PEDEVCO Q3 2026 net loss widens to $9.2M
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
PEDEVCO Corp. (PED) reported third-quarter oil and gas sales of $35.5 million for the three months ended September 30, 2026, compared with $7.0 million a year earlier; net loss was $9.2 million versus $0.3 million. For the first nine months, revenue was $121.9 million versus $22.7 million, while net loss was $17.4 million versus $1.9 million.
Operating cash flow for the nine months was $35.4 million, versus $12.9 million; derivative contracts recorded a $42.8 million loss. PEDEVCO had drawn $80.0 million under a revolving facility with a $125 million borrowing base. J. Douglas Schick ceased to be president and CEO and a director on September 21, 2026, remaining a non-executive Senior Advisor through December 31; $2.1 million of severance costs were recognized and payment was expected in the first quarter of 2027.
On October 1, 2026, PEDEVCO entered crude oil swaps covering 400,330 barrels from January 2027 through December 2028, including 60,330 barrels for 2027 at a weighted average $77.45 per barrel and 340,000 barrels for 2028 at $70.95 per barrel.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue was $121.9 million, versus $22.7 million a year earlier.
- Moderate pointNine-month operating cash flow was $35.4 million, versus $12.9 million.
Negative
- Major pointDerivative contracts recorded a $42.8 million loss over nine months. 24% of market cap
- Moderate pointNine-month net loss was $17.4 million, versus $1.9 million.
Filing Explained
The completed conversion added common shares and reduced existing common holders’ percentage ownership; PEDEVCO reported no preferred shares outstanding afterward.
The completed conversion added common shares and reduced existing common holders’ percentage ownership; PEDEVCO reported no preferred shares outstanding afterward.
On
A separate amendment dated
Key Figures
Key Terms
mark-to-market financial
three-way collars financial
borrowing base financial
asset retirement obligations financial
Monte Carlo simulation model technical
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did PED report in the third quarter of 2026?
How much had PED drawn on its revolving credit facility?
What crude oil swaps did PED enter in October 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended:
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________to______
Commission file number:
PEDEVCO CORP. |
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
| ||
(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
At November 9, 2026, there were
PEDEVCO CORP.
TABLE OF CONTENTS
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Reverse Stock Split |
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3 |
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Cautionary Note Regarding Forward-Looking Statements |
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4 |
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PART I – FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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6 |
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Consolidated Balance Sheets as of September 30, 2026 (Unaudited) and December 31, 2025 |
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Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2026 and 2025 (Unaudited) |
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Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 (Unaudited) |
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Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025 (Unaudited) |
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Notes to Unaudited Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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45 |
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Item 4. |
Controls and Procedures |
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PART II – OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. |
Defaults Upon Senior Securities |
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Item 4. |
Mine Safety Disclosures |
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Item 5. |
Other Information |
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Item 6. |
Exhibits |
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Signatures |
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51 |
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2
Table of Contents
REVERSE STOCK SPLIT
On October 29, 2025, stockholders of PEDEVCO Corp. (the “Company”, “we” and “us”) who collectively held more than two-thirds of the combined voting power of the total issued and outstanding shares of Company common stock, executed a written consent in lieu of a special meeting of stockholders of the Company (the “Written Consent”), approving among other things, the grant of discretionary authority to the Company’s Board of Directors (the “Board”) to (A) approve an amendment to the Company’s Certificate of Formation, as amended, to effect a reverse stock split of our issued and outstanding shares of common stock, by a ratio of between one-for-ten to one-for-twenty, inclusive, with the exact ratio to be set at a whole number to be determined by our Board or a duly authorized committee thereof in its discretion, at any time after approval of the amendment and prior to October 30, 2026, and (B) determine whether to arrange for the disposition of fractional interests by stockholders entitled thereto, to pay in cash the fair value of fractions of a share of common stock as of the time when those entitled to receive such fractions are determined, or to entitle stockholder to receive from the Company’s transfer agent, in lieu of any fractional share, the number of shares of common stock rounded up to the next whole number (the “Stockholder Authority”).
The effectiveness of the Stockholder Authority was subject to the Company filing a definitive information statement on Schedule 14C, which was filed with the Securities and Exchange Commission (the “SEC” or the “Commission”) on February 2, 2026 (the “Information Statement”) and the mailing of such Information Statement to the Company’s stockholders describing among other things, the majority stockholders’ approval of the Stockholder Authority, which as described in greater detail in the Current Report on Form 8-K filed by the Company with the Commission on March 3, 2026, was mailed to the stockholders of the Company on February 6, 2026, in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a result, the Stockholder Authority became effective on February 27, 2026, the 21st day following the mailing date of the Information Statement.
Following effectiveness of the Stockholder Authority, the Company’s Board approved an amendment to our Second Amended and Restated Certificate of Formation to effect a reverse stock split of our common stock at a ratio of 1-for-20, and to pay in cash the fair value of fractions of a share of common stock as of the time when those entitled to receive such fractions are determined (the “Reverse Stock Split”).
On March 10, 2026, we filed a Certificate of Amendment to our Second Amended and Restated Certificate of Formation (the “Certificate of Amendment”) with the Secretary of State of the State of Texas to effect the Reverse Stock Split.
Pursuant to the Certificate of Amendment, the Reverse Stock Split became effective on March 13, 2026 at 12:01 a.m. Eastern Time (the “Effective Time”). The shares of the Company’s common stock began trading on the NYSE American (“NYSE American”) on a post-split basis on March 13, 2026, with a new CUSIP number of 70532Y402. No change was made to the trading symbol for the Company’s shares of common stock, “PED” in connection with the Reverse Stock Split.
At the Effective Time, every twenty (20) shares of issued and outstanding common stock were converted into one (1) share of issued and outstanding common stock. No fractional shares were issued in connection with the Reverse Stock Split, and stockholders who would have otherwise been entitled to receive a fractional share as a result of the Reverse Stock Split instead received cash in lieu of such fractional share, based upon the closing sale price of the common stock on the trading day immediately prior to the Effective Time as reported on the NYSE American.
In addition, the number of shares of common stock issuable upon exercise of our stock options and other equity awards (including shares reserved for issuance under the Company’s equity compensation plans) were proportionately adjusted by the applicable administrator, using the 1-for-20 ratio, and rounded down to the nearest whole share, effective as of the Effective Time, pursuant to the terms of the Company’s equity compensation plans. In addition, the exercise price for each outstanding stock option was increased in inverse proportion to the 1-for-20 split ratio such that, upon exercise, the aggregate exercise price payable by the optionee to the Company for the shares subject to the option will remain approximately the same as the aggregate exercise price prior to the Reverse Stock Split, subject to the terms of such securities.
The effects of the Reverse Stock Split have been retroactively applied throughout this Report unless otherwise stated.
3
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Quarterly Report on Form 10-Q (this “Report”) include forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may,” and similar expressions or future or conditional verbs such as “should”, “would”, and “could” are generally forward-looking in nature and not historical facts. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs and cash flows, prospects, plans and objectives of management are forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. These factors include, among others, the factors set forth below under the heading “Risk Factors.” Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Most of these factors are difficult to predict accurately and are generally beyond our control. Readers are cautioned not to place undue reliance on these forward-looking statements.
Forward-looking statements may include statements about:
● |
our business strategy; |
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our reserves; |
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our technology; |
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our cash flows and liquidity, including the results of borrowing base redeterminations and our compliance with the covenants under our A&R Credit Agreement; |
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our financial strategy, budget, projections and operating results; |
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oil and natural gas realized prices; |
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timing and amount of future production of oil and natural gas; |
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the availability of oil field labor; |
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the amount, nature and timing of capital expenditures, including future exploration and development costs; |
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drilling of wells; |
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government regulation and taxation of the oil and natural gas industry; |
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changes in, and interpretations and enforcement of, environmental and other laws and other political and regulatory developments, including, in particular, additional permit scrutiny in Colorado; |
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exploitation projects or property acquisitions and divestitures; |
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costs of exploiting and developing our properties and conducting other operations; |
● |
general economic conditions in the United States and around the world, including the effect of regional or global health pandemics (such as, for example, the 2019 coronavirus (“COVID-19”)), recent changes in inflation and interest rates, tariffs and trade wars, and risks of recessions, including as a result thereof; |
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competition in the oil and natural gas industry; |
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effectiveness of our risk management activities; |
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environmental liabilities; |
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counterparty credit risk; |
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developments in oil-producing and natural gas-producing countries; |
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political conditions in or affecting oil, NGLs and natural gas producing regions and/or pipelines, including in Eastern Europe, the Middle East and South America, for example, as experienced with the Russian invasion of the Ukraine in February 2022 and the ongoing conflicts involving Iran and related disruptions to shipping through the Strait of Hormuz; |
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the impairment of oil and gas assets, including as a result of lease expirations or the cancellation of federal leases in connection with the BLM Litigation; |
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our future operating results; |
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the benefits of our recent acquisitions (discussed below) and future acquisition transactions; |
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the impairment of oil and gas assets; |
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our estimated future reserves and the present value of such reserves; and |
● |
our plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical. |
4
Table of Contents
All forward-looking statements speak only at the date of the filing of this Quarterly Report. The reader should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report are reasonable, we can provide no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 31, 2026. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. We do not undertake any obligation to update or revise publicly any forward-looking statements except as required by law, including the securities laws of the United States and the rules and regulations of the SEC.
5
Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PEDEVCO CORP.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share and per share data)
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| September 30, 2026 |
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| December 31, |
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| (Unaudited) |
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| 2025 |
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Assets |
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Current assets: |
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Cash |
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Restricted cash |
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Accounts receivable – oil and gas |
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Inventory |
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Derivative contract assets, current |
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Prepaid expenses and other current assets |
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Total current assets |
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Oil and gas properties: |
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Oil and gas properties, subject to amortization, net |
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Oil and gas properties, not subject to amortization, net |
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Total oil and gas properties, net |
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Derivative contract assets |
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Operating lease - right-of-use asset |
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Other assets |
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Total assets |
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Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Accounts payable |
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Accrued expenses |
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Revenue payable |
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Operating lease liabilities – current |
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Derivative contract liabilities - current |
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Asset retirement obligations - current |
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Total current liabilities |
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Long-term liabilities: |
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Revolving credit facility |
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Operating lease liabilities, net of current portion |
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Derivative contract liabilities |
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Asset retirement obligations, net of current portion |
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Deferred income taxes |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 12) |
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Shareholders’ equity |
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Series A preferred stock, $ par value, shares authorized; shares designated; -- and shares issued and outstanding, respectively |
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Common stock, $ par value, and shares authorized, respectively; and shares issued and outstanding, respectively |
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Additional paid-in capital |
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Accumulated deficit |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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See accompanying notes to unaudited consolidated financial statements.
6
Table of Contents
PEDEVCO CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(amounts in thousands, except share and per share data)
|
| Three Months Ended September 30, |
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| Nine Months Ended September 30, |
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Revenue: |
| 2026 |
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Oil and gas sales |
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Operating expenses: |
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Lease operating costs |
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Exploration expense |
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Selling, general and administrative expense |
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Depreciation, depletion, amortization and accretion |
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Impairment of oil and gas properties |
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Total operating expenses |
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Gain on sale of oil and gas properties, net |
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Note receivable - credit loss |
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Operating income (loss) |
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Other income (expense): |
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Interest expense |
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Interest income |
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Net income (loss) on derivative contracts |
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Other income (expense) |
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Total other income (expense) |
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Income (loss) before income taxes |
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Income tax benefit (expense) |
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Net income (loss) |
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| $ | ( | ) |
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Earnings (loss) per common share: |
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Basic |
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| $ | ( | ) |
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Diluted |
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| $ | ( | ) |
| $ | ( | ) |
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Weighted average number of common shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to unaudited consolidated financial statements.
7
Table of Contents
PEDEVCO CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(amounts in thousands)
|
| Nine Months Ended September 30, |
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| 2026 |
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| 2025 |
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Cash Flows From Operating Activities: |
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Net income (loss) |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation, depletion, amortization and accretion |
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Impairment of oil and gas properties |
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Note receivable - credit loss |
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Amortization of right-of-use asset |
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Amortization of deferred financing costs |
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Amortization of debt discount |
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Stock-based compensation expense |
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Net loss (gain) on derivative contracts |
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Cash received (paid) for derivative settlements, net |
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Deferred income tax expense (benefit) |
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Gain on sale of oil and gas properties |
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Loss on disposal of subsidiaries |
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Note receivable accrued interest |
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Changes in operating assets and liabilities: |
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Accounts receivable – oil and gas |
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Prepaid expenses and other current assets |
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Inventory |
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Accounts payable |
|
| ( | ) |
|
|
| |
Accrued expenses |
|
|
|
|
| ( | ) | |
Revenue payable |
|
| ( | ) |
|
|
| |
Other liabilities |
|
| ( | ) |
|
|
| |
Net cash provided by operating activities |
|
|
|
|
|
| ||
|
|
|
| |
|
|
| |
Cash Flows From Investing Activities: |
|
|
| |
|
|
| |
Cash paid for drilling and completion costs |
|
| ( | ) |
|
| ( | ) |
Acquisition of oil and gas leasehold costs |
|
| ( | ) |
|
|
| |
Proceeds from the sale of oil and gas property |
|
|
|
|
|
| ||
Cash paid on disposal of subsidiaries, including cash disposed |
|
| ( | ) |
|
|
| |
Net cash used in investing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
| |
|
|
| |
Cash Flows From Financing Activities: |
|
|
| |
|
|
| |
Proceeds from credit facility |
|
|
|
|
|
| ||
Repayments of credit facility |
|
| ( | ) |
|
|
| |
Reverse stock split costs |
|
| ( | ) |
|
|
| |
Proceeds from issuance of shares, net of offering costs |
|
|
|
|
|
| ||
Net cash provided by (used in) financing activities |
|
| ( | ) |
|
|
| |
|
|
|
| |
|
|
| |
Net increase (decrease) in cash and restricted cash |
|
| ( | ) |
|
|
| |
Cash and restricted cash at beginning of period |
|
|
|
|
|
| ||
Cash and restricted cash at end of period |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Supplemental Disclosure of Cash Flow Information |
|
|
| |
|
|
| |
Cash paid for: |
|
|
| |
|
|
| |
Interest |
| $ |
|
| $ |
| ||
Income taxes |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Noncash investing and financing activities: |
|
|
| |
|
|
| |
Change in accrued oil and gas development costs |
| $ | ( | ) |
| $ | ( | ) |
Changes in estimates of asset retirement costs |
| $ |
|
| $ |
| ||
Conversion of preferred stock into common stock |
| $ |
|
| $ |
| ||
Asset retirement obligations disposed in sale of oil and gas properties |
| $ |
|
| $ |
| ||
Note payable issued on disposal of subsidiaries |
| $ |
|
| $ |
| ||
Note receivable associated with sale of oil and gas properties |
| $ |
|
| $ |
| ||
Issuance of restricted common stock |
| $ |
|
| $ |
| ||
See accompanying notes to unaudited consolidated financial statements.
8
Table of Contents
PEDEVCO CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE three and nine months ended September 30, 2026 and 2025
(Unaudited)
(amounts in thousands, except share amounts)
|
| Series A Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Accumulated |
|
|
|
| |||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Totals |
| |||||||
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Balances at December 31, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Issuance of restricted common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balances at March 31, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Issuance of restricted common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
| |
|
| |
|
|
|
|
| |
|
|
| |||||
Net income (loss) |
|
| - |
|
|
|
|
|
|
| |
|
| |
|
| |
|
| ( | ) |
|
| ( | ) | |||
Balances at June 30, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Issuance of restricted common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| |
|
|
| ||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
|
| |
|
| |
|
|
|
|
| |
|
|
| |||||
Net income (loss) |
|
| - |
|
|
|
|
|
|
| |
|
| |
|
| |
|
| ( | ) |
|
| ( | ) | |||
Balances at September 30, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
|
| Series A Preferred Stock |
|
| Common Stock |
|
| Additional Paid-in |
|
| Accumulated |
|
|
|
| |||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Totals |
| |||||||
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Balances at December 31, 2025 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Issuance of restricted common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Restricted common stock surrendered for tax withholding |
|
|
|
|
| - |
|
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |
Preferred conversion |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Reduction for fractional shares in reverse stock split |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balances at March 31, 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Issuance of restricted common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Restricted common stock forfeitures |
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balances at June 30, 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
Issuance of restricted common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Restricted common stock forfeitures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Stock-based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income (loss) |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balances at September 30, 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||
See accompanying notes to unaudited consolidated financial statements.
9
Table of Contents
PEDEVCO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
The accompanying interim unaudited consolidated financial statements of PEDEVCO Corp. (“PEDEVCO” or the “Company”), have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in PEDEVCO’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 31, 2026 (the “2025 Annual Report”), have been omitted.
The Company’s consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and subsidiaries in which the Company has a controlling financial interest. All significant inter-company accounts and transactions have been eliminated in consolidation.
The Company’s future financial condition and liquidity will be impacted by, among other factors, the success of our drilling program, the number of commercially viable oil and natural gas discoveries made and the quantities of oil and natural gas discovered, the speed with which we can bring such discoveries to production, the actual cost of exploration, appraisal and development of our prospects, the prevailing prices for, and demand for, oil and natural gas.
Reverse Stock Split
On March 13, 2026, the Company effected a 1-for-
As a result of the Reverse Stock Split:
| ● | every |
| ● | the par value of the Company’s common stock remained unchanged at $ |
| ● | fractional shares remaining after the Reverse Stock Split were paid in cash, such amounts were not material. |
All issued and outstanding common stock, stock options, and other equity instruments, as well as the related exercise or conversion prices, were proportionately adjusted to reflect the Reverse Stock Split.
Retroactive Adjustment
All share amounts, per-share data, earnings (loss) per share, and weighted-average shares outstanding presented in the accompanying consolidated financial statements and related notes have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented, unless otherwise indicated. The Reverse Stock Split did not affect the Company’s total stockholders’ equity or the proportionate voting rights of stockholders, and no fractional shares were issued in connection with the reverse stock split. Stockholders who would otherwise have been entitled to receive fractional shares received cash in lieu thereof, based on the closing price of the Company’s common stock on March 12, 2026, the trading day immediately prior to the effective date of the Reverse Stock Split.
10
Table of Contents
NOTE 2 – DESCRIPTION OF BUSINESS
PEDEVCO is an oil and gas company focused on the acquisition, development and optimization of oil and natural gas assets in the areas it operates. In particular, the Company focuses on legacy proven properties where there is a long production history, well defined geology and existing infrastructure that can be leveraged when applying modern field management technologies. The Company’s current properties are located in the Denver-Julesburg Basin (“D-J Basin”) in Colorado and Wyoming, the Powder River Basin (“PRB”) in Wyoming, and in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the “Permian Basin”).
The Company’s D-J Basin assets (the “D-J Basin Assets”), located in Weld and Morgan Counties, Colorado and Laramie County, Wyoming, are held through the Company’s wholly-owned subsidiaries, PRH Holdings LLC (“PRH”) and North Peak Oil & Gas LLC (“NPOG”), and are operated by the Company’s wholly-owned operating subsidiaries, Red Hawk Petroleum, LLC (“Red Hawk”), North Silo Resources, LLC (“NSR”), and Longs Peak Resources, LLC (“LPR”).
The Company’s PRB assets (the “Powder River Basin Assets” or “PRB Assets”), located in Campbell, Converse, Johnson, and Niobrara Counties, Wyoming, are held through the Company’s wholly-owned subsidiary Century Oil and Gas, LLC (“Century”), and operated by the Company’s wholly-owned operating subsidiaries, Century Oil and Gas Sub-Holdings, LLC (“COG”) and Navigation Powder River, LLC (“NPR”).
The Company’s Permian Basin assets (the “Permian Basin Assets”), located in Chaves and Roosevelt Counties, New Mexico, are held by the Company’s wholly-owned subsidiary, Pacific Energy Development Corp. (“PEDCO”), and are operated by the Company’s wholly-owned subsidiary, Ridgeway Arizona Oil Corp. (“RAZO”).
On October 31, 2025, the Company completed the transactions (the “Mergers”) contemplated by that certain Agreement and Plan of Merger, dated October 31, 2025 (the “Merger Agreement”), by and among the Company; NP Merger Sub, LLC, a wholly owned subsidiary of the Company (the “First Merger Sub”); COG Merger Sub, LLC, a wholly owned subsidiary of the Company (the “Second Merger Sub,” and together with First Merger Sub, the “Merger Subs”); NPOG and COG (together with NPOG, the “Acquired Companies”); and, solely for purposes of specified provisions therein, North Peak Oil & Gas Holdings, LLC (“North Peak”), pursuant to which the Acquired Companies were merged with and into the Merger Subs, with the Acquired Companies continuing as the surviving companies and wholly-owned subsidiaries of the Company. The Acquired Companies own substantial oil-weighted producing assets and significant leasehold interests in the D-J Basin and PRB.
The Company believes that horizontal development and exploitation of conventional assets in the Wattenberg and Wattenberg Extension in the D-J Basin and the PRB represent among the most economic oil and natural gas plays in the United States (“U.S.”). Moving forward, the Company plans to optimize its existing assets and opportunistically seek additional acreage proximate to its currently held core acreage, as well as other attractive onshore U.S. oil and gas assets that fit the Company’s acquisition criteria, that Company management believes can be developed using its technical and operating expertise and be accretive to shareholder value.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company has provided a discussion of significant accounting policies, estimates and judgments in its 2025 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2025.
11
Table of Contents
New Accounting Pronouncements
Income Statement –Expense Disaggregation Disclosures. In November 2024, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update which requires disaggregated disclosures of income statement expenses for public business entities. The guidance will require companies to disclose disaggregated information about specific natural expense categories underlying certain income statement expense line items that are considered relevant because they include one or more of the five natural expense categories, as applicable: (1) purchase of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization and (5) depreciation, depletion and amortization (“DD&A”) recognized as part of oil and gas producing activities or other depletion expenses. The new guidance is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of this guidance on the Company’s financial disclosures. Adoption of the update is not expected to impact the Company’s financial position, results of operations or liquidity.
Other accounting standards that have been issued by the FASB or other standard-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Subsequent Events
The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.
NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue from Contracts with Customers. The following table disaggregates revenue by significant product type in the periods indicated (in thousands):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2026 |
|
| 2025 |
|
| 2026 |
|
| 2025 |
| ||||
Oil sales |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Natural gas sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Natural gas liquids sales |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenue from customers |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
There were
NOTE 5 – CASH
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets, which sum to the total of such amounts in the periods indicated (in thousands):
|
| September 30, 2026 |
|
| December 31, 2025 |
| ||
Cash |
| $ |
|
| $ |
| ||
Restricted cash |
|
|
|
|
|
| ||
Restricted cash included in other assets |
|
|
|
|
|
| ||
Total cash and restricted cash |
| $ |
|
| $ |
| ||
Restricted cash decreased from $
12
Table of Contents
NOTE 6 – OIL AND GAS PROPERTIES
The following table summarizes the Company’s oil and gas activities by classification for the nine months ended September 30, 2026 (in thousands):
|
| December 31, 2025 |
|
| Additions |
|
| Dispositions |
|
| Transfers |
|
| September 30, 2026 |
| |||||
Oil and gas properties, subject to amortization |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
| ||||
Oil and gas properties, not subject to amortization |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||||
Asset retirement costs |
|
|
|
|
|
|
|
| ( | ) |
|
| - |
|
|
|
| |||
Accumulated depletion |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| - |
|
|
| ( | ) | |
Accumulated impairment |
|
| ( | ) |
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| ( | ) |
Total oil and gas assets |
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ |
| ||||
For the three and nine months ended September 30, 2026, the Company incurred $
Additionally, for the three and nine months ended September 30, 2026, the Company recorded an impairment of oil and gas properties of $
The Company incurred depreciation, depletion and amortization on our proved properties of $
NOTE 7 – ACQUISITIONS AND DIVESTITURES
Merger Agreement
On October 31, 2025, the Company completed the transactions contemplated by the Merger Agreement discussed in “Note 2 – Description of Business”.
Pursuant to the Merger Agreement, (i) the First Merger Sub merged with and into NPOG, with NPOG surviving as a wholly-owned subsidiary of PEDEVCO, and (ii) the Second Merger Sub merged with and into COG, with COG surviving as a wholly-owned subsidiary of PEDEVCO. The Acquired Companies own substantial oil-weighted producing assets and significant leasehold interests in the D-J Basin and Powder River Basin located in Wyoming.
The aggregate fair value of the consideration paid in the Mergers was approximately $
The fair value of the consideration transferred was allocated to the identifiable assets acquired and liabilities assumed on a relative fair value basis and recorded as of October 31, 2025. The allocation was subsequently finalized, and no material measurement period adjustments were recorded during 2026.
Determining the fair value of the acquired assets and assumed liabilities required significant judgment and the use of various assumptions, the most significant of which related to the valuation of NPOG’s and COG’s oil and gas properties. The inputs and assumptions used in valuing these properties were classified as Level 3 within the fair value hierarchy.
13
Table of Contents
Consideration: |
|
|
| |
Series A Convertible Preferred Stock |
|
|
| |
Fair Value Per Share of Preferred Stock |
| $ |
| |
Series A Convertible Preferred Stock Consideration |
| $ |
| |
|
|
|
| |
Cash paid to settle North Peak Debt |
|
|
| |
|
|
|
| |
Total consideration |
| $ |
| |
|
|
|
| |
Fair value of assets acquired: |
|
|
| |
Cash and restricted cash |
| $ |
| |
Accounts receivable |
|
|
| |
Commodity derivative, asset - current |
|
|
| |
Prepaid expenses and other current assets |
|
|
| |
Evaluated oil and gas properties |
|
|
| |
Unevaluated oil and gas properties |
|
|
| |
Asset retirement costs |
|
|
| |
Other long-term assets |
|
|
| |
Total assets acquired |
| $ |
| |
|
|
|
| |
Fair value of liabilities assumed: |
|
|
| |
Accounts payable and accrued liabilities |
| $ |
| |
Asset retirement obligations - current |
|
|
| |
Asset retirement obligations - long-term |
|
|
| |
Other long-term liabilities |
|
|
| |
Total liabilities assumed |
| $ |
| |
|
|
|
| |
Total identifiable net assets acquired |
| $ |
|
Unaudited pro forma financial information. Presented below are the Company’s condensed consolidated results of operations for the periods presented on an unaudited pro forma basis, as if the Mergers had occurred on January 1, 2025. The information reflects adjustments based on available data and assumptions the Company believes are factual and supportable. The unaudited pro forma financial information is not necessarily indicative of the results that would have occurred had the Mergers been completed on the assumed date, nor is it indicative of future results. It also does not give effect to any expected cost savings, synergies, or integration costs associated with the Mergers or the Acquired Assets.
|
| Three Months Ended September 30, 2025 |
| Nine Months Ended September 30, 2025 |
(in thousands) |
|
|
|
|
Pro forma revenues |
| $ |
| $ |
Pro forma net income (loss) |
| $ ( |
| $ ( |
At the closing of the Mergers (the “Closing”), the Company entered into a Shareholder Agreement with Century and North Peak (together, the “Juniper Shareholder”) and, for certain limited provisions, Dr. Simon G. Kukes, then Executive Chairman of the Company, and The SGK 2018 Revocable Trust (of which Dr. Kukes serves as trustee and beneficiary). The agreement grants the Juniper Shareholder board nomination rights from the Closing until the Automatic Conversion Date, including the right to designate one director nominee and one non-voting observer.
Following the Automatic Conversion Date, the Board consisted of six directors, with the Juniper Shareholder’s nomination rights determined based on its ownership percentage of Company’s common stock at that time. For purposes of the Shareholder Agreement, “Juniper Beneficial Ownership” is defined as the ownership, together with affiliates, of
14
Table of Contents
Based on Juniper Beneficial Ownership: (i) at
The Juniper Shareholder also has the right to remove or replace its designees, subject to Board approval and applicable SEC and NYSE independence and suitability requirements. At least one Juniper designee will serve on each Board committee (other than the Audit Committee) and will chair the Compensation and Nominating and Corporate Governance Committees, subject to limited exceptions.
The Shareholder Agreement also provides registration rights. The Company was required to use commercially reasonable efforts to file a registration statement within 45 days of the Automatic Conversion Date covering resale of shares issuable upon conversion of the Series A Preferred Stock, using Form S-3 or Form S-1 if necessary. The Company filed the registration statement during the quarter ending September 30, 2026 and the registration statement was declared effective by the Securities and Exchange Commission on September 8, 2026, and no penalties were incurred for the Company’s failure to file within the original deadline set forth in the Shareholder Agreement. The agreement permits underwritten offerings of at least $10 million, subject to customary conditions, underwriter approval, frequency limits, and applicable grace periods. Piggyback registration rights are also provided, subject to customary underwriter and priority provisions. The Company will bear related expenses and provide customary indemnification under the Securities Act of 1933, as amended. The Shareholder Agreement became effective at Closing and terminates in accordance with its terms.
On February 27, 2026, and at the request of the Juniper Shareholder pursuant to the Shareholder Agreement, the Board, upon recommendation of the Nominating and Corporate Governance Committee, increased its size from five (5) to six (6) directors and appointed Edward Geiser to the Board and as Chair of the Nominating and Corporate Governance Committee, to serve until his successor is duly elected and qualified or earlier resignation, death, or removal.
Also, effective February 27, 2026, Josh Schmidt, another Juniper Shareholder appointee, was appointed Chairman of the Board.
Other Acquisitions and Divestitures
As a result of the Phoenix Energy One, LLC litigation (see Note 12—Commitments and Contingencies) and assignment of the assets to Phoenix Energy One, LLC in July 2026 in exchange for $
On July 30, 2026, the Company entered into a Purchase and Sale Agreement to sell its interests in certain properties within Weld County, Colorado. In exchange for the sale and transfer of its interests, the Company received $
Effective July 1, 2026, the Company sold
NOTE 8 – REVOLVING CREDIT FACILITY
On October 31, 2025, the Company entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”), which amended and restated its prior senior secured revolving credit agreement dated September 11, 2024, with Citibank, N.A., as administrative agent, and the lenders party thereto.
The A&R Credit Agreement matures on October 31, 2029 and provided for an initial borrowing base and elected commitments of $
The obligations are guaranteed by the Company’s subsidiaries and secured by first-priority liens on substantially all assets of the Company and its subsidiaries, including mortgages on oil and gas properties representing at least
Borrowings may be alternate base rate (“ABR”) loans or SOFR loans. SOFR loans bear interest at the forward-looking term rate based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) plus a margin of points, and ABR loans bear interest at the applicable base rate plus a margin of points, in each case depending on borrowing base utilization.
For the nine months ended September 30, 2026, total interest expense was $
The A&R Credit Agreement includes customary representations, warranties, affirmative and negative covenants, and events of default, including a change in control. Financial covenants require (i) a minimum current ratio of
15
Table of Contents
The Company was required to hedge at least
On December 2, 2025, the parties to the A&R Credit Agreement entered into a First Amendment to Credit Agreement, which amended the A&R Credit Agreement to add an additional lender and re-allocate commitments among the lender group, which amendment was deemed immaterial by the Company.
On May 5, 2026, the parties to the A&R Credit Agreement entered into a Second Amendment to Credit Agreement which, among other amendments set forth therein, (i) amended the definition of “EBITDAX” to (A) update the cap on permitted transaction cost add-backs to EBITDAX for any acquisition or disposition of the Company’s oil and gas properties which form the collateral for the agreement, to the greater of $
On May 19, 2026, the parties to the A&R Credit Agreement entered into a Third Amendment to Credit Agreement to increase the borrowing base and elected commitment amount from $
On October 22, 2026, the parties to the A&R Credit Agreement entered into a Fourth Amendment to Credit Agreement. The amendment reaffirmed the borrowing base and elected commitment amount at $
In connection with the closing of the Mergers, the Company drew $
16
Table of Contents
NOTE 9 – DERIVATIVES
Derivative instruments are utilized to manage exposure to commodity price fluctuations and to achieve a more predictable cash flow in connection with oil and gas sales. These instruments limit exposure to declines in prices but also limit the benefits that would be realized if prices increased. The Company does not hold or issue derivative financial instruments for speculative trading purposes.
The Company may use a combination of commodity derivatives (costless collars, producer three-way collars, standalone put options, and fixed-price swaps) to manage exposure to commodity price volatility. Costless collar and three-way producer collar agreements are combinations of put and call options used to establish floor and ceiling commodity prices for a fixed volume of production during a certain time period. All collar agreements provide for payments between the counterparties if the settlement price under the agreement exceeds the ceiling or if the settlement price under the agreement is below the floor. Standalone put options are floors that are purchased for a cost and provide that counterparties make payments to us if the settlement price is below the established floor. The fixed-price swap agreements call for payments to, or receipts from, counterparties depending on whether the index price of oil or natural gas for the period is greater or less than the fixed price established for the period contracted under the fixed-price swap agreement.
On October 31, 2025, the Company assumed the derivative liabilities (novated hedges) associated with its Mergers (see Note 7 above) which are subject to master netting agreements. Additional derivative contracts with the same counterparty are also subject to netting. Still, in accordance with ASC 815, the Company will classify the fair value of all its derivative positions on a gross basis in its corresponding consolidated balance sheets.
The Company has not designated its derivative instruments as accounting hedges. Accordingly, changes in the fair value of outstanding derivatives and settlements of derivative contracts are recognized in earnings and included in “Other Income (Expense)” under the caption “Net income (loss) on derivative contracts” in the consolidated statements of operations.
|
| Derivative Contracts |
| |||||||
Commodity derivative instruments |
| Location of gain (loss) recognized in income on derivative contracts |
| Three Months Ended September 30, 2026 |
|
| Nine Months Ended September 30, 2026 |
| ||
Realized loss on derivative contracts |
| Other income (expense) Net income (loss) on derivative contracts |
| $ | ( | ) |
| $ | ( | ) |
Unrealized loss on derivative contracts |
| Other income (expense) Net income (loss) on derivative contracts |
|
| ( | ) |
|
| ( | ) |
Total loss on derivative contracts |
| $ | ( | ) |
| $ | ( | ) | ||
“Derivative contract assets” and “Derivative contract liabilities” represent the estimated fair value of open derivative positions, which reflects the difference between current forward commodity prices and the contractual hedge prices for the remaining hedged volumes as of September 30, 2026 (the “mark-to-market” valuation).
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Table of Contents
As of September 30, 2026, the Company had the following open crude oil and natural gas derivative contracts:
Crude Oil - Three Way Collars |
| |||||||||||||||||||||||||||||||
|
| Producer Three-Way Collars (Summary of |
|
| Participating Three-Way Collars (Summary of |
| ||||||||||||||||||||||||||
|
| Three Separate Contracts) |
|
| Three Separate Contracts) |
| ||||||||||||||||||||||||||
|
| Volume |
|
| Put Sold(1) |
|
| Put Bought |
|
| Call Sold |
|
| Volume |
|
| Put Bought |
|
| Call Sold |
|
| Call Bought |
| ||||||||
Date |
| (Bbl) |
|
| ($/Bbl) |
|
| ($/Bbl) |
|
| ($/Bbl) |
|
| (Bbl) |
|
| ($/Bbl) |
|
| ($/Bbl) |
|
| ($/Bbl) |
| ||||||||
4Q 2026 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
FY 2026 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
1Q 2027 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
2Q 2027 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
3Q 2027 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
4Q 2027 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
FY 2027 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
1Q 2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
2Q 2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
3Q 2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
4Q 2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
FY 2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
|
| $ |
| ||||||||
(1) On July 31, 2026, the Company purchased crude oil put options with a strike price of $
Crude Oil - Swaps and Costless Collars |
| |||||||||||||||||||
|
| Swaps |
|
| Costless Collars |
| ||||||||||||||
|
| Volume |
|
| Avg. Price |
|
| Volume |
|
| Floor Price |
|
| Ceiling Price |
| |||||
Date |
| (Bbl) |
|
| ($/Bbl) |
|
| (Bbl) |
|
| ($/Bbl) |
|
| ($/Bbl) |
| |||||
4Q 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
FY 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
1Q 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
2Q 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
3Q 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
4Q 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
FY 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
Natural Gas |
| |||||||||||||||||||
|
| Swaps |
|
| Costless Collars |
| ||||||||||||||
|
| Volume |
|
| Avg. Price |
|
| Volume |
|
| Floor Price |
|
| Ceiling Price |
| |||||
Date |
| (Mcf) |
|
| ($/mcf) |
|
| (Mcf) |
|
| ($/mcf) |
|
| ($/mcf) |
| |||||
4Q 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
FY 2026 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
1Q 2027 |
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
| |||||
2Q 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
3Q 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
4Q 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
FY 2027 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
1Q 2028 |
|
|
|
|
|
|
|
|
|
| $ |
|
| $ |
| |||||
2Q 2028 |
|
|
|
| $ |
|
|
|
|
|
|
|
|
|
| |||||
3Q 2028 |
|
|
|
| $ |
|
|
|
|
|
|
|
|
|
| |||||
4Q 2028 |
|
|
|
| $ |
|
|
|
|
|
|
|
|
|
| |||||
FY 2028 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
| |||||
18
Table of Contents
NOTE 10 – FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Authoritative guidance establishes a framework for measuring fair value and requires that fair value measurements be classified and disclosed in one of the following categories:
| ● | Level 1 – Observable inputs based on quoted market prices for identical assets or liabilities in active markets. |
|
|
|
| ● | Level 2 – Observable inputs other than Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. |
|
|
|
| ● | Level 3 – Unobservable inputs for the asset or liability due to little or no market activity that are significant to the fair value measurement. These inputs reflect assumptions that market participants would use in pricing the asset or liability. |
Assets and liabilities measured at fair value are classified based on the lowest level input that is significant to the measurement. The determination of the significance of inputs requires judgment and may affect the classification within the fair value hierarchy. There were no transfers between levels of the fair value hierarchy during any period presented.
The Company measures its derivative instruments at fair value on a recurring basis using a market approach. Fair value is estimated using observable commodity futures prices for the underlying commodities obtained from a third-party pricing source. These measurements are classified within Level 2 of the fair value hierarchy. The fair values of the Company’s derivatives are not based on quoted prices for identical instruments in active markets.
The Company applies fair value guidance on a non-recurring basis to certain non-financial assets and liabilities, which are not measured at fair value on an ongoing basis but are subject to adjustment if events or changes in circumstances indicate impairment or other adjustments may be necessary.
The following table sets forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value as of September 30, 2026 (in thousands).
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Derivative contract assets |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Liabilities |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
Derivative contract liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Derivative contract assets and liabilities. Derivative contracts listed above as Level 2 include fixed-price swaps and costless collars, three-way collars and put options that are carried at fair value. The Company classifies the net change in fair value of these positions under the caption “Net income (loss) on derivative contracts” in the consolidated statements of operations.
Other financial instruments. The carrying amounts of cash, restricted cash, accounts receivable, accounts payable, accrued expenses and revenue payable approximate fair value due to their short-term nature. The carrying amount of borrowings under the A&R Credit Agreement ($
Asset retirement obligations. The fair value of asset retirement obligation is estimated using discounted cash flow projections with primarily Level 3 inputs, using numerous estimates, assumptions and judgments regarding such factors as the existence of a legal obligation, estimated plugging and abandonment costs, timing of remediation, the credit adjusted risk-free rate and inflation rate.
Merger Acquisition. On October 31, 2025, the Company completed the Mergers with the Acquired Companies, recording assets and liabilities at fair value. Oil and gas properties and asset retirement obligations were valued using discounted cash flows with primarily Level 3 inputs, including estimated future production based upon the estimation of reserves, future operating and development costs, future commodity prices (adjusted for basis differentials), and discount rates (see Note 7 — Acquisitions and Divestitures).
19
Table of Contents
NOTE 11 – ASSET RETIREMENT OBLIGATIONS
The Company’s asset retirement obligations primarily relate to the Company’s portion of future plugging and abandonment costs for wells and related facilities. The following table presents the changes in the asset retirement obligations for the nine months ended September 30, 2026 (in thousands):
|
| Nine Months Ended September 30, 2026 |
| |
Asset retirement obligation at beginning of period |
| $ |
| |
Accretion expense |
|
|
| |
Liabilities settled |
|
| ( | ) |
Liabilities sold - sale of oil and gas properties |
|
| ( | ) |
Changes in estimates, net |
|
|
| |
Asset retirement obligation at end of period |
| $ |
| |
Less: current portion |
|
|
| |
Asset retirement obligation - long-term portion |
| $ |
| |
Liabilities sold - sale of oil and gas properties of $
In New Mexico, the Company, through its New Mexico operating subsidiary RAZO, has entered into a Stipulated Final Order (“SFO”) with Director of the Oil and Gas Conservation Division of New Mexico (the “OCD”) pursuant to which, among other things, RAZO agreed to reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Lease Agreements
In December 2022, the Company entered into a lease agreement for approximately
The Company’s office lease does not provide an implicit rate. Accordingly, the Company is required to use its incremental borrowing rate in determining the present value of lease payments based on the information available at the commencement date. The Company’s incremental borrowing rate would reflect the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. However, at the time of implementation, the Company did not maintain debt at the time, and in order to apply an appropriate discount rate, the Company used a borrowing rate obtained from a financial institution at which it maintains banking accounts.
20
Table of Contents
Supplemental cash flow information related to the Company’s operating office lease is included in the table below (in thousands):
| | Nine Months Ended | | |||||
| | September 30, | | |||||
| | 2026 | | | 2025 | | ||
Cash paid for amounts included in the measurement of lease liabilities | | $ | | | $ | | ||
Supplemental balance sheet information related to operating leases is included in the table below (in thousands):
| | September 30, 2026 | | | December 31, 2025 | | ||
Operating lease – right-of-use asset | | $ | | | $ | | ||
| | | | | | | | |
Operating lease liabilities - current | | $ | | | $ | | ||
Operating lease liabilities - long-term | | | | | | | ||
Total lease liability | | $ | | | $ | | ||
The remaining lease term for the Company’s office lease is
On October 29, 2026, the Company entered into a First Amendment to the lease for its Houston, Texas corporate office. The amendment relocates the Company’s office within the same building from approximately
Chief Executive Officer Transition
On September 21, 2026 (the “Transition Date”), J. Douglas Schick ceased to serve as the Company’s President and Chief Executive Officer and as a member of the Board of Directors. Mr. Schick remains employed as a non-executive Senior Advisor through December 31, 2026 (the “Separation Date”) under a Transition and Separation Agreement and General Release of Claims (the “Separation Agreement”). The Separation Agreement provides the separation payments and benefits set forth in Mr. Schick’s employment agreement dated October 31, 2025, consisting of cash severance of $
During the three and nine months ended September 30, 2026, the Company recognized $
Leasehold Drilling Commitments
The Company’s oil and gas leasehold acreage is subject to expiration of leases if the Company does not drill and hold such acreage by production or otherwise exercises options to extend such leases, if available, in exchange for payment of additional cash consideration.
For the D-J Basin Assets,
For the PRB Assets,
All of the Company’s acreage in the Permian Basin Assets is currently held by production. As such, no net acres are set to expire for the year ending December 31, 2026.
21
Table of Contents
Other Commitments
Although the Company may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of business, except as described below and in Part II, Item 1, the Company is not currently a party to any material legal proceeding. In addition, the Company is not aware of any material legal or governmental proceedings against it or contemplated to be brought against it.
As part of its regular operations, the Company may become party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters.
Although the Company provides no assurance about the outcome of these or any other pending legal and administrative proceedings and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on the Company’s financial condition or results of operations.
Milnesand Sale Dispute and Tilloo Note Default and Litigation
On November 9, 2023, in accordance with the sale of our then wholly-owned subsidiary EOR Operating Company (“EOR”) to Tilloo Exploration and Production LLC (“Tilloo”), the Company entered into a -year secured promissory note (the “Note”) with Tilloo, bearing interest at
Tilloo failed to make its initial installment payment on January 8, 2025, and has not made any subsequent payments as of December 31, 2025. The Company issued a notice of default under the Note to Tilloo in mid- January 2025, and sought to work with Tilloo into April 2025, in an effort to either restructure the Note or arrange for the sale of the assets securing the same to an unaffiliated third-party buyer, with proceeds of such sale to be applied toward repayment of the Note. On September 18, 2025, Tilloo filed a civil lawsuit against the Company in the District Court of Harris County, Texas, alleging breach of contract, fraudulent inducement, and negligent misrepresentation. In November 2025, the Company issued to Tilloo a notice of acceleration and demand for payment under the Note and also filed a counterclaim against Tilloo for breach of contract seeking full recovery under the Note. In February 2026, the Company filed a motion for summary judgement with respect to Tilloo’s claims and the Company’s counterclaims asserted against Tilloo for breach of contract related to the Note. The court denied that motion. The Company has filed a motion for reconsideration and, in the alternative, to certify the motion for summary judgment ruling for immediate appeal. Discovery is ongoing, with trial set for March 1, 2027. The Company does not anticipate that the Company will incur any material losses related to this matter.
Phoenix Litigation
On September 10, 2025, Navigation Powder River, LLC (“NPRLLC”), now an indirect wholly-owned subsidiary of the Company, sued Phoenix Energy One, LLC (“Phoenix”) in the Texas Business Court. NPRLLC alleged that Phoenix breached a July 31, 2025 Purchase and Sale Agreement (the “Phoenix PSA”) by failing to close its purchase of certain oil and gas properties in Campbell and Converse Counties, Wyoming. On June 1, 2026, the parties entered into a settlement agreement, later amended on September 29, 2026 (the “Phoenix Settlement Agreement”). Under the Phoenix Settlement Agreement, Phoenix agreed to pay NPRLLC $
22
Table of Contents
NOTE 13 – SHAREHOLDERS’ EQUITY
All share and per-share amounts presented below have been retroactively adjusted to reflect the 1-for-
Series A Convertible Preferred Stock
As part of the Mergers, the Company issued newly designated Series A Convertible Preferred Stock of the Company in two separate transactions. First, in connection with the Mergers,
In addition, concurrently with the Mergers, certain investors (the “PIPE Investors”) purchased
In both preferred stock issuances noted above, the preferred stock functioned as a temporary equity instrument that subsequently and automatically converted into
Common Stock
As noted above,
NOTE 14 – SHARE-BASED COMPENSATION
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award over the vesting period.
Modification of Awards
In connection with the Separation Agreement described in Note 12 - Commitments and Contingencies, the vesting of all of Mr. Schick’s unvested equity awards —
The Separation Agreement also removed the $
Restricted Stock Awards
The Company grants restricted stock awards to employees and directors. As of September 30, 2026, all restricted stock awards are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur.
23
Table of Contents
The following table summarizes activity for nonvested restricted stock awards for the period presented:
Nonvested Awards |
| Number of Awards |
|
| Weighted-Average Grant-Date Fair Value ($) |
| ||
Nonvested at January 1, 2026 |
|
|
|
| $ |
| ||
Granted |
|
|
|
| $ |
| ||
Vested |
|
| ( | ) |
| $ |
| |
Forfeited |
|
| ( | ) |
| $ |
| |
Surrendered for Tax Withholding* |
|
| ( | ) |
| $ |
| |
Nonvested at September 30, 2026 |
|
|
|
| $ |
| ||
*To satisfy employee tax withholding obligations, these shares were surrendered and cancelled and were recorded as a reduction to additional paid-in capital.
Stock-based compensation expense recorded related to the vesting of restricted stock for the three and nine months ended September 30, 2026, was $
Restricted Stock Units
The Company grants restricted stock units (“RSU”) to employees and directors. As of September 30, 2026, all RSU grants are accounted for as equity-classified awards. The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur.
The following table summarizes activity for nonvested RSUs for the period presented:
Nonvested Awards |
| Number of Awards |
|
| Weighted-Average Grant-Date Fair Value ($) |
| ||
Nonvested at January 1, 2026 |
|
|
|
|
|
| ||
Granted |
|
|
|
| $ |
| ||
Vested |
|
|
|
|
|
| ||
Forfeited* |
|
| ( | ) |
| $ |
| |
Nonvested at September 30, 2026 |
|
|
|
| $ |
| ||
Stock-based compensation expense recorded related to the vesting of RSUs for the three and nine months ended September 30, 2026, was $
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Performance Based Restricted Stock Units
In June 2026, the Company began granting performance based restricted stock units (“PBRSUs”) to certain employees. PBRSUs contain both market and service vesting conditions and are accounted for as equity-classified stock-based compensation awards. Vesting of PBRSUs can range from
The grant-date fair value of the PBRSUs was estimated using a Monte Carlo simulation model. The model incorporated certain assumptions, including the expected term, expected stock price volatility of the Company and its peer group, correlation coefficients between the Company and each peer group company, the risk-free interest rate, and the expected dividend yield. The expected term is based on the time remaining in the performance period as of the grant date. Expected volatilities for the Company and each peer group company were estimated using historical stock price volatility over a period consistent with the remaining performance period as of the grant date. The risk-free interest rate is based on the yield of the U.S. Treasury Constant Maturity for a term consistent with the remaining performance period. The expected dividend yield is based on management's expectation that the Company will not declare or pay cash dividends during the remaining performance period.
The table below reflects the ranges for the assumptions used in the Monte Carlo model for the PBRSUs:
Expected volatility | | | % | |
Dividend yield | | | % | |
Risk-free interest rate | | | % |
The grant-date fair value is recognized as compensation cost on a straight-line basis. The Company recognizes compensation cost over the requisite service or performance period. The Company accounts for forfeitures as they occur.
Compensation costs related to PBRSUs are recorded as general and administrative expense. The unrecognized cost associated with PBRSU awards was $
The following table summarizes information regarding the PBRSU activity for the period presented:
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Vested |
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PBRSUs outstanding at September 30, 2026 |
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(1) Determined by dividing the aggregate grant-date fair value of awards by the number of awards issued.
(2) The aggregate grant-date fair value of PBRSUs issued for the nine months ended September 30, 2026 was $
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Options
During the nine months ended September 30, 2026,
The intrinsic value of outstanding and exercisable options at September 30, 2026 was $
Option activity during the nine months ended September 30, 2026, was:
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Outstanding at December 31, 2025 |
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Outstanding at September 30, 2026 |
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Exercisable at September 30, 2026 |
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NOTE 15 – EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share-basic is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share-diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing net income (loss) by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net income (loss) per common share-diluted considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares, as defined above, would have an anti-dilutive effect.
The calculation of earnings (loss) per share for the periods indicated below were as follows (amounts in thousands, except share and per share data):
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| For the Three Months Ended |
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| For the Nine Months Ended |
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Numerator: |
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Net income (loss) |
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Effect of common stock equivalents |
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Net income (loss) adjusted for common stock equivalents |
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Denominator: |
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Weighted average common shares – basic |
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Dilutive effect of common stock equivalents: |
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Options, RSUs and PBRSUs |
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Denominator: |
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Weighted average common shares – diluted |
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Earnings (loss) per common share – basic |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Earnings (loss) per common share – diluted |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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For the three and nine months ended September 30, 2026, share equivalents related to
NOTE 16 – INCOME TAXES
The effective tax rates for the nine months ended September 30, 2026 and 2025 were (
The Company’s current income tax benefit (expense) was $
The Company’s deferred income tax benefit (expense) was ($
NOTE 17 — SEGMENT INFORMATION
Operating segments are defined as components of an enterprise for which separate financial information is available and regularly evaluated by the Chief Operating Decision Maker (“CODM”) for the purpose of making key operating decisions, allocating resources, and assessing operating performance. The Company operates in reportable operating segment, oil and natural gas development, exploration and production. The Company’s oil and gas properties are managed as a whole rather than through discrete operating segments. Financial and operational information is tracked by geographic area; however, financial performance is assessed as a single enterprise and not on a geographic basis. Allocation of resources is made on a project basis across the Company’s entire portfolio without regard to geographic area, and considers among other things, return on investment, current market conditions, including commodity prices and market supply, availability of services and human resources, and contractual commitments. The Company’s Interim President, Interim Chief Executive Officer, and Chief Operating Officer is its CODM.
The Company’s profitability measure is consolidated net income which is used to assess budgeted versus actual results and drives the Company’s operating cash flow. The CODM reviews significant consolidated forecasts and results of operations, including return on capital, operating expenses, and cash flow when making decisions such as the allocation of capital. The financial position, results of operations and cash flows of the Company’s reportable operating segment are consistent with the Company’s consolidated financial statements included herein.
Note 18 — Supplemental Disclosures to the Unaudited Consolidated Balance Sheets
Accrued Expenses
Current accrued expenses consisted of the following at the dates indicated (in thousands):
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| September 30, 2026 |
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| December 31, 2025 |
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Capital expenditures |
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Lease operating expense |
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Notes payable issued on disposal of subsidiaries, current portion |
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Accrued interest |
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Total Accrued Expenses |
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NOTE 19 — SUBSEQUENT EVENTS
On October 1, 2026, the Company received the final $
On October 1, 2026, the Company entered into a fixed-price crude oil swap agreement covering an aggregate of
On October 22, 2026, the Company entered into the Fourth Amendment to the A&R Credit Agreement (see Note 8 - Revolving Credit Facility).
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
The following is management’s discussion and analysis of the significant factors that affected the Company’s financial position and results of operations during the periods included in the accompanying unaudited consolidated financial statements. You should read this in conjunction with the discussion under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, and the unaudited consolidated financial statements included in this quarterly Report.
Certain abbreviations and oil and gas industry terms used throughout this Quarterly Report are described and defined in greater detail under “Glossary of Oil And Natural Gas Terms” on page 5 of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on March 31, 2026.
Our fiscal year ends on December 31st. Interim results are presented on a quarterly basis for the quarters ended March 31st, June 30th, and September 30th, the first quarter, second quarter and third quarter, respectively, with the quarter ending December 31st being referenced herein as our fourth quarter. Fiscal 2026 means the year ended December 31, 2026, whereas fiscal 2025 means the year ended December 31, 2025.
Certain capitalized terms used below but not otherwise defined, are defined in, and shall be read along with the meanings given to such terms in, the notes to the unaudited financial statements of the Company for the three and nine months ended September 30, 2026, above.
Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “PEDEVCO” and “PEDEVCO Corp.” refer specifically to PEDEVCO Corp. and its wholly and majority-owned subsidiaries.
In addition, unless the context otherwise requires and for the purposes of this Report only:
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“Boe” refers to barrels of oil equivalent, determined using the ratio of one Bbl of crude oil, condensate or natural gas liquids, to six Mcf of natural gas; |
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“Bopd” refers to barrels of oil day; |
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“Mcf” refers to a thousand cubic feet of natural gas; |
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“NGL” refers to natural gas liquids; |
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“Exchange Act” refers to the Securities Exchange Act of 1934, as amended; |
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“SEC” or the “Commission” refers to the United States Securities and Exchange Commission; |
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“SWD” means a saltwater disposal well; and |
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“Securities Act” refers to the Securities Act of 1933, as amended. |
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Available Information
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the SEC. The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge at our website (www.pedevco.com) under “Investors” – “SEC Filings”, when such reports are available on the SEC’s website. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Company periodically provides other information for investors on its corporate website, www.pedevco.com. This includes press releases and other information about financial performance, information on corporate governance and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. Our MD&A is organized as follows:
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General Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of our MD&A. |
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Strategy. Discussion of our strategy moving forward and how we plan to seek to increase stockholder value. |
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Results of Operations and Financial Condition. An analysis of our financial results comparing the three and nine-month periods ended September 30, 2026 and 2025, and a discussion of changes in our consolidated balance sheets, cash flows and a discussion of our financial condition. |
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Critical Accounting Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
General Overview
We are an oil and gas company focused on the acquisition, development and optimization of oil and natural gas assets in the areas in which we operate. In particular, we focus on legacy proven properties where there is a long production history, well defined geology and existing infrastructure that can be leveraged when applying modern field management technologies. Our current properties are located in the Denver-Julesburg Basin (“D-J Basin”) in Colorado and Wyoming, the Powder River Basin (the “Powder River Basin” or “PRB”) in Wyoming, and in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the “Permian Basin”).
As of September 30, 2026, we held approximately 85,898 net acres in the D-J Basin located in Weld and Morgan Counties, Colorado and Laramie County, Wyoming, through our wholly-owned subsidiaries, PRH Holdings LLC (“PRH”) and North Peak Oil & Gas, LLC (“NPOG”)(the “D-J Basin Asset”), which assets are operated by the Company’s wholly-owned operating subsidiaries, Red Hawk Petroleum, LLC (“Red Hawk”), North Silo Resources, LLC (“NSR”), and Longs Peak Resources, LLC (“LPR”).
As of September 30, 2026, the Company held approximately 183,829 net acres in the Powder River Basin, located in Campbell, Converse, Johnson, and Niobrara Counties, Wyoming, through its wholly-owned subsidiary Century Oil and Gas Sub-Holdings, LLC (“COG”). These assets are operated by the Company’s wholly-owned operating subsidiaries, COG and Navigation Powder River, LLC (“NPR”) and are referred to as the “Powder River Basin Asset” or the “PRB Asset.”
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As of September 30, 2026, we held approximately 14,505 net acres in the Permian Basin located in Chaves and Roosevelt Counties, New Mexico, through our wholly-owned subsidiary, Pacific Energy Development Corp. (“PEDCO”). These assets are operated by our wholly-owned operating subsidiary, Ridgeway Arizona Oil Corp. (“RAZO”), and are collectively referred to as our “Permian Basin Asset.”
Strategy
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, 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.
Specifically, we seek to increase stockholder value through the following strategies:
● |
Grow production, cash flow and reserves by developing our operated drilling inventory and participating opportunistically in non-operated projects. We believe our extensive inventory of drilling locations in the D-J Basin and Powder River Basin, combined with our operating expertise, will enable us to continue to deliver accretive production, cash flow and reserves growth. We believe the location, concentration and scale of our core leasehold positions, coupled with our technical understanding of the reservoirs, will allow us to efficiently develop our core areas and to allocate capital to maximize the value of our resource base. |
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Apply modern drilling and completion techniques and technologies. We own and intend to acquire additional properties that have been historically underdeveloped and underexploited. We believe our attention to detail and application of the latest industry advances in horizontal drilling, completions design, frac intensity and locally optimal frac fluids will allow us to successfully develop our properties. |
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Optimization of development plans, well density and configuration. We own properties that are located in oil and gas producing basins that are geologically well defined, characterized by widespread vertical and horizontal development and geological well control. We utilize the extensive geological, petrophysical and production data of such properties to confirm optimal development plans, well spacing and configuration using modern reservoir evaluation methodologies. |
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Maintain a high degree of operational control and/or form partnerships which allow for a high degree of control over non-operated properties. We believe that by retaining operational control and/or by forming partnerships which require consent and input by all partners in major development projects, we can efficiently manage the timing and amount of our capital expenditures and operating costs, and thus key in on the optimal drilling and completions strategies, which we believe will generate higher recoveries and greater rates of return per well. |
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Leverage extensive deal flow, technical and operational experience to evaluate and execute accretive acquisition opportunities. 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 believe our understanding of the business, financial, geology, geophysics and reservoir properties of potential acquisition targets will allow us to identify and acquire highly prospective acquisitions and leasing opportunities in order to grow our reserve base and maximize stockholder value. |
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Preserve financial flexibility to pursue organic and external growth opportunities. We intend to maintain a disciplined financial profile in order to provide flexibility across various commodity and market cycles. |
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Our strategy is to be the operator and/or a significant working interest owner, directly or through our subsidiaries and joint ventures, in the majority of our acreage so we can dictate the pace of development in order to execute our business plan. In areas we deem highly economic and do not have a high enough working interest to serve as operator, we seek to participate in projects if returns match or exceed other projects in our portfolio. Due to the fragmented nature of acreage positions in some of our holdings, our ownership interest does not always allow us to serve as the operator. Through the nine months ended September 30, 2026, our net capital expenditures have been $32.5 million.
Net capital expenditures for the nine months ended September 30, 2026 have been approximately $17.6 million, $8.0 million and $6.9 million for development, maintenance capital and acquisition costs, respectively. Our development drilling has primarily been related to operated and non-operated properties in the Powder River Basin and operated properties in the D-J Basin. Maintenance capital has primarily been related to optimization projects on the newly acquired assets from the Mergers. These optimization projects include jet pump to rod pump or gas lift conversions, electronic submersible pump (ESP) to rod pump conversions, compression optimization projects, recompletions, and well cleanouts that are expected to materially lower lease operating expenses on our operated assets going forward. Other minor capital expenditures included in these figures are leasing, facilities, remediation and other miscellaneous capital expenses. Acquisition costs have primarily been related to the acquisition of federal oil and gas leases.
We estimate our net capital expenditures for full year 2026 will be in the range of $37 million to $42 million, with capital expenditures during the fourth quarter of 2026 relating to Powder River Basin non-operated properties. We periodically review our capital expenditures and adjust our capital forecasts and allocations based on liquidity, drilling results, leasehold acquisition opportunities, partner non-consents, proposals from third party operators, and commodity prices, while prioritizing our financial strength and liquidity. As such, these estimates are subject to change.
We plan to continue to evaluate all non-operated well proposals as received from third party operators and participate in those we deem most economic and prospective. If new proposals are received that meet our economic thresholds and require material capital expenditures, we have flexibility to expand our capital program or move capital from our operated D-J Basin, Powder River Basin, and Permian Basin assets, allowing for flexibility on timing of development. Our remaining 2026 development program is based upon our current outlook for the year and is subject to revision, if and as necessary, to react to market conditions, product pricing, contractor availability, requisite permitting, capital availability, partner non-consents, capital allocation changes between assets, acquisitions, divestitures and other adjustments determined by the Company in the best interest of its shareholders while prioritizing our financial strength and liquidity.
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, discussed above, from (i) projected cash flow from our operations, (ii) existing cash on hand, and (iii) credit or loan facilities, including under the Company’s A&R Credit Agreement with Citibank, N.A., as administrative agent, which currently provides a borrowing base of $125 million and an aggregate maximum revolving credit amount of $250 million (of which $80 million has been drawn down by the Company to date), as discussed in greater detail below under “Amended and Restated Credit Agreement.”
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Participations Agreements Related to D-J Basin Assets
On August 21, 2024, the Company, through PRH, entered into a five-year Participation Agreement with a large private equity-backed D-J Basin exploration and production company with extensive operational experience (“Joint Development Party”), whereby the Joint Development Party assigned to PRH a 30% interest in approximately 7,607 net acres of existing oil and gas leases and PRH assigned to the Joint Development Party a 70% interest in approximately 3,166 net acres of oil and gas leases, all located within the SW Pony Prospect in the D-J Basin in Weld County, Colorado. Additionally, to facilitate joint development of the SW Pony Prospect, the parties agreed to an Area of Mutual Interest covering approximately 16,900 gross acres wherein the parties have the opportunity to participate in subsequent leasehold acquisitions proportionate to their working interest under the Participation Agreement. Each party’s participation is based on their proportionate share of the total acquisition cost. The Company participated in six wells which were drilled and completed in 2024 (the Harlequin wells), and four wells which were drilled and completed in the fourth quarter of 2025 (three Mavericks wells and one Jaws well), all of which were within this Area of Mutual Interest.
In February 2025, the Company entered into a Joint Development Agreement with a large, Denver, Colorado-based private equity-backed D-J Basin exploration and production (E&P) Company with extensive operational experience (the “Operator”), pursuant to which the parties agreed to jointly participate in the expansion and development of the Company’s Roth and Amber drilling spacing units (DSUs) located in Weld County, Colorado, with the Operator paying to the Company $1.7 million, the Company agreeing to amend the Company’s existing Roth and Amber DSUs to increase each to 1,600 acres and transferring operatorship of the DSUs to the Operator, and the parties agreeing to jointly participate in the development of the Roth and Amber DSUs. The Roth wells were drilled and completed in the fourth quarter of 2025. The Operator had until May 10, 2026, to make an election to acquire up to 50% of the Company’s working interest in the Amber DSU at an acquisition price of approximately $2.5 million but did not make this election.
Merger Agreement
On October 31, 2025 (the “Closing”), the Company completed the transactions contemplated by that certain Agreement and Plan of Merger, dated October 31, 2025 (the “Merger Agreement”), by and among the Company; NP Merger Sub, LLC, a wholly owned subsidiary of the Company (the “First Merger Sub”); COG Merger Sub, LLC, a wholly owned subsidiary of the Company (the “Second Merger Sub”); NPOG; COG; and, solely for purposes of specified provisions therein, North Peak Oil & Gas Holdings, LLC (“North Peak”).
Pursuant to the Merger Agreement, (i) the First Merger Sub merged with and into NPOG, with NPOG surviving as a wholly-owned subsidiary of PEDEVCO, and (ii) the Second Merger Sub merged with and into COG, with COG surviving as a wholly-owned subsidiary of PEDEVCO.
Subject to the terms and conditions of the Merger Agreement, all of the issued and outstanding limited liability company interests of each of NPOG and COG were automatically converted into the right to receive an aggregate of 10,650,000 validly issued, fully paid and nonassessable shares of newly designated Series A Convertible Preferred Stock of the Company (the “Merger Preferred Shares”), par value $0.001 per share (the “Series A Preferred Stock”), which shares were issued to Century Oil and Gas Holdings, LLC, a Delaware limited liability company (“Century”) and North Peak. The Series A Preferred Stock automatically converted into shares of common stock of the Company, par value $0.001 per share (the “Automatic Conversion”), at a ratio of 0.5-to-1, effective February 27, 2026, following the expiration of the twenty calendar day period commencing on the distribution of an information statement to the Company’s shareholders in accordance with Rule 14c-2 of Regulation 14C promulgated under the Exchange Act (the “Automatic Conversion Date”). On the Automatic Conversion Date, the Merger Preferred Shares converted into an aggregate of 5,325,000 shares of Company common stock.
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Amended and Restated Credit Agreement
On October 31, 2025, the Company entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”), which amended and restated that prior senior secured revolving credit agreement entered into on September 11, 2024 (the “Original Credit Agreement”) among the Company, as borrower, Citibank, N.A., as administrative agent (the “Administrative Agent”), and the lenders from time to time party thereto (the “Lenders”).
The A&R Credit Agreement has a maturity date of October 31, 2029. The A&R Credit Agreement provided for an initial borrowing base and aggregate elected commitments of $120 million and an aggregate maximum revolving credit amount of $250 million. The borrowing base is scheduled to be redetermined semiannually on or about February 1 and August 1 of each calendar year (as amended by the Fourth Amendment, discussed below), and is subject to additional adjustments from time to time, including, for certain asset sales, elimination or reduction of hedge positions and title defects.
The A&R Credit Agreement contains additional restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, incur additional liens, enter into mergers and consolidations, make or declare dividends, make investments and loans, engage in transactions with affiliates.
On December 2, 2025, the parties to the A&R Credit Agreement entered into a First Amendment to Credit Agreement, which amended the A&R Credit Agreement to add an additional lender and re-allocate commitments among the lender group, which amendment was deemed immaterial by the Company.
On May 5, 2026, the parties to the A&R Credit Agreement entered into a Second Amendment to Credit Agreement which, among other amendments set forth therein, (i) amended the definition of “EBITDAX” to (A) update the cap on permitted transaction cost add-backs to EBITDAX for any acquisition or disposition of the Company’s oil and gas properties which form the collateral for the agreement, to the greater of $6,000,000 or five percent (5%) of the then-current borrowing base (currently $125 million), and (B) add back an estimated EBITDAX for the month of October 2025 attributable to the companies acquired by the Company in October 2025 from Juniper Capital Advisors, L.P. for any test period that includes the fiscal quarter ended December 31, 2025; (ii) amended the definition of "Test Period" to provide for annualization of EBITDAX beginning with the Test Period ended December 31, 2025, building to a full trailing twelve-month calculation for the Test Period ending September 30, 2026; (iii) revised the borrowing base redetermination schedule so that the next scheduled redetermination occurs on or about July 1, 2026, with semi-annual redeterminations thereafter on or about April 1 and October 1 of each year; and (iv) updated the reserve report delivery schedule so that the next reserve report is due on or about June 1, 2026, with subsequent reports thereafter due on or about March 1 and September 1 of each year.
On May 19, 2026, the parties to the A&R Credit Agreement entered into a Third Amendment to Credit Agreement to increase the borrowing base and elected commitment amount from $120 million to $125 million. The redetermination of the borrowing base pursuant to the Third Amendment constituted the redetermination originally scheduled for on or about December 1, 2025, with the next redetermination scheduled to occur on or about July 1, 2026.
On October 22, 2026, the parties to the A&R Credit Agreement entered into a Fourth Amendment to Credit Agreement, Limited Waiver and Limited Consent, which (i) reaffirmed the borrowing base and elected commitment amount at $125 million, (ii) provided for scheduled redeterminations on or about February 1 and August 1 of each year, (iii) waived the redetermination scheduled for July 1, 2026, and (iv) provided the lenders’ consent, effective July 1, 2026, to the sale of Pine Haven and the release of the Pine Haven entities from the guaranty.
In connection with the closing of the Mergers, the Company drew $87 million under the A&R Credit Agreement. The Company subsequently borrowed an additional $6.0 million on January 8, 2026 and $5.0 million on February 5, 2026. The proceeds from these borrowings were used to fund the Company’s participation in certain non-operated well operations and to pay other Company obligations. The Company repaid $13 million during the second quarter of 2026 and $5.0 million during the third quarter of 2026, resulting in an outstanding balance of $80.0 million as of September 30, 2026.
PIPE Offering
Concurrently with the Closing of the Mergers, certain investors (the “PIPE Investors”) subscribed for and purchased an aggregate of 6,363,637 shares of Series A Preferred Stock (the “PIPE Preferred Shares”), at a price per share equal to $5.50 per share (the “Purchase Price”) ($11.00 per share of common stock issuable upon conversion thereof, on a post-reverse stock split basis), pursuant to their entry into Series A Convertible Preferred Stock Subscription Agreements in favor of the Company (the “Subscription Agreements”). On the Automatic Conversion Date, the PIPE Preferred Shares converted into 3,181,818 shares of Company common stock (the “PIPE Conversion Shares”).
34
Table of Contents
The PIPE Investors included (a) The SGK 2018 Revocable Trust, a family trust of which Dr. Simon Kukes, the then Executive Chairman of the Company is trustee and beneficiary ($15,409,977); (b) American Resources, Inc., an entity owned and controlled by J. Douglas Schick, the then Chief Executive Officer, President and member of the Board ($250,003); (c) Clark R. Moore, the Executive Vice President, General Counsel and Secretary of the Company ($25,003); (d) John J. Scelfo Revocable Trust Dated October 8, 2003, a trust of which John J. Scelfo, a then member of the Board, is trustee and beneficiary ($550,000); (e) Jody D. Crook, the Chief Commercial Officer of the Company ($25,003); (f) J PED, LLC, an entity affiliated with Juniper Capital Advisors, L.P. (“Juniper”) ($18,550,004); (g) Reagan T. ("R.T.") Dukes, the then Chief Executive Officer of the Acquired Companies, who was appointed Chief Operating Officer of the Company at the Closing of the Mergers ($52,503) and (h) Robert J. Long, the then Chief Financial Officer of the Acquired Companies, who was appointed Chief Financial Officer, Treasurer and Principal Accounting/Financial Officer of the Company at the Closing of the Mergers ($52,503). The PIPE Financing closed concurrently with the Mergers and the $35,000,004 of net proceeds raised by the Company pursuant to the PIPE Financing was used to pay off certain liabilities of the Acquired Companies in connection with the Mergers and certain expenses of the PIPE Financing and Mergers.
Second Amended and Restated Designation of Series A Convertible Preferred Stock
In preparation for the Closing of the Mergers, the Board of Directors approved the Second Amended and Restated Certificate of Designations establishing the rights, preferences, and limitations of the Company’s Series A Convertible Preferred Stock on October 29, 2025, which was filed with the Texas Secretary of State on October 31, 2025. A total of 17,013,637 shares of Series A Preferred Stock were designated. Except as required by law or the designation, Series A Preferred Stockholders had no voting rights, except the right to elect one director (the “Series A Director”) until the Automatic Conversion Date, with Josh Schmidt serving as such director.
Holders of Series A Preferred Stock were entitled to certain protective provisions, requiring approval by a majority in interest of outstanding shares for actions such as amending governing documents, changing board composition, issuing new securities, major acquisitions or disposals, indebtedness above $500,000, executive appointments, and other material corporate actions. The holders of Series A Preferred Stock were provided no dividend rights, and in the event of liquidation, dissolution, or winding-up, Series A holders were to receive distributions pari passu with common shareholders, as if their shares were converted to common stock. All of the 17,013,637 then outstanding shares of Series A Preferred Stock converted on the Automatic Conversion Date, into an aggregate of 8,506,818 shares of the Company common stock in a ratio of 0.5-for-1.
Additionally, on February 27, 2026, the Company, after approval of the Board of Directors and the stockholders pursuant to the Written Consent, filed a Second Amended and Restated Certificate of Formation of the Company, which among other things, terminated the designation of the Series A Preferred Stock. As such, as of the date of this filing, we have no Series A Preferred Stock outstanding or designated.
How We Conduct Our Business and Evaluate Our Operations
Our use of capital for acquisitions and development allows us to direct our capital resources to what we believe to be the most attractive opportunities as market conditions evolve. We have historically acquired properties that we believe had significant appreciation potential. We intend to continue to acquire both operated and non-operated properties to the extent we believe they meet our return objectives.
We use a variety of financial and operational metrics to assess the performance of our oil and natural gas operations, including:
|
● |
production volumes; |
|
● |
realized prices on the sale of oil and natural gas, including the effects of our commodity derivative contracts; |
|
● |
oil and natural gas production and operating expenses; |
|
● |
capital expenditures; |
|
● |
general and administrative expenses; |
|
● |
net cash provided by operating activities; and |
|
● |
net income (loss). |
35
Table of Contents
Recent Developments
Chief Executive Officer Transition
On September 21, 2026 (the “Transition Date”), the Company announced that J. Douglas Schick had ceased to serve as the Company’s President and Chief Executive Officer and a member of the Company’s Board of Directors. R.T. Dukes, the Company’s Chief Operating Officer, was appointed as the Company’s Interim President, Interim Chief Executive Officer, and Chief Operating Officer, effective as of the Transition Date. Mr. Schick will remain employed by the Company and provide transition services through December 31, 2026 (the “Separation Date”), at which time his employment will end.
In connection with Mr. Schick’s transition, the Company has entered into a transition and separation agreement and general release of claims with Mr. Schick (the “Separation Agreement”), pursuant to which he will serve as a non-executive Senior Advisor of the Company through the Separation Date. The Separation Agreement provides Mr. Schick with the separation payments and benefits set forth under his employment agreement with the Company (consisting of 2.5 times the sum of his annual base salary and target annual bonus, Company payment or reimbursement of premiums for continuation coverage under the Company’s group health plans for up to 30 months following the Separation Date, and accelerated vesting of his unvested Company equity awards), as well as a cash payment of $255,000 in lieu of any 2026 annual bonus, reimbursement of up to $10,000 in documented legal fees incurred by him in connection with the review of the Separation Agreement, and if the Company terminates his employment for any reason other than for cause prior to the Separation Date, he will receive the compensation, benefits and vesting that he would have received if his employment continued through the Separation Date. The Separation Agreement also includes certain customary covenants and a general release of claims in favor of the Company and its affiliates.
Corporate Office Lease
On October 29, 2026, the Company entered into a First Amendment to the lease for its Houston, Texas corporate office. The amendment relocates the Company’s office within the same building from approximately 5,200 square feet to approximately 10,000 square feet, effective on the later of March 1, 2027 and substantial completion of the landlord’s improvements, and extends the lease term for 64 months from that date (currently expected to expire June 30, 2032). Base rent begins at approximately $25,000 per month and increases periodically to approximately $27,600 per month, with the first four months of base rent abated. Total base rent over the extended term, net of abatement, is approximately $1.6 million. The landlord will provide a tenant improvement allowance of up to approximately $0.4 million, and the Company has one five-year renewal option at market rent.
Results of Operations and Financial Condition
Market Conditions and Commodity Prices
Our financial results depend on many factors, particularly the price of natural gas and crude oil and our ability to market our production on economically attractive terms. Commodity prices are affected by many factors outside of our control, including changes in market supply and demand, which are impacted by, among other factors, weather conditions, inventory storage levels, basis differentials and other factors. As a result, we cannot accurately predict future commodity prices and, therefore, we cannot determine with any degree of certainty what effect increases or decreases in these prices will have on our production volumes or revenues. In addition to production volumes and commodity prices, finding and developing sufficient amounts of natural gas and crude oil reserves at economical costs are critical to our long-term success. We expect prices to remain volatile for the remainder of the year. For information about the impact of realized commodity prices on our natural gas and crude oil and condensate revenues, refer to “Results of Operations” below.
Results of Operations
The following discussion and analysis of the results of operations for the three and nine-month periods ended September 30, 2026, and 2025, should be read in conjunction with our consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The majority of the numbers presented below are rounded numbers and should be considered as approximate.
Three Months Ended September 30, 2026, vs. Three Months Ended September 30, 2025
We reported net loss for the three-month period ended September 30, 2026, of $9.2 million, or $0.70 per common share, compared to a net loss of $0.3 million, or $0.07 per common share, for the three-month period ended September 30, 2025. Operating income increased $9.8 million, primarily from the properties acquired in the October 2025 Mergers and a $4.7 million net gain on property sales. This was more than offset by a $16.6 million net loss on derivative contracts ($4.6 million realized and $12.0 million unrealized) as commodity prices increased from previous lows at June 30, 2026, and $1.6 million of higher interest expense.
36
Table of Contents
Net Revenues
The following table sets forth the operating results and production data for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Increase |
|
|
% |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
Incr(Decr) |
|
||||
Sale Volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls) |
|
|
387,878 |
|
|
|
96,864 |
|
|
|
291,014 |
|
|
|
300 |
% |
Natural Gas (Mcf) |
|
|
469,754 |
|
|
|
128,369 |
|
|
|
341,385 |
|
|
|
266 |
% |
NGL (Bbls) |
|
|
72,061 |
|
|
|
17,007 |
|
|
|
55,054 |
|
|
|
324 |
% |
Total (Boe) (1) |
|
|
538,231 |
|
|
|
135,266 |
|
|
|
402,965 |
|
|
|
298 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls per day) |
|
|
4,216 |
|
|
|
1,053 |
|
|
|
3,163 |
|
|
|
300 |
% |
Natural Gas (Mcf per day) |
|
|
5,106 |
|
|
|
1,395 |
|
|
|
3,711 |
|
|
|
266 |
% |
NGL (Bbls per day) |
|
|
783 |
|
|
|
185 |
|
|
|
598 |
|
|
|
323 |
% |
Total (Boe per day) (1) |
|
|
5,850 |
|
|
|
1,471 |
|
|
|
4,379 |
|
|
|
298 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sale Price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil ($/Bbl) |
|
$ | 83.81 |
|
|
$ | 63.76 |
|
|
$ | 20.05 |
|
|
|
31 |
% |
Natural Gas($/Mcf) |
|
|
1.94 |
|
|
|
2.94 |
|
|
|
(1.00 |
) |
|
|
(34 |
%) |
NGL ($/Bbl) |
|
|
29.44 |
|
|
|
24.00 |
|
|
|
5.44 |
|
|
|
23 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil |
|
$ | 32,507 |
|
|
$ | 6,176 |
|
|
$ | 26,331 |
|
|
|
426 |
% |
Natural Gas |
|
|
912 |
|
|
|
377 |
|
|
|
535 |
|
|
|
142 |
% |
NGL |
|
|
2,121 |
|
|
|
408 |
|
|
|
1,713 |
|
|
|
420 |
% |
Total Revenues |
|
$ | 35,540 |
|
|
$ | 6,961 |
|
|
$ | 28,579 |
|
|
|
411 |
% |
(1) |
Assumes 6 Mcf of natural gas equivalents to 1 barrel of oil. |
Total crude oil, natural gas and NGL revenues for the three-month period ended September 30, 2026, increased $28.6 million, or 411%, to $35.5 million, compared to $7.0 million for the same period a year ago. Of the total increase in revenues, $26.7 million is attributable to increased sales volumes and $1.9 million is attributable to increased pricing compared to prior period. The increase in production volume is related to our October 2025 Mergers. Third quarter 2026 production was reduced by temporary offset shut-ins associated with drilling and completion activity in the D-J Basin and the Powder River Basin, and by our decision to accelerate into the third quarter a series of rod conversions originally planned for the fourth quarter. These activities curtailed over 200 barrels of oil per day of production during the quarter, and the affected wells have since returned to production. As a result, we expect our production to recover in the fourth quarter of 2026 from third quarter levels.
37
Table of Contents
Operating Expenses and Other Income
The following table summarizes our production costs and operating expenses for the periods indicated (in thousands):
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|||||
|
|
September 30, |
|
|
Increase |
|
|
% Increase |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Direct Lease Operating Expense |
|
$ |
7,376 |
|
|
$ |
1,287 |
|
|
$ |
6,089 |
|
|
|
473 |
% |
Workovers |
|
|
591 |
|
|
|
- |
|
|
|
591 |
|
|
|
N/A |
|
Other* |
|
|
6,353 |
|
|
|
807 |
|
|
|
5,546 |
|
|
|
687 |
% |
Lease Operating Expenses |
|
|
14,320 |
|
|
|
2,094 |
|
|
|
12,226 |
|
|
|
584 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, Depletion, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and Accretion |
|
$ |
9,703 |
|
|
$ |
4,010 |
|
|
$ |
5,693 |
|
|
|
142 |
% |
Impairment of Oil and Gas Properties |
|
$ |
2,367 |
|
|
$ |
165 |
|
|
$ |
2,202 |
|
|
|
1335 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative (Cash) |
|
$ |
4,329 |
|
|
$ |
989 |
|
|
$ |
3,340 |
|
|
|
338 |
% |
Share-Based Compensation (Non-Cash) |
|
|
611 |
|
|
|
537 |
|
|
|
74 |
|
|
|
14 |
% |
Total General and Administrative Expense |
|
$ |
4,940 |
|
|
$ |
1,526 |
|
|
$ |
3,414 |
|
|
|
224 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of Oil and Gas Properties, Net |
|
$ |
4,735 |
|
|
$ |
- |
|
|
$ |
4,735 |
|
|
|
N/A |
|
Interest Expense |
|
$ |
1,734 |
|
|
$ |
102 |
|
|
$ |
1,632 |
|
|
|
1600 |
% |
Interest Income |
|
$ |
140 |
|
|
$ |
69 |
|
|
$ |
71 |
|
|
|
103 |
% |
Net Income (Loss) on Derivative Contracts |
|
$ |
(16,571 |
) |
|
$ |
- |
|
|
$ |
(16,571 |
) |
|
|
N/A |
|
Other Income (Expense) |
|
$ |
23 |
|
|
$ |
378 |
|
|
$ |
(355 |
) |
|
|
-94 |
% |
Income Tax Benefit (Expense) |
|
$ |
(16 |
) |
|
$ |
164 |
|
|
$ |
(180 |
) |
|
|
-110 |
% |
* Includes severance taxes, ad valorem taxes, assessment and gathering, transportation and processing costs.
Lease operating expenses. Lease operating expenses increased by $12.2 million for the three months ended September 30, 2026, primarily due to the October 2025 Mergers. Acquired properties contributed $6.6 million of direct lease operating expenses and $4.3 million of other operating costs, along with $1.3 million of higher variable expenses associated with increased legacy production volumes.
Depreciation, depletion, amortization and accretion. Increased by $5.7 million for the three months ended September 30, 2026, compared to the prior period, primarily due to the production increase noted above, which is primarily attributed to inclusion of the Acquired Companies.
Impairment of oil and gas properties. The Company recorded an impairment of oil and gas properties of $2.4 million and $0.2 million during the three months ended September 30, 2026 and 2025, respectively. The impairments related to expiration of certain leases representing 3,878 and 187 net acres, respectively, in the D-J Basin, that it allowed to expire or currently has no plans to drill prior to expiration.
General and administrative expenses (excluding share-based compensation). General and administrative expenses (excluding share-based compensation) increased by $3.3 million for the three months ended September 30, 2026, compared to the prior period, primarily due to $2.1 million of severance costs incurred in September 2026 related to the Separation Agreement and additional payroll expenses associated with the Mergers.
Share-Based Compensation. Share-based compensation, which is included in general and administrative expenses in the Statements of Operations, slightly increased when comparing periods. While share-based compensation expense for the three months ended September 30, 2026 has increased compared to prior period due to grants of RSUs and PBRSUs during Q2 and Q3 2026, this was offset by a $0.3 million reversal of compensation cost previously recognized on a market-condition restricted stock award modified under the Separation Agreement. We expect to recognize $1.4 million of share-based compensation on Mr. Schick’s awards in the fourth quarter of 2026 as a result of the accelerated vesting (see Note 14 - Share-Based Compensation).
Net loss on derivative contracts. For the three months ended September 30, 2026, the Company recorded a net loss of $16.6 million from its derivative contracts. The net loss is composed of realized losses of $4.6 million and unrealized losses of $12.0 million during the three months ended September 30, 2026. The losses are primarily due to the increase in commodity pricing from June 30, 2026 to September 30, 2026 related to unsettled periods. There were no derivative contracts in the prior period.
38
Table of Contents
Interest expense. The Company recognized $1.7 million in interest expense in the current period compared to $0.1 million in interest expense in the prior period as a result of the Company utilizing its credit facility beginning in October 2025. Interest expense for the current period consisted of $1.5 million in interest incurred under the A&R Credit Agreement (discussed above) and $0.2 million related to the amortization of deferred financing costs. No significant interest expense or amortization of deferred financing costs were recorded in the prior period.
Nine Months Ended September 30, 2026, vs. Nine Months Ended September 30, 2025
We reported a net loss for the nine month period ended September 30, 2026, of $17.4 million, or $1.51 per common share, compared to a net loss of $1.9 million, or $0.41 per common share, for the nine months ended September 30, 2025. Although operating income increased by $33.9 million in the current period compared to the prior period, primarily the result of the October 2025 Mergers, net loss increased by $15.6 million. The increase was primarily driven by a net loss of $42.8 million on derivative contracts (both realized and unrealized), resulting from the increase in commodity prices in relation to the Company’s hedge positions. Additionally, the Company recorded $5.7 million in interest expense during the nine months ended September 30, 2026. Prior to the Company’s Mergers in October 2025, the Company had no outstanding debt or hedge positions as of and for the nine months ended September 30, 2025.
Net Revenues
The following table sets forth the operating results and production data for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|
Increase |
|
|
% |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
Incr(Decr) |
|
||||
Sale Volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls) |
|
|
1,373,048 |
|
|
|
299,795 |
|
|
|
1,073,253 |
|
|
|
358 |
% |
Natural Gas (Mcf) |
|
|
1,618,616 |
|
|
|
414,596 |
|
|
|
1,204,020 |
|
|
|
290 |
% |
NGL (Bbls) |
|
|
242,467 |
|
|
|
58,013 |
|
|
|
184,454 |
|
|
|
318 |
% |
Total (Boe) (1) |
|
|
1,885,284 |
|
|
|
426,907 |
|
|
|
1,458,377 |
|
|
|
342 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls per day) |
|
|
5,029 |
|
|
|
1,098 |
|
|
|
3,931 |
|
|
|
358 |
% |
Natural Gas (Mcf per day) |
|
|
5,929 |
|
|
|
1,519 |
|
|
|
4,410 |
|
|
|
290 |
% |
NGL (Bbls per day) |
|
|
888 |
|
|
|
213 |
|
|
|
675 |
|
|
|
317 |
% |
Total (Boe per day) (1) |
|
|
6,905 |
|
|
|
1,564 |
|
|
|
5,341 |
|
|
|
341 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sale Price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil ($/Bbl) |
|
$ | 81.17 |
|
|
$ | 64.81 |
|
|
$ | 16.36 |
|
|
|
25 |
% |
Natural Gas($/Mcf) |
|
|
2.40 |
|
|
|
3.72 |
|
|
|
(1.32 |
) |
|
|
(35 |
%) |
NGL ($/Bbl) |
|
|
26.99 |
|
|
|
29.25 |
|
|
|
(2.26 |
) |
|
|
(8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil |
|
$ | 111,452 |
|
|
$ | 19,430 |
|
|
$ | 92,022 |
|
|
|
474 |
% |
Natural Gas |
|
|
3,879 |
|
|
|
1,542 |
|
|
|
2,337 |
|
|
|
152 |
% |
NGL |
|
|
6,544 |
|
|
|
1,697 |
|
|
|
4,847 |
|
|
|
286 |
% |
Total Revenues |
|
$ | 121,875 |
|
|
$ | 22,669 |
|
|
$ | 99,206 |
|
|
|
438 |
% |
(1) |
Assumes 6 Mcf of natural gas equivalents to 1 barrel of oil. |
Total crude oil, natural gas and NGL revenues for the nine-month period ended September 30, 2026, increased $99.2 million, or 438%, to $121.9 million, compared to $22.7 million for the same period a year ago. Of the total increase in revenues, $95.0 million is attributable to increased sales volumes and $4.2 million is attributable to increased pricing compared to prior period. The increase in production volume is related to our October 2025 Mergers. Production for the nine-month period was also reduced by the third quarter 2026 curtailments discussed above.
39
Table of Contents
Operating Expenses and Other Income
The following table summarizes our production costs and operating expenses for the periods indicated (in thousands):
|
|
Nine Months Ended |
|
|
|
|
|
|
|
|
|
|||||
|
|
September 30, |
|
|
Increase |
|
|
% Increase |
|
|||||||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
(Decrease) |
|
||||
Direct Lease Operating Expense |
|
$ |
25,853 |
|
|
$ |
4,468 |
|
|
$ |
21,385 |
|
|
|
479 |
% |
Workovers |
|
|
1,355 |
|
|
|
731 |
|
|
|
624 |
|
|
|
85 |
% |
Other* |
|
|
19,875 |
|
|
|
3,106 |
|
|
|
16,769 |
|
|
|
540 |
% |
Lease Operating Expenses |
|
|
47,083 |
|
|
|
8,305 |
|
|
|
38,778 |
|
|
|
467 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, Depletion, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and Accretion |
|
$ |
32,305 |
|
|
$ |
11,213 |
|
|
$ |
21,092 |
|
|
|
188 |
% |
Impairment of Oil and Gas Properties |
|
$ |
4,789 |
|
|
$ |
907 |
|
|
$ |
3,882 |
|
|
|
428 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative (Cash) |
|
$ |
9,940 |
|
|
$ |
3,329 |
|
|
$ |
6,611 |
|
|
|
199 |
% |
Share-Based Compensation (Non-Cash) |
|
|
1,515 |
|
|
|
1,486 |
|
|
|
29 |
|
|
|
2 |
% |
Total General and Administrative Expense |
|
$ |
11,455 |
|
|
$ |
4,815 |
|
|
$ |
6,640 |
|
|
|
138 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of Oil and Gas Properties, Net |
|
$ |
4,787 |
|
|
$ |
1,021 |
|
|
$ |
3,766 |
|
|
|
369 |
% |
Note Receivable - Credit Loss |
|
$ |
- |
|
|
$ |
(1,378 |
) |
|
|
1,378 |
|
|
|
-100 |
% |
Interest Expense |
|
$ |
5,702 |
|
|
$ |
102 |
|
|
$ |
5,600 |
|
|
|
5490 |
% |
Interest Income |
|
$ |
274 |
|
|
$ |
196 |
|
|
$ |
78 |
|
|
|
40 |
% |
Net Income (Loss) on Derivative Contracts |
|
$ |
(42,823 |
) |
|
$ |
- |
|
|
$ |
(42,823 |
) |
|
|
N/A |
|
Other Income (Expense) |
|
$ |
34 |
|
|
$ |
395 |
|
|
$ |
(361 |
) |
|
|
-91 |
% |
Income Tax Benefit (Expense) |
|
$ |
(175 |
) |
|
$ |
578 |
|
|
$ |
(753 |
) |
|
|
-130 |
% |
* Includes severance taxes, ad valorem taxes, assessment and gathering, transportation and processing costs.
Lease operating expenses. Lease operating expenses increased by $38.8 million for the nine months ended September 30, 2026, primarily due to the October 2025 Mergers. Acquired properties contributed $20.8 million of direct lease operating expenses and $14.1 million of other operating costs, along with $3.9 million of higher variable expenses associated with increased legacy production volumes.
Depreciation, depletion, amortization and accretion. Increased by $21.1 million for the nine months ended September 30, 2026, compared to the prior period, primarily due to the production increase noted above, which is attributed to inclusion of the Acquired Companies.
Impairment of oil and gas properties. The Company recorded an impairment of oil and gas properties of $4.8 million and $0.9 million during the nine months ended September 30, 2026 and 2025, respectively, related to the expiration of certain leases representing 9,540 and 1,034 net acres, respectively, in the D-J Basin, that it allowed to expire or currently has no plans to drill prior to expiration.
General and administrative expenses (excluding share-based compensation). General and administrative expenses (excluding share-based compensation) increased by $6.6 million for the nine months ended September 30, 2026, compared to the prior period, primarily due to $2.1 million of severance costs incurred in September 2026 related to the Separation Agreement (see Note 12 - Commitments and Contingencies) and additional payroll expenses associated with the Mergers.
Share-Based Compensation. Share-based compensation, which is included in general and administrative expenses in the Statements of Operations, slightly increased when comparing periods. While share-based compensation expense for the nine months ended September 30, 2026 has increased compared to prior period due to grants of RSUs and PBRSUs during Q2 and Q3 2026, this was offset by a $0.3 million reversal of compensation cost previously recognized on a market-condition restricted stock award modified under the Separation Agreement. We expect to recognize $1.4 million of share-based compensation on Mr. Schick’s awards in the fourth quarter of 2026 as a result of the accelerated vesting (see Note 14 - Share-Based Compensation).
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Table of Contents
Net loss on derivative contracts. For the nine months ended September 30, 2026, the Company recorded a net loss of $42.8 million from its derivative contracts. During this period, the Company recorded $16.1 million in realized losses for its settled contracts and unrealized losses of $26.7 million for its unsettled contracts. Both losses were driven by the increases in commodity pricing during the first nine months of 2026. There were no derivative contracts in the prior period.
Interest expense. The Company recognized $5.7 million in interest expense in the current period compared to $0.1 million interest expense in the prior period as a result of the Company utilizing its credit facility beginning in October 2025. Interest expense for the current period consisted of $5.2 million of interest under the A&R Credit Agreement (discussed above) and $0.5 million related to the amortization of deferred financing costs. No significant interest expense or amortization of deferred financing costs were recorded in the prior period.
Liquidity and Capital Resources
The primary sources of cash for the Company during the nine-month period ended September 30, 2026 were from $121.9 million in sales of crude oil, natural gas and NGLs. As of September 30, 2026, the Company has $5.7 million in cash and restricted cash and availability of $45 million under the A&R Credit Agreement. The primary uses of cash were funds used for drilling, completion and operating costs.
Working Capital
At September 30, 2026, the Company’s total current liabilities of $65.5 million exceeded its total current assets of $33.3 million, resulting in a working capital deficit of $32.2 million. At December 31, 2025, total current liabilities of $64.5 million exceeded total current assets of $37.8 million, resulting in a working capital deficit of $26.7 million. The $5.4 million increase in the working capital deficit was primarily driven by a $17.2 million increase in current derivative liabilities resulting from higher commodity prices, partially offset by lower accounts payable. The deficit as of September 30, 2026 includes $18.1 million of current derivative liabilities, which will be settled as the hedged volumes are produced and sold.
Our acreage position is subject to lease expirations if we are unable to meet drilling commitments or obtain extensions. In the aggregate, a significant portion of our undeveloped acreage in the D-J Basin and Powder River Basin is scheduled to expire over the 2026–2028 period. Failure to retain these leases could result in the loss of leasehold interests and associated capitalized costs, potentially leading to write-offs of unproved properties and adversely affecting our liquidity and capital resources.
Financing
The Company has an ongoing $8.0 million offering of securities in an “at the market offering”, pursuant to which the Company may sell securities from time to time (the “ATM Offering”). During the month of June 2025, the Company sold an aggregate of 24,498 shares of common stock in five separate sales at a sales prices ranging between $14.32 to $16.02 per share via an ongoing “at the market offering” (for net proceeds of $354,000, which includes $11,000 in commission fees). The Company also incurred $214,000 in initial and subsequent legal and audit-related fees and expenses incurred in connection with the registration and placement of the ATM Offering. As of September 30, 2026, a total of $7.6 million is available for future sales of common stock under the ATM Offering.
The ATM Offering was made pursuant to the terms of that certain December 20, 2024, Sales Agreement (the “Sales Agreement”), entered into with Roth Capital Partners, LLC (the “Lead Agent”) and A.G.P./Alliance Global Partners (“AGP”, and collectively with the Lead Agent, the “Agents”), pursuant to which the Company may sell securities from time to time in an “at the market offering”. The Company will pay the Lead Agent a commission of 3.0% of the gross sales price of any shares sold under the Sales Agreement. The Company also agreed to reimburse the Agents for their reasonable and documented out-of-pocket expenses in an amount not to exceed $75,000, in connection with entering into the Sales Agreement and for the Agents’ reasonable and documented out-of-pocket expenses related to quarterly maintenance of the Sales Agreement on a quarterly basis in an amount not to exceed $5,000.
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Table of Contents
Our expected net capital expenditures for 2026 are discussed above under “Strategy”. 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 remaining portion of our 2026 development program, discussed above, which cash we anticipate being available from (i) projected cash flow from our operations, (ii) existing cash on hand, (iii) borrowing under our A&R Credit Agreement with Citibank, N.A., as administrative agent, which provides for a borrowing base of $125 million and an aggregate maximum revolving credit amount of $250 million (of which $80 million has been drawn down by the Company to date to fund the Mergers, participation in non-operated wells operations, and other Company payables), as discussed below, (iv) public or private debt or equity financings, pursuant to the ATM Offering noted above, and (v) funding through other credit or loan facilities. In addition, we may seek additional funding through asset sales, farm-out arrangements, and partnerships to fund potential acquisitions during the remainder of 2026.
On October 31, 2025, the Company entered into the Amended and Restated Credit Agreement, discussed in greater detail above.
Cash Flows (in thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows provided by operating activities |
|
$ | 35,425 |
|
|
$ | 12,905 |
|
Cash flows (used in) provided by investing activities |
|
|
(28,960 |
) |
|
|
(5,982 |
) |
Cash flows (used in) provided by financing activities |
|
|
(7,044 |
) |
|
|
139 |
|
Net increase (decrease) in cash and restricted cash |
|
$ | (579 |
) |
|
$ | 7,062 |
|
Cash flows provided by operating activities. Net cash provided by operating activities increased by $22.5 million for the current year’s period, when compared to the prior year’s period, primarily due to an increase in operating income of $33.9 million, partially offset by $11.5 million of net cash paid for derivative settlements during the nine months ended September 30, 2026.
Cash flows (used in) provided by investing activities. Net cash used in investing activities increased by $23.0 million for the current year’s period, when compared to the prior year’s period, primarily due to $21.4 million of higher cash outlays for our drilling and completion activities and $6.1 million of leasehold acquisitions, partially offset by $5.3 million of higher proceeds from the sale of oil and gas properties.
Cash flows (used in) provided by financing activities. Net cash used in financing activities during the nine months ended September 30, 2026 consisted of a net repayment of $7 million on our credit facility. There were no significant cash flows from financing activities in the prior period.
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Table of Contents
Non-GAAP Financial Measures
We have included EBITDA and Adjusted EBITDA in this Report as supplements to generally accepted accounting principles in the United States of America (“GAAP”) measures of performance to provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations.
“EBITDA” represents net income before interest, taxes, depreciation and amortization. “Adjusted EBITDA” represents EBITDA, adjusted to exclude share-based compensation, merger acquisition costs, impairment of oil and gas properties, unrealized gain (loss) on derivative contracts, gain on sale of oil and gas properties, net, note receivable credit loss and severance costs. Adjusted EBITDA excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated.
EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, future requirements for capital expenditures, or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments. For example, although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Additionally, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than PEDEVCO Corp. does, limiting its usefulness as a comparative measure. You should not consider EBITDA and Adjusted EBITDA in isolation, or as substitutes for analysis of the Company’s results as reported under GAAP. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure. The following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of Adjusted EBITDA (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income (loss) |
|
$ |
(9,242 |
) |
|
$ |
(325 |
) |
|
$ |
(17,415 |
) |
|
$ |
(1,861 |
) |
Add (deduct) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,734 |
|
|
|
102 |
|
|
|
5,702 |
|
|
|
102 |
|
Income tax benefit (expense) |
|
|
16 |
|
|
|
(164 |
) |
|
|
175 |
|
|
|
(578 |
) |
Depreciation, depletion, amortization and accretion |
|
|
9,703 |
|
|
|
4,010 |
|
|
|
32,305 |
|
|
|
11,213 |
|
EBITDA |
|
|
2,211 |
|
|
|
3,623 |
|
|
|
20,767 |
|
|
|
8,876 |
|
Add (deduct) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation (non-cash) |
|
|
611 |
|
|
|
537 |
|
|
|
1,515 |
|
|
|
1,486 |
|
Merger acquisition costs |
|
|
184 |
|
|
|
- |
|
|
|
384 |
|
|
|
- |
|
Impairment of oil and gas properties |
|
|
2,367 |
|
|
|
165 |
|
|
|
4,789 |
|
|
|
907 |
|
Unrealized (gain) loss on derivative contracts |
|
|
11,966 |
|
|
|
- |
|
|
|
26,743 |
|
|
|
- |
|
Gain on sale of oil and gas properties, net |
|
|
(4,735 |
) |
|
|
- |
|
|
|
(4,787 |
) |
|
|
(1,021 |
) |
Severance costs |
|
|
2,076 |
|
|
|
- |
|
|
|
2,076 |
|
|
|
- |
|
Note receivable - credit loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,378 |
|
Adjusted EBITDA |
|
$ |
14,680 |
|
|
$ |
4,325 |
|
|
$ |
51,487 |
|
|
$ |
11,626 |
|
43
Table of Contents
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our most significant judgments and estimates used in preparation of our consolidated financial statements.
Oil and Gas Properties, Successful Efforts Method. The successful efforts method of accounting is used for oil and gas exploration and production activities. Under this method, all costs for development wells, support equipment and facilities, and proved mineral interests in oil and gas properties are capitalized. Geological and geophysical costs are expensed when incurred. Costs of exploratory wells are capitalized as exploration and evaluation assets pending determination of whether the wells find proved oil and gas reserves. Proved oil and gas reserves are the estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, (i.e., prices and costs as of the date the estimate is made). Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions.
Exploratory wells in areas not requiring major capital expenditures are evaluated for economic viability within one year of completion of drilling. The related well costs are expensed as dry holes if it is determined that such economic viability is not attained. Otherwise, the related well costs are reclassified to oil and gas properties and subject to impairment review. For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is under way or firmly planned. Otherwise, the related well costs are expensed as dry holes.
Exploration and evaluation expenditures incurred subsequent to the acquisition of an exploration asset in a business combination are accounted for in accordance with the policy outlined above.
Depreciation, depletion and amortization of capitalized oil and gas properties is calculated on a field-by-field basis using the unit of production method. Lease acquisition costs are amortized over the total estimated proved developed and undeveloped reserves and all other capitalized costs are amortized over proved developed reserves. Costs specific to developmental wells for which drilling is in progress or uncompleted are capitalized as wells in progress and not subject to amortization until completion and production commences, at which time amortization on the basis of production will begin.
Business Combinations. The Company accounts for business combinations using the acquisition method, recording oil and gas assets acquired and liabilities assumed at estimated fair values. Fair values are determined using discounted cash flows, market comparables, and other valuation techniques, with significant judgment applied to estimates of reserves, future commodity prices, and operating and development costs. Purchase price allocations may be adjusted during a one-year measurement period. The Mergers were completed on October 31, 2025 and have been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”), PEDEVCO was treated as the acquirer for accounting purposes. Under the acquisition method of accounting, the assets and liabilities of Acquired Companies have been recorded at their respective fair values as of the acquisition date on October 31, 2025. The purchase price allocation has been finalized and no material measurement period adjustments were recorded during 2026. See Note 7 – Acquisitions and Divestitures, for additional information.
Recently Adopted Accounting Pronouncement
In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity's effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. The Company adopted this ASU on December 31, 2025 and reflected the required disclosures in the notes to its consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2025. The ASU had no impact on the Company’s consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows.
44
Table of Contents
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, as appropriate, in order to allow timely decisions in connection with required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”)(the Principal Executive Officer) and Chief Financial Officer (“CFO”)(the Principal Financial/Accounting Officer), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report. Based on this evaluation, our CEO and CFO concluded as of September 30, 2026, that our 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. Management's conclusion was the result of the material weaknesses identified during the preparation of the Company's year-end financial statements and reported in Item 9A of the Form 10-K for the year ended December 31, 2025 that have not yet been remediated as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended September 30, 2026, that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting, including any corrective actions regarding significant deficiencies and material weaknesses.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
45
Table of Contents
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Litigation and Regulatory Proceedings
From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. Except as disclosed below, we are not currently involved in any legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations.
Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “Part II, Item 1. Legal Proceedings” of this Report from, “Part I – Item 1. Financial Information” in the Notes to Consolidated Financial Statements in “Note 12 – Commitments and Contingencies”, under the headings “Milnesand Sale Dispute and Tilloo Note Default and Litigation” and “Phoenix Litigation”. The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.
Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
Governmental Proceedings
From time-to-time, we receive notices of violation from governmental and regulatory authorities, including notices relating to alleged violations of environmental statutes or the rules and regulations promulgated thereunder. While we cannot predict with certainty whether these notices of violation will result in fines, penalties or both, if fines or penalties are imposed, they may result in monetary sanctions, individually or in the aggregate, in excess of a specified threshold. We have elected to use a $300,000 threshold for disclosing governmental proceedings of this nature. We believe proceedings under this threshold are not material to our business and financial condition.
As of September 30, 2026, the Company held approximately 183,829 net acres in the Powder River Basin, located in Campbell, Converse, Johnson, and Niobrara Counties, Wyoming, referred to as the “Powder River Basin Asset” or the “PRB Asset,” of which approximately 171,724 net acres were leased from the Bureau of Land Management (“BLM”). In 2022, two environmental advocacy groups filed suit against the U.S. Department of Interior and the BLM challenging certain lease sales by the BLM beginning in December of 2017 (the “BLM Litigation”), including certain lease sales held by the Company related to leases covering approximately 43,670 net acres in the PRB. On January 17, 2025, a three-judge panel of the Ninth Circuit Court of Appeals upheld vacatur (i.e., agreed with a lower court’s decision to set aside) a portion of the leases sold by the BLM, on grounds that the BLM violated the Federal Land Policy and Management Act when selling certain leases. While the Ninth Circuit ruling cancelled certain leases, the Ninth Circuit reversed its portion of the ruling, and determined that some of the leases should not be cancelled. Similarly, on June 12, 2026, the Montana District Court ruled that certain other leases should be cancelled on the grounds that BLM had again violated the Federal Land Policy and Management Act. This portion of the case has been appealed to the Ninth Circuit Court of Appeals by at least one party. It is possible that the Ninth Circuit Court of Appeals ruling could result in the cancellation of some or all of these leases. In the event all of these leases are cancelled, the Company would lose leases covering approximately 43,670 net acres in the PRB, upon cancellation of which leases the Company would receive reimbursement for leasehold purchase amounts paid of approximately $40.2 million.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Commission on March 31, 2026 (the “Form 10-K”), under the heading “Item 1A. Risk Factors”, except as discussed below, and investors are encouraged to review such risk factors in the Annual Report and below, prior to making an investment in the Company. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
46
Table of Contents
Geopolitical conflicts and disruptions to global energy markets, including risks associated with the Strait of Hormuz, may adversely affect our business, financial condition, and results of operations
Ongoing geopolitical conflicts involving Iran and other countries in the Middle East have created significant volatility and uncertainty in global energy markets. The Strait of Hormuz, a critical transit chokepoint through which approximately 20% of the world’s oil supply and a significant portion of liquefied natural gas flows, has experienced material disruption, including reduced vessel traffic, military activity, and heightened security risks.
Although our operations are domestic, our business is indirectly exposed to global energy market conditions. Disruptions to supply, transportation constraints, or perceived risks of interruption in the Strait of Hormuz or surrounding regions may result in significant commodity price volatility, including rapid increases or decreases in oil and natural gas prices, as well as dislocations in supply chains and end markets.
In addition, military escalation or collateral damage affecting energy infrastructure, shipping routes, or regional production facilities in the Middle East may further exacerbate global supply shortages, increase input and operating costs, and contribute to broader macroeconomic instability, including inflationary pressures or recessionary conditions. These conditions may adversely impact demand for our oil and natural gas, disrupt capital markets, and impair our ability to access financing on acceptable terms.
Our ongoing development activities may also be adversely affected by such geopolitical events. Supply chain disruptions, equipment procurement delays, cost inflation, or volatility in oil and gas pricing could delay project timelines, increase capital expenditures, or reduce expected returns.
Furthermore, geopolitical instability may result in heightened regulatory scrutiny, trade restrictions, sanctions, or changes in U.S. energy policy, any of which could adversely affect our operations, counterparties, or strategic initiatives. The extent and duration of these risks remain uncertain and could have a material adverse effect on our business, financial condition, and results of operations.
Our hedging activities have in the past and may in the future prevent us from fully benefiting from increases in crude oil, natural gas and NGLs prices and may expose us to other risks, including counterparty risk, and our future production may not be sufficiently protected from any declines in commodity prices by our existing or future hedging arrangements.
We use financial derivative instruments (primarily financial fixed price swaps and collar contracts) to hedge the impact of fluctuations in commodity prices on our results of operations and cash flows. In connection with the entry into the A&R Credit Agreement, the Company was required to hedge at least 75% of its projected proved developed producing reserves (PDP) oil and gas production at the time of entry into the A&R Credit Agreement, for the first 24 months of the agreement, and 50% of its projected PDP of oil and gas production for months 25–36. Afterward, within 60 days after each fiscal quarter, the Company must show it has hedged at least 50% of expected oil and gas production for the next 18 months. The Company may hedge crude oil, natural gas, or natural gas liquids (on a barrel of oil equivalent basis) to meet these requirements, but may not hedge more than 75% of anticipated production (on a barrel of oil equivalent basis) for any month.
As of the date of this Report, the Company has approximately 70% of our forecasted production on a BOE basis hedged for the fourth quarter of 2026, 73% hedged for 2027 and 68% hedged for 2028. As of September 30, 2026, we had outstanding crude oil and natural gas derivative contracts covering approximately 1.56 million Bbl and 1.49 million Mcf, respectively, for periods through the fourth quarter of 2028. Our crude oil contracts include swaps at average prices ranging from $64.90 to $68.51 per Bbl; collars with purchased put or floor prices ranging from $54.00 to $58.11 per Bbl and sold call or ceiling prices ranging from $62.50 to $71.55 per Bbl; certain three-way collars also included sold puts at $45.00 per Bbl (those for October 2026 through March 2027 are offset by purchased puts at $45.00 per Bbl), and our participating three-way collars include purchased calls at $80.00 per Bbl. Our natural gas contracts included swaps at average prices ranging from $3.49 to $3.95 per Mcf and collars with floor prices ranging from $3.50 to $4.00 per Mcf and ceiling prices ranging from $4.10 to $5.23 per Mcf. See also “Note 9—Derivatives” to the consolidated financial statements included herein. These arrangements may limit our ability to benefit from increases in commodity prices, and the sold puts under certain crude oil collars reduce downside protection when prices fall below the applicable sold put price.
For the three and nine months ended September 30, 2026, the Company had a net loss on derivative contracts of $16.6 million and $42.8 million, respectively. Our hedging activities have in the past exposed, and may in the future expose, us to the risk of financial loss in certain circumstances, including instances in which the counterparties to our hedging contracts fail to perform under the contracts. Our hedges have in the past and may in the future result in losses and reduce the amount of revenue we would otherwise obtain upon the sale of our oil and natural gas production and may also decrease our margins and net revenues.
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Our actual future production may be significantly higher or lower than we estimate at the time we enter into derivative contracts for the relevant period. If the actual amount of production is higher than we estimated, we will have greater commodity price exposure than we intended. If the actual amount of production is lower than the notional amount that is subject to our derivative instruments, we might be forced to satisfy all or a portion of our derivative transactions without the benefit of the cash flow from our sale of the underlying physical commodity, resulting in a substantial diminution of our liquidity. As a result of these factors, our hedging activities may not be as effective as we intend in reducing the volatility of our cash flows, and in certain circumstances may actually increase the volatility of our cash flows.
To the extent that we have engaged, or in the future engage, in hedging activities to protect ourselves against commodity price declines, we may be prevented from fully realizing the benefits of increases in commodity prices above the prices established by our hedging contracts, similar to what occurred during the nine months ended September 30, 2026. In addition, our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which the counterparties to our hedging contracts fail to perform under the contracts.
Derivative instruments also expose us to the risk of financial loss in some circumstances, including when:
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the counter-party to the derivative instrument defaults on its contract obligations; |
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there is an increase in the differential between the underlying price in the derivative instrument and actual prices received; or |
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the steps we take to monitor our derivative financial instruments do not detect and prevent transactions that are inconsistent with our risk management strategies. |
In addition, depending on the type of derivative arrangements we enter into, the agreements could limit the benefit we would receive from increases in oil and gas prices. It cannot be assumed that the hedging transactions we have entered into, or will enter into, will adequately protect us from fluctuations in commodity prices.
Increases in the differential between the ceiling value for oil and natural gas prices set forth in our commodity derivative contracts and commodity derivative collar contracts is anticipated to affect our business, financial condition and results of operations.
For more information regarding our current derivative instruments see “Part I. Item 1. Financial Statements” – “Note 9 – Derivatives”.
We have recorded impairments in the past and may be required to record additional write-downs of our oil and natural gas properties in the future, including as a result of declining commodity prices and lease expirations, which could adversely affect our financial condition and results of operations.
We review our long-lived tangible and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Historically, impairments have resulted primarily from declines in oil and natural gas prices. For example, for the year ended December 31, 2020, we recorded a $19.3 million impairment related to our D-J Basin properties, and during the years ended December 31, 2024 and 2023, the Acquired Companies recorded impairment charges of $3.9 million and $21.1 million, respectively, with respect to their proved and unproved oil and natural gas properties in the PRB for 2024 and both the PRB and D-J Basin for 2023. Aside from certain lease expirations resulting in an impairment loss of $0.9 million, no other significant impairment was recorded for the year ended December 31, 2025.
In addition to commodity price volatility, our asset base is subject to the risk of lease expirations, which may result in the loss of leasehold interests and associated capitalized costs if we are unable to meet drilling commitments or obtain extensions. In our D-J Basin asset, 16,138 total net acres were scheduled to expire during 2026, of which 7,188 net acres expired during the nine months ended September 30, 2026, with an additional 2,133 and 638 net acres expiring in 2027 and 2028, respectively, and 8,081 net acres thereafter, in each case net to our direct ownership interest, if we do not satisfy applicable drilling or extension requirements. In the PRB, 4,822 total net acres were set to expire in 2026, of which 720 net acres expired during the nine months ended September 30, 2026, with 34,999 and 15,828 net acres expiring in 2027 and 2028, respectively. In the Permian Basin asset, all of our acreage is currently held by production, and no net acres are scheduled to expire in 2026.
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If oil, natural gas and NGL prices remain depressed for extended periods, decline materially from current levels, or if we experience significant lease expirations without replacement or development, we may be required to record additional material write-downs of both proved and unproved properties. Any such impairments or write-offs would adversely affect our balance sheet, results of operations and cash flows, and could cause the value of our securities to decline.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company did not issue or sell any unregistered equity securities during the quarter ended September 30, 2026, and through the date of the filing of this Report.
Use of Proceeds From Sale of Registered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
(a) Form 8-K Information.
The following information is disclosed pursuant to Item 5(a) of Part II of Form 10-Q:
On October 22, 2026, the parties to the A&R Credit Agreement (discussed in “Note 8 – Revolving Credit Facility” in the notes to consolidated financial statements included above), entered into a Fourth Amendment to Credit Agreement. The amendment reaffirmed the borrowing base and elected commitment amount at $125 million and set the redetermination of the borrowing base on February 1 and August 1 of each year going forward. The Fourth Amendment also (i) waived the scheduled borrowing base redetermination that was to occur on or about July 1, 2026, (ii) provided the lenders’ retroactive consent, effective July 1, 2026, to the sale of Pine Haven and released Pine Haven and its subsidiaries from their guaranty obligations, and (iii) changed the reserve report delivery dates to on or about January 20 and July 15 of each year.
On September 29, 2026, Navigation Powder River, LLC (“NPRLLC”), an indirect wholly-owned subsidiary of the Company, and Phoenix Energy One, LLC (“Phoenix”) entered into a First Amendment to Settlement Agreement (the “Phoenix Amendment”). It amends the Settlement Agreement dated June 1, 2026 between NPRLLC and Phoenix (discussed under “Phoenix Litigation” in “Note 12 – Commitments and Contingencies” in the notes to consolidated financial statements included above). The Phoenix Amendment pushes the deadline for Phoenix’s fourth and final settlement payment of $1.0 million from September 30, 2026 to October 1, 2026. Nothing else in the Settlement Agreement changed. Phoenix made the final payment on October 1, 2026. The description of the Phoenix Amendment above is a summary and is qualified in its entirety by the full text of the Phoenix Amendment, which is filed as Exhibit 10.19 to this Quarterly Report on Form 10-Q and incorporated herein by reference.
(c) Rule 10b5-1 Trading Plans.
In the event our directors and executive officers desire to purchase or sell our shares, they are encouraged, but not required, to enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended September 30, 2026, of the Company’s directors or officers (as defined in Rule 16a-1(f)) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.
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ITEM 6. EXHIBITS
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Incorporated By Reference |
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Exhibit No. |
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Description |
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Form |
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Exhibit |
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Filing Date |
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File Number |
3.1 |
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Second Amended and Restated Certificate of Formation of PEDEVCO Corp., filed with the Secretary of State of Texas on February 27, 2026 |
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8-K |
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3.1 |
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3/3/2026 |
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001-35922 |
3.2 |
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Certificate of Amendment to Second Amended and Restated Certificate of Formation, affecting a 1-for-20 Reverse Stock Split of the Outstanding Common Stock, filed with the Secretary of State of Texas on March 10, 2026 |
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8-K |
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3.2 |
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3/13/2026 |
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001-35922 |
10.1# |
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PEDEVCO Corp. 2021 Equity Incentive Plan |
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8-K |
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10.1 |
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9/1/2021 |
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001-35922 |
10.2# |
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First Amendment to PEDEVCO Corp. 2021 Equity Incentive Plan |
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8-K |
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10.1 |
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8/30/2024 |
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001-35922 |
10.3# |
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Second Amendment to PEDEVCO Corp. 2021 Equity Incentive Plan |
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8-K |
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10.7 |
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11/3/2025 |
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001-35922 |
10.4# |
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PEDEVCO Corp. 2021 Equity Incentive Plan Form of Restricted Shares Grant Agreement |
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S-8 |
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99.3 |
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9/1/2021 |
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333-259248 |
10.5# |
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PEDEVCO Corp. 2021 Equity Incentive Plan Form of Stock Option Grant Agreement |
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S-8 |
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99.2 |
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9/1/2021 |
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333-259248 |
10.6 |
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First Amendment to Credit Agreement, dated as of December 2, 2025, among PEDEVCO Corp., as borrower, Citibank, N.A., as administrative agent, each guarantor party thereto, and each lender party thereto |
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8-K |
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10.2 |
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5/8/2026 |
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001-35922 |
10.7 |
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Second Amendment to Credit Agreement, dated as of May 5, 2026, among PEDEVCO Corp., as borrower, Citibank, N.A., as administrative agent, each guarantor party thereto, and each lender party thereto |
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8-K |
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10.3 |
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5/8/2026 |
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001-35922 |
10.8 |
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Third Amendment to Credit Agreement, dated as of May 19, 2026, among PEDEVCO Corp., as borrower, Citibank, N.A., as administrative agent, each guarantor party thereto, and each lender party thereto |
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8-K |
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10.4 |
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5/20/2026 |
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001-35922 |
10.9# |
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PEDEVCO Corp. 2021 Equity Incentive Plan Form of Restricted Stock Unit Award Agreement |
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8-K |
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10.4 |
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6/24/2026 |
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001-35922 |
10.10# |
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PEDEVCO Corp. 2021 Equity Incentive Plan Form of Performance-Based Restricted Stock Unit Award Agreement |
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8-K |
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10.5 |
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6/24/2026 |
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001-35922 |
10.11# |
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PEDEVCO Corp. 2021 Equity Incentive Plan Form of Performance-Based Restricted Stock Unit Award Agreement Performance Matrix |
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8-K |
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10.6 |
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6/24/2026 |
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001-35922 |
10.12# |
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Separation and General Release Agreement dated July 15, 2026, by and between PEDEVCO Corp. and Paul Pinkston |
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8-K |
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10.1 |
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7/17/2026 |
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001-35922 |
10.13# |
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Employment Agreement dated July 22, 2026, between PEDEVCO Corp. and Reagan Tuck Dukes |
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8-K |
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10.6 |
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7/24/2026 |
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001-35922 |
10.14# |
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Employment Agreement dated July 22, 2026, between PEDEVCO Corp. and Robert J. Long |
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8-K |
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10.7 |
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7/24/2026 |
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001-35922 |
10.15 |
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Settlement Agreement dated June 1, 2026, by and between Phoenix Energy One, LLC and Navigation Powder River, LLC |
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10-Q |
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10.15 |
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8/13/2026 |
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001-35922 |
10.16* |
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Fourth Amendment to Credit Agreement, dated as of October 22, 2026, among PEDEVCO Corp., as borrower, Citibank, N.A., as administrative agent, each guarantor party thereto, and each lender party thereto |
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10.17#* |
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Transition and Separation Agreement and General Release of Claims, dated September 21, 2026, between PEDEVCO Corp. and J. Douglas Schick |
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10.18# |
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Third Amendment to the PEDEVCO Corp. 2021 Equity Incentive Plan |
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8-K |
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10.4 |
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8/28/2026 |
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001-35922 |
10.19* |
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First Amendment to Settlement Agreement dated September 29, 2026, by and between Phoenix Energy One, LLC and Navigation Powder River, LLC |
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31.1* |
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2* |
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Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1** |
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Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2** |
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Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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101.INS* |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL* |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF* |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB* |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE* |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104* |
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Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set |
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* Filed herewith.
** Furnished herewith.
# Indicates management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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PEDEVCO Corp. |
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November 12, 2026 |
By: |
/s/ R.T. Dukes |
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R.T. Dukes |
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Interim President, Interim Chief Executive Officer, and Chief Operating Officer |
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(Principal Executive Officer) |
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PEDEVCO Corp. |
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November 12, 2026 |
By: |
/s/ Robert J. Long |
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Robert J. Long |
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Chief Financial Officer and Treasurer |
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(Principal Financial and Accounting Officer) |
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51