8-K: PEDEVCO Receives Approval for D-J Basin Development Plan, Plans Q2 Drilling

PEDEVCO Corp. has received approval for its D-J Basin Oil and Gas Development Plan, paving the way for drilling operations to commence in the second quarter of 2024.

Summary

• PEDEVCO Corp. announced the approval of its Roth 2-11 Oil and Gas Development Plan (OGDP) by the Colorado Energy and Carbon Management Commission (ECMC).
• The OGDP covers 2,560 acres and allows for up to 11 horizontal Niobrara wells in Weld County, Colorado.
• Drilling operations are scheduled to begin in the second quarter of 2024.
• Initial production from these wells is anticipated in the second half of 2024.

Sentiment

Score: 7

Explanation: The document is positive due to the approval of the development plan and the commencement of drilling operations. However, the document also includes standard risk disclosures, which temper the overall sentiment.

Positives

• The approval of the D-J Basin development plan allows PEDEVCO to move forward with its 2024 operated development program.
• The company anticipates a high rate of return from the multi-well drilling unit.
• The development is located directly offsetting recent successful non-operated development in the D-J Basin.

Risks

• The company's future results are subject to risks and uncertainties, including the volatility of oil and natural gas prices.
• There are risks associated with discovering, estimating, developing, and replacing oil and natural gas reserves.
• The company faces risks related to the profitability of operations and generating sufficient cash flow.
• Changes in the legal and regulatory environment governing the oil and gas industry could impact the company.
• The company is exposed to risks related to the availability of capital and the costs thereof.
• There are risks associated with the uncertainty of drilling, completion, and enhanced recovery operations.
• The company's stock is subject to illiquidity and volatility.
• The company is dependent upon present management.
• The company is exposed to risks related to military conflicts in oil producing countries.
• The company is exposed to risks related to limitations in the availability of, and costs of, supplies, materials, contractors and services that may delay the drilling or completion of wells or make such wells more expensive.
• The company is exposed to risks related to regulatory changes, including those related to carbon dioxide and greenhouse gas emissions.

Future Outlook

PEDEVCO plans to commence drilling operations in Q2 2024, with initial production anticipated in the second half of 2024. The company anticipates a high rate of return from the multi-well drilling unit.

Management Comments

• J. Douglas Schick, President of the Company, stated, 'We are very pleased to commence our 2024 operated development program in the D-J Basin now that we have obtained this important approval.'
• The company looks forward to procuring the necessary services to begin operations next quarter.
• The company seeks to develop what it anticipates to be a high rate of return multi-well drilling unit on its acreage.

Industry Context

This announcement indicates PEDEVCO's continued focus on developing its D-J Basin assets, aligning with the broader trend of oil and gas companies seeking to capitalize on established and productive basins. The company is leveraging its position to develop acreage directly offsetting recent successful non-operated development in the D-J Basin.

Comparison to Industry Standards

• The development of 11 horizontal Niobrara wells is a typical project size for companies operating in the D-J Basin.
• Companies such as PDC Energy and Civitas Resources are active in the D-J Basin and have similar development plans.
• The anticipated production in the second half of 2024 is a standard timeline for this type of project.
• The company's focus on high rate of return multi-well drilling units is consistent with industry best practices.

Stakeholder Impact

• Shareholders will likely view the approval of the development plan positively.
• Employees will be involved in the upcoming drilling operations.
• The development will contribute to the company's production and revenue.

Next Steps

• PEDEVCO will procure the necessary services to begin drilling operations in the second quarter of 2024.
• The company will commence drilling operations in Q2 2024.
• The company will begin initial production in the second half of 2024.

Key Dates

Keywords

PEDEVCO, D-J Basin, Oil and Gas Development, Niobrara wells, Drilling, Production, Colorado Energy and Carbon Management Commission, ECMC, Horizontal wells