Battalion Oil Corporation reported third‑quarter 2025 results that included a $15.0 million net loss, or $0.91 per share, and an adjusted EBITDA of $18.9 million—an increase of roughly 40% from $13.5 million in the same quarter a year earlier. Total operating revenue fell to $43.5 million, down from $45.3 million in Q3 2024, while average daily production rose to 12,293 barrels of oil equivalent per day, up from 12,076 Boe/d in the prior year and 53% of that volume being oil.
The net loss reflects a combination of higher operating costs and the impact of the AGI facility shutdown. The facility, which had processed sour‑gas since March 2024, ceased operations on August 11, 2025, forcing Battalion to shut in about 1,600 Boe/d from its Monument Draw field and redirect gas to third‑party processing sites. The shutdown increased lease operating and workover expenses per Boe, largely due to higher water disposal costs from new wells, and added a one‑time charge related to the AGI shutdown. These cost pressures offset the revenue decline caused by lower realized prices, which were driven by a broader market downturn in oil and gas prices.
Despite the loss, adjusted EBITDA grew because Battalion cut costs in its drilling and completion operations. The company completed two wells in the West Quito Draw that now produce an average of 883 Boe/d, saving more than $1.1 million per well in operating expenses. Combined with improved gathering and central‑facility efficiencies, these savings helped lift EBITDA even as revenue slipped. The 40% EBITDA growth signals that operational efficiency gains are material and that the company can generate cash flow from its core assets even amid headwinds.
Operationally, the AGI shutdown remains a significant challenge. Battalion temporarily shut in 1,600 Boe/d and has been redirecting gas to nearby processing sites, which increases transportation and handling costs. The company’s management has been actively seeking alternative gas‑processing solutions and has secured a support letter from related‑party investors for up to $30 million in preferred equity, underscoring ongoing liquidity concerns. As of September 30, 2025, the company carried $213.8 million in term‑loan debt against $50.5 million in cash and equivalents, leaving it in negative working capital and prompting the recent amendment to its senior secured credit agreement on November 12, 2025, which provided covenant relief through June 30, 2027.
Looking ahead, Battalion’s management remains cautious. The company’s focus is on resolving the AGI shutdown, stabilizing gas processing, and maintaining cost discipline to preserve its adjusted EBITDA trajectory. While the net loss signals short‑term financial strain, the company’s ability to generate positive EBITDA and secure credit‑facility relief suggests that it is positioning itself to weather the sour‑gas environment in the Delaware Basin. Investors will likely monitor the company’s progress on gas‑processing alternatives, the timing of the AGI shutdown’s impact on cash flow, and the effectiveness of the preferred‑equity support in restoring working capital.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.