BATTALION OIL CORP

Previous wording

The following discussion is intended to assist in understanding our results of operations for the three and six months ended June 30, 2025 and 2024 and should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and with the consolidated financial statements, notes and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The results presented in this Form 10-Q are not necessarily indicative of future operating results.

Current wording

The following discussion is intended to assist in understanding our results of operations for the three and nine months ended September 30, 2025 and 2024 and should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and with the consolidated financial statements, notes and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The results presented in this Form 10-Q are not necessarily indicative of future operating results.

Previous wording

Borrowings under the 2024 Amended Term Loan Agreement bear interest at a rate per annum equal to a forward-looking term rate based on the SOFR for a tenor of three months (with a credit spread adjustment of 0.15% per annum) (or another applicable reference rate, as determined pursuant to the terms of the 2024 Amended Term Loan Agreement) plus an applicable margin of 7.75%.

Current wording

Borrowings under the 2024 Amended Term Loan Agreement initially bore interest at a rate per annum equal to a forward-looking term rate based on the SOFR for a tenor of three months (with a credit spread adjustment of 0.15% per annum) (or another applicable reference rate, as determined pursuant to the terms of the 2024 Amended Term Loan Agreement) plus an applicable margin of 7.75%.

Previous wording

The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement), including maintenance of the following ratios.

Current wording

The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement and as amended in the Second Amendment), including maintenance of the following ratios.

Previous wording

We are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding on the Initial Closing Date plus the Incremental Term Loans, commencing with the fiscal quarter ending June 30, 2025. Under the 2024 Amended Term Loan Agreement, we must make scheduled amortization payments in the aggregate amount of $16.9 million and $22.5 million in 2025 and 2026, respectively. During the quarter ended June 30, 2025, we made a scheduled amortization payment in the amount of $5.6 million.

Current wording

We are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding on the Initial Closing Date plus the Incremental Term Loans, commencing with the fiscal quarter ending June 30, 2025. Under the 2024 Amended Term Loan Agreement, we must make scheduled amortization payments in the aggregate amount of $5.6 million for the remainder of 2025 and $22.5 million in 2026. During the quarter and nine months ended September 30, 2025, we made scheduled amortization payments in the amount of $5.6 million and $11.3 million, respectively.

Previous wording

We recognized a loss on extinguishment of debt for the year ended December 31, 2024 in the amount of $7.5 million resulting from the credit agreement refinancing on December 26, 2024 which included a $3.6 million non-cash write-off of deferred financing costs, original issue discounts and embedded derivatives associated with the extinguished debt and $3.9 million in fees and debt issuance costs paid for the new debt. Additionally, the Company deferred $4.3 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet at December 31, 2024 in conjunction with entry into the 2024 Term Loan Agreement and deferred an additional $1.8 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet at June 30, 2025 in conjunction with the issuance of the Incremental Term Loans in January 2025.

Current wording

We recognized a loss on extinguishment of debt for the year ended December 31, 2024 in the amount of $7.5 million resulting from the credit agreement refinancing on December 26, 2024 which included a $3.6 million non-cash write-off of deferred financing costs, original issue discounts and embedded derivatives associated with the extinguished debt and $3.9 million in fees and debt issuance costs paid for the new debt. Additionally, the Company deferred $4.3 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet at December 31, 2024 in conjunction with entry into the 2024 Term Loan Agreement and deferred an additional $1.8 million of original issue discount and financing costs on the unaudited condensed consolidated balance sheet in conjunction with the issuance of the Incremental Term Loans in January 2025.

Previous wording

H2S Treating Joint Venture. The acid gas injection facility (“AGI Facility”) to which we are a party to a joint venture has been processing gas since March 9, 2024. On August 11, 2025, we received notice from WAT that it decided to cease taking deliveries of gas and to cease operations effective immediately. In response, we are temporarily shutting in a portion of our Monument Draw field production. The cessation of operations is expected to materially increase processing costs and decrease production and revenue projections in the near-term. Management is actively working to identify and execute on a plan for alternative gas processing. In addition to general facility downtime, the AGI Facility had continued to experience interruptions in processing due to the completion of improvement and maintenance projects, including pump and other facility equipment replacement. The continued processing delays and interruptions resulted in higher processing fees than forecasted as we pay higher processing rates with other service providers.

Current wording

H2S Treating Joint Venture. The acid gas injection facility (“AGI Facility”) to which we are a party to a joint venture has been processing gas since March 9, 2024. On August 11, 2025, we received notice from WAT that it decided to cease taking deliveries of gas and to cease operations effective immediately. In response, we temporarily shut-in a portion of our Monument Draw field production. As of September 30, 2025 and as of the date of this filing, the WAT facility remains out of service. The cessation of operations has increased processing costs as we pay higher processing rates with other service providers and resulted in decreased production and revenue for the quarter ended September 30, 2025. Management continues to actively work to identify and execute on a plan for alternative gas processing.

Previous wording

Overview. Our ability to execute our operating strategy is dependent on our ability to maintain adequate liquidity and access additional capital, as needed. Our future capital resources and liquidity depend, in part, on our success in developing our leasehold interests, growing our reserves and production and finding additional reserves. Sufficient levels of available cash are required to fund capital expenditures necessary to offset inherent declines in our production and proven reserves. We generated net income of $10.8 million for the six months ended June 30, 2025 and had negative working capital of $6.6 million at June 30, 2025. At June 30, 2025, we had $44.6 million of cash and cash equivalents, no additional borrowing capacity under the 2024 Amended Term Loan Agreement (as defined in Note 5, “Debt” to the unaudited condensed consolidated financial statements) and a total of $22.5 million in debt repayments due through June 2026 under our 2024 Amended Term Loan Agreement. At June 30, 2025, $30.0 million remained available for issuance on or before August 29, 2025 under a support letter from our investors.

Current wording

Overview. Our ability to execute our operating strategy is dependent on our ability to maintain adequate liquidity and access additional capital, as needed. Our future capital resources and liquidity depend, in part, on our success in developing our leasehold interests, growing our reserves and production and finding additional reserves. Sufficient levels of available cash are required to fund capital expenditures necessary to offset inherent declines in our production and proven reserves. We generated net income of $10.1 million for the nine months ended September 30, 2025 and had negative working capital of $3.9 million at September 30, 2025. At September 30, 2025, we had $50.5 million of cash and cash equivalents, no additional borrowing capacity under the 2024 Amended Term Loan Agreement (as defined in

Previous wording

We continue to execute on a plan to reduce operating and capital costs to improve cash flows. Changes to our current business estimates and forecasts, based primarily on recent commodity prices and modifications to our planned drilling schedule to achieve better overall well economics, indicate that we will require additional liquidity to meet our debt covenant requirements for the next 12 months from the issuance of these unaudited condensed consolidated financial statements. In response to these events and conditions, the Company has continued to execute on a plan to reduce operating and capital costs to improve cash flows. The Company also has obtained a support letter from its three largest current related party investors to purchase additional preferred equity securities in an amount up to $30.0 million on or before August 31, 2026. We believe that, based upon our operational forecasts, cash and cash equivalents on hand, cost reduction measures, and the sale of $30 million in additional preferred equity, it is probable that we will have sufficient liquidity to maintain compliance with our future debt covenants as described in Note 5, “Debt,” for the next 12 months from the issuance of these unaudited condensed consolidated financial statements. We will, however, continue to consider alternative liquidity sources which could include a sale of a portion of our non-core assets, seeking capital partners for our drilling program, pursuing strategic merger opportunities or joint ventures, the sale of the Company, or pursuing additional general and administrative or other cost reduction opportunities. Our estimates and forecasts are based upon assumptions that may prove to be incorrect due to many factors that are currently unknown, such as prevailing economic conditions, many of which are beyond our control.

Current wording

We continue to execute on a plan to reduce operating and capital costs to improve cash flows. Changes to our current business estimates and forecasts, based primarily on recent commodity prices and modifications to our planned drilling schedule to achieve better overall well economics, indicate that we are at risk of potential non-compliance with our debt covenant requirements for the next 12 months from the issuance of these unaudited condensed consolidated financial statements. In response to these events and conditions, we have continued to execute on a plan to reduce operating and capital costs to improve cash flows. The Company also continues to have a support letter from its three largest current related party investors to purchase additional preferred equity securities in an amount up to $30.0 million on or before August 31, 2026. We believe that, based upon our operational forecasts, cash and cash equivalents on hand, cost reduction measures, and the support letter for the sale of $30.0 million in additional preferred equity, it is probable that we will have sufficient liquidity to maintain compliance with our future debt covenants as described in Note 5, “Debt,” for the next 12 months from the issuance of these unaudited condensed consolidated financial statements. We will, however, continue to consider alternative liquidity sources which could include a sale of a portion of our non-core assets, seeking capital partners for our drilling program, pursuing strategic merger opportunities or joint ventures, the sale of the Company, or pursuing additional general and administrative or other cost reduction opportunities. Our estimates and forecasts are based upon assumptions that may prove to be incorrect due to many factors that are currently unknown, such as prevailing economic conditions, many of which are beyond our control.

Previous wording

Company Guide (the “Company Guide”). Section 1003(a)(i) requires a listed company to have stockholders’ equity of $2 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years. Section 1003(a)(ii) requires a listed company to have stockholders’ equity of $4 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. Our noncompliance resulted from our reporting stockholders’ equity of $(1.8) million as of March 31, 2025, and losses from continuing operations and/or net losses in three of our four most recent fiscal years ended December 31, 2024. We continue to report negative stockholders’ equity at June 30, 2025 of $(5.2) million and additional losses from continuing operations. The Notice further provided that we must submit a plan of compliance (the “Plan”) by June 30, 2025 addressing how we intend to regain compliance with the continued listing standards by November 30, 2026. Such Plan was submitted by the required deadline and our Plan submission continues to be under review by the NYSE. The Notice has no immediate impact on the listing of our shares of common stock, which will continue to be listed and traded under the symbol “BATL” on the NYSE American during this period, subject to our compliance with the other listing requirements of the NYSE American. The notice does not affect our ongoing business operations or our reporting requirements with the Securities and Exchange Commission.

Current wording

On May 30, 2025, we received written notice (the “Notice”) on behalf of the NYSE American indicating that we are no longer in compliance with NYSE American’s continued listing standards. Specifically, the letter stated that we are not in compliance with the continued listing standards set forth in Sections 1003(a)(i) and 1003(a)(ii) of the NYSE American Company Guide (the “Company Guide”). Section 1003(a)(i) requires a listed company to have stockholders’ equity of $2 million or more if the listed company has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years. Section 1003(a)(ii) requires a listed company to have stockholders’ equity of $4 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. Our noncompliance resulted from our reporting stockholders’ equity of $(1.8) million as of March 31, 2025, and losses from continuing operations and/or net losses in three of our four most recent fiscal years ended December 31, 2024. We continue to report negative stockholders’ equity at September 30, 2025 of $(20.3) million and additional losses from continuing operations. The Notice further provided that we must submit a plan of compliance (the “Plan”) by June 30, 2025 addressing how we intend to regain compliance with the continued listing standards by November 30, 2026. Such Plan was submitted by the required deadline and our Plan was accepted by the NYSE. The Notice has no immediate impact on the listing of our shares of common stock, which will continue to be listed and traded under the symbol “BATL” on the NYSE American during this period, subject to our compliance with the other

Previous wording

Debt Obligations. Under our 2024 Amended Term Loan, we are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding commencing with the fiscal quarter ending June 30, 2025 and such payments total $22.5 million through June 2026.

Current wording

Debt Obligations. Under our 2024 Amended Term Loan, we are required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the aggregate principal amount of the loans outstanding commencing with the fiscal quarter ending June 30, 2025. We must makea total of $22.5 million in debt repayments through September 2026 under our 2024 Amended Term Loan Agreement.

Previous wording

While we have largely been successful in obtaining modifications of our covenants as needed, there can be no assurance that we will be successful in the future. In the event we are not successful in obtaining covenant modifications, if needed, there is no assurance that we will be successful in implementing alternatives that allow us to maintain

Current wording

While we have largely been successful in obtaining modifications of our covenants as needed, there can be no assurance that we will be successful in the future. In the event we are not successful in obtaining covenant modifications, if needed, there is no assurance that we will be successful in implementing alternatives that allow us to maintain compliance with our covenants or that we will be successful in obtaining alternative financing that provides us with the liquidity that we need to operate our business. Even if successful, alternative sources of financing could prove more expensive than borrowings under our 2024 Amended Term Loan Agreement.

Previous wording

Operating Activities. Net cash flows provided by operating activities for the six months ended June 30, 2025 and 2024, were $22.9 million and $33.7 million, respectively. Items impacting the decrease in operating cash flows were primarily driven by lower operating revenues coupled with changes in working capital for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Current wording

Operating Activities. Net cash flows provided by operating activities for the nine months ended September 30, 2025 and 2024, were $50.9 million and $28.7 million, respectively. Items impacting the increase in operating cash flows were primarily driven by changes in working capital for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Previous wording

*Investing Activities.*Net cash flows used in investing activities for the six months ended June 30, 2025 and 2024 were approximately $53.5 million and $45.7 million, respectively, primarily for drilling and completion activities.

Current wording

*Investing Activities.*Net cash flows used in investing activities for the nine months ended September 30, 2025 and 2024 were approximately $70.0 million and $52.6 million, respectively, primarily for drilling and completion activities.

Previous wording

During the six months ended June 30, 2025, we spent $53.1 million on oil and natural gas capital expenditures, of which $47.2 million related to drilling and completion costs and $5.0 million related to the development of our treating equipment and gathering support infrastructure. In the first six months of 2025, we ran one operated rig in the Delaware Basin, drilled and cased six gross (5.5 net) operated wells, and completed and put online four gross (4.0 net) operated wells.

Current wording

During the nine months ended September 30, 2025, we spent $69.6 million on oil and natural gas capital expenditures, of which $59.9 million related to drilling and completion costs and $8.5 million related to the development of our treating equipment and gathering support infrastructure. In the first nine months of 2025, we ran one operated rig in the Delaware Basin, drilled, cased, completed and put online six gross (5.5 net) operated wells.

Previous wording

During the six months ended June 30, 2024, we spent $44.8 million on oil and natural gas capital expenditures, of which $42.2 million related to drilling and completion costs and $2.0 million related to the development of our treating equipment and gathering support infrastructure. During the first half of 2024, our cash capital expenditures included amounts related to the drilling and completion activities that occurred in the fourth quarter of 2023. In the first six months of 2024, we ran one operated rig in the Delaware Basin, drilled and cased four gross (3.73 net), and completed and put online two gross (1.925 net) operated wells. We also received $7.0 million in proceeds from the sale of oil and natural gas assets that were deemed to be unnecessary for future operations.

Current wording

During the nine months ended September 30, 2024, we spent $51.8 million on oil and natural gas capital expenditures, of which $46.8 million related to drilling and completion costs and $4.1 million related to the development of our treating equipment and gathering support infrastructure. During the first half of 2024, our cash capital expenditures included amounts related to the drilling and completion activities that occurred in the fourth quarter of 2023. In the first nine months of 2024, we ran one 1 operated rig in the Delaware Basin, drilled and cased four 4 gross (3.73 net), and completed and put online two 2 gross (1.925 net) operated wells. We also received $7.0 million in proceeds from the sale of oil and natural gas assets that were deemed to be unnecessary for future operations.

Previous wording

Financing Activities. Net cash flows provided by financing activities for the six months ended June 30, 2025 and 2024 were $55.5 million and $8.9 million, respectively. During the six months ended June 30, 2025, we received net proceeds of $61.1 million from the incurrence of the Incremental Term Loans and repaid $5.6 million under our 2024 Amended Term Loan Agreement. During the six months ended June 30, 2024, we received $38.8 million from our preferred stock equity issuances and repaid $39.9 million under our 2021 Amended Term Loan Agreement. Our net cash flows provided by financing activities during the six months ended June 30, 2024 also reflect the receipt of $10.0 million distributed from escrow to the Company in accordance with the terms of a merger agreement that was subsequently terminated on December 20, 2024.

Current wording

Financing Activities. Net cash flows provided by financing activities for the nine months ended September 30, 2025 were $49.8 million compared to net cash flows used in financing activities for the nine months ended September 30, 2024 of $3.8 million. During the nine months ended September 30, 2025, we received net proceeds of $61.1 million from the incurrence of the Incremental Term Loans and repaid $11.3 million under our 2024 Amended Term Loan Agreement. During the nine months ended September 30, 2024, we repaid $52.3 million under our Amended Term Loan Agreement and received $38.8 million from our preferred stock equity issuances. Our net cash flows provided by financing activities during the nine months ended September 30, 2024 also reflect the receipt of the $10.0 million distributed from the Merger escrow account to the Company.

Previous wording

Our discussion and analysis of our financial condition and results of operations are based upon the unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and

Current wording

Our discussion and analysis of our financial condition and results of operations are based upon the unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. There have been no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Previous wording

Operating Revenues. Oil, natural gas and NGLs revenues were $42.6 million and $49.1 million for the three months ended June 30, 2025 and 2024, respectively. The decrease in revenues is primarily attributable to a decrease in average realized prices. Production averaged 12,989 Boe per day for the three months ended June 30, 2025 compared to 12,857 Boe per day for the three months ended June 30, 2024. Average realized prices (excluding the effects of hedging arrangements) decreased approximately $5.93 per Boe for three months ended June 30, 2025 when compared with the same period in 2024.

Current wording

Operating Revenues. Oil, natural gas and NGLs revenues were $43.4 million and $45.1 million for the three months ended September 30, 2025 and 2024, respectively. The decrease in revenues is primarily attributable to a decrease in average realized prices. Production averaged 12,293 Boe per day for the three months ended September 30, 2025 compared to 12,076 Boe per day for the three months ended September 30, 2024. Average realized prices (excluding the effects of hedging arrangements) decreased approximately $2.24 per Boe for three months ended September 30, 2025 when compared with the same period in 2024.

Previous wording

Oil, natural gas and NGLs revenues were $90.0 million and $98.6 million for the six months ended June 30, 2025 and 2024, respectively. The decrease in revenues is primarily attributable to a combination of a decrease in our average realized prices and lower production volumes in 2025 compared to 2024. Production averaged 12,448 Boe per day for the six months ended June 30, 2025 compared to 12,923 Boe per day for the six months ended June 30, 2024. Average realized prices (excluding the effects of hedging arrangements) decreased approximately $2.00 per Boe for the six months ended June 30, 2025 when compared with the same period in 2024. The amount we realize for our production depends predominantly upon commodity prices, which are affected by changes in market demand and supply, as impacted by overall economic activity, weather, transportation take-away capacity constraints, inventory storage levels, quality of production, basis differentials and other factors.

Current wording

Oil, natural gas and NGLs revenues were $133.3 million and $143.7 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease in revenues is primarily attributable to a combination of a decrease in our average realized prices and lower production volumes in 2025 compared to 2024. Production averaged 12,396 Boe per day for the nine months ended September 30, 2025 compared to 12,639 Boe per day for the nine months ended September 30, 2024. Average realized prices (excluding the effects of hedging arrangements) decreased approximately $2.09 per Boe for the nine months ended September 30, 2025 when compared with the same period in 2024. The amount we realize for our production depends predominantly upon commodity prices, which are affected by changes in market demand and supply, as impacted by overall economic activity, weather, transportation take-away capacity constraints, inventory storage levels, quality of production, basis differentials and other factors.

Previous wording

Lease Operating Expenses. Lease operating expenses were $10.7 million and $11.0 million for the three months ended June 30, 2025 and 2024, respectively, and $21.0 million and $22.6 million for the six months ended June 30, 2025 and 2024, respectively. On a per unit basis, lease operating expenses were $9.03 per Boe and $9.41 per Boe for the three months ended June 30, 2025 and 2024, respectively, and $9.33 per Boe and $9.61 per Boe for the six months ended June 30, 2025 and 2024, respectively. The decrease in lease operating expenses on a per unit basis for the three and six months ended June 30, 2025 compared to the same periods of 2024 is primarily a result of contract negotiations with water disposal companies resulting in lower water production costs, lower chemical costs and aggressive preventative maintenance programs yielding decreased reactive repairs and maintenance costs.

Current wording

Lease Operating Expenses. Lease operating expenses were $12.4 million and $11.6 million for the three months ended September 30, 2025 and 2024, respectively, and $33.4 million and $34.2 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, lease operating expenses were $10.95 per Boe and $10.44 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $9.88 per Boe and $9.87 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The increase in lease operating expenses for the three months ended September 30, 2025 compared to the same period of 2024 is primarily a result of increased water production from new wells yielding higher disposal costs. The decrease in lease operating expenses for the nine months ended September 30, 2025 compared to the same period in 2024 primarily results from contract negotiations with service providers in all fields resulting in lower water production costs, lower chemical costs and aggressive preventative maintenance programs yielding decreased reactive repairs and maintenance costs.

Previous wording

Workover and Other Expenses. Workover and other expenses were $2.3 million and $0.9 million for the three months ended June 30, 2025 and 2024, respectively, and $3.7 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively. On a per unit basis, workover and other expenses were $1.95 per Boe and $0.81 per Boe for the three months ended June 30, 2025 and 2024, respectively, and $1.66 per Boe and $0.78 per Boe for the six months ended June 30, 2025 and 2024, respectively. The increase in workover and other expenses for the three and six months ended June 30, 2025 compared to the same periods of 2024 relates to increased workover activity during 2025 and include costs related to a non-recurring well cleanout program.

Current wording

Workover and Other Expenses. Workover and other expenses were $0.8 million and $1.2 million for the three months ended September 30, 2025 and 2024, respectively, and $4.6 million and $3.1 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, workover and other expenses were $0.74 per Boe and $1.12 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $1.35 per Boe and $0.89 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The decrease in workover and other expenses for the three months ended September 30, 2025 compared to the same period in 2024 is the result of less workover activity during the third quarter of 2025. The increase in workover and other expenses for the nine months ended September 30, 2025 compared to the same periods of 2024 relates to increased workover activity during 2025 and includes costs related to a non-recurring well cleanout program that meaningfully increased production combined with a higher volume of ESP maintenance.

Previous wording

Taxes Other than Income. Taxes other than income were $2.5 million and $3.3 million for the three months ended June 30, 2025 and 2024, respectively, and $5.3 million and $6.3 million for the six months ended June 30, 2025 and 2024, respectively. Severance taxes are based on realized prices and volumes at the wellhead, while ad valorem taxes are tied to the annual valuation of our properties. As revenues or volumes from oil and natural gas sales increase or decrease, severance taxes on these sales also increase or decrease. On a per unit basis, taxes other than income were $2.13 per Boe and $2.86 per Boe for the three months ended June 30, 2025 and 2024, respectively, and $2.36 per Boe and $2.70 per Boe for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Taxes Other than Income. Taxes other than income were $2.6 million and $2.5 million for the three months ended September 30, 2025 and 2024, respectively, and $7.9 million and $8.9 million for the nine months ended September 30, 2025 and 2024, respectively. Severance taxes are based on realized prices and volumes at the wellhead, while ad valorem taxes are tied to the annual valuation of our properties. As revenues or volumes from oil and natural gas sales increase or decrease, severance taxes on these sales also increase or decrease. On a per unit basis, taxes other than income were $2.32 per Boe and $2.28 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $2.35 per Boe and $2.56 per Boe for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Gathering and Other Expenses. Gathering and other expenses were $11.0 million and $12.1 million for the three months ended June 30, 2025 and 2024, respectively, and $23.0 million and $29.4 million for the six months ended June 30, 2025 and 2024, respectively. Gathering and other expenses include gathering fees paid to third parties on our oil and natural gas production and operating expenses of our gathering support infrastructure. Our gathering and other expenses are primarily driven by the amount and location of natural gas production, the concentration of H 2 S in our sour gas produced, and the amounts paid to treat our sour gas volumes, either through our own hydrogen sulfide treating plant or through third parties. On a per unit basis, gathering and other expenses were $9.27 per Boe and $10.36 per Boe for the three months ended June 30, 2025 and 2024, respectively, and $10.19 per Boe and $12.51 per Boe for the sixmonths ended June 30, 2025 and 2024, respectively. The decrease in gathering and other expenses per Boe for the three and six months ended June 30, 2025 compared to the same periods of 2024 is primarily related to progress made at the central production facilities yielding lower labor and repair costs as well as increased throughput and overall production volumes being treated by the AGI facility during 2025. The AGI facility did not come online until March 2024.

Current wording

Gathering and Other Expenses. Gathering and other expenses were $10.2 million and $12.4 million for the three months ended September 30, 2025 and 2024, respectively, and $33.2 million and $41.9 million for the nine months ended September 30, 2025 and 2024, respectively. Gathering and other expenses include gathering fees paid to third parties on our oil and natural gas production and operating expenses of our gathering support infrastructure. Our gathering and other expenses are primarily driven by the amount and location of natural gas production, the concentration of H 2 S in our sour gas produced, and the amounts paid to treat our sour gas volumes, either through our own hydrogen sulfide treating plant or through third parties. On a per unit basis, gathering and other expenses were

Previous wording

General and Administrative Expense. General and administrative expense was $2.6 million and $3.3 million for the three months ended June 30, 2025 and 2024, respectively, and $6.9 million and $7.3 million for the six months ended June 30, 2025 and 2024, respectively. On a per unit basis, general and administrative expenses were $2.17 per Boe and $2.82 per Boe for the three months ended June 30, 2025 and 2024, respectively, and $3.08 per Boe and $3.09 per Boe for the six months ended June 30, 2025 and 2024, respectively. The decrease in general and administrative expense for the three and six months ended June 30, 2025 compared with the same prior year periods is primarily due to lower merger costs.

Current wording

General and Administrative Expense. General and administrative expense was $3.1 million and $3.8 million for the three months ended September 30, 2025 and 2024, respectively, and $10.0 million and $11.1 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, general and administrative expenses were $2.73 per Boe and $3.46 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $2.96 per Boe and $3.21 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The decrease in general and administrative expense for the three and nine months ended September 30, 2025 compared with the same prior year periods is primarily due to lower merger costs.

Previous wording

Depletion expense was $13.6 million and $12.8 million for the three months ended June 30, 2025 and 2024, respectively, and $26.2 million and $25.4 million for the six months ended June 30, 2025 and 2024, respectively. On a per unit basis, depletion expense was $11.47 per Boe and $10.95 per Boe for the three months ended June 30, 2025 and 2024, respectively, and $11.64 per Boe and $10.82 per Boe for the six months ended June 30, 2025 and 2024, respectively. The increase in our depletion rate per Boe isprimarily due to a period over period increase in net oil and natural gas properties combined with the associated period over period decrease in proved reserves.

Current wording

Depletion expense was $13.2 million and $12.1 million for the three months ended September 30, 2025 and 2024, respectively, and $39.4 million and $37.6 million for the nine months ended September 30, 2025 and 2024, respectively. On a per unit basis, depletion expense was $11.64 per Boe and $10.91 per Boe for the three months ended September 30, 2025 and 2024, respectively, and $11.64 per Boe and $10.85 per Boe for the nine months ended September 30, 2025 and 2024, respectively. The increase in our depletion rate per Boe isprimarily due to a period over period increase in net oil and natural gas properties combined with the associated period over period decrease in proved reserves.

Previous wording

Net gain (loss) on derivative contracts. We enter into derivative commodity instruments to hedge our exposure to price fluctuations on our anticipated oil, natural gas and NGLs production. Consistent with prior years, we have elected not to designate any positions as cash flow hedges for accounting purposes, and accordingly, we recorded the net change in the mark-to-market value of these derivative contracts in the unaudited condensed consolidated statements of operations.

Current wording

Net gain on derivative contracts. We enter into derivative commodity instruments to hedge our exposure to price fluctuations on our anticipated oil, natural gas and NGLs production. Consistent with prior years, we have elected not to designate any positions as cash flow hedges for accounting purposes, and accordingly, we recorded the net change in the mark-to-market value of these derivative contracts in the unaudited condensed consolidated statements of operations.

Previous wording

For the three months ended June 30, 2025, we recorded a net derivative gain of $11.5 million ($7.2 million net unrealized gainon unsettled contracts and $4.3 million net realized gain on settled contracts). For the three months ended June 30, 2024, we recorded a net derivative gain of $1.2 million ($4.4 million net unrealized gainon unsettled contracts offset by a $3.2 million net realized loss on settled contracts). For the six months ended June 30, 2025, we recorded a net derivative gain of $20.9 million ($19.1 million net unrealized gainon unsettled contracts and $1.8 million net realized gain on settled contracts). For the six months ended June 30, 2024, we recorded a net derivative loss of $22.9 million ($15.3 million net unrealized losson unsettled contracts and $7.6 million net realized loss on settled contracts). At June 30, 2025, we had a $20.1 million derivative asset ($13.7 million current) and a $9.2 million derivative liability ($4.5 million current).

Current wording

For the three months ended September 30, 2025, we recorded a net derivative gain of $5.2 million ($1.1 million net unrealized gainon unsettled contracts and $4.1 million net realized gain on settled contracts). For the three months ended September 30, 2024, we recorded a net derivative gain of $26.9 million ($28.1 million net gainon unsettled contracts and $1.2 million net realized loss on settled contracts). For the nine months ended September 30, 2025, we recorded a net derivative gain of $26.0 million ($20.1 million net unrealized gainon unsettled contracts and $5.9 million net realized gain on settled contracts). For the nine months ended September 30, 2024, we recorded a net derivative gain of $3.9 million ($12.7 million net gainon unsettled contracts and $8.8 million net realized loss on settled contracts). At September 30, 2025, we had a $18.5 million derivative asset ($15.1 million current) and a $6.6 million derivative liability ($1.9 million current).

Previous wording

Interest Expense and Other. Interest expense and other totaled $6.6 million and $6.5 million for the three months ended June 30, 2025 and 2024, respectively and $13.3 million and $13.5 million for the six months ended June 30, 2025 and 2024, respectively. Our weighted average interest rate was approximately 12.20% for the three and six months ended June 30, 2025. Comparatively, our weighted average interest rate was approximately 12.95% for the quarter ended June 30, 2024 and 12.97% for the six months ended June 30, 2024. For the third quarter of 2025, our interest rate will be approximately 12.20% on outstanding borrowings.

Current wording

Interest Expense and Other. Interest expense and other totaled $6.7 million and $6.3 million for the three months ended September 30, 2025 and 2024, respectively and $20.0 million and $19.8 million for the nine months ended September 30, 2025 and 2024, respectively. Our weighted average interest rate was approximately 12.19% and 12.20% for the three and nine months ended September 30, 2025, respectively. Comparatively, our weighted average interest rate was approximately 12.98% for the quarter ended September 30, 2024 and 12.97% for the nine months ended September 30, 2024. For the fourth quarter of 2025, our interest rate will be approximately 11.90% on outstanding borrowings.