andrews; few joined today my I'd Chief Daniel I'm Rohling. Chief our Officer, Richard

contains This conference statements. call forward-looking

description to detailed see disclaimer, measure measures. non-GAAP earnings of certain and non-GAAP our issued conference call financial our website. these the comparable on financial under our yesterday. of contained This release most measures also yesterday in a announcement For release earnings posted are includes directly to references GAAP Reconciliations our released

We will have an be which presentation, and this found during may webcast. be also published referenced website on our investor

that, to team over a Now will I'd things followed start few to present by turn Rich? to remarks it And Rich our scripted like off. with Q&A.

Thanks, everyone, great and really I'd taken we Welcome, to today. join here to earnings tell. the have this to us our the thank Chris. morning. call. to in Battalion XXXX who's your interest everyone to like quarter It's story be time appreciate second We

was quarter welcomed us as second return to The exciting growth. one the an for we

ability year. of in to into our drive volumes. much flow course quarter, the to half new participate the program X as look environment ability the our quarter. the the from are for entire our put online to volumes critical wells, new pricing on to this capital daily of us relied and With we as our the cash XXXX base an production our exited we the first increase hedged saw year, in begin of bring we up Over trend These new second higher production on coming in

illustrating quarter this great a execute. we results Our what happens job when do

to X-well from accelerate come saw of of track next we into increase the and us So year. the in third half quarter production our over online building of a adjusted quarter, solid quarter-over-quarter, EBITDA volumes second remaining roughly we pad new of as these wells XX%. we're flat With an on full despite late the ahead momentum

without Getting to hasn't though. this point its challenges, come

doubt hit did and service hard And felt from this industry how factor the this of across disruptions have remind like That's we inflation our budgeting supply original capital to on operators these heard You've some chain the others, why no year. planning providers too. energy you pressures, it's process. important uncertainty into and that and we sector

the to have to capture plan market our capital so, pricing pressures disruption on we amount to ability our us that received executing seeing. without leave and believe taken While in our efficiencies some process this of planning do significant the these continue offsetting been steps of while inflationary well-equipped we've will attention and a our we've continue dynamics year and operational

in back a As our believe industry to our we continue operate that our to and also continues safe performance. We have emphasize to increase way. momentum, around activity with that and important operate in commitment us environmentally team, business communities way, the levels right our and it's responsibility up the to our our a friendly to we and we build

it the we to also recordable methodically but So to win incidents the flare and X months, our way. to reduced had want proud XX say, last to right We intensity I'm industry we've over we've want standards. do below

gas strategic I future for provides chance processing beyond Winkler current it is Operationally, to the expansion to like Phase and off our a comprehensive multiple significant checks This with development to develop County. take treatment X. announced to Danny, a venture box. also a Battalion acid we for pass every needs one opportunities facility that solution and the would in facility in May highlight I joint Before this

This our meaningfully we Monument with financially, virtually while of we the and Draw a accelerate meaningfully is transition believe our ability And milestone production. capital all in for from existing reduce requirements the HXS by profitable company that improvements growth reduce costs then impact our as sets apart a us we fully the from agreement COX to to environmental an operating balance one basin. and and sequester minimizing Environmentally, us the our utilizing peers wellbore. I incremental sheet

and I'd our it Danny to Danny? some the on continue over pass to to operational Now like providing detail results. project

I I'll phenomenal you, the safety EHS, start comments and to with on Rich. a few achievement. the by want on Thank open team additional congratulating

industry, X.X culture is rate in incident of development active our to of first. program together leaders happen, our our type the field safety have and That to companies put Our that in here extremely in just for tirelessly performance worked establish a rare of particularly Houston and recordable and recognition hazard mode. are in doesn't

QX. We're XX-month also us where focus drop. for reducing time this continued to at with and below well proud delivering a on we're average been volumes where flare in This industry of of has sit today continuing trailing environmental our and year, the front, the our we major we the trend standard

issues, this In all volumes, the leak ago with we we're by of on goal program being off of reactive reduced continued expand also flare we've instead the our to our emissions and addressing detection encouraged program to made LDAR. and We improvements the X in fields. or addition improve proactive kicked years across

a to a few looked Now busy our results. program. as progress operational in quarter our on we We we of on on had the made QX build touch to capital

the Overall, drilling we and X-rig efficiency have next online put by online we of the During and third X-well kicking which our spudding our end expect the with pad, quarter. continued see to quarter, to wells completion by improved program operations. off we continue total X in

operational exceptionally by both high side, day, averaging our high operators rates productivity. with the drilling planned. marks average coupled averages. area. What more over pumping to increased efficiencies for We're hours that side, adds say are our higher the XX% we On completion excited footage drilling on online came wells day those to we've than XXXX X fact our optimism XX.X that And in the per nearly initial these per is with we're production than

to To expand around logistical such we're preexisting earlier optimize efforts before curb market began and ahead costs, to designs shortages uncertainty, work, modifying utilizing and turn. to drill of production. available, site well to frac comments limit starts prepurchasing bit We're and the on hiccups stay and pads to supply where our inflation chain equipment Rich's as lower casing. We're materials

inflation. full our efficiently All of work through move development while impact interruption, without this of has us all helped plan dampening hard the

more at environmentally The for cubic part capacity an treat an have like combined little is joint venture natural forward which provide we step designed acid with XX well, X of to least a friendly way. to color a tremendous develop on as facility. a will assets feet up develop COX concentration supported a by in strategic day and to treatment as HXS gas the in for announced us to is initial represents AGI facility, I'd a gas our This May facility and cost-effective Finally, million of a Phase we and XX%. of

will year to is facility in will sequester to we XX,XXX that capacity, treating, midstream more providers. What and up this planning HXS this per fully the and well initial for than of under at Battalion deliver able After to dedicated capture back be gas tons means is to COX. and XXXX. third-party way, and are its Construction facility early have delivery sweet facility running

at development. and further have To accelerate Draw offtake safety opportunities, big Monument there our multiple providing and optionality footprint Beyond flexibility have treating To expansion Phase that cost project that to and environmental are enhances our processing one game-changer. X, a needs culture solves meaningfully of is reduces improved significantly also a win. provides is for optionality, and a

is Now Kevin walk to results. financial through our you going

increase in production the volumes Danny, impact entered testament first being And roughly our We oil barrels morning, on to day, and to quarter or compared the per BOE able flat financial quarter during XX,XXX that volumes increased having we're with were XX,XXX to good despite results. volumes this fact those the a per in by of equivalent encouraged of Thanks, we is day the be the per quarter curtailments first third-party the wells second year. everyone. downtime anticipating BOE quarter day, real results. to are online. and related June to The to strength weather total Total

oil Total in which revenue the second was million, represented $XXX.X of XX%. quarter

a We million $XX.X NYMEX on during heavily continue our hedges below our current realizing hedge from market those of many of into production, to loss the XXX% receive quarter XXXX strong pricing, program. prices. with came the before We oil hedged base average realizing price

EBITDA. in participate XXXX a that by of environment, in more an new is of One an price fully to from primary benefits we're this improved increase the adjusted capital evidenced able program commodity production

quarter the and EBITDA second first our million, totaled $XX.X on adjusted of program the the With During from realized wells from quarter, in being first the this online cash capital come production ramp increases to third to over XX% continuing to to volumes. flat year, that prices relatively flow half benefit up, improve. new significant fully quarter production a as continue was and XXXX year our of volumes second these expect we and through drive the increase

to by crude an excitement over as price XXXX per our in weighted we as only oil of compared average our builds the second eye XXXX. half on As to XXXX, improves strike barrel $XX turn swaps

$XX.X our Continuing of the or adjusting net derivative $X.XX quarter diluted net for of including results. with of We share. for the common financial share. $XX.X loss the shareholders second diluted effect of company reflected $X.XX adjusted per income an certain per GAAP XXXX net to items, million After of million reported unrealized gains,

yesterday. to of announcement our please earnings adjustments, details these released For refer

$X.X to With support on basis, the an development and completion related related capital accrual of expenditures which gathering activity, incurred to we treating costs million our in equipment million $XX.X and $XX.X and infrastructure. of increase of drilling the million

volumes materials. Our scarcity do job to mitigating great delivering continues drive in the and to equipment Those continue impact supply team inflation. while issues of chain a

market do increased efficiencies mitigate and increases continue monitor thoughtful to will the price We best to and our through planning. any

in liquidity few loans of had At million half available meaningful strong of million, in expect and of $XX to term term $XX.X year, back capitalization. of capability our loan $XX.X the in be million the end XX, company a we XXXX, strong cash cash by profile a the generating comments draw delayed and consisting of liquidity under June Finally, on Battalion's year. and the improvement the agreement. leverage flow liquidity drawn of With

turn will it Rich offer I Now back some to concluding remarks. to over

wells be asset optimistic Thanks, gas about. our online, treatment cash and lot flow breaking a facility ground, With building new there's a Kevin. to game-changing

drive Battalion, as and We forward. interest we're up, and growth With concludes production program to we for half of turn the cash are facilitate it our that to second to operator scripted excited in at about flow your the our and capital thank we turning ramping methodically now expect year. point our move you Once Q&A. the over I'll again, remarks. grow

question first Instructions] from will Steely [Operator take ]. We [ our Edward

the on for would year. wells I planning like rest Yes, drilling of you're the on to know

Yes. be a right pretty beginning Thanks We've the call and to story. XX X, the probably between wells, our fair for of estimate listening being to that's and still now. year guided on going

and So XX grow X track would that about continue from, the to the we it, anywhere to estimate to second third, X I on But we that. still guidance. bring the so on within brought on quarter. the X in talked call in We're we'll

this there appears to for It over at or would Richard remarks. Little time. to [Operator are any the no back turn closing I further questions call additional Instructions] like

to And for team and It's for to returning work us. excited a dedication exciting growth. This Thanks. point, an lot about taken hard future, our do the and you to back just appreciate Battalion. again, is your in want I today. time great. I get interest Goodbye. this to Okay, time But by everybody's of we're thank

today's gentlemen. That participation, will conference call. and you conclude ladies for your Thank

You may now disconnect.