Battalion Oil (NYSE: BATL) plans $62.59M West Quito Draw asset sale

Rhea-AI Filing Summary

Battalion Oil Corporation has agreed to sell substantially all of its oil and natural gas properties in the West Quito Draw area of the Southern Delaware Basin in Ward County, Texas to MCM Delaware Resources for approximately $62.59 million. The sale covers about 6,207 net acres with proved reserves of roughly 8 MMBoe, which represented about 12.4% of Battalion’s 2024 year-end proved reserves. Battalion plans to use the net proceeds to repay amounts outstanding under its Senior Secured Credit Agreement and for general corporate purposes, including potential acquisitions and planned drilling. The deal is effective as of December 1, 2025 and is expected to close in the first quarter of 2026, subject to customary closing conditions and purchase price adjustments; MCM has placed a deposit of about $6.26 million into escrow.

Insights

Energy sector analyst

Battalion plans a sizable non-core asset sale to raise cash and reduce debt.

Battalion Oil Corporation agreed to sell substantially all West Quito Draw properties to MCM Delaware Resources for about $62.59 million. The package includes roughly 6,207 net acres in Ward County, Texas and proved reserves of about 8 MMBoe, which accounted for around 12.4% of 2024 year-end proved reserves. This indicates Battalion is divesting a meaningful portion of its reserve base in a single transaction.

Management states that net proceeds are intended for repayment of amounts outstanding under the Senior Secured Credit Agreement and for general corporate purposes, including potential acquisitions and planned drilling expenditures. That combination suggests a mix of balance sheet focus and portfolio reshaping, without specifying which future assets or projects might replace the divested reserves.

The agreement includes typical oil and gas deal mechanics: purchase price adjustments for operations between the effective date of December 1, 2025 and closing, plus title and environmental defect adjustments. The parties may terminate if adjustments exceed 20% of the price (about $12.52 million) or if closing has not occurred by March 26, 2026. Actual impact will depend on whether the deal closes on these terms and how Battalion redeploys any remaining cash after debt repayment.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 18, 2025 

Battalion Oil Corporation

(Exact name of registrant as specified in its charter)

Delaware		001-35467		20-0700684
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

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820 Gessner Road Suite 1100 Houston, Texas		77024
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (832) 538-0300

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(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

◻    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

◻    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

◻    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

◻    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock par value $0.0001		BATL		NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
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Item 1.01 Entry into a Material Definitive Agreement

Agreement to Divest West Quito Draw Properties

On December 18, 2025, certain subsidiaries of Battalion Oil Corporation (the “Company”) entered into an Agreement of Sale and Purchase (the “Sale Agreement”) with MCM Delaware Resources, LLC (“MCM”) pursuant to which the Company agreed to a sale of substantially all of its oil and natural gas properties and related assets in its West Quito Draw area located in the Southern Delaware Basin located in Ward County, Texas (the “West Quito Assets”) for a total purchase price of approximately $62.59 million.  The effective date of the proposed sale is December 1, 2025, and the Company expects to close the transaction in the first quarter of 2026.

The sale properties include approximately 6,207 net acres located in Ward County, Texas. Proved reserves from these properties accounted for approximately 8 MMBoe, or approximately 12.4 % of the Company’s 2024 Year End proved reserves.

The Company intends to use the net proceeds from the divestiture of the West Quito Assets, if such transaction closes, to repay amounts outstanding under the Company’s Senior Secured Credit Agreement and for general corporate purposes, including funding potential acquisitions and planned drilling expenditures.

The purchase price is subject to adjustments for (i) operating expenses, capital expenditures and revenues between the effective date and the closing date, (ii) title, casualty and environmental defects, and (iii) other purchase price adjustments customary in oil and gas purchase and sale agreements. Pursuant to the terms of the Sale Agreement, MCM paid into escrow a deposit totaling approximately $6.26 million, which amount will be applied to the purchase price if the transaction closes.

MCM and the Company each make representations and warranties in the Sale Agreement that are customary for a transaction of this type. The Sale Agreement also includes customary covenants relating to the operation of the West Quito Assets and other matters.  Purchase price adjustments attributable to title or environmental defects are subject to certain threshold limitations.

The completion of the divestiture of the West Quito Assets is subject to customary closing conditions. The parties may terminate the Purchase Agreement if certain closing conditions have not been satisfied, or if total adjustments to the purchase price exceed 20% of the purchase price, approximately $12.52 million, or the transaction has not closed on or before March 26, 2026. If one or more of the closing conditions are not satisfied, or if the transaction is otherwise terminated, the divestiture may not be completed. There can be no assurance that the Company will sell the West Quito Assets on the terms or timing described or at all.

TenOaks Energy Advisors is serving as financial advisor to the Company.  

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BATTALION OIL CORPORATION
December 19, 2025	By:	/s/ Matthew B. Steele
	Name:	Matthew B. Steele
	Title:	Chief Executive Officer

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FAQ

What asset sale did Battalion Oil Corporation (BATL) announce?

Battalion Oil Corporation agreed to sell substantially all of its oil and natural gas properties and related assets in the West Quito Draw area of the Southern Delaware Basin in Ward County, Texas to MCM Delaware Resources for a total purchase price of approximately $62.59 million.

How large are the West Quito Draw assets Battalion Oil is selling?

The West Quito Draw sale package includes approximately 6,207 net acres in Ward County, Texas, with proved reserves of about 8 MMBoe that represented roughly 12.4% of Battalion’s 2024 year-end proved reserves.

How does Battalion Oil plan to use the proceeds from the West Quito Draw sale?

Battalion intends to use the net proceeds from the divestiture to repay amounts outstanding under its Senior Secured Credit Agreement and for general corporate purposes, including funding potential acquisitions and planned drilling expenditures.

When is the West Quito Draw divestiture expected to close for Battalion Oil?

The effective date of the proposed sale is December 1, 2025, and Battalion expects to close the transaction in the first quarter of 2026, subject to customary closing conditions and purchase price adjustments.

What deposit and termination rights are included in Battalion Oil’s sale agreement?

MCM Delaware Resources has paid a deposit of approximately $6.26 million into escrow, which will be applied to the purchase price if the deal closes. The parties may terminate the agreement if total purchase price adjustments exceed 20% of the price (about $12.52 million) or if the transaction has not closed on or before March 26, 2026.

Who is advising Battalion Oil on the West Quito Draw asset sale?

TenOaks Energy Advisors is serving as financial advisor to Battalion Oil Corporation in connection with the divestiture of the West Quito Draw assets.