Battalion Oil Corp. said it strengthened its liquidity position with a strategic refinancing for a new term loan enabling the Houston-based oil producer to accelerate development of its Monument Draw asset in the Delaware Basin of the Permian.

“Coming off a strong quarter, we are pleased to announce a strategic refinancing,” commented Battalion CEO Richard Little in a company release on Nov. 29 before adding: “This new capital not only allows for a complete repayment of our previous credit facility, but also provides ample liquidity to accelerate the development of our Monument Draw asset.”

According to the company release, Battalion closed an agreement with a group of lenders for a new first lien delayed draw term loan facility for up to $235 million bearing interest of LIBOR plus 7.00% on drawn amounts.

Initial borrowings of $200 million will allow Battalion to repay all outstanding loans and obligations under the company’s previous senior revolving credit facility and add significant cash to the balance sheet after fees and expenses. Battalion will also have approximately $35 million of additional capacity under the term loan which will be available for future development of the Monument Draw asset located in Ward and Winkler counties in West Texas, the company release noted.

Little, a former top exec of Permian Basin-focused Ajax Resources, joined Battalion in June 2019 while the company was still known as Halcón Resources. In addition to its new team and culture, the change to Battalion Oil, which occurred in January 2020, was also reflected in the company’s results-oriented strategy.

“Since joining Battalion in the summer of 2019, our team has methodically reduced costs, improved flow assurance, and positioned the company to take advantage of the unique strengths our assets have to offer,” Little said. “We have completed a lot of the heavy lifting and have created an asset base that can compete with some of the best wells in the basin.”

For the third quarter, Battalion reported in early November quarter-over-quarter production growth despite the completion of the company’s 2021 capital program in the first half of the year. Battalion’s daily production averaged 17,728 boe/d during third-quarter 2021, a 14% increase over second-quarter 2021, due largely to facility upgrades at Monument Draw and reduced well downtime, according to a company release on Nov. 8.

Additionally, Battalion also said in early November that it had recently secured a rig contract and expected to spud the first well of its 2022 capital program in December.

“We look forward to returning to growth through the drill bit while locking in strong returns through an aggressive hedge program,” Little added in the Nov. 29 release.

Macquarie Group was sole lead arranger for the term loan, and is serving as a lender, letter of credit provider, and a hedge counterparty for Battalion. Weil, Gotshal & Manges LLP was legal adviser to Battalion and Sidley Austin LLP served as legal adviser to the lending group.

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