PEDEVCO (PED) - 2024 Q4 - Annual Results

Executive Summary & Key Highlights 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 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] - 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] - 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] Financial Performance Summary 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][5] - Average daily production increased 29% to 1,835 barrels of oil equivalent per day ("BOEPD") (73% oil, 85% liquids) in 2024[8] Detailed Financial Review 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 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] Operating Expenses 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) 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] Depreciation, Depletion, Amortization and Accretion (DD&A) 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] General and Administrative Expenses (G&A) 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] - 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] Other Income and Expenses 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 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] - 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] Interest Income and Other Expense 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][19] Liquidity and Capital Resources 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 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] Capital Expenditure Plans and Funding 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] - 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] Company Overview 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] - 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] - PEDEVCO is headquartered in Houston, Texas[24] Non-GAAP Financial Measures 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 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] - 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] - 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] - 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] Reconciliation of Non-GAAP Measures 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 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] - 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] - 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] Consolidated Financial Statements 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 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 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 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 |