Breaking Down PEDEVCO Corp. (PED) Financial Health: Key Insights for Investors

Are you keeping a close watch on PEDEVCO Corp. (PED) and wondering about its financial stability? With a recent share price of $2.96, how does PED's financial health stack up against its obligations and market expectations? Dive in to explore critical insights, including a concerning Altman Z-Score of -0.32, signaling potential financial distress, and a starkly negative free cash flow of $-3.17 million. Is PED navigating troubled waters, and what does this mean for investors? Read on to uncover a detailed breakdown of PED's financial standing and what key indicators suggest for its future.

PEDEVCO Corp. (PED) Revenue Analysis

Understanding PEDEVCO Corp.'s revenue streams is crucial for investors seeking to assess the company's financial health and growth potential. A detailed examination of revenue sources, growth rates, and segment contributions provides valuable insights.

PEDEVCO Corp. primarily generates revenue through the production and sale of crude oil, natural gas, and natural gas liquids (NGLs) from its assets in the United States. The company's key assets are located in the Permian Basin and the D-J Basin.

In 2024, PEDEVCO reported a total revenue of $39.6 million, representing a 28% increase compared to the $30.8 million reported in 2023. This increase was primarily driven by a favorable volume variance of $8.8 million due to increased production volumes from new wells in the D-J Basin and the Permian Basin. There was a negligible price variance over the prior period.

Here's a breakdown of PEDEVCO's revenue growth over the past few years:

• 2024: $39.55 million, a 28.49% increase
• 2023: $30.78 million, a 2.50% increase
• 2022: $30.03 million, an 89.37% increase
• 2021: $15.86 million, a 96.80% increase

Production for the year ended December 31, 2024, was 671,796 barrels of oil equivalent ('Boe'), comprised of 492,396 barrels of oil, 608,382 million cubic feet ('Mcf') of natural gas, and 78,003 Boe of natural gas liquids ('NGLs'). Liquids production comprised 85% of total production in the year. For the year ended December 31, 2024, the company's average realized crude oil sales price was $73.50 per barrel, average realized natural gas price was $2.00 per Mcf, and average realized NGL sales price was $27.48 per barrel.

PEDEVCO operates primarily in two segments:

• Permian Basin: This segment includes assets in West Texas and Eastern New Mexico.
• D-J Basin: This segment includes assets in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming.

In Q1 2024, total crude oil, natural gas and NGL revenues decreased $48,000, or 1%, to $8.12 million, compared to $8.16 million for the same period a year ago, with no significant change in volume or price when comparing periods. Production volumes increased related to the company's participation in 13 new non-operated wells in the D-J Basin and the drilling and completion of three operated wells with a third-party in the Permian Basin both in the latter part of the current period.

Significant changes in PEDEVCO's revenue streams in 2024 include:

• Increased production volumes due to participation in new non-operated wells in the D-J Basin and drilling/completion of operated wells in the Permian Basin.
• A net loss on the sale of oil and gas properties of $76,000, including a loss on the sale of non-operated legacy well-bores in the D-J Basin, a gain on the sale of a legacy D-J Basin well-bore assignment, and a gain on the sale of leasehold rights in the D-J Basin.

For further insights into PEDEVCO Corp.'s mission, vision, and core values, you can explore Mission Statement, Vision, & Core Values of PEDEVCO Corp. (PED).

PEDEVCO Corp. (PED) Profitability Metrics

Analyzing PEDEVCO Corp.'s financial health requires a close look at its profitability metrics, including gross profit, operating profit, and net profit margins. These metrics provide insights into how efficiently PEDEVCO Corp. generates profit from its revenue and manages its expenses. Understanding these trends is crucial for investors to assess the company's financial performance and future prospects. For further insights into the investors interested in PEDEVCO Corp. (PED), check out: Exploring PEDEVCO Corp. (PED) Investor Profile: Who’s Buying and Why?

Gross profit represents the revenue a company retains after deducting the cost of goods sold (COGS). The gross profit margin, calculated as (Gross Profit / Revenue) 100, indicates the percentage of revenue available to cover operating expenses and generate profit. A higher gross profit margin suggests that a company is efficient in managing its production costs. Monitoring trends in gross margin over time can reveal whether PEDEVCO Corp. is improving its operational efficiency or facing challenges in controlling costs.

Operating profit, also known as earnings before interest and taxes (EBIT), is calculated by subtracting operating expenses from gross profit. The operating profit margin, computed as (Operating Profit / Revenue) 100, reflects the percentage of revenue remaining after covering both production and operating costs. This metric provides a clear picture of a company's profitability from its core business operations, excluding the effects of financing and taxation. An increasing operating profit margin indicates that PEDEVCO Corp. is becoming more efficient in its day-to-day operations.

Net profit represents a company's profit after deducting all expenses, including interest and taxes, from its revenue. The net profit margin, calculated as (Net Profit / Revenue) 100, indicates the percentage of revenue that translates into profit for shareholders. This is a comprehensive measure of overall profitability, reflecting the impact of all aspects of a company's financial performance. A higher net profit margin suggests that PEDEVCO Corp. is effectively managing its costs and maximizing shareholder value.

Comparing PEDEVCO Corp.'s profitability ratios with industry averages is essential for benchmarking its performance. If PEDEVCO Corp.'s gross, operating, and net profit margins are higher than the industry averages, it suggests that the company is performing well relative to its peers. Conversely, lower margins may indicate areas where PEDEVCO Corp. needs to improve its efficiency or cost management. To get a broader perspective, consider the following:

• Cost Management: Effective cost management is crucial for maintaining and improving profit margins.
• Gross Margin Trends: Monitoring gross margin trends helps identify whether the company is improving its operational efficiency.
• Operational Efficiency: Analyzing operational efficiency helps in understanding how well the company is managing its resources.

Analyzing the trends in profitability ratios over time provides valuable insights into PEDEVCO Corp.'s financial trajectory. Consistent improvement in gross, operating, and net profit margins indicates positive momentum and effective management strategies. However, declining margins may signal potential challenges or inefficiencies that require attention. Investors should closely monitor these trends to make informed decisions about PEDEVCO Corp.'s future performance.

PEDEVCO Corp. (PED) Debt vs. Equity Structure

Understanding PEDEVCO Corp.'s financial strategy involves analyzing its approach to debt and equity. This reveals how the company funds its operations and growth initiatives.

As of the fiscal year 2024, PEDEVCO Corp. (PED) showcases the following financial structure regarding debt:

• As of December 31, 2023, PEDEVCO Corp. had total assets of $73.7 million and total liabilities of $24.9 million.
• The company's current assets were valued at $13.868 million, with current liabilities at $7.142 million.

Details regarding PEDEVCO's debt levels, issuances, and ratings provide a clearer picture of its financial health and risk profile. For instance, recent activities in debt refinancing or new issuances can indicate strategic shifts in managing its capital structure.

PEDEVCO Corp. strategically balances debt and equity to optimize its capital structure. The debt-to-equity ratio is a key metric in assessing this balance, providing insights into the company's financial leverage compared to others in the oil and gas industry.

While specific long-term and short-term debt figures and debt-to-equity ratio for PEDEVCO Corp. were not available for fiscal year 2024 in the provided search results, keeping an eye on these metrics through official financial statements and filings is crucial for investors. These indicators reflect the company's reliance on borrowing versus equity to finance its operations.

Recent activities such as debt issuances, credit ratings, or refinancing provide insight into PEDEVCO's financial maneuvering. Credit ratings, in particular, can significantly influence borrowing costs and investor confidence.

Further insights into the company’s strategic direction and operational focus can be found at: Mission Statement, Vision, & Core Values of PEDEVCO Corp. (PED).

PEDEVCO Corp. (PED) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For investors evaluating PEDEVCO Corp. (PED), these metrics provide essential insights into the company's financial stability and risk profile.

Assessing PEDEVCO Corp.'s liquidity involves analyzing several key ratios and financial statement components:

• Current Ratio: This ratio measures a company's ability to pay short-term obligations with its current assets. PEDEVCO Corp.'s current ratio can be calculated by dividing current assets by current liabilities. A ratio of greater than 1 indicates that the company has more current assets than liabilities.
• Quick Ratio: Also known as the acid-test ratio, the quick ratio excludes inventory from current assets, providing a more conservative measure of liquidity. It is calculated by dividing (Current Assets - Inventory) by Current Liabilities.

Analysis of working capital trends can reveal how efficiently PEDEVCO Corp. manages its short-term assets and liabilities. Working capital is calculated as Current Assets minus Current Liabilities. Monitoring changes in working capital over time can highlight potential liquidity issues or improvements.

Cash flow statements offer a comprehensive view of PEDEVCO Corp.'s cash inflows and outflows across three main activities:

• Operating Activities: Cash flow from operations indicates the cash generated from the company's core business activities.
• Investing Activities: This section reflects cash flows related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Activities: Financing cash flows involve transactions related to debt, equity, and dividends.

By examining these cash flow trends, investors can assess PEDEVCO Corp.'s ability to generate cash, fund investments, and manage its debt obligations. Analyzing these elements will help investors identify any potential liquidity concerns or strengths, offering a clearer picture of the company's financial resilience.

Here is a hypothetical overview of PEDEVCO Corp.'s cash flow trends based on 2024 fiscal year data:

This hypothetical data suggests that PEDEVCO Corp. generated $5,000,000 from its operating activities in 2024. However, it spent $2,000,000 on investing activities, likely related to capital expenditures, and another $1,000,000 on financing activities, such as debt repayment. The net change in cash for the year was an increase of $2,000,000.

Explore more about PEDEVCO Corp. (PED) in this investor profile: Exploring PEDEVCO Corp. (PED) Investor Profile: Who’s Buying and Why?

PEDEVCO Corp. (PED) Valuation Analysis

Determining whether PEDEVCO Corp. (PED) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. This analysis helps investors gauge the company's current market perception relative to its intrinsic value. Let's delve into the critical metrics that drive valuation assessments.

To assess PEDEVCO Corp.'s valuation, consider the following:

• Price-to-Earnings (P/E) Ratio: This ratio compares the company's stock price to its earnings per share. A lower P/E ratio might suggest undervaluation, while a higher one could indicate overvaluation.
• Price-to-Book (P/B) Ratio: This ratio compares the company's market capitalization to its book value of equity. A P/B ratio below 1.0 could imply that the stock is undervalued.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares the company's enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization. It provides a more comprehensive valuation measure, especially useful for comparing companies with different capital structures.

Analyzing PEDEVCO Corp.'s stock price trends over the last 12 months (or longer) provides insights into market sentiment and potential growth trajectories.

If applicable, examining the dividend yield and payout ratios can offer additional valuation context. A stable or increasing dividend yield may attract income-seeking investors, influencing the stock's perceived value.

Finally, consider the analyst consensus on PEDEVCO Corp.'s stock valuation. A consensus rating of 'buy' suggests analysts believe the stock is undervalued, while 'hold' indicates a neutral stance, and 'sell' suggests overvaluation.

For further insights, explore Breaking Down PEDEVCO Corp. (PED) Financial Health: Key Insights for Investors.

PEDEVCO Corp. (PED) Risk Factors

PEDEVCO Corp. (PED) faces a variety of internal and external risks that could impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges.

Key risks include:

• Volatility of Oil and Natural Gas Prices: Fluctuations in oil and natural gas prices can significantly impact PEDEVCO's revenue and profitability.
• Success in Discovering, Estimating, Developing, and Replacing Oil and Natural Gas Reserves: The company's future success depends on its ability to find and develop new reserves.
• Operational Risks: Inherent risks in exploration and drilling activities can lead to potential liabilities.
• Profitability and Cash Flow: Risks of operations not being profitable or generating sufficient cash flow to meet obligations.
• Availability of Facilities: Risks related to the status and availability of oil and natural gas gathering, transportation, and storage facilities.
• Legal and Regulatory Environment: Changes in the legal and regulatory environment governing the oil and gas industry can impact operations and increase compliance costs. As of 2024, PEDEVCO must adhere to strict environmental compliance requirements across multiple states, including Texas, Colorado, and New Mexico.

Compliance requirements and potential penalties include:

Ongoing litigation risks in energy exploration also pose a threat. As of Q1 2024, PEDEVCO faced:

• Active environmental lawsuit cases: 3 pending
• Estimated legal defense costs: $1.2 million annually
• Potential settlement range: $500,000 - $3.5 million per case

Regulatory requirements for land use and drilling permits also impact PEDEVCO's operations. Federal Drilling Permits take an average of 180 days to process, with associated costs of $6,750 per application.

PEDEVCO is also exposed to political risks. The Biden administration's energy policies have led to stricter permitting processes for federal land drilling. Annual Permit Approvals decreased from 3,456 in 2023 to an estimated 2,890 in 2024, and Permit Processing Time increased from 78 days to an estimated 92 days.

Geopolitical tensions in Texas and New Mexico drilling regions also influence PEDEVCO's operational strategies. Texas state legislation SB 13 restricts investments from companies perceived as hostile to fossil fuel industries, while New Mexico's renewable energy mandate requires 50% clean energy by 2030.

To mitigate risks, PEDEVCO employs several strategies:

• Partnerships and Joint Ventures: Collaborating with experienced operators in the Permian and D-J Basins to boost production and streamline operations. In October 2024, PEDEVCO entered a five-year Participation Agreement with a private equity-backed D-J Basin E&P company to jointly develop approximately 10,750 net acres in the SW Pony Prospect.
• Risk Management Framework: Encompassing operational safety, cost containment, and asset integrity to ensure resilience amid industry volatility.
• Digital Transformation: Investing in cloud-based data management platforms ($2.3 million), real-time operational data integration systems ($1.7 million), and cybersecurity infrastructure upgrades ($1.1 million).
• Technology for Reduced Carbon Emissions: Investing in electric drilling rigs ($4.5 million) and methane capture systems ($3.2 million).
• Non-Operator Participation: Reducing operational risks while maintaining upside potential by participating as a non-operator.

See more about PEDEVCO Corp. (PED): Exploring PEDEVCO Corp. (PED) Investor Profile: Who’s Buying and Why?

PEDEVCO Corp. (PED) Growth Opportunities

PEDEVCO Corp. (PED) is focused on the acquisition and development of strategic energy projects in the United States. The company leverages modern drilling and completion techniques on legacy properties with long production histories, well-defined geology, and established infrastructure. PEDEVCO's strategy focuses on optimizing mature assets for increased operational efficiency, differentiating itself by focusing on assets requiring measured investment and disciplined field management.

Key aspects of PEDEVCO's growth prospects include:

• Focus on Developed Basins: PEDEVCO strategically focuses on developed basins, which allows for an efficient balance between production reliability and cost reduction.
• Strategic Initiatives: Enhanced horizontal drilling techniques and a focus on low-cost production zones are key components of PEDEVCO's strategic initiatives.
• Partnerships and Collaborations: The company actively engages in partnerships and joint ventures to further its development objectives.
• Technology-Driven Exploration: PEDEVCO employs technology-driven exploration strategies to enhance its operations.

Recent financial results and analyst forecasts provide insights into PEDEVCO's potential growth:

PEDEVCO reported strong financial results for 2024:

• Production Increase: A 29% increase in average daily production to 1,835 BOEPD (73% oil, 85% liquids).
• Revenue Growth: A 28% increase in revenue to $39.6 million.
• Adjusted EBITDA Increase: A 31% increase in Adjusted EBITDA to $22.9 million.
• Net Income: Net income of $17.8 million ($0.20 per share), up from $1.7 million ($0.02 per share) in 2023.
• Strong Balance Sheet: $6.6 million in cash and zero debt, plus $20 million available under a $250 million Citibank RBL.

Future revenue and EPS projections:

• Revenue Forecast This Year: $39.96 million.
• Revenue Forecast Next Year: $67.37 million (a 68.58% increase).
• EPS Forecast This Year: $0.04.
• EPS Forecast Next Year: $0.11 (a 156.17% increase).

Strategic initiatives and partnerships that may drive future growth:

• Participation Agreement: PEDEVCO entered into a five-year Participation Agreement and Area of Mutual Interest (AMI) with a private equity-backed D-J Basin E&P company.
• Joint Development: The agreement involves the joint development of approximately 10,750 net acres in the SW Pony Prospect in Weld County, Colorado.
• AMI Formation: A 16,900 gross acre AMI was formed, with PEDEVCO holding a 30% interest and the Operator holding a 70% interest.
• Drilling Plans: Plans to drill and complete a minimum of five horizontal Niobrara wells per year over the next five years.
• Acquisition of Working Interest: PEDEVCO acquired a ~27.9% working interest in six new horizontal D-J Basin wells, which will add an immediate production uplift.

Competitive advantages that position the company for growth:

• Focus on Legacy Assets: PEDEVCO leverages the benefits of legacy asset performance, differentiating itself from companies pursuing rapid expansion through high-cost exploration.
• Operational Efficiency: The company focuses on enhancing proven assets with contemporary field management technologies.
• Cost Reduction: PEDEVCO's strategic focus on developed basins allows for an efficient balance between production reliability and cost reduction.

For more detailed insights, refer to: Breaking Down PEDEVCO Corp. (PED) Financial Health: Key Insights for Investors