Financial Performance - Pedevco Corp. reported break-even quarterly earnings per share, missing the Zacks Consensus Estimate of $0.02, compared to earnings of $0.01 per share a year ago, representing an earnings surprise of -100% [1] - The company posted revenues of $8.74 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.11%, and this is an increase from year-ago revenues of $8.12 million [2] - Over the last four quarters, Pedevco has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Stock Performance - Pedevco shares have lost about 17.8% since the beginning of the year, while the S&P 500 has gained 0.2% [3] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.01 on $8.67 million in revenues, and $0.05 on $36 million in revenues for the current fiscal year [7] - The outlook for the industry, specifically the Oil and Gas - Mechanical and Equipment sector, is currently in the bottom 7% of over 250 Zacks industries, which may impact stock performance [8]

```markdown [Cautionary Note Regarding Forward-Looking Statements](index=2&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section provides a standard disclosure about forward-looking statements, highlighting their inherent risks and uncertainties. It lists various factors that could cause actual results to differ materially from expectations and states the company's policy not to update these statements unless legally required - Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the company's control[10](index=10&type=chunk) - Factors that could cause actual results to differ include future financial performance, business strategy, projected plans, oil and natural gas realized prices, capital expenditures, government regulation, general economic conditions, and competition in the oil and natural gas industry[10](index=10&type=chunk)[14](index=14&type=chunk) - The company cannot guarantee future results, levels of activity, performance, or achievements and does not undertake any obligation to update or revise publicly any forward-looking statements except as required by law[10](index=10&type=chunk)[11](index=11&type=chunk) [PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements for the three months ended March 31, 2025, and 2024, including balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, business description, accounting policies, and specific financial line items [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202025%20(Unaudited)%20and%20December%2031%2C%202024) Consolidated Balance Sheets | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total Assets | $145,575 | $133,845 | | Total Current Assets | $23,595 | $13,215 | | Total Oil and Gas Properties, net | $104,977 | $103,512 | | Total Liabilities | $23,860 | $12,745 | | Total Current Liabilities | $16,909 | $6,908 | | Total Shareholders' Equity | $121,715 | $121,100 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024%20(Unaudited)) Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Oil and gas sales | $8,736 | $8,116 | | Total operating expenses | $8,586 | $7,511 | | Operating income | $150 | $617 | | Income before income taxes | $216 | $773 | | Income tax expense | $76 | $- | | Net income | $140 | $773 | | Basic Earnings per common share | $0.00 | $0.01 | | Diluted Earnings per common share | $0.00 | $0.01 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024%20(Unaudited)) Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $5,928 | $(4,295) | | Net cash provided by (used in) investing activities | $625 | $(926) | | Net cash provided by financing activities | $- | $- | | Net increase (decrease) in cash and restricted cash | $6,553 | $(5,221) | | Cash, cash equivalents and restricted cash at end of period | $13,160 | $15,494 | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024%20(Unaudited)) Consolidated Statements of Shareholders' Equity | Metric | December 31, 2024 | March 31, 2025 | | :------------------------------------ | :---------------- | :------------- | | Common Stock Shares | 89,495,267 | 91,339,385 | | Common Stock Amount (in thousands) | $89 | $91 | | Additional Paid-in Capital (in thousands) | $227,013 | $227,486 | | Accumulated Deficit (in thousands) | $(106,002) | $(105,862) | | Total Shareholders' Equity (in thousands) | $121,100 | $121,715 | - Issuance of **1,844,118 restricted common stock shares** during the three months ended March 31, 2025[26](index=26&type=chunk) - Share-based compensation expense was **$475,000** for both the three months ended March 31, 2025, and 2024[26](index=26&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [NOTE 1 – BASIS OF PRESENTATION](index=7&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) The interim unaudited consolidated financial statements are prepared in accordance with GAAP and SEC rules, consistent with the latest 10-K. The company's future financial condition and liquidity are significantly influenced by the success of its drilling program, oil and natural gas discoveries, production speed, and prevailing commodity prices - Interim financial statements are prepared in accordance with GAAP and SEC rules, and should be read in conjunction with the audited financial statements in the 2024 Annual Report on Form 10-K[28](index=28&type=chunk)[29](index=29&type=chunk) - Future financial condition and liquidity are dependent on the success of the drilling program, the number and quantities of commercially viable oil and natural gas discoveries, the speed of bringing discoveries to production, and prevailing prices for oil and natural gas[31](index=31&type=chunk) [NOTE 2 – DESCRIPTION OF BUSINESS](index=7&type=section&id=NOTE%202%20%E2%80%93%20DESCRIPTION%20OF%20BUSINESS) PEDEVCO is an oil and gas company focused on the development, acquisition, and production of oil and natural gas assets. The company targets legacy proven properties in the Permian Basin (West Texas and eastern New Mexico) and the Denver-Julesberg Basin (Colorado and Wyoming), applying modern drilling and completion techniques - PEDEVCO is an oil and gas company focused on developing, acquiring, and producing oil and natural gas assets[32](index=32&type=chunk) - The company targets legacy proven properties in the Permian Basin and the Denver-Julesberg Basin, leveraging modern drilling and completion techniques[32](index=32&type=chunk) [NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=NOTE%203%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) There have been no changes to the company's significant accounting policies since December 31, 2024. The company is currently evaluating the impact of recently issued FASB ASUs related to income tax disclosures (ASU 2023-09) and income statement expense disaggregation (ASU 2024-03) - No changes to the company's significant accounting policies since December 31, 2024[33](index=33&type=chunk) - The company is evaluating ASU 2023-09 (Income Taxes), effective December 31, 2025, which requires disaggregated information about effective tax rate reconciliation and income taxes paid[34](index=34&type=chunk) - The company is evaluating ASU 2024-03 (Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2026, which requires additional disclosure about specified expense categories[35](index=35&type=chunk) [NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS](index=8&type=section&id=NOTE%204%20%E2%80%93%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Total revenue from contracts with customers increased by 8% to $8.7 million for the three months ended March 31, 2025, compared to $8.1 million in the prior year. This increase was primarily driven by significant growth in natural gas and natural gas liquids sales, while oil sales experienced a slight decrease NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS | Product Type | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | :------- | | Oil sales | $7,074 | $7,454 | $(380) | (5%) | | Natural gas sales | $842 | $333 | +$509 | 153% | | Natural gas liquids sales | $820 | $329 | +$491 | 149% | | Total revenue from customers | $8,736 | $8,116 | +$620 | 8% | [NOTE 5 – CASH AND CASH EQUIVALENTS](index=8&type=section&id=NOTE%205%20%E2%80%93%20CASH%20AND%20CASH%20EQUIVALENTS) The company's total cash, cash equivalents, and restricted cash significantly increased to $13.2 million at March 31, 2025, from $6.6 million at December 31, 2024. The increase in restricted cash is attributed to additional collateral required for a surety bond by the Colorado Bureau of Land Management NOTE 5 – CASH AND CASH EQUIVALENTS | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------ | :------------------------------ | :------------------------------- | | Cash | $10,413 | $4,010 | | Restricted cash included in other assets | $2,747 | $2,597 | | Total cash and cash equivalents and restricted cash | $13,160 | $6,607 | - The increase in restricted cash is related to additional collateral for a surety bond required by the Colorado Bureau of Land Management for the company's Colorado operations[39](index=39&type=chunk) [NOTE 6 – OIL AND GAS PROPERTIES](index=8&type=section&id=NOTE%206%20%E2%80%93%20OIL%20AND%20GAS%20PROPERTIES) Total net oil and gas properties increased to $105.0 million at March 31, 2025. The company incurred $5.7 million in capital costs for completion operations in the Permian Basin and recorded a $0.2 million impairment for undeveloped D-J Basin leases. A joint development agreement in the D-J Basin resulted in a $1.7 million payment to the company and a transfer of operatorship NOTE 6 – OIL AND GAS PROPERTIES | Metric | Balance at Dec 31, 2024 (in thousands) | Additions (in thousands) | Disposals (in thousands) | Balance at Mar 31, 2025 (in thousands) | | :------------------------------------------ | :------------------------------------- | :----------------------- | :----------------------- | :------------------------------------- | | Oil and gas properties, subject to amortization | $210,039 | $442 | $(2,028) | $208,453 | | Oil and gas properties, not subject to amortization | $8,442 | $5,238 | $- | $13,680 | | Asset retirement costs | $4,326 | $1,085 | $- | $5,411 | | Accumulated depreciation, depletion and impairment | $(119,295) | $(3,272) | $- | $(122,567) | | Total oil and gas assets | $103,512 | $3,493 | $(2,028) | $104,977 | - Incurred **$5.68 million** in capital costs primarily related to completion operations for four operated wells in the Permian Basin[41](index=41&type=chunk) - Recorded an impairment of **$232,000** for undeveloped D-J Basin leases (232 net acres) that expired or have no future drilling plans[42](index=42&type=chunk) - Entered a joint development agreement in February 2025 for D-J Basin Roth and Amber DSUs, receiving **$1.7 million** and transferring operatorship to a third-party operator[43](index=43&type=chunk)[44](index=44&type=chunk) [NOTE 7 – NOTE RECEIVABLE](index=9&type=section&id=NOTE%207%20%E2%80%93%20NOTE%20RECEIVABLE) The company holds a $1.267 million secured promissory note from Tilloo Exploration and Production LLC, which defaulted on its initial payment due January 8, 2025, and subsequent payments. The company has issued a default notice and intends to pursue all available remedies, believing the note is fully secured - Note receivable from Tilloo Exploration and Production LLC totals **$1.267 million** (**$498,000** current, **$769,000** long-term including accrued interest) as of March 31, 2025[46](index=46&type=chunk) - Tilloo failed to make the initial installment payment due on January 8, 2025, and subsequent monthly payments[47](index=47&type=chunk) - The company issued a notice of default and intends to pursue all available remedies, including potential foreclosure, believing the note is fully secured[47](index=47&type=chunk) [NOTE 8 – ASSET RETIREMENT OBLIGATIONS](index=9&type=section&id=NOTE%208%20%E2%80%93%20ASSET%20RETIREMENT%20OBLIGATIONS) Asset retirement obligations increased to $7.5 million at March 31, 2025, from $6.4 million at the beginning of the period, primarily due to changes in estimates and accretion expense. The company reimbursed $53,000 and incurred an additional $173,000 for plugging and abandoning inactive wells in New Mexico NOTE 8 – ASSET RETIREMENT OBLIGATIONS | Metric | Three Months Ended March 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------------------------- | | Balance at the beginning of the period | $6,371 | | Accretion expense | $293 | | Liabilities settled | $(226) | | Changes in estimates, net | $1,085 | | Balance at end of period | $7,523 | - Reimbursed the New Mexico Oil and Gas Conservation Division **$53,000** and incurred an additional **$173,000** in plugging and abandoning costs related to inactive legacy wells in the Permian Basin Asset[50](index=50&type=chunk) [NOTE 9 – COMMITMENTS AND CONTINGENCIES](index=10&type=section&id=NOTE%209%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company has an operating sublease for office space with a total lease liability of $203,000 as of March 31, 2025, expiring in February 2027. Leasehold drilling commitments include 776 net acres in the D-J Basin expiring in the remainder of 2025 and 4,821 net acres expiring within the next two years. The company is not currently involved in any material legal proceedings but is in a dispute with Tilloo regarding alleged misrepresentations in the Milnesand Sale and the Tilloo Note default - Operating lease liability for office space is **$203,000** as of March 31, 2025, with a weighted-average remaining lease term of **1.9 years**[55](index=55&type=chunk)[56](index=56&type=chunk) - Leasehold drilling commitments include **776 net acres** in the D-J Basin expiring during the remainder of 2025, and **4,821 net acres** expiring within the next two-year period[58](index=58&type=chunk) - The company is in a dispute with Tilloo Exploration & Production, LLC regarding alleged intentional misrepresentations in the Milnesand Sale and the subsequent default on the Tilloo Note[62](index=62&type=chunk) [NOTE 10 – SHAREHOLDERS' EQUITY](index=11&type=section&id=NOTE%2010%20%E2%80%93%20SHAREHOLDERS'%20EQUITY) During the three months ended March 31, 2025, the company granted an aggregate of 1,844,118 restricted stock awards to various employees - Granted an aggregate of **1,844,118 restricted stock awards** to employees during the three months ended March 31, 2025[63](index=63&type=chunk) [NOTE 11 – SHARE-BASED COMPENSATION](index=11&type=section&id=NOTE%2011%20%E2%80%93%20SHARE-BASED%20COMPENSATION) In January 2025, the company granted 1,844,118 restricted stock awards and options to purchase 464,000 shares. Stock-based compensation expense for the three months ended March 31, 2025, totaled $475,000, comprising $419,000 for restricted stock and $56,000 for options - On January 23, 2025, **1,844,118 restricted common stock shares** were granted to officers and employees with a total fair value of **$1,568,000**[65](index=65&type=chunk) - On January 23, 2025, options to purchase **464,000 shares** of common stock were granted at an exercise price of **$0.85 per share**, with an aggregate fair value of **$195,000**[67](index=67&type=chunk)[68](index=68&type=chunk) - Stock-based compensation expense for Q1 2025 was **$419,000** for restricted stock and **$56,000** for stock options, totaling **$475,000**[66](index=66&type=chunk)[69](index=69&type=chunk) NOTE 11 – SHARE-BASED COMPENSATION | Metric | Number of Stock Options | Weighted Average Exercise Price | | :-------------------------- | :---------------------- | :------------------------------ | | Outstanding at December 31, 2024 | 1,835,667 | $1.12 | | Granted | 464,000 | $0.85 | | Expired/Canceled | (215,667) | $1.68 | | Outstanding at March 31, 2025 | 2,084,000 | $1.00 | | Exercisable at March 31, 2025 | 1,156,666 | $1.14 | [NOTE 12 – EARNINGS PER COMMON SHARE](index=12&type=section&id=NOTE%2012%20%E2%80%93%20EARNINGS%20PER%20COMMON%20SHARE) Basic and diluted earnings per common share for the three months ended March 31, 2025, were $0.00, a decrease from $0.01 in the prior year, reflecting the lower net income. Share equivalents related to options were excluded from diluted EPS calculations as their inclusion would have been anti-dilutive NOTE 12 – EARNINGS PER COMMON SHARE | Metric | March 31, 2025 | March 31, 2024 | | :------------------------------------ | :------------- | :------------- | | Net income (in thousands) | $140 | $773 | | Weighted average common shares – basic | 90,868,110 | 88,753,838 | | Earnings per common share – basic | $0.00 | $0.01 | | Earnings per common share – diluted | $0.00 | $0.01 | - Share equivalents related to options (**2,294,000** for Q1 2025 and **2,092,334** for Q1 2024) were excluded from diluted EPS computation due to their anti-dilutive effect[74](index=74&type=chunk) [NOTE 13 – INCOME TAXES](index=13&type=section&id=NOTE%2013%20%E2%80%93%20INCOME%20TAXES) The company's effective tax rate increased to approximately 34.9% for the three months ended March 31, 2025, from 0.0% in the prior year, resulting in an income tax expense of $76,000. This change was primarily due to state income taxes and other tax adjustments, contrasting with a full valuation allowance in the previous period - Effective tax rate was approximately **34.9%** for Q1 2025, compared to **0.0%** for Q1 2024[75](index=75&type=chunk) - Recognized income tax expense of **$76,000** for Q1 2025, primarily due to state income taxes and other tax adjustments[75](index=75&type=chunk) [NOTE 14 – SEGMENT INFORMATION](index=13&type=section&id=NOTE%2014%20%E2%80%93%20SEGMENT%20INFORMATION) The company operates as a single reportable segment focused on oil and natural gas development, exploration, and production. Financial performance is assessed on a consolidated enterprise basis, with resource allocation decisions made across the entire portfolio based on project economics rather than geographic area - The company operates in one reportable operating segment: oil and natural gas development, exploration, and production[76](index=76&type=chunk) - Financial performance is assessed as a single enterprise, and resource allocation is made on a project basis across the entire portfolio, considering return on investment and market conditions, without regard to geographic area[76](index=76&type=chunk) [NOTE 15 – SUBSEQUENT EVENTS](index=13&type=section&id=NOTE%2015%20%E2%80%93%20SUBSEQUENT%20EVENTS) On April 3, 2025, effective January 1, 2025, the company sold all its operated production, including wellbore and surface equipment, in Weld County, Colorado, to a private buyer for an adjusted price of $606,000, while retaining ownership of its existing leasehold - On April 3, 2025, the company sold all of its operated production (wellbore and surface equipment) in Weld County, Colorado, for **$606,000**, effective January 1, 2025[78](index=78&type=chunk) - The company retained ownership in all its existing leasehold in the D-J Basin Asset despite the sale of operated production[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and cash flows for the three months ended March 31, 2025, compared to the prior year. It covers the business overview, strategic initiatives, detailed results of operations, liquidity, capital resources, and critical accounting estimates [Introduction](index=13&type=section&id=Introduction) - This MD&A should be read in conjunction with the consolidated financial statements and notes in this Quarterly Report on Form 10-Q and the Annual Report on Form 10-K for the year ended December 31, 2024[80](index=80&type=chunk) - References to 'Company,' 'we,' 'us,' 'our,' 'PEDEVCO,' and 'PEDEVCO Corp.' refer to PEDEVCO Corp. and its wholly and majority-owned subsidiaries[83](index=83&type=chunk) [General Overview](index=14&type=section&id=General%20Overview) - PEDEVCO is an oil and gas company focused on acquiring and developing assets in the Permian Basin and D-J Basin, applying modern drilling and completion techniques to legacy proven properties[85](index=85&type=chunk) - As of March 31, 2025, the company held approximately **14,105 net Permian Basin acres** (35 gross, 33.5 net wells) and **18,572 net D-J Basin acres** (82 gross, 21.9 net wells)[85](index=85&type=chunk)[88](index=88&type=chunk) - Effective January 1, 2025, the company sold all **17 gross (15.4 net) operated wells** in its D-J Basin Asset to reduce plugging and abandonment liabilities and recurring operational expenses[88](index=88&type=chunk) [Strategy](index=15&type=section&id=Strategy) - The company's strategy is to optimize existing assets and opportunistically seek additional acreage, focusing on horizontal development and exploitation in the Permian and D-J Basins to increase stockholder value[89](index=89&type=chunk) - Key strategies include growing production, cash flow, and reserves through operated and non-operated projects, applying modern drilling and completion techniques, optimizing well density, maintaining operational control, leveraging acquisition expertise, and preserving financial flexibility[90](index=90&type=chunk) - Estimated net capital expenditures for 2025 range from **$27 million to $33 million**, with approximately **70% to 75%** allocated to D-J Basin development under joint development agreements[91](index=91&type=chunk) - The company expects to have sufficient cash for the next 12 months from projected cash flow, existing cash, potential equity infusions/loans, public/private debt or equity financings (including up to **$8.0 million** from an ATM offering), and an undrawn **$250 million** reserve-based lending facility (initial borrowing base of **$20 million**)[93](index=93&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Entered a joint development agreement in February 2025 for D-J Basin Roth and Amber DSUs, receiving **$1.7 million** and transferring operatorship, following a Participation Agreement in August 2024 for the SW Pony Prospect[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [Results of Operations and Financial Condition](index=17&type=section&id=Results%20of%20Operations%20and%20Financial%20Condition) [Market Conditions and Commodity Prices](index=17&type=section&id=Market%20Conditions%20and%20Commodity%20Prices) The company's financial results are highly dependent on the volatile prices of natural gas and crude oil, which are influenced by external factors such as market supply and demand, weather conditions, and inventory levels. The company anticipates continued price volatility for the remainder of the year - Financial results are highly dependent on the price of natural gas and crude oil, which are affected by factors outside the company's control[98](index=98&type=chunk) - Commodity prices are influenced by market supply and demand, weather conditions, inventory storage levels, and basis differentials[98](index=98&type=chunk) - The company expects prices to remain volatile for the remainder of the year[98](index=98&type=chunk) [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Net income decreased by $0.7 million to $0.1 million in Q1 2025 from $0.8 million in Q1 2024, primarily due to a $1.1 million increase in total operating expenses (including a $0.2 million impairment) and income tax expense, partially offset by a $0.6 million increase in total revenues. The revenue increase was driven by higher production volumes, particularly from new non-operated D-J Basin wells - Net income for the three months ended March 31, 2025, was **$0.1 million** (**$0.00 per common share**), down from **$0.8 million** (**$0.01 per share**) in the prior year period[100](index=100&type=chunk) - The decrease in net income was primarily due to a **$1.1 million** increase in total operating expenses (including a **$0.2 million** impairment of oil and gas properties) and **$76,000** in income tax expense, partially offset by a **$0.6 million** increase in revenues[100](index=100&type=chunk) Results of Operations | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Increase (Decrease) | % Increase (Decrease) | | :---------------------- | :-------------------------------- | :-------------------------------- | :------------------ | :-------------------- | | Crude Oil (Bbls) | 102,699 | 100,903 | 1,796 | 2% | | Natural Gas (Mcf) | 166,733 | 131,939 | 34,794 | 26% | | NGL (Bbls) | 23,143 | 11,557 | 11,586 | 100% | | Total (Boe) | 153,631 | 134,450 | 19,181 | 14% | | Crude Oil ($/Bbl) | $68.88 | $73.87 | $(4.99) | (7%) | | Natural Gas ($/Mcf) | $5.05 | $2.52 | $2.53 | 100% | | NGL ($/Bbl) | $35.43 | $28.48 | $6.95 | 24% | | Total Revenues | $8,736 | $8,116 | $620 | 8% | - Total revenues increased by **$0.6 million** (**8%**) due to a favorable volume variance of **$0.7 million**, offset by an unfavorable price variance of **$0.1 million**. The volume increase is primarily from participation in **11 new non-operated D-J Basin wells**[104](index=104&type=chunk) Results of Operations | Expense Category | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Increase (Decrease) (in thousands) | % Increase (Decrease) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------- | :-------------------- | | Total Lease Operating Expenses | $3,412 | $2,531 | $881 | 35% | | Depreciation, Depletion, Amortization and Accretion | $3,346 | $3,485 | $(139) | (4%) | | Impairment of Oil and Gas Properties | $232 | $- | $232 | 5% | | Total General and Administrative Expense | $1,596 | $1,495 | $101 | 7% | | Interest Income | $64 | $149 | $(85) | (57%) | - Lease Operating Expenses increased by **$0.9 million** (**35%**) due to higher direct and variable costs associated with increased oil volume and new non-operated D-J Basin wells[106](index=106&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary cash sources in Q1 2025 were $8.7 million from sales of crude oil, natural gas, and NGLs, used mainly for drilling, completion, and operating costs. Working capital surplus increased by $0.4 million to $6.7 million. The company has $8.0 million available under an ATM offering and an undrawn $250 million reserve-based lending facility (initial $20 million borrowing base), expecting sufficient cash for its 2025 development program - Primary cash sources for Q1 2025 were **$8.7 million** from sales of crude oil, natural gas, and NGLs, primarily used for drilling, completion, and operating costs[111](index=111&type=chunk) - Working capital surplus increased by **$0.4 million** to **$6.7 million** at March 31, 2025, from **$6.3 million** at December 31, 2024[112](index=112&type=chunk) - The company has **$8.0 million** of availability under a December 2024 'at the market' (ATM) offering sales agreement, with no securities sold to date[113](index=113&type=chunk) - A **$250 million** reserve-based lending facility with Citibank, N.A., provides an initial borrowing base of **$20 million**, with no borrowings drawn down as of the report date[115](index=115&type=chunk) - The company expects to have sufficient cash to meet its needs over the next 12 months, including funding the 2025 development program, from operations, existing cash, potential equity/loans, ATM offerings, and the RBL facility[114](index=114&type=chunk) [Cash Flows](index=20&type=section&id=Cash%20Flows%20(in%20thousands)) Net cash provided by operating activities significantly increased by $10.2 million, moving from a use of $4.3 million in Q1 2024 to a provision of $5.9 million in Q1 2025. Investing activities also shifted from a net use to a net provision, primarily due to cash received from the sale of oil and gas properties Cash Flows (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Cash flows provided by (used in) by operating activities | $5,928 | $(4,295) | | Cash flows provided by (used in) investing activities | $625 | $(926) | | Cash flows provided by financing activities | $- | $- | | Net increase (decrease) in cash and restricted cash | $6,553 | $(5,221) | - Net cash provided by operating activities increased by **$10.2 million**, primarily due to a **$10.7 million** net increase in other components of working capital, partially offset by a decrease in net income and DDA[117](index=117&type=chunk) - Net cash provided by investing activities increased by **$1.6 million**, mainly due to cash received from the sale of oil and gas properties, offset by increased capital spending for drilling and completion activities[118](index=118&type=chunk) [Non-GAAP Financial Measures](index=20&type=section&id=Non-GAAP%20Financial%20Measures) The company presents EBITDA and Adjusted EBITDA as non-GAAP measures to provide additional analytical insight into its performance, excluding non-cash items and certain non-recurring or non-estimable items. Adjusted EBITDA for Q1 2025 was $4.3 million, a decrease from $4.7 million in Q1 2024 - EBITDA and Adjusted EBITDA are non-GAAP measures used to evaluate performance, excluding interest, taxes, depreciation, amortization, share-based compensation, impairment of oil and gas properties, and gain on sale of fixed assets[119](index=119&type=chunk) Non-GAAP Financial Measures | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net income | $140 | $773 | | EBITDA | $3,562 | $4,258 | | Adjusted EBITDA | $4,269 | $4,721 | [Critical Accounting Estimates](index=21&type=section&id=Critical%20Accounting%20Estimates) This section outlines the company's critical accounting policies that involve significant estimates and judgments. These include the successful efforts method for oil and gas properties, revenue recognition based on control transfer, asset retirement obligations (ARO) for future site reclamation, and stock-based compensation valuation using the Black-Scholes model with subjective assumptions - Uses the successful efforts method for oil and gas properties, capitalizing development wells and proved mineral interests, expensing geological/geophysical costs, and evaluating exploratory wells for economic viability[122](index=122&type=chunk)[123](index=123&type=chunk) - Recognizes sales revenues for oil, natural gas, and NGLs when control transfers to the customer, based on the contract price, which may include adjustments for market differentials and downstream costs[127](index=127&type=chunk)[128](index=128&type=chunk) - Records asset retirement obligations (ARO) for estimated future costs of site reclamation, dismantling facilities, or plugging wells, capitalizing the present value in oil and gas properties and subsequently accreting and depreciating it[130](index=130&type=chunk) - Estimates the fair value of employee stock option awards using the Black-Scholes option pricing model, which requires subjective assumptions such as expected volatility and expected life[131](index=131&type=chunk) [Recently Issued Accounting Pronouncements](index=22&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) The company is evaluating two recently issued FASB ASUs: ASU 2023-09 (Income Taxes), effective December 31, 2025, for disaggregated tax information, and ASU 2024-03 (Income Statement Expenses), effective December 15, 2026, for additional expense disclosures. Neither is expected to have a material effect on the consolidated financial statements - Evaluating ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' effective December 31, 2025, for disaggregated information about effective tax rate reconciliation and income taxes paid[132](index=132&type=chunk) - Evaluating ASU 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,' effective for annual periods beginning after December 15, 2026[133](index=133&type=chunk) - The company does not expect either ASU to have a material effect on its consolidated financial statements[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a 'smaller reporting company,' PEDEVCO Corp. is not required to provide quantitative and qualitative disclosures about market risk under Item 305(e) of Regulation S-K - The company is not required to provide quantitative and qualitative disclosures about market risk as it is a 'smaller reporting company'[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CAO concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, due to un-remediated material weaknesses identified in the 2024 Form 10-K. No material changes in internal control over financial reporting occurred during the three months ended March 31, 2025 - The CEO and CAO concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to un-remediated material weaknesses identified in the 2024 Form 10-K[137](index=137&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2025[138](index=138&type=chunk) [PART II – OTHER INFORMATION](index=23&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal or governmental proceedings. While it may be involved in litigation in the normal course of business, it has implemented policies and procedures to mitigate environmental risks associated with its natural gas and oil operations - The company is not currently a party to any material legal or governmental proceedings[141](index=141&type=chunk) - Various policies, programs, and procedures have been implemented to reduce and mitigate environmental risks inherent in the natural gas and oil business[142](index=142&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024. Investors are advised to review those factors - No material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024[143](index=143&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not issue or sell any unregistered equity securities during the quarter ended March 31, 2025. There were also no uses of proceeds from the sale of registered securities or purchases of equity securities by the issuer during this period - The company did not issue or sell any unregistered equity securities during the quarter ended March 31, 2025[144](index=144&type=chunk) - There were no uses of proceeds from the sale of registered securities or purchases of equity securities by the issuer and affiliated purchasers[145](index=145&type=chunk)[146](index=146&type=chunk) [Item 3. Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is included in the report's table of contents but contains no specific information, indicating that there were no defaults upon senior securities during the reported period - No information provided, implying no defaults upon senior securities[147](index=147&type=chunk) [Item 4. Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as 'Not Applicable' in the report, indicating that the company does not have operations requiring mine safety disclosures - This item is marked as 'Not Applicable'[148](index=148&type=chunk) [Item 5. Other Information](index=24&type=section&id=Item%205.%20Other%20Information) During the quarter ended March 31, 2025, none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements - None of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the quarter ended March 31, 2025[149](index=149&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's 2021 Equity Incentive Plan and related forms, certifications from the CEO and CFO (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and various Inline XBRL documents - Exhibits include the PEDEVCO Corp. 2021 Equity Incentive Plan and related forms of restricted shares and stock option grant agreements[150](index=150&type=chunk) - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed/furnished[150](index=150&type=chunk) - Inline XBRL Instance Document and Taxonomy Extension Documents are included[150](index=150&type=chunk) [Signatures](index=24&type=section&id=Signatures) The Quarterly Report on Form 10-Q was duly signed on behalf of PEDEVCO Corp. by J. Douglas Schick, President and Chief Executive Officer, and Paul A. Pinkston, Chief Accounting Officer, on May 15, 2025 - The report was signed by J. Douglas Schick, President and Chief Executive Officer, and Paul A. Pinkston, Chief Accounting Officer, on May 15, 2025[156](index=156&type=chunk) ```

Core Viewpoint - The article emphasizes the importance of value investing and highlights Pedevco (PED) as a strong value stock based on its financial metrics and Zacks Rank [2][4][6] Company Analysis - Pedevco (PED) currently holds a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for investment [4] - The stock has a Forward P/E ratio of 10.80, which is lower than the industry average of 11.86, suggesting it may be undervalued [4] - Over the past year, PED's Forward P/E has fluctuated between a high of 33.33 and a low of 9.88, with a median of 12.16 [4] - Pedevco has a P/B ratio of 0.41, significantly lower than the industry average of 0.99, further indicating potential undervaluation [5] - The P/B ratio has ranged from a high of 0.93 to a low of 0.38 over the past 12 months, with a median of 0.75 [5] - These financial metrics contribute to Pedevco's strong Value grade and suggest that the stock is likely undervalued at present [6]

[Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) PEDEVCO Corp. reported strong operational and financial results in 2024, marked by significant increases in annual production, revenue, and EBITDA, while maintaining financial discipline and strengthening its asset base [CEO Statement & Operational Overview](index=1&type=section&id=J.%20Douglas%20Schick%2C%20President%20and%20Chief%20Executive%20Officer%20of%20the%20Company%2C%20stated) PEDEVCO Corp. reported strong operational and financial results in 2024, marked by significant increases in annual production, revenue, and EBITDA. The company strengthened its positions in the D-J Basin and Permian Basin through participation in new wells and strategic agreements, while maintaining financial discipline with a strong cash position and zero debt - Increased **annual production, revenue, and EBITDA** in 2024, while maintaining disciplined G&A and operating expenses, and exiting the year with a **strong cash position and zero debt**[4](index=4&type=chunk) - Participated in the drilling and completion of **24 non-operated wells** in the D-J Basin (working interests ranging from ~7% to 28%) and is currently participating in an additional **6 non-operated wells** (~5% working interest) awaiting completion[4](index=4&type=chunk) - Completed **three new horizontal San Andres wells** in the Permian Basin early in the year and has **four recently drilled horizontal wells** currently undergoing completion operations, planned to turn in-line in Q2 2025[4](index=4&type=chunk) [Financial Performance Summary](index=1&type=section&id=Financial%20Summary%3A) For the year ended December 31, 2024, PEDEVCO reported a substantial increase in net income and EPS, driven by an income tax benefit and increased revenue, despite higher operating expenses. Adjusted EBITDA also saw significant growth, and the company ended the year with a strong cash position and no debt Key Financial Metrics (2024 vs. 2023) (in millions) | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | Net Income | $17.8 | $1.7 | +$16.1 | | EPS | $0.20 | $0.02 | +$0.18 | | Revenue | $39.6 | $30.8 | +28% | | Operating Expenses | $34.8 | $25.3 | +37% | | Adjusted EBITDA | $22.9 | $17.5 | +31% | | Cash & Cash Equivalents | $6.6 | $20.7 | -$14.1 | | Debt | Zero | Zero | No Change | - Net income increase primarily due to a **$12.8 million income tax benefit** from net operating loss carryforwards and an **$8.8 million increase in revenue**, offset by a **$9.5 million increase in total operating expenses**[4](index=4&type=chunk)[5](index=5&type=chunk) - Average daily production increased **29% to 1,835 barrels of oil equivalent per day ("BOEPD")** (**73% oil, 85% liquids**) in 2024[8](index=8&type=chunk) [Detailed Financial Review](index=2&type=section&id=Detailed%20Financial%20Review) This section provides a comprehensive analysis of PEDEVCO's production volumes, realized prices, revenue drivers, and detailed operating expenses for the fiscal year 2024 [Production, Prices and Revenues](index=2&type=section&id=Production%2C%20Prices%20and%20Revenues%3A) In 2024, PEDEVCO experienced a significant increase in production volumes, leading to a 28% rise in total revenue, despite a negligible change in combined average realized sales price per Boe. Liquids comprised a substantial portion of total production Production and Revenue (Year Ended December 31, 2024) | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | Total Production (Boe) | 671,796 | N/A | N/A | | Oil Production (barrels) | 492,396 | N/A | N/A | | Natural Gas Production (Mcf) | 608,382 | N/A | N/A | | NGL Production (Boe) | 78,003 | N/A | N/A | | Liquids % of Total Production | 85% | N/A | N/A | | Average Realized Crude Oil Price | $73.50/barrel | N/A | N/A | | Average Realized Natural Gas Price | $2.00/Mcf | N/A | N/A | | Average Realized NGL Price | $27.48/barrel | N/A | N/A | | Combined Average Realized Sales Price | $58.88/Boe | $59.10/Boe | -0.4% | | Total Revenue | $39.6 million | $30.8 million | +28% | - The **$8.8 million increase in total revenue** was primarily due to a favorable volume variance, resulting from participation in **24 new non-operated wells** in the D-J Basin and the drilling and completion of **three operated wells** in the Permian Basin[12](index=12&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Total operating expenses increased by $9.5 million in 2024, primarily driven by higher lease operating expenses and depreciation, depletion, amortization, and accretion (DD&A), both directly linked to increased production volumes. General and administrative expenses also saw a modest rise [Lease Operating Expenses (LOE)](index=2&type=section&id=Lease%20Operating%20Expenses%20%28%22LOE%22%29%3A) Lease operating expenses increased by $2.6 million in 2024, primarily due to higher direct and variable costs associated with increased oil and gas production volumes Lease Operating Expenses (LOE) (2024 vs. 2023) (in millions) | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | Total LOE | $12.4 | $9.8 | +$2.6 | - The increase in LOE was primarily due to higher direct and variable lease operating expenses associated with the **higher oil volume** resulting from the **increased number of wells** and **increased oil and gas production**[13](index=13&type=chunk) [Depreciation, Depletion, Amortization and Accretion (DD&A)](index=2&type=section&id=Depreciation%2C%20Depletion%2C%20Amortization%20and%20Accretion%20%28%22DD%26A%22%29%3A) Depreciation, depletion, amortization, and accretion expenses rose by $6.5 million in 2024, mainly driven by increased production and a higher accretion expense from a plugging and abandonment program Depreciation, Depletion, Amortization and Accretion (DD&A) (2024 vs. 2023) (in millions) | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | DD&A | $15.9 | $9.4 | +$6.5 | - The increase in DD&A was primarily the result of an **increase in production** in the current period. Additionally, accretion expense increased by approximately **$0.4 million** in Q4 2024 due to the plugging and abandonment program in the Permian Basin Asset[14](index=14&type=chunk) [General and Administrative Expenses (G&A)](index=2&type=section&id=General%20and%20Administrative%20Expenses%20%28%22G%26A%22%29%3A) General and administrative expenses, excluding share-based compensation, increased by $0.6 million in 2024 due to higher staffing, bonuses, software, and professional services, while share-based compensation nominally decreased General and Administrative Expenses (G&A) (2024 vs. 2023) | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | G&A (excl. share-based comp) | N/A | N/A | +$0.6 million | | Share-based compensation | N/A | N/A | Nominally decreased | - The increase of **$0.6 million in G&A** (excluding share-based compensation) was primarily due to increased contract and full-time staff related to increased activity, higher accrued bonuses, software licensing fees, and general increases in accounting and professional services[15](index=15&type=chunk) - Share-based compensation decreased nominally due to the forfeiture of certain employee stock-based options from voluntary employee terminations, utilized for conserving cash resources for field development[16](index=16&type=chunk) [Other Income and Expenses](index=2&type=section&id=Other%20Income%20and%20Expenses) The company reported a net loss on the sale of oil and gas properties in 2024 from multiple transactions, significantly lower than the prior year's loss. Interest income was earned from cash accounts, while other expenses related to a cash escrow disposition [Loss on Sale of Oil and Gas Properties, net](index=2&type=section&id=Loss%20on%20Sale%20of%20Oil%20and%20Gas%20Properties%2C%20net%3A) The net loss on the sale of oil and gas properties significantly decreased in 2024 to $76,000, compared to a $4.3 million loss in 2023, reflecting various asset dispositions and acquisitions Loss on Sale of Oil and Gas Properties, net (2024 vs. 2023) (in thousands) | Metric | 2024 | 2023 | | :----- | :--- | :--- | | Total Net Loss on Sale | $76 | $4,300 | - In 2024, the company sold **30 gross (5.1 net) non-operated legacy D-J Basin well-bores** for a loss of **$865,000**, sold a legacy D-J Basin well-bore assignment for a gain of **$29,000**, and sold leasehold rights to **320 net acres** in the D-J Basin for a gain of **$735,000**[17](index=17&type=chunk) - In the prior period (2023), the company recognized a **$4.3 million loss** from the sale of its wholly-owned subsidiary EOR Operating Company and related assets (Milnesand Sale)[17](index=17&type=chunk) [Interest Income and Other Expense](index=2&type=section&id=Interest%20Income%20and%20Other%20Expense%3A) Interest income was $351,000 in 2024, while other expenses primarily related to the disposition of a cash escrow balance from the Milnesand Sale Interest Income (2024) (in thousands) | Metric | 2024 | | :----- | :--- | | Interest Income | $351 | - Other expense in 2024 primarily relates to the subsequent disposition of a cash escrow bank balance related to the Milnesand Sale. Other income in the prior period was primarily related to the sale of used pipe[18](index=18&type=chunk)[19](index=19&type=chunk) [Liquidity and Capital Resources](index=3&type=section&id=Working%20Capital%20and%20Liquidity%3A) This section details PEDEVCO's working capital position, liquidity, and future capital expenditure plans, outlining funding strategies for ongoing and planned development activities [Working Capital and Liquidity Position](index=3&type=section&id=Working%20Capital%20and%20Liquidity%20Position) PEDEVCO maintained a healthy working capital surplus in 2024, which increased slightly compared to 2023, primarily due to a larger reduction in accounts payable and accrued expenditures relative to current assets Working Capital Surplus (2024 vs. 2023) (in millions) | Metric | December 31, 2024 | December 31, 2023 | | :----- | :------------------ | :------------------ | | Total Current Assets | $13.2 | $24.6 | | Total Current Liabilities | $6.9 | $18.9 | | Working Capital Surplus | $6.3 | $5.7 | - The **$0.6 million net increase in working capital surplus** was primarily related to a larger reduction in accounts payable and accrued expenditures compared to the corresponding smaller reduction in current assets, due to the timing of cash payments related to drilling activities[20](index=20&type=chunk) [Capital Expenditure Plans and Funding](index=3&type=section&id=Capital%20Expenditure%20Plans%20and%20Funding) The company estimates 2025 net capital expenditures between $27 million and $33 million, with the majority allocated to development in the D-J Basin. PEDEVCO anticipates sufficient cash to meet its needs through projected cash flow, existing cash, its RBL facility, potential equity/loans from Dr. Kukes, public/private financings, and asset sales Estimated 2025 Capital Expenditures (in millions) | Category | Estimated Range | | :------- | :-------------- | | Total Net Capital Expenditures | $27 - $33 | | Drilling & Completion (Permian & D-J) | $24.5 - $30.5 | | Other Capital Expenses | ~$2.5 | - Approximately **70% to 75% of expected capital expenditures** for 2025 will be allocated to development in the D-J Basin under new joint development and participation agreements[21](index=21&type=chunk) - Anticipated funding sources for 2025 development include projected cash flow from operations, existing cash on hand, borrowing under the **$250 million Citibank RBL facility** (initial **$20 million borrowing base**, none drawn), potential equity infusions or loans from Dr. Simon G. Kukes, public or private debt/equity financings (including up to **$8.0 million in 'at the market offerings'**), and funding through other credit facilities or asset sales[22](index=22&type=chunk) [Company Overview](index=3&type=section&id=About%20PEDEVCO%20Corp.) PEDEVCO Corp. is a publicly-traded energy company focused on acquiring and developing strategic, high-growth energy projects in the U.S., with principal assets in the Permian Basin (New Mexico) and D-J Basin (Colorado, Wyoming) - PEDEVCO Corp. (NYSE American: PED) is a publicly-traded energy company engaged in the acquisition and development of strategic, high growth energy projects in the United States[24](index=24&type=chunk) - The Company's principal assets are its Permian Basin Asset located in the Northwest Shelf of the Permian Basin in eastern New Mexico, and its D-J Basin Asset located in the D-J Basin in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming[24](index=24&type=chunk) - PEDEVCO is headquartered in Houston, Texas[24](index=24&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) This section defines and reconciles non-GAAP financial measures, specifically EBITDA and Adjusted EBITDA, explaining their utility and limitations for investors [Use of Non-GAAP Financial Information](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) This section explains the company's use of non-GAAP financial measures, specifically EBITDA and Adjusted EBITDA, providing their definitions, the rationale for their presentation to investors, and important limitations to consider - **EBITDA** represents net income before interest, taxes, depreciation and amortization[25](index=25&type=chunk) - **Adjusted EBITDA** is defined as EBITDA before share-based compensation expense, loss on sale of oil and gas properties, net, and gain on sale of fixed assets[25](index=25&type=chunk) - These non-GAAP measures are presented because they provide additional useful information to investors due to various noncash items and are frequently used by analysts and investors in the industry, but should not be viewed as an alternative to GAAP measures[25](index=25&type=chunk) - Limitations include not reflecting cash expenditures, future requirements for capital expenditures, changes in working capital needs, significant interest expense, or cash income tax payments[26](index=26&type=chunk) [Reconciliation of Non-GAAP Measures](index=7&type=section&id=Reconciliation%20of%20Net%20Income%20%28Loss%29%20attributable%20to%20PEDEVCO%20Corp.%2C%20to%20Earnings%20before%20Interest%2C%20Taxes%2C%20Depreciation%20and%20Amortization%20%28EBITDA%29%20and%20Adjusted%20EBITDA%2A) The company provides a reconciliation of its GAAP net income to non-GAAP EBITDA and Adjusted EBITDA for the years ended December 31, 2024, and 2023, detailing the adjustments made Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) | Metric | 2024 | 2023 (As Restated) | | :----- | :--- | :----------------- | | Net income | $17,789 | $1,699 | | Add (deduct): | | | | Income tax benefit | (12,751) | - | | Depreciation, depletion, amortization and accretion | 15,920 | 9,440 | | **EBITDA** | **$20,958** | **$11,139** | | Add (deduct): | | | | Share-based compensation | 1,859 | 2,043 | | Loss on sale of oil and gas properties, net | 76 | 4,268 | | Gain on sale of fixed assets | (12) | - | | **Adjusted EBITDA** | **$22,881** | **$17,450** | [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward%20Looking%20Statements) This section serves as a legal disclaimer, identifying forward-looking statements within the press release and outlining the inherent risks, uncertainties, and other factors that could cause actual results to differ materially from those projected. It emphasizes that the company undertakes no obligation to update these statements - The press release may contain forward-looking statements, identified by words such as 'may,' 'could,' 'expect,' 'intend,' 'plan,' 'seek,' 'anticipate,' 'believe,' 'estimate,' 'predict,' 'potential,' 'continue,' 'likely,' 'will,' 'would' and variations of these terms and similar expressions[27](index=27&type=chunk) - These statements involve known and unknown risks, uncertainties, and other factors, which may cause the results of PEDEVCO to be materially different than those expressed or implied, including volatility of oil and natural gas prices, success in discovering reserves, profitability risks, regulatory changes, economic conditions, and the need for additional capital[27](index=27&type=chunk) - The company undertakes no obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws[28](index=28&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents PEDEVCO Corp.'s audited consolidated financial statements, including the balance sheets, statements of operations, and cash flows for the specified fiscal periods [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The consolidated balance sheets provide a snapshot of PEDEVCO Corp.'s assets, liabilities, and shareholders' equity as of December 31, 2024, and 2023 Consolidated Balance Sheets (amounts in thousands) | Metric | December 31, 2024 | December 31, 2023 (As Restated) | | :------------------------------------------------ | :------------------ | :-------------------------------- | | **Assets** | | | | Cash and cash equivalents | $4,010 | $18,515 | | Accounts receivable – oil and gas | 7,995 | 5,790 | | Note receivable, current | 293 | 42 | | Prepaid expenses and other current assets | 917 | 260 | | **Total current assets** | **13,215** | **24,607** | | Oil and gas properties, subject to amortization, net | 95,070 | 81,872 | | Oil and gas properties, not subject to amortization, net | 8,442 | 12,407 | | **Total oil and gas properties, net** | **103,512** | **94,279** | | Note receivable | 933 | 1,099 | | Operating lease – right-of-use asset | 224 | 316 | | Deferred income taxes | 12,751 | - | | Other assets | 3,210 | 2,443 | | **Total assets** | **$133,845** | **$122,744** | | **Liabilities and Shareholders' Equity** | | | | Accounts payable | $2,625 | $6,580 | | Accrued expenses | 2,255 | 8,712 | | Revenue payable | 1,266 | 3,371 | | Operating lease liabilities – current | 99 | 89 | | Asset retirement obligations – current | 663 | 147 | | **Total current liabilities** | **6,908** | **18,899** | | Operating lease liabilities, net of current portion | 129 | 227 | | Asset retirement obligations, net of current portion | 5,708 | 2,166 | | **Total liabilities** | **12,745** | **21,292** | | Common stock | 89 | 87 | | Additional paid-in capital | 227,013 | 225,156 | | Accumulated deficit | (106,002) | (123,791) | | **Total Shareholders' Equity** | **121,100** | **101,452** | | **Total Liabilities and Shareholders' Equity** | **$133,845** | **$122,744** | [Consolidated Statements of Operations](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The consolidated statements of operations detail PEDEVCO Corp.'s revenues, operating expenses, and net income for the years ended December 31, 2024, and 2023 Consolidated Statements of Operations (amounts in thousands) | Metric | 2024 | 2023 (As Restated) | | :------------------------------------------ | :--- | :----------------- | | **Revenue:** | | | | Oil and gas sales | $39,553 | $30,784 | | **Operating expenses:** | | | | Lease operating costs | 12,449 | 9,831 | | Selling, general and administrative expense | 6,391 | 6,008 | | Depreciation, depletion, amortization and accretion | 15,920 | 9,440 | | **Total operating expenses** | **34,760** | **25,279** | | Loss on sale of oil and gas properties, net | (76) | (4,268) | | **Operating income** | **4,717** | **1,237** | | **Other income (Expense):** | | | | Interest income | 351 | 422 | | Gain on sale of fixed asset | 12 | - | | Other (expense) income | (42) | 40 | | **Total other income** | **321** | **462** | | **Income before income taxes** | **5,038** | **1,699** | | Income tax benefit | 12,751 | - | | **Net Income** | **$17,789** | **$1,699** | | **Earnings per common share:** | | | | Basic | $0.20 | $0.02 | | Diluted | $0.20 | $0.02 | | **Weighted average number of common shares outstanding:** | | | | Basic | 89,234,611 | 87,031,692 | | Diluted | 89,236,237 | 87,031,692 | [Consolidated Statements of Cash Flows](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The consolidated statements of cash flows present the sources and uses of cash for PEDEVCO Corp. across operating, investing, and financing activities for the years ended December 31, 2024, and 2023 Consolidated Statements of Cash Flows (amounts in thousands) | Metric | 2024 | 2023 (As Restated) | | :---------------------------------------------------- | :--- | :----------------- | | **Cash Flows From Operating Activities:** | | | | Net income | $17,789 | $1,699 | | Depreciation, depletion and amortization | 15,920 | 9,440 | | Share-based compensation expense | 1,859 | 2,043 | | Loss on sale of oil and gas properties, net | 76 | 4,268 | | Deferred income tax benefit | (12,751) | - | | Amortization of right-of-use asset | 110 | 100 | | Changes in operating assets and liabilities (net) | (10,275) | 5,931 | | **Net cash provided by operating activities** | **12,766** | **23,481** | | **Cash Flows From Investing Activities:** | | | | Cash paid for drilling and completion costs | (27,857) | (34,951) | | Proceeds from the sale of oil and gas property | 1,140 | 366 | | **Net cash used in investing activities** | **(26,874)** | **(35,743)** | | **Net decrease in cash and restricted cash** | **(14,108)** | **(12,262)** | | Cash and restricted cash at beginning of year | 20,715 | 32,977 | | **Cash and restricted cash at end of year** | **$6,607** | **$20,715** |

Financial Performance - Total revenues for the year ended December 31, 2024, reached $39.55 million, a 28.5% increase from $30.78 million in 2023[129]. - Crude oil production totaled 492,396 barrels in 2024, up 28.8% from 382,794 barrels in 2023, with an average sales price of $73.50 per barrel[129]. - Natural gas production increased to 608,382 Mcf in 2024, compared to 479,533 Mcf in 2023, with an average sales price of $2.00 per Mcf[129]. - Total production for 2024 was 78,003 Bbls, an increase from 58,170 Bbls in 2023, representing a growth of 34%[130]. - Average sales price per Bbl increased to $27.48 in 2024 from $24.43 in 2023, reflecting a rise of 12.5%[130]. - The company incurred $20.5 million in capital costs for the year ended December 31, 2024, primarily related to non-operated drilling and completion costs[147]. Capital Expenditures and Investments - Estimated net capital expenditures for 2025 are projected to range between $27 million to $33 million, with $24.5 million to $30.5 million allocated for drilling and completion costs[97]. - Approximately 70% to 75% of the expected capital expenditures for 2025 will be allocated to development in the D-J Basin[97]. - The company anticipates sufficient cash flow to fund its 2025 development program, including projected cash flow from operations and existing cash on hand[99]. - The company plans to optimize existing assets and seek additional acreage to enhance stockholder value through strategic acquisitions[93]. - The company aims to apply modern drilling and completion techniques to historically underdeveloped properties to increase production and reserves[94]. Reserves and Production Potential - The report discusses the importance of proved reserves, which are reserves that have been confirmed to a high degree of certainty[71]. - The company highlights the significance of production costs, which include operating and maintaining wells and related facilities[69]. - The report mentions the present value of future net revenues (PV-10), calculated using a 10% discount rate, which reflects the estimated future revenues from proved reserves[67]. - Total estimated proved reserves as of December 31, 2024, were 18.1 million Boe, including 14.2 million Bbls of crude oil and NGL reserves[138]. - The company holds interests in 14,105 net acres in the Permian Basin and 18,669 net acres in the D-J Basin, indicating significant drilling potential[110]. - The D-J Basin Asset has grown to approximately 14,809 net acres in Weld and Morgan Counties, Colorado, and 3,860 net acres in Laramie County, Wyoming[127]. Regulatory Environment - The production of oil and natural gas is regulated by various federal and state laws, which may limit the number of wells that can be drilled and impose additional costs on operations[155]. - Each state imposes a production or severance tax on the production and sale of oil, NGL, and gas, affecting overall profitability[157]. - The Federal Energy Regulatory Commission (FERC) regulates interstate natural gas pipeline transportation rates, which can impact the revenues received from oil and gas sales[161]. - The FERC has the authority to impose civil penalties for violations of regulations, with penalties reaching up to $1.5 million per day per violation[162]. - Compliance with environmental regulations may require significant capital investments for air pollution control equipment, impacting future capital expenditures[172]. - The EPA has proposed new rules aimed at reducing methane emissions from oil and gas operations, which could impose additional operational requirements[173]. Operational Control and Management - The company retains operational control over its properties to efficiently manage capital expenditures and maximize returns[96]. - The management team has extensive experience in the oil and gas industry, with key members having over 25 years of relevant experience[108]. - The company has a borrowing base of $20 million and an aggregate maximum revolving credit amount of $250 million under its reserve-based lending facility[99]. - The company is committed to maintaining a disciplined financial profile to provide flexibility across various commodity and market cycles[96]. Joint Ventures and Agreements - A Participation Agreement with Evolution Petroleum Corporation was established for joint development of the Chaveroo oilfield, covering approximately 16,000 gross leasehold acres[123]. - A joint development agreement was entered into in February 2025, with the operator paying $1.7 million for participation in the expansion of the Roth and Amber DSUs[145]. Environmental and Safety Regulations - The company faces potential significant costs and delays due to new or more stringent federal, state, or local legal restrictions on hydraulic fracturing, which could adversely affect exploration and production activities[201]. - The Clean Water Act and state laws impose strict controls on the discharge of pollutants, which could delay the development of oil and natural gas projects[204]. - The Oil Pollution Act of 1990 imposes duties and liabilities on operators related to oil spill prevention, which could adversely affect the Company's operations[206]. - Stricter regulations on hazardous waste could increase costs for the Company and the oil and natural gas industry, potentially impacting financial performance[209]. - The company may be subject to joint and several liability for cleanup costs related to hazardous substances under CERCLA, which could be substantial[210]. - The company operates properties that have been used for oil and natural gas exploration, which may have released hazardous substances[211].

Financial Performance - Pedevco Corp. reported quarterly earnings of $0.02 per share, matching the Zacks Consensus Estimate, and an increase from $0.01 per share a year ago [1] - The company posted revenues of $9.05 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 2.72%, and up from $7.33 million year-over-year [2] - Over the last four quarters, Pedevco has consistently surpassed consensus revenue estimates, achieving this four times [2] Stock Performance and Outlook - Pedevco shares have increased approximately 16.5% since the beginning of the year, while the S&P 500 has gained 25.5% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] - Current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $9.68 million, and for the current fiscal year, it is $0.06 on revenues of $38.42 million [7] Industry Context - The Oil and Gas - Mechanical and Equipment industry, to which Pedevco belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, indicating potential challenges [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Pedevco's stock performance [5]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Pedevco Corp. (PED) due to higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2] Earnings Expectations - Pedevco is expected to report quarterly earnings of $0.02 per share, reflecting a 100% year-over-year increase, with revenues projected at $8.81 million, a 20.2% increase from the previous year [3] Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst assessments [4] - The Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [10] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likelihood of actual earnings deviating from consensus estimates, with positive readings being more predictive of earnings beats [6][7] - A positive Earnings ESP combined with a strong Zacks Rank (1-3) shows a nearly 70% success rate for positive surprises [8] Historical Performance - Pedevco has not exceeded consensus EPS estimates in the last four quarters, with the last reported quarter matching expectations with earnings of $0.03 per share [12][13] Overall Assessment - Pedevco does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when evaluating the stock ahead of the earnings release [16]

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued ...

Core Viewpoint - The article emphasizes the importance of value investing and highlights Pedevco (PED) as a strong value stock based on various valuation metrics [1][6]. Valuation Metrics - Pedevco has a Zacks Rank of 1 (Strong Buy) and an A grade for Value, indicating it is a high-quality value stock [3]. - The stock's P/E ratio is 11.65, significantly lower than the industry's average of 16.81, suggesting it may be undervalued [3]. - Pedevco's P/B ratio stands at 0.74, compared to the industry's average of 1.95, further indicating potential undervaluation [4]. - The P/CF ratio for Pedevco is 5.76, which is attractive relative to the industry's average of 7.56, reinforcing the notion of being undervalued [5]. Earnings Outlook - The combination of Pedevco's strong valuation metrics and positive earnings outlook positions it as an impressive value stock in the current market [6].

Group 1: Earnings Performance - Pedevco Corp. reported quarterly earnings of $0.03 per share, matching the Zacks Consensus Estimate, but down from $0.04 per share a year ago [1] - The company posted revenues of $11.81 million for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 30.51%, compared to $10.91 million in the same quarter last year [2] - Over the last four quarters, Pedevco has not surpassed consensus EPS estimates, but has topped revenue estimates four times [1][2] Group 2: Stock Performance and Outlook - Pedevco shares have increased approximately 16.5% since the beginning of the year, outperforming the S&P 500's gain of 13.9% [3] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $0.02 for the coming quarter and $0.06 for the current fiscal year [4][7] - The estimate revisions trend for Pedevco is currently favorable, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Group 3: Industry Context - The Oil and Gas - Mechanical and Equipment industry, to which Pedevco belongs, is currently ranked in the top 15% of over 250 Zacks industries, suggesting a positive outlook for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]