Battalion Oil Corporation — financial distress indicators
Financial-health summary
Battalion Oil Corporation's reported numbers place it in the 'Weak' financial-health band (distress score 61/100). The main indicators are market-implied default probability >20%, material debt with no ebitda and share price down >80% from 52-week high. Independently, the Ohlson accounting model puts its 1-year failure probability at 50% and the market-implied (Merton) default probability is 64.6%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -0.37 σ → PD 65%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Debt is 40% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
Price is -96% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
Current ratio is 0.90.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Operating margin fell from 8% to -4% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
📰 Recent news scan
- Battalion Oil Announces Publication of Updated Investor PresentationYahoo Finance · 2026-09-30
- Battalion Oil to Release Investor Presentation on Sept. 30Yahoo Finance · 2026-09-24
- Battalion Oil Announces Refinancing and Execution of Third Amended and Restated Credit AgreementYahoo Finance · 2026-07-01
- Battalion Oil Announces Updated Drilling ProgramYahoo Finance · 2026-05-28
- Battalion Oil Announces Letter of Intent for Joint Development Agreement to Accelerate Monument Draw ActivityYahoo Finance · 2026-05-05
- Battalion Oil Increases Compression Capacity, Building on Previously Announced Midstream ReliabilityYahoo Finance · 2026-04-29
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Battalion Oil Corporation's financial-health indicators show?
As of 2026-10-08, Battalion Oil Corporation's public financial data places it in the 'Weak' band with a distress score of 61/100, driven by market-implied default probability >20%, material debt with no ebitda and share price down >80% from 52-week high. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Battalion Oil Corporation's financial distress score?
61/100 ('Weak'). Ohlson O-score 0.01 (model 1-year failure probability 50%). Merton distance-to-default -0.37 σ (model default probability 64.6%).
What works in Battalion Oil Corporation's favour?
Operating cash flow is positive over the latest 12 months.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Energy, Oil & Gas companies with distress indicators
- Sky Quarry Inc. (SKYQ)Very weak 100/100
- SolarMax Technology, Inc. (SMXT)Very weak 100/100
- Spruce Power Holding Corporation (SPRU)Very weak 100/100
- Vivakor, Inc. (VIVK)Very weak 100/100
- SUNation Energy Inc. (SUNE)Very weak 86/100
- Canadian Solar Inc. (CSIQ)Very weak 74/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.