10-K: PEDEVCO Reports 2025 Net Loss Amid Major Merger & Growth

PEDEVCO Corp. reported a net loss of $10.4 million for 2025, driven by merger-related expenses and increased operating costs, despite significant production and reserve growth from strategic acquisitions.

Summary

• PEDEVCO Corp. reported a net loss of $10.4 million, or ($2.25) per share, for the year ended December 31, 2025, a decrease from a net income of $12.3 million, or $2.76 per share, in 2024.
• Total revenues from oil, natural gas, and NGLs increased by 16% to $45.8 million in 2025, up from $39.6 million in 2024, primarily due to increased production volumes from the October 2025 Mergers.
• Total production volumes increased by 35% to 910,068 Boe (2,494 Boe/d) in 2025, compared to 671,796 Boe (1,835 Boe/d) in 2024.
• Proved reserves increased by 14.0 MMBoe to 32.1 MMBoe as of December 31, 2025, with 49% classified as proved undeveloped.
• The company completed a significant merger on October 31, 2025, acquiring North Peak Oil & Gas, LLC and Century Oil and Gas Sub-Holdings, LLC, expanding its footprint in the D-J Basin and Powder River Basin.
• Capital expenditures for 2025 totaled $239.2 million, including $204.6 million related to the Mergers and $34.0 million for drilling and completion activities.
• A 1-for-20 reverse stock split was effected on March 13, 2026, approved by stockholders on October 29, 2025, and by the Board on February 27, 2026.
• Material weaknesses in disclosure controls and internal control over financial reporting were identified and extended, related to depletion expense calculations and tax provisions.
• The company entered into an Amended and Restated Credit Agreement on October 31, 2025, with an initial borrowing base of $120 million and a maximum revolving credit amount of $250 million, drawing $87 million at closing.
• A $1.4 million note receivable credit loss was recognized due to the full write-off of the Tilloo Note receivable and accrued interest.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed but strategically active period. While significant growth in reserves and production through the merger is positive, the reported net loss, increased expenses, and persistent internal control weaknesses present notable concerns. The ongoing legal and regulatory challenges add to the uncertainty.

Positives

• Total proved reserves increased significantly by 14.0 MMBoe to 32.1 MMBoe as of December 31, 2025, primarily due to the acquisition of properties in the D-J and Powder River Basins.
• Total production volumes increased by 35% to 910,068 Boe (2,494 Boe/d) in 2025, with oil production up 37%, natural gas up 27%, and NGL up 39%.
• The October 2025 Mergers expanded the company's footprint to approximately 320,000 net acres across the D-J Basin and Powder River Basin, positioning it as a premier Rockies-focused operator.
• The company expects organic production growth from 32 wells recently completed in Q4 2025 and early Q1 2026.
• The company maintains a low-cost operating profile and conservative capital structure, which management expects to preserve.
• A net gain of $6.3 million was recognized on derivative contracts in 2025, including a realized gain of $2.1 million and an unrealized gain of $4.1 million.
• The company successfully divested 17 gross (15.4 net) operated wells in the D-J Basin in April 2025, reducing plugging and abandonment liabilities and recurring operating expenses, while retaining leasehold interests.

Negatives

• Reported a net loss of $10.4 million in 2025, a significant decline from a net income of $12.3 million in 2024.
• Operating expenses increased substantially, with total lease operating expenses up 54% to $19.1 million and general and administrative expenses (excluding share-based compensation) up 209% to $14.0 million, largely due to merger-related costs and increased payroll.
• Average sales price for crude oil decreased by 19% to $59.78 per Bbl in 2025 from $73.50 per Bbl in 2024.
• Incurred a $1.4 million note receivable credit loss due to the full write-off of the Tilloo Note receivable and accrued interest.
• A working capital deficit of $26.7 million was reported at December 31, 2025, compared to a surplus of $6.3 million in 2024, primarily due to assumed current liabilities from the Mergers.
• The company recorded an impairment of oil and gas properties of $0.9 million related to undeveloped leases in the D-J Basin that expired or have no drilling plans.
• The company is involved in litigation with Tilloo Exploration & Production, LLC regarding alleged breach of contract and misrepresentations related to a prior asset sale.
• The company is also involved in litigation with Phoenix Energy One, LLC for alleged breach of contract related to an oil and gas property sale, with a potential loss of $7.7 million if unresolved in its favor.

Risks

• Need to raise additional capital to support operations and repay outstanding indebtedness.
• Future price volatility of oil, natural gas, and NGLs, which heavily influences revenue, profitability, and cash flows.
• Impact of public health crises (e.g., COVID-19) on operations, property value, and commodity prices.
• Effect of political and economic conditions in oil and natural gas producing countries, including ongoing conflicts (Russia-Ukraine, Israel-Hamas, Israel-Iran, Venezuela).
• Current and future declines in economic activity, recessions, changes in inflation and interest rates.
• Status and availability of third-party oil and natural gas gathering, transportation, and storage facilities.
• Increase in the differential between benchmark prices (NYMEX) and wellhead prices received for production.
• New or amended environmental legislation or regulatory initiatives leading to increased costs, operating restrictions, or delays.
• Future shut-ins of operated production if market conditions significantly deteriorate.
• Declines in the value of crude oil, natural gas, and NGL properties resulting in impairments.
• Inability to generate sufficient cash flow to meet future debt service and other obligations.
• Vulnerability to risks associated with operating in only three geographic areas (Permian Basin, Powder River Basin, D-J Basin).
• Highly speculative nature of oil and gas operations, including risks of non-commercial quantities, accidents, equipment failures, and unforeseen interruptions.
• Potential conflicts of interest for management and board members holding positions with other entities and the largest stockholder (Juniper).
• Limited control over activities on non-operated properties.
• Inaccuracies in oil and gas reserve estimates or underlying assumptions.
• Intense competition in the oil and natural gas industry for acquisitions, marketing, and personnel.
• Competitors' use of superior technology and data resources that the company may be unable to afford or obtain.
• Uncertainties associated with enhanced recovery methods, potentially leading to unacceptable returns.
• Requirements to drill on certain acreage to hold leases by production.
• Improvements in or new discoveries of alternative energy technologies reducing demand for oil and gas.
• Future litigation or governmental proceedings resulting in adverse judgments or settlements.
• Sporadic and volatile market for common stock.
• Dependence on the continued involvement of present management.
• Juniper's beneficial ownership of 52% of common stock, giving it majority voting control and potential differing interests.
• Ability to maintain NYSE American listing criteria.
• Dilution caused by future offerings.
• Future material impairments of oil and gas assets.
• Difficulties in integrating acquired companies' assets, personnel, and operations, and failure to realize anticipated synergies from the Mergers.
• Inability to retain suppliers or distributors, or modification of contractual relationships post-Mergers.
• Significant resources and management attention required to integrate acquired private companies into public reporting compliance.
• Limitations on the ability to utilize net operating loss carryforwards and tax credit carryforwards due to ownership changes.
• Adverse effects from security threats, including cybersecurity threats.
• Difficulty managing growth in business due to small size and strain on resources.
• Failure to adequately protect critical data and technology systems.
• Increasing attention to environmental, social, and governance (ESG) matters impacting costs, profits, and access to capital.
• Adverse macroeconomic conditions, including inflation, slower growth, tariffs, and higher interest rates.
• Adverse impacts from climate change or legal, regulatory, or market responses to such change.
• Adverse impacts from changes in accounting standards.

Future Outlook

The company plans to optimize existing assets and opportunistically seek additional acreage in the Rockies and Permian Basins. Net capital expenditures for 2026 are estimated to range between $16 million to $20 million, with 90% allocated to the D-J Basin for drilling, completion, and optimization projects. The company is evaluating future development plans for late 2026 and 2027 as it integrates acquired assets. Funding for these plans is anticipated from projected cash flow, existing cash, public/private debt or equity financings (including up to $7.6 million from ATM offerings), and credit facilities. The company expects to have sufficient cash to meet needs over the next 12 months and in the foreseeable future.

Management Comments

• We believe that horizontal development and exploitation of conventional and unconventional oil and gas assets in the Rockies region, including the D-J and Powder River Basins, and the Permian Basin, represent among the most economic oil and natural gas plays in the U.S.
• We plan to optimize our existing assets and opportunistically seek additional acreage proximate to our currently held core acreage, as well as target other acquisitions in the Rockies region that fit our acquisition criteria.
• We believe there is a significant opportunity to build a leading oil and gas company in the Rockies region through both organic growth and acquisitions on terms that are more attractive than what we see in other oil and gas producing basins.
• Our management and technical teams have an extensive track record of forming, buying, building and selling oil and gas businesses. We also have significant expertise in successfully sourcing, evaluating and executing acquisition opportunities.
• We expect that we will have sufficient cash available to meet our needs over the next 12 months after the filing of this report and in the foreseeable future, including to fund the remainder of our 2026 development program.

Industry Context

StockSavvy.ai notes that PEDEVCO's strategic focus on legacy proven properties in the D-J, Powder River, and Permian Basins, combined with the application of modern drilling and completion techniques, aligns with a broader industry trend of optimizing mature fields for enhanced recovery. The significant increase in acreage and reserves through the recent mergers positions PEDEVCO to capitalize on the economic potential of these regions, which are recognized as highly active and productive in the U.S. oil and natural gas sector. However, the industry continues to face volatility in commodity prices, increasing regulatory scrutiny on environmental matters (e.g., methane emissions, hydraulic fracturing), and competition from larger, more diversified players, which could impact PEDEVCO's operational costs and market access.

Comparison to Industry Standards

• PEDEVCO's increase in proved reserves by 14.0 MMBoe to 32.1 MMBoe in 2025, largely driven by acquisitions, demonstrates a growth trajectory that, while substantial for a smaller reporting company, would need to be sustained to compare with the organic growth rates of larger, established operators like EOG Resources or Continental Resources in the D-J and Powder River Basins.
• The company's average oil sales price of $59.78/Bbl in 2025 is below the high NYMEX WTI crude prices seen in early 2022 ($120/Bbl) and more recent mid-$90s/Bbl, indicating potential for lower realized prices or less favorable hedging outcomes compared to some peers.
• The average natural gas sales price of $3.45/Mcf in 2025 shows an improvement over 2024 ($2.00/Mcf), but remains susceptible to the significant volatility observed in Henry Hub spot prices, which ranged from $1.21 to $13.20 in 2024 and $2.65 to $9.86 in 2025.
• The identified material weaknesses in internal controls over financial reporting are a concern, as leading industry players typically maintain robust control environments to ensure financial reporting accuracy and investor confidence, a standard PEDEVCO is actively working to meet.
• PEDEVCO's hedging strategy, covering 75% of projected PDP oil and gas production for the first 24 months post-credit agreement, is a common risk management practice in the industry, comparable to policies adopted by mid-cap E&P companies to stabilize cash flows against commodity price fluctuations.

Management Changes

Corporate Governance

Legal Proceedings

• Tilloo Exploration & Production, LLC filed a civil lawsuit against the Company on September 18, 2025, alleging breach of contract, fraudulent inducement, and negligent misrepresentation related to the Milnesand Sale. The Company has filed a counterclaim for full recovery under the Tilloo Note.
• Navigation Powder River, LLC (a wholly-owned subsidiary) filed a Petition against Phoenix Energy One, LLC on September 10, 2025, alleging breach of contract for failure to consummate a property sale. The potential loss if unresolved in the Company's favor is approximately $7.7 million.
• The Company is subject to the BLM Litigation, where a Ninth Circuit Court of Appeals ruling on January 17, 2025, upheld vacatur of various BLM leases. Certain PRB leases (approx. 82,804 acres) are 'placed in suspense' and could be cancelled, though the Company might receive reimbursement of up to $79 million for leasehold purchase amounts.
• A U.S. District Court ruling on September 13, 2024, temporarily enjoined further applications for permits to drill (APDs) for certain BLM leases, citing erroneous groundwater data, potentially impacting the BLM's review and approval of the Company's APDs.

Related Party Transactions

• In connection with the Mergers, certain PIPE Investors, including Dr. Simon Kukes (former Executive Chairman), J. Douglas Schick (CEO), Clark R. Moore (EVP, General Counsel), John J. Scelfo (Director), Jody D. Crook (CCO), J PED, LLC (affiliated with Juniper Capital Advisors, L.P.), Reagan T. Dukes (COO), and Robert J. Long (CFO), purchased 6,363,637 shares of Series A Convertible Preferred Stock for $35.0 million.
• On February 27, 2026, upon automatic conversion of Series A Preferred Stock, affiliates of Century and North Peak received 5,325,000 shares of common stock, and PIPE Investors received 3,181,818 shares of common stock, including significant amounts to related parties (e.g., SGK Trust, American Resources, J PED, LLC, and individual executives).
• Additionally, 169,485 shares of common stock were issued directly to certain third parties pursuant to a pre-existing agreement with Juniper, including 51,922 shares to Reagan T. Dukes and 42,136 shares to Robert J. Long.
• Juniper Capital Advisors, L.P. (Juniper) beneficially owns approximately 52% of the Company's common stock and has rights to appoint three of the six Board members, including the Chairman of the Board and chairpersons of the Compensation and Nominating and Corporate Governance Committees.
• The Company's Certificate of Formation allows Juniper and Dr. Simon Kukes' affiliates to engage in other business ventures, including those that may compete with the Company, and waives the Company's right to participate in certain corporate opportunities.
• Compensation for Juniper appointees to the Board for service as Chairman of the Board and/or any Committees thereof is paid in cash, not restricted common stock, with restricted common stock awards assigned to Juniper Capital Advisors, L.P. (or its designees).

Stakeholder Impact

• **Shareholders**: Experience dilution from the reverse stock split and future equity offerings. Juniper's majority ownership and board control may limit influence of other shareholders. The net loss and internal control weaknesses could negatively impact investor confidence and stock price. Increased proved reserves and production from mergers offer long-term growth potential.
• **Employees**: New employment agreements for key executives provide stability and incentives. The addition of 12 employees through the mergers expands the workforce. Training and development programs are offered for professional growth.
• **Customers**: Increased production volumes and expanded asset base from mergers could lead to more reliable supply. However, dependence on a small number of customers and third-party operators introduces concentration risk.
• **Suppliers/Vendors**: Integration challenges post-merger could disrupt relationships. Financial difficulties of third-party operators could impact project timing and payments.
• **Creditors**: The A&R Credit Agreement provides a $120 million borrowing base, but restrictive covenants and a high level of indebtedness increase default risk. The $98 million outstanding debt is secured by substantially all company assets.

Next Steps

• Integrate the assets and operations acquired in the Mergers.
• Execute the near-term optimization program on newly acquired assets, including jet pump to rod pump/gas lift conversions, ESP to rod pump conversions, compression optimization, recompletions, and well cleanouts.
• Evaluate future development plans for late 2026 and 2027.
• Continue to evaluate D-J Basin non-operated well proposals from third-party operators and participate in economic and prospective projects.
• Implement new controls and procedures to remediate identified material weaknesses in internal control over financial reporting and tax provision preparation.
• Vigorously defend against Tilloo's civil lawsuit and pursue counterclaims for full recovery under the Tilloo Note.
• Vigorously pursue claims against Phoenix Energy One, LLC in the breach of contract litigation.
• Monitor and comply with evolving environmental regulations, including those related to methane emissions and hydraulic fracturing, particularly in Colorado and New Mexico.
• Address potential impacts from the BLM Litigation on PRB leases placed in suspense.

Key Dates

Recommendation

The filing presents a mixed bag of significant strategic growth and notable financial and operational challenges. The successful merger, substantial increase in proved reserves, and higher production volumes are strong indicators of future potential and strategic execution. However, the reported net loss, increased operating expenses, and the identified material weaknesses in internal controls are significant concerns that warrant caution. The ongoing legal disputes and regulatory uncertainties, particularly regarding federal land leases and environmental compliance, add further risk. While the long-term growth strategy is compelling, the immediate financial performance and control issues suggest a 'hold' recommendation, allowing investors to monitor the company's ability to integrate its new assets, remediate control weaknesses, and navigate legal and regulatory hurdles before committing further capital.

Keywords

Oil and Gas, Exploration and Production, D-J Basin, Powder River Basin, Permian Basin, Merger, Reserves, Production Growth, Capital Expenditures, Reverse Stock Split, SEC Filing, Financial Reporting, Corporate Governance, Risk Management, Energy Sector, Hydraulic Fracturing, Commodity Prices, Debt Financing, Internal Controls