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DEBT | 12 Months Ended
--- | ---
Dec. 31, 2024
DEBT |
DEBT | 7. DEBT As of December 31, 2024 and 2023, the Company’s debt consisted of the following (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31, 2024 |  | December 31, 2023
Term loan credit facility | ​ | $ | 162,000 | ​ | $ | 200,000
Other | ​ | ​ | 106 | ​ | ​ | 215
Total debt (Face Value) | ​ | ​ | 162,106 | ​ | ​ | 200,215
Less: | ​ | ​ | ​ | ​ | ​ | ​
Current Portion of Long-Term Debt(1) | ​ | ​ | (12,246) | ​ | ​ | (50,106)
Other(2) | ​ | ​ | (4,325) | ​ | ​ | (9,833)
Long-Term Debt, net | ​ | $ | 145,535 | ​ | $ | 140,276
(1) | Amounts primarily reflect payments due of $12.2 million under the Company’s 2024 Amended Term Loan Agreement and $50.0 million under the Company’s 2021 Amended Term Loan Agreement due within one year as of December 31, 2024 and December 31, 2023, respectively.
(2) | Amounts primarily reflect unamortized discount and debt issuance costs of approximately $4.3 million and $6.9 million at December 31, 2024 and December 31, 2023, respectively. The December 31, 2023 balance also includes an unamortized debt discount associated with an embedded derivative separately presented and further described in Note 8, “Fair Value Measurements”. For the years ended December 31, 2024 and 2023, we recorded approximately $6.4 million and $7.6 million, respectively, in interest expense reflecting the amortization/accretion of deferred financing costs and debt discount.
Amended and Restated Credit Agreement ​ On December 26, 2024 (the “Initial Closing Date”), Halcón Holdings, LLC (the “Borrower”), a wholly-owned subsidiary of the Company, entered into a Second Amended and Restated Senior Secured Credit Agreement (the “2024 Term Loan Agreement”) with Fortress Credit Corp., as administrative agent, and certain other financial institutions party thereto, as lenders. The 2024 Term Loan Agreement amends and restates in its entirety the Company’s 2021 Amended Term Loan Agreement (as defined below). Pursuant to the 2024 Term Loan Agreement, the lenders party thereto agreed to provide the Borrower with (i) an initial term loan facility in the aggregate principal amount of $162.0 million, funded on December 26, 2024 and (ii) an incremental term loan facility in the aggregate principal amount of up to $63.0 million to be made available to the Borrower from January 3, 2025 until the date that is the earliest to occur of (x) the date on which such incremental term facility is fully drawn, (y) the date on which such incremental term facility is terminated and (z) January 11, 2025, subject to the satisfaction of certain conditions. On January 9, 2025, the Borrower entered into a first amendment (the “First Amendment”) to its 2024 Term Loan Agreement (as amended, the “2024 Amended Term Loan Agreement”). Pursuant to the First Amendment, the Borrower incurred incremental term loans in the aggregate principal amount of $63.0 million (the “Incremental Term Loans”). ​ The net proceeds of the 2024 Term Loan Agreement were used to repay all outstanding indebtedness under the 2021 Amended Term Loan Agreement, including accrued and unpaid interest, in an aggregate amount of approximately $152.1 million and to pay related fees and expenses. Upon extinguishment of the 2021 Amended Term Loan Agreement, the difference between the repayment amount of the extinguished debt and its respective carrying amount is recorded as a gain or loss on extinguishment of debt in the consolidated statement of operations. For the year ended December 31, 2024, the Company recognized a loss on extinguishment of debt in the amount of $7.5 million resulting from the credit agreement refinancing on December 26, 2024 which includes 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 consolidated balance sheet at December 31, 2024. The maturity date of the 2024 Amended Term Loan Agreement is December 26, 2028. ​ 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 Secured Overnight Financing Rate (“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%. The Borrower may elect, at its option, to prepay any borrowing outstanding under the 2024 Amended Term Loan Agreement. Such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable: ​
​ | ​ | ​ | ​
Period | ​ | ​ | Premium
Months 0 - 12 | ​ | ​ | Make-whole amount equal to 12 months of interest plus 4.00%
Months 13 - 30 | ​ | ​ | 2.00%
Thereafter | ​ | ​ | 0.00%
​ In the event the Borrower shall receive a disapproval notice (as defined in the 2024 Term Loan Agreement) from the required lenders under the 2024 Amended Term Loan Agreement rejecting or otherwise disqualifying a proposed buyer in connection with a permitted change in control thereunder to be consummated within 12 months following the Initial Closing Date, such voluntary prepayments, certain mandatory prepayments and change of control prepayments are subject to the following prepayment premium, as applicable: ​
​ | ​ | ​ | ​
Period | ​ | ​ | Premium
Months 0 - 9 | ​ | ​ | Make-whole amount equal to 9 months of interest plus 2.00%
Months 10 - 30 | ​ | ​ | 2.00%
Thereafter | ​ | ​ | 0.00%
​ The Borrower may be required to make mandatory prepayments of the loans under the 2024 Amended Term Loan Agreement in connection with the incurrence of non-permitted debt, certain asset sales and with excess cash on hand in excess of certain maximum levels. As of December 31, 2024, the Borrower is 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 commencing with the fiscal quarter ending June 30, 2025, and subsequent to December 31, 2024, is required to make scheduled quarterly amortization payments in an aggregate principal amount equal to 2.50% of the total 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. Amounts outstanding under the 2024 Amended Term Loan Agreement are guaranteed by certain of the Borrower’s direct and indirect subsidiaries and secured by a security interest in substantially all of the assets of the Borrower and such direct and indirect subsidiaries, and of the equity interests of the Borrower held by the Company. The 2024 Amended Term Loan agreement contains certain financial covenants (as defined in the 2024 Term Loan Agreement), including the maintenance of the following ratios.
| ● | Asset Coverage Ratio not to fall below 1.70 x as of March 31, 2025 through and including June 30, 2025, 1.85 x as of September 30, 2025 through and including December 31, 2025 and 2.00 x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;
| ● | Total Net Leverage Ratio not to exceed 2.75 x as of March 31, 2025 through and including June 30, 2025 and 2.50 x for each fiscal quarter thereafter, determined as of the last day of each fiscal quarter;
| ● | Current Ratio not to fall below 1.00 x, determined on the last day of each calendar month commencing with the calendar month ending March 31, 2025; and
| ● | Liquidity not to fall below the greater of (x) $10,000,000 and (y) the amount equal to the scheduled principal and interest payments for the immediately succeeding three-month period, determined as of the last day of any fiscal quarter.
Under the 2024 Amended Term Loan Agreement, the Company is required to hedge approximately 85% to 50% of its anticipated oil and natural gas production, in varying percentages by year, on a rolling basis for the next four years. Entry into the 2024 Term Loan Agreement did not result in any material changes to the Company’s hedges. The 2024 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 2024 Term Loan Agreement, the Company agreed to pay an exit fee equal to the amount resulting from multiplying 3.50% by the difference, if any, of (x) Total proved developed producing (“PDP”) PV-10 (the “PDP PV-10”) as of the date that is the earlier of (i) Payment in Full, (ii) the Maturity Date, or (iii) the loans and other obligations otherwise becoming immediately due and payable pursuant to Section 10.02 of the 2024 Term Loan Agreement (including whether, in the case of clauses (i) or (iii), such Payment in Full or acceleration, respectively, may be made in connection with a refinancing transaction or a disposition of all or substantially all of the assets of the Company) (such earlier date, the “Exit Fee Determination Date”), less (y) the Total PDP PV-10 reflected in the Initial Reserve Report (as defined in the 2024 Term Loan Agreement) (the “Exit Fee”). Upon evaluation of the payoff profiles associated with the Exit Fee, the Company concluded that such embedded features resulting from the application of this fee were not clearly and closely related to the host debt instrument. The fair value analysis for such derivative was performed and the fair value was deemed to be zero at commencement and at December 31, 2024. Refer to Note 8, “Fair Value Measurements,” for a discussion of the valuation approach used and the significant inputs to the valuation for the Exit Fee derivative. As of December 31, 2024, the Company had $162.0 million of indebtedness under the 2024 Term Loan Agreement. Upon entry into the First Amendment on January 9, 2025, the Company had $225.0 million of indebtedness under the 2024 Amended Term Loan Agreement. Term Loan Credit Facility On November 24, 2021, the Company and Borrower entered into an Amended and Restated Senior Secured Credit Agreement (the “2021 Term Loan Agreement”) with Macquarie Bank Limited, as administrative agent, and certain other financial institutions party thereto, as lenders, having a maturity date of November 24, 2025. The 2021 Term Loan Agreement amended and restated in its entirety the senior secured revolving credit agreement, as amended, entered into in 2019. On November 14, 2022, the Company paid approximately $2.4 million and entered into a further Amended Credit Agreement (the “2021 Amended Term Loan Agreement”) with its lenders which modified certain provisions of its original 2021 Term Loan Agreement. The 2021 Amended Term Loan Agreement also contained certain financial covenants (as defined in the 2021 Amended Term Loan Agreement), including the maintenance of the following ratios:
| ● | Asset Coverage Ratio of not less than 1.80 to 1.00 as of December 31, 2023 and the last day of each fiscal quarter thereafter;
| ● | Total Net Leverage Ratio of not greater than 2.50 to 1.00 as of December 31, 2023 and each fiscal quarter thereafter, and
| ● | Current Ratio of not less than 1.00 to 1.00, determined as of the last day of any fiscal quarter period, as of December 31, 2023 and each fiscal quarter thereafter.
On March 28, 2024, the Company entered into the Third Amendment to the 2021 Amended Term Loan Agreement (the “Third Amendment”) with its lenders. The Third Amendment, amended the 2021 Amended Term Loan Agreement to, among other things, (a) amend the APOD for certain properties, (b) remove the PDP Production Test and APOD Economic Test (each defined in the 2021 Term Loan Agreement), (c) require the Borrower to receive cash proceeds from equity issuances and/or cash contributions in an aggregate amount of not less than $38.0 million during the period from Amendment Effective Date through March 31, 2024 (the “Specified Additional Equity Capital”), which such Specified Additional Equity Capital shall be excluded from the calculation of Consolidated Cash Balance (as defined in the 2021 Term Loan Agreement), and (d) make amendments to certain other affirmative covenants in connection with the foregoing. On August 23, 2024, the Company entered into the Fourth Amendment to the 2021 Amended Term Loan Agreement (the “Fourth Amendment”) with its lenders. The Fourth Amendment amended the 2021 Amended Term Loan Agreement to allow for a Current Ratio (as defined in the 2021 Amended Term Loan Agreement) of 0.90 to 1.00 for the fiscal quarter ending September 30, 2024. All obligations under the 2021 Amended Term Loan Agreement were refunded, refinanced and repaid in full by the loans under the 2024 Term Loan Agreement on December 26, 2024. Under the 2021 Amended Term Loan Agreement, the Company could elect, at its option, to prepay any borrowings outstanding under the 2021 Amended Term Loan Agreement subject to the following prepayment premiums:
​ | ​ | ​ | ​
Period (after applicable borrowing date(1)) | ​ | ​ | Premium
Months 0 - 12 | ​ | ​ | Make-whole amount equal to 12 months of interest plus 2.00%
Months 13 - 24 | ​ | ​ | 2.00%
Months 25 - 36 | ​ | ​ | 1.00%
Months 37 - 48 | ​ | ​ | 0.00%
​
(1) | Applicable borrowing dates are November 2021 for the original $200.0 million borrowed and April and November 2022 for the $20.0 million and $15.0 million in delayed borrowings, respectively.
The Company’s prepayment premiums would differ from those noted in the table above if a change of control resulted in prepayment within the second anniversary of the amendment date, as a 2% payment premium would apply. ​ Borrowings under the 2021 Amended Term Loan Agreement bore interest at a variable interest rate based on SOFR plus an applicable margin of 7.5%. The weighted average interest rate on the Company’s term loan borrowings for the year ended December 31, 2024 was approximately 12.88%. ​ Under the 2021 Amended Term Loan Agreement, the Company may have been required to make mandatory prepayments in connection with the incurrence of non-permitted debt, certain asset sales, or with excess cash on hand in excess of certain maximum levels beginning in 2023. For each fiscal quarter after January 1, 2023, the Company was required to make mandatory prepayments when the Consolidated Cash Balance, as defined in the 2021 Amended Term Loan Agreement, exceeded $20.0 million. Until December 31, 2024, the forecasted capital expenditures for the succeeding fiscal quarter on the approved plan of development (“APOD”) wells (i.e. oil and natural gas wells located within a specified boundary as set by the 2021 Amended Term Loan Agreement) were excluded for purposes of determining the Consolidated Cash Balance. ​ The Company was required to make scheduled amortization payments in the aggregate amount of $35.0 million during 2024 with $10.0 million due at the end of the first quarter of 2024 and $12.5 million due at the end of each of the second and third quarters of 2024. Amounts outstanding under the 2021 Amended Term Loan Agreement were 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 2021 Amended Term Loan Agreement there were certain restrictions on the transfer of assets, including cash, to Battalion from the guarantor subsidiaries. The 2021 Amended Term Loan Agreement also contained an APOD for the Company’s Monument Draw acreage through the drilling and completion of certain wells. The 2021 Amended Term Loan Agreement contained a proved developed producing production test and an APOD economic test which the Company must maintain compliance with; otherwise, subject to any available remedies or waivers, the Company was required to immediately cease making expenditures in respect of the APOD other than any expenditures deemed necessary by the Company in respect of no more than six additional APOD wells. ​ The 2021 Amended Term Loan Agreement also contained 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 2021 Term Loan Agreement, 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 (the “CEO”) or the Principal 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 was reduced over time through the payment of interest and certain fees. The Change of Control Call Option was accounted for as an embedded derivative not clearly and closely related to the host debt instrument. Accordingly, the Company recorded the initial fair value separately on the consolidated balance sheet within “Other noncurrent liabilities” and recorded changes in the fair value of the embedded derivative each reporting period in “Interest expense and other” on the consolidated statements of operations. Refer to Note 8, “Fair Value Measurements,” for a discussion of the valuation approach used, the significant inputs to the valuation, and for a reconciliation of the change in fair value of the Change of Control Call Option. ​ Debt Maturities Aggregate debt maturities due in future years as of December 31, 2024 are as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Term Loan Credit Facility(1) | ​ | Other |  | Total
2025 | ​ | $ | 12,150 | ​ | $ | 96 | ​ | $ | 12,246
2026 | ​ | ​ | 16,200 | ​ | ​ | 10 | ​ | ​ | 16,210
2027 | ​ | ​ | 16,200 | ​ | ​ | — | ​ | ​ | 16,200
2028 | ​ | ​ | 117,450 | ​ | ​ | — | ​ | ​ | 117,450
Total | ​ | $ | 162,000 | ​ | $ | 106 | ​ | $ | 162,106
(1) | On January 9, 2025, resulting from the First Amendment to the 2024 Term Loan Agreement, the Company incurred incremental term loans in the aggregate principal amount of $63.0 million resulting in required quarterly debt maturities payments in the aggregate principal amount of $16.9 million in 2025, $22.5 million in each of 2026 and 2027, $16.9 million in 2028 and a final payment at maturity on December 26, 2028 of $146.3 million.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1E -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I + Details
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