Battalion Oil Corporationhas entered into an Agreement and Plan of Merger with Fury Resources, pursuant to which Parent will acquire all of the outstanding shares of Common Stock of the Company, for $9.80 per share in cash, which represents a total transaction value of approximately $450 million. The Preferred Stock of the Company held by Luminus Management LLC and funds and accounts managed by Oaktree Capital Management, L.P., or their respective affiliates, will be contributed to Buyer in exchange for new preferred shares of Buyer, or sold to Buyer for cash, in each case at a valuation based on the conversion or redemption value of such Preferred Stock.

The transaction is expected to close in the first quarter of 2024, subject to various closing conditions. Such conditions include customary closing conditions, such as the approval of Battalion’s stockholders.

Parent has received debt commitments from Fortress Credit Corp. and AI Partners Asset Management Co., Ltd to finance a portion of the Merger Consideration under the Merger Agreement.

In connection with the transaction, the Rollover Stockholders, who collectively own 61.61% of the Common Stock of the Company, entered into a Voting Agreement with Buyer pursuant to which they have agreed, among other things, to vote 6,254,652 of their shares of Common Stock, which in the aggregate represents 38% of the total voting power of the shares of capital stock of the Company, in favor of adopting the Merger Agreement.

For Battalion, Houlihan Lokey Capital, Inc. acted as financial advisor and Mayer Brown LLP is acting as legal counsel. Jefferies LLC acted as financial advisor and K&L Gates LLP is acting as legal counsel to the Buyer.

Avi Mirman, Executive Chairman of the Board of Parent commented:
“We are excited to announce this transaction with Battalion and believe we are well positioned to drive value growth for our investors as we return the asset to active development. It has been a pleasure working with the Battalion team on this transaction, and we look forward to continuing that work as we move toward a successful close.

The acquisition of Battalion represents a return to the Delaware Basin for our team, which now includes Battalion’s former CEO Richard Little. Our team has a strong understanding of the subsurface as well as the capital constraints that have previously hampered the Company’s ability to exploit this asset. With the benefit of a newly revived balance sheet, we believe we can leverage our deep knowledge of the basin and combined operational excellence to fully unlock the asset’s potential. Additionally, we are excited to explore the opportunities provided to the Company through its joint venture with Caracara. By offering the ability to drill locations with higher H2S volumes, this joint venture will allow the company to exploit additional drilling and acquisition opportunities which may not be available to others in the region.

As part of this transaction, several of Battalion’s major shareholders have agreed to reinvest proceeds from this sale into the ongoing business. We view this as a vote of confidence in our ability to develop this asset and drive profitable growth. This acquisition represents a compelling value proposition for our investors and we are eager to get to work.”

Matt Steele, Battalion CEO, commented:
“It has been a pleasure working with Avi Mirman and his team to get the transaction to this point. Avi has a plan to become a premier player in the Delaware Basin. With the additional investment capital provided by the transaction, the company will finally be in a position to fully develop the Battalion asset base and position the company, its investors, and its employees for success.”

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