PEDEVCO Corp. (PED) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed strong financial performance with significant revenue and EBITDA growth, despite a net loss driven by noncash derivative adjustments. The working capital deficit improved substantially, and the company maintained efficient cost control. Additionally, proactive measures and a strategic hedging approach mitigate operational risks. While management avoided specifics on some development plans, overall sentiment remains positive due to robust production and disciplined spending. The lack of market cap data limits precise prediction, but positive financial indicators suggest a likely stock price increase.
Key Financial Performance
Production Production averaged 8,091 BOE per day in Q1 2026. This was driven by the performance of 31 D-J Basin wells that came online in late 2025, which mostly performed ahead of their type curves.
Revenue Revenue was $40.2 million in Q1 2026, up 360% from $8.7 million in Q1 2025. The increase was almost entirely due to higher production volumes from the combined asset base.
Adjusted EBITDA Adjusted EBITDA was $21.5 million in Q1 2026, representing a 404% increase from $4.3 million in Q1 2025. This reflects the operating performance of the business and excludes noncash derivative losses.
Net Reported Loss Net reported loss was $25.6 million in Q1 2026, driven almost entirely by a $31.3 million net loss on derivative contracts, of which $27.9 million was a noncash mark-to-market adjustment.
Lease Operating Expense (LOE) LOE was $22.46 per BOE in Q1 2026, essentially flat compared to $22.21 per BOE in Q1 2025. This demonstrates efficient integration of the combined asset base.
General and Administrative Expenses (G&A) Total G&A was $3.1 million in Q1 2026, with cash G&A at $2.6 million. This included some residual merger integration costs, which are expected to roll off throughout the year.
Working Capital Deficit The working capital deficit improved by $27.1 million, from $34.1 million at year-end 2025 to $7 million at March 31, 2026. This reflects the settlement of development capital and merger-related payables.
Net Debt Net debt at quarter end was approximately $87 million, $11 million below the funded debt of $98 million. This improvement was due to strong cash generation and reduced working capital deficit.
Realized Oil Price Realized oil price was $68.39 per barrel in Q1 2026, roughly flat year-over-year.
Capital Expenditures Capital expenditures incurred in Q4 2025 and paid in Q1 2026 were within or under expectations, reflecting disciplined spending.
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Operating Highlights
Production Performance: Production averaged 8,091 BOE per day, driven by 31 D-J Basin wells performing ahead of type curves.
Development Inventory: Focus on planning future developments in late 2026 and 2027, with a drilled uncompleted well in the D-J Basin to be completed mid-summer 2026.
Revenue Growth: Revenue increased to $40.2 million, a 360% rise from Q1 2025, primarily due to expanded production.
Commodity Price Impact: Higher commodity prices positively influenced cash generation and operational capacity.
Operational Optimization: $10-$13 million allocated for pump conversions and well interventions to reduce lease operating expenses, targeting up to $1 million per month in cost savings by 2027.
Cost Management: Lease operating expense was $22.46 per BOE, and G&A costs were $3.1 million, with further improvements expected as merger integration costs roll off.
Capital Discipline: Incremental capital commitments will be evaluated against return thresholds and liquidity position.
Hedging Strategy: Maintained a balanced hedge book to reduce cash flow volatility and protect project economics.
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Risk or Challenges
Derivative Contracts Loss: The company reported a $31.3 million net loss on derivative contracts, with $27.9 million being a noncash mark-to-market adjustment. This reflects the movement of commodity prices above hedge strike prices, which could impact financial stability if commodity prices remain volatile.
Production Decline: Production is expected to moderate through the middle quarters of 2026 due to natural decline curves of wells that reached peak production in Q1. This could impact revenue and operational performance.
Capital Expenditure Constraints: The company has limited its capital expenditures to $16 million to $20 million for 2026, which may restrict its ability to scale production or respond to market opportunities.
Working Capital Deficit: Although the working capital deficit improved, it still stood at $7 million as of March 31, 2026. This could pose liquidity challenges if not managed effectively.
Commodity Price Dependence: The company's financial performance is heavily dependent on sustained higher commodity prices. A downturn in prices could adversely affect cash flow and returns.
Operational Optimization Risks: The optimization program aimed at reducing lease operating expenses carries execution risks. Delays or inefficiencies in implementation could impact cost savings and operational efficiency.
Regulatory and Environmental Risks: The company operates in multiple basins, including the D-J, Powder River, and Permian, which may expose it to varying regulatory and environmental compliance requirements, potentially increasing operational costs.
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Guidance & Outlook
Future Development Plans: The company is planning future developments in late 2026 and 2027, focusing on creating substantial value for shareholders. This includes completing and bringing online a drilled uncompleted well in the D-J Basin by mid-summer 2026 and evaluating further development options in the D-J Basin, Powder River Basin, and Permian Basin.
Capital Expenditures: The company has approved $16 million to $20 million of net capital expenditures for 2026. Incremental capital commitments will be evaluated against return thresholds, liquidity position, and balance sheet strength.
Production Expectations: Full-year average production is expected to be 6,500 to 7,000 BOE per day. Production is anticipated to moderate in the middle quarters of 2026 due to natural decline curves and is expected to be supported by second-half development activity and optimization work heading into 2027.
Adjusted EBITDA: The company expects $60 million to $70 million of adjusted EBITDA for the full year 2026. Adjustments to development and capital plans may lead to revised production and adjusted EBITDA expectations.
Optimization Program: The company has allocated $10 million to $13 million for operational optimization in 2026, targeting lease operating expense (LOE) reductions of up to $1 million per month. The program includes pump conversions and well interventions, with the majority of work to be completed in Q3 and Q4 2026. Full benefits are expected to be visible in 2027.
Hedge Book Strategy: The company maintains a balanced hedge book to reduce cash flow volatility, protect the capital plan, and ensure project economics. The hedge position includes swaps, costless collars, and 3-way collars.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How much of the optimization CapEx has been spent in the first quarter?
A:The company started optimization efforts in earnest in Q2. In Q1, two wells were converted to rod pumps below budget and are performing to plan.
Q:Why were workover expenses lower in Q1 compared to Q4?
A:The lower expenses were attributed to a mild winter and proactive measures taken in previous years to ensure operational reliability during colder seasons. Preventative actions in Q4 also contributed to the reduced expenses.
Q:What is the split between D-J and Powder River development plans for the second half of the year?
A:The company is completing a DUC in the D-J Basin this summer. Optimization projects are planned across the Powder River, D-J, and Permian basins, but specific details on the split have not been disclosed.
Q:Are pump conversions and interventions being applied across the entire portfolio?
A:Yes, pump conversions and interventions are being applied across the bulk of the portfolio. The company is accelerating these efforts to complete most of the fields this year and into next year.
Q:How quickly can the company ramp up development if the macro environment remains favorable?
A:The company can move quickly on Permian and D-J Basin assets, while Powder River Basin assets require longer lead times. Non-operated positions in the Colorado D-J are being coordinated with partners for potential development in late 2026 and 2027.
Q:What is the company's hedging strategy given the volatility in commodity prices?
A:The company is required to hedge 75% of production due to bank requirements. Currently, about 60% of production is hedged. The company has benefited from some hedges and is monitoring the oil curve for potential hedging opportunities for late 2026 and 2027.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the split between D-J and Powder River development plans, stating only that optimization projects are planned across multiple basins without further breakdown.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
BOE GA
BOE day
Basin acre
Basin well
LOE
activity
afternoon
asset base
balance
benefit
capital deficit
cash
commodity price
completion
contract
cost
development
end
expense
improvement
integration
interest
inventory
lease
line expectation
loss
merger
month
optimization program
plan
position
production
quarter
remark
return
work
PED Transcript
PEDEVCO Corp. (PED) Q1 2026 Earnings Call Transcript
Positive5-16
The earnings call revealed strong financial performance with significant revenue and EBITDA growth, despite a net loss driven by noncash derivative adjustments. The working capital deficit improved substantially, and the company maintained efficient cost control. Additionally, proactive measures and a strategic hedging approach mitigate operational risks. While management avoided specifics on some development plans, overall sentiment remains positive due to robust production and disciplined spending. The lack of market cap data limits precise prediction, but positive financial indicators suggest a likely stock price increase.
PEDEVCO Corp. (PED) Q4 2025 Earnings Call Transcript
Unknown4-2
The earnings call lacked substantial information on financial performance, product updates, or market strategy, with a focus on a reverse stock split. No new partnerships or guidance changes were discussed. The absence of clear management responses in the Q&A adds uncertainty, but not enough to predict a strong negative reaction. The reverse stock split might stabilize the stock, leading to a neutral outlook.
PED Report
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