Battalion Oil Corporation filed SEC Form 8-K: Entry into a Material Definitive Agreement
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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.
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December 19, 2025 | By: | /s/ Matthew B. Steele |
| Name: | Matthew B. Steele |
| Title: | Chief Executive Officer |
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