PED

PEDEVCO Corp. 10-Q Summary: Quarter Ended September 30, 2025

Business Context and Reporting Period

PEDEVCO Corp. is an oil and natural gas exploration and production company focused on legacy assets in the Permian Basin (New Mexico) and the Denver-Julesberg (D-J) Basin (Colorado/Wyoming). This report covers the quarterly period ended September 30, 2025. The company is classified as a non-accelerated filer and a smaller reporting company. As of November 13, 2025, there were 95,519,352 shares of common stock outstanding.

Key Financial Metrics

Note: The company has a reserve-based lending facility with an initial borrowing base of $120 million and a maximum of $250 million. As of the filing date, $87 million had been drawn down.

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased 23% year-over-year for the three months ended September 30, 2025, and 22% for the nine-month period. This was driven by lower production volumes (due to the sale of 17 operated wells in the D-J Basin and natural declines) and lower realized crude oil prices.
• Profitability Shift: The company reported a net loss of $0.33 million for the quarter, compared to a net income of $2.92 million in the prior year quarter. For the nine months, the net loss was $1.86 million versus net income of $6.37 million in the prior year.
• Impairments and Write-offs: The company recorded a $0.91 million impairment of oil and gas properties for the nine months ended September 30, 2025, related to undeveloped leases in the D-J Basin. Additionally, a $1.38 million credit loss was recognized due to the full write-off of a note receivable from Tilloo Exploration and Production LLC.
• Asset Sales: The company recognized a gain of $1.02 million on the sale of oil and gas properties during the nine-month period, primarily from the sale of legacy operated wells in the D-J Basin.

Guidance, Outlook, and Risks

• Subsequent Merger: On October 31, 2025, PEDEVCO closed a merger with North Peak Oil & Gas, LLC and Century Oil and Gas Sub-Holdings, LLC. This transaction is not reflected in the financial statements but significantly alters the company's asset base and capital structure.
• Capital Expenditures: Net capital expenditures for 2025 are estimated between $42 million and $45 million. Approximately 78-80% of this is allocated to the D-J Basin.
• Liquidity: Management expects sufficient cash to meet needs for the next 12 months through operating cash flow, existing cash, an "at-the-market" (ATM) offering, and its credit facility.
• Risks: Key risks include commodity price volatility, the success of integrating the acquired companies, potential litigation regarding the Tilloo note default and the Phoenix Energy One sale, and the impact of a potential reverse stock split on liquidity.
• Internal Controls: Management concluded that disclosure controls and procedures were not effective as of September 30, 2025, due to material weaknesses identified in the prior year-end audit that have not yet been remediated.

Investor Verification Checklist

• Merger Integration: Verify the timeline and financial impact of the October 31, 2025 merger with North Peak and Century Oil, including the conversion of Series A Preferred Stock.
• Tilloo Litigation: Monitor the status of the lawsuit filed by Tilloo Exploration and Production LLC regarding the defaulted note receivable and the potential for recovery or further losses.
• Debt Covenants: Review the terms of the Amended and Restated Credit Agreement, specifically the leverage ratio (max 3.0x) and current ratio (min 1.0x) covenants, to ensure compliance post-merger.
• Production Volumes: Track production volumes in the D-J Basin and Permian Basin to assess the impact of the sold wells and new drilling programs on future revenue.
• Internal Controls: Assess the remediation plan for the material weaknesses in internal controls over financial reporting disclosed in the filing.