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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended: September 30,
2021
☐
|
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:
001-35922

PEDEVCO
Corp.
|
(Exact name of registrant as specified in its charter)
|
Texas
|
|
22-3755993
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
575 N. Dairy Ashford, Suite 210, Houston,
Texas
|
|
77079
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(713)
221-1768
(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
|
Common Stock, $0.001 par value per share
|
PED
|
NYSE American
|
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. Yes ☒ No ☐
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).
Yes ☒ No ☐
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
|
☐
|
Non-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
☐ No ☒
At November 12, 2021, there were 84,210,203 shares of the
Registrant’s common stock outstanding.
PEDEVCO CORP.
TABLE OF CONTENTS
CAUTIONARY NOTE ABOUT 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 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. These
forward-looking statements discuss future expectations, contain
projections of results of operations or financial conditions. The
words “believe,”
“intend,”
“plan,”
“expect,”
“anticipate,”
“estimate,”
“project,”
“goal” and similar
expressions identify such a statement was made, although not all
forward-looking statements contain such identifying words. These
statements are subject to known and unknown risks, uncertainties,
and other factors that could cause the actual results to differ
materially from those contemplated by the statements. The
forward-looking information is based on various factors and is
derived using numerous assumptions. Factors that might cause or
contribute to such a discrepancy include, but are not limited to,
the risks discussed in this and our other Securities and Exchange
Commission (SEC) filings. We do not promise to or take any
responsibility to update forward-looking information to reflect
actual results or changes in assumptions or other factors that
could affect those statements except as required by law. Future
events and actual results could differ materially from those
expressed in, contemplated by, or underlying such forward-looking
statements.
Forward-looking statements may include statements about our:
|
●
|
business strategy;
|
|
●
|
reserves;
|
|
●
|
technology;
|
|
●
|
cash flows and liquidity;
|
|
●
|
financial strategy, budget, projections and operating results;
|
|
●
|
oil and natural gas realized prices;
|
|
●
|
timing and amount of future production of oil and natural gas;
|
|
●
|
availability of oil field labor;
|
|
●
|
the amount, nature and timing of capital expenditures, including
future exploration and development costs;
|
|
●
|
drilling of wells;
|
|
●
|
government regulation and taxation of the oil and natural gas
industry;
|
|
●
|
marketing of oil and natural gas;
|
|
●
|
exploitation projects or property acquisitions;
|
|
●
|
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, COVID-19);
|
|
●
|
the continued effect of COVID-19 on the U.S. and global economy,
the effect of U.S. and global efforts to reduce the spread of the
virus, and the resulting effect of such pandemic and governmental
responses thereto on the market for oil and gas and the U.S. and
global economy in general;
|
|
●
|
competition in the oil and natural gas industry;
|
|
●
|
effectiveness of our risk management activities;
|
|
●
|
environmental liabilities;
|
|
●
|
counterparty credit risk;
|
|
●
|
developments in oil-producing and natural gas-producing
countries;
|
|
●
|
future operating results;
|
|
●
|
future acquisition transactions;
|
|
●
|
estimated future reserves and the present value of such reserves;
and
|
|
●
|
plans, objectives, expectations and intentions contained in this
Quarterly Report that are not historical.
|
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 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,
2020, filed with the SEC on March 23, 2021. 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.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PEDEVCO CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(amounts in thousands, except share and per share data)
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
Assets
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
19,926 |
|
|
$ |
8,027 |
|
Accounts receivable – oil and gas
|
|
|
1,520 |
|
|
|
660 |
|
Prepaid expenses and other current assets
|
|
|
361 |
|
|
|
66 |
|
Total current assets
|
|
|
21,807 |
|
|
|
8,753 |
|
|
|
|
|
|
|
|
|
|
Oil and gas properties:
|
|
|
|
|
|
|
|
|
Oil and gas properties, subject to amortization, net
|
|
|
64,789 |
|
|
|
66,994 |
|
Oil and gas properties, not subject to amortization, net
|
|
|
4 |
|
|
|
4 |
|
Total oil and gas properties, net
|
|
|
64,793 |
|
|
|
66,998 |
|
|
|
|
|
|
|
|
|
|
Operating lease – right-of-use asset
|
|
|
198 |
|
|
|
270 |
|
Other assets
|
|
|
3,553 |
|
|
|
3,543 |
|
Total assets
|
|
$ |
90,351 |
|
|
$ |
79,564 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
752 |
|
|
$ |
212 |
|
Accrued expenses
|
|
|
483 |
|
|
|
303 |
|
Revenue payable
|
|
|
960 |
|
|
|
836 |
|
PPP loan, current
|
|
|
- |
|
|
|
288 |
|
Operating lease liabilities – current
|
|
|
111 |
|
|
|
105 |
|
Asset retirement obligations – current
|
|
|
173 |
|
|
|
234 |
|
Total current liabilities
|
|
|
2,479 |
|
|
|
1,978 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
PPP loan, net of current portion
|
|
|
- |
|
|
|
82 |
|
Operating lease liabilities, net of current portion
|
|
|
110 |
|
|
|
195 |
|
Asset retirement obligations, net of current portion
|
|
|
1,844 |
|
|
|
1,673 |
|
Total liabilities
|
|
|
4,433 |
|
|
|
3,928 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 200,000,000 shares authorized;
79,751,603 and 72,463,340 shares issued and outstanding,
respectively
|
|
|
80 |
|
|
|
72 |
|
Additional paid-in capital
|
|
|
213,946 |
|
|
|
203,850 |
|
Accumulated deficit
|
|
|
(128,108 |
) |
|
|
(128,286 |
) |
Total shareholders’ equity
|
|
|
85,918 |
|
|
|
75,636 |
|
Total liabilities and shareholders’ equity
|
|
$ |
90,351 |
|
|
$ |
79,564 |
|
See accompanying notes to unaudited consolidated financial
statements.
PEDEVCO CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(amounts in thousands, except share and per share data)
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
Revenue:
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Oil and gas sales
|
|
$ |
4,069 |
|
|
$ |
2,417 |
|
|
$ |
11,340 |
|
|
$ |
5,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating costs
|
|
|
1,423 |
|
|
|
1,054 |
|
|
|
4,164 |
|
|
|
3,326 |
|
Exploration expense
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
31 |
|
Selling, general and administrative expense
|
|
|
1,337 |
|
|
|
1,281 |
|
|
|
4,434 |
|
|
|
4,826 |
|
Depreciation, depletion, amortization and accretion
|
|
|
1,666 |
|
|
|
2,974 |
|
|
|
4,829 |
|
|
|
8,323 |
|
Total operating expenses
|
|
|
4,426 |
|
|
|
5,310 |
|
|
|
13,427 |
|
|
|
16,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of oil and gas properties
|
|
|
- |
|
|
|
- |
|
|
|
1,805 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(357 |
) |
|
|
(2,893 |
) |
|
|
(282 |
) |
|
|
(10,601 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
- |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Interest income
|
|
|
4 |
|
|
|
4 |
|
|
|
11 |
|
|
|
36 |
|
Other income
|
|
|
28 |
|
|
|
597 |
|
|
|
76 |
|
|
|
1,275 |
|
Gain on forgiveness of PPP loan
|
|
|
- |
|
|
|
- |
|
|
|
374 |
|
|
|
- |
|
Total other income
|
|
|
32 |
|
|
|
600 |
|
|
|
460 |
|
|
|
1,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
(325 |
) |
|
$ |
(2,293 |
) |
|
$ |
178 |
|
|
$ |
(9,291 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.13 |
) |
Diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
79,533,016 |
|
|
|
72,250,014 |
|
|
|
78,628,077 |
|
|
|
72,124,339 |
|
Diluted
|
|
|
79,533,016 |
|
|
|
72,250,014 |
|
|
|
78,700,140 |
|
|
|
72,124,339 |
|
See accompanying notes to unaudited consolidated financial
statements.
PEDEVCO CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(amounts in thousands)
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
178 |
|
|
$ |
(9,291 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion
|
|
|
4,829 |
|
|
|
8,323 |
|
Gain on sale of oil and gas properties
|
|
|
(1,805 |
) |
|
|
- |
|
Loss on disposal of fixed asset
|
|
|
- |
|
|
|
24 |
|
Amortization of right-of-use asset
|
|
|
72 |
|
|
|
67 |
|
Share-based compensation expense
|
|
|
1,867 |
|
|
|
2,073 |
|
Gain on forgiveness of PPP loan
|
|
|
(374 |
) |
|
|
- |
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable – oil and gas
|
|
|
(860 |
) |
|
|
3,658 |
|
Prepaid expenses and other current assets
|
|
|
(295 |
) |
|
|
(146 |
) |
Accounts payable
|
|
|
51 |
|
|
|
(3,087 |
) |
Accrued expenses
|
|
|
184 |
|
|
|
(1,647 |
) |
Revenue payable
|
|
|
124 |
|
|
|
2 |
|
Net cash provided by (used in) operating activities
|
|
|
3,971 |
|
|
|
(24 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
Cash paid for property and equipment
|
|
|
(35 |
) |
|
|
- |
|
Cash paid for drilling and completion costs
|
|
|
(2,145 |
) |
|
|
(14,379 |
) |
Proceeds from the sale of oil and gas property
|
|
|
1,871 |
|
|
|
- |
|
Net cash used in investing activities
|
|
|
(309 |
) |
|
|
(14,379 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from PPP loans
|
|
|
- |
|
|
|
740 |
|
Repayment of PPP loan
|
|
|
- |
|
|
|
(370 |
) |
Proceeds from issuance of shares, net of offering costs
|
|
|
8,237 |
|
|
|
- |
|
Net cash provided by financing activities
|
|
|
8,237 |
|
|
|
370 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and restricted cash
|
|
|
11,899 |
|
|
|
(14,033 |
) |
Cash and restricted cash at beginning of period
|
|
|
11,324 |
|
|
|
25,712 |
|
Cash and restricted cash at end of period
|
|
$ |
23,223 |
|
|
$ |
11,679 |
|
|
|
|
|
|
|
|
|
|
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
|
|
$ |
287 |
|
|
$ |
8,581 |
|
Changes in estimates of asset retirement costs, net
|
|
$ |
51 |
|
|
$ |
247 |
|
Issuance of restricted common stock
|
|
$ |
2 |
|
|
$ |
1 |
|
See accompanying notes to unaudited consolidated financial
statements.
PEDEVCO CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’
EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND
2020
(Unaudited)
(amounts in thousands, except share amounts)
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
Balances at December 31, 2020
|
|
|
72,463,340 |
|
|
$ |
72 |
|
|
$ |
203,850 |
|
|
$ |
(128,286 |
) |
|
$ |
75,636 |
|
Issuance of restricted common stock
|
|
|
960,000 |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
Rescinded restricted common stock
|
|
|
(16,667 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance of common stock to non-affiliate
|
|
|
5,968,500 |
|
|
|
6 |
|
|
|
8,297 |
|
|
|
- |
|
|
|
8,303 |
|
Cashless exercise of stock options
|
|
|
86,430 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Share-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
684 |
|
|
|
- |
|
|
|
684 |
|
Net income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
728 |
|
|
|
728 |
|
Balances at March 31, 2021
|
|
|
79,461,603 |
|
|
|
79 |
|
|
|
212,830 |
|
|
|
(127,558 |
) |
|
|
85,351 |
|
Offering costs incurred for issuance of common stock to
non-affiliate
|
|
|
- |
|
|
|
- |
|
|
|
(66 |
) |
|
|
- |
|
|
|
(66 |
) |
Share-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
591 |
|
|
|
- |
|
|
|
591 |
|
Net income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(225 |
) |
|
|
(225 |
) |
Balances at June 30, 2021
|
|
|
79,461,603 |
|
|
|
79 |
|
|
|
213,355 |
|
|
|
(127,783 |
) |
|
|
85,651 |
|
Issuance of restricted common stock
|
|
|
240,000 |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
Issuance of common stock to a non-affiliate
|
|
|
50,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Share-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
592 |
|
|
|
- |
|
|
|
592 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(325 |
) |
|
|
(325 |
) |
Balances at September 30, 2021
|
|
|
79,751,603 |
|
|
$ |
80 |
|
|
$ |
213,946 |
|
|
$ |
(128,108 |
) |
|
$ |
85,918 |
|
|
|
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
Balances at December 31, 2020
|
|
|
71,061,328 |
|
|
$ |
71 |
|
|
$ |
201,027 |
|
|
$ |
(95,596 |
) |
|
$ |
105,502 |
|
Issuance of restricted common stock
|
|
|
1,119,000 |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
Rescinded restricted common stock
|
|
|
(55,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
853 |
|
|
|
- |
|
|
|
853 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,257 |
) |
|
|
(4,257 |
) |
Balances at March 31, 2020
|
|
|
72,125,328 |
|
|
|
72 |
|
|
|
201,879 |
|
|
|
(99,853 |
) |
|
|
102,098 |
|
Stock-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
719 |
|
|
|
- |
|
|
|
719 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,741 |
) |
|
|
(2,741 |
) |
Balances at June 30, 2020
|
|
|
72,125,328 |
|
|
|
72 |
|
|
|
202,598 |
|
|
|
(102,594 |
) |
|
|
100,076 |
|
Issuance of restricted common stock
|
|
|
240,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Rescinded restricted common stock
|
|
|
(74,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance of restricted common stock to non-affiliate
|
|
|
70,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance of restricted common stock to affiliate
|
|
|
70,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Cashless exercise of stock options
|
|
|
32,012 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
501 |
|
|
|
- |
|
|
|
501 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,293 |
) |
|
|
(2,293 |
) |
Balances at September 30, 2020
|
|
|
72,463,340 |
|
|
$ |
72 |
|
|
$ |
203,099 |
|
|
$ |
(104,887 |
) |
|
$ |
98,284 |
|
See accompanying notes to unaudited consolidated financial
statements.
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, 2020, filed with the
SEC on March 23, 2021 (the “2020 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.
NOTE 2 – DESCRIPTION OF BUSINESS
PEDEVCO is an oil and gas company focused on the development,
acquisition and production of oil and natural gas assets where the
latest in modern drilling and completion techniques and
technologies have yet to be applied. 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 San Andres formation of the Permian Basin situated
in West Texas and eastern New Mexico (the “Permian Basin”) and in
the Denver-Julesburg Basin (“D-J Basin”) in Colorado. The Company
holds its Permian Basin acres located in Chaves and Roosevelt
Counties, New Mexico, through its wholly-owned operating
subsidiary, Pacific Energy Development Corp. (“PEDCO”), which asset
the Company refers to as its “Permian Basin Asset,” and it holds
its D-J Basin acres located in Weld and Morgan Counties, Colorado,
through its wholly-owned operating subsidiary, Red Hawk Petroleum,
LLC (“Red Hawk”), which asset the Company refers to as its “D-J
Basin Asset.”
The Company believes that horizontal development and exploitation
of conventional assets in the Permian Basin and development of the
Wattenberg and Wattenberg Extension in the D-J Basin 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 2020 Annual Report. There
have been no changes to the Company’s significant accounting
policies since December 31, 2020.
Recently Issued Accounting
Pronouncements
The Company does not expect the adoption of any other recently
issued accounting pronouncements to have a significant impact on
its 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,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Oil sales
|
|
$ |
3,697 |
|
|
$ |
2,262 |
|
|
$ |
10,635 |
|
|
$ |
5,569 |
|
Natural gas sales
|
|
|
319 |
|
|
|
91 |
|
|
|
604 |
|
|
|
221 |
|
Natural gas liquids sales
|
|
|
53 |
|
|
|
64 |
|
|
|
101 |
|
|
|
115 |
|
Total revenue from customers
|
|
$ |
4,069 |
|
|
$ |
2,417 |
|
|
$ |
11,340 |
|
|
$ |
5,905 |
|
There were no significant contract liabilities or transaction price
allocations to any remaining performance obligations as of
September 30, 2021.
NOTE 5 – CASH
The following table provides a reconciliation of cash and
restricted cash reported within the balance sheets, which sum to
the total of such amounts in the periods indicated (in
thousands):
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
Cash
|
|
$ |
19,926 |
|
|
$ |
8,027 |
|
Restricted cash included in other assets
|
|
|
3,297 |
|
|
|
3,297 |
|
Total cash and restricted cash
|
|
$ |
23,223 |
|
|
$ |
11,324 |
|
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, 2021 (in
thousands):
|
|
Balance at
December 31,
2020
|
|
|
Additions
|
|
|
Disposals
|
|
|
Transfers
|
|
|
Balance at
September 30,
2021
|
|
Oil and gas properties, subject to amortization
|
|
$ |
146,950 |
|
|
$ |
2,432 |
|
|
$ |
(66 |
) |
|
$ |
- |
|
|
$ |
149,316 |
|
Oil and gas properties, not subject to amortization
|
|
|
4 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4 |
|
Asset retirement costs
|
|
|
1,108 |
|
|
|
(46 |
) |
|
|
(5 |
) |
|
|
- |
|
|
|
1,057 |
|
Accumulated depreciation, depletion and impairment
|
|
|
(81,064 |
) |
|
|
(4,520 |
) |
|
|
- |
|
|
|
- |
|
|
|
(85,584 |
) |
Total oil and gas assets
|
|
$ |
66,998 |
|
|
$ |
(2,134 |
) |
|
$ |
(71 |
) |
|
$ |
- |
|
|
$ |
64,793 |
|
For the nine-month period ended September 30, 2021, the Company
incurred $2,432,000 in capital costs related to capital workovers
for our Permian Basin Asset, which included four clean outs,
converting two wells from electric submersible pumps (“ESP”) to rod pumps,
installation of a new ESP, and purchase in place of ESP systems
that were previously rentals. The Company incurred additional
capital costs upon implementation of a recompletions and
reactivation program for our existing vertical wells in the Permian
Basin Asset, and in our DJ-Basin Asset, the Company incurred
capital costs related to converting a well from gas lift to rod
pump.
On March 18, 2021, the Company, through its wholly-owned subsidiary
Red Hawk, consummated the sale of certain assets and associated
liabilities located in its D-J Basin Asset to third parties
pursuant to a Purchase and Sale Agreement. The Company received net
cash at closing of $1.9 million. The final purchase price was
further subject to customary post-closing adjustments, resulting in
an additional $52,000 paid by Red Hawk in July 2021. As a result of
the transaction, the Company recognized a $1.8 million gain on sale
of oil and gas properties on the Statement of Operations for the
nine months ended September 30, 2021.
The depletion recorded for production on proved properties for the
three and nine months ended September 30, 2021 and 2020, amounted
to $1,576,000 compared to $2,890,000, and $4,520,000, compared to
$8,076,000, respectively.
NOTE 7 – PPP LOANS
On April 22, 2020, the Company received loan proceeds of $370,000
(the “Original PPP Loan”) under the U.S. Small Business
Administration’s (“SBA”) Paycheck Protection Program (“PPP”)
established as part of the Coronavirus Aid, Relief and Economic
Security Act (“CARES Act”), and on April 23, 2020, the SBA issued
guidance that cast doubt on the ability of public companies to
qualify for a PPP loan. As a result, out of an abundance of
caution, on May 1, 2020, the Company repaid the full amount of the
Original PPP Loan to Texas Capital Bank, N.A.
On June 2, 2020, the Company again received loan proceeds of
$370,000 (the “New PPP Loan”) under the SBA PPP. The New PPP Loan
is evidenced by a promissory note, dated as of May 28, 2020 (the
“Note”), between the Company and Texas Capital Bank, N.A. The Note
has a two-year term, bears interest at the rate of 1.00% per annum,
and may be prepaid at any time without payment of any premium.
Effective May 20, 2021, the Company received notification from
Texas Capital Bank, N.A. that the SBA had fully forgiven the
Company’s New PPP Loan principal and accrued interest of $370,000
and $4,000, respectively. Therefore, as of September 30, 2021, the
Company recognized no debt or accrued interest related to the New
PPP Loan on the balance sheet, and a gain on forgiveness of PPP
Loan of $374,000 for the nine months ended September 30, 2021 in
connection with such forgiveness.
NOTE 8 – ASSET RETIREMENT OBLIGATIONS
Activity related to the Company’s asset retirement obligations is
as follows (in thousands):
|
|
Nine Months
Ended
September 30,
2021
|
|
Balance at the beginning of the period (1)
|
|
$ |
1,907 |
|
Accretion expense
|
|
|
284 |
|
Liabilities settled
|
|
|
(123 |
) |
Changes in estimates, net
|
|
|
(51 |
) |
Balance at end of period (2)
|
|
$ |
2,017 |
|
(1)
|
Includes $234,000 of current asset retirement obligations at
December 31, 2020.
|
|
|
(2)
|
Includes $173,000 of current asset retirement obligations at
September 30, 2021.
|
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Lease Agreements
Currently, the Company has one operating lease for office space
that requires Accounting Standards Codification (“ASC”) Topic 842
treatment, discussed below.
The Company’s leases typically do 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, the Company currently
maintains no debt, and in order to apply an appropriate discount
rate, the Company used an average discount rate of eight publicly
traded peer group companies similar to it based on size, geographic
location, asset types, and/or operating characteristics.
The Company has a sublease for its corporate offices in Houston,
Texas on approximately 5,200 square feet of office space that
expires on August 31, 2023 and has a base monthly rent of
approximately $10,000.
Supplemental cash flow information related to the Company’s
operating lease is included in the table below (in thousands):
|
|
Nine Months
Ended
|
|
|
|
September 30,
2021
|
|
Cash paid for amounts included in the measurement of lease
liabilities
|
|
$ |
89 |
|
Supplemental balance sheet information related to operating leases
is included in the table below (in thousands):
|
|
September 30,
2021
|
|
Operating lease – right-of-use asset
|
|
$ |
198 |
|
|
|
|
|
|
Operating lease liabilities - current
|
|
$ |
111 |
|
Operating lease liabilities - long-term
|
|
|
110 |
|
Total lease liability
|
|
$ |
221 |
|
The weighted-average remaining lease term for the Company’s
operating lease is 1.9 years as of September 30, 2021, with a
weighted-average discount rate of 5.35%.
Lease liability with enforceable contract terms that have greater
than one-year terms are as follows (in thousands):
Remainder of 2021
|
|
$ |
29 |
|
2022
|
|
|
121 |
|
2023
|
|
|
82 |
|
Thereafter
|
|
|
- |
|
Total lease payments
|
|
|
232 |
|
Less imputed interest
|
|
|
(11 |
) |
Total lease liability
|
|
$ |
221 |
|
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. In the D-J Basin Asset, no net acres expire during
the remainder of 2021, and no significant net acres expire
thereafter (net to our direct ownership interest only). In the
Permian Basin Asset, 522 net acres are due to expire
during the remainder of 2021 and 1,331 net acres expire thereafter
(net to our direct ownership interest only). The Company plans to
hold significantly all of this acreage through a program of
drilling and completing producing wells. If the Company is not able
to drill and complete a well before lease expiration, the Company
may seek to extend leases where able.
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, 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.
NOTE 10 – SHAREHOLDERS’ EQUITY
Common Stock
During the nine months ended September 30, 2021, the Company
granted an aggregate of 1,250,000 restricted stock awards to
various employees, board members and a non-affiliated advisor of
the Company. Additionally, 16,667 shares of restricted common stock
were forfeited to the Company and canceled due to an employee
termination (see Note 11 below).
On February 5, 2021, the Company closed an underwritten public
offering of 5,968,500 shares of common stock at a public offering
price of $1.50 per share, which included the full exercise of the
underwriter’s over-allotment option, for net proceeds (after
deducting the underwriters’ discount equal to 6% of the public
offering price and expenses associated with the offering) of
approximately $8.2 million.
Warrants
During the nine months ended September 30, 2021, warrants to
purchase 150,329 shares of common stock outstanding, with an
exercise price of $0.32 per share expired unexercised on June 25,
2021. As of September 30, 2021, the Company has no warrants
outstanding.
NOTE 11 – 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.
Common Stock
On January 19, 2021, restricted stock awards were granted to
officers of the Company for an aggregate of 940,000 of the
Company’s common stock, under the Company’s Amended and Restated
2012 Equity Incentive Plan. The grant for the 940,000 shares of
restricted stock vest as follows: 33.3% vest each subsequent year
from the date of grant contingent upon the recipient’s continued
service with the Company. These shares have a total fair value of
$1,307,000 based on the market price on the issuance date.
On February 5, 2021, the Company closed an underwritten public
offering of 5,968,500 shares of common stock at a public offering
price of $1.50 per share, which included the full exercise of the
underwriter’s over-allotment option, for net proceeds (after
deducting the underwriters’ discount equal to 6% of the public
offering price and expenses associated with the offering) of
approximately $8.2 million.
On February 28, 2021, 16,667 shares of restricted common stock were
rescinded due to an employee termination. As a result, these shares
were canceled and the shares once again became eligible for future
awards under the Company’s Amended and Restated 2012 Equity
Incentive Plan.
On March 31, 2021, 20,000 restricted stock awards were granted to a
new employee of the Company, under the Company’s Amended and
Restated 2012 Equity Incentive Plan. The grant for the 20,000
shares of restricted stock vest as follows: 100% vest on March 22,
2022, contingent upon the recipient’s continued service with the
Company. These shares have a total fair value of $29,000 based on
the market price on the issuance date.
On September 1, 2021, restricted stock awards were granted to three
board members and an advisor for an aggregate of 240,000, and
50,000 shares, respectively, of the Company’s restricted common
stock, under the Company’s Amended and Restated 2012 Equity
Incentive Plan. The grant of the 240,000 shares of restricted
common stock vest as follows: 100% of 170,000 shares and 100% of
70,000 shares vesting on July 12, 2022 and September 27, 2022,
respectively, contingent upon each recipient’s continued service
with the Company. These shares have a total fair value of $276,000,
based on the market price on the grant date. The grant of the
remaining aggregate of 50,000 shares of restricted common stock
vest as follows: 100% on the six-month anniversary of the grant
date, subject to recipient’s continued service with the Company.
These advisor shares have a total fair value of $58,000, based on
the market price on the grant date.
Stock-based compensation expense recorded related to the vesting of
restricted stock for the nine months ended September 30, 2021 was
$1,486,000. The remaining unamortized stock-based compensation
expense at September 30, 2021 related to restricted stock was
$1,297,000.
Options
On January 19, 2021, the Company granted options to purchase an
aggregate of 550,000 shares of common stock to various Company
employees at an exercise price of $1.39 per share. The options have
a term of five years and fully vest in January 2024, with 33.3%
vesting each subsequent year from the date of grant, contingent
upon each recipient’s continued service with the Company. The
aggregate fair value of the options on the date of grant, using the
Black-Scholes model, was $654,000. Variables used in the
Black-Scholes option-pricing model for the options issued include:
(1) a discount rate of 0.45% based on the applicable US Treasury
bill rate, (2) expected term of 3.5 years, (3) expected volatility
of 156% based on the trading history of the Company, and (4) zero
expected dividends.
On January 28, 2021, the Company issued 86,430 total shares of
common stock upon the cashless exercise of stock options to
purchase an aggregate of 191,999 shares of common stock with
exercise prices ranging between $1.10 and $1.68 per share, based on
a then-current market value of $2.89 per share, under the terms of
the options. The options had an intrinsic value of $250,000 on the
exercise date.
During the nine months ended September 30, 2021, the Company
recognized stock option expense of $381,000. The remaining amount
of unamortized stock options expense at September 30, 2021, was
$443,000.
The intrinsic value of outstanding and exercisable options at
September 30, 2021 was $156,000.
Option activity during the nine months ended September 30, 2021
was:
|
|
Number of
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contract Term
(Years)
|
|
Outstanding at December 31, 2020
|
|
|
1,234,849 |
|
|
$ |
2.43 |
|
|
|
2.7 |
|
Granted
|
|
|
550,000 |
|
|
$ |
1.39 |
|
|
|
|
|
Exercised
|
|
|
(191,999 |
) |
|
$ |
1.59 |
|
|
|
|
|
Expired/Canceled
|
|
|
(314,414 |
) |
|
$ |
4.11 |
|
|
|
|
|
Outstanding at September 30, 2021
|
|
|
1,278,436 |
|
|
$ |
1.70 |
|
|
|
3.0 |
|
Exercisable at September 30, 2021
|
|
|
456,435 |
|
|
$ |
2.04 |
|
|
|
1.5 |
|
NOTE 12 – 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 (loss) income
by the sum of the weighted average number of shares of common
stock, as defined above, outstanding plus potentially dilutive
securities. Net (loss) income 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
(amounts in thousands, except share and per share data).
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
Numerator:
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net income (loss)
|
|
$ |
(325 |
) |
|
$ |
(2,293 |
) |
|
$ |
178 |
|
|
$ |
(9,291 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares – basic
|
|
|
79,533,016 |
|
|
|
72,250,014 |
|
|
|
78,628,077 |
|
|
|
72,124,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of common stock equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options and Warrants
|
|
|
- |
|
|
|
- |
|
|
|
72,063 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares – diluted
|
|
|
79,533,016 |
|
|
|
72,250,014 |
|
|
|
78,700,140 |
|
|
|
72,124,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share – basic
|
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.13 |
) |
Earnings (loss) per share – diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.13 |
) |
For the three and nine-month periods ended September 30, 2021 and
2020, share equivalents related to options and warrants to purchase
1,143,436, compared to 1,234,849, and 1,126,769, compared to
1,234,849, shares of common stock, respectively, were excluded from
the computation of diluted net income (loss) per share as the
inclusion of such shares would be anti-dilutive.
NOTE 13 – INCOME TAXES
The Company has estimated that its effective tax rate for U.S.
purposes will be zero for the 2021 and 2020 fiscal years as a
result of net losses and a full valuation allowance against the net
deferred tax assets. Consequently, the Company has recorded no
provision or benefit for income taxes for the three and nine months
ended September 30, 2021 and 2020, respectively.
NOTE 14 – SUBSEQUENT EVENTS
On October 6, 2021, the Company closed a registered direct offering
of 4,458,600 shares of common stock at a price of $1.57 per share
for net proceeds (after deducting the placement agent’s fees and
other estimated offering expenses associated with the offering) of
approximately $6.5 million.
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, 2020, 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 4 of our Annual Report on Form 10-K for the year ended
December 31, 2020, as filed with the Securities and Exchange
Commission on March 23, 2021.
Our fiscal year ends on December 31st. Interim results are
presented on a quarterly basis for the quarters ended March 31,
June 30, and September 30, the first quarter, second quarter and
third quarter, respectively, with the quarter ending December 31st
being referenced herein as our fourth quarter. Fiscal 2021 means
the year ended December 31, 2021, whereas fiscal 2020 means the
year ended December 31, 2020.
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, 2021,
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:
|
●
|
“Bbl” refers to one
stock tank barrel, or 42 U.S. gallons liquid volume, used in this
Report in reference to crude oil or other liquid hydrocarbons;
|
|
|
|
|
●
|
“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;
|
|
|
|
|
●
|
“Bopd” refers to
barrels of oil day;
|
|
|
|
|
●
|
“Mcf” refers to a
thousand cubic feet of natural gas;
|
|
|
|
|
●
|
“NGL” refers to
natural gas liquids;
|
|
|
|
|
●
|
“Exchange Act”
refers to the Securities Exchange Act of 1934, as amended;
|
|
|
|
|
●
|
“SEC” or the
“Commission” refers
to the United States Securities and Exchange Commission;
|
|
|
|
|
●
|
“SWD” means a
saltwater disposal well; and
|
|
|
|
|
●
|
“Securities Act”
refers to the Securities Act of 1933, as amended.
|
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:
|
●
|
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.
|
|
|
|
|
●
|
Strategy. Discussion of our strategy moving
forward and how we plan to seek to increase stockholder value.
|
|
|
|
|
●
|
Results of Operations and Financial Condition. An
analysis of our financial results comparing the three and nine
months ended September 30, 2021, and 2020, and a discussion of
changes in our consolidated balance sheets, cash flows and a
discussion of our financial condition.
|
|
|
|
|
●
|
Critical Accounting Policies. 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 development,
acquisition and production of oil and natural gas assets where the
latest in modern drilling and completion techniques and
technologies have yet to be applied. 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 San Andres formation of the
Permian Basin situated in West Texas and eastern New Mexico and in
the Denver-Julesburg Basin in Colorado. As of September 30, 2021,
we held approximately 33,392 net Permian Basin acres located in
Chaves, Roosevelt and Lea Counties, New Mexico, through PEDCO and
approximately 11,580 net D-J Basin acres located in Weld and Morgan
Counties, Colorado, through our wholly-owned operating subsidiary,
Red Hawk. As of September 30, 2021, we held interests in 382 gross
(303 net) wells in our Permian Basin Asset of which 35 are active
producers, 14 are active injectors and two are active Saltwater
Disposal Wells (“SWDs”), all of which are held by
PEDCO and operated by its wholly-owned operating subsidiaries, and
interests in 74 gross (21.0 net) wells in our D-J Basin Asset, of
which 18 gross (16.2 net) wells are operated by Red Hawk and
currently producing, 35 gross (5.2 net) wells are non-operated, and
21 wells have an after-payout interest.
Strategy
We believe that horizontal development and exploitation of
conventional assets in the Permian Basin and development of the
Wattenberg and Wattenberg Extension in the D-J Basin, represent
among the most economic oil and natural gas plays in the U.S. We
plan to optimize our existing assets and opportunistically seek
additional acreage proximate to our currently held core acreage, as
well as other attractive onshore U.S. oil and gas assets that fit
our acquisition criteria, that Company management believes can be
developed using our technical and operating expertise and be
accretive to stockholder value.
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 Permian Basin and the D-J Basin,
combined with our operating expertise, will enable us to continue
to deliver accretive production, cash flow and reserves growth. We
have identified approximately 150 gross drilling locations across
our Permian Basin acreage based on 20-acre spacing. 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.
|
|
|
|
|
●
|
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.
|
|
|
|
|
●
|
Optimization of well density and configuration. We
own properties that are legacy conventional oil fields
characterized by widespread vertical development and geological
well control. We utilize the extensive petrophysical and production
data of such legacy properties to confirm optimal well spacing and
configuration using modern reservoir evaluation methodologies.
|
|
|
|
|
●
|
Maintain a high degree of operational control. We
believe that by retaining high operational control, 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.
|
|
|
|
|
●
|
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 and building oil and gas
businesses. We also have significant expertise in successfully
sourcing, evaluating and executing acquisition opportunities. We
believe our understanding of the geology, geophysics and reservoir
properties of potential acquisition targets will allow us to
identify and acquire highly prospective acreage in order to grow
our reserve base and maximize stockholder value.
|
|
|
|
|
●
|
Preserve financial flexibility to pursue organic and
external growth opportunities. We intend to maintain a
disciplined financial profile in order to provide us flexibility
across various commodity and market cycles. We intend to utilize
our strategic partners and public currency to continuously fund
development and operations.
|
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 that we can dictate the
pace of development in order to execute our business plan. Our 2021
development plan includes several projects delayed from our 2019
Phase II Permian Basin Asset development program, which were put on
hold through 2020 due to the COVID-19 outbreak and the related low
oil price environment through most of 2020. In late 2020, we
resumed work on these carryover projects, including the completion
of a SWD well in the Chaveroo field (Chaves and Roosevelt Counties,
New Mexico) which was brought online in September 2020. In
September 2020, we brought online one horizontal San Andres well
from our 2019 Phase I Permian Basin Asset development program that
was previously shut in due to salt water disposal capacity
constraints. In January 2021, we initiated production hookup and
commencement of two horizontal San Andres wells drilled in our
2019/2020 Phase II Permian Basin Asset development program. Over
the remainder of 2021, we plan to permit up to ten horizontal San
Andres wells in our Permian Basin Asset and anticipate drilling and
completing at least two of these wells in late 2021 or early 2022,
with the remainder planned to be drilled and completed in 2022. We
have also completed several well reactivation projects and
completed several enhancement and facilities projects across our
operated Permian Basin Asset. We also plan to spend approximately
$1.2 million for participation in four non-operated well projects
(with a working interest of 6.52%) on our D-J Basin Asset that were
drilled and completed in the third quarter of 2021. We expect to
pay those costs and begin to receive revenue from those four wells
in the fourth quarter of 2021. Additionally, we have elected to
participate in eight wells in the D-J Basin that are currently
planned to be drilled in the first quarter of 2022, at a net cost
of approximately $2.1 million (with a working interest of 4.699%)
pursuant to well proposals received from third party operators on
lands in which we share a leasehold interest; provided that no
money has been spent to date on these eight well proposals. We have
advanced our business development activities in the D-J Basin over
the past year, which we believe will add opportunities for growth
and development. We plan to continue to evaluate D-J Basin well
proposals as received from third party operators and participate in
those we deem most economic and prospective. Our 2021 development
program is based upon our current outlook for the remainder of the
year and is subject to revision, if and as necessary, to react to
market conditions, product pricing, contractor availability,
requisite permitting and capital availability, additional
non-operated well projects on our D-J Basin Asset that may become
available, 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 foreseeable future, including to fund the remainder
of our 2021 development program, discussed above, which cash we
anticipate being available from (i) projected cash flow from our
operations, (ii) existing cash on hand, (iii) equity infusions or
loans (which may be convertible) made available from SK Energy LLC
(“SK Energy”), which
is 100% owned and controlled by Simon Kukes, our Chief Executive
Officer and director, which funding SK Energy is under no
obligation to provide, (iv) public or private debt or equity
financings, and (v) funding through credit or loan facilities. In
addition, we may seek additional funding through asset sales,
farm-out arrangements, and credit facilities to fund potential
acquisitions during the remainder of 2021.
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, 2021 and
2020, 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, 2021 vs. Three Months
Ended September 30, 2020
We reported a net loss for the three-month period ended September
30, 2021 of $0.3 million, or ($0.00) per share, compared to a net
loss for the three-month period ended September 30, 2020 of $2.3
million or ($0.03) per share. The decrease in net loss of $2.0
million was primarily due to a $1.7 million increase in revenue
coupled with a $0.9 million decrease in total operating expenses
offset with a $0.6 million decrease in other income, when comparing
the current period to the prior year period (all of which are
discussed in more detail below).
Net Revenues
The following table sets forth the operating results and production
data for the periods indicated:
|
|
Three Months Ended
September 30,
|
|
|
Increase
|
|
|
% Increase
|
|
|
|
2021
|
|
|
2020
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
Sale Volumes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls)
|
|
|
55,106 |
|
|
|
60,786 |
|
|
|
(5,680 |
) |
|
|
(9 |
)% |
Natural Gas (Mcf)
|
|
|
60,949 |
|
|
|
44,051 |
|
|
|
16,898 |
|
|
|
38 |
% |
NGL (Bbls)
|
|
|
1,592 |
|
|
|
5,072 |
|
|
|
(3,480 |
) |
|
|
(69 |
)% |
Total (Boe) (1)
|
|
|
66,856 |
|
|
|
73,200 |
|
|
|
(6,344 |
) |
|
|
(9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls per day)
|
|
|
599 |
|
|
|
661 |
|
|
|
(62 |
) |
|
|
(9 |
)% |
Natural Gas (Mcf per day)
|
|
|
662 |
|
|
|
479 |
|
|
|
183 |
|
|
|
38 |
% |
NGL (Bbls per day)
|
|
|
17 |
|
|
|
55 |
|
|
|
(38 |
) |
|
|
(69 |
)% |
Total (Boe per day) (1)
|
|
|
726 |
|
|
|
796 |
|
|
|
(70 |
) |
|
|
(9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sale Price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil ($/Bbl)
|
|
$ |
67.08 |
|
|
$ |
37.21 |
|
|
$ |
29.87 |
|
|
|
80 |
% |
Natural Gas ($/Mcf)
|
|
|
5.24 |
|
|
|
2.06 |
|
|
|
3.18 |
|
|
|
154 |
% |
NGL ($/Bbl)
|
|
|
33.17 |
|
|
|
12.66 |
|
|
|
20.51 |
|
|
|
162 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
|
|
$ |
3,697 |
|
|
$ |
2,262 |
|
|
$ |
1,435 |
|
|
|
63 |
% |
Natural Gas
|
|
|
319 |
|
|
|
91 |
|
|
|
228 |
|
|
|
251 |
% |
NGL
|
|
|
53 |
|
|
|
64 |
|
|
|
(11 |
) |
|
|
(17 |
)% |
Total Revenues
|
|
$ |
4,069 |
|
|
$ |
2,417 |
|
|
$ |
1,652 |
|
|
|
68 |
% |
(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, 2021 increased $1.7 million, or 68%, to
$4.1 million, compared to $2.4 million for the same period a year
ago, due primarily to a favorable price variance of $2.1 million,
offset by an unfavorable volume variance of $0.4 million. The
production decrease is primarily related to several of our newer
wells having higher peak production early in the prior year,
coupled with normal production declines, offset by an increase in
natural gas production in the current period, as the Company began
selling gas from additional well locations in our Permian Basin
Asset.
Operating Expenses and Other Income
(Expense)
The following table summarizes our production costs and operating
expenses for the periods indicated (in thousands):
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
Increase
|
|
|
% Increase
|
|
|
|
2021
|
|
|
2020
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
Direct Lease Operating Expenses
|
|
$ |
879 |
|
|
$ |
763 |
|
|
$ |
116 |
|
|
|
15 |
% |
Workovers
|
|
|
151 |
|
|
|
2 |
|
|
|
149 |
|
|
|
7,450 |
% |
Other*
|
|
|
393 |
|
|
|
289 |
|
|
|
104 |
|
|
|
36 |
% |
Total Lease Operating Expenses
|
|
$ |
1,423 |
|
|
$ |
1,054 |
|
|
$ |
369 |
|
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration Expenses
|
|
$ |
- |
|
|
$ |
1 |
|
|
$ |
(1 |
) |
|
|
(100 |
)% |
Depreciation, Depletion,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and Accretion
|
|
$ |
1,666 |
|
|
$ |
2,974 |
|
|
$ |
(1,308 |
) |
|
|
(44 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative (Cash)
|
|
$ |
745 |
|
|
$ |
780 |
|
|
$ |
(35 |
) |
|
|
(4 |
)% |
Share-Based Compensation (Non-Cash)
|
|
|
592 |
|
|
|
501 |
|
|
|
91 |
|
|
|
18 |
% |
Total General and Administrative Expense
|
|
$ |
1,337 |
|
|
$ |
1,281 |
|
|
$ |
56 |
|
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
$ |
- |
|
|
$ |
1 |
|
|
$ |
(1 |
) |
|
|
(100 |
)% |
Interest Income
|
|
$ |
4 |
|
|
$ |
4 |
|
|
$ |
- |
|
|
|
- |
|
Other Income
|
|
$ |
28 |
|
|
$ |
597 |
|
|
$ |
(569 |
) |
|
|
(95 |
)% |
*Includes severance, ad valorem taxes and marketing costs.
Lease Operating Expenses. The increase of $0.4 million in
lease operating expenses was primarily due to the Company
increasing its active well count for previously shut-in wells due
to the commodity price increases during the current period,
compared to the prior period’s well count, which resulted in
increased lease operating and workover expenses.
Exploration Expense. There was minimal to no expenses in
exploration activity undertaken by the Company in the current
year’s period and the prior year’s period.
Depreciation, Depletion, Amortization and Accretion. The
$1.3 million decrease in depreciation, depletion, amortization and
accretion was primarily the result of a decrease in our depletable
base due to the impairment of our oil and gas properties at the
prior year end (discussed below), when compared to the prior
period. For the year ended December 31, 2020, due to falling oil
and gas prices, we incurred a $19.3 million impairment of our oil
and gas properties located in our D-J Basin Asset.
General and Administrative Expenses (excluding share-based
compensation). There was a nominal decrease in general and
administrative expenses (excluding share-based compensation)
primarily due to savings in payroll expenses from the Company
outsourcing payroll functions to a new payroll provider in November
2020, as well as other cost decreases, offset by increases in
payroll expenses from the return of all the salaries of the
Company’s salaried employees and officers to original levels on
April 1, 2021, from a previously implemented 20% salary reduction
on April 1, 2020. The salary reduction was put in place to reduce
costs at the time that oil and gas prices were falling as a result
of decreased demand due to the COVID-19 pandemic at the end of
March 2020. The salaries of the Company’s employees and officers
returned to prior levels beginning April 1, 2021, as the Company
determined that the oil markets have recovered to acceptable
levels.
Share-Based Compensation. Share-based compensation, which
is included in general and administrative expenses in the
Statements of Operations, increased by $0.1 million primarily due
to an increase in the awarding of employee stock-based options and
restricted stock as compensation. Share-based compensation is
utilized for the purpose of conserving cash resources for use in
field development activities and operations.
Interest Expense. There was minimal to no interest expense
in the current year’s period and the prior year’s period. The
interest expense in the prior period was due to prior period
accrued interest related to the Company’s New PPP Loan (see Note 7
to the notes to the unaudited financial statements of the Company
included above), which was forgiven during the current period as
discussed below.
Interest Income and Other Income. Interest income and
other income includes interest earned from our interest-bearing
cash accounts, and the settlement of $0.3 million in accounts
payables and working interest credits of $0.3 million in the prior
period.
Nine Months Ended September 30, 2021 vs. Nine Months
Ended September 30, 2020
We reported net income for the nine-month period ended September
30, 2021 of $178,000, or $0.00 per share, compared to a net loss
for the nine-month period ended September 30, 2020 of $9.3 million
or ($0.13) per share. The increase in net income of $9.5 million
was primarily due to a $5.4 million increase in revenue coupled
with a $1.8 million gain on sale of oil and gas properties, a $3.1
million decrease in total operating expenses and a $0.4 million
gain from forgiveness of our New PPP Loan, offset by a $1.2 million
decrease in other income, when comparing the current period to the
prior year period (all of which are discussed in more detail
below).
Net Revenues
The following table sets forth the operating results and production
data for the periods indicated:
|
|
Nine Months Ended
September 30,
|
|
|
Increase
|
|
|
% Increase
|
|
|
|
2021
|
|
|
2020
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
Sale Volumes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls)
|
|
|
172,357 |
|
|
|
179,167 |
|
|
|
(6,810 |
) |
|
|
(4 |
)% |
Natural Gas (Mcf)
|
|
|
149,614 |
|
|
|
149,417 |
|
|
|
197 |
|
|
|
*
|
|
NGL (Bbls)
|
|
|
3,328 |
|
|
|
12,176 |
|
|
|
(8,848 |
) |
|
|
(73 |
)% |
Total (Boe) (1)
|
|
|
200,621 |
|
|
|
216,246 |
|
|
|
(15,625 |
) |
|
|
(7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (Bbls per day)
|
|
|
631 |
|
|
|
654 |
|
|
|
(23 |
) |
|
|
(4 |
)% |
Natural Gas (Mcf per day)
|
|
|
548 |
|
|
|
545 |
|
|
|
3 |
|
|
|
1 |
% |
NGL (Bbls per day)
|
|
|
12 |
|
|
|
44 |
|
|
|
(32 |
) |
|
|
(73 |
)% |
Total (Boe per day) (1)
|
|
|
734 |
|
|
|
789 |
|
|
|
(55 |
) |
|
|
(7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sale Price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil ($/Bbl)
|
|
$ |
61.70 |
|
|
$ |
31.08 |
|
|
$ |
30.62 |
|
|
|
99 |
% |
Natural Gas ($/Mcf)
|
|
|
4.04 |
|
|
|
1.48 |
|
|
|
2.56 |
|
|
|
173 |
% |
NGL ($/Bbl)
|
|
|
30.32 |
|
|
|
9.41 |
|
|
|
20.91 |
|
|
|
222 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
|
|
$ |
10,635 |
|
|
$ |
5,569 |
|
|
$ |
5,066 |
|
|
|
91 |
% |
Natural Gas
|
|
|
604 |
|
|
|
221 |
|
|
|
383 |
|
|
|
173 |
% |
NGL
|
|
|
101 |
|
|
|
115 |
|
|
|
(14 |
) |
|
|
(12 |
)% |
Total Revenues
|
|
$ |
11,340 |
|
|
$ |
5,905 |
|
|
$ |
5,435 |
|
|
|
92 |
% |
(1)
|
Assumes 6 Mcf of natural gas equivalents to 1 barrel of oil.
|
* Less than 1%.
Total crude oil, natural gas and NGL revenues for the nine-month
period ended September 30, 2021 increased $5.4 million, or 92%, to
$11.3 million, compared to $5.9 million for the same period a year
ago, due primarily to a favorable price variance of $6.1 million,
offset by an unfavorable volume variance of $0.7 million.
Production decreases are primarily related to several of our newer
wells having higher peak production early in the prior year,
coupled with our oil and gas property sale and well shut-ins
related to the winter storms that occurred earlier in the current
2021 period.
Operating Expenses and Other Income
(Expense)
The following table summarizes our production costs and operating
expenses for the periods indicated (in thousands):
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
Increase
|
|
|
% Increase
|
|
|
|
2021
|
|
|
2020
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
Direct Lease Operating Expenses
|
|
$ |
2,700 |
|
|
$ |
2,483 |
|
|
$ |
217 |
|
|
|
9 |
% |
Workovers
|
|
|
481 |
|
|
|
139 |
|
|
|
342 |
|
|
|
246 |
% |
Other*
|
|
|
983 |
|
|
|
704 |
|
|
|
279 |
|
|
|
40 |
% |
Total Lease Operating Expenses
|
|
$ |
4,164 |
|
|
$ |
3,326 |
|
|
$ |
838 |
|
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration Expenses
|
|
$ |
- |
|
|
$ |
31 |
|
|
$ |
(31 |
) |
|
|
(100 |
)% |
Depreciation, Depletion,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and Accretion
|
|
$ |
4,829 |
|
|
$ |
8,323 |
|
|
$ |
(3,494 |
) |
|
|
(42 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative (Cash)
|
|
$ |
2,567 |
|
|
$ |
2,753 |
|
|
$ |
(186 |
) |
|
|
(7 |
)% |
Share-Based Compensation (Non-Cash)
|
|
|
1,867 |
|
|
|
2,073 |
|
|
|
(206 |
) |
|
|
(10 |
)% |
Total General and Administrative Expense
|
|
$ |
4,434 |
|
|
$ |
4,826 |
|
|
$ |
(392 |
) |
|
|
(8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of Oil and Gas Properties
|
|
$ |
1,805 |
|
|
$ |
- |
|
|
$ |
1,805 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
- |
|
|
|
- |
|
Interest Income
|
|
$ |
11 |
|
|
$ |
36 |
|
|
$ |
(25 |
) |
|
|
(69 |
)% |
Other Income
|
|
$ |
76 |
|
|
$ |
1,275 |
|
|
$ |
(1,199 |
) |
|
|
(94 |
)% |
Gain on forgiveness of PPP loan
|
|
$ |
374 |
|
|
$ |
- |
|
|
$ |
374 |
|
|
|
100 |
% |
*Includes severance, ad valorem taxes and marketing costs.
Lease Operating Expenses. The increase of $0.8 million in
lease operating expenses was primarily due to the shut-in of all of
our operated wells for 42 days in the prior period related to the
severe reduction in pricing from the decreased demand related to
the start of the global spread of the COVID-19 outbreak,
notwithstanding the Company continuing to maintain certain cost
cutting initiatives that were implemented during the prior year,
coupled with overall lower operating expense rates.
Exploration Expense. There was no exploration activity
undertaken by the Company in the current year’s period compared to
minimal activity in the prior year’s period.
Depreciation, Depletion, Amortization and Accretion. The
$3.5 million decrease in depreciation, depletion, amortization and
accretion was primarily the result of a decrease in our depletable
base due to the impairment of our oil and gas properties at the
prior year end (discussed below) coupled with production decreases
in the current period, when compared to the prior period. For the
year ended December 31, 2020, due to falling oil and gas prices, we
incurred a $19.3 million impairment of our oil and gas properties
located in our D-J Basin Asset.
General and Administrative Expenses (excluding share-based
compensation). The decrease of $0.2 million in general and
administrative expenses (excluding share-based compensation) was
primarily due to decreases in payroll, as well as other cost
decreases, resulting from a 20% reduction in salary for all of the
Company’s salaried employees and officers implemented on April 1,
2020, which was put in place to reduce costs at the time that oil
and gas prices were falling as a result of decreased demand due to
the COVID-19 pandemic, and a reduction of non-essential
contractors. The salaries of the Company’s employees and officers
returned to prior levels beginning April 1, 2021, as the Company
determined that the oil markets have recovered to acceptable
levels.
Share-Based Compensation. Share-based compensation, which
is included in general and administrative expenses in the
Statements of Operations, decreased by $0.2 million primarily due
to the forfeiture of certain employee stock-based options and
nonvested restricted shares due to employee terminations.
Share-based compensation is utilized for the purpose of conserving
cash resources for use in field development activities and
operations.
Gain on Sale of Oil and Gas Properties. The Company sold
rights to 230 net acres and interests in three non-operated wells
located in the D-J Basin for net cash proceeds of $1.9 million and
recognized a gain on sale of oil and gas properties of $1.8 million
during the nine months ended September 30, 2021. We had no sales of
oil and gas properties during the nine months ended September 30,
2020.
Interest Expense. There was minimal interest expense in
the current year’s period and the prior year’s period. The accrued
interest related to the Company’s New PPP Loan (see Note 7 to the
notes to the unaudited financial statements of the Company included
above), which was forgiven during the period as discussed
below.
Interest Income and Other Income. Includes interest earned
from our interest-bearing cash accounts, for which interest rates
have decreased significantly when comparing the current period to
the prior period, and the settlement of $0.9 million in accounts
payables and working interest credits of $0.3 million in the prior
period.
Gain on forgiveness of New PPP loan. Includes principal
and accrued interest from our New PPP Loan that was fully forgiven
during the current period (see Note 7 to the notes to the unaudited
financial statements of the Company included above).
Liquidity and Capital Resources
The primary sources of cash for the Company during the nine-month
period ended September 30, 2021 were from an underwritten public
offering pursuant to which we sold 5,968,500 shares of common stock
at a public offering price of $1.50 per share, and generated net
proceeds of approximately $8.2 million, $1.9 million in the sale of
oil and gas properties, and the sales of crude oil and natural gas.
The primary uses of cash were funds used for well completion and
operating costs.
Impact of COVID-19
In December 2019, a novel strain of coronavirus, which causes the
infectious disease known as COVID-19, was reported in Wuhan, China.
The World Health Organization declared COVID-19 a “Public Health
Emergency of International Concern” on January 30, 2020, and a
global pandemic on March 11, 2020. COVID-19 and the governmental
responses thereto significantly reduced worldwide economic activity
during much of 2020, and continues to threaten the global economy,
as variants and mutations of the disease continue to spread, even
as vaccines have become more widely available. While oil and gas
prices have increased above pre-pandemic levels, it is not possible
at this time for the Company to estimate the full impact that
COVID-19 will have on the Company’s business in the future as such
estimate would need to be based on whether or not COVID-19
continues to spread and the effectiveness of the containment of the
virus, by the governments of countries affected and in which the
Company operates. However, the Company’s operations have previously
been disrupted, and may be disrupted again in the future due to
COVID-19. The COVID-19 outbreak and mitigation measures have also
had an adverse impact on global economic conditions, as well as an
adverse effect on the Company’s business and financial condition
and may continue to have an adverse effect on the Company,
including on its potential to conduct financings on terms
acceptable to the Company, if at all. The Company implemented
temporary precautionary measures intended to help minimize the risk
of the virus to its employees, vendors, and guests, including
limiting the number of occupants at the Company’s Houston
headquarters and requiring all others to work remotely, and
discouraged employee attendance at in-person work-related meetings,
which could negatively affect the Company’s business, which
measures have recently eased in accordance with federal, state and
local guidance, and the vaccination of substantially all of the
Company’s office-based employees. The extent to which the COVID-19
outbreak will continue to impact the Company’s results will depend
on future developments that are highly uncertain and cannot be
predicted, including new information that may emerge concerning the
severity of the virus, the continued availability and efficacy of
vaccines and booster shots, the willingness of individuals to be
vaccinated initially, and to obtain booster shots, the effect of
virus mutations, and the actions to contain its impact. Any future
decrease in the price of oil, or the demand for oil and gas, as a
result of COVID-19 or otherwise, will likely have a negative impact
on our results of operations and cash flows.
In response to the effects of COVID-19, the Company has adopted
policies, procedures, and practices both in its Houston office
headquarters and across its field operations to protect its
employees, contractors, and guests from COVID-19, including the
adoption of a COVID-19 Response Plan, implementation of contractor
questionnaires to assess COVID-19 risk and exposure prior to
entering any Company facility or worksite, adopting best practices,
guidelines and protocols recommended by the Centers for Disease
Control (the “CDC”)
and the Office of the Texas Governor for the prevention of exposure
and spread of COVID-19, and instituting twice-monthly management
calls discussing the COVID-19 pandemic and the Company’s ongoing
response to the COVID-19 pandemic and effectiveness thereof. Given
the Company’s robust online systems and workflow practices and
procedures, the Company has not experienced any material challenges
or reductions in efficiency or effectiveness of its office-based
workforce, while its field personnel continue to attend to their
daily field operations uninterrupted, while mindful of social
distancing and other preventative measures and safeguards
recommended by the CDC, and subject to the CDC’s updated
guidance.
We plan to continue to closely monitor the global energy markets
and oil and gas pricing, with the remainder of our 2021 development
plan being subject to revision, if and as necessary, to react to
market conditions in the best interest of its shareholders, while
prioritizing its financial strength and liquidity.
Working Capital
At September 30, 2021, the Company’s total current assets of $21.8
million exceeded its total current liabilities of $2.5 million,
resulting in a working capital surplus of $19.3 million, while at
December 31, 2020, the Company’s total current assets of $8.8
million exceeded its total current liabilities of $2.0 million,
resulting in a working capital surplus of $6.8 million. The $12.5
million increase in our working capital surplus is primarily
related to cash received from the sale of common stock in our
February 2021 underwritten offering (discussed below), the sale of
certain oil and gas properties and the forgiveness in full of our
New PPP Loan principal and accrued interest, during the nine months
ended September 30, 2021.
Financing
On February 5, 2021, the Company closed an underwritten public
offering of 5,968,500 shares of common stock at a public offering
price of $1.50 per share, which included the full exercise of the
underwriter’s over-allotment option, for net proceeds (after
deducting the underwriters’ discount equal to 6% of the public
offering price and expenses associated with the offering) of
approximately $8.2 million.
Subsequently, on October 6, 2021, after the date of the September
30, 2021 balance sheet discussed above, the Company closed a
registered direct offering of 4,458,600 shares of common stock at a
price of $1.57 per share for net proceeds (after deducting the
placement agent’s fees and other estimated offering expenses
associated with the offering) of approximately $6.5 million.
We expect that we will have sufficient cash available to meet our
needs over the foreseeable future, which cash we anticipate being
available from (i) projected cash flow from our operations, (ii)
existing cash on hand, (iii) equity infusions or loans (which may
be convertible) made available from SK Energy, which is 100% owned
and controlled by Simon Kukes, our Chief Executive Officer and
director, which funding SK Energy is under no obligation to
provide, (iv) public or private debt or equity financings, and (v)
funding through credit or loan facilities. In addition, we may seek
additional funding through asset sales, farm-out arrangements, and
credit facilities to fund potential acquisitions during the
remainder of 2021 and into 2022. If market conditions are not
conducive to developing our assets consistent with our remaining
2021 development program, the Company may choose to delay or extend
the drilling program and associated capital expenditures into the
future. Furthermore, as a result of the COVID-19 outbreak, and the
sharp decline in oil prices which occurred partially as a result of
the decreased demand for oil caused by such outbreak and the
actions taken globally to stop the spread of such virus, in
mid-April 2020, the Company shut-in all of its operated producing
wells in its Permian Basin Asset and D-J Basin Asset to preserve
the Company’s oil and gas reserves for production during a more
favorable oil price environment, with the Company now back on full
production from its operated wells in the Permian Basin and the D-J
Basin that the Company had shut-in in mid-April 2020 due to the
partial recovery of oil prices in early June 2020. If oil prices
deteriorate significantly from current levels, the Company may
again shut-in some or all of its oil and gas production, which
would result in reduced or no cash flow being generated from
operations during the period such wells are shut-in, have a
material adverse effect on the Company’s projected cash flow from
operations, and, once our cash on hand is depleted, eventually
require additional infusions of capital through debt and/or equity
financings, asset sales, farm-out arrangements, lines of credit, or
other means, which may not be available on favorable terms, if at
all.
Cash Flows (in thousands)
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows provided by (used in) operating activities
|
|
$ |
3,971 |
|
|
$ |
(24 |
) |
Cash flows used in investing activities
|
|
|
(309 |
) |
|
|
(14,379 |
) |
Cash flows provided by financing activities
|
|
|
8,237 |
|
|
|
370 |
|
Net increase (decrease) in cash and restricted
cash
|
|
$ |
11,899 |
|
|
$ |
(14,033 |
) |
Cash flows provided by (used in) operating
activities. Net cash operating activities increased by
$4.0 million for the current year’s period, when compared to the
prior year’s period, primarily due to an increase in net income of
$9.5 million, which includes a decrease of $3.5 million in
depreciation, depletion and amortization and a $1.8 million gain on
the sale of oil and gas properties, coupled with net increases to
our other components of working capital, which are related to our
increased revenue in the current period, when compared to the prior
period.
Cash flows used in investing activities. Net cash
used in investing activities decreased by $14.1 million for the
current year’s period, when compared to the prior year’s period,
primarily due to $12.2 million less in capital spending, coupled
with $1.9 million in proceeds from the sale of oil and gas
properties.
Cash flows provided by financing activities. In
the current period, the Company generated net cash from financing
activities by selling common stock, net of offering costs, of $8.2
million, compared to net cash from financing activities of $0.4
million in the prior period, due to proceeds from obtaining the New
PPP Loan financing.
Off-Balance Sheet Arrangements
The Company does not participate in financial transactions that
generate relationships with unconsolidated entities or financial
partnerships. As of September 30, 2021, we did not have any
off-balance sheet arrangements.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results
of operations are based upon our Condensed Consolidated Financial
Statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. See Part II, Item 7, “Critical Accounting
Policies” in our Annual Report on Form 10-K for the year ended
December 31, 2020. There have been no material changes to our
critical accounting policies and estimates since our Annual Report
on Form 10‑K for the year ended December 31, 2020, as disclosed
under “Note 3 – Summary of Significant Accounting Policies” to the
notes to the audited financial statements included under Part II,
Item 8 of the Annual Report on Form 10-K.
Recently Adopted and Recently Issued Accounting
Pronouncements
None.
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 Accounting Officer (“CAO”)(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 CAO concluded as of September 30. 2021, that our disclosure
controls and procedures were effective.
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, 2021, 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.
As a result of COVID-19, our workforce has continued to operate
primarily in a work from home environment for the quarter ended
September 30, 2021. While pre-existing controls were not
specifically designed to operate in our current work from home
operating environment, we do not believe that such work from home
actions have had a material adverse effect on our internal controls
over financial reporting. We have continued to re-evaluate and
refine our financial reporting process to provide reasonable
assurance that we could report our financial results accurately and
timely.
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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Although we may, from time to time, be involved in litigation and
claims arising out of our operations in the normal course of
business, we are not currently a party to any material legal
proceeding. In addition, we are not aware of any material legal or
governmental proceedings against us or contemplated to be brought
against us.
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, 2020, filed with the Commission on
March 23, 2021 (the “Form
10-K”), under the heading “Item 1A. Risk Factors“, other
than as set forth 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 one or more of which could,
directly or indirectly, cause the Company’s actual financial
condition and operating results to vary materially from past, or
from anticipated future, financial condition and operating results
and/or could materially and adversely affect the Company’s business
and stock price.
The Federal Government previously instituted a
moratorium on new oil and gas leases and permits on federal onshore
and offshore lands, which may have a material adverse effect on the
Company and its results of operations.
On January 20, 2021, the Acting U.S. Interior Secretary, instituted
a 60-day moratorium on new oil and gas leases and permits on
federal onshore and offshore lands, which was subsequently extended
indefinitely. In June 2021, a federal judge issued an injunction
lifting the moratorium, provided that the federal government it is
appealing the injunction. A total of approximately 26% of the
Company’s acreage in New Mexico and 1% of the Company’s acreage in
Colorado are located on federal lands. It is currently unclear
whether the moratorium will be reinstated, or whether such
moratorium is the start of a change in federal policies regarding
the grant of oil and gas permits on federal lands. The moratorium
does not affect the Company, as the Company has no plans to drill
new wells on any leases held on federal lands; however, if such
prior moratorium was to become permanent, or the federal government
in the future were to grant less permits on federal lands, make
such permitting process more difficult, costly, or to institute
more stringent rules relating to such permitting process, it could
have a material adverse effect on the value of the Company’s leases
and/or its ability to undertake oil and gas operations on such the
portion of its leases on federal lands.
Simon Kukes, our Chief Executive Officer and a member
of board of directors, beneficially owns 64.8% of our common stock,
which gives him majority voting control over stockholder matters
and his interests may be different from your interests; and as a
result of such ownership, we are a “controlled company” under
applicable NYSE American rules.
Simon Kukes, our Chief Executive Officer and member of the board of
directors, through his individual ownership of the Company and
through his position as principal and sole owner of SK Energy LLC,
which beneficially owns approximately 61.5% of our issued and
outstanding common stock and Mr. Kukes, together with the ownership
of SK Energy, beneficially owns approximately 64.8% of our issued
and outstanding common stock. As such, Mr. Kukes can control the
outcome of all matters requiring a stockholder vote, including the
election of directors, the adoption of amendments to our
certificate of formation or bylaws and the approval of mergers and
other significant corporate transactions. Subject to any fiduciary
duties owed to the stockholders generally, while Mr. Kukes’
interests may generally be aligned with the interests of our
stockholders, in some instances Mr. Kukes may have interests
different than the rest of our stockholders, including but not
limited to, future potential company financings in which SK Energy
may participate, or his leadership at the Company. Mr. Kukes’
influence or control of our company as a stockholder may have the
effect of delaying or preventing a change of control of our company
and may adversely affect the voting and other rights of other
stockholders. Because Mr. Kukes controls the stockholder vote,
investors may find it difficult to replace Mr. Kukes (and such
persons as he may appoint from time to time) as members of our
management if they disagree with the way our business is being
operated. Additionally, the interests of Mr. Kukes may differ from
the interests of the other stockholders and thus result in
corporate decisions that are adverse to other stockholders.
Because of Mr. Kukes’ ownership of the Company, as discussed above,
we are a “controlled
company” under the rules of the NYSE American. Under these
rules, a company of which more than 50% of the voting power is held
by an individual, a group or another company is a “controlled company” and, as
such, can elect to be exempt from certain corporate governance
requirements, including requirements that:
|
●
|
a majority of the Board of Directors consist of independent
directors (or 50% in the case of a smaller reporting company such
as the Company);
|
|
|
|
|
●
|
the board maintain a nominations committee with prescribed duties
and a written charter; and
|
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●
|
the board maintain a compensation committee with prescribed duties
and a written charter and comprised solely of independent
directors.
|
As a “controlled
company,” we may elect to rely on some or all of these
exemptions, provided that we have to date not taken advantage of
any of these exemptions and do not currently intend to take
advantage of any of these exemptions moving forward.
Notwithstanding that, should the interests of Mr. Kukes differ from
those of other stockholders, the other stockholders may not have
the same protections afforded to stockholders of companies that are
subject to all of the NYSE American corporate governance standards.
Even if we do not avail ourselves of these exemptions, our status
as a controlled company could make our common stock less attractive
to some investors or otherwise harm our stock price.
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, 2021, and through
the date of the filing of this Report, which were not previously
disclosed in a prior Quarterly Report on Form 10-Q, our Annual
Report on Form 10-K or in a Current Report on Form 8-K.
Use of Proceeds From Sale of Registered
Securities
Our shelf Registration Statement on Form S-3 (Reg. No. 333-250904)
in connection with the sale by us of up to $100 million in
securities (common stock, preferred stock, warrants and units) was
declared effective by the Securities and Exchange Commission on
December 2, 2020.
On February 3, 2021, we filed a final Rule 424(b)(5) prospectus
supplement relating to the primary offering by us in a firm
commitment underwritten public offering of 5,190,000 shares of
common stock at a public offering price per share of $1.50. The
underwriters of the offering (EF Hutton (formerly Kingswood Capital
Markets), a division of Benchmark Investments, Inc. as sole
bookrunner and Dawson James Securities) were also provided an
option to purchase an additional 778,500 shares from us, at the
public offering price less the underwriting discount, within 45
days of the offering to cover over-allotments, if any, which
overallotment option was exercised in full by the underwriters. The
offering (including the sale of the underwriters’ overallotment
shares) closed on February 5, 2021. The net proceeds to us from our
sale of the common stock (including the shares sold in connection
with the exercise of the underwriters’ overallotment) were
approximately $8.2 million (after deducting the underwriting
discount and commissions and offering expenses payable by us). No
further shares will be sold under the prospectus supplement.
On October 3, 2021, we filed a final Rule 424(b)(5) prospectus
supplement relating to the registered direct offering by us of
4,458,600 shares of common stock at an offering price per share of
$1.57. EF Hutton, division of Benchmark Investments, LLC and Roth
Capital Partners acted as joint placement agents in the offering.
The offering closed on October 6, 2021. The net proceeds to us from
our sale of the common stock was approximately $6.5 million (after
deducting the placement agent’s fees and other estimated offering
expenses associated with the offering). No further shares will be
sold under the prospectus supplement.
No payments for our expenses were made in the offerings described
above directly or indirectly to (i) any of our directors, officers
or their associates, (ii) any person(s) owning 10% or more of any
class of our equity securities or (iii) any of our affiliates.
There has been no material change in the planned use of proceeds
from our offerings as described in our final prospectuses filed
with the SEC pursuant to Rule 424(b).
Issuer Purchases of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
None.
ITEM 4. MINE SAFETY
DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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Incorporated By Reference
|
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Exhibit No.
|
|
Description
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
File Number
|
|
1.1
|
|
Placement Agency Agreement, dated October 3, 2021, by and between
PEDEVCO Corp. and EF Hutton, division of Benchmark Investments, LLC
and Roth Capital Partners, LLC
|
|
8-K
|
|
1.1
|
|
October 6, 2021
|
|
001-35922
|
|
10.1
|
|
PEDEVCO Corp. 2021 Equity Incentive Plan
|
|
8-K
|
|
10.1
|
|
September 1, 2021
|
|
001-35922
|
|
10.2
|
|
PEDEVCO Corp. 2012 Equity Incentive Plan Form of Restricted Shares
Grant Agreement
|
|
S-8
|
|
4.5
|
|
October 31, 2013
|
|
333-192002
|
|
10.3
|
|
Form of Securities Purchase Agreement, dated October 3, 2021, by
and between PEDEVCO Corp. and the investor party thereto
|
|
8-K
|
|
10.1
|
|
October 6, 2021
|
|
001-35922
|
|
10.4
|
|
Form of Lock-Up Agreement (October 2021 Offering)
|
|
8-K
|
|
10.2
|
|
October 6, 2021
|
|
001-35922
|
|
31.1*
|
|
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**
|
|
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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|
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|
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32.2**
|
|
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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|
|
|
|
|
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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.
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.
|
PEDEVCO Corp.
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November 15, 2021
|
By:
|
/s/ Simon Kukes
|
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Simon Kukes
|
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|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
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PEDEVCO Corp.
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November 15, 2021
|
By:
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/s/ Paul A. Pinkston
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Paul A. Pinkston
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Chief Accounting Officer
|
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(Principal Financial and Accounting Officer)
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|
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