Why Is Battalion Oil Stock Jumping Premarket Friday?

Battalion Oil Corporation BATL shares are trading higher after the company disclosed an amendment to its Merger Agreement with Fury Resources, Inc., where Fury will acquire all outstanding common stock of Battalion for $7.00 per share in cash.

In December 2023, Battalion Oil disclosed a merger agreement, under which Fury agreed to acquire all outstanding shares of Battalion’s common stock for $9.80 per share in cash. The initial deal represented a total transaction value of approximately $450 million.

According to Benzinga Pro, BATL stock has lost over 69% in the year-to-date period.

Fury has confirmed capital commitments for the transaction, including $200 million in debt financing from Fortress Credit Corp. and AI Partners Asset Management Co., Ltd., $188 million in Preferred Stock commitments with $173 million from the Rollover Stockholders and $15 million from AI Partners Asset Management Co., Ltd., and $160 million in equity commitments for the acquisition of new common stock in Fury.

The transaction is anticipated to close in the fourth quarter of 2024, pending approval from the Battalion’s stockholders and satisfaction of other customary closing conditions outlined in the Merger Agreement.

Avi Mirman, Co-Founder and Chairman of Fury Resources, said, “With this acquisition, Fury has secured a foothold in one of the world’s most prolific basins. Our team has significant experience in the region, and we believe these assets present a compelling value proposition for our investors.”

After closing, Fury is expected to hold about $100 million in cash, net of acquisition costs and fees.

Matt Steele, Battalion CEO, said, “This transaction has taken longer than anyone at the table intended. Despite that, the teams persevered to achieve the best outcome for BATL stockholders. The company and Fury will work diligently in the coming months to close this transaction and position Fury for a successful transition.”

As of June 30, 2024, the company had $160.2 million in outstanding debt and around $0.3 million in letters of credit.

Price Action: BATL shares are up 120% at $6.47 premarket at the last check Friday.

Image via Shutterstock

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