Pedevco Posts 41 Percent Sales Drop

Pedevco (PED +2.68%), an independent oil and gas company focused in the Permian and D-J Basins, released its second quarter 2025 results on August 14, 2025. Both top- and bottom-line results (GAAP) fell sharply compared to the prior-year quarter, reflecting lower production and pricing. The company posted a net loss, and Adjusted EBITDA and net income both declined significantly compared to Q2 2024. The quarter was marked by operational disruptions and non-cash charges, though Cash and cash equivalents (GAAP) increased to $11.2 million as of June 30, 2025, up from $6.6 million as of December 31, 2024. Overall, the quarter proved challenging for the company, highlighting ongoing operational and market risks.

Source: Analyst estimates for the quarter provided by FactSet.

About Pedevco and Its Strategic Focus

Pedevco (PED +2.68%) is a U.S. oil and gas explorer and producer with assets concentrated in the Permian Basin in New Mexico and the Denver-Julesberg (D-J) Basin in Colorado, which are among the country's major oil fields. The business relies heavily on developing and operating oil and gas wells in these two basins, with output generally weighted toward liquid hydrocarbons such as crude oil and natural gas liquids.

The company's ongoing strategy involves advancing operational efficiency, managing cost, and carefully prioritizing capital spending. Recent years have seen it sell off non-core wells, increase focus on core acreage, and bring new horizontal wells online. Pedevco's ability to manage drilling and production costs, adapt to changing commodity prices, and execute development projects on time are key factors for its overall success.

Quarter Review: Financial and Operational Developments

The most notable headline from the quarter was the substantial drop in both production and sales, which sharply reduced revenue and profit measures. The company produced an average of 1,517 barrels of oil equivalent per day (BOEPD) in Q2 2025. Unplanned downtime in both the Permian and D-J Basins, along with some wells being intentionally shut in due to nearby fracking activity, contributed to these reduced volumes. These impacts were in addition to the sale of non-core and low working interest wells, which also trimmed output.

Lower volumes were compounded by weaker commodity prices. The average realized price per barrel of oil equivalent was $50.51 in Q2 2025, about 22% lower than a year earlier. Both market-driven pricing and product mix (oil, natural gas, and NGLs) pressured sales. Management highlighted that $2.3 million of the revenue decline in Q2 2025 was attributable to lower average sales prices, and a further $2.5 million was attributable to declining production volumes.

Profitability declined compared to Q2 2024. The company reported an operating loss and Adjusted EBITDA (non-GAAP) dropped by 58% compared to Q2 2024. Several one-time items also weighed on results, including a $0.5 million impairment of certain undeveloped leases that were allowed to expire and the write-off of a note receivable from a subsidiary sale. A $1.0 million gain on asset sales and a small income tax benefit provided some offset to these expenses.

Lease operating expenses were $2.8 million, down from $3.5 million in Q2 2024. However, General and administrative (overhead) costs rose, with increased spending for payroll, audit, and technology compared to Q2 2024. Despite higher G&A spending and profit pressures, cash and equivalents rose meaningfully in the six months ended June 30, 2025, partly due to lower capital outlays and a conservative approach to debt. The company reported no debt at quarter-end and maintained access to a $250 million revolving credit line.

Operations Update: Portfolio and Well Activity

The period saw a number of changes in Pedevco’s operating footprint. In the Permian, four new horizontal San Andres wells in the Chaveroo Field came online in May 2025. These are part of its core development program; management described early well performance as positive, but did not disclose specific numbers. In the D-J Basin, the company participated in eighteen non-operated wells at various working interests, with most completions scheduled from August through the fourth quarter of 2025 and first production for these wells expected later in the year. Another four non-operated wells are planned to be drilled in the final quarter of 2025.

Pedevco also continued to streamline its portfolio, selling seventeen operated wells in the D-J Basin in April 2025 and thirty non-core, non-operated wells in late 2024. The impairment charge recognized this quarter was linked to undeveloped D-J Basin leases.

Cost management remained a feature, with total operating expenses trending lower despite some increases in overhead. Lower lease operating expenses and depreciation and depletion charges were primarily the result of lower production volumes.

No dividend was declared or mentioned as raised or reduced during the quarter.

Looking Ahead: Guidance and Investor Focus Points

Management expects results to improve in the coming quarters as wells recently brought online ramp up production and as a heavy schedule of non-operated D-J Basin completions begins to contribute. However, no explicit quantitative guidance was provided for revenue, profit, production, or capital expenditure for either the next quarter or the remainder of fiscal 2025. The company did indicate that initial production from new D-J Basin wells should begin in early in the fourth quarter, but did not offer additional specifics.

Looking forward, investors should pay close attention to updates on production trends, timing of new well completions, and whether cost controls persist. Areas such as general and administrative spending, realized prices for oil and gas, and further asset sales or impairments will also be in focus. Pedevco does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.