Delaware Basin drilling is entering a new phase for Battalion Oil. The company is preparing a program of up to eight wells at Monument Draw in Ward County, Texas, while strengthening its financial position and progressively concentrating its development strategy on this West Texas asset.
The move follows a significant transformation of the company’s balance sheet. Hart Energy reported on August 14 that Battalion reduced its leverage below 1.5x for the first time, creating greater financial flexibility to resume drilling activity. The company had already reduced its net debt from US$180.2 million at the end of the fourth quarter of 2025 to US$108.3 million at the end of the first quarter of 2026.
Behind that reduction is a broader reorganization. Battalion sold its West Quito assets for net proceeds of US$60.1 million and used US$45.6 million to repay debt. At the same time, it acquired 7,090 net acres contiguous with Monument Draw, expanding its consolidated position in the area to approximately 27,097 acres.
Delaware Basin Drilling Targets Three Productive Intervals
The most significant operational element is the joint development agreement finalized by Battalion in late May. The program includes up to eight wells at Monument Draw, although execution will begin with a four-well pad.
The targets are distributed across the Third Bone Spring, Wolfcamp A, and Wolfcamp B, three intervals that form part of the Delaware Basin’s productive column. Battalion will remain the operator and retain a majority working interest, while the agreement structure allows part of the capital required to develop the wells to be shared.
The strategy is significant because it is not limited to increasing the number of wells drilled. Battalion intends to move toward a cube development model, in which different intervals within the same stratigraphic column can be developed in a coordinated manner.
This approach seeks to optimize well spacing, hydrocarbonhttps://inspenet.com/en/news/oil-and-gas-recovery-after-the-war-could-take-up-to-two-years/ recovery, and capital efficiency, avoiding the treatment of each productive horizon as a completely independent project. The company believes the program results could help validate more than 100 additional locations, primarily in the Wolfcamp B and Third Bone Spring.
Nearby Well Results Support the New Campaign
The decision to move forward is not based solely on geological models. Recently completed wells near the program’s first pad have generated production benchmarks that Battalion is using to evaluate the area’s potential.
One of those wells accumulated approximately 389,000 barrels of oil equivalent (boe) over 267 days of production, with an oil mix of 53%. Another reached approximately 123,000 boe in 82 days, with 41% oil, despite having a partially completed lateral of only 2,637 feet.
Battalion expects the new wells to potentially deliver comparable performance, although this should be understood as the company’s expectation rather than a guaranteed outcome.
That will be one of the program’s key tests: determining whether the coordinated development of the Third Bone Spring and Wolfcamp intervals can reproduce, on a larger scale, the performance observed in nearby wells.
New Processing Capacity Helped Restore Production
This improvement is important for the next drilling campaign because the expansion of Monument Draw will require sufficient capacity to process the additional volumes associated with the new wells.
The ability to develop new wells at Monument Draw is also linked to the availability of infrastructure to process the produced gas.
Battalion faced operational constraints after the Wink Amine Treater acid gas injection facility ceased operations on August 11, 2025. The situation forced the temporary shut-in of part of the field’s production while the company used alternative processing options. In January 2026, Battalion formally terminated the existing agreement and consolidated its gas processing through another facility whose capacity had been expanded during the fourth quarter of 2025.
The change produced measurable results. The alternative facility processed more than 30 MMcf/d of Battalion’s gas, compared with an average of approximately 17.4 MMcf/d during December. According to the company, the additional capacity improved operational reliability and contributed to increasing average oil production by approximately 1,200 net barrels per day in January compared with the previous month’s average.
During the first quarter of 2026, Battalion reported sales volumes of 12,578 boe/d, compared with 11,207 boe/d in the fourth quarter of 2025. The company itself linked the period’s performance to greater consistency and reliability in gas processing.
Battalion Concentrates Capital on Monument Draw
The financial and subsurface strategies are thus beginning to converge. Battalion sold assets, reduced debt, expanded its contiguous acreage position at Monument Draw, reorganized its gas processing, and formalized a mechanism to share capital during the next drilling campaign. In addition, a refinancing announced later extended the debt maturity to December 2029 and modified the financial terms to provide greater flexibility during development of the asset.
The eight-well program will now serve as an operational test of that transformation. If the first four wells confirm the expected performance, Battalion will not only have resumed drilling in the Delaware Basin. It will also be able to obtain the information needed to evaluate a considerably larger inventory within Monument Draw.
In a basin where capital efficiency is as important as the individual productivity of each well, that difference could determine whether the new campaign represents merely a return to drilling or the beginning of a multi-year development program.
Sources: Hart Energy / Battalion Oil / Oil & Gas Journal / U.S. SEC – Monument Draw Acquisition
