10-Q: PEDEVCO Corp. Reports Net Income of $140,000 for Q1 2025, Revenue Increases 8%

PEDEVCO Corp. announces a net income of $140,000 for the first quarter of 2025, with an 8% increase in revenue compared to the same period last year.

Summary

• PEDEVCO Corp. reported a net income of $140,000, or $0.00 per common share, for the three months ended March 31, 2025.
• This compares to a net income of $773,000, or $0.01 per share, for the same period in 2024.
• Total revenue increased by 8% to $8.736 million, driven by higher production volumes of crude oil, natural gas and NGLs.
• The company's average sale price for crude oil decreased by 7% to $68.88 per barrel, while natural gas prices increased by 100% to $5.05 per Mcf.
• Lease operating expenses increased by 35% to $3.412 million, primarily due to higher direct and variable costs.
• The company recorded an impairment of oil and gas properties of $232,000 related to undeveloped leases in the D-J Basin.
• Capital expenditures for 2025 are estimated to range between $27 million and $33 million.
• The company has $8.0 million of availability under a December 20, 2024, Sales Agreement, entered into with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners, pursuant to which the Company may sell securities from time to time in an at the market offering.
• The company expects to have sufficient cash to meet its needs over the next 12 months, including funding the 2025 development program.

Sentiment

Score: 5

Explanation: The report shows mixed results with increased revenue offset by decreased net income and increased operating expenses. The company is pursuing strategic initiatives, but faces challenges related to commodity prices and operational costs.

Positives

• Revenue increased by 8% due to higher production volumes.
• Natural gas and NGL production saw significant increases of 28% and 102%, respectively.
• The company has a $250 million reserve-based lending facility with Citibank, N.A., providing financial flexibility.
• The company has $8.0 million of availability under a December 20, 2024, Sales Agreement, entered into with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners, pursuant to which the Company may sell securities from time to time in an at the market offering.

Negatives

• Net income decreased from $773,000 in Q1 2024 to $140,000 in Q1 2025.
• Lease operating expenses increased by 35%, impacting profitability.
• The company recorded an impairment of oil and gas properties of $232,000 related to undeveloped leases in the D-J Basin.
• The company's disclosure controls and procedures were not designed at a reasonable assurance level and were not effective to provide reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Risks

• Commodity price volatility could impact revenue and profitability.
• The company's ability to find and develop sufficient oil and gas reserves at economical costs is critical to long-term success.
• Failure of Tilloo to make payments on the secured promissory note could negatively impact the company.
• The company's disclosure controls and procedures were not designed at a reasonable assurance level and were not effective to provide reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Future Outlook

The company plans to optimize its existing assets and opportunistically seek additional acreage, aiming to increase stockholder value through production growth, modern drilling techniques, and strategic acquisitions.

Industry Context

The company is focused on the Permian Basin and D-J Basin, which are considered among the most economic oil and natural gas plays in the U.S. The company's strategy involves applying modern drilling and completion techniques to historically underdeveloped properties.

Comparison to Industry Standards

• The report does not contain enough information to make a detailed comparison to industry standards.
• A full comparison would require a peer group analysis including companies such as Devon Energy, EOG Resources, Pioneer Natural Resources, and Occidental Petroleum.
• Key metrics for comparison would include production costs per BOE, reserve replacement ratio, and return on capital employed.

Legal Proceedings

• The Company does not believe any misrepresentations were made by the Company or its principals in the Milnesand Sale and that the claims will fail as a matter of law.
• The Company has not received any correspondence from Tilloo regarding the allegations made in the November 4, 2024 correspondence subsequent to receipt of the same from Tilloo, and Tilloo failed to make the initial installment payment due under the Tilloo Note on January 8, 2025.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income.
• Employees may be affected by changes in operational strategies and capital allocation.
• Customers and suppliers may be impacted by the company's production volumes and pricing strategies.

Next Steps

• The company plans to continue evaluating D-J Basin well proposals and participate in those deemed most economic.
• The company intends to maintain a disciplined financial profile to provide flexibility across various commodity and market cycles.
• The company plans to hold significantly all of this acreage through a program of drilling and completing producing wells.

Key Dates

Keywords

PEDEVCO, oil and gas, production, revenue, Permian Basin, D-J Basin, financial results, Q1 2025