Battalion Oil — Income Statement, Cash Flows & Balance Sheet
Is Battalion Oil profitable?
Battalion Oil swung to a GAAP net profit in 2025, but after accounting for preferred stock dividends, common shareholders are still deep in the red.
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Total operating revenues ($000s) | $193,893 | $166,043 | -14.4% |
| Loss from operations ($000s) | $(11,745) | $(6,637) | Improved by $5.1M |
| Net gain on derivative contracts ($000s) | $2,308 | $45,263 | +$42.9M |
| Net income (loss) ($000s) | $(31,882) | $11,879 | Swing of $43.8M |
| Net loss available to common stockholders ($000s) | $(64,101) | $(36,827) | Still a large loss |
Revenue fell year-over-year alongside lower oil prices, and the core business still ran at an operating loss. The headline net income was entirely driven by a large gain on hedging contracts (derivatives used to lock in oil prices) rather than operational improvement — strip that away and the business lost money. On top of that, the preferred stock carries a punishing cash-equivalent dividend that consumed nearly all reported net income, leaving common shareholders with a significant per-share loss.
A large one-time asset impairment in 2024 and a sharp drop in gathering costs helped narrow the operating loss in 2025.
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Asset impairment ($000s) | $18,511 | $1,072 | -$17.4M |
| Gathering and other expense ($000s) | $54,117 | $43,742 | -$10.4M |
| General and administrative ($000s) | $18,356 | $14,622 | -$3.7M |
The absence of last year's hefty impairment charge and meaningful reductions in gathering and overhead costs are real improvements, but they were needed just to partially offset the revenue decline from falling commodity prices.
Does Battalion Oil generate cash?
Battalion Oil does generate meaningful operating cash flow, but capital spending outpaces it, requiring ongoing borrowing to fund the gap.
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Cash from operations ($000s) | $35,355 | $39,090 | +$3.7M |
| Oil and gas capital expenditures ($000s) | $(64,625) | $(74,556) | -$9.9M |
| Free cash flow (operating less capex, GAAP) ($000s) | $(29,270) | $(35,466) | Widened |
| Net cash from financing ($000s) | $(7,728) | $44,114 | Swing of $51.8M |
| Ending cash ($000s) | $19,712 | $27,965 | +$8.3M |
Free cash flow (operating cash minus capital spending) was negative in both years and widened in 2025 as the company drilled more wells. Battalion plugged that gap by borrowing an additional net $46M on its term loan. Cash on hand improved modestly, but that improvement came from debt, not operations.
How strong is Battalion Oil's balance sheet?
Debt is rising, preferred stock is compounding rapidly, and common stockholders' equity has turned negative — this is a leveraged balance sheet with limited cushion.
| Item | Dec 31, 2024 | Dec 31, 2025 | Change |
|---|---|---|---|
| Total debt, face value ($000s) | $162,106 | $208,135 | +$46.0M |
| Preferred stock carrying value ($000s) | $177,535 | $226,241 | +$48.7M |
| Total stockholders' equity (deficit) ($000s) | $4,120 | $(32,792) | Flipped negative |
| Cash and equivalents ($000s) | $19,712 | $27,965 | +$8.3M |
The preferred stock accrues dividends at 16% annually if not paid in cash — and the loan agreement prohibits cash payment — meaning this obligation is compounding quickly. Combined with a rising term loan, total obligations owed ahead of common shareholders increased by nearly $100M in a single year. The loan matures in December 2028, with a large balloon payment due at that time. Subsequent to year-end, Battalion sold its West Quito properties for ~$60M and used most of the proceeds to pay down debt, which provides some relief but does not eliminate the structural leverage concerns.