Battalion Oil (BATL) 10-Q14 Nov 222022 Q3 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2022	Nov. 09, 2022
Cover [Abstract]
Entity Registrant Name	Battalion Oil Corp
Entity Central Index Key	0001282648
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Amendment Flag	false
Trading Symbol	BATL
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,344,815
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-0700684
Entity Address, Address Line One	3505 West Sam Houston Parkway North
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77043
City Area Code	832
Local Phone Number	538-0300
Title of 12(b) Security	Common Stock, par value $0.0001
Security Exchange Name	NYSEAMER
Entity File Number	001-35467

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Oil, natural gas and natural gas liquids sales:
Total oil, natural gas and natural gas liquids sales	$ 98,706	$ 80,504	$ 281,404	$ 199,873
Other	443	312	858	827
Total operating revenues	99,149	80,816	282,262	200,700
Production:
Lease operating	12,265	11,979	35,698	31,615
Workover and other	2,559	990	4,807	2,317
Taxes other than income	5,613	3,082	15,936	9,186
Gathering and other	16,663	15,934	47,787	43,436
General and administrative	4,498	4,491	14,071	13,349
Depletion, depreciation and accretion	13,615	10,885	36,436	32,729
Total operating expenses	55,213	47,361	154,735	132,632
Income (loss) from operations	43,936	33,455	127,527	68,068
Other income (expenses):
Net gain (loss) on derivative contracts	67,634	(20,571)	(88,134)	(119,371)
Interest expense and other	(5,682)	(1,900)	(13,202)	(5,017)
Gain (loss) on extinguishment of debt		2,068		2,068
Total other income (expenses)	61,952	(20,403)	(101,336)	(122,320)
Income (loss) before income taxes	105,888	13,052	26,191	(54,252)
Income tax benefit (provision)
Net income (loss)	$ 105,888	$ 13,052	$ 26,191	$ (54,252)
Net income (loss) per share of common stock:
Basic (in dollars per share)	$ 6.48	$ 0.80	$ 1.60	$ (3.34)
Diluted (in dollars per share)	$ 6.42	$ 0.79	$ 1.59	$ (3.34)
Weighted average common shares outstanding:
Basic (in shares)	16,340	16,270	16,327	16,257
Diluted (in shares)	16,483	16,428	16,496	16,257
Oil
Oil, natural gas and natural gas liquids sales:
Total oil, natural gas and natural gas liquids sales	$ 70,406	$ 60,023	$ 206,874	$ 153,228
Natural gas
Oil, natural gas and natural gas liquids sales:
Total oil, natural gas and natural gas liquids sales	15,656	9,435	39,296	23,839
NGLs
Oil, natural gas and natural gas liquids sales:
Total oil, natural gas and natural gas liquids sales	$ 12,644	$ 11,046	$ 35,234	$ 22,806

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 33,499	$ 46,864
Accounts receivable, net	39,867	36,806
Assets from derivative contracts	18,225	1,383
Restricted cash	60	1,495
Prepaids and other	958	1,366
Total current assets	92,609	87,914
Oil and natural gas properties (full cost method):
Evaluated	680,202	569,886
Unevaluated	65,021	64,305
Gross oil and natural gas properties	745,223	634,191
Less - accumulated depletion	(375,648)	(339,776)
Net oil and natural gas properties	369,575	294,415
Other operating property and equipment:
Other operating property and equipment	4,223	3,467
Less - accumulated depreciation	(1,072)	(1,035)
Net other operating property and equipment	3,151	2,432
Other noncurrent assets:
Assets from derivative contracts	8,789	2,515
Operating lease right of use assets	446	721
Other assets	2,933	2,270
Total assets	477,503	390,267
Current liabilities:
Accounts payable and accrued liabilities	100,198	62,826
Liabilities from derivative contracts	41,088	58,322
Current portion of long-term debt	25,041	85
Operating lease liabilities	381	369
Asset retirement obligations	222
Total current liabilities	166,930	121,602
Long-term debt, net	179,372	181,565
Other noncurrent liabilities:
Liabilities from derivative contracts	23,583	7,144
Asset retirement obligations	15,250	11,896
Operating lease liabilities	65	352
Other	960	4,003
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock: 100,000,000 shares of $0.0001 par value authorized; 16,343,814 and 16,273,913 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	2	2
Additional paid-in capital	333,634	332,187
Retained earnings (accumulated deficit)	(242,293)	(268,484)
Total stockholders' equity	91,343	63,705
Total liabilities and stockholders' equity	$ 477,503	$ 390,267

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Stockholders' equity:
Common stock, shares authorized	100,000,000	100,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares issued	16,343,814	16,273,913
Common stock, shares outstanding	16,343,814	16,273,913

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Total
Balances at Dec. 31, 2020	$ 2	$ 330,123	$ (240,167)	$ 89,958
Balances (in shares) at Dec. 31, 2020	16,204
Increase (Decrease) in Stockholders' Equity
Net income (loss)			(33,375)	(33,375)
Reduction in shares to cover individuals' tax withholding		(264)		(264)
Reduction in shares to cover individuals' tax withholding (in shares)	(24)
Stock-based compensation		692		692
Balances at Mar. 31, 2021	$ 2	330,551	(273,542)	57,011
Balances (in shares) at Mar. 31, 2021	16,267
Balances at Dec. 31, 2020	$ 2	330,123	(240,167)	89,958
Balances (in shares) at Dec. 31, 2020	16,204
Increase (Decrease) in Stockholders' Equity
Net income (loss)				(54,252)
Long-term incentive plan vestings (in shares)	87
Balances at Sep. 30, 2021	$ 2	331,660	(294,419)	37,243
Balances (in shares) at Sep. 30, 2021	16,274
Balances at Mar. 31, 2021	$ 2	330,551	(273,542)	57,011
Balances (in shares) at Mar. 31, 2021	16,267
Increase (Decrease) in Stockholders' Equity
Net income (loss)			(33,929)	(33,929)
Long-term incentive plan vestings (in shares)	1
Reduction in shares to cover individuals' tax withholding		(5)		(5)
Stock-based compensation		571		571
Balances at Jun. 30, 2021	$ 2	331,117	(307,471)	23,648
Balances (in shares) at Jun. 30, 2021	16,268
Increase (Decrease) in Stockholders' Equity
Net income (loss)			13,052	13,052
Long-term incentive plan vestings (in shares)	8
Reduction in shares to cover individuals' tax withholding		(22)		(22)
Reduction in shares to cover individuals' tax withholding (in shares)	(2)
Stock-based compensation		565		565
Balances at Sep. 30, 2021	$ 2	331,660	(294,419)	37,243
Balances (in shares) at Sep. 30, 2021	16,274
Increase (Decrease) in Stockholders' Equity
Net income (loss)			25,935	25,935
Stock-based compensation		527		527
Balances at Dec. 31, 2021	$ 2	332,187	(268,484)	63,705
Balances (in shares) at Dec. 31, 2021	16,274
Increase (Decrease) in Stockholders' Equity
Net income (loss)			(92,744)	(92,744)
Reduction in shares to cover individuals' tax withholding		(461)		(461)
Reduction in shares to cover individuals' tax withholding (in shares)	(26)
Stock-based compensation		452		452
Balances at Mar. 31, 2022	$ 2	332,178	(361,228)	(29,048)
Balances (in shares) at Mar. 31, 2022	16,337
Balances at Dec. 31, 2021	$ 2	332,187	(268,484)	63,705
Balances (in shares) at Dec. 31, 2021	16,274
Increase (Decrease) in Stockholders' Equity
Net income (loss)				26,191
Long-term incentive plan vestings (in shares)	89
Balances at Sep. 30, 2022	$ 2	333,634	(242,293)	91,343
Balances (in shares) at Sep. 30, 2022	16,344
Balances at Mar. 31, 2022	$ 2	332,178	(361,228)	(29,048)
Balances (in shares) at Mar. 31, 2022	16,337
Increase (Decrease) in Stockholders' Equity
Net income (loss)			13,047	13,047
Long-term incentive plan vestings (in shares)	1
Reduction in shares to cover individuals' tax withholding		(6)		(6)
Stock-based compensation		594		594
Balances at Jun. 30, 2022	$ 2	332,766	(348,181)	(15,413)
Balances (in shares) at Jun. 30, 2022	16,338
Increase (Decrease) in Stockholders' Equity
Net income (loss)			105,888	105,888
Equity issuance costs	$ 8
Reduction in shares to cover individuals' tax withholding		(25)		(25)
Reduction in shares to cover individuals' tax withholding (in shares)	(2)
Stock-based compensation		893		893
Balances at Sep. 30, 2022	$ 2	$ 333,634	$ (242,293)	$ 91,343
Balances (in shares) at Sep. 30, 2022	16,344

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income (loss)	$ 26,191	$ (54,252)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depletion, depreciation and accretion	36,436	32,729
Stock-based compensation, net	1,540	1,560
Unrealized loss (gain) on derivative contracts	(23,911)	69,053
Amortization of deferred loan costs	2,726
Reorganization items, net	(744)
Loss (gain) on extinguishment of debt		(2,068)
Accrued settlements on derivative contracts	7,493	6,769
Change in fair value of Change of Control Call Option	(3,043)
Other income (expense)	(128)	(229)
Change in assets and liabilities:
Accounts receivable	(1,605)	(8,432)
Prepaids and other	407	806
Accounts payable and accrued liabilities	8,452	1,196
Net cash provided by (used in) operating activities	53,814	47,132
Cash flows from investing activities:
Oil and natural gas capital expenditures	(86,998)	(47,204)
Proceeds received from sale of oil and natural gas properties	1	947
Other operating property and equipment capital expenditures	(949)	(7)
Funds held in escrow and other	166	16
Net cash provided by (used in) investing activities	(87,780)	(46,248)
Cash flows from financing activities:
Proceeds from borrowings	20,122	145,000
Repayments of borrowings	(85)	(148,021)
Debt issuance costs	(379)
Other	(492)	(290)
Net cash provided by (used in) financing activities	19,166	(3,311)
Net increase (decrease) in cash, cash equivalents and restricted cash	(14,800)	(2,427)
Cash, cash equivalents and restricted cash at beginning of period	48,359	4,295
Cash, cash equivalents and restricted cash at end of period	33,559	$ 1,868
Supplemental cash flow information:
Cash paid for reorganization items	$ 744

FINANCIAL STATEMENT PRESENTATIO

FINANCIAL STATEMENT PRESENTATION	9 Months Ended
FINANCIAL STATEMENT PRESENTATION	Sep. 30, 2022
FINANCIAL STATEMENT PRESENTATION
FINANCIAL STATEMENT PRESENTATION	1. FINANCIAL STATEMENT PRESENTATION Basis of Presentation and Principles of Consolidation Battalion is an independent energy company focused on the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets in the United States. The consolidated financial statements include the accounts of all majority-owned, controlled subsidiaries. The Company operates in one segment which focuses on oil and natural gas acquisition, production, exploration and development. Allocation of capital is made across the Company’s entire portfolio without regard to operating area. All intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements reflect, in the opinion of the Company’s management, all adjustments, consisting of normal and recurring adjustments, necessary to present fairly the financial position as of, and the results of operations for, the periods presented. Interim period results are not necessarily indicative of results of operations or cash flows for the full year and accordingly, certain information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, has been condensed or omitted. During interim periods, Battalion follows the accounting policies disclosed in its Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission (SEC) on March 7, 2022. Please refer to the notes in the Annual Report on Form 10- K for the year ended December 31, 2021 when reviewing interim financial results. The Company has evaluated events or transactions through the date of issuance of these unaudited condensed consolidated financial statements. Risk and Uncertainties Supply chain issues. In periods of increasing commodity prices, the Company continues to be at risk to supply chain issues, including, but not limited to, labor shortages, pipe restrictions and potential delays in obtaining frac and/or drilling related equipment that could impact our business . During these periods, the costs and delivery times of rigs, equipment and supplies may also be substantially greater. The unavailability or high cost of drilling rigs and/or frac crews, pressure pumping equipment, tubulars and other supplies, and of qualified personnel can materially and adversely affect our operations and profitability. COVID-19. The Company is continuously monitoring the current and potential impacts of the novel coronavirus (COVID-19) pandemic on its business, including how it has and may continue to impact its operations, financial results, liquidity, contractors, customers, employees and vendors, and taking appropriate actions in response, including implementing various measures to ensure the continued operation of its business in a safe and secure manner. During 2021, widespread availability of COVID-19 vaccines in the United States and elsewhere combined with accommodative governmental monetary and fiscal policies and other factors, led to a rebound in demand for oil and natural gas and increases in oil and natural gas prices. Further, in 2022, the effects of Russian sanctions amidst the conflict with Ukraine have pushed oil and gas prices higher. However, there remains the potential for demand for oil and natural gas to be adversely impacted by the economic effects of rising interest rates and tightening monetary policies, as well as the ongoing COVID-19 pandemic, including as a consequence of the circulation of more infectious “variants” of the disease, vaccine hesitancy, waning vaccine effectiveness or other factors. As a consequence, the Company is unable to predict whether oil and natural gas prices will remain at current levels or will be adversely impacted by these or other factors. The results presented in this Form 10-Q are not necessarily indicative of future operating results. For further information regarding supply chain issues and the actual and potential impacts of COVID-19 on the Company, see “Risk Factors” Use of Estimates The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Estimates and assumptions that, in the opinion of management of the Company, are significant include oil and natural gas revenue accruals, capital and operating expense accruals, oil and natural gas reserves, depletion relating to oil and natural gas properties, asset retirement obligations, and fair value estimates. The Company bases its estimates and judgments on historical experience and on various other assumptions and information believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results may differ from the estimates and assumptions used in the preparation of the Company’s unaudited condensed consolidated financial statements. Cash, Cash Equivalents and Restricted Cash “Cash and cash equivalents” “Restricted cash” September 30, 2022 December 31, 2021 Cash and cash equivalents $ 33,499 $ 46,864 Restricted cash 60 1,495 Total cash, cash equivalents and restricted cash $ 33,559 $ 48,359 Accounts Receivable and Allowance for Doubtful Accounts The Company’s accounts receivable are primarily receivables from joint interest owners and oil and natural gas purchasers. Accounts receivable are recorded at the amount due, less an allowance for doubtful accounts, when applicable. The Company establishes provisions for losses on accounts receivable if it determines that collection of all or part of the outstanding balance is doubtful. The Company regularly reviews collectability and establishes or adjusts the allowance for doubtful accounts as necessary using the specific identification method. As of both September 30, 2022 and December 31, 2021, allowances for doubtful accounts were approximately $0.2 million. Concentrations of Credit Risk The Company’s primary concentrations of credit risk are the risks of uncollectible accounts receivable and of nonperformance by counterparties under the Company’s derivative contracts. Each reporting period, the Company assesses the recoverability of material receivables using historical data, current market conditions and reasonable and supportable forecasts of future economic conditions to determine expected collectability of its material receivables. The Company’s exposure to credit risk under its derivative contracts is varied among major financial institutions with investment grade credit ratings, where it has master netting agreements which provide for offsetting of amounts payable or receivable between the Company and the counterparty. To manage counterparty risk associated with derivative contracts, the Company selects and monitors counterparties based on an assessment of their financial strength and/or credit ratings. At September 30, 2022, the Company’s derivative counterparties include two major financial institutions, both of which are secured lenders under the Term Loan Agreement. Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848)

LEASES

LEASES	9 Months Ended
LEASES	Sep. 30, 2022
LEASES
LEASES	2. LEASES “Operating lease right of use assets” “Operating lease liabilities” “Gathering and other” “General and administrative” “Operating lease right of use assets” Nine Months Ended September 30, 2022 2021 Lease cost Operating lease costs $ 294 $ 346 Short-term lease costs 6,112 2,231 Variable lease costs — 307 Total lease costs $ 6,406 $ 2,884 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 294 $ 439 Right-of-use assets obtained in exchange for new operating lease liabilities 841 Weighted-average remaining lease term - operating leases 1.2 years 2.2 years Weighted-average discount rate - operating leases 4.29 % 4.29 % September 30, 2022 Remaining period in 2022 $ 98 2023 359 2024 — 2025 — 2026 — Thereafter — Total operating lease payments 457 Less: discount to present value 11 Total operating lease liabilities 446 Less: current operating lease liabilities 381 Noncurrent operating lease liabilities $ 65

OPERATING REVENUES

OPERATING REVENUES	9 Months Ended
OPERATING REVENUES	Sep. 30, 2022
OPERATING REVENUES
OPERATING REVENUES	3. OPERATING REVENUES Substantially all of the Company’s revenues are derived from single basin operations, the Delaware Basin in Pecos, Reeves, Ward and Winkler Counties, Texas. Revenue is presented disaggregated in the statement of operations by major product, and depicts how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors in the Company’s single basin operations. Revenue is recognized when the following five steps are completed: (1) identify the contract with the customer, (2) identify the performance obligation (promise) in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, (5) recognize revenue when the reporting organization satisfies a performance obligation. Revenues from the sale of crude oil, natural gas and natural gas liquids are recognized, at a point in time, when a performance obligation is satisfied by the transfer of control of the commodity to the customer. Revenue is measured based on consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. Because the Company’s performance obligations have been satisfied and an unconditional right to consideration exists as of the balance sheet date, the Company recognized amounts due from contracts with customers of $ “Accounts receivable, net”

OIL AND NATURAL GAS PROPERTIES

OIL AND NATURAL GAS PROPERTIES	9 Months Ended
OIL AND NATURAL GAS PROPERTIES	Sep. 30, 2022
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES	4. OIL AND NATURAL GAS PROPERTIES The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas reserves (including such costs as leasehold acquisition costs, geological expenditures, treating equipment and gathering support facilities costs, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depletion, exceed the discounted future net revenues of proved oil and natural gas reserves, net of deferred taxes, such excess capitalized costs are charged to expense. Additionally, the Company assesses all properties classified as unevaluated property on a quarterly basis for possible impairment. The Company assesses properties on an individual basis or as a group, if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and the full cost ceiling test limitation.

DEBT

DEBT	9 Months Ended
DEBT	Sep. 30, 2022
DEBT
DEBT	5. DEBT As of September 30, 2022 and December 31, 2021, the Company’s debt consisted of the following (in thousands): September 30, 2022 December 31, 2021 Term loan credit facility (1) $ 204,291 $ 181,565 Other 122 85 Total debt, net 204,413 181,650 Current portion of long-term debt (2) 25,041 85 Total long-term debt, net $ 179,372 $ 181,565 (1) Amount is net of $11.5 million and $14.2 million in unamortized debt issuance costs at September 30, 2022 and December 31, 2021, respectively. Amount also excludes the initial fair value allocated to the change of control call option embedded derivative of $4.2 million. Refer to “Term Loan Credit Facility” below for further details . (2) As of September 30, 2022, amount primarily represents amortization payments of $25.0 million under the Term Loan Agreement due within one year. As of December 31, 2021, amount represents the balance owed under the Company’s Paycheck Protection Program Loan. Term Loan Credit Facility ● Current Ratio . Our Current Ratio financial covenant decreased to 0.9 to 1.00 as of September 30, 2022, to 0.70 to 1.00 for the quarter ended December 31, 2022, and to 0.75 to 1.00 for the quarter ended March 31, 2023, returning to 1.00 to 1.00 for the quarter ended June 30, 2023 and for each fiscal quarter thereafter as further described below. ● Interest Rate. We (i) converted the benchmark interest rate to the Secured Overnight Financing Rate (SOFR) and (ii) increased the applicable margin on borrowings by 0.50% , such that borrowings under the Term Loan Agreement will now bear interest at a rate per annum equal to the SOFR plus an applicable margin of 7.50% . ● Prepayment Premium. We reset the prepayment periods (for outstanding borrowings) beginning on the amendment date with the following prepayment premiums, subject to the conditions described in the table below and the discussion that follows: Period (after amendment date) Premium Months 0 - 12 Make-whole amount equal to 12 months of interest plus 2.00% Months 13 - 24 2.00% Thereafter 0.00% The Company is required to make scheduled amortization payments in the aggregate amount of $120.0 million from the fiscal quarter ending March 31, 2023 through the fiscal quarter ending September 30, 2025. Amounts outstanding under the Amended Term Loan Agreement are guaranteed by certain of the Borrower’s direct and indirect subsidiaries and secured by substantially all of the assets of the Borrower and such direct and indirect subsidiaries, and by the equity interests of the Borrower held by the Company. As part of the Amended Term Loan Agreement there are certain restrictions on the transfer of assets, including cash, to Battalion from the guarantor subsidiaries. ● Asset Coverage Ratio of not less than 1.70 to 1.00 as of September 30, 2022, and 1.80 to 1.00 as of December 31, 2022 and each fiscal quarter thereafter ● Total Net Leverage Ratio of not greater than 3.00 to 1.00 as of September 30, 2022 and December 31, 2022, 2.75 to 1.00 as of March 31, 2023, and 2.50 to 1.00 as of each fiscal quarter thereafter, and ● Current Ratio of not less than 1.00 to 1.00, each determined as of the last day of any fiscal quarter period, other than as amended in November 2022 to 0.9 to 1.00 as of September 30, 2022, to 0.70 to 1.00 as of December 31, 2022, and to 0.75 to 1.00 as of March 31, 2023 As of September 30, 2022, (i) the Company was in compliance with the Asset Coverage Ratio and Total Net Leverage Ratio covenants under the Term Loan Agreement and (ii) our Current Ratio was 0.96 to 1, which was less than the 1.00 to 1.00 Current Ratio required under the original terms of the Term Loan Agreement. As a result of the amendment to our Term Loan Agreement on November 14, 2022, we were in compliance with the amended Current Ratio covenant of 0.9 to 1.00 for the quarter ended September 30, 2022. respect of the APOD other than any expenditures deemed necessary by the Company in respect of no more than six additional APOD wells. The Amended Term Loan Agreement also contains certain events of default, including non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy. In conjunction with entering into the original Term Loan Agreement in November 2021, the Company agreed to pay a premium to the lenders upon a future change of control event in which a majority of the board of directors or the Chief Executive Officer or the Chief Financial Officer positions do not remain held by the same persons as before the change of control event (Change of Control Call Option). The premium is reduced over time through the payment of interest and certain fees. The Change of Control Call Option is accounted for as an embedded derivative not clearly and closely related to the host debt instrument. Accordingly, the Company recorded the initial “Other noncurrent liabilities” “Interest expense and other” Fair Value Measurements Paycheck Protection Program Loan “Gain (loss) on extinguishment of debt” in the consolidated statements of operations during the quarter ended September 30, 2021. During the first quarter of 2022, the

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
FAIR VALUE MEASUREMENTS	Sep. 30, 2022
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	6. FAIR VALUE MEASUREMENTS The Company’s determination of fair value incorporates not only the credit standing of the counterparties involved in transactions with the Company resulting in receivables on the Company’s unaudited condensed consolidated balance sheets, but also the impact of the Company’s nonperformance risk on its own liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company separates the fair value of its financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy assigns the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 measurements are inputs that are observable for assets or liabilities, either directly or indirectly, other than quoted prices included within Level 1. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There were no transfers liabilities associated with commodity-based derivative contracts that were accounted for at fair value as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 Level 1 Level 2 Level 3 Total Assets Assets from commodity-based derivative contracts $ — $ 27,014 $ — $ 27,014 Liabilities Liabilities from commodity-based derivative contracts $ — $ 64,671 $ — $ 64,671 December 31, 2021 Level 1 Level 2 Level 3 Total Assets Assets from commodity-based derivative contracts $ — $ 3,898 $ — $ 3,898 Liabilities Liabilities from commodity-based derivative contracts $ — $ 65,466 $ — $ 65,466 Derivative contracts listed above as Level 2 include fixed-price swaps, collars, basis swaps and WTI NYMEX rolls that are carried at fair value. The Company records the net change in the fair value of these positions in “Net gain (loss) on derivative contracts” “Derivative and Hedging Activities,” The Company’s derivative contracts are with major financial institutions with investment grade credit ratings which are believed to have minimal credit risk. As such, the Company is exposed to credit risk to the extent of nonperformance by the counterparties in the derivative contracts; however, the Company does not anticipate such nonperformance. As discussed in Note 5, “Debt,” “Interest expense and other” Change of Control Call Option Balance at December 31, 2021 $ 4,003 Change in fair value (3,043) Balance at September 30, 2022 $ 960 Estimated fair value amounts have been determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, cash equivalents and restricted cash, accounts receivable, and accounts payable approximates their carrying value due to their short- term nature. The estimated fair value of borrowings under the Company’s Term Loan Agreement approximates carrying value because the interest rates approximate current market rates. The Company follows the provisions of ASC 820, for nonfinancial assets and liabilities measured at fair value on a non-recurring basis. These provisions apply to the Company’s initial recognition of asset retirement obligations for which fair value is used. The asset retirement obligation estimates are derived from historical costs and management’s expectation of future cost environments; and therefore, the Company has designated these liabilities as Level 3. See Note 8, “Asset Retirement Obligations,”

DERIVATIVE AND HEDGING ACTIVITI

DERIVATIVE AND HEDGING ACTIVITIES	9 Months Ended
DERIVATIVE AND HEDGING ACTIVITIES	Sep. 30, 2022
DERIVATIVE AND HEDGING ACTIVITIES
DERIVATIVE AND HEDGING ACTIVITIES	7. DERIVATIVE AND HEDGING ACTIVITIES The Company is exposed to certain risks relating to its ongoing business operations, such as commodity price risk and interest rate risk. In accordance with the Company’s policy and the requirements under the Term Loan Agreement, it generally hedges a substantial, but varying, portion of anticipated oil and natural gas production for future periods. Derivatives are carried at fair value on the unaudited condensed consolidated balance sheets as assets or liabilities, with the changes in the fair value included in the unaudited condensed consolidated statements of operations for the period in which the change occurs. The Company has elected not to designate any of its derivative contracts for hedge accounting. Accordingly, the Company records the net change in the mark-to-market valuation of these derivative contracts, as well as all payments and receipts on settled derivative contracts, in “Net gain (loss) on derivative contracts” It is the Company’s policy to enter into derivative contracts only with counterparties that are creditworthy financial or commodity hedging institutions deemed by management as competent and competitive market makers. As of September 30, 2022, the Company did not post collateral under any of its derivative contracts as they are secured under the Company’s Term Loan Agreement. The Company’s crude oil, and natural gas derivative positions at any point in time may consist of fixed-price swaps, costless put/call collars, basis swaps and WTI NYMEX rolls further described as follows: ● Fixed-price swaps are designed so that the Company receives or makes payments based on a differential between fixed and variable prices for crude oil and natural gas. ● Costless collars consist of a sold call, which establishes a maximum price the Company will receive for the volumes under contract and a purchased put that establishes a minimum price and are generally utilized less frequently by the Company than fixed-price swaps. ● Basis swaps effectively lock in a price differential between regional prices (i.e. Midland) where the product is sold and the relevant pricing index under which the oil production is hedged (i.e. Cushing). ● WTI NYMEX roll agreements account for pricing adjustments to the trade month versus the delivery month for contract pricing. The following table summarizes the location and fair value amounts of all commodity derivative contracts in the unaudited condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands): Balance sheet location September 30, 2022 December 31, 2021 Balance sheet location September 30, 2022 December 31, 2021 Current assets $ 18,225 $ 1,383 Current liabilities $ (41,088) $ (58,322) Other noncurrent assets 8,789 2,515 Other noncurrent liabilities (23,583) (7,144) $ 27,014 $ 3,898 $ (64,671) $ (65,466) The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivative contracts in the Company’s unaudited condensed consolidated statements of operations (in thousands): Location of net gain (loss) Three Months Ended Nine Months Ended on derivative contracts on September 30, September 30, Type Statement of Operations 2022 2021 2022 2021 Commodity derivative contracts: Unrealized gain (loss) Other income (expenses) $ 102,112 $ 1,816 $ 23,911 $ (69,053) Realized gain (loss) Other income (expenses) (34,478) (22,387) (112,045) (50,318) Total net gain (loss) $ 67,634 $ (20,571) $ (88,134) $ (119,371) At September 30, 2022, the Company had the following open crude oil and natural gas derivative contracts: Instrument 2022 2023 2024 2025 2026 Crude oil: Fixed-price swap: Total volumes (Bbls) 631,398 2,519,350 1,761,468 1,127,696 484,213 Weighted average price $ 54.64 69.62 63.56 60.66 64.43 Basis swap: Total volumes (Bbls) 622,398 2,586,562 1,759,239 1,127,696 484,213 Weighted average price $ 0.44 0.40 0.26 0.15 0.11 WTI NYMEX roll: Total volumes (Bbls) 622,398 2,519,350 1,613,039 1,127,696 484,213 Weighted average price $ 0.15 0.58 0.30 0.13 0.20 Natural gas: Fixed-price swap: Total volumes (MMBtu) 385,500 4,888,650 3,401,504 2,867,065 742,678 Weighted average price $ 3.87 3.67 3.37 3.17 4.01 Two-way collar: Total volumes (MMBtu) 1,578,768 2,199,328 1,848,139 825,653 760,562 Weighted average price (call) $ 4.79 5.91 4.97 4.71 4.64 Weighted average price (put) $ 4.04 4.36 3.57 3.65 4.04 Basis swap: Total volumes (MMBtu) 1,838,418 6,876,237 5,225,092 3,724,085 1,512,752 Weighted average price $ (0.55) (0.75) (0.75) (0.59) (0.85) Derivative Assets Derivative Liabilities Offsetting of Derivative Assets and Liabilities September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 Gross Amounts - Consolidated Balance Sheet $ 27,014 $ 3,898 $ (64,671) $ (65,466) Amounts Not Offset - Consolidated Balance Sheet (24,845) (3,898) 24,845 3,898 Net Amount $ 2,169 $ — $ (39,826) $ (61,568) The Company enters into an International Swap Dealers Association Master Agreement (ISDA) with each counterparty prior to a derivative contract with such counterparty. The ISDA is a standard contract that governs all derivative contracts entered into between the Company and the respective counterparty. The ISDA allows for offsetting of amounts payable or receivable between the Company and the counterparty, at the election of both parties, for transactions that occur on the same date and in the same currency.

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS	9 Months Ended
ASSET RETIREMENT OBLIGATIONS	Sep. 30, 2022
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS	8. ASSET RETIREMENT OBLIGATIONS The Company records an asset retirement obligation (ARO) on oil and natural gas properties when it can reasonably estimate the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon costs. The Company records the ARO liability on the unaudited condensed consolidated balance sheets and capitalizes the cost in “Oil and natural gas properties” “Depletion, depreciation and accretion” The Company recorded the following activity related to its ARO liability (in thousands): Liability for asset retirement obligations as of December 31, 2021 $ 11,896 Liabilities incurred during the period 103 Liabilities settled during the period (402) Accretion expense 334 Change in estimate 3,541 Liability for asset retirement obligations as of September 30, 2022 $ 15,472

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2022
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	9. COMMITMENTS AND CONTINGENCIES Commitments As of September 30, 2022, the Company has a minimum volume commitment with a third party for the purchase of chemicals to treat sour gas production through December 31, 2022. The future payments associated with the minimum volume commitment are approximately $1.6 million. As of September 30, 2022, the Company has an active drilling rig commitment of approximately $2.8 million through the fourth quarter of 2022. Termination of the active drilling rig commitment would require an early termination penalty of $1.0 million, which would be in lieu of paying the active drilling rig commitment of $2.8 million. The Company has entered into various long-term gathering, transportation and sales contracts with respect to its oil and natural gas production from the Delaware Basin in West Texas. As of September 30, 2022, the Company had in place two long-term crude oil contracts and 12 long-term natural gas contracts in this area and the sales prices under these contracts are based on posted market rates. Under the terms of these contracts, the Company has committed a substantial portion of its production from this area for periods ranging from one twenty Contingencies Surface owners of properties in Louisiana, where the Company formerly operated, often file lawsuits or assert claims against oil and gas companies claiming that operators and working interest owners are liable for environmental damages arising from operations conducted on the leased properties. These damages are frequently measured by the cost to restore the leased properties to their original condition. Currently and in the past, the Company has been party to such matters in Louisiana. With regard to pending matters, the overall exposure is not currently determinable. The Company intends to vigorously oppose these claims.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	9 Months Ended
STOCKHOLDERS' EQUITY	Sep. 30, 2022
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY	10. STOCKHOLDERS’ EQUITY Incentive Plans For the nine months ended September 30, 2022 and 2021, the Company recognized expense of $ "General and administrative" Restricted Stock From time to time, the Company grants shares of restricted stock units (RSUs) under the Plan to employees of the Company. Under the Plan, employee RSUs will generally vest and convert to shares three , depending on award, or when the performance or market conditions described further described in our Annual Report on Form 10-K occur. During the nine months ended September 30, 2022, the Company granted 0.2 million shares of RSUs at a weighted average grant date fair value of $13.75 per share. At September 30, 2022, the Company had $3.4 million of unrecognized compensation expense related to non-vested RSU awards to be recognized over a weighted average period of 1.3 years. Stock Options From time to time, the Company has granted stock options under the Plan covering shares of common stock to employees of the Company. Stock options, when exercised, are settled through the payment of the exercise price in exchange for new shares of stock underlying the option. Awards granted under the Plan typically vest over a four year period at a rate of one from the date of grant. unrecognized compensation expense related to non-vested stock options to be recognized over a weighted-average period of 1 year. Warrants On October 8, 2019, pursuant to the Company’s plan of reorganization, approximately 6.9 million Series A, Series B and Series C warrants were issued to pre-emergence holders of the predecessor Company’s common stock with corresponding initial exercise prices ranging from $40.17 to $60.45 per share, on a pro rata basis. Each series of Warrants issued under the Warrant Agreement had a three-year term, which expired on October 8, 2022.

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
EARNINGS PER SHARE	Sep. 30, 2022
EARNINGS PER SHARE
EARNINGS PER SHARE	11. EARNINGS PER SHARE The following represents the calculation of earnings (loss) per share (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Basic: Net income (loss) $ 105,888 $ 13,052 $ 26,191 $ (54,252) Weighted average basic number of common shares outstanding 16,340 16,270 16,327 16,257 Basic net income (loss) per share of common stock $ 6.48 $ 0.80 $ 1.60 $ (3.34) Diluted: Net income (loss) $ 105,888 $ 13,052 $ 26,191 $ (54,252) Weighted average basic number of common shares outstanding 16,340 16,270 16,327 16,257 Common stock equivalent shares representing shares issuable upon: Exercise of Warrants & Stock Options Anti-dilutive Anti-dilutive Anti-dilutive Anti-dilutive Vesting of restricted stock units 143 158 169 Anti-dilutive Weighted average diluted number of common shares outstanding 16,483 16,428 16,496 16,257 Diluted net income (loss) per share of common stock $ 6.42 $ 0.79 $ 1.59 $ (3.34) Common stock equivalents, including warrants and options, totaling 7.4 million for the three and nine months ended September 30, 2022 and three months ended September 30, 2021 were anti-dilutive and not included in the computation of diluted earnings per share of common stock. For the nine months ended September 30, 2021, common stock equivalents, including warrants, options and restricted stock units, totaling

ADDITIONAL FINANCIAL STATEMENT

ADDITIONAL FINANCIAL STATEMENT INFORMATION	9 Months Ended
ADDITIONAL FINANCIAL STATEMENT INFORMATION	Sep. 30, 2022
ADDITIONAL FINANCIAL STATEMENT INFORMATION
ADDITIONAL FINANCIAL STATEMENT INFORMATION	12. ADDITIONAL FINANCIAL STATEMENT INFORMATION Certain balance sheet amounts are comprised of the following (in thousands): September 30, 2022 December 31, 2021 Accounts receivable, net: Oil, natural gas and natural gas liquids revenues $ 36,441 $ 34,110 Joint interest accounts 3,009 2,503 Other 417 193 $ 39,867 $ 36,806 Prepaids and other: Prepaids $ 573 $ 975 Funds in escrow 341 390 Other 44 1 $ 958 $ 1,366 Other assets (Non-current): Investment in unconsolidated affiliate (1) $ 1,612 $ — Oil, natural gas and natural gas liquids revenues 59 1,010 Funds in escrow 523 1,227 Other 739 33 $ 2,933 $ 2,270 Accounts payable and accrued liabilities: Trade payables $ 34,201 $ 25,315 Accrued oil and natural gas capital costs 27,208 4,881 Revenues and royalties payable 29,595 22,763 Accrued interest expense 66 42 Accrued employee compensation 2,482 3,735 Accrued lease operating expenses 6,534 6,090 Drilling advances from partners 109 — Other 3 — $ 100,198 $ 62,826 (1) In May 2022, we entered into a joint venture with Caracara Services, LLC (“Caracara”) to develop an acid gas treatment facility to remove hydrogen sulfide and carbon dioxide from our produced natural gas. We also entered into a gas treating agreement with the joint venture, Brazos Amine Treater, LLC (“BAT”), and have a minimum volume commitment of 20 MMcf per day, with certain rollover rights and start-up flexibility, for an initial term of five years from the in service date of the facility. Caracara will provide all necessary capital for the construction of the treatment facility. We contributed certain full cost pool assets to the joint venture in exchange for a retained 5% equity interest in BAT, an unconsolidated subsidiary. For accounting purposes, since we do not control the key activities (e.g. operating and maintaining the facility) which most significantly impact economic performance nor do we have the obligation to absorb losses or the right to receive benefits that could potentially be significant, we are not the primary beneficiary of BAT. Accordingly, we account for our investment in BAT using the equity method of accounting based on our ability to exercise significant influence , but not control, over the key activities of the joint venture. (2)

FINANCIAL STATEMENT PRESENTAT_2

FINANCIAL STATEMENT PRESENTATION (Policies)	9 Months Ended
FINANCIAL STATEMENT PRESENTATION (Policies)	Sep. 30, 2022
FINANCIAL STATEMENT PRESENTATION
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation Battalion is an independent energy company focused on the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets in the United States. The consolidated financial statements include the accounts of all majority-owned, controlled subsidiaries. The Company operates in one segment which focuses on oil and natural gas acquisition, production, exploration and development. Allocation of capital is made across the Company’s entire portfolio without regard to operating area. All intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements reflect, in the opinion of the Company’s management, all adjustments, consisting of normal and recurring adjustments, necessary to present fairly the financial position as of, and the results of operations for, the periods presented. Interim period results are not necessarily indicative of results of operations or cash flows for the full year and accordingly, certain information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, has been condensed or omitted. During interim periods, Battalion follows the accounting policies disclosed in its Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission (SEC) on March 7, 2022. Please refer to the notes in the Annual Report on Form 10- K for the year ended December 31, 2021 when reviewing interim financial results. The Company has evaluated events or transactions through the date of issuance of these unaudited condensed consolidated financial statements.
Risk and Uncertainties	Risk and Uncertainties Supply chain issues. In periods of increasing commodity prices, the Company continues to be at risk to supply chain issues, including, but not limited to, labor shortages, pipe restrictions and potential delays in obtaining frac and/or drilling related equipment that could impact our business . During these periods, the costs and delivery times of rigs, equipment and supplies may also be substantially greater. The unavailability or high cost of drilling rigs and/or frac crews, pressure pumping equipment, tubulars and other supplies, and of qualified personnel can materially and adversely affect our operations and profitability. COVID-19. The Company is continuously monitoring the current and potential impacts of the novel coronavirus (COVID-19) pandemic on its business, including how it has and may continue to impact its operations, financial results, liquidity, contractors, customers, employees and vendors, and taking appropriate actions in response, including implementing various measures to ensure the continued operation of its business in a safe and secure manner. During 2021, widespread availability of COVID-19 vaccines in the United States and elsewhere combined with accommodative governmental monetary and fiscal policies and other factors, led to a rebound in demand for oil and natural gas and increases in oil and natural gas prices. Further, in 2022, the effects of Russian sanctions amidst the conflict with Ukraine have pushed oil and gas prices higher. However, there remains the potential for demand for oil and natural gas to be adversely impacted by the economic effects of rising interest rates and tightening monetary policies, as well as the ongoing COVID-19 pandemic, including as a consequence of the circulation of more infectious “variants” of the disease, vaccine hesitancy, waning vaccine effectiveness or other factors. As a consequence, the Company is unable to predict whether oil and natural gas prices will remain at current levels or will be adversely impacted by these or other factors. The results presented in this Form 10-Q are not necessarily indicative of future operating results. For further information regarding supply chain issues and the actual and potential impacts of COVID-19 on the Company, see “Risk Factors”
Use of Estimates	Use of Estimates The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Estimates and assumptions that, in the opinion of management of the Company, are significant include oil and natural gas revenue accruals, capital and operating expense accruals, oil and natural gas reserves, depletion relating to oil and natural gas properties, asset retirement obligations, and fair value estimates. The Company bases its estimates and judgments on historical experience and on various other assumptions and information believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results may differ from the estimates and assumptions used in the preparation of the Company’s unaudited condensed consolidated financial statements.
Cash and Cash Equivalents	Cash, Cash Equivalents and Restricted Cash “Cash and cash equivalents” “Restricted cash” September 30, 2022 December 31, 2021 Cash and cash equivalents $ 33,499 $ 46,864 Restricted cash 60 1,495 Total cash, cash equivalents and restricted cash $ 33,559 $ 48,359
Accounts Receivable and Allowance for Doubtful Accounts	Accounts Receivable and Allowance for Doubtful Accounts The Company’s accounts receivable are primarily receivables from joint interest owners and oil and natural gas purchasers. Accounts receivable are recorded at the amount due, less an allowance for doubtful accounts, when applicable. The Company establishes provisions for losses on accounts receivable if it determines that collection of all or part of the outstanding balance is doubtful. The Company regularly reviews collectability and establishes or adjusts the allowance for doubtful accounts as necessary using the specific identification method. As of both September 30, 2022 and December 31, 2021, allowances for doubtful accounts were approximately $0.2 million.
Concentrations of Credit Risk	The Company’s primary concentrations of credit risk are the risks of uncollectible accounts receivable and of nonperformance by counterparties under the Company’s derivative contracts. Each reporting period, the Company assesses the recoverability of material receivables using historical data, current market conditions and reasonable and supportable forecasts of future economic conditions to determine expected collectability of its material receivables. The Company’s exposure to credit risk under its derivative contracts is varied among major financial institutions with investment grade credit ratings, where it has master netting agreements which provide for offsetting of amounts payable or receivable between the Company and the counterparty. To manage counterparty risk associated with derivative contracts, the Company selects and monitors counterparties based on an assessment of their financial strength and/or credit ratings. At September 30, 2022, the Company’s derivative counterparties include two major financial institutions, both of which are secured lenders under the Term Loan Agreement.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848)

FINANCIAL STATEMENT PRESENTAT_3

FINANCIAL STATEMENT PRESENTATION (Tables)	9 Months Ended
FINANCIAL STATEMENT PRESENTATION (Tables)	Sep. 30, 2022
FINANCIAL STATEMENT PRESENTATION
Schedule Of Cash, Cash Equivalents And Restricted Cash	September 30, 2022 December 31, 2021 Cash and cash equivalents $ 33,499 $ 46,864 Restricted cash 60 1,495 Total cash, cash equivalents and restricted cash $ 33,559 $ 48,359

LEASES (Tables)

LEASES (Tables)	9 Months Ended
LEASES (Tables)	Sep. 30, 2022
LEASES
Schedule of Company's leases	The table below summarizes the Company’s leases for the nine months ended September 30, 2022 and 2021 (in thousands, except term and discount rate): Nine Months Ended September 30, 2022 2021 Lease cost Operating lease costs $ 294 $ 346 Short-term lease costs 6,112 2,231 Variable lease costs — 307 Total lease costs $ 6,406 $ 2,884 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 294 $ 439 Right-of-use assets obtained in exchange for new operating lease liabilities 841 Weighted-average remaining lease term - operating leases 1.2 years 2.2 years Weighted-average discount rate - operating leases 4.29 % 4.29 %
Schedule of future minimum lease payments associated with the Company's non-cancellable operating leases for office space and equipment	Future minimum lease payments associated with the Company’s non-cancellable operating leases for office space as of September 30, 2022 are presented in the table below (in thousands): September 30, 2022 Remaining period in 2022 $ 98 2023 359 2024 — 2025 — 2026 — Thereafter — Total operating lease payments 457 Less: discount to present value 11 Total operating lease liabilities 446 Less: current operating lease liabilities 381 Noncurrent operating lease liabilities $ 65

DEBT (Tables)

DEBT (Tables)	9 Months Ended
DEBT (Tables)	Sep. 30, 2022
DEBT
Schedule of debt	As of September 30, 2022 and December 31, 2021, the Company’s debt consisted of the following (in thousands): September 30, 2022 December 31, 2021 Term loan credit facility (1) $ 204,291 $ 181,565 Other 122 85 Total debt, net 204,413 181,650 Current portion of long-term debt (2) 25,041 85 Total long-term debt, net $ 179,372 $ 181,565 (1) Amount is net of $11.5 million and $14.2 million in unamortized debt issuance costs at September 30, 2022 and December 31, 2021, respectively. Amount also excludes the initial fair value allocated to the change of control call option embedded derivative of $4.2 million. Refer to “Term Loan Credit Facility” below for further details . (2) As of September 30, 2022, amount primarily represents amortization payments of $25.0 million under the Term Loan Agreement due within one year. As of December 31, 2021, amount represents the balance owed under the Company’s Paycheck Protection Program Loan.
Schedule of prepayment premiums	Period (after amendment date) Premium Months 0 - 12 Make-whole amount equal to 12 months of interest plus 2.00% Months 13 - 24 2.00% Thereafter 0.00%

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
FAIR VALUE MEASUREMENTS (Tables)	Sep. 30, 2022
FAIR VALUE MEASUREMENTS
Schedule of fair value of the Company's financial assets and liabilities	liabilities associated with commodity-based derivative contracts that were accounted for at fair value as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022 Level 1 Level 2 Level 3 Total Assets Assets from commodity-based derivative contracts $ — $ 27,014 $ — $ 27,014 Liabilities Liabilities from commodity-based derivative contracts $ — $ 64,671 $ — $ 64,671 December 31, 2021 Level 1 Level 2 Level 3 Total Assets Assets from commodity-based derivative contracts $ — $ 3,898 $ — $ 3,898 Liabilities Liabilities from commodity-based derivative contracts $ — $ 65,466 $ — $ 65,466
Schedule of changes in fair value of the change of control call option	The following table sets forth a reconciliation of the changes in fair value of the Change of Control Call Option classified as Level 3 in the fair value hierarchy (in thousands): Change of Control Call Option Balance at December 31, 2021 $ 4,003 Change in fair value (3,043) Balance at September 30, 2022 $ 960

DERIVATIVE AND HEDGING ACTIVI_2

DERIVATIVE AND HEDGING ACTIVITIES (Tables)	9 Months Ended
DERIVATIVE AND HEDGING ACTIVITIES (Tables)	Sep. 30, 2022
DERIVATIVE AND HEDGING ACTIVITIES
Summary of location and fair value of derivative contracts	The following table summarizes the location and fair value amounts of all commodity derivative contracts in the unaudited condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands): Balance sheet location September 30, 2022 December 31, 2021 Balance sheet location September 30, 2022 December 31, 2021 Current assets $ 18,225 $ 1,383 Current liabilities $ (41,088) $ (58,322) Other noncurrent assets 8,789 2,515 Other noncurrent liabilities (23,583) (7,144) $ 27,014 $ 3,898 $ (64,671) $ (65,466)
Summary of the location and amounts of the Company's realized and unrealized gains and losses on derivative contracts	The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivative contracts in the Company’s unaudited condensed consolidated statements of operations (in thousands): Location of net gain (loss) Three Months Ended Nine Months Ended on derivative contracts on September 30, September 30, Type Statement of Operations 2022 2021 2022 2021 Commodity derivative contracts: Unrealized gain (loss) Other income (expenses) $ 102,112 $ 1,816 $ 23,911 $ (69,053) Realized gain (loss) Other income (expenses) (34,478) (22,387) (112,045) (50,318) Total net gain (loss) $ 67,634 $ (20,571) $ (88,134) $ (119,371)
Schedule of open derivative contracts	At September 30, 2022, the Company had the following open crude oil and natural gas derivative contracts: Instrument 2022 2023 2024 2025 2026 Crude oil: Fixed-price swap: Total volumes (Bbls) 631,398 2,519,350 1,761,468 1,127,696 484,213 Weighted average price $ 54.64 69.62 63.56 60.66 64.43 Basis swap: Total volumes (Bbls) 622,398 2,586,562 1,759,239 1,127,696 484,213 Weighted average price $ 0.44 0.40 0.26 0.15 0.11 WTI NYMEX roll: Total volumes (Bbls) 622,398 2,519,350 1,613,039 1,127,696 484,213 Weighted average price $ 0.15 0.58 0.30 0.13 0.20 Natural gas: Fixed-price swap: Total volumes (MMBtu) 385,500 4,888,650 3,401,504 2,867,065 742,678 Weighted average price $ 3.87 3.67 3.37 3.17 4.01 Two-way collar: Total volumes (MMBtu) 1,578,768 2,199,328 1,848,139 825,653 760,562 Weighted average price (call) $ 4.79 5.91 4.97 4.71 4.64 Weighted average price (put) $ 4.04 4.36 3.57 3.65 4.04 Basis swap: Total volumes (MMBtu) 1,838,418 6,876,237 5,225,092 3,724,085 1,512,752 Weighted average price $ (0.55) (0.75) (0.75) (0.59) (0.85)
Schedule of potential effects of master netting arrangements on the fair value of derivative contracts	Derivative Assets Derivative Liabilities Offsetting of Derivative Assets and Liabilities September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 Gross Amounts - Consolidated Balance Sheet $ 27,014 $ 3,898 $ (64,671) $ (65,466) Amounts Not Offset - Consolidated Balance Sheet (24,845) (3,898) 24,845 3,898 Net Amount $ 2,169 $ — $ (39,826) $ (61,568)

ASSET RETIREMENT OBLIGATIONS (T

ASSET RETIREMENT OBLIGATIONS (Tables)	9 Months Ended
ASSET RETIREMENT OBLIGATIONS (Tables)	Sep. 30, 2022
ASSET RETIREMENT OBLIGATIONS
Schedule of activity related to ARO liability	The Company recorded the following activity related to its ARO liability (in thousands): Liability for asset retirement obligations as of December 31, 2021 $ 11,896 Liabilities incurred during the period 103 Liabilities settled during the period (402) Accretion expense 334 Change in estimate 3,541 Liability for asset retirement obligations as of September 30, 2022 $ 15,472

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
EARNINGS PER SHARE (Tables)	Sep. 30, 2022
EARNINGS PER SHARE
Schedule of calculation of earnings (loss) per share	The following represents the calculation of earnings (loss) per share (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Basic: Net income (loss) $ 105,888 $ 13,052 $ 26,191 $ (54,252) Weighted average basic number of common shares outstanding 16,340 16,270 16,327 16,257 Basic net income (loss) per share of common stock $ 6.48 $ 0.80 $ 1.60 $ (3.34) Diluted: Net income (loss) $ 105,888 $ 13,052 $ 26,191 $ (54,252) Weighted average basic number of common shares outstanding 16,340 16,270 16,327 16,257 Common stock equivalent shares representing shares issuable upon: Exercise of Warrants & Stock Options Anti-dilutive Anti-dilutive Anti-dilutive Anti-dilutive Vesting of restricted stock units 143 158 169 Anti-dilutive Weighted average diluted number of common shares outstanding 16,483 16,428 16,496 16,257 Diluted net income (loss) per share of common stock $ 6.42 $ 0.79 $ 1.59 $ (3.34)

FINANCIAL STATEMENT PRESENTAT_4

FINANCIAL STATEMENT PRESENTATION (Details) $ in Millions	9 Months Ended
FINANCIAL STATEMENT PRESENTATION (Details) $ in Millions	Sep. 30, 2022 USD ($) segment	Dec. 31, 2021 USD ($)
Basis of Presentation and Principles of Consolidation
Number of operating segments \| segment	1
Allowance for doubtful accounts \| $	$ 0.2	$ 0.2

FINANCIAL STATEMENT PRESENTAT_5

FINANCIAL STATEMENT PRESENTATION- Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020
FINANCIAL STATEMENT PRESENTATION
Cash and cash equivalents	$ 33,499	$ 46,864
Restricted cash	60	1,495
Total cash, cash equivalents and restricted cash	$ 33,559	$ 48,359	$ 1,868	$ 4,295

LEASES (Details)

LEASES (Details) - USD ($) $ in Thousands	9 Months Ended
LEASES (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Lease cost
Operating lease costs	$ 294	$ 346
Short-term lease costs	6,112	2,231
Variable lease costs		307
Total lease costs	6,406	2,884
Other information
Operating cash flows from operating leases	$ 294	439
Right-of-use assets obtained in exchange for new operating lease liabilities		$ 841
Weighted-average remaining lease term - operating leases	1 year 2 months 12 days	2 years 2 months 12 days
Weighted-average discount rate - operating leases	4.29%	4.29%
Initial lease term	2 years 3 months 18 days		2 years 3 months 18 days

LEASES - Reported under ASC 842

LEASES - Reported under ASC 842 and ASC 840 (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Future minimum lease payments for non-cancellable operating leases
Remaining period in 2022	$ 98
2023	359
Total operating lease payment	457
Less: discount to present value	11
Total operating lease liabilities	446
Less: current operating lease liabilities	381	$ 369
Noncurrent operating lease liabilities	$ 65	$ 352

OPERATING REVENUES - Revenue Re

OPERATING REVENUES - Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Disaggregation of operating revenue
Total oil, natural gas and natural gas liquids sales	$ 98,706	$ 80,504	$ 281,404	$ 199,873
Other	443	312	858	827
Total operating revenues	99,149	80,816	282,262	200,700
Oil
Disaggregation of operating revenue
Total oil, natural gas and natural gas liquids sales	70,406	60,023	206,874	153,228
Natural gas
Disaggregation of operating revenue
Total oil, natural gas and natural gas liquids sales	15,656	9,435	39,296	23,839
NGLs
Disaggregation of operating revenue
Total oil, natural gas and natural gas liquids sales	12,644	$ 11,046	35,234	$ 22,806
Accounts receivable
Disaggregation of operating revenue
Due from contracts with customers	$ 36,500		$ 36,500		$ 35,100

OIL AND NATURAL GAS PROPERTIES

OIL AND NATURAL GAS PROPERTIES (Details)	9 Months Ended
OIL AND NATURAL GAS PROPERTIES (Details)	Sep. 30, 2022 $ / bbl $ / MMBTU	Sep. 30, 2021 $ / bbl $ / MMBTU
Ceiling Limitation Disclosures
First-day-of-month 12-month average price for natural gas (in $/MMBtu) \| $ / MMBTU	6.13	2.94
First-day-of-month 12-month average price for crude oil used in ceiling test impairment (in dollars per barrel) \| $ / bbl	92.16	57.64

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Nov. 24, 2021
Current and long-term debt
Debt	$ 204,413	$ 181,650
Current portion of long-term debt	25,041	85
Total long-term debt	179,372	181,565
Unamortized premium related to debt issued	25,000
Term loan credit facility
Current and long-term debt
Debt	204,291	181,565
Unamortized debt issuance costs	11,500	14,200
Allocated to the change of control call option embedded derivative	4,200	4,200
Term loan credit facility \| Other noncurrent liabilities - liabilities from derivative contracts
Current and long-term debt
Allocated to the change of control call option embedded derivative			$ 4,200
Paycheck Protection Program Loan [Member]
Current and long-term debt
Debt	$ 122	$ 85

DEBT - Term Loan Credit Facilit

DEBT - Term Loan Credit Facility (Details) $ in Thousands			3 Months Ended	9 Months Ended		10 Months Ended
DEBT - Term Loan Credit Facility (Details) $ in Thousands	Nov. 14, 2022 USD ($)	Nov. 24, 2021 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) item	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) item
Debt Instrument [Line Items]
Lender fees paid				$ 2,726
Gain (loss) on extinguishment of debt			$ 2,068		$ 2,068
Term loan credit facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 220,000
Amount available for issuance of letters of credit		$ 5,000
Applicable margin (as a percent)		7%
Current ratio				96%
Credit facility term						18 months
Maturity date				Nov. 24, 2025
Letters of credit outstanding				$ 1,300		$ 1,300
Threshold from capital expenditures to cash balance				$ 20,000
Maximum number of additional approved plan of development wells if out of compliance with loan agreement \| item				6		6
Aggregate scheduled amortization payments				$ 120,000		$ 120,000
Term loan credit facility \| Minimum
Debt Instrument [Line Items]
Current ratio				100%
Term loan credit facility \| Subsequent event
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	0.50%
Lender fees paid	$ 2,400
Cash dividend or cash interest for prepayment premium	$ 0
Interest plus	2%
Term loan credit facility \| Subsequent event \| Minimum
Debt Instrument [Line Items]
Threshold new capital raising requirements for prepayment premiums	$ 20,000
Term loan credit facility \| Subsequent event \| Prior to February 15, 2020
Debt Instrument [Line Items]
Interest plus	2%
Term loan credit facility \| Subsequent event \| Prior to February 15, 2020 \| Minimum
Debt Instrument [Line Items]
Debt instrument prepayment term	0 months
Term loan credit facility \| Subsequent event \| Prior to February 15, 2020 \| Maximum
Debt Instrument [Line Items]
Debt instrument prepayment term	12 months
Term loan credit facility \| Subsequent event \| February 15, 2020
Debt Instrument [Line Items]
Interest plus	2%
Term loan credit facility \| Subsequent event \| February 15, 2020 \| Minimum
Debt Instrument [Line Items]
Debt instrument prepayment term	13 months
Term loan credit facility \| Subsequent event \| February 15, 2020 \| Maximum
Debt Instrument [Line Items]
Debt instrument prepayment term	24 months
Term loan credit facility \| Subsequent event \| February 15, 2022
Debt Instrument [Line Items]
Interest plus	0%
Term loan credit facility \| Subsequent event \| SOFR
Debt Instrument [Line Items]
Applicable margin (as a percent)	7.50%
Term loan credit facility \| Amount available to be drawn up to 18 months after November 24, 2021
Debt Instrument [Line Items]
Incremental borrowing that we can make if we meet certain criteria		$ 15,000
Term loan credit facility \| Fiscal quarter ending September 30, 2022 \| Subsequent event \| Minimum
Debt Instrument [Line Items]
Asset coverage ratio	170%
Current ratio	90%
Term loan credit facility \| Fiscal quarter ending December 31, 2022 and each fiscal quarter thereafter \| Subsequent event \| Minimum
Debt Instrument [Line Items]
Asset coverage ratio	180%
Term loan credit facility \| Fiscal quarter ending September 30, 2022 and December 31, 2022 \| Subsequent event \| Maximum
Debt Instrument [Line Items]
Net Leverage Ratio	300%
Term loan credit facility \| Fiscal quarter ending December 31, 2022 [Member] \| Subsequent event \| Minimum
Debt Instrument [Line Items]
Current ratio	70%
Term loan credit facility \| Fiscal quarter ending March 31, 2023 \| Subsequent event \| Minimum
Debt Instrument [Line Items]
Current ratio	75%
Term loan credit facility \| Fiscal quarter ending March 31, 2023 \| Subsequent event \| Maximum
Debt Instrument [Line Items]
Net Leverage Ratio	275%
Term loan credit facility \| Fiscal quarter ending June 30, 2023 \| Subsequent event \| Minimum
Debt Instrument [Line Items]
Current ratio	100%
Term loan credit facility \| Fiscal quarter ending each fiscal quarter thereafter \| Subsequent event \| Maximum
Debt Instrument [Line Items]
Net Leverage Ratio	250%

DEBT - Senior Facility (Details

DEBT - Senior Facility (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
DEBT - Senior Facility (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2022	Dec. 31, 2021
DEBT
Debt			$ 204,413	$ 181,650
Gain (loss) on extinguishment of debt	$ 2,068	$ 2,068

DEBT - Paycheck Protection Prog

DEBT - Paycheck Protection Program Loan (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended
	Aug. 13, 2021	Apr. 16, 2020	Mar. 31, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Current and long-term debt
Proceeds from issuance of debt					$ 20,122	$ 145,000
Gain (loss) on extinguishment of debt				$ 2,068		$ 2,068
Paycheck Protection Program Loan [Member]
Current and long-term debt
Proceeds from issuance of debt		$ 2,200
Principal repaid			$ 200
Principal amount	$ 200
Forgiveness	$ 2,000
Gain (loss) on extinguishment of debt				$ 2,100

DEBT - Debt Maturities and Debt

DEBT - Debt Maturities and Debt Issuance Costs (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Debt Issuance Costs
Payment of debt issuance costs on Senior Credit Agreement	$ 379
Term loan credit facility
Debt Issuance Costs
Unamortized debt issuance costs	$ 11,500	$ 14,200

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	9 Months Ended
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Assets
Asset transfers between levels	$ 0
Liabilities
Liability transfers between levels	0
Recurring \| Total
Assets
Receivables from derivative contracts	27,014	$ 3,898
Liabilities
Liabilities from derivative contracts	64,671	65,466
Recurring \| Level 2
Assets
Receivables from derivative contracts	27,014	3,898
Liabilities
Liabilities from derivative contracts	$ 64,671	$ 65,466

FAIR VALUE MEASUREMENTS - Chang

FAIR VALUE MEASUREMENTS - Change of Control Call Option (Details) - Change of Control Call Option $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance at the beginning of the period	$ 4,003
Change in fair value	(3,043)
Balance at the end of the period	$ 960

DERIVATIVE AND HEDGING ACTIVI_3

DERIVATIVE AND HEDGING ACTIVITIES - (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Derivative and hedging activities
Asset derivative contracts	$ 27,014	$ 3,898
Liability derivative contracts	(64,671)	(65,466)
Derivatives not designated as hedging contracts
Derivative and hedging activities
Asset derivative contracts	27,014	3,898
Liability derivative contracts	(64,671)	(65,466)
Derivatives not designated as hedging contracts \| Commodity contracts \| Current assets - receivables from derivative contracts
Derivative and hedging activities
Asset derivative contracts	18,225	1,383
Derivatives not designated as hedging contracts \| Commodity contracts \| Other noncurrent assets - receivables from derivative contracts
Derivative and hedging activities
Asset derivative contracts	8,789	2,515
Derivatives not designated as hedging contracts \| Commodity contracts \| Current liabilities - liabilities from derivative contracts
Derivative and hedging activities
Liability derivative contracts	(41,088)	(58,322)
Derivatives not designated as hedging contracts \| Commodity contracts \| Other noncurrent liabilities - liabilities from derivative contracts
Derivative and hedging activities
Liability derivative contracts	$ (23,583)	$ (7,144)

DERIVATIVE AND HEDGING ACTIVI_4

DERIVATIVE AND HEDGING ACTIVITIES - Realized Unrealized (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Derivative and hedging activities
Total net gain (loss) on derivative contracts	$ 67,634	$ (20,571)	$ (88,134)	$ (119,371)
Derivatives not designated as hedging contracts \| Commodity contracts
Derivative and hedging activities
Total net gain (loss) on derivative contracts	67,634	(20,571)	(88,134)	(119,371)
Derivatives not designated as hedging contracts \| Commodity contracts \| Other Income Expense
Derivative and hedging activities
Unrealized gain (loss) on commodity contracts	102,112	1,816	23,911	(69,053)
Realized gain (loss) on commodity contracts	$ (34,478)	$ (22,387)	$ (112,045)	$ (50,318)

DERIVATIVE AND HEDGING ACTIVI_5

DERIVATIVE AND HEDGING ACTIVITIES - Open Contracts (Details)	9 Months Ended
	Sep. 30, 2022 MMBTU $ / bbl $ / MMBTU bbl
January 2022 - December 2022 \| Fixed Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	631,398
January 2022 - December 2022 \| Fixed Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	54.64
January 2022 - December 2022 \| Fixed Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	385,500
January 2022 - December 2022 \| Fixed Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	3.87
January 2022 - December 2022 \| Basis Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	622,398
January 2022 - December 2022 \| Basis Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.44
January 2022 - December 2022 \| Basis Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	1,838,418
January 2022 - December 2022 \| Basis Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	(0.55)
January 2022 - December 2022 \| WTI NYMEX Roll \| Crude oil \| Maximum
Derivative and hedging activities
Volume in Bbl's \| bbl	622,398
January 2022 - December 2022 \| WTI NYMEX Roll \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.15
January 2022 - December 2022 \| Collars \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	1,578,768
January 2022 - December 2022 \| Call option \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.79
January 2022 - December 2022 \| Put options \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.04
January 2023 - December 2023 \| Fixed Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	2,519,350
January 2023 - December 2023 \| Fixed Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	69.62
January 2023 - December 2023 \| Fixed Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	4,888,650
January 2023 - December 2023 \| Fixed Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	3.67
January 2023 - December 2023 \| Basis Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	2,586,562
January 2023 - December 2023 \| Basis Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.40
January 2023 - December 2023 \| Basis Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	6,876,237
January 2023 - December 2023 \| Basis Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	(0.75)
January 2023 - December 2023 \| WTI NYMEX Roll \| Crude oil \| Maximum
Derivative and hedging activities
Volume in Bbl's \| bbl	2,519,350
January 2023 - December 2023 \| WTI NYMEX Roll \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.58
January 2023 - December 2023 \| Collars \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	2,199,328
January 2023 - December 2023 \| Call option \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	5.91
January 2023 - December 2023 \| Put options \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.36
January 2024 - December 2024 \| Fixed Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	1,761,468
January 2024 - December 2024 \| Fixed Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	63.56
January 2024 - December 2024 \| Fixed Swap \| Natural Gas [Member] \| Minimum
Derivative and hedging activities
Floor (in dollars per Mmbtu's/Bbl's)	3,401,504
January 2024 - December 2024 \| Fixed Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	3.37
January 2024 - December 2024 \| Basis Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	1,759,239
January 2024 - December 2024 \| Basis Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.26
January 2024 - December 2024 \| Basis Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	5,225,092
January 2024 - December 2024 \| Basis Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	(0.75)
January 2024 - December 2024 \| WTI NYMEX Roll \| Crude oil \| Maximum
Derivative and hedging activities
Volume in Bbl's \| bbl	1,613,039
January 2024 - December 2024 \| WTI NYMEX Roll \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.30
January 2024 - December 2024 \| Collars \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	1,848,139
January 2024 - December 2024 \| Call option \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.97
January 2024 - December 2024 \| Put options \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	3.57
January 2025 - December 2025 \| Fixed Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	1,127,696
January 2025 - December 2025 \| Fixed Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	60.66
January 2025 - December 2025 \| Fixed Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	2,867,065
January 2025 - December 2025 \| Fixed Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	3.17
January 2025 - December 2025 \| Basis Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	1,127,696
January 2025 - December 2025 \| Basis Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.15
January 2025 - December 2025 \| Basis Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	3,724,085
January 2025 - December 2025 \| Basis Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	(0.59)
January 2025 - December 2025 \| WTI NYMEX Roll \| Crude oil \| Maximum
Derivative and hedging activities
Volume in Bbl's \| bbl	1,127,696
January 2025 - December 2025 \| WTI NYMEX Roll \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.13
January 2025 - December 2025 \| Collars \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	825,653
January 2025 - December 2025 \| Call option \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.71
January 2025 - December 2025 \| Put options \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	3.65
January 2026 - December 2026 \| Fixed Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	484,213
January 2026 - December 2026 \| Fixed Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	64.43
January 2026 - December 2026 \| Fixed Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	742,678
January 2026 - December 2026 \| Fixed Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.01
January 2026 - December 2026 \| Basis Swap \| Crude oil
Derivative and hedging activities
Volume in Bbl's \| bbl	484,213
January 2026 - December 2026 \| Basis Swap \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.11
January 2026 - December 2026 \| Basis Swap \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	1,512,752
January 2026 - December 2026 \| Basis Swap \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	(0.85)
January 2026 - December 2026 \| WTI NYMEX Roll \| Crude oil \| Maximum
Derivative and hedging activities
Volume in Bbl's \| bbl	484,213
January 2026 - December 2026 \| WTI NYMEX Roll \| Crude oil \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's) \| $ / bbl	0.20
January 2026 - December 2026 \| Collars \| Natural Gas [Member]
Derivative and hedging activities
Volume in Mmbtu's \| MMBTU	760,562
January 2026 - December 2026 \| Call option \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.64
January 2026 - December 2026 \| Put options \| Natural Gas [Member] \| Weighted Average
Derivative and hedging activities
Weighted Average Price (in dollars per Mmbtu's/Bbl's)	4.04

DERIVATIVE AND HEDGING ACTIVI_6

DERIVATIVE AND HEDGING ACTIVITIES - Netting Arrangements (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Derivative Assets
Gross Amounts Presented in the Consolidated Balance Sheet	$ 27,014	$ 3,898
Amounts Not Offset in the Consolidated Balance Sheet	(24,845)	(3,898)
Net Amount	2,169	0
Derivative Liabilities
Gross Amounts Presented in the Consolidated Balance Sheet	(64,671)	(65,466)
Amounts Not Offset in the Consolidated Balance Sheet	24,845	3,898
Net Amount	$ (39,826)	$ (61,568)

ASSET RETIREMENT OBLIGATIONS (D

ASSET RETIREMENT OBLIGATIONS (Details) $ in Thousands	9 Months Ended
ASSET RETIREMENT OBLIGATIONS (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Activity related to ARO liability
Liability for asset retirement obligations at the beginning of the period	$ 11,896
Liabilities incurred during the period	103
Liabilities settled and divested	(402)
Accretion expense	334
Change in estimate	3,541
Liability for asset retirement obligations at the end of the period	$ 15,472

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) $ in Millions	9 Months Ended
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions	Sep. 30, 2022 USD ($) contract
Purchase commitments related to equipment
Total	$ 2.8
Remaining commitment	1.6
Drilling rig commitment	2.8
Early termination penalty	$ 1
Gathering, transportation and sales \| West Texas
Purchase commitments related to equipment
Number of long-term crude oil sales contracts to which the entity is committed \| contract	2
Number of long-term natural gas sales contracts to which the entity is committed \| contract	12
Gathering, transportation and sales \| West Texas \| Minimum
Purchase commitments related to equipment
Period of commitment for production from the date of first production	1 year
Gathering, transportation and sales \| West Texas \| Maximum
Purchase commitments related to equipment
Period of commitment for production from the date of first production	20 years

STOCKHOLDERS' EQUITY - Warrants

STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares shares in Millions	Oct. 08, 2019	Sep. 30, 2022
Stockholders' equity
Warrants issued	6.9
Warrant term (in years)	3 years
Warrant maturity date		Oct. 08, 2022
Minimum
Stockholders' equity
Exercise price (in dollars per share)	$ 40.17
Maximum
Stockholders' equity
Exercise price (in dollars per share)	$ 60.45

STOCKHOLDERS' EQUITY - Incentiv

STOCKHOLDERS' EQUITY - Incentive Plans (Details) $ / shares in Units, shares in Millions, $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2021 USD ($)
Stock-based compensation
Percentage of awards vesting on the annual anniversary date of the grant	0.25
Directors and employees
Stock-based compensation
Compensation expense recorded \| $	$ 1.5	$ 1.6
Restricted Stock
Number of Shares
Granted (in shares)	0.2
Weighted Average Grant Date fair Value Per Share
Granted (in dollars per share) \| $ / shares	$ 13.75
2020 Incentive Plan
Stock-based compensation
Aggregate number of shares available	1.8
Maximum number of shares that remained reserved for issuance under the Plan	0.2

STOCKHOLDERS' EQUITY - Stock Op

STOCKHOLDERS' EQUITY - Stock Options (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($) shares
Stock-based compensation
Percentage of awards vesting on the annual anniversary date of the grant	0.25
Granted (in shares) \| shares	0
Stock options
Stock-based compensation
Vesting period	4 years
Expiration term	7 years
Unrecognized compensation expense stock option \| $	$ 0.2
Weighted average remaining vesting period	1 year

STOCKHOLDERS' EQUITY - Restrict

STOCKHOLDERS' EQUITY - Restricted Stock (Details) - Restricted Stock $ / shares in Units, shares in Millions, $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
Stock-based compensation
Number of shares granted \| shares	0.2
Granted (in dollars per share) \| $ / shares	$ 13.75
Unrecognized compensation expense other than options \| $	$ 3.4
Weighted average remaining vesting period	1 year 3 months 18 days
Minimum
Stock-based compensation
Vesting period	3 years
Maximum
Stock-based compensation
Vesting period	4 years

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Basic:
Net income (loss) available to common stockholders	$ 105,888	$ 13,052	$ 26,191	$ (54,252)
Weighted average basic number of common shares outstanding	16,340	16,270	16,327	16,257
Basic net income (loss) per share of common share (in dollars per share)	$ 6.48	$ 0.80	$ 1.60	$ (3.34)
Diluted:
Net income (loss) available to common stockholders	$ 105,888	$ 13,052	$ 26,191	$ (54,252)
Weighted average basic number of common shares outstanding	16,340	16,270	16,327	16,257
Common stock equivalent shares representing shares included upon Vesting of restricted shares	143	158	169
Weighted average diluted number of common shares outstanding	16,483	16,428	16,496	16,257
Diluted net income (loss) per share of common stock (in dollars per share)	$ 6.42	$ 0.79	$ 1.59	$ (3.34)
Common stock equivalents excluded from computation of diluted earnings per share of common stock because of anti-dilutive effect			7,400	7,700

ADDITIONAL FINANCIAL STATEMEN_2

ADDITIONAL FINANCIAL STATEMENT INFORMATION (Details) $ in Thousands	1 Months Ended
	May 31, 2022 MMcf / d	Sep. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Accounts receivable:
Oil, natural gas and natural gas liquids revenues		$ 36,441	$ 34,110
Joint interest accounts		3,009	2,503
Other		417	193
Total		39,867	36,806
Prepaids and other:
Prepaids		573	975
Funds in escrow		341	390
Other		44	1
Total		958	1,366
Other assets:
Investment in Unconsolidated Affiliate		1,612
Oil, natural gas and natural gas liquids revenues		59	1,010
Funds in escrow		523	1,227
Other		739	33
Total		2,933	2,270
Accounts payable and accrued liabilities:
Trade payables		34,201	25,315
Accrued oil and natural gas capital costs		27,208	4,881
Revenues and royalties payable		29,595	22,763
Accrued interest expense		66	42
Accrued employee compensation		2,482	3,735
Accrued lease operating expenses		6,534	6,090
Drilling advances from partners		109
Other		3
Total		$ 100,198	$ 62,826
Minimum volume commitment \| MMcf / d	20
Volume commitment term	5 years
Brazos Amine Treater, LLC [Member]
Accounts payable and accrued liabilities:
Equity interest	5%