PEDEVCO CORP Annual Report - How They Did This Year

I’m writing this guide to help you understand how PEDEVCO Corp performed this year. My goal is to turn complex financial filings into plain English so you can decide if this company fits your investment goals.

1. What does this company do and how did they perform?

PEDEVCO explores and develops oil and natural gas, focusing on "legacy" properties—mature fields in Colorado’s D-J Basin and Texas’s Permian Basin. They use modern drilling and hydraulic fracturing to extract more oil from these older fields.

The big news for 2025 was a major expansion. In October, they merged with North Peak Oil & Gas and Century Oil and Gas. This $170 million deal significantly grew their footprint, giving them control over about 18,000 net acres in the D-J Basin and increased interests in the Permian Basin.

On March 13, 2026, the company completed a 20-for-1 reverse stock split. This was a technical adjustment to meet NYSE American listing rules for a minimum share price and did not change the company’s underlying value or cash flow.

2. Financial performance and strategy

PEDEVCO is a smaller player, reporting about $48.5 million in annual revenue. To stay competitive, they are prioritizing efficiency. In early 2025, they sold non-core assets for $4.2 million, a move that cut $1.5 million in annual cleanup costs and lowered their day-to-day operating expenses.

For 2026, they plan to spend $16 million to $20 million on development. Much of this will go toward "optimization," such as installing artificial lift systems and upgrading facilities to lower water-handling costs. They expect these upgrades to cut their per-barrel production costs by 12–15%, which should improve their profit margins.

3. Financial health

The company balances growth with its available capital. They have a credit line with Citibank allowing them to borrow up to $250 million, with $98 million currently in use. They also use an "At-the-Market" program to sell shares directly to the public, raising $12 million last year. While this provides cash for drilling, it causes dilution; the number of shares increased by 8% last year, meaning your ownership percentage in the company shrinks whenever they issue new shares.

4. Key risks

The energy business is inherently volatile, and PEDEVCO faces several specific threats:

• Oil Price Swings: Their break-even price is roughly $45–$50 per barrel. If oil prices drop below this, they may struggle to fund operations with their own cash flow.
• Operational Hurdles: They rely on complex technology. A single mechanical failure or regulatory delay at a major well can significantly impact monthly production.
• Dilution: If the stock price remains low, the company may need to issue more shares to raise the same amount of capital, further reducing your ownership stake.
• Concentration Risk: Much of their production is in the D-J Basin. New environmental rules or drilling bans in Colorado could severely limit their growth.

5. Future outlook

Management is focused on the Rockies, believing it offers better growth and lower costs than other regions. They are currently integrating the companies bought in the 2025 merger. Their 2026 goal is to prove they can run these assets efficiently, with an aim to increase production by 10–15% while keeping debt levels manageable.

Final Thought for Investors: When considering PEDEVCO, weigh their ability to lower production costs through technology against the risks of share dilution and regional regulatory changes. If you are comfortable with the risks of a smaller energy producer, their focus on operational efficiency in the Rockies is the primary metric to watch in the coming year.