☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Texas
|
|
22-3755993
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(IRS
Employer Identification No.)
|
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
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☑
|
Smaller reporting company ☑
|
Emerging growth company ☐
|
|
PART I – FINANCIAL INFORMATION
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Page
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3
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3
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4
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5
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6
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8
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21
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31
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32
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33
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33
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33
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34
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34
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34
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34
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35
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36
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September 30,
|
December 31,
|
|
2019
|
2018
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
|
$33,945
|
$3,463
|
Restricted
cash – current
|
-
|
2,316
|
Accounts
receivable – oil and gas
|
2,086
|
842
|
Prepaid
expenses and other current assets
|
96
|
204
|
Total
current assets
|
36,127
|
6,825
|
|
|
|
Oil
and gas properties:
|
|
|
Oil
and gas properties, subject to amortization, net
|
73,213
|
51,946
|
Oil
and gas properties, not subject to amortization, net
|
6,604
|
8,516
|
Total
oil and gas properties, net
|
79,817
|
60,462
|
|
|
|
Operating
lease – right-of-use asset
|
382
|
-
|
Other
assets
|
3,608
|
238
|
Total
assets
|
$119,934
|
$67,525
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$7,470
|
$4,509
|
Accrued
expenses
|
1,801
|
3,391
|
Revenue
payable
|
850
|
831
|
Operating
lease liabilities – current
|
67
|
-
|
Asset
retirement obligations – current
|
134
|
119
|
Total
current liabilities
|
10,322
|
8,850
|
|
|
|
Long-term
liabilities:
|
|
|
Accrued
expenses
|
-
|
14
|
Accrued
expenses – related party
|
-
|
943
|
Notes
payable – subordinated
|
-
|
400
|
Notes
payable – subordinated – related party
|
-
|
30,200
|
Notes
payable – related party, net of debt discount of $-0- and
$161, respectively
|
-
|
7,694
|
Operating
lease liabilities
|
324
|
-
|
Asset
retirement obligations
|
2,579
|
2,452
|
Total
liabilities
|
13,225
|
50,553
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
Common
stock, $0.001 par value, 200,000,000 shares authorized; 70,711,328
and 15,808,445 shares issued and outstanding,
respectively
|
70
|
16
|
Additional
paid-in capital
|
200,494
|
101,450
|
Accumulated
deficit
|
(93,855)
|
(84,494)
|
Total
shareholders’ equity
|
106,709
|
16,972
|
Total
liabilities and shareholders’ equity
|
$119,934
|
$67,525
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
Revenue:
|
2019
|
2018
|
2019
|
2018
|
Oil
and gas sales
|
$3,129
|
$1,259
|
$8,767
|
$2,801
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Lease
operating costs
|
1,691
|
936
|
4,756
|
1,665
|
Exploration
expense
|
27
|
-
|
50
|
38
|
Selling,
general and administrative expense
|
1,366
|
1,622
|
4,338
|
2,976
|
Depreciation,
depletion, amortization and accretion
|
3,952
|
937
|
8,985
|
2,220
|
Total
operating expenses
|
7,036
|
3,495
|
18,129
|
6,899
|
|
|
|
|
|
Gain
on sale of oil and gas properties
|
-
|
-
|
920
|
-
|
|
|
|
|
|
Operating
loss
|
(3,907)
|
(2,236)
|
(8,442)
|
(4,098)
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
Interest
expense
|
-
|
(497)
|
(824)
|
(6,888)
|
Interest
Income
|
15
|
-
|
22
|
-
|
Gain
on debt restructuring
|
-
|
-
|
-
|
70,309
|
Other
expense
|
(14)
|
-
|
(117)
|
-
|
Total
other income (expense)
|
1
|
(497)
|
(919)
|
63,421
|
|
|
|
|
|
Net
income (loss)
|
$(3,906)
|
$(2,733)
|
$(9,361)
|
$59,323
|
|
|
|
|
|
Earnings
(loss) per common share:
|
|
|
|
|
Basic
|
$(0.07)
|
$(0.19)
|
$(0.21)
|
$6.04
|
Diluted
|
$(0.07)
|
$(0.19)
|
$(0.21)
|
$5.97
|
|
|
|
|
|
Weighted
average number of common shares outstanding:
|
|
|
|
|
Basic
|
56,213,568
|
14,747,952
|
44,517,500
|
9,822,007
|
Diluted
|
56,213,568
|
14,747,952
|
44,517,500
|
9,942,583
|
|
Nine Months Ended September 30,
|
|
|
2019
|
2018
|
Cash
Flows From Operating Activities:
|
|
|
Net
income (loss)
|
$(9,361)
|
$59,323
|
Adjustments
to reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
Depreciation,
depletion and amortization
|
8,985
|
2,220
|
Share-based
compensation expense
|
1,023
|
566
|
Interest
expense deferred and capitalized in debt restructuring
|
-
|
3,803
|
Gain
on debt restructuring
|
-
|
(70,309)
|
Gain
on sale of oil and gas properties
|
(920)
|
-
|
Amortization
of debt discount
|
161
|
1,403
|
Amortization
of right-of-use asset
|
9
|
-
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable – oil and gas
|
(1,244)
|
(512)
|
Prepaid
expenses and other current assets
|
108
|
(61)
|
Accounts
payable
|
8,641
|
195
|
Accrued
expenses
|
16
|
1,829
|
Accrued
expenses – related parties
|
(943)
|
477
|
Revenue
payable
|
19
|
362
|
Net
cash provided by (used in) operating activities
|
6,494
|
(704)
|
|
|
|
Cash
Flows From Investing Activities:
|
|
|
Cash
paid for the acquisition of oil and gas properties
|
(1,056)
|
(19,693)
|
Cash
paid for drilling and completion costs
|
(33,059)
|
(113)
|
Cash
paid for oil and gas security bonds
|
-
|
(105)
|
Proceeds
from the sale of oil and gas property
|
1,175
|
-
|
Cash
paid for security deposit
|
(10)
|
-
|
Cash
paid for property and equipment
|
(81)
|
-
|
Net
cash used in investing activities
|
(33,031)
|
(19,911)
|
|
|
|
Cash
Flows From Financing Activities:
|
|
|
Proceeds
from notes payable
|
-
|
400
|
Cash
paid for warrant repurchase
|
-
|
(1,095)
|
Proceeds
from notes payable – related parties
|
15,000
|
30,900
|
Repayment
of notes payable
|
-
|
(7,795)
|
Proceeds
from issuance of common shares
|
43,000
|
64
|
Net
cash provided by financing activities
|
58,000
|
22,474
|
|
|
|
|
|
|
Net
increase in cash and restricted cash
|
31,463
|
1,859
|
Cash
and restricted cash at beginning of period
|
5,779
|
917
|
Cash
and restricted cash at end of period
|
$37,242
|
$2,776
|
|
|
|
|
|
|
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
|
$5,680
|
$211
|
Acquisition
of asset retirement obligations
|
$33
|
$2,061
|
Changes
in estimates of asset retirement costs
|
$166
|
$13
|
Conversion
of Series A preferred stock
|
$-
|
$7
|
Common
stock issued as debt inducement
|
$-
|
$185
|
Common
stock issued for debt conversion
|
$55,075
|
$-
|
|
Series A Convertible Preferred Stock
|
Common Stock
|
Additional
|
|
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Paid-in
Capital
|
Accumulated
Deficit
|
Totals
|
Balances at January 1, 2019
|
-
|
$-
|
15,808,445
|
$16
|
$101,450
|
$(84,494)
|
$16,972
|
Issuance
of common stock for debt conversion
|
-
|
-
|
29,480,383
|
29
|
55,046
|
-
|
55,075
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
299
|
-
|
299
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(2,995)
|
(2,995)
|
Balances
at March 31, 2019
|
-
|
-
|
45,288,828
|
45
|
156,795
|
(87,489)
|
69,351
|
Issuance
of restricted common stock
|
-
|
-
|
160,000
|
-
|
-
|
-
|
-
|
Issuance
of common stock to non-affiliates
|
-
|
-
|
1,500,000
|
1
|
2,999
|
-
|
3,000
|
Issuance
of common stock to affiliate
|
-
|
-
|
6,818,181
|
7
|
14,993
|
-
|
15,000
|
Exercise
of warrants
|
-
|
-
|
60,056
|
-
|
-
|
-
|
-
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
398
|
-
|
398
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(2,460)
|
(2,460)
|
Balances
at June 30, 2019
|
-
|
-
|
53,827,065
|
53
|
175,185
|
(89,949)
|
85,289
|
Exercise
of stock options
|
-
|
-
|
9,782
|
-
|
-
|
-
|
-
|
Issuance
of restricted common stock
|
-
|
-
|
270,000
|
-
|
-
|
-
|
-
|
Issuance
of common stock to non-affiliates
|
-
|
-
|
8,400,000
|
9
|
11,991
|
-
|
12,000
|
Issuance
of common stock to affiliate
|
-
|
-
|
8,204,481
|
8
|
12,992
|
-
|
13,000
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
326
|
-
|
326
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(3,906)
|
(3,906)
|
Balances at September 30, 2019
|
-
|
$-
|
70,711,328
|
$70
|
$200,494
|
$(93,855)
|
$106,709
|
|
Series A Convertible Preferred Stock
|
Common Stock
|
Additional
|
|
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Paid-in
Capital
|
Accumulated
Deficit
|
Totals
|
Balances at January 1, 2018
|
66,625
|
$-
|
7,278,754
|
$7
|
$100,954
|
$(138,101)
|
$(37,140)
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
183
|
-
|
183
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
(4,234)
|
(4,234)
|
Balances
at March 31, 2018
|
66,625
|
-
|
7,278,754
|
7
|
101,137
|
(142,335)
|
(41,191)
|
Conversion
of stock options
|
-
|
-
|
30,848
|
-
|
-
|
-
|
-
|
Issuance
of restricted common stock
|
-
|
-
|
80,000
|
-
|
-
|
-
|
-
|
Issuance
of warrants for debt repayment
|
-
|
-
|
-
|
-
|
322
|
-
|
322
|
Issuance
of common stock for debt inducement
|
-
|
-
|
600,000
|
1
|
184
|
-
|
185
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
166
|
-
|
166
|
Net
Income
|
-
|
-
|
-
|
-
|
-
|
66,290
|
66,290
|
Balances
at June 30, 2018
|
66,625
|
-
|
7,989,602
|
8
|
101,809
|
(76,045)
|
25,772
|
Conversion
of stock options
|
-
|
-
|
65,017
|
-
|
-
|
-
|
-
|
Issuance
of restricted common stock
|
-
|
-
|
200,000
|
-
|
-
|
-
|
-
|
Conversion
of Series A Preferred Stock to common stock
|
(66,625)
|
-
|
6,662,500
|
7
|
(7)
|
-
|
-
|
Issuance
of common stock for exercise of warrants
|
-
|
-
|
192,208
|
-
|
64
|
-
|
64
|
Warrants
repurchased
|
-
|
-
|
-
|
-
|
(1,095)
|
-
|
(1,095)
|
Share-based
compensation
|
-
|
-
|
-
|
-
|
217
|
-
|
217
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(2,733)
|
(2,733)
|
Balances at September 30, 2018
|
-
|
$-
|
15,109,327
|
$15
|
$100,988
|
$(78,778)
|
$22,225
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
2019
|
2018
|
2019
|
2018
|
Oil
sales
|
$3,059
|
$1,173
|
$8,549
|
$2,552
|
Natural
gas sales
|
68
|
50
|
203
|
144
|
Natural
gas liquids sales
|
2
|
36
|
15
|
105
|
Total
revenue from customers
|
$3,129
|
$1,259
|
$8,767
|
$2,801
|
|
As of September 30,
|
|
|
2019
|
2018
|
Cash
|
$33,945
|
$460
|
Restricted
cash
|
-
|
2,316
|
Restricted
cash included in other assets
|
3,297
|
-
|
Total
cash and restricted cash as shown in the consolidated statements of
cash flows
|
$37,242
|
$2,776
|
|
Balance at
December 31,
|
|
|
|
Balance at
September 30,
|
|
2018
|
Additions
|
Disposals
|
Transfers
|
2019
|
Oil and gas
properties, subject to amortization
|
$70,803
|
$23,751
|
$(255)
|
$6,596
|
$100,895
|
Oil and gas
properties, not subject to amortization
|
8,516
|
4,684
|
-
|
(6,596)
|
6,604
|
Asset retirement
costs
|
2,188
|
(133)
|
-
|
-
|
2,055
|
Accumulated
depreciation and depletion
|
(21,045)
|
(8,692)
|
-
|
-
|
(29,737)
|
Total oil and gas
assets
|
$60,462
|
$19,610
|
$(255)
|
$-
|
$79,817
|
|
September 30,
|
December 31,
|
|
2019
|
2018
|
Notes
Payable – Subordinated
|
$-
|
$400
|
Notes
Payable – Subordinated Related Party
|
-
|
30,200
|
Notes
Payable – Related Party
|
-
|
7,855
|
|
-
|
38,455
|
Unamortized
Debt Discount
|
-
|
(161)
|
Total
Notes Payable
|
$-
|
$38,294
|
|
Nine Months
Ended
September 30,
2019
|
Balance at the
beginning of the period (1)
|
$2,571
|
Accretion
expense
|
275
|
Obligations
incurred for acquisition
|
33
|
Changes in
estimates
|
(166)
|
Balance at end of
period (2)
|
$2,713
|
|
Nine Months Ended
|
|
September 30,
2019
|
Cash
paid for amounts included in the measurement of lease
liabilities
|
$-
|
|
September 30, 2019
|
Operating
lease – right-of-use asset
|
$382
|
|
|
Operating
lease liabilities - current
|
$67
|
Operating
lease liabilities - long-term
|
324
|
Total
lease liability
|
$391
|
Remainder
of 2019
|
$-
|
2020
|
116
|
2021
|
118
|
2022
|
121
|
2023
|
83
|
Thereafter
|
-
|
Total
lease payments
|
438
|
Less
imputed interest
|
(47)
|
Total
lease liability
|
$391
|
|
Number of Warrants
|
Weighted Average Exercise Price
|
Weighted Average
Remaining Contract Term (Years)
|
Outstanding
at December 31, 2018
|
1,216,686
|
$7.44
|
1.4
|
Exercised
|
(596,280)
|
$2.50
|
|
Expired/Cancelled
|
(100,000)
|
$25.00
|
|
Outstanding
at September 30, 2019
|
520,406
|
$7.20
|
0.6
|
Exercisable
at September 30, 2019
|
520,406
|
$7.20
|
0.6
|
|
Number of Options
|
Weighted Average Exercise Price
|
Weighted Average
Remaining Contract Term (Years)
|
Outstanding
at December 31, 2018
|
890,232
|
$3.26
|
3.3
|
Exercised
|
(12,500)
|
$0.31
|
|
Expired
|
(14,250)
|
$19.40
|
|
Outstanding
at September 30, 2019
|
863,482
|
$3.12
|
2.6
|
Exercisable
at September 30, 2019
|
813,482
|
$3.23
|
2.5
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
2019
|
2018
|
2019
|
2018
|
Numerator:
|
|
|
|
|
Net
income (loss) (in thousands)
|
$(3,906)
|
$(2,733)
|
$(9,361)
|
$59,323
|
|
|
|
|
|
Denominator:
|
|
|
|
|
Weighted
average common shares – basic
|
56,213,568
|
14,747,952
|
44,517,500
|
9,822,007
|
|
|
|
|
|
Dilutive
effect of common stock equivalents:
|
|
|
|
|
Options
and warrants
|
-
|
-
|
-
|
120,576
|
|
|
|
|
|
Denominator:
|
|
|
|
|
Weighted
average common shares – diluted
|
56,213,568
|
14,747,952
|
44,517,500
|
9,942,583
|
|
|
|
|
|
Earnings
(loss) per share – basic
|
$(0.07)
|
$(0.19)
|
$(0.21)
|
$6.04
|
Earnings
(loss) per share – diluted
|
$(0.07)
|
$(0.19)
|
$(0.21)
|
$5.97
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
September 30,
|
September 30,
|
||
|
2019
|
2018
|
2019
|
2018
|
Common
shares issuable for:
|
|
|
|
|
options
and warrants
|
1,383,888
|
1,711,588
|
1,383,888
|
1,781,588
|
|
September
30,
|
December
31
|
|
2019
|
2018
|
Long-term accrued
expenses
|
$-
|
$943
|
Long-term notes
payable – subordinated
|
-
|
30,200
|
Long-term notes
payable, net of discount of $-0- and $161,
respectively
|
-
|
7,694
|
Total related party
liabilities
|
$-
|
$38,837
|
●
|
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;
|
●
|
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.
|
Capital
Expenditures
|
|
Leasehold Acquisitions (1)
|
$342
|
Property Acquisitions (1)
|
862
|
Drilling and Facilities (2)
|
27,231
|
Total
|
$28,435
|
|
Three Months Ended
September 30,
|
Increase
|
% Increase
|
|
|
2019
|
2018
|
(Decrease)
|
(Decrease)
|
Sale Volumes:
|
|
|
|
|
Crude
Oil (Bbls)
|
61,441
|
18,870
|
42,571
|
226%
|
Natural
Gas (Mcf)
|
43,725
|
25,858
|
17,867
|
69%
|
NGL
(Bbls)
|
780
|
2,425
|
(1,645)
|
(68%)
|
Total (Boe) (1)
|
69,509
|
25,605
|
43,904
|
171%
|
|
|
|
|
|
Crude
Oil (Bbls per day)
|
668
|
205
|
462
|
226%
|
Natural
Gas (Mcf per day)
|
475
|
281
|
194
|
69%
|
NGL
(Bbls per day)
|
8
|
26
|
(18)
|
(69%)
|
Total (Boe per day) (1)
|
755
|
278
|
477
|
172%
|
|
|
|
|
|
Average Sale Price:
|
|
|
|
|
Crude
Oil ($/Bbl)
|
$49.80
|
$62.16
|
$(12.36)
|
(20%)
|
Natural
Gas ($/Mcf)
|
1.57
|
1.95
|
(0.38)
|
(19%)
|
NGL
($/Bbl)
|
2.10
|
14.94
|
(12.84)
|
(86%)
|
|
|
|
|
|
|
|
|
|
|
Net Operating Revenues (in thousands):
|
|
|
|
|
Crude
Oil
|
$3,059
|
$1,173
|
$1,886
|
161%
|
Natural
Gas
|
68
|
50
|
18
|
36%
|
NGL
|
2
|
36
|
(34)
|
(95%)
|
Total Revenues
|
$3,129
|
$1,259
|
$1,870
|
149%
|
(1)
|
Assumes
6 Mcf of natural gas and NGL equivalents to 1 barrel of
oil.
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
Increase
|
% Increase
|
|
|
2019
|
2018
|
(Decrease)
|
(Decrease)
|
|
|
|
|
|
Direct
Lease Operating Expenses
|
$1,081
|
$413
|
$668
|
162%
|
Workovers
|
276
|
340
|
(64)
|
(19%)
|
Other*
|
334
|
183
|
151
|
83%
|
Total
Lease Operating Expenses
|
1,691
|
936
|
755
|
81%
|
|
|
|
|
|
Exploration
Expenses
|
27
|
-
|
27
|
100%
|
Depreciation,
Depletion,
|
|
|
|
|
Amortization
and Accretion
|
3,952
|
937
|
3,015
|
322%
|
|
|
|
|
|
General
and Administrative (Cash)
|
$1,040
|
$1,239
|
$(199)
|
(16%)
|
Share-Based
Compensation (Non-Cash)
|
326
|
383
|
(57)
|
(15%)
|
Total
General and Administrative Expense
|
1,366
|
1,622
|
(256)
|
(16%)
|
|
|
|
|
|
Interest
Expense
|
$-
|
$497
|
$(497)
|
(100%)
|
Interest
Income
|
$15
|
$-
|
$15
|
100%
|
Other
Expense
|
$(14)
|
$-
|
$(14)
|
100%
|
|
Nine Months Ended
September 30,
|
Increase
|
% Increase
|
|
|
2019
|
2018
|
(Decrease)
|
(Decrease)
|
Sale Volumes:
|
|
|
|
|
Crude
Oil (Bbls)
|
163,089
|
41,132
|
121,957
|
297%
|
Natural
Gas (Mcf)
|
81,481
|
62,273
|
19,208
|
31%
|
NGL
(Bbls)
|
2,170
|
5,808
|
(3,638)
|
(63%)
|
Total (Boe) (1)
|
178,839
|
57,319
|
121,520
|
212%
|
|
|
|
|
|
Crude
Oil (Bbls per day)
|
597
|
151
|
446
|
295%
|
Natural
Gas (Mcf per day)
|
298
|
228
|
70
|
31%
|
NGL
(Bbls per day)
|
8
|
21
|
(13)
|
(62%)
|
Total (Boe per day) (1)
|
655
|
210
|
445
|
212%
|
|
|
|
|
|
Average Sale Price:
|
|
|
|
|
Crude
Oil ($/Bbl)
|
$52.42
|
$62.04
|
$(9.62)
|
(16%)
|
Natural
Gas ($/Mcf)
|
2.50
|
2.31
|
0.19
|
8%
|
NGL
($/Bbl)
|
6.80
|
18.13
|
(11.33)
|
(62%)
|
|
|
|
|
|
|
|
|
|
|
Net Operating Revenues (in thousands):
|
|
|
|
|
Crude
Oil
|
$8,549
|
$2,552
|
$5,997
|
235%
|
Natural
Gas
|
203
|
144
|
59
|
41%
|
NGL
|
15
|
105
|
(90)
|
(86%)
|
Total Revenues
|
$8,767
|
$2,801
|
$5,966
|
213%
|
(1)
|
Assumes
6 Mcf of natural gas and NGL equivalents to 1 barrel of
oil.
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
Increase
|
% Increase
|
|
|
2019
|
2018
|
(Decrease)
|
(Decrease)
|
|
|
|
|
|
Direct
Lease Operating Expenses
|
$2,976
|
$1,013
|
$1,963
|
194%
|
Workovers
|
956
|
375
|
581
|
155%
|
Other*
|
824
|
277
|
547
|
197%
|
Total
Lease Operating Expenses
|
4,756
|
1,665
|
3,091
|
186%
|
|
|
|
|
|
Exploration
Expenses
|
50
|
38
|
12
|
32%
|
Depreciation,
Depletion,
|
|
|
|
|
Amortization
and Accretion
|
8,985
|
2,220
|
6,765
|
305%
|
|
|
|
|
|
General
and Administrative (Cash)
|
$3,315
|
$2,410
|
$905
|
38%
|
Share-Based
Compensation (Non-Cash)
|
1,023
|
566
|
457
|
81%
|
Total
General and Administrative Expense
|
4,338
|
2,976
|
1,362
|
46%
|
|
|
|
|
|
Gain
on Sale of Oil and Gas Properties
|
$920
|
$-
|
$920
|
100%
|
|
|
|
|
|
Interest
Expense
|
$824
|
$6,888
|
$(6,064)
|
(88%)
|
Interest
Income
|
$22
|
$-
|
$22
|
100%
|
Gain
on Debt Extinguishment
|
$-
|
$70,309
|
$(70,309)
|
(100%)
|
Other
Expense
|
$(117)
|
$-
|
$(117)
|
100%
|
|
Nine Months
Ended September 30,
|
|
|
2019
|
2018
|
Cash flows provided
by (used in) operating activities
|
$6,494
|
$(704)
|
Cash flows used in
investing activities
|
(33,031)
|
(19,911)
|
Cash flows provided
by financing activities
|
58,000
|
22,474
|
Net
increase in cash and restricted cash
|
$31,463
|
$1,859
|
|
PEDEVCO Corp.
|
|
|
||
|
|
|
|
||
November 8, 2019
|
By:
|
/s/ Dr.
Simon Kukes
|
|
||
|
|
Dr.
Simon Kukes
|
|
||
|
|
Chief
Executive Officer
|
|
||
|
|
(Principal
Executive Officer)
|
|
|
PEDEVCO Corp.
|
|
|
||
|
|
|
|
||
November 8, 2019
|
By:
|
/s/ Paul
A. Pinkston
|
|
||
|
|
Paul A.
Pinkston
|
|
||
|
|
Chief
Accounting Officer
|
|
||
|
|
(Principal
Financial and Accounting Officer)
|
|
|
Incorporated By
Reference
|
|||||||||||||
Exhibit No.
|
|
Description
|
|
Form
|
|
Exhibit
|
|
Filing
Date/Period End Date
|
File
Number
|
|||||
2.1# |
|
Purchase and Sale Agreement dated January 11, 2019, by and between
Manzano, LLC and Manzano Energy Partners, II, LLC, as seller and
Pacific Energy Development Corp., as
purchaser
|
|
8-K
|
|
2.1
|
|
January 14, 2019
|
|
001-35922
|
||||
10.1***
|
|
Separation
and General Release Agreement, dated December 31, 2018, between
Pacific Energy Development Corp. and Gregory
Overholtzer
|
|
8-K
|
|
10.1
|
|
January
4, 2019
|
|
001-35922
|
||||
10.2***
|
|
Consulting
Agreement, dated January 1, 2019, between Gregory Overholtzer and
Pacific Energy Development Corp.
|
|
8-K
|
|
10.2
|
|
January
4, 2019
|
|
001-35922
|
||||
|
$15,000,000
Convertible Promissory Note between PEDEVCO Corp., as borrower and
SK Energy LLC as lender, dated January 11, 2019
|
|
8-K
|
|
10.1
|
|
January
14, 2019
|
|
001-35922
|
|||||
|
First
Amendment to Convertible Promissory Notes, dated February 15, 2019,
entered into by and between PEDEVCO Corp. and SK Energy
LLC
|
|
8-K
|
|
10.4
|
|
February
19, 2019
|
|
001-35922
|
|||||
|
First
Amendment to Promissory Note, dated March 1, 2019, entered into by
and between PEDEVCO Corp. and SK Energy LLC
|
|
8-K
|
|
10.1
|
|
March
4, 2019
|
|
001-35922
|
|||||
|
$14,999,998.20
Common Stock Subscription Agreement between PEDEVCO Corp. and SK
Energy LLC, dated May 21, 2019
|
|
8-K/A
|
|
10.1
|
|
August
12, 2019
|
|
001-35922
|
|||||
|
PEDEVCO
Corp. 2012 Amended and Restated Equity Incentive
Plan**
|
|
S-8
|
|
4.1
|
|
August
29, 2019
|
|
333-233525
|
|||||
|
Pacific
Energy Development Corp. 2012 Plan - Form of Restricted Shares
Grant Agreement**
|
|
S-8
|
|
4.2
|
|
October
31, 2013
|
|
333-192002
|
|||||
|
Pacific
Energy Development Corp. 2012 Plan - Form of Stock Option Agreement
**
|
|
S-8
|
|
4.2
|
|
October
31, 2013
|
|
333-192002
|
|||||
|
$12,000,000
Common Stock Subscription Agreement between PEDEVCO Corp. and
Viktor Tkachev, dated September 17, 2019
|
|
8-K
|
|
10.1
|
|
September
18, 2019
|
|
001-35922
|
|||||
|
$13,000,000.14
Common Stock Subscription Agreement between PEDEVCO Corp. and SK
Energy LLC, dated September 17, 2019
|
|
8-K
|
|
10.2
|
|
September
18, 2019
|
|
001-35922
|
|||||
|
Advisory Agreement, dated November 8, 2019, entered into by and
between PEDEVCO Corp. and Ivar Siem
|
|
|
|
|
|
|
|
|
|||||
|
Sublease Letter Agreement, dated November 8, 2019, entered into by
and between PEDEVCO Corp. and SK Energy, LLC
|
|
|
|
|
|
|
|
|
|||||
|
Advisory Agreement, dated November 8, 2019, entered into by and
between PEDEVCO Corp. and Viktor Tkachev
|
|
|
|
|
|
|
|
|
|||||
31.1*
|
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
||||
31.2*
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
||||
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
|
|
|
|
|
|
|
|
|
||||
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
|
|
|
|
|
|
|
|
|
||||
101.INS*
|
|
XBRL
Instance Document
|
|
|
|
|
|
|
|
|
||||
101.SCH*
|
|
XBRL
Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
||||
101.CAL*
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
||||
101.DEF*
|
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
||||
101.LAB*
|
|
XBRL
Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
||||
101.PRE*
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
COMPANY
PEDEVCO CORP.
By:
/s/ Clark R.
Moore
Name:
Clark R. Moore
Title:
EVP and General Counsel
|
ADVISOR
IVAR SIEM
By:
/s/ Ivar Siem
SSN: On
File
Address: 105 Sage
Road, Houston, TX 77056
|
|
|
COMPANY
PEDEVCO CORP.
By:
/s/ Clark R.
Moore
Name:
Clark R. Moore
Title:
EVP and General Counsel
|
ADVISOR
VIKTOR TKACHEV
By:
/s/ Viktor
Tkachev
SSN: On
File
Address:
Arhitektora Vlasova street, 22, apt.
93, Moscow 117393, Russia
|
|
|
10. COMMITMENTS AND CONTINGENCIES (Details 1) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2019 | $ 0 |
2020 | 116 |
2021 | 118 |
2022 | 121 |
2023 | 83 |
Thereafter | 0 |
Total lease payments | 438 |
Less imputed interest | (47) |
Total lease liability | $ 391 |
13. EARNINGS (LOSS) PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Numerator: | ||||||||
Net income (loss) | $ (3,906) | $ (2,460) | $ (2,995) | $ (2,733) | $ 66,290 | $ (4,234) | $ (9,361) | $ 59,323 |
Denominator: | ||||||||
Weighted average common shares - basic | 56,213,568 | 14,747,952 | 44,517,500 | 9,822,007 | ||||
Dilutive effect of common stock equivalents: Options and Warrants | 0 | 0 | 0 | 120,576 | ||||
Weighted average common shares - diluted | 56,213,568 | 14,747,952 | 44,517,500 | 9,942,583 | ||||
Earnings (loss) per share - basic | $ (0.07) | $ (0.19) | $ (0.21) | $ 6.04 | ||||
Earnings (loss) per share - diluted | $ (0.07) | $ (0.19) | $ (0.21) | $ 5.97 |
4. REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by significant product type |
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14. RELATED PARTY TRANSACTIONS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | The following table reflects the related party amounts for SK Energy, Directors and Officers included in the balance sheets of the period indicated (in thousands):
See Note 8 – Notes Payable above for a further discussion of the debt conversions and subsequent retirement of all related party debt.
Additionally, on May 21, 2019, SK Energy, which is owned and controlled by Dr. Kukes, our Chief Executive Officer and a member of the Board of Directors, purchased 6,818,181 shares of restricted common stock from the Company at a price of $2.20 per share, or $15 million in aggregate, and on September 17, 2019, SK Energy purchased 8,204,481 additional shares of restricted common stock from the Company at a price of $1.5845 per share, or $13 million in aggregate (see Note 11 – Shareholders’ Equity above for a further discussion of the issuance of the restricted common stock).
On August 28, 2019, 50,000 shares of restricted stock were awarded to a director for advisory services provided to the Company, which shares have a total fair value of $82,500, based on the market price on the issuance date (see Note 12 – Share-Based Compensation above for a further discussion of the issuance of the share-based compensation).
Also on August 28, 2019, the Company granted (i) 70,000 shares of restricted Company common stock to Mr. John Scelfo, the Chairman, which shares vest 100% on July 12, 2020, which shares have a total fair value of $115,500, (ii) 50,000 shares of restricted Company common stock to Mr. H. Douglas Evans, a director, which shares vest 100% on September 27, 2020, which shares have a total fair value of $82,500, and (iii) 50,000 shares of restricted Company common stock to Mr. Ivar Siem, a director, which shares vest 100% on July 12, 2020, which shares have a total fair value of $82,500, in each case subject to the recipient of the shares being a member of the Company’s Board of Directors on such vesting date. |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Revenue: | ||||
Oil and gas sales | $ 3,129 | $ 1,259 | $ 8,767 | $ 2,801 |
Operating expenses: | ||||
Lease operating costs | 1,691 | 936 | 4,756 | 1,665 |
Exploration expense | 27 | 0 | 50 | 38 |
Selling, general and administrative expense | 1,366 | 1,622 | 4,338 | 2,976 |
Depreciation, depletion, amortization and accretion | 3,952 | 937 | 8,985 | 2,220 |
Total operating expenses | 7,036 | 3,495 | 18,129 | 6,899 |
Gain on sale of oil and gas properties | 0 | 0 | 920 | 0 |
Operating loss | (3,907) | (2,236) | (8,442) | (4,098) |
Other income (expense): | ||||
Interest expense | 0 | (497) | (824) | (6,888) |
Interest income | 15 | 0 | 22 | 0 |
Gain on debt restructuring | 0 | 0 | 0 | 70,309 |
Other expense | (14) | 0 | (117) | 0 |
Total other income (expense) | 1 | (497) | (919) | 63,421 |
Net income (loss) | $ (3,906) | $ (2,733) | $ (9,361) | $ 59,323 |
Earnings (loss) per common share: Basic | $ (0.07) | $ (0.19) | $ (0.21) | $ 6.04 |
Earnings (loss) per common share: Diluted | $ (0.07) | $ (0.19) | $ (0.21) | $ 5.97 |
Weighted average number of common shares outstanding: Basic | 56,213,568 | 14,747,952 | 44,517,500 | 9,822,007 |
Weighted average number of common shares outstanding: Diluted | 56,213,568 | 14,747,952 | 44,517,500 | 9,942,583 |
9. ASSET RETIREMENT OBLIGATIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation [Abstract] | |||||||||||||||||||||||||||||||||||||
Asset retirement obligation |
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2. DESCRIPTION OF BUSINESS |
9 Months Ended |
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Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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-Julesberg Basin (“D-J Basin”) in Colorado. The Company holds its Permian Basin acres located in Chaves, Roosevelt and Lea 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’s strategy is to be the operator, directly or through its subsidiaries and joint ventures, in the majority of its acreage so it can dictate the pace of development in order to execute its business plan. The majority of its capital expenditure budget through 2019 will be focused on the development of the Company’s Permian Basin Asset, with a secondary focus on development of its D-J Basin Asset. The Company’s 2019 total development plan calls for the deployment of an estimated $50 million in capital, all of which has been raised to date. On the Company’s Permian Basin Asset, four initial horizontal wells were drilled in the first quarter of 2019 in Phase One of its development plan. Phase Two of the development program began in July 2019 and called for the drilling and completion of an additional five horizontal San Andres wells and one saltwater disposal well. To date, the five horizontal wells have been drilled and are planned to be completed in the fourth quarter of 2019 or first quarter of 2020, pending final permitting and completion of the saltwater disposal well. The Company’s future D-J Basin Asset development plans are currently under evaluation for its operated acreage, but the Company anticipates deploying approximately $1 million in capital to participate in drilling and completion operations by other operators on its non-operated acreage through 2019. The Company expects that it will have sufficient cash available to meet its needs over the foreseeable future, which cash the Company anticipates being available from (i) its projected cash flows from operations, (ii) its existing cash on hand, (iii) equity infusions or loans (which may be convertible) made available from SK Energy LLC, which is 100% owned and controlled by Dr. Simon Kukes, the Company’s Chief Executive Officer and director (“SK Energy”), which funding SK Energy is under no obligation to provide, and (iv) funding through credit or loan facilities. In addition, the Company may seek additional funding through asset sales, farm-out arrangements, lines of credit, or public or private debt or equity financings to fund additional 2019 capital expenditures and/or acquisitions. If market conditions are not conducive to raising additional funds, the Company may choose to extend the drilling program and associated capital expenditures further into 2020.
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9. ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) $ in Thousands |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
||||||
Asset Retirement Obligation [Abstract] | |||||||
Balance at the beginning of the period | [1] | $ 2,571 | |||||
Accretion expense | 275 | ||||||
Obligations incurred for acquisition | 33 | ||||||
Changes in estimates | (166) | $ (13) | |||||
Balance at end of period | [2] | $ 2,713 | |||||
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12. SHARE-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option and warrant activity |
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Warrant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option and warrant activity |
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5. RESTRICTED CASH (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Receivables [Abstract] | ||||
Cash | $ 33,945 | $ 460 | ||
Restricted cash | 0 | $ 2,316 | 2,316 | |
Restricted cash included in other assets | 3,297 | 0 | ||
Cash, cash equivalents and restricted cash | $ 37,242 | $ 5,779 | $ 2,776 | $ 917 |
10. COMMITMENTS AND CONTINGENCIES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | Lease Agreements
The Company determines if an arrangement is a lease at inception of the arrangement. To the extent that the Company determines an arrangement represents a lease, that lease is classified as an operating lease or a finance lease. The Company currently does not have any finance leases. In accordance with Accounting Standards Codification (ASC) Topic 842, operating leases are capitalized on the Company’s consolidated balance sheet through an asset and a corresponding lease liability. Recorded assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Short-term leases that have an initial term of one year or less are not capitalized. Currently, the Company has one operating lease for office space that requires ASC Topic 842 treatment, discussed below.
Discount Rate
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 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.
Office Lease In June 2018, the Company assumed the lease for its corporate office space located in Houston, Texas from American Resources, Inc., an entity beneficially owned and controlled by Ivar Siem, a director of the Company, and J. Douglas Schick, the Company’s President. The term of the lease ended on August 31, 2019. Effective September 1, 2019, the Company moved its corporate headquarters from 1250 Wood Branch Park Dr., Suite 400, Houston, Texas 77079 to 575 N. Dairy Ashford, Suite 210, Houston, Texas 77079 in connection with the expiration of its former office space lease. The Company entered into a sublease 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 with the first month rent due beginning on January 1, 2020. The Company paid a security deposit of $9,600. The Company also leased space for its former corporate headquarters in Danville, California that was scheduled to expire July 31, 2019, but was terminated in January 2019, without penalty or other amounts due. In February 2019, the Company entered into a six-month lease agreement for 187 square feet of new office space located in Danville, California for the Company’s General Counsel. The monthly rent is $1,200, and the Company paid a $1,200 security deposit. In August 2019, the lease was extended for an additional six months. The Company did not apply ASC Topic 842 to this lease, as the lease term and extension period are for 12-months or less and we cannot currently conclude if the lease will be renewed or extended. The total current obligation for the remainder of this lease through January 2020 is $3,600.
For the nine months ended September 30, 2019 and 2018, the Company incurred lease expense of $112,000 and $59,000, respectively, for the combined leases.
Supplemental cash flow information related to the Company’s operating lease is included in the table below:
Supplemental balance sheet information related to operating leases is included in the table below (in thousands):
The weighted-average remaining lease term for the Company’s operating lease is 3.9 years as of September 30, 2019, 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):
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 significant net acres expire during the remainder of 2019, and 31 net acres expire thereafter (net to our direct ownership interest only). In the Permian Basin Asset, no significant net acres are due to expire in 2019 and 2,886 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. Although the Company provides no assurance about the outcome of these or any other pending legal and administrative proceedings and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on the Company’s financial condition or results of operations.
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6. OIL AND GAS PROPERTIES |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Property [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OIL AND GAS PROPERTIES | The following table summarizes the Company’s oil and gas activities by classification for the nine months ended September 30, 2019 (in thousands):
On February 1, 2019, for consideration of $700,000, the Company completed an asset purchase from Manzano, LLC and Manzano Energy Partners II, LLC, whereby the Company purchased approximately 18,000 net leasehold acres, ownership and operated production from one horizontal well currently producing from the San Andres play in the Permian Basin, ownership of three additional shut-in wells and ownership of one saltwater disposal well. The Company subsequently drilled one Manzano well in Phase Two of its 2019 development plan, which has yet to be completed.
On March 7, 2019, Red Hawk sold rights to 85.5 net acres of oil and gas leases located in Weld County, Colorado, to a third party, for aggregate proceeds of $1.2 million and recognized a gain on sale of oil and gas properties of $920,000 on the statement of operations. The sale agreement included a provision whereby the purchaser was required to assign Red Hawk 85 net acres of leaseholds in an area located where the Company already owns other leases in Weld County, Colorado, within nine months from the date of the sale, or to repay the Company up to $200,000 (proportionally adjusted for the amount of leasehold delivered). The purchaser has not yet identified or assigned the required leasehold acreage to the Company.
Effective June 10, 2019, for consideration of $350,000, the Company completed an asset purchase from a private operator, whereby the Company purchased approximately 2,076 net leasehold acres, ownership and operated production from 22 vertical wells currently producing from the San Andres play in the Permian Basin and ownership of three injection wells.
Effective August 1, 2019, the Company participated in the drilling and completion of two horizontal wells in the DJ-Basin by a third-party outside operator and incurred $500,000 in net participation costs.
For the three and nine months ended September 30, 2019, the Company incurred $4.7 million and $23.6 million, respectively, in capital cost which included drilling costs for the drilling of nine wells (four of which have been completed), and corresponding facility costs in its Permian Basin Asset.
The depletion recorded for production on proved properties for the three and nine months ended September 30, 2019 and 2018, amounted to $3,836,000 compared to $885,000, and $8,692,000 compared to $2,136,000, respectively.
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11. SHAREHOLDERS' EQUITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option and warrant activity |
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4. REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Total revenue from customers | $ 3,129 | $ 1,259 | $ 8,767 | $ 2,801 |
Oil Sales | ||||
Total revenue from customers | 3,059 | 1,173 | 8,549 | 2,552 |
Natural Gas Sales | ||||
Total revenue from customers | 68 | 50 | 203 | 144 |
Natural Gas Liquids Sales | ||||
Total revenue from customers | $ 2 | $ 36 | $ 15 | $ 105 |
8. NOTES PAYABLE (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Notes payable | $ 0 | $ 38,455 |
Unamortized debt discount | 0 | (161) |
Notes payable | 0 | 38,294 |
Note 1 | ||
Notes payable | 0 | 400 |
Note 2 | ||
Notes payable | 0 | 30,200 |
Note 3 | ||
Notes payable | $ 0 | $ 7,855 |
11. SHAREHOLDERS' EQUITY |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY | Common Stock
On February 15, 2019 and March 1, 2019, $22.3 million and $32.8 million of outstanding note payables and accrued interest were converted into 14,098,778 and 15,381,605 shares of the Company’s common stock, respectively (see Note 8- Notes Payable above for further discussion of the note conversions).
On May 16, 2019, the Company sold an aggregate of 1,500,000 shares of its restricted common stock to two third-party purchasers at a price of $2.00 per share, or $3 million in aggregate, pursuant to subscription agreements, and on September 17, 2019, the Company sold an aggregate of 8,400,000 shares of its restricted common stock to an additional third-party purchaser, Viktor Tkachev, who became an affiliate after the issuance, at a price of $1.43 per share, or $12 million in aggregate, pursuant to a subscription agreement.
On May 21, 2019, SK Energy, which is owned and controlled by Dr. Kukes, the Company’s Chief Executive Officer and a member of the Board of Directors, purchased 6,818,181 shares of restricted common stock from the Company at a price of $2.20 per share, or $15 million in aggregate, pursuant to a subscription agreement, and on September 17, 2019, SK Energy purchased an additional 8,204,481 shares of restricted common stock from the Company at a price of $1.58 per share, or $13 million in aggregate, pursuant to a subscription agreement.
As a result of the purchases above, SK Energy, which beneficially owned 78.2% of the Company’s outstanding common stock prior to the May 16, 2019 subscription agreement, beneficially owned 73.2% of the Company’s outstanding common stock after all of the subscriptions discussed above.
Warrants
During the nine months ended September 30, 2019, no warrants were granted, and warrants to purchase 100,000 shares of common stock expired. Additionally, on April 1, 2019, the Company issued 60,056 total shares of common stock upon the cashless exercise of two warrants to purchase an aggregate of 596,280 shares of common stock with an exercise price of $2.50 per share, based on a current market value of $2.78 per share, under the terms of each warrant.
The intrinsic value of outstanding, as well as exercisable, warrants, at September 30, 2019 was $174,000.
Warrant activity during the nine months ended September 30, 2019 was:
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7. OTHER CURRENT ASSETS |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Other Assets [Abstract] | |
OTHER CURRENT ASSETS | On September 11, 2013, the Company entered into a Shares Subscription Agreement (“SSA”) to acquire an approximate 51% ownership in Asia Sixth Energy Resources Limited (“Asia Sixth”), which held an approximate 60% ownership interest in Aral Petroleum Capital Limited Partnership (“Aral”), a Kazakhstan entity. In August 2014 the SSA was restructured (the “Aral Restructuring”), in connection with which the Company received a promissory note in the principal amount of $10.0 million from Asia Sixth (the “A6 Promissory Note”), which was to be converted into a 10.0% interest in Caspian Energy, Inc. (“Caspian Energy”), an Ontario, Canada company listed at that time on the NEX Board of the TSX Venture Exchange, upon the consummation of the Aral Restructuring. The Aral Restructuring was consummated on May 20, 2015, upon which date the A6 Promissory Note was converted into 23,182,880 shares of common stock of Caspian Energy.
In February 2015, the Company expanded its D-J Basin position through the acquisition of acreage from Golden Globe Energy (US), LLC (“GGE”)(the “GGE Acquisition” and the “GGE Acquired Assets”). In connection with the GGE Acquisition, on February 23, 2015, the Company provided GGE an option to acquire its interest in Caspian Energy for $100,000 payable upon exercise of the option (with an expiration date of May 12, 2019) recorded in prepaid expenses and other current assets. As a result, the carrying value of the 23,182,880 shares of common stock of Caspian Energy which were issued upon conversion of the A6 Promissory Note at December 31, 2015 was $100,000. The shares of Caspian Energy underlying the option were classified as part of other current assets. The option expired without being exercised on May 12, 2019. The Company fully reserved the $100,000 and recognized no value related to the shares of Caspian Energy on the Company’s balance sheet as of September 30, 2019 as the Company determined the value of the shares to be $0 as a result of it delisting from the NEX Board of the TSX Venture Exchange. |
10. COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 0 | |
Operating lease - right-of-use asset | 382 | $ 0 |
Operating lease liabilities - current | 67 | 0 |
Operating lease liabilities - long-term | 324 | $ 0 |
Total lease liability | $ 391 |
12. SHARE-BASED COMPENSATION (Details Narrative) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
|
|
Equity [Abstract] | ||
Stock-based compensation expense, restricted stock | $ 262 | $ 733 |
Unamortized stock-based compensation expense, restricted stock | 1,046 | 1,046 |
Stock-based compensation expense, stock option | 64 | 290 |
Unamortized stock-based compensation expense, stock option | 30 | 30 |
Intrinsic value of options exercisable | $ 158 | $ 158 |
10. COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental information related to operating lease | Supplemental cash flow information related to the Company’s operating lease is included in the table below:
Supplemental balance sheet information related to operating leases is included in the table below (in thousands):
|
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Lease liability maturity |
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | The Company has provided a discussion of significant accounting policies, estimates and judgments in its 2018 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2018.
Recently Adopted Accounting Pronouncements
Revenue Recognition. Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and industry-specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 on January 1, 2018, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Under the modified retrospective method, prior period financial positions and results will not be adjusted. The cumulative effect adjustment recognized in the opening balances included no significant changes as a result of this adoption. While the Company’s net earnings are not materially impacted by revenue recognition timing changes, Topic 606 required certain changes to the presentation of revenues and related expenses beginning January 1, 2018. Refer to Note 4 – Revenue from Contracts with Customers for additional information.
Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases (Topic 842)”. The new lease guidance supersedes Topic 840. The core principle of the guidance is that entities should recognize the assets and liabilities that arise from leases. Topic 840 does not apply to leases to explore for or use minerals, oil, natural gas and similar nonregenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, which provides entities with an alternative modified transition method to elect not to recast the comparative periods presented when adopting Topic 842. The Company adopted Topic 842 as of January 1, 2019, using the alternative modified transition method, for which, comparative periods, including the disclosures related to those periods, are not restated.
In addition, the Company elected practical expedients provided by the new standard whereby, the Company has elected to not reassess its prior conclusions about lease identification, lease classification, and initial direct costs and to retain off-balance sheet treatment of short-term leases (i.e., 12 months or less and does not contain a purchase option that the Company is reasonably certain to exercise). Refer to Note 10 – Commitments and Contingencies for additional information.
Compensation-Stock Compensation. In June 2018, the FASB issued ASU 2018-07, “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”. The amendments in this update maintain or improve the usefulness of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. The areas for simplification in this update involve several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, to include share-based payment transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted the standard as of January 1, 2019. There was no impact of the standard on its consolidated financial statements. 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. |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Nov. 09, 2019 |
|
Income Taxes All Open Details | ||
Entity Registrant Name | PEDEVCO CORP | |
Entity Central Index Key | 0001141197 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 70,961,328 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
5. RESTRICTED CASH (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cash and restricted cash |
|
15. INCOME TAXES |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company has estimated that its effective tax rate for U.S. purposes will be zero for the 2019 and 2018 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 nine months ended September 30, 2019 and 2018.
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9. ASSET RETIREMENT OBLIGATIONS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation [Abstract] | |||||||||||||||||||||||||||||||||||||
ASSET RETIREMENT OBLIGATIONS | Activity related to the Company’s asset retirement obligations is as follows (in thousands):
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5. RESTRICTED CASH |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRICTED 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 shown in the accompanying unaudited consolidated statements of cash flows (in thousands):
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13. EARNINGS (LOSS) PER COMMON SHARE |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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.
For the three and nine-month periods ended September 30, 2019 and 2018, the following share equivalents related to options and warrants to purchase shares of common stock were excluded from the computation of diluted net income (loss) per share as the inclusion of such shares would be anti-dilutive.
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13. EARNINGS (LOSS) PER COMMON SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted |
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Schedule of antidilutive securities excluded from computation of earnings per share |
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11. SHAREHOLDERS' EQUITY (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019
$ / shares
shares
| |
Shareholders' equity: | |
Number of Warrants Outstanding, Beginning | shares | 1,216,686 |
Number of Warrants Exercised | shares | (596,280) |
Number of Warrants Expired/Cancelled | shares | (100,000) |
Number of Warrants Outstanding, Ending | shares | 520,406 |
Number of Warrants Exercisable | shares | 520,406 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 7.44 |
Weighted Average Exercise Price Exercised | $ / shares | 2.50 |
Weighted Average Exercise Price Expired/Cancelled | $ / shares | 25.00 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | 7.20 |
Weighted Average Exercise Price Exercisable | $ / shares | $ 7.20 |
Weighted Average Remaining Contractual Life (in years) Outstanding, Beginning | 1 year 4 months 24 days |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 7 months 6 days |
Weighted Average Remaining Contractual Life (in years) Exercisable | 7 months 6 days |
13. EARNINGS (LOSS) PER COMMON SHARE (Details 1) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Options and Warrants | ||||
Anti-dilutive shares | 1,383,888 | 1,711,588 | 1,383,888 | 1,781,588 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Notes payable - related party, net of debt discount | $ 0 | $ 161 |
Stockholders' equity: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 70,711,328 | 15,808,445 |
Common stock, shares outstanding | 70,711,328 | 15,808,445 |
8. NOTES PAYABLE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt restructuring |
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Pronouncements | Revenue Recognition. Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and industry-specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 on January 1, 2018, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Under the modified retrospective method, prior period financial positions and results will not be adjusted. The cumulative effect adjustment recognized in the opening balances included no significant changes as a result of this adoption. While the Company’s net earnings are not materially impacted by revenue recognition timing changes, Topic 606 required certain changes to the presentation of revenues and related expenses beginning January 1, 2018. Refer to Note 4 – Revenue from Contracts with Customers for additional information.
Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases (Topic 842)”. The new lease guidance supersedes Topic 840. The core principle of the guidance is that entities should recognize the assets and liabilities that arise from leases. Topic 840 does not apply to leases to explore for or use minerals, oil, natural gas and similar nonregenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, which provides entities with an alternative modified transition method to elect not to recast the comparative periods presented when adopting Topic 842. The Company adopted Topic 842 as of January 1, 2019, using the alternative modified transition method, for which, comparative periods, including the disclosures related to those periods, are not restated.
In addition, the Company elected practical expedients provided by the new standard whereby, the Company has elected to not reassess its prior conclusions about lease identification, lease classification, and initial direct costs and to retain off-balance sheet treatment of short-term leases (i.e., 12 months or less and does not contain a purchase option that the Company is reasonably certain to exercise). Refer to Note 10 – Commitments and Contingencies for additional information.
Compensation-Stock Compensation. In June 2018, the FASB issued ASU 2018-07, “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”. The amendments in this update maintain or improve the usefulness of the information provided to the users of financial statements while reducing cost and complexity in financial reporting. The areas for simplification in this update involve several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, to include share-based payment transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted the standard as of January 1, 2019. There was no impact of the standard on its consolidated financial statements. |
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. |
1. BASIS OF PRESENTATION |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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, 2018, filed with the SEC on April 1, 2019, 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, and the actual cost of exploration, appraisal and development of our prospects.
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12. SHARE-BASED COMPENSATION (Details) |
9 Months Ended |
---|---|
Sep. 30, 2019
$ / shares
shares
| |
Equity [Abstract] | |
Number of Options Outstanding, Beginning | shares | 890,232 |
Number of Options Exercised | shares | (12,500) |
Number of Options Expired | shares | (14,250) |
Number of Options Outstanding, Ending | shares | 863,482 |
Number of Options Exercisable | shares | 813,482 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 3.26 |
Weighted Average Exercise Price Exercised | $ / shares | .31 |
Weighted Average Exercise Price Expired | $ / shares | 19.40 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | 3.12 |
Weighted Average Exercise Price Exercisable | $ / shares | $ 3.23 |
Weighted Average Remaining Contractual Life (in years) Outstanding, Beginning | 3 years 3 months 18 days |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 2 years 7 months 6 days |
Weighted Average Remaining Contractual Life (in years) Exercisable | 2 years 6 months |
14. RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Related Party Transactions [Abstract] | ||
Long-term accrued expenses | $ 0 | $ 943 |
Long-term notes payable - subordinated | 0 | 30,200 |
Long-term notes payable, net of discount of $-0- and $161, respectively | 0 | 7,694 |
Total related party liabilities | $ 0 | $ 38,837 |
6. OIL AND GAS PROPERTIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oil and Gas Property [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and gas interests |
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16. SUBSEQUENT EVENTS |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Effective October 5, 2019, 250,000 shares of restricted stock were awarded to an advisor under the Company’s Amended and Restated 2012 Equity Incentive Plan. The restricted stock vests as follows: 100% on the six-month anniversary of the grant date, subject to the recipient’s continued service with the Company. These shares have a total fair value of $350,000, based on the market price on the issuance date.
Effective on November 1, 2019, the Company subleased approximately 300 square feet of office space at its current headquarters to SK Energy, which is owned and controlled by Dr. Kukes, our Chief Executive Officer and a member of the Board of Directors. The lease renews on a monthly basis, may be terminated by either party at any time upon prior written notice delivered to the other party and has a monthly base rent of $1,200.
Effective November 8, 2019, the Company entered into an Advisory Agreement and Restricted Shares Grant Agreement with Viktor Tkachev, a greater than 10% shareholder of the Company (who acquired $12 million of shares of common stock on September 17, 2019), under which Mr. Tkachev agreed to provide strategic planning and business development services, and pursuant to which 100,000 shares of restricted common stock were awarded to Mr. Trachev under the Company’s Amended and Restated 2012 Equity Incentive Plan, 100% of which vest on the six-month anniversary of the grant date, subject to the recipient’s continued service with the Company and the terms and conditions of these agreements. These shares have a total fair value of $128,000, based on the market price on the issuance date.
Effective November 8, 2019, the Company entered into an Advisory Agreement with Ivar Siem, a member of the Board of Directors, pursuant to which the 50,000 restricted shares of common stock previously awarded to Mr. Siem on August 28, 2019 under the Plan continue to vest, with 100% vesting on July 12, 2020, subject to Mr. Siem continuing to provide advisory services to the Company on such vesting date, and subject to the terms and conditions of a Restricted Shares Grant Agreement entered into by and between the Company and Mr. Siem on August 28, 2019. The Advisory Agreement contains customary confidentiality, indemnification and no conflict language; and may be terminated by the Company or the advisor with 15 days prior written notice for any reason. See also Note 12 – Share-Based Compensation, above. |
12. SHARE-BASED COMPENSATION |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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
In April 2019, restricted stock awards were granted to three new employees and one consultant for an aggregate of 160,000 shares of the Company’s common stock, under the Company’s Amended and Restated 2012 Equity Incentive Plan. The grant for a total of 50,000 of the restricted stock awards vests as follows: 100% on the one-year anniversary of the grant date, subject to the recipient’s continued service with the Company. These shares have a total fair value of $135,000 based on the market price on the issuance date. The grants for 110,000 shares of restricted stock vest as follows: 50% on the one-year anniversary of the grant date and 50% on the second-year anniversary of the grant date, subject to the recipient’s continued service with the Company. These shares have a total fair value of $253,000 based on the market price on the issuance date.
Effective July 18, 2019, 50,000 shares of restricted stock were awarded to an advisor under the Company’s Amended and Restated 2012 Equity Incentive Plan. The restricted stock vests as follows: 100% on the six-month anniversary of the grant date, subject to the recipient’s continued service with the Company. These shares have a total fair value of $83,000, based on the market price on the issuance date.
Effective August 28, 2019, restricted stock awards were granted to three directors for an aggregate of 170,000 shares of the Company’s common stock, under the Company’s Amended and Restated 2012 Equity Incentive Plan. The grant for a total of 120,000 of the restricted stock awards vests as follows: 100% on July 12, 2020, subject to the recipient’s continued service with the Company. These shares have a total fair value of $187,000 based on the market price on the issuance date. The grants for 50,000 shares of restricted stock vest as follows: 100% on September 27, 2020, subject to the recipient’s continued service with the Company. These shares have a total fair value of $78,000 based on the market price on the issuance date. Additionally, 50,000 shares of restricted stock were awarded to a director for advisory services provided to the Company under the Company’s Amended and Restated 2012 Equity Incentive Plan. The restricted stock vests as follows: 100% on July 12, 2020, subject to the recipient’s continued service with the Company. These shares have a total fair value of $78,000, based on the market price on the issuance date.
The awarded shares above are subject to trading restrictions, and forfeiture, subject to the vesting terms described above. When such securities are vested in accordance with their terms, the trading restrictions are lifted.
Stock-based compensation expense recorded related to the vesting of restricted stock for the three and nine months ended September 30, 2019 was $262,000 and $733,000, respectively. The remaining unamortized stock-based compensation expense at September 30, 2019 related to restricted stock was $1,046,000.
Options
During the nine months ended September 30, 2019, no options were granted, 12,500 options were exercised (discussed below) and 14,250 options expired.
On August 14, 2019, the Company issued 9,782 total shares of common stock upon the cashless exercise of stock options to purchase an aggregate of 12,500 shares of common stock with an exercise price of $0.31 per share, based on a current market value of $1.42 per share, under the terms of the options.
During the three and nine months ended September 30, 2019, the Company recognized stock option expense of $64,000 and $290,000, respectively. The remaining amount of unamortized stock options expense at September 30, 2019, was $30,000.
The intrinsic value of outstanding and exercisable options at September 30, 2019 was $158,000.
Option activity during the nine months ended September 30, 2019 was:
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