PEDEVCO (PED) - 2025 Q2 - Quarterly Results

Executive Summary Q2 2025 Performance Overview PEDEVCO reported a net loss of $1.7 million in Q2 2025, a significant decrease from a net income of $2.7 million in Q2 2024, driven by a credit loss write-off, reduced revenue, and impairment, partially offset by asset sales and tax benefit Q2 2025 Key Financial and Operational Metrics | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :--------------------- | :------ | :------ | :----------- | | Net (Loss) Income | ($1.7M) | $2.7M | -$4.4M | | Basic EPS | ($0.02) | $0.03 | -$0.05 | | Revenue | $7.0M | $11.8M | -$4.8M | | Operating Loss | ($2.2M) | $2.7M | -$4.9M | | Production (BOEPD) | 1,517 | 2,010 | -25% | | Adjusted EBITDA | $3.0M | $7.4M | -58% | - The decrease in net income was primarily due to a $3.5 million reduction in operating income, resulting from a full write-off of a note receivable and accrued interest, a $4.8 million reduction in revenue, and a $0.5 million impairment to oil and gas properties, partially offset by a $1.0 million gain on the sale of oil and gas properties and a $0.5 million income tax benefit[5] Operational Highlights and Outlook Despite Q2 2025 production being hampered by temporary factors, PEDEVCO remains optimistic about future growth with new wells online and active participation in drilling programs, maintaining a strong financial position with over $10 million in cash and zero debt - Received first production from four recently completed horizontal San Andres wells in its core Chaveroo Field in the Permian Basin starting in May 2025[7][20] - Participated in the drilling of 18 non-operated wells in the D-J Basin across three projects, with completions expected in mid-August and early September 2025, and initial production anticipated in early to mid-Q4 2025, with an additional six non-operated wells planned for drilling in late Q4 2025[7][21] - The company maintains a strong financial position with over $10 million of cash on its balance sheet, zero debt, and an untouched $250 million RBL in place with Citibank[4][7] - Strategic focus includes disciplined growth, developing the Permian Basin Asset, growing operated and non-operated production in the D-J Basin Asset, controlling lease operating and G&A expenses, and seeking accretive M&A opportunities[4] Financial Performance Analysis Summary of Financial Results PEDEVCO experienced a significant shift from net income to net loss in Q2 2025 compared to Q2 2024, primarily due to a $1.378 million credit loss on a note receivable and a $0.510 million impairment of oil and gas properties, alongside a $4.8 million reduction in oil and gas sales revenue, partially offset by a $1.021 million gain on asset sales and a $0.490 million income tax benefit Summary of Financial Results (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Oil and gas sales | $6,972 | $11,811 | -$4,839 | | Total operating expenses | $8,859 | $9,173 | -$314 | | Gain on sale of oil and gas properties | $1,021 | $0 | +$1,021 | | Note receivable – credit loss | ($1,378) | $0 | -$1,378 | | Operating income (expense) | ($2,244) | $2,638 | -$4,882 | | Income tax benefit | $490 | $0 | +$490 | | Net (loss) income | ($1,676) | $2,681 | -$4,357 | | Basic EPS | ($0.02) | $0.03 | -$0.05 | Production, Prices and Revenues Total crude oil, natural gas, and NGL revenues decreased by 41% or $4.8 million in Q2 2025 compared to Q2 2024, driven by both unfavorable price and volume variances, with average realized sales prices declining and production volumes decreasing due to operational issues, natural declines, and asset sales Production and Revenue Metrics | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | Average Production (BOEPD) | 1,517 | 2,010 | -25% | | Total Production (Boe) | 138,028 | N/A | N/A | | Liquids Production (% of total) | 86% | N/A | N/A | | Average Realized Crude Oil Price ($/bbl) | $61.65 | N/A | N/A | | Average Realized Natural Gas Price ($/Mcf) | $2.70 | N/A | N/A | | Average Realized NGL Price ($/bbl) | $26.24 | N/A | N/A | | Combined Average Realized Sales Price ($/Boe) | $50.51 | $64.61 | -22% | | Total Revenue Decrease | $4.8M | N/A | -41% | - Revenue decrease attributed to an unfavorable price variance of $2.3 million and an unfavorable volume variance of $2.5 million[11] - Production volume decreased due to several non-recurring items, including a large non-operated D-J Basin pad being offline, wells shut-in for offset fracs in the Permian, natural declines from Q4 2024 D-J Basin wells, and the sale of 17 operated D-J Basin wells in April 2025 and 30 non-core non-operated D-J Basin wells in late 2024[12] Operating Expenses Total operating expenses in Q2 2025 decreased by $0.3 million compared to Q2 2024, primarily due to lower direct and variable lease operating expenses and reduced depreciation, depletion, amortization, and accretion expenses associated with lower production volumes, partially offset by a $0.5 million impairment of oil and gas properties Total Operating Expenses (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :--------------------- | :--------------------- | :--------------------- | :----------- | | Total operating expenses | $8,859 | $9,173 | -$314 | Lease Operating Expenses (LOE) LOE decreased by $0.7 million in Q2 2025 to $2.8 million, primarily due to lower direct and variable expenses associated with reduced crude oil, natural gas, and NGL volumes Lease Operating Costs (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Lease operating costs | $2,799 | $3,548 | -$749 | - The decrease was primarily due to lower direct and variable lease operating expenses associated with the lower crude oil, natural gas, and NGL volumes[13] Depreciation, Depletion, Amortization and Accretion (DD&A) DD&A expenses decreased by $0.4 million to $3.86 million in Q2 2025, mainly as a result of lower crude oil, natural gas, and NGL volumes DD&A Expenses (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :--------------------- | :--------------------- | :----------- | | Depreciation, depletion, amortization and accretion | $3,857 | $4,242 | -$385 | - The decrease was primarily the result of lower crude oil, natural gas, and NGL volumes[14] Impairment of Oil and Gas Properties The company recorded a $0.5 million impairment of oil and gas properties in Q2 2025, related to undeveloped leases in the D-J Basin that were allowed to expire or have no current drilling plans, with no impairment recorded in the prior period Impairment of Oil and Gas Properties (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :--------------------- | :--------------------- | :----------- | | Impairment of oil and gas properties | $510 | $0 | +$510 | - Impairment related to undeveloped leases representing 776 net acres in the D-J Basin that were allowed to expire or have no plans to drill prior to expiration[15] General and Administrative Expenses (G&A) G&A expenses increased by $0.3 million in Q2 2025, driven by additional payroll, audit fees, and software licensing fees, with share-based compensation also seeing a nominal increase Selling, General and Administrative Expense (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :--------------------- | :--------------------- | :----------- | | Selling, general and administrative expense | $1,693 | $1,383 | +$310 | - Increase primarily due to additional payroll, audit fees, and software licensing fees[16] - Share-based compensation increased nominally and is utilized for conserving cash resources for field development activities[16] Interest and Other Income/Expense Interest income decreased nominally in Q2 2025 to $63,000, primarily due to additional cash usage for operations and no interest recognized on a fully written-off note receivable, while other income in the current period was related to sales tax refunds Interest and Other Income/Expense (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Interest income | $63 | $93 | -$30 | | Other income (expense) | $15 | ($50) | +$65 | - Interest income decreased due to additional cash usage for operations and no interest recognized on the fully written-off note receivable[18] - Other income in the current period is related to sales tax refunds[18] Working Capital and Liquidity PEDEVCO's working capital surplus increased to $7.0 million as of June 30, 2025, from $6.3 million at December 31, 2024, mainly due to a proportional increase in production and sales, partially offset by an increase in payables related to the capital drilling program, maintaining a strong liquidity position with $11.2 million in cash and zero debt Working Capital and Liquidity (in thousands) | Metric | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | Change | | :-------------------------- | :--------------------------- | :-------------------------- | :----- | | Total current assets | $17,591 | $13,215 | +$4,376 | | Total current liabilities | $10,564 | $6,908 | +$3,656 | | Working capital surplus | $7,027 | $6,307 | +$720 | | Cash and cash equivalents | $11,200 | $6,600 | +$4,600 | | Total Debt | $0 | $0 | $0 | - The $0.7 million increase in working capital surplus is primarily related to a proportional increase in production and sales, offset by a proportional increase in payables related to the current capital drilling program[19] Adjusted EBITDA (Non-GAAP) Adjusted EBITDA for Q2 2025 decreased by 58% to $3.0 million from $7.4 million in Q2 2024, reflecting the overall challenging financial performance during the quarter, including the credit loss and lower revenues Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :-------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Adjusted EBITDA | $3,032 | $7,385 | -$4,353 | - Adjusted EBITDA is a non-GAAP financial measure, defined as EBITDA before share-based compensation expense, impairment of oil and gas properties, gain on sale of oil and gas properties, gain on sale of fixed assets, and note receivable – credit loss[24] Operational Update Permian Basin Activities PEDEVCO successfully brought four new horizontal San Andres wells in its core Chaveroo Field in the Permian Basin online in May 2025, with early production results being satisfactory - Received first production in mid-Q2 from four new horizontal San Andres wells drilled and completed in its core Chaveroo Field in the Permian Basin in Q1 2025 and early Q2 2025[7][20] - The Company is pleased with the early production results[20] D-J Basin Activities The company is actively participating in multiple non-operated drilling programs in the D-J Basin, including eight 2.5-mile lateral wells and four other non-operated wells with completions expected in Q3 2025 and initial production in Q4 2025, and six additional non-operated wells planned for late Q4 2025 - Participated in the drilling of eight 2.5-mile lateral non-operated wells (~7.5% working interest) with completion expected in mid-August 2025 and initial production in early Q4 2025[7][21] - Participated in the drilling of three 2.5-mile lateral and one 3-mile U-shaped lateral non-operated wells (~44% working interest) with completion expected in early September 2025 and initial production in mid-Q4 2025[7][21] - Participated in the drilling of six 1.5-mile lateral non-operated wells (~5% working interest) planned for late Q4 2025[7][21] Additional Information About PEDEVCO Corp. 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 and Wyoming) - PEDEVCO Corp. (NYSE American: PED) is a publicly-traded energy company[23] - Engaged in the acquisition and development of strategic, high growth energy projects in the United States[23] - Principal assets are its Permian Basin Asset (Northwest Shelf of the Permian Basin in eastern New Mexico) and its D-J Basin Asset (Weld and Morgan Counties, Colorado, and Laramie County, Wyoming)[23] Use of Non-GAAP Financial Information This section defines EBITDA and Adjusted EBITDA as supplemental non-GAAP measures used to evaluate the company's performance, highlighting their limitations and the need for reconciliation to comparable GAAP measures, with Adjusted EBITDA specifically excluding share-based compensation, impairment, gains on asset sales, and credit losses - EBITDA represents net income before interest, taxes, depreciation and amortization[24] - Adjusted EBITDA is defined as EBITDA before share-based compensation expense, impairment of oil and gas properties, gain on sale of oil and gas properties, gain on sale of fixed assets, and note receivable – credit loss[24] - These non-GAAP measures are presented to provide additional useful information to investors due to various noncash items and are frequently used by analysts and investors in the industry, however, they have limitations and should not be viewed as an alternative to GAAP measures[24][25] Cautionary Statement Regarding Forward Looking Statements This section serves as a disclaimer for forward-looking statements made in the press release, emphasizing that actual results may differ materially due to various known and unknown risks and uncertainties, including commodity price volatility, operational risks, regulatory changes, and economic conditions, and the company undertakes no obligation to update these statements - Forward-looking statements are 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[26] - Actual results may differ materially due to known and unknown risks and uncertainties, including volatility of oil and natural gas prices, success in discovering/developing reserves, profitability risks, regulatory changes, and general economic conditions[26] - The company cautions against undue reliance on these statements and undertakes no obligation to update them publicly, except as required by applicable laws[26][27] Consolidated Financial Statements Consolidated Balance Sheets The consolidated balance sheet shows an increase in total assets to $136.8 million as of June 30, 2025, from $133.8 million at December 31, 2024, with current assets increasing due to higher cash and accounts receivable, while total liabilities also increased primarily due to higher accounts payable and revenue payable Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | Change | | :------------------------------------ | :--------------------------- | :-------------------------- | :----- | | Total assets | $136,818 | $133,845 | +$2,973 | | Total current assets | $17,591 | $13,215 | +$4,376 | | Cash and cash equivalents | $8,467 | $4,010 | +$4,457 | | Accounts receivable – oil and gas | $8,556 | $7,995 | +$561 | | Total liabilities | $16,166 | $12,745 | +$3,421 | | Total current liabilities | $10,564 | $6,908 | +$3,656 | | Accounts payable | $5,782 | $2,625 | +$3,157 | | Revenue payable | $2,467 | $1,266 | +$1,201 | | Total shareholders' equity | $120,652 | $121,100 | -$448 | Consolidated Statements of Operations The consolidated statements of operations reflect a net loss of $1.676 million for Q2 2025, a reversal from a net income of $2.681 million in Q2 2024, primarily due to a significant decrease in oil and gas sales revenue, a credit loss on a note receivable, and an impairment of oil and gas properties, partially offset by a gain on asset sales and an income tax benefit Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Oil and gas sales | $6,972 | $11,811 | $15,708 | $19,927 | | Total operating expenses | $8,859 | $9,173 | $17,445 | $16,684 | | Operating income (expense) | ($2,244) | $2,638 | ($2,094) | $3,243 | | Net (loss) income | ($1,676) | $2,681 | ($1,536) | $3,454 | | Basic EPS | ($0.02) | $0.03 | ($0.02) | $0.04 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $5.508 million from $0.295 million in the prior year, largely due to adjustments for non-cash items, while net cash used in investing activities decreased substantially to $1.040 million, primarily due to lower drilling and completion costs and cash received from asset sales, with the company ending the period with $11.214 million in cash and restricted cash Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net (loss) income | ($1,536) | $3,454 | | Net cash provided by operating activities | $5,508 | $295 | | Net cash used in investing activities | ($1,040) | ($12,333) | | Net cash provided by financing activities | $139 | $0 | | Net increase (decrease) in cash and restricted cash | $4,607 | ($12,038) | | Cash and restricted cash at end of period | $11,214 | $8,677 | - Cash paid for drilling and completion costs decreased from $12.290 million in the six months ended June 30, 2024, to $3.675 million in the same period of 2025[34] - Cash received for the sale of oil and gas properties amounted to $2.635 million in the six months ended June 30, 2025[34] Reconciliation of Non-GAAP Financial Measures The reconciliation shows that Adjusted EBITDA for Q2 2025 was $3.032 million, down from $7.385 million in Q2 2024, and for the six months ended June 30, 2025, it was $7.301 million, compared to $12.106 million in the prior year, with key adjustments from net income including adding back DD&A, share-based compensation, impairment, and credit loss, while deducting income tax benefit and gain on asset sales Reconciliation of Non-GAAP Financial Measures (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net (loss) income | ($1,676) | $2,681 | ($1,536) | $3,454 | | EBITDA | $1,691 | $6,923 | $5,253 | $11,181 | | Adjusted EBITDA | $3,032 | $7,385 | $7,301 | $12,106 | - Key adjustments for Q2 2025 include adding back $3.857 million for DD&A, $474,000 for share-based compensation, $510,000 for impairment, and $1.378 million for note receivable credit loss, while deducting $490,000 for income tax benefit and $1.021 million for gain on sale of oil and gas properties[35]