10q10k10q10k.net

What changed in PEDEVCO CORP's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of PEDEVCO CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+618 added−510 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-31)

Top changes in PEDEVCO CORP's 2025 10-K

618 paragraphs added · 510 removed · 228 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

86 edited+191 added−216 removed75 unchanged
Biggest changeKukes is under no obligation to provide, (iv) public or private debt or equity financings, including up to $8.0 million in securities which we may sell in the future in “at the market offerings”, pursuant to a Sales Agreement entered into on December 20, 2024, with Roth Capital Partners, LLC (the “ Lead Agent ”), and A.G.P./Alliance Global Partners (“ AGP ” and, together with the Lead Agent, the “ Agents ”)(discussed in greater detail below under “ Item 7.
Biggest changeWe expect that we will have sufficient cash available to meet our needs over the next 12 months after the filing of this report and in the foreseeable future, including to fund the remainder of our 2026 development program, discussed above, which cash we anticipate being available from (i) projected cash flow from our operations, (ii) existing cash on hand, (iii) public or private debt or equity financings, including up to $7.6 million in securities which we may sell in the future in “at the market offerings”, pursuant to a Sales Agreement entered into on December 20, 2024, with Roth Capital Partners, LLC (the “ Lead Agent ”), and A.G.P./Alliance Global Partners (“ AGP ” and, together with the Lead Agent, the “ Agents ”) discussed in greater detail below under “Liquidity and Capital Resources—Financing” (under which we have sold 24,498 shares of common stock to date at a sales prices ranging between $14.32 to $16.02 per share), and (iv) funding through credit or loan facilities, including under the Company’s A&R Credit Agreement with Citibank, N.A., as administrative agent, which provides for an initial borrowing base of $120 million and an aggregate maximum revolving credit amount of $250 million (of which $98 million has been drawn down by the Company to date), as discussed in greater detail below under “ Liquidity and Capital Resources ”.
Consequently, in the event that local or state restrictions or prohibitions are adopted in the Permian Basin in New Mexico and/or the D-J Basin in Colorado and/or Wyoming that impose more stringent limitations on the production and development of oil and natural gas, we may incur significant costs to comply with such requirements or may experience delays or curtailment in the pursuit of exploration, development, or production activities, and possibly be limited or precluded in the drilling of wells or in the amounts that we are ultimately able to produce from our reserves.
Consequently, in the event that local or state restrictions or prohibitions are adopted in the D-J Basin in Colorado, and/or the PRB and/or the D-J Basin in Wyoming, and/or the Permian Basin in New Mexico that impose more stringent limitations on the production and development of oil and natural gas, we may incur significant costs to comply with such requirements or may experience delays or curtailment in the pursuit of exploration, development, or production activities, and possibly be limited or precluded in the drilling of wells or in the amounts that we are ultimately able to produce from our reserves.
No other customer accounted for more than 10% of our revenue during these periods. The Company is not dependent upon any one purchaser and believes that, if its primary customers are unable or unwilling to continue to purchase the Company’s production, there are a substantial number of alternative buyers for its production at comparable prices. Oil .
No other customer accounted for more than 10% of our revenue during these periods. The Company is not dependent upon any one purchaser and believes that, if its primary customers are unable or unwilling to continue to purchase the Company’s production, there are a substantial number of alternative buyers for its production at comparable prices.
We plan to opportunistically seek additional acreage proximate to our currently held core acreage located in the Northwest Shelf of the Permian Basin in Chaves and Roosevelt Counties, New Mexico, and the Wattenberg and Wattenberg Extension areas of Weld and Morgan Counties, Colorado, and Laramie County, Wyoming, and elsewhere in the D-J Basin.
We plan to opportunistically seek additional acreage proximate to our currently held core acreage located in the Wattenberg and Wattenberg Extension areas of Weld and Morgan Counties, Colorado, and Laramie County, Wyoming, and elsewhere in the D-J Basin, the PRB, and the Northwest Shelf of the Permian Basin in Chaves and Roosevelt Counties, New Mexico.
In New Mexico, the Company, through its New Mexico operating subsidiary RAZO, has entered into a Stipulated Final Order (“ SFO ”) with the OCD pursuant to which, among other things, RAZO agreed to reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.
In New Mexico, the Company, through its New Mexico operating subsidiary RAZO, has entered into a Stipulated Final Order with the OCD pursuant to which, among other things, RAZO agreed to reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.
Our 2025 development program is based upon our current outlook for the year and is subject to revision, if and as necessary, to react to market conditions, product pricing, contractor availability, requisite permitting, capital availability, partner non-consents, capital allocation changes between assets, acquisitions, divestitures and other adjustments determined by the Company in the best interest of its shareholders while prioritizing our financial strength and liquidity.
Our 2026 development program is based upon our current outlook for the year and is subject to revision, if and as necessary, to react to market conditions, product pricing, contractor availability, requisite permitting, capital availability, partner non-consents, capital allocation changes between assets, acquisitions, divestitures and other adjustments determined by the Company in the best interest of its shareholders while prioritizing our financial strength and liquidity.
Also, our Executive Vice President and General Counsel, Clark R. Moore, has nearly 20 years of energy industry experience, and formerly served as acting general counsel of Erin Energy Corp.
Also, our Executive Vice President and General Counsel, Clark R. Moore, has 20 years of energy industry experience, and formerly served as acting general counsel of Erin Energy Corp.
Oil and Gas Properties We believe that our Permian Basin and D-J Basin assets represent among the most economic oil and natural gas plays in the U.S.
Oil and Gas Properties We believe that our D-J Basin, PRB, and Permian Basin Assets represent among the most economic oil and natural gas plays in the U.S.
We own and intend to acquire additional properties that have been historically underdeveloped and underexploited. We believe our attention to detail and application of the latest industry advances in horizontal drilling, completions design, frac intensity and locally optimal frac fluids will allow us to successfully develop our properties. · Optimization of well density and configuration.
We own and intend to acquire additional properties that have been historically underdeveloped and underexploited. We believe our attention to detail and application of the latest industry advances in horizontal drilling, completions design, frac intensity and locally optimal frac fluids will allow us to successfully develop our properties. · Optimization of development plans, well density and configuration.
Currently, all net acres in our Permian Basin Asset have been designated as critical or suitable habitat for the lesser prairie chicken, which could adversely impact the pace of our development and the value of these leases. Other We are also subject to rules regarding worker safety and similar matters promulgated by the U.S.
Currently, all net acres in our Permian Basin Asset have been designated as critical or suitable habitat for the lesser prairie chicken, which could adversely impact the pace of our development and the value of these leases. 35 Table of Contents Other We are also subject to rules regarding worker safety and similar matters promulgated by the U.S.
We believe our extensive inventory of drilling locations in the Permian Basin and the D-J Basin, combined with our operating expertise, will enable us to continue to deliver accretive production, cash flow and reserves growth.
We believe our extensive inventory of drilling locations in the D-J Basin, Powder River Basin, and Permian Basin, combined with our operating expertise, will enable us to continue to deliver accretive production, cash flow and reserves growth.
For estimates of the Company’s net proved producing reserves of crude oil and natural gas, as well as discussion of the Company’s proved and probable undeveloped reserves, see “ Part II ” - “ Item 8 Financial Statements and Supplementary Data ” – “ Supplemental Oil and Gas Disclosures (Unaudited) ”.
For estimates of the Company’s net proved producing reserves of crude oil and natural gas, as well as discussion of the Company’s proved and probable undeveloped reserves, see “ Part II ” - “ Item 8 Financial Statements and Supplementary Data ” – “Supplemental Oil and Gas Disclosures (Unaudited) ”.
Our management and technical teams have an extensive track record of forming and building oil and gas businesses. We also have significant expertise in successfully sourcing, evaluating and executing acquisition opportunities.
Our management and technical teams have an extensive track record of forming, buying, building and selling oil and gas businesses. We also have significant expertise in successfully sourcing, evaluating and executing acquisition opportunities.
We utilize the extensive geological, petrophysical and production data of such legacy properties to confirm optimal well spacing and configuration using modern reservoir evaluation methodologies. · Maintain a high degree of operational control and/or form partnerships which allow for a high degree of control over non-operated properties.
We utilize the extensive geological, petrophysical and production data of such properties to confirm optimal development plans, well spacing and configuration using modern reservoir evaluation methodologies. · Maintain a high degree of operational control and/or form partnerships which allow for a high degree of control over non-operated properties.
In the course of such evaluations, an agency will prepare an Environmental Assessment that assesses the potential direct, indirect and cumulative impacts of a proposed project and, if necessary, will prepare a more detailed Environmental Impact Statement that may be made available for public review and comment.
In the course of such evaluations, an agency will prepare an environmental assessment that pertains to the potential direct, indirect and cumulative impacts of a proposed project and, if necessary, will prepare a more detailed Environmental Impact Statement that may be made available for public review and comment.
In February 2025, the Company entered into a joint development agreement (“ Agreement ”) with a large, Denver, Colorado-based private equity-backed D-J Basin E&P Company with extensive operational experience (“ Operator ”), pursuant to which the parties agreed to jointly participate in the expansion and development of the Company’s Roth and Amber DSUs located in Weld County, Colorado, with the Operator paying to the Company $1.7 million, the Company agreeing to amend the Company’s existing Roth and Amber DSUs to increase each to 1,600 acres and transferring operatorship of the DSUs to the Operator, and the parties agreeing to jointly participate in the development of the Roth and Amber DSUs.
In February 2025, the Company entered into a Joint Development Agreement with a large, Denver, Colorado-based private equity-backed D-J Basin exploration and production (E&P) Company with extensive operational experience (the “ Operator ”), pursuant to which the parties agreed to jointly participate in the expansion and development of the Company’s Roth and Amber drilling spacing units (DSUs) located in Weld County, Colorado, with the Operator paying to the Company $1.7 million, the Company agreeing to amend the Company’s existing Roth and Amber DSUs to increase each to 1,600 acres and transferring operatorship of the DSUs to the Operator, and the parties agreeing to jointly participate in the development of the Roth and Amber DSUs.
The COGCC denied the petition; however, the COGCC initiated a cumulative impacts stakeholder process to determine how best to address cumulative impacts going forward, which may include additional regulations.
The COGCC (now ECMC) denied the petition; however, the COGCC (now the ECMC) initiated a cumulative impacts stakeholder process to determine how best to address cumulative impacts going forward, which may include additional regulations.
As of December 31, 2024, the Wattenberg Field in our D-J Basin Asset and as of December 31, 2023 and 2022, the Chaveroo Field in our Permian Basin Asset and the Wattenberg Field in our D-J Basin Asset are the fields that each comprise 15% or more of our total proved reserves.
As of December 31, 2025, the Wattenberg Field and the D-J Wyoming Field in our D-J Basin Asset, and as of December 31, 2024 the Wattenberg Field in our D-J Basin, and as of December 31, 2023, the Chaveroo Field in our Permian Basin Asset and the Wattenberg Field in our D-J Basin Asset are the fields that each comprise 15% or more of our total proved reserves.
We believe our understanding of the geology, geophysics and reservoir properties of potential acquisition targets will allow us to identify and acquire highly prospective acreage in order to grow our reserve base and maximize stockholder value. · Preserve financial flexibility to pursue organic and external growth opportunities.
We believe our understanding of the business, financial, geology, geophysics and reservoir properties of potential acquisition targets will allow us to identify and acquire highly prospective acquisitions and leasing opportunities in order to grow our reserve base and maximize stockholder value. · Preserve financial flexibility to pursue organic and external growth opportunities.
In addition, in December 2023, the Company’s operator, RAZO, entered into a Stipulated Final Order (“ SFO ”) with the Director of the Oil and Gas Conservation Division of New Mexico (the “ OCD ”) pursuant to which, among other things, RAZO agreed to reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.
In addition, in December 2023, the Company’s operating company, RAZO, entered into a Stipulated Final Order (“SFO”) with the Director of the Oil and Gas Conservation Division of New Mexico (the “OCD”) pursuant to which, among other things, RAZO agreed to reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.
The fee imposed under the Methane Emissions and Waste Reduction Incentive Program for 2024 is $900 per ton emitted over annual methane emissions thresholds, and increases to $1,200 in 2025, and $1,500 in 2026. In January 2025, industry associations challenged the Waste Emissions Charge rule in the D.C. Circuit.
The fee imposed under the Methane Emissions Reduction Program for 2024 is $900 per ton emitted over annual methane emissions thresholds, and increases to $1,200 in 2025, and $1,500 in 2026. In January 2025, industry associations challenged the Waste Emissions Charge rule in the D.C. Circuit Court of Appeals.
Our 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 and Wyoming.
Our current properties are located in the Denver-Julesberg Basin (“ D-J Basin ”) in Colorado and Wyoming, the Powder River Basin (“ PRB ”) in Wyoming, and in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the “ Permian Basin ”).
At the state level, our operations in Colorado are regulated by the Energy & Carbon Management Commission (“ ECMC ”) (formerly the Colorado Oil & Gas Conservation Commission (“ COGCC ”)), our planned operations in Wyoming will be regulated by the Wyoming Oil and Gas Conservation Commission (“ WOGCC ”), and our New Mexico operations are regulated by the Conservation Division of the New Mexico Energy, Minerals, and Natural Resources Department (regulates oil and gas operations), New Mexico Environment Department (administers environmental protection laws), and the New Mexico State Land Office (oversees surface and mineral acres and development).
At the state level, our operations in Colorado are regulated by the ECMC (formerly the Colorado Oil & Gas Conservation Commission (“ COGCC ”)), our operations in Wyoming are regulated by the Wyoming Oil and Gas Conservation Commission (“ WOGCC ”), and our New Mexico operations are regulated by the Conservation Division of the New Mexico Energy, Minerals, and Natural Resources Department (regulates oil and gas operations), New Mexico Environment Department (administers environmental protection laws), and the New Mexico State Land Office (oversees surface and mineral acres and development).
Our current Permian Basin Asset interests are all located in Chaves and Roosevelt Counties, New Mexico, where we currently operate 35 gross (33.5 net) wells, of which 28 wells are active producers, and two are active SWDs.
Our current Permian Basin Asset interests are all located in Chaves and Roosevelt Counties, New Mexico, where we currently operate 35 gross (33.5 net) wells, of which 28 wells are active producers, and two are active salt water disposal (“SWD”) wells.
Douglas Schick, who has served as our President since 2018 and was recently appointed as our Chief Executive Officer effective January 1, 2025, and has over 25 years of experience in the oil and gas industry, having co-founded American Resources, Inc., and formerly serving in executive, management and operational planning, strategy and finance roles at Highland Oil and Gas, Mariner Energy, Inc., The Houston Exploration Co., ConocoPhillips and Shell Oil Company.
Douglas Schick, who has served as our President since 2018 and as our Chief Executive Officer since January 2025 and also serves as a member of our Board of Directors, and has over 25 years of experience in the oil and gas industry, having co-founded American Resources, Inc., and formerly serving in executive, management and operational planning, strategy and finance roles at Highland Oil and Gas, Mariner Energy, Inc., The Houston Exploration Co., ConocoPhillips and Shell Oil Company.
Our Core Areas Permian Basin Asset We hold our Permian Basin Asset through our wholly-owned subsidiary, PEDCO, with operations conducted through PEDCO’s wholly-owned operating subsidiary, RAZO. Our Permian Basin Asset was assembled through three acquisitions completed between 2018 and 2019.
Permian Basin Asset We hold our Permian Basin Asset through our wholly-owned subsidiary, PEDCO, with operations conducted through PEDCO’s wholly-owned operating subsidiary, Ridgeway Arizona Oil Corp. (RAZO). Our Permian Basin Asset was assembled through three acquisitions completed between 2018 and 2019.
Not all of these potential well locations in our Permian Basin Asset and D-J Basin Asset are included in our reserve report due to SEC guidelines related to development timing. 14 Table of Contents Marketing We generally sell a significant portion of our oil and gas production to a relatively small number of customers, and during the year ended December 31, 2024, sales to three customers comprised 38%, 36% and 12%, respectively, of the Company’s total oil and gas revenues.
Not all of these potential well locations in our D-J Basin Asset, Powder River Basin and Permian Basin Asset are included in our reserve report due to SEC guidelines related to development timing. 16 Table of Contents Marketing We generally sell a significant portion of our oil and gas production to a relatively small number of customers, and during the year ended December 31, 2025, sales to two customers comprised 26% and 22%, respectively, of the Company’s total oil and gas revenues.
We lease that space pursuant to a lease that expires in February 2027. Business Operations Overview We are an oil and gas company focused on the acquisition and development of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied.
Business Operations Overview We are an oil and gas company focused on the acquisition and development of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied.
Many of our competitors have substantially greater financial resources, staffs, facilities and other resources than we have. In addition, larger competitors may be able to absorb the burden of any changes in federal, state and local laws and regulations more easily than we can, which would adversely affect our competitive position.
In addition, larger competitors may be able to absorb the burden of any changes in federal, state and local laws and regulations more easily than we can, which would adversely affect our competitive position.
As of December 31, 2024, our Permian Basin Asset acreage is located where indicated in the below map of the State of New Mexico and more specifically in the areas shaded in yellow in the subsequent sectional map. 15 Table of Contents State of New Mexico 16 Table of Contents In September 2023, the Company and Evolution Petroleum Corporation (“ Evolution ”) entered into a Participation Agreement (the “ Participation Agreement ”) for the joint development of a portion of the Company’s Permian Basin Asset known as the Chaveroo oilfield, located in Chaves and Roosevelt Counties, New Mexico (the “ Chaveroo Field ” and the “ Chaveroo Farmout Transaction ”).
As of December 31, 2025, our Permian Basin Asset acreage is located where indicated in the below map of the State of New Mexico and more specifically in the areas shaded in yellow in the subsequent sectional map. 21 Table of Contents State of New Mexico 22 Table of Contents In September 2023, the Company and Evolution Petroleum Corporation (“Evolution”) entered into a Participation Agreement for the joint development of the Chaveroo oilfield in Chaves and Roosevelt Counties, New Mexico.
We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages. We consider our relations with our employees to be satisfactory. The development, attraction and retention of employees is a critical success factor for the Company.
Our future success will depend partially on our ability to attract, retain and motivate qualified personnel. We are not a party to any collective bargaining agreements and have not experienced any strikes or work stoppages. We consider our relations with our employees to be satisfactory. The development, attraction and retention of employees is a critical success factor for the Company.
Business Strategy We believe that horizontal development and exploitation of conventional assets in the Permian Basin and development of the Wattenberg and Wattenberg Extension in the D-J Basin, represent among the most economic oil and natural gas plays in the U.S.
Business Strategy We believe that horizontal development and exploitation of conventional and unconventional oil and gas assets in the Rockies region, including the D-J and Powder River Basins, and the Permian Basin, represent among the most economic oil and natural gas plays in the U.S.
In addition, on September 28, 2020, the COGCC (now the ECMC) voted in favor of a preliminary approval establishing a new 2,000-foot setback rule from buildings for drilling and fracturing operations statewide, increasing the previous 500-foot setback rule, which rule became effective January 1, 2021, and could likewise make it more difficult for us to undertake oil and gas development activities in Colorado, although given the distance of most of our current leases from buildings in Colorado, these setback rules have not yet had a significant impact on our operations, but may impact future development if we seek develop acreage within such setback boundaries.
In addition, on September 28, 2020, the COGCC (now the ECMC) voted in favor of a preliminary approval establishing a new 2,000-foot setback rule from buildings for drilling and fracturing operations statewide, increasing the previous 500-foot setback rule, which rule became effective January 1, 2021, and could likewise make it more difficult for us to undertake oil and gas development activities in Colorado, although given the distance of most of our current leases from buildings in Colorado, these setback rules have not yet had a significant impact on our operations, but may impact future development if we seek develop acreage within such setback boundaries. 34 Table of Contents Further, on May 10, 2022, the Colorado Legislature adopted SB 22-198, the “Orphaned Oil and Gas Well Enterprise” bill, which requires each oil and gas operator in Colorado to pay a mitigation fee to the “enterprise” for each well that has been spud but not yet plugged and abandoned.
Our crude oil is generally sold under short-term, extendable and cancellable agreements with unaffiliated purchasers. Crude oil prices realized from production sales are indexed to published posted refinery prices, and to published crude indexes with adjustments on a contract basis. Transportation costs related to moving crude oil are also deducted from the price received for crude oil. Natural Gas .
Crude oil prices realized from production sales are indexed to published posted refinery prices, and to published crude indexes with adjustments on a contract basis. Transportation costs related to moving crude oil are also deducted from the price received for crude oil. Natural Gas .
Current Year Events Participations Agreements Related to D-J Basin Assets On August 21, 2024, the Company, through PRH, entered into a five-year Participation Agreement with a large private equity-backed D-J Basin exploration and production company with extensive operational experience (“ Joint Development Party ”), whereby the Joint Development Party assigned to PRH a 30% interest in approximately 7,607 net acres of existing oil and gas leases and PRH assigned to the Joint Development Party a 70% interest in approximately 3,166 net acres of oil and gas leases, all located within the SW Pony Prospect in the D-J Basin in Weld County, Colorado.
In addition, we may seek additional funding through asset sales, farm-out arrangements, and credit facilities to fund potential acquisitions during the remainder of 2026. 12 Table of Contents Participations Agreements Related to D-J Basin Assets On August 21, 2024, the Company, through PRH, entered into a five-year Participation Agreement with a large private equity-backed D-J Basin exploration and production company with extensive operational experience (“ Joint Development Party ”), whereby the Joint Development Party assigned to PRH a 30% interest in approximately 7,607 net acres of existing oil and gas leases and PRH assigned to the Joint Development Party a 70% interest in approximately 3,166 net acres of oil and gas leases, all located within the SW Pony Prospect in the D-J Basin in Weld County, Colorado.
Risk Factors ”). 11 Table of Contents We plan to continue to evaluate D-J Basin well proposals as received from third party operators and participate in those we deem most economic and prospective.
We plan to continue to evaluate D-J Basin non-operated well proposals as received from third party operators and participate in those we deem most economic and prospective.
Total Net Undeveloped Acreage Expiration In the event that production is not established or we take no action to extend or renew the terms of our leases, our net undeveloped acreage that will expire over the next three years as follows: (i) in the D-J Basin Asset, 809 net acres are set to expire during 2025 (net to our direct ownership interest only), with 3,662 and 1,657 net acres set to expire for the years ending December 31, 2026 and 2027 respectively, and 508.53 net acres thereafter; and (ii) in the Permian Basin Asset only 200 net acres are set to expire for the year ending December 31, 2026, (net to our direct ownership interest only), with all of the remaining acreage currently held by production.
Total Net Undeveloped Acreage Expiration In the event that production is not established or we take no action to extend or renew the terms of our leases, our net undeveloped acreage that will expire over the next three years as follows: (i) in the D-J Basin Asset, 16,138 net acres are set to expire during 2026 (net to our direct ownership interest only), with 2,110 and 678 net acres set to expire for the years ending December 31, 2027 and 2028 respectively, and 8,081 net acres thereafter; (ii) in the Permian Basin Asset only 200 net acres are set to expire for the year ending December 31, 2026; and (iii) in the Powder River Basin Asset, 4,822 net acres are set to expire during 2026, with 34,999 and 15,828 net acres set to expire for the years ending December 31, 2027 and 2028, respectively (net to our direct ownership interest only), with all of the remaining acreage currently held by production.
Our current Permian Basin Asset interests are all located in Chaves and Roosevelt Counties, New Mexico, where we currently operate 35 gross (33.5 net) wells, of which 28 wells are active producers, and two are active SWDs.
The Chaveroo NE Field is an extension of the Chaveroo Field that was not originally developed vertically. Our current Permian Basin Asset interests are all located in Chaves and Roosevelt Counties, New Mexico, where we currently operate 35 gross (33.5 net) wells, of which 28 wells are active producers, and two are active SWDs.
In addition, the New Mexico state legislature is considering a bill that would increase fines and fees on oil and gas operators and codify New Mexico’s 98% methane capture rule, which the New Mexico Energy, Minerals and Natural Resources Department (“ NMOCD ”) enacted in 2021.
We expect to meet or exceed the required gas capture requirements in accordance with this rule change. 32 Table of Contents In addition, the New Mexico state legislature is considering a bill that would increase fines and fees on oil and gas operators and codify New Mexico’s 98% methane capture rule, which the New Mexico Energy, Minerals and Natural Resources Department (“ NMOCD ”) enacted in 2021.
In addition, the NMOCD adopted a rule in August 2022 that requires oil and natural gas producers in counties that are at risk of non-attainment of federal ozone standards to, among other things, check emission rates and have those calculations certified by a qualified engineer, perform enhanced checks for leaks, repair those leaks within 15 days of discovery, and maintain records to demonstrate continuous compliance. 28 Table of Contents Compliance with these and other air pollution control, air monitoring, gas capture, and permitting requirements has the potential to delay the development of crude oil and natural gas projects and increase our costs of development and production, which costs could be significant.
In addition, the NMOCD adopted a rule in August 2022 that requires oil and natural gas producers in counties that are at risk of non-attainment of federal ozone standards to, among other things, check emission rates and have those calculations certified by a qualified engineer, perform enhanced checks for leaks, repair those leaks within 15 days of discovery, and maintain records to demonstrate continuous compliance.
At December 31, 2024, the Company’s total estimated proved reserves were 18.1 million Boe, of which 14.2 million Bbls were crude oil and NGL reserves, and 23.4 million Mcf were natural gas reserves. Internal Controls.
At December 31, 2025, the Company’s total estimated proved reserves were 32.1 million Boe, of which 27.3 million Bbls were crude oil and NGL reserves, and 28.8 million Mcf were natural gas reserves. Internal Controls.
Significant acreage positions and drilling potential . As of December 31, 2024, we have accumulated interests in a total of 14,105 net acres in our core Permian Basin Asset operating area, and 18,669 net acres in our core D-J Basin Asset operating area, both of which we believe represent significant upside potential.
As of December 31, 2025, we have accumulated interests in a total of 99,561 net acres in our core D-J Basin Asset operating area, 201,886 net acres in our core Powder River Basin Asset operating area, and 14,105 net acres in our core Permian Basin Asset operating area, all of which we believe represent significant upside potential.
The majority of our interests are in or near areas of considerable activity by both major and independent operators, although such activity may not be indicative of our future operations. Based on our current acreage position, we believe our Permian Basin Asset could contain up to 100 potential net 1.0 mile laterals wells on 160 acre spacing.
The majority of our interests are in or near areas of considerable activity by both major and independent operators, although such activity may not be indicative of our future operations. Based on our current acreage position, we believe our D-J Basin Asset could contain up to 450 potential gross well locations of varying lateral lengths.
Our strategy is to be the operator and/or a significant working interest owner, directly or through our subsidiaries and joint ventures, in the majority of our Permian Basin acreage so we can dictate the pace of development in order to execute our business plan.
We intend to maintain a disciplined financial profile in order to provide flexibility across various commodity and market cycles. 11 Table of Contents Our strategy is to be the operator and/or a significant working interest owner, directly or through our subsidiaries and joint ventures, in the majority of our acreage so we can dictate the pace of development in order to execute our business plan.
Our D-J Basin strategy is to participate in projects we deem highly economic on an operated or non-operated basis as our acreage position does not always allow for us to serve as operator in the D-J Basin. Our net capital expenditures for 2025 are estimated at the time of this Annual Report to range between $27 million to $33 million.
Our D-J Basin strategy is to participate in projects we deem highly economic on an operated or non-operated basis as our acreage position does not always allow for us to serve as operator in the D-J Basin.
If new proposals are received that meet our economic thresholds and require material capital expenditures, we have flexibility to move capital from our Permian Asset to our D-J Basin Asset, or vice versa, as our Permian Asset is 100% operated and nearly all held by production (“ HBP ”), allowing for flexibility of timing on development.
If new proposals are received that meet our economic thresholds and require material capital expenditures, we have flexibility to expand our capital program or move capital from our operated D-J Basin, Powder River Basin, and Permian Basin assets, allowing for flexibility on timing of development.
RAZO has been timely paying each reimbursement invoice received from the OCD in accordance with the SFO and is in full compliance with the SFO. The SFO superseded all previous Agreed Compliance Orders, as amended, entered into by and between RAZO and the OCD.
RAZO has been timely paying each reimbursement invoice received from the OCD in accordance with the SFO and is in full compliance with the SFO.
We own properties that are legacy oil fields characterized by widespread vertical and horizontal development and geological well control.
We own properties that are located in oil and gas producing basins that are geologically well defined, characterized by widespread vertical and horizontal development and geological well control.
However, in January 2025, President Trump issued an executive order directing the heads of all federal agencies to identify and begin the processes to suspend, revise, or rescind all agency actions that are unduly burdensome on the identification, development, or use of domestic energy resources. As a result, future implementation and enforcement of this rule remains uncertain at this time.
Also in January 2025, President Trump issued an executive order directing the heads of all federal agencies to identify and begin the processes to suspend, revise or rescind all agency actions that are unduly burdensome on the identification, development or use of domestic energy resources. In late February 2025, the newly seated Congress successfully passed a joint resolution (H.J.
If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, including, for example, on federal and American Indian lands, we could incur potentially significant added cost to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities, and perhaps even be precluded from drilling wells. 31 Table of Contents Moreover, because most of our operations are conducted in two particular areas, the Permian Basin in New Mexico and the D-J Basin in Colorado, and potentially extending into Wyoming in the future, legal restrictions imposed in those areas will have a significantly greater adverse effect than if we had our operations spread out amongst several diverse geographic areas.
If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, including, for example, on federal and American Indian lands, we could incur potentially significant added cost to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities, and perhaps even be precluded from drilling wells.
Any such increased costs, delays, cessations, restrictions or prohibitions could have a material adverse effect on our business, prospects, results of operations, financial condition, and liquidity.
Any such increased costs, delays, cessations, restrictions or prohibitions could have a material adverse effect on our business, prospects, results of operations, financial condition, and liquidity. Endangered Species and Migratory Birds Considerations The federal Endangered Species Act (“ ESA ”), and comparable state laws were established to protect endangered and threatened species.
In addition to state laws, local land use restrictions may restrict drilling or the hydraulic fracturing process and cities may adopt local ordinances allowing hydraulic fracturing activities within their jurisdictions but regulating the time, place and manner of those activities. 30 Table of Contents For example, on November 6, 2018, registered voters in the State of Colorado cast their ballots and rejected Proposition 112 (“ Prop. 112 ”), with 55% of ballots cast against the measure.
In addition to state laws, local land use restrictions may restrict drilling or the hydraulic fracturing process and cities may adopt local ordinances allowing hydraulic fracturing activities within their jurisdictions but regulating the time, place and manner of those activities.
Should private litigation be initiated against us, it could result in injunctions halting our development and production operations, thereby reducing our cashflow from operations, and incurrence of costs and expenses to defend any such litigation. 36 Table of Contents Related Permits and Authorizations Many environmental laws require us to obtain permits or other authorizations from state and/or federal agencies before initiating certain drilling, construction, production, operation, or other oil and natural gas activities, and to maintain these permits and compliance with their requirements for on-going operations.
Related Permits and Authorizations Many environmental laws require us to obtain permits or other authorizations from state and/or federal agencies before initiating certain drilling, construction, production, operation, or other oil and natural gas activities, and to maintain these permits and compliance with their requirements for on-going operations.
The occurrence of a significant event or adverse claim in excess of the insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on our financial condition and results of operations.
The occurrence of a significant event or adverse claim in excess of the insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on our financial condition and results of operations. 36 Table of Contents Human Capital Resources At March 27, 2026, we employed 25 people and also utilize the services of independent contractors to perform various field and other services.
Our strategy is to be the operator and/or a significant working interest owner, directly or through our subsidiaries and joint ventures, in the majority of our Permian Basin acreage so we can dictate the pace of development in order to execute our business plan.
Our strategy in the PRB and the Permian Basin is to be the operator and/or a significant working interest owner, directly or through our subsidiaries and joint ventures, in the majority of our acreage so we can dictate the pace of development in order to execute our business plan. 17 Table of Contents Our Core Areas D-J Basin Asset We hold our combined D-J Basin Asset through our wholly-owned subsidiaries PRH Holdings LLC (PRH), and North Peak Oil & Gas, LLC (NPOG) an additional wholly-owned subsidiary acquired through the Mergers.
Drilling Activity We drilled wells or participated in the drilling of wells as indicated in the table below: 2024 2023 2022 Gross Net Gross Net Gross Net Development Productive 27 5.1 8 0.4 8 4.1 Dry - - - - - - Exploratory Productive - - - - - - Dry - - - - - - Oil and Natural Gas Reserves Reserve Information.
Drilling Activity We drilled wells or participated in the drilling of wells as indicated in the table below: 2025 2024 2023 Gross Net Gross Net Gross Net Development Productive 36 8.5 27 5.1 8 0.4 Dry - - - - - - Exploratory Productive - - - - - - Dry - - - - - - 25 Table of Contents The following table sets forth information about wells for which drilling was in progress or which were drilled but uncompleted at December 31, 2025, which are not included in the above table: Drilling In Progress Drilled But Uncompleted Gross Net Gross Net Development wells - - 11 1.2 Exploratory wells - - - - Total - - 11 1.2 Oil and Natural Gas Reserves Reserve Information.
As of December 31, 2024, we held approximately 14,105 net Permian Basin acres located in Chaves and Roosevelt Counties, New Mexico, through our wholly-owned subsidiary, Pacific Energy Development Corp. (“ PEDCO ”), and which are operated by our wholly-owned operating subsidiary, Ridgeway Arizona Oil Corp.
These assets are operated by the Company’s wholly-owned operating subsidiaries, COG, Navigation Powder River, LLC (“ NPR ”), and Pine Haven Resources, LLC (“ Pine Haven ”), and are referred to as the “Powder River Basin Asset” or the “PRB Asset.” As of December 31, 2025, we held approximately 14,105 net acres in the Permian Basin located in Chaves and Roosevelt Counties, New Mexico, through our wholly-owned subsidiary, Pacific Energy Development Corp.
Other active operators in the area include Fundare Resources Company, LLC (which acquired Whiting Petroleum Company’s D-J Basin interests in late 2019), and Occidental Petroleum (which acquired Anadarko Petroleum in 2019). 18 Table of Contents Weld and Morgan Counties, Colorado and Laramie County, Wyoming 19 Table of Contents Production, Sales Price and Production Costs We have listed below the total production volumes and total revenue, net to the Company, for the years ended December 31, 2024, 2023, and 2022: 2024 2023 2022 Total Revenues $ 39,553,000 $ 30,784,000 $ 30,034,000 Oil: Total Production (Bbls) 492,396 382,794 304,507 Average sales price (per Bbl) $ 73.50 $ 72.95 $ 90.86 Natural Gas: Total Production (Mcf) 608,382 479,533 245,923 Average sales price (per Mcf) $ 2.00 $ 3.00 $ 6.41 NGL: Total Production (Bbls) 78,003 58,170 19,277 Average sales price (per Bbl) $ 27.48 $ 24.43 $ 40.87 Oil Equivalents: Total Production (Boe) (1) 671,796 520,886 364,771 Average Daily Production (Boe/d) 1,835 1,427 999 Average Production Costs (per Boe) (2) $ 10.36 $ 8.98 $ 13.12 _________________________ (1) Assumes 6 Mcf of natural gas equivalents to 1 barrel of oil.
Production, Sales Price and Production Costs We have listed below the total production volumes and total revenue, net to the Company, for the years ended December 31, 2025, 2024, and 2023: 2025 2024 2023 Total Revenues $ 45,751,000 $ 39,553,000 $ 30,784,000 Oil: Total Production (Bbls) 672,924 492,396 382,794 Average sales price (per Bbl) $ 59.78 $ 73.50 $ 72.95 Natural Gas: Total Production (Mcf) 770,919 608,382 479,533 Average sales price (per Mcf) $ 3.45 $ 2.00 $ 3.00 NGL: Total Production (Bbls) 108,657 78,003 58,170 Average sales price (per Bbl) $ 26.30 $ 27.48 $ 24.43 Oil Equivalents: Total Production (Boe) (1) 910,068 671,796 520,886 Average Daily Production (Boe/d) 2,494 1,835 1,427 Average Production Costs (per Boe) (2) $ 11.62 $ 10.36 $ 8.98 _________________________ (1) Assumes 6 Mcf of natural gas equivalents to 1 barrel of oil.
This summary includes crude oil wells in which we have a working interest: Gross Net Crude oil 117.0 59.3 Natural gas - - Total* 117.0 59.3 * Total percentage of gross operated wells is 47.0%.
Well Summary The following table presents our ownership in productive crude oil and natural gas wells at December 31, 2025. This summary includes crude oil wells in which we have a working interest: Gross Net Crude oil 344.0 225.4 Natural gas - - Total* 344.0 225.4 * Total percentage of gross operated wells is 66.3%.
The potential impact of further changes to the NEPA regulations and statutory text therefore remains uncertain and could have an effect on our business and operations. 29 Table of Contents On January 20, 2021, the Acting U.S.
The potential impact of further changes to the NEPA regulations and statutory text therefore remains uncertain and could have an effect on our operations and our ability to obtain governmental permits. 29 Table of Contents BLM leases contain relatively standardized terms requiring compliance with detailed regulations.
Our team are creative problem solvers with expertise in wellbore mechanics, completion design, production enhancement, artificial lift design, water handling, facilities optimization, and production down-time reduction. Low Cost Development . Shallow conventional reservoirs ( Management .
Technical Engineering & Operations Expertise . Lateral landing decisions incorporate log analysis, fracture-geometry modeling and an understanding of local porosity and saturation distributions. Our team are creative problem solvers with expertise in wellbore mechanics, completion design, production enhancement, artificial lift design, water handling, facilities optimization, and production down-time reduction. 15 Table of Contents Low-Cost Development .
Following the merger, we refocused our business plan on the acquisition, exploration, development and production of oil and natural gas resources in the United States. Our corporate headquarters are located in approximately 5,200 square feet of office space at 575 N. Dairy Ashford, Suite 210, Houston, Texas 77079.
Following the merger, we refocused our business plan on the acquisition, exploration, development and production of oil and natural gas resources in the United States.
Natural gas produced by us is sold at various delivery points at or near producing wells to both unaffiliated independent marketing companies and unaffiliated mid-stream companies. We receive proceeds from prices that are based on various pipeline indices less any associated fees for processing, location or transportation differentials.
We receive proceeds from prices that are based on various pipeline indices less any associated fees for processing, location or transportation differentials.
D-J Basin Asset We have grown our legacy D-J Basin Asset position to approximately 14,809 net acres in Weld and Morgan Counties, Colorado and approximately 3,860 net acres in Laramie County, Wyoming. We directly hold all of our interests in the D-J Basin Asset through our wholly-owned subsidiary, PRH.
Prior to the Mergers, we had grown our legacy D-J Basin position to approximately 15,853 net acres in Weld and Morgan Counties, Colorado, and approximately 4,823 net acres in Laramie County, Wyoming.
We believe that the Company’s approximately 14,550 net acres within the Chaveroo and Chaveroo NE Fields offer a unique opportunity to drill infill horizontal wells. The Chaveroo NE Field is an extension of the Chaveroo Field that was not originally developed vertically.
The SFO superseded all previous Agreed Compliance Orders, as amended, entered into by and between RAZO and the OCD. 23 Table of Contents We believe that the Company’s approximately 14,550 net acres within the Chaveroo and Chaveroo NE Fields offer a unique opportunity to drill infill horizontal wells.
In addition, in January 2025, President Trump issued executive orders directing (i) CEQ to provide guidance on implementing NEPA and to propose rescinding and replacing CEQ’s NEPA regulations with implementing regulations at the agency level and (ii) federal agencies to adhere to only the relevant legislated requirements for environmental reviews and to prioritize efficiency and certainty over any other objectives in such reviews.
However, in January 2025, President Trump issued an executive order requiring the Council on Environmental Quality (“ CEQ ”) to provide guidance on implementing NEPA and to propose rescinding and replacing CEQ’s NEPA regulations with implementing regulations at the agency level.
The RBL includes customary representations and warranties, and affirmative and negative covenants of the Company for a facility of that size and type, including prohibiting the Loan Parties from creating any indebtedness without the consent of the lenders, subject to certain exceptions, and requiring the Company to have a net leverage ratio (the ratio of (a) total net debt to (b) EBITDAX) of no less than 1.0 to 1.0 and a current ratio (the ratio of (i) consolidated current assets to (ii) consolidated current liabilities) of no less than 1.0 to 1.0.
Borrowings are subject to customary conditions, including compliance with financial covenants. The A&R Credit Agreement includes customary representations and warranties for a facility of that size and type, including prohibiting the Loan Parties from creating any indebtedness without the consent of the lenders, subject to certain exceptions.
Many of our competitors have a longer history of operations than we have, and many of them have also demonstrated the ability to operate through industry cycles. 13 Table of Contents Competitive Strengths We believe we are well positioned to successfully execute our business strategies and achieve our business objectives because of the following competitive strengths: Legacy Conventional Focus .
Many of our competitors have a longer history of operations than we have, and many of them have also demonstrated the ability to operate through industry cycles. Risk Management We are exposed to certain risks relating to our ongoing business operations, including commodity price risk.
Additionally, to facilitate joint development of the SW Pony Prospect, the parties agreed to an approximately 16,900 gross acre Area of Mutual Interest wherein the Joint Development Party will transfer 30% of future interests acquired by the Joint Development Party in leaseholds to PRH, and PRH will transfer 70% of future interests acquired by PRH in leaseholds to the Joint Development Party, in each case at an acquisition cost proportionate to their respective interests.
Additionally, to facilitate joint development of the SW Pony Prospect, the parties agreed to an Area of Mutual Interest covering approximately 16,900 gross acres wherein the parties have the opportunity to participate in subsequent leasehold acquisitions proportionate to their working interest under the Participation Agreement. Each party’s participation is based on their proportionate share of the total acquisition cost.
Our D-J Basin strategy is to participate in projects we deem highly economic on an operated or non-operated basis as our acreage position does not always allow for us to serve as operator in the D-J Basin. Our net capital expenditures for 2025 are estimated at the time of this Annual Report to range between $27 million to $33 million.
Due to the fragmented nature of acreage positions in some of our holdings, our ownership interest does not always allow us to serve as the operator. Our net capital expenditures for 2026 are estimated at the time of this filing to range between $16 million to $20 million.
We plan to optimize our existing assets and opportunistically seek additional acreage proximate to our currently held core acreage, as well as other attractive onshore U.S. oil and gas assets that fit our acquisition criteria, that Company management believes can be developed using our technical and operating expertise and be accretive to stockholder value. 10 Table of Contents Specifically, we seek to increase stockholder value through the following strategies: · Grow production, cash flow and reserves by developing our operated drilling inventory and participating opportunistically in non-operated projects.
Specifically, we seek to increase stockholder value through the following strategies: · Grow production, cash flow and reserves by developing our operated drilling inventory and participating opportunistically in non-operated projects.
Legacy conventional oil fields that have seen large-scale vertical development. Vertical production confirms moveable hydrocarbons ideal for horizontal development that may have been technologically or economically limited or missed. Technical Engineering & Operations Expertise . Lateral landing decisions incorporate log analysis, fracture-geometry modeling and an understanding of local porosity and saturation distributions.
Competitive Strengths We believe we are well positioned to successfully execute our business strategies and achieve our business objectives because of the following competitive strengths: Legacy Conventional Focus . Legacy conventional oil fields that have seen large-scale vertical development. Vertical production confirms moveable hydrocarbons ideal for horizontal development that may have been technologically or economically limited or missed.
The Facility has a maturity of four years and provides for an initial borrowing base of $20.0 million and an aggregate maximum revolving credit amount of $250 million. The Company has not drawn down any borrowings under the Facility as of the date of these financial statements.
The A&R Credit Agreement provides for an initial borrowing base and aggregate elected commitments of $120 million and an aggregate maximum revolving credit amount of $250 million.
We compete, and will continue to compete, with major and independent oil and natural gas companies for exploration and exploitation opportunities, acreage and property acquisitions. We also compete for drilling rig contracts and other equipment and labor required to drill, operate and develop our properties.
We also compete for drilling rig contracts and other equipment and labor required to drill, operate and develop our properties. Many of our competitors have substantially greater financial resources, staffs, facilities and other resources than we have.
The applicable production volumes from these fields for the years ended December 31, 2024, 2023, and 2022, are represented in the table below in total barrels (Bbls): 2024 2023 2022 Chaveroo (Permian Asset Base) - 168,458 211,310 Wattenberg (D-J Asset Base) 333,635 331,896 91,685 The following table summarizes our gross and net developed and undeveloped leasehold acreage Iat December 31, 2024: Total Developed (1) Undeveloped (2) Gross Net Gross Net Gross Net D-J Basin 82,560 18,669 69,760 11,150 12,800 7,519 Permian Basin 26,240 14,105 21,760 13,785 4,980 320 Total 108,800 32,774 91,520 24,935 17,280 7,839 (1) Developed acreage is the number of acres that are allocated or assignable to producing wells or wells capable of production.
The applicable production volumes from these fields for the years ended December 31, 2025, 2024, and 2023, are represented in the table below in total barrels (Bbls): 2025* 2024 2023 Oil (Bbls): Chaveroo (Permian Asset Base) - - 157,413 Wattenberg (D-J Asset Base) 251,402 199,518 220,788 D-J Wyoming (D-J Asset Base) 187,005 - - Natural Gas (Mcf): Chaveroo (Permian Asset Base) - - 66,270 Wattenberg (D-J Asset Base) 599,845 445,650 354,570 D-J Wyoming (D-J Asset Base) 137,880 - - NGL (Bbls): Chaveroo (Permian Asset Base) - - - Wattenberg (D-J Asset Base) 83,856 59,842 52,013 D-J Wyoming (D-J Asset Base) 22,805 - - Total Production (Boe)(1): Chaveroo (Permian Asset Base) - - 168,458 Wattenberg (D-J Asset Base) 435,103 333,635 331,896 D-J Wyoming (D-J Asset Base) 232,790 - - (1) Assumes 6 Mcf of natural gas equivalents to 1 barrel of oil. 24 Table of Contents The following table summarizes our gross and net developed and undeveloped leasehold acreage at December 31, 2025: Total Developed (1) Undeveloped (2) Gross Net Gross Net Gross Net D-J Basin 272,581 99,561 222,477 70,244 50,104 29,317 Powder River Basin 280,731 201,886 132,962 61,233 147,769 140,653 Permian Basin 26,240 14,105 21,760 13,785 4,980 320 Total 580,052 315,552 377,199 145,262 202,853 170,290 (1) Developed acreage is the number of acres that are allocated or assignable to producing wells or wells capable of production.
The Participation Agreement includes customary representations and warranties of the parties and also provides that any new leases acquired by the Company within certain identified tracts within two years from the date of the agreement will become Existing Leases under the agreement. 17 Table of Contents Pursuant to the Participation Agreement, in September 2023 Evolution acquired a 50% working interest share in Existing Leases covering approximately 813 net acres located in the first and second Development Blocks in exchange for the payment of $366,000 in total proceeds to the Company, and in June 2024 Evolution acquired a 50% working interest share in Existing Leases covering approximately 811 net acres located in the third, fourth and fifth Development Blocks in exchange for the payment of $365,000 in total proceeds to the Company.
To date,Evolution has acquired working interests in five Development Blocks: a 50% interest in approximately 813 net acres in the first and second Development Blocks for $366,000 in September 2023; a 50% interest in approximately 811 net acres in the third, fourth, and fifth Development Blocks for $365,000 in June 2024; and a 50% interest in approximately 640 net acres in the eighth Development Block for $288,000 in September 2025.
A copy of the report issued by Cawley, Gillespie & Associates, Inc. is attached to this Report as Exhibit 99.1 . 21 Table of Contents For more information regarding our oil and gas reserves, please refer to “ Item 8 Financial Statements and Supplementary Data ” – “ Supplemental Oil and Gas Disclosures (Unaudited) ”.
A copy of the report issued by Cawley, Gillespie & Associates, Inc. is incorporated by reference as Exhibit 99.1 to this Report.
Further, the EPA has continued with its comprehensive strategy for further reducing methane emissions from oil and gas operations, with a final rule being issued in June 2016 as part of the Subpart OOOOa NSPS. In November 2021, the EPA issued a proposed rule intended to reduce methane emissions from oil and gas sources.
In November 2021, the EPA proposed a rule to further reduce methane and VOC emissions from new and existing sources in the oil and natural gas sector, and, in November 2022, the EPA issued a supplemental proposal to expand its November 2021 proposed rule, including proposed regulation of additional sources of methane and VOC emissions, such as abandoned and unplugged wells.
The Company also acquired approximately 267 net mineral acres and 4,960 net lease acres in and around its existing footprint in the D-J Basin through multiple transactions at total acquisition and due diligence costs of $725,000 and $862,000, respectively. 22 Table of Contents Reserve-Based Lending Facility On September 11, 2024, the Company entered into a new $250 million reserve-based lending facility (the “ RBL ” or “ Facility ”) with Citibank, N.A., as administrative agent, and the lenders (including Citibank, N.A.) from time to time a party thereto.
Additionally, the Company acquired approximately 100 net mineral acres and 310 net lease acres in and around its existing footprint in the D-J Basin through multiple transactions at total acquisition and due diligence costs of $194,000 and $420,000, respectively.
(“ RAZO ”), which asset we refer to as our “ Permian Basin Asset .” Also as of December 31, 2024, we held approximately 18,669 net D-J Basin acres located in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming, through our wholly-owned subsidiary, PRH Holdings LLC (“ PRH ”), and which are operated by our wholly-owned operating subsidiary, Red Hawk Petroleum, LLC (“ Red Hawk ”), which asset we refer to as our “ D-J Basin Asset .” As of December 31, 2024, we held interests in 35 gross (33.5 net) wells in our Permian Basin Asset, of which 28 gross (26.5 net) wells are active producers, five gross (five net) wells are inactive, and two gross (two net) wells are active salt water disposal wells (“ SWD’ s”), all of which are held by PEDCO and operated by RAZO, and interests in 82 gross (21.9 net) wells in our D-J Basin Asset held by PRH, all of which 17 gross (15.4 net) wells are operated by Red Hawk and currently producing, 48 gross (6.5 net) wells are non-operated, and 17 wells have an after-payout interest.
As of December 31, 2025, we held approximately 99,561 net acres in the D-J Basin located in Weld and Morgan Counties, Colorado and Laramie County, Wyoming, through our wholly-owned subsidiaries, PRH Holdings LLC (“ PRH ”) and NPOG (the “ D-J Basin Asset ”), which assets are operated by the Company’s wholly-owned operating subsidiaries, Red Hawk Petroleum, LLC (“ Red Hawk ”), North Silo Resources, LLC (“ NSR ”), and Longs Peak Resources, LLC (“ LPR ”).

… 413 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

122 edited+84 added−57 removed184 unchanged
Biggest changeIn particular, our business in the D-J Basin of Colorado utilizes a methodology available in Colorado known as “ forced pooling, ” which refers to the ability of a holder of an oil and natural gas interest in a particular prospective drilling spacing unit to apply to the Colorado Oil and Gas Conservation Commission for an order forcing all other holders of oil and natural gas interests in such area into a common pool for purposes of developing that drilling spacing unit.
Biggest changeSuch rules, regulations, policies and legislation may affect, among other things, (i) permitting for oil and gas drilling on state, tribal and federal lands; (ii) the leasing of state, tribal and federal lands for oil and gas development; (iii) the regulation and disclosure of greenhouse gas emissions and/or other climate change-related matters associated with oil and gas operations (e.g., the development, implementation and carrying out of carbon capture and storage activities, including associated financial or tax incentives); (iv) the use of hydraulic fracturing on state, tribal and federal lands; (v) the calculation of royalty payments in respect of oil and gas production from state, tribal and federal lands (including, but not limited to, an increase in applicable royalty percentages); (vi) U.S. federal income tax laws applicable to oil and gas exploration and production companies; and (vii) the use of financial derivative instruments to hedge the financial impact of fluctuations in crude oil, natural gas and NGLs prices. 62 Table of Contents For example, our business in the D-J Basin of Colorado utilizes a methodology available in Colorado known as “ forced pooling, ” which refers to the ability of a holder of an oil and natural gas interest in a particular prospective drilling spacing unit to apply to the Colorado Oil and Gas Conservation Commission for an order forcing all other holders of oil and natural gas interests in such area into a common pool for purposes of developing that drilling spacing unit.
In addition, future events, such as terrorist attacks, wars, threat of wars, or combat peace-keeping missions, financial market disruptions, general economic recessions, oil and natural gas industry recessions, large company bankruptcies, accounting scandals, pandemic diseases, overstated reserves estimates by major public oil companies and disruptions in the financial and capital markets have caused financial institutions, credit rating agencies and the public to more closely review the financial statements, capital structures and earnings of public companies, including energy companies.
In addition, future events, such as terrorist attacks, wars and conflicts, threat of wars and conflicts, or combat peace-keeping missions, financial market disruptions, general economic recessions, oil and natural gas industry recessions, large company bankruptcies, accounting scandals, pandemic diseases, overstated reserves estimates by major public oil companies and disruptions in the financial and capital markets have caused financial institutions, credit rating agencies and the public to more closely review the financial statements, capital structures and earnings of public companies, including energy companies.
The environmental laws and regulations to which we are subject may, among other things: · require us to apply for and receive a permit before drilling commences or certain associated facilities are developed; · restrict the types, quantities, and concentrations of substances that can be released into the environment in connection with drilling, hydraulic fracturing, and production activities; · limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other “ waters of the United States , ” threatened and endangered species habitat, and other protected areas; · require remedial measures to mitigate pollution from former operations, such as plugging abandoned wells; 62 Table of Contents · require us to add procedures and/or staff in order to comply with applicable laws and regulations; and · impose substantial liabilities for pollution resulting from our operations.
The environmental laws and regulations to which we are subject may, among other things: · require us to apply for and receive a permit before drilling commences or certain associated facilities are developed; · restrict the types, quantities, and concentrations of substances that can be released into the environment in connection with drilling, hydraulic fracturing, and production activities; · limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other “ waters of the United States , ” threatened and endangered species habitat, and other protected areas; · require remedial measures to mitigate pollution from former operations, such as plugging abandoned wells; · require us to add procedures and/or staff in order to comply with applicable laws and regulations; and · impose substantial liabilities for pollution resulting from our operations.
In addition, a decline in consumer confidence or changing patterns in the availability and use of disposable income by consumers can negatively affect the demand for oil and gas and as a result our results of operations. 53 Table of Contents Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations.
In addition, a decline in consumer confidence or changing patterns in the availability and use of disposable income by consumers can negatively affect the demand for oil and gas and as a result our results of operations. 55 Table of Contents Improvements in or new discoveries of alternative energy technologies could have a material adverse effect on our financial condition and results of operations.
We cannot assure you that the analogies we draw from available data obtained by analyzing other wells, more fully explored prospects or producing fields will be applicable to our drilling prospects. 55 Table of Contents Negative public perception regarding us and/or our industry could have an adverse effect on our operations.
We cannot assure you that the analogies we draw from available data obtained by analyzing other wells, more fully explored prospects or producing fields will be applicable to our drilling prospects. 57 Table of Contents Negative public perception regarding us and/or our industry could have an adverse effect on our operations.
For example, bottlenecks in processing and transportation that have occurred in some recent periods in the Permian Basin and D-J Basin may negatively affect our results of operations, and these adverse effects may be disproportionately severe to us compared to our more geographically diverse competitors.
For example, bottlenecks in processing and transportation that have occurred in some recent periods in the Permian Basin, Powder River Basin, and D-J Basin may negatively affect our results of operations, and these adverse effects may be disproportionately severe to us compared to our more geographically diverse competitors.
If any of these companies enter into one or more transactions with our company, or if the officer’s position with any such company requires significantly more time than currently anticipated, potential conflicts of interests could arise from the officers performing services for us and these other entities.
If any of these companies enter into one or more transactions with our company, or if the officer’s or director’s position with any such company requires significantly more time than currently anticipated, potential conflicts of interests could arise from the officers or directors performing services for us and these other entities.
In addition, in areas where exploration and production activities are increasing, as has been the case in recent years in the Permian Basin and D-J Basin, the demand for, and cost of, drilling rigs, equipment, supplies, personnel and oilfield services increase.
In addition, in areas where exploration and production activities are increasing, as has been the case in recent years in the Permian Basin, the Powder River Basin, and D-J Basin, the demand for, and cost of, drilling rigs, equipment, supplies, personnel and oilfield services increase.
In addition, approximately 17% of the Company’s acreage in New Mexico, 1% of the Company’s acreage in Colorado, and 4% of the Company’s acreage in Wyoming is located on federal lands, which may be subject to federal laws, regulations and orders that could limit our ability to operate.
In addition, approximately 17% of the Company’s acreage in New Mexico, 1% of the Company’s acreage in Colorado, and 66% of the Company’s acreage in Wyoming is located on federal lands, which may be subject to federal laws, regulations and orders that could limit our ability to operate.
The prices we receive for our production, and the levels of our production, will continue to depend on numerous factors, including the following: · the domestic and foreign supply of oil, NGLs and natural gas; · the domestic and foreign demand for oil, NGLs and natural gas; · the prices and availability of competitors’ supplies of oil, NGLs and natural gas; · the actions of the Organization of Petroleum Exporting Countries, or OPEC, and state-controlled oil companies relating to oil price and production controls; · the price and quantity of foreign imports of oil, NGLs and natural gas; · the impact of U.S. dollar exchange rates on oil, NGLs and natural gas prices; · domestic and foreign governmental regulations and taxes; 44 Table of Contents · speculative trading of oil, NGLs and natural gas futures contracts; · localized supply and demand fundamentals, including the availability, proximity and capacity of gathering and transportation systems for natural gas; · the availability of refining capacity; · the prices and availability of alternative fuel sources; · the threat, or perceived threat, or results, of viral pandemics, for example, as experienced with the COVID-19 pandemic in 2020 and 2021; · weather conditions and natural disasters; · political conditions in or affecting oil, NGLs and natural gas producing regions and/or pipelines, including in Eastern Europe, the Middle East and South America, for example, as experienced with the Russian invasion of the Ukraine in February 2022, and the current armed conflict in Israel and the Gaza Strip, which conflicts are ongoing; · the continued threat of terrorism and the impact of military action and civil unrest; · public pressure on, and legislative and regulatory interest within, federal, state and local governments to stop, significantly limit or regulate hydraulic fracturing activities; · the level of global oil, NGL and natural gas inventories and exploration and production activity; · authorization of exports from the Unites States of liquefied natural gas; · the impact of energy conservation efforts; · technological advances affecting energy consumption; and · overall worldwide economic conditions.
The prices we receive for our production, and the levels of our production, will continue to depend on numerous factors, including the following: · the domestic and foreign supply of oil, NGLs and natural gas; · the domestic and foreign demand for oil, NGLs and natural gas; · the prices and availability of competitors’ supplies of oil, NGLs and natural gas; · the actions of the Organization of Petroleum Exporting Countries, or OPEC, and state-controlled oil companies relating to oil price and production controls; · the price and quantity of foreign imports of oil, NGLs and natural gas; · the impact of U.S. dollar exchange rates on oil, NGLs and natural gas prices; · domestic and foreign governmental regulations and taxes; · speculative trading of oil, NGLs and natural gas futures contracts; · localized supply and demand fundamentals, including the availability, proximity and capacity of gathering and transportation systems for natural gas; · the availability of refining capacity; · the prices and availability of alternative fuel sources; · the threat, or perceived threat, or results, of viral pandemics, for example, as experienced with the COVID-19 pandemic in 2020 and 2021; · weather conditions and natural disasters; · political conditions in or affecting oil, NGLs and natural gas producing regions and/or pipelines, including in Eastern Europe, the Middle East and South America, for example, as experienced with the recent armed conflict in Israel and the Gaza Strip, the Russian invasion of the Ukraine in February 2022, and the more recent conflict between the United States and Iran (all of which conflicts are ongoing); · the continued threat of terrorism and the impact of military action and civil unrest; · public pressure on, and legislative and regulatory interest within, federal, state and local governments to stop, significantly limit or regulate hydraulic fracturing activities; · the level of global oil, NGL and natural gas inventories and exploration and production activity; · authorization of exports from the Unites States of liquefied natural gas; · the impact of energy conservation efforts; · technological advances affecting energy consumption; and · overall worldwide economic conditions.
Although we believe there is currently sufficient supply of hydraulic fracturing services, if demand for fracturing services increases or the supply of fracturing equipment and crews decreases, then higher costs could result and could adversely affect our business, financial condition and results of operations. 50 Table of Contents We have limited control over activities on properties we do not operate.
Although we believe there is currently sufficient supply of hydraulic fracturing services, if demand for fracturing services increases or the supply of fracturing equipment and crews decreases, then higher costs could result and could adversely affect our business, financial condition and results of operations. We have limited control over activities on properties we do not operate.
Concerns over global economic conditions, the duration and effects of future pandemics, and the results thereof, energy costs, geopolitical issues (including, but not limited to the current Ukraine/Russia and Israel/Gaza Strip conflicts), inflation, increasing interest rates and the availability and cost of credit have contributed to increased economic uncertainty and diminished expectations for the global economy.
Concerns over global economic conditions, the duration and effects of future pandemics, and the results thereof, energy costs, geopolitical issues (including, but not limited to the Israel/Gaza Strip conflict, the Ukraine/Russia conflict and the current Iran conflict), inflation, increasing interest rates and the availability and cost of credit have contributed to increased economic uncertainty and diminished expectations for the global economy.
We may also damage a potentially hydrocarbon-bearing formation during drilling and completion operations. Such incidents may result in a reduction of our production and reserves from the well or in abandonment of the well. Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured.
We may also damage a potentially hydrocarbon-bearing formation during drilling and completion operations. Such incidents may result in a reduction of our production and reserves from the well or in abandonment of the well. 49 Table of Contents Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured.
Schick could be quickly replaced with personnel of equal experience and capabilities, and their successor(s) may not be as effective. If Dr. Kukes, Mr. Schick, or any of our other key personnel resign or become unable to continue in their present roles and if they are not adequately replaced, our business operations could be adversely affected.
Schick could be quickly replaced with personnel of equal experience and capabilities, and his successor(s) may not be as effective. If Mr. Schick or any of our other key personnel resign or become unable to continue in their present roles and if they are not adequately replaced, our business operations could be adversely affected. Mr.
Any such outcome could have a material and adverse impact on our cash flows and results of operations. For example, in 2014, 2016 and 2018, opponents of hydraulic fracturing sought statewide ballot initiatives in Colorado that would have restricted oil and gas development in Colorado and could have had materially adverse impacts on us.
Any such outcome could have a material and adverse impact on our cash flows and results of operations. 63 Table of Contents For example, in 2014, 2016 and 2018, opponents of hydraulic fracturing sought statewide ballot initiatives in Colorado that would have restricted oil and gas development in Colorado and could have had materially adverse impacts on us.
If we do not drill productive and profitable wells in the future, our business, financial condition and results of operations could be materially and adversely affected. Our success is dependent on the prices of oil, NGLs and natural gas.
If we do not drill productive and profitable wells in the future, our business, financial condition and results of operations could be materially and adversely affected. 43 Table of Contents Our success is dependent on the prices of oil, NGLs and natural gas.
We are not the operator on some of our properties located in our D-J Basin Asset, and, as a result, our ability to exercise influence over the operations of these properties or their associated costs is limited.
We are not the operator on all of our properties located in our D-J Basin and PRB Asset, and, as a result, our ability to exercise influence over the operations of these properties or their associated costs is limited.
As a result of the above, our creditors, in the event of the occurrence of a default under the RBL, may enforce their security interests over our assets and/or our subsidiaries which secure such obligations, may take control of our assets and operations, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations.
As a result of the above, our creditors, in the event of the occurrence of a default under the A&R Credit Agreement, may enforce their security interests over our assets and/or our subsidiaries which secure such obligations, may take control of our assets and operations, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations.
If we need to raise additional funds in the future by issuing equity securities, including sales of common stock under our December 2024 Sales Agreement entered into with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners, pursuant to which we can sell up to $8 million in at-the-market offerings, dilution to existing stockholders will result, and such securities may have rights, preferences and privileges senior to those of our common stock.
If we need to raise additional funds in the future by issuing equity securities, including sales of common stock under our December 2024 Sales Agreement entered into with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners, pursuant to which we can sell up to $8 million in at-the-market offerings, dilution to existing stockholders will result, and such securities may have rights, preferences and privileges senior to those of our common stock, and/or through drawing debt under our A&R Credit Agreement.
Inflation has also resulted in higher interest rates in the past, which in turn raises our cost of debt borrowing. 41 Table of Contents Economic uncertainty may affect our access to capital and/or increase the costs of such capital.
Inflation has also resulted in higher interest rates in the past, which in turn raises our cost of debt borrowing. Economic uncertainty may affect our access to capital and/or increase the costs of such capital.
A total of approximately 17% of the Company’s acreage in New Mexico, 1% of the Company’s acreage in Colorado, and 4% of the Company’s acreage in Wyoming is located on federal lands.
A total of approximately 17% of the Company’s acreage in New Mexico, 1% of the Company’s acreage in Colorado, and 66% of the Company’s acreage in Wyoming is located on federal lands.
If that were to happen, any investment in the Company (including, but not limited to any investment in our common stock) could become worthless. Continued increases in interest rates will cause our debt service obligations to increase and may have an adverse effect on our operations.
If that were to happen, any investment in the Company (including, but not limited to, any investment in our common stock) could become worthless. 59 Table of Contents Continued increases in interest rates will cause our debt service obligations to increase and may have an adverse effect on our operations.
Notwithstanding that, should the interests of Dr. Kukes differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE American corporate governance standards.
Notwithstanding that, should the interests of Juniper differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE American corporate governance standards.
If an event of default occurs and is continuing, the administrative agent may, with the consent of majority lenders, or shall, at the request of the majority lenders, accelerate any amounts outstanding and terminate lender commitments and declare the entire amount of obligations owed under the RBL immediately due and payable and take certain other actions provided for under the RBL.
If an event of default occurs and is continuing, the administrative agent may, with the consent of majority lenders, or shall, at the request of the majority lenders, accelerate any amounts outstanding and terminate lender commitments and declare the entire amount of obligations owed under the A&R Credit Agreement immediately due and payable and take certain other actions provided for under the A&R Credit Agreement.
Further, oil prices and natural gas prices do not necessarily fluctuate in direct relation to each other. Because approximately 60% of our estimated proved reserves as of December 31, 2024 were oil, our financial results are more sensitive to movements in oil prices.
Further, oil prices and natural gas prices do not necessarily fluctuate in direct relation to each other. Because approximately 72% of our estimated proved reserves as of December 31, 2025 were oil, our financial results are more sensitive to movements in oil prices.
This Bill, among other things, gives more power to local government entities in making land use decisions about oil and gas development and regulation, and directs the Energy & Carbon Management Commission (“ ECMC ”) (formerly the Colorado Oil & Gas Conservation Commission (“ COGCC ”)) to promulgate rules to ensure, among other things, proper wellbore integrity, allow public disclosure of flowline information, and evaluate when inactive or shut-in wells must be inspected before being put into production or used for injection.
This Bill, among other things, gives more power to local government entities in making land use decisions about oil and gas development and regulation, and directs the ECMC (formerly the COGCC)) to promulgate rules to ensure, among other things, proper wellbore integrity, allow public disclosure of flowline information, and evaluate when inactive or shut-in wells must be inspected before being put into production or used for injection.
In particular, risks associated with our business include: · The future price of oil, natural gas and NGL; · The impact of public health crises, similar to COVID-19, on the Company’s operations, future prospects, the value of its properties, and the economy in general, including the related effect on the supply and demand, and ultimate price of oil and natural gas; · Current and future declines in economic activity and recessions, changes in inflation and interest rates, and their effect on the Company, its property, prospects and the supply and demand, and ultimate price of oil and natural gas; · The status and availability of oil and natural gas gathering, transportation, and storage facilities owned and operated by third parties; · An increase in the differential between the NYMEX or other benchmark prices of oil and natural gas and the wellhead price we receive for our production may adversely affect our business, financial condition, and results of operations; · New or amended environmental legislation or regulatory initiatives which could result in increased costs, additional operating restrictions, or delays, or have other adverse effects on us; · The effect of future shut-ins of our operated production, should market conditions significantly deteriorate; · Declines in the value of our crude oil, natural gas and NGL properties resulting in impairments; · Our need for additional capital to complete future acquisitions, conduct our operations and fund our business, and our ability to obtain such necessary funding on favorable terms, if at all; · Our ability to generate sufficient cash flow to meet any future debt service and other obligations due to events beyond our control; · The fact that all of our assets and operations are located in the Permian Basin and the D-J Basin, making us vulnerable to risks associated with operating in only two geographic areas; · The speculative nature of our oil and gas operations, and general risks associated with the exploration for, and production of oil and gas; including accidents, equipment failures or mechanical problems which may occur while drilling or completing wells or in production activities; operational hazards and unforeseen interruptions for which we may not be adequately insured; the threat and impact of terrorist attacks, cyber-attacks or similar hostilities; declining reserves and production; and losses or costs we may incur as a result of title deficiencies or environmental issues in the properties in which we invest, any one of which may adversely impact our operations; · Potential conflicts of interest that could arise for certain members of our management team and Board of Directors that hold management positions with other entities and our largest stockholder; 38 Table of Contents · The limited control we have over activities on properties we do not operate; · The estimates of the value of our oil and gas properties and accounting in connection therewith; · Intense competition in the oil and natural gas industry; · Our competitors use of superior technology and data resources that we may be unable to afford or obtain the use of; · Changes in the legal and regulatory environment governing the oil and natural gas industry, including new or amended environmental legislation or regulatory initiatives which could result in increased costs, additional operating restrictions, or delays, or have other adverse effects on us; · Uncertainties associated with enhanced recovery methods which may result in us not realizing an acceptable return on our investments in such projects or suffering losses; · Requirements that we must drill on certain of acreage in order to hold such acreage by production; · Improvements in or new discoveries of alternative energy technologies that could have a material adverse effect on our financial condition and results of operations; · Future litigation or governmental proceedings which could result in material adverse consequences, including judgments or settlements; · The currently sporadic and volatile market for our common stock; · Our dependence on the continued involvement of our present management; · The fact that Dr.
In particular, risks associated with our business include: · Our need to raise additional capital to support our operations and repay outstanding indebtedness. · The future price of oil, natural gas and NGL; · The impact of public health crises, similar to COVID-19, on the Company’s operations, future prospects, the value of its properties, and the economy in general, including the related effect on the supply and demand, and ultimate price of oil and natural gas; · The effect of political and economic conditions in oil and natural gas producing countries, including uncertainty or instability resulting from civil unrest, terrorism or war, such as the current conflicts between Russia and Ukraine, the Israel-Hamas war, the Israel-Iran conflict, recent events in Venezuela, and other instability in the Middle East; · Current and future declines in economic activity and recessions, changes in inflation and interest rates, and their effect on the Company, its property, prospects and the supply and demand, and ultimate price of oil and natural gas; · The status and availability of oil and natural gas gathering, transportation, and storage facilities owned and operated by third parties; · An increase in the differential between the NYMEX or other benchmark prices of oil and natural gas and the wellhead price we receive for our production may adversely affect our business, financial condition, and results of operations; · New or amended environmental legislation or regulatory initiatives which could result in increased costs, additional operating restrictions, or delays, or have other adverse effects on us; · The effect of future shut-ins of our operated production, should market conditions significantly deteriorate; · Declines in the value of our crude oil, natural gas and NGL properties resulting in impairments; · Our need for additional capital to complete future acquisitions, conduct our operations and fund our business, and our ability to obtain such necessary funding on favorable terms, if at all; · Our ability to generate sufficient cash flow to meet any future debt service and other obligations due to events beyond our control; · The fact that all of our assets and operations are located in the Permian Basin, the Powder River Basin, and the D-J Basin, making us vulnerable to risks associated with operating in only three geographic areas; · The speculative nature of our oil and gas operations, and general risks associated with the exploration for, and production of oil and gas; including accidents, equipment failures or mechanical problems which may occur while drilling or completing wells or in production activities; operational hazards and unforeseen interruptions for which we may not be adequately insured; the threat and impact of terrorist attacks, cyber-attacks or similar hostilities; declining reserves and production; and losses or costs we may incur as a result of title deficiencies or environmental issues in the properties in which we invest, any one of which may adversely impact our operations; 38 Table of Contents · Potential conflicts of interest that could arise for certain members of our management team and Board of Directors that hold management positions with other entities and our largest stockholder; · The limited control we have over activities on properties we do not operate; · The estimates of the value of our oil and gas properties and accounting in connection therewith; · Intense competition in the oil and natural gas industry; · Our competitors use of superior technology and data resources that we may be unable to afford or obtain the use of; · Changes in the legal and regulatory environment governing the oil and natural gas industry, including new or amended environmental legislation or regulatory initiatives which could result in increased costs, additional operating restrictions, or delays, or have other adverse effects on us; · Uncertainties associated with enhanced recovery methods which may result in us not realizing an acceptable return on our investments in such projects or suffering losses; · Requirements that we must drill on certain of acreage in order to hold such acreage by production; · Improvements in or new discoveries of alternative energy technologies that could have a material adverse effect on our financial condition and results of operations; · Future litigation or governmental proceedings which could result in material adverse consequences, including judgments or settlements; · The currently sporadic and volatile market for our common stock; · Our dependence on the continued involvement of our present management; · The fact that affiliates of Juniper Capital Advisors, L.P.
In considering an investment in our common stock, you should consider that there is only limited historical and financial operating information available upon which to base your evaluation of our performance. We have incurred net losses of $106,002,000 from the date of inception (February 9, 2011) through December 31, 2024.
In considering an investment in our common stock, you should consider that there is only limited historical and financial operating information available upon which to base your evaluation of our performance. We have incurred net losses of $121,860,000 from the date of inception (February 9, 2011) through December 31, 2025.
Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the ongoing conflict between the Ukraine and Russia and the current armed conflict in Israel and the Gaza Strip, and the effect of tariffs.
Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the recent armed conflict in Israel and the Gaza Strip, and the ongoing conflicts between the Ukraine and Russia and the United States and Iran, and the effect of tariffs.
The amounts borrowed under the RBL bear interest at either the SOFR Rate or the ABR Rate. Interest rates have recently been subject to increasing volatility and any increase in the interest rates associated with our floating-rate debt would increase our debt service costs and affect our results of operations.
The amounts borrowed under the A&R Credit Agreement bear interest at either the SOFR Rate or the ABR Rate. Interest rates have recently been subject to increasing volatility and any increase in the interest rates associated with our floating-rate debt would increase our debt service costs and affect our results of operations.
These could result in a material adverse effect on our prospects, business, financial condition and our results of operations. 54 Table of Contents A substantial percentage of our Colorado and New Mexico properties, and all of our Wyoming properties, are undeveloped; therefore, the risk associated with our success is greater than would be the case if the majority of such properties were categorized as proved developed producing.
These could result in a material adverse effect on our prospects, business, financial condition and our results of operations. 56 Table of Contents Approximately 50% of our Colorado, New Mexico, and Wyoming properties, are undeveloped; therefore, the risk associated with our success is greater than would be the case if the majority of such properties were categorized as proved developed producing.
On January 20, 2021, the Acting U.S. Interior Secretary, instituted a moratorium on new oil and gas leases and permits on federal onshore and offshore lands, which a federal court blocked with a preliminary injunction in June 2021. President Biden subsequently announced that his administration will resume onshore oil and gas lease sales on federal lands effective April 18, 2022.
Interior Secretary, instituted a moratorium on new oil and gas leases and permits on federal onshore and offshore lands, which a federal court blocked with a preliminary injunction in June 2021. President Biden subsequently announced that his administration will resume onshore oil and gas lease sales on federal lands effective April 18, 2022.
Because of the ownership of securities of Dr. Kukes, investors may find it difficult to replace our current directors (and such persons as they may appoint from time to time) as members of our management if they disagree with the way our business is being operated. Additionally, the interests of Dr.
Because of the ownership of securities of Juniper, investors may find it difficult to replace our current directors (and such persons as they may appoint from time to time) as members of our management if they disagree with the way our business is being operated.
We may drill or participate in new wells that are not productive. We may drill wells that are productive, but that do not produce sufficient net revenues to return a profit after drilling, operating and other costs.
We may drill wells that are productive, but that do not produce sufficient net revenues to return a profit after drilling, operating and other costs.
Our operations in the Permian Basin in Chaves and Roosevelt Counties, New Mexico, and the D-J Basin in Weld and Morgan Counties, Colorado, and potentially extending into Laramie County, Wyoming, involve utilizing the latest drilling and completion techniques in order to maximize cumulative recoveries and therefore generate the highest possible returns.
Our operations in the Permian Basin in Chaves and Roosevelt Counties, New Mexico, the D-J Basin in Weld and Morgan Counties, Colorado, and the PRB in Laramie and Campbell Counties, Wyoming, involve utilizing the latest drilling and completion techniques in order to maximize cumulative recoveries and therefore generate the highest possible returns.
The amounts borrowed pursuant to the terms of the RBL are secured by substantially all of the present and after-acquired assets of the Company and its subsidiaries. Additionally, certain of our subsidiaries have guaranteed the amounts due, and obligations under, the RBL.
The amounts borrowed pursuant to the terms of the A&R Credit Agreement are secured by substantially all of the present and after-acquired assets of the Company and its subsidiaries. Additionally, certain of our subsidiaries have guaranteed the amounts due, and obligations under, the A&R Credit Agreement.
Global economic conditions continue to be volatile and uncertain due to, among other things, consumer confidence in future economic conditions, fears of recession and trade wars, the effect of tariffs, the price of energy, fluctuating interest rates, the availability and cost of consumer credit, the availability and timing of government stimulus programs, levels of unemployment, increased inflation, and tax rates.
Global economic conditions continue to be volatile and uncertain due to, among other things, consumer confidence in future economic conditions, ongoing wars and conflicts, including the ongoing conflict between the United States and Iran, fears of recession and trade wars, the effect of tariffs, the price of energy, fluctuating interest rates, the availability and cost of consumer credit, the availability and timing of government stimulus programs, levels of unemployment, increased inflation, and tax rates.
Borrowings under the RBL may be alternate base rate (“ ABR ”) loans or SOFR loans, at the election of the Company. Interest is payable quarterly for ABR loans and at the end of the applicable interest period for SOFR loans.
Borrowings under the A&R Credit Agreement may be alternate base rate (“ ABR ”) loans or SOFR loans, at the election of the Company. Interest is payable quarterly for ABR loans and at the end of the applicable interest period for SOFR loans.
The Company may repay any amounts borrowed under the RBL prior to the maturity date without any premium or penalty, and is required to repay certain portions of the amounts borrowed under the RBL upon the occurrence of certain events.
The Company may repay any amounts borrowed under the A&R Credit Agreement prior to the maturity date without any premium or penalty, and is required to repay certain portions of the amounts borrowed under the A&R Credit Agreement upon the occurrence of certain events.
If amounts outstanding under such RBL or future debt facilities were to be accelerated, our assets might not be sufficient to repay in full that indebtedness and our other indebtedness.
If amounts outstanding under such A&R Credit Agreement or future debt facilities were to be accelerated, our assets might not be sufficient to repay in full that indebtedness and our other indebtedness.
We may be required to alter or increase substantially our capitalization to finance these acquisitions through the use of cash on hand, the issuance of debt or equity securities, the sale of production payments, the sale of non-strategic assets, the borrowing of funds or otherwise.
We may engage in bidding and negotiating to complete successful acquisitions. We may be required to alter or increase substantially our capitalization to finance these acquisitions through the use of cash on hand, the issuance of debt or equity securities, the sale of production payments, the sale of non-strategic assets, the borrowing of funds or otherwise.
The Company has entered into an SFO with the OCD through RAZO, the Company’s New Mexico operating subsidiary, which requires, among other things, that the Company reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO. .RAZO has been timely paying each reimbursement invoice received from the OCD in accordance with the SFO and is in full compliance with the SFO.
The Company has entered into an SFO with the OCD through RAZO, the Company’s New Mexico operating subsidiary, which requires, among other things, that the Company reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset (of which seven have been plugged to date) at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.
Kukes, our former CEO and newly appointed Executive Chairman of the Company's Board of Directors, beneficially owns a majority of our common stock and that his interests may be different from other shareholders; · Our ability to maintain the listing of our common stock on the NYSE American; · Dilution caused by future offerings; · Future material impairments of our oil and gas assets; and · Other risks described under “ Risk Factors ” below. 39 Table of Contents Risks Related to the Oil, NGL and Natural Gas Industry; Our Business and Operations Declines in oil and, to a lesser extent, NGL and natural gas prices, have in the past, and will continue in the future, to adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations or targets and financial commitments.
(“Juniper”), which are entitled to appoint, and have appointed, three of the six members of the Company's Board of Directors, beneficially own a majority of our common stock and that Juniper’s interests may be different from other shareholders; · Our ability to maintain the listing of our common stock on the NYSE American; · Dilution caused by future offerings; · Future material impairments of our oil and gas assets; and · Other risks described under “ Risk Factors ” below. 39 Table of Contents Risks Related to the Oil, NGL and Natural Gas Industry; Our Business and Operations Declines in oil and, to a lesser extent, NGL and natural gas prices, have in the past, and will continue in the future, to adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations or targets and financial commitments.
If our enhanced recovery methods do not allow for the extraction of crude oil, natural gas, and associated liquids in a manner or to the extent that we anticipate, we may not realize an acceptable return on our investments in such projects.
Production and reserves, if any, attributable to the use of enhanced recovery methods are inherently difficult to predict. If our enhanced recovery methods do not allow for the extraction of crude oil, natural gas, and associated liquids in a manner or to the extent that we anticipate, we may not realize an acceptable return on our investments in such projects.
If we succeed in selling additional equity securities to raise funds, at such time the ownership percentage of our existing stockholders would be diluted, and new investors may demand rights, preferences or privileges senior to those of existing stockholders.
If we succeed in selling additional equity securities to raise funds, at such time the ownership percentage of our existing stockholders would be diluted, and new investors may demand rights, preferences or privileges senior to those of existing stockholders. If we choose to farm-out interests in our prospects, we may lose operating control over such prospects.
If this were to happen, we may be forced to scale back our business plan, sell or liquidate assets to satisfy outstanding debts, all of which could result in the value of our outstanding securities declining in value.
If this were to happen, we may be forced to scale back our business plan, sell or liquidate assets to satisfy outstanding debts, all of which could result in the value of our outstanding securities declining in value. We have been and may continue to be negatively impacted by inflation.
If such prior moratorium was to become permanent, or the federal government in the future were to grant less permits on federal lands, make such permitting process more difficult, costly, or to institute more stringent rules relating to such permitting process, it could have a material adverse effect on the value of the Company’s leases and/or its ability to undertake oil and gas operations on such the portion of its leases on federal lands.
If such prior moratorium was to become permanent, or the federal government in the future were to grant less permits on federal lands, make such permitting process more difficult, costly, or to institute more stringent rules relating to such permitting process, it could have a material adverse effect on the value of the Company’s leases and/or its ability to undertake oil and gas operations on such the portion of its leases on federal lands. 64 Table of Contents SEC rules could limit our ability to book additional proved undeveloped reserves (“ PUDs ”) in the future.
Rules adopted by federal regulators establishing federal regulation of the over-the-counter (“ OTC ”) derivatives market and entities that participate in that market may adversely affect our ability to manage certain of our risks on a cost-effective basis.
Regulations could adversely affect our ability to hedge risks associated with our business and our operating results and cash flows. Rules adopted by federal regulators establishing federal regulation of the over-the-counter (“ OTC ”) derivatives market and entities that participate in that market may adversely affect our ability to manage certain of our risks on a cost-effective basis.
The breach of any of these requirements or covenants could result in a default under the RBL or future credit facilities. Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding under such RBL or future debt facilities, including accrued interest or other obligations, to be immediately due and payable.
Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding under such A&R Credit Agreement or future debt facilities, including accrued interest or other obligations, to be immediately due and payable.
We do not have, and may not have in the future, any derivative contracts or hedging covering the amount of the basis differentials we experience in respect of our production. As such, we will be exposed to any increase in such differentials.
We do not have, and may not have in the future, any derivative contracts or hedging covering the amount of the basis differentials we experience in respect of our production.
Under applicable environmental laws and regulations, including The Comprehensive Environmental Response, Compensation, and Liability Act - otherwise known as CERCLA or Superfund, and state laws, we could be held liable for the removal or remediation of previously released materials or property contamination at such locations, or at third-party locations to which we have sent waste, regardless of our fault, whether we were responsible for the release or whether the operations at the time of the release were lawful.
Under applicable environmental laws and regulations, including The Comprehensive Environmental Response, Compensation, and Liability Act - otherwise known as CERCLA or Superfund, and state laws, we could be held liable for the removal or remediation of previously released materials or property contamination at such locations, or at third-party locations to which we have sent waste, regardless of our fault, whether we were responsible for the release or whether the operations at the time of the release were lawful. 65 Table of Contents Compliance with, or liabilities associated with violations of or remediation obligations under, environmental laws and regulations could have a material adverse effect on our results of operations and financial condition.
If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, including, for example, on federal and American Indian lands, we could incur potentially significant added cost to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities, and perhaps even be precluded from drilling wells. 60 Table of Contents New or amended environmental legislation or regulatory initiatives could result in increased costs, additional operating restrictions, or delays, or have other adverse effects on us.
If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, including, for example, on federal and American Indian lands, we could incur potentially significant added cost to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities, and perhaps even be precluded from drilling wells.
Shortages or the high cost of drilling rigs, equipment, supplies, personnel or oilfield services could delay or adversely affect our development and exploration operations or cause us to incur significant expenditures that are not provided for in our capital forecast, which could have a material adverse effect on our business, financial condition or results of operations.
Shortages or the high cost of drilling rigs, equipment, supplies, personnel or oilfield services could delay or adversely affect our development and exploration operations or cause us to incur significant expenditures that are not provided for in our capital forecast, which could have a material adverse effect on our business, financial condition or results of operations. 42 Table of Contents Drilling for and producing oil and natural gas are highly speculative and involve a high degree of risk, with many uncertainties that could adversely affect our business.
Should natural gas, NGL or oil prices decline from current levels and remain there for an extended period of time, we may choose to shut-in our operated wells, (similar to our shut-in of our operated wells in 2020 in response to the COVID-19 pandemic), delay some or all of our exploration and development plans for our prospects, or to cease exploration or development activities on certain prospects due to the anticipated unfavorable economics from such activities, and, as a result, we may have to make substantial downward adjustments to our estimated proved reserves, each of which would have a material adverse effect on our business, financial condition and results of operations.
Should natural gas, NGL or oil prices decline from current levels and remain there for an extended period of time, we may choose to shut-in our operated wells, (similar to our shut-in of our operated wells in the Permian Basin and the D-J Basin in 2020 in response to the COVID-19 pandemic), delay some or all of our exploration and development plans for our prospects, or to cease exploration or development activities on certain prospects due to the anticipated unfavorable economics from such activities, and, as a result, we may have to make substantial downward adjustments to our estimated proved reserves, each of which would have a material adverse effect on our business, financial condition and results of operations. 44 Table of Contents We have in the past incurred impairments and future conditions might require us to incur additional impairments or make write-downs in our assets, which would adversely affect our balance sheet and results of operations.
Our current operations are focused solely in the Permian Basin located in Chaves and Roosevelt Counties, New Mexico, and the D-J Basin of Weld and Morgan Counties, Colorado, with potential future operations extending into Laramie County, Wyoming, which means our current producing properties and new drilling opportunities are geographically concentrated in those two areas.
Our current operations are focused solely in the Permian Basin located in Chaves and Roosevelt Counties, New Mexico, and the D-J Basin of Weld and Morgan Counties, Colorado, with future operations extending into the Powder River Basin in Campbell and Laramie Counties, Wyoming, as a result of our October 2025 Mergers, with which means our current producing properties and new drilling opportunities are geographically concentrated in those three areas.
Kukes may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other stockholders.
Additionally, the interests of such persons may differ from the interests of the other shareholders and thus result in corporate decisions that are adverse to other shareholders.
If we acquire properties with risks or liabilities we did not know about or that we did not assess correctly, our business, financial condition and results of operations could be adversely affected as we settle claims and incur cleanup costs related to these liabilities.
If we acquire properties with risks or liabilities we did not know about or that we did not assess correctly, our business, financial condition and results of operations could be adversely affected as we settle claims and incur cleanup costs related to these liabilities. 51 Table of Contents We may incur losses or costs as a result of title deficiencies in the properties in which we invest.
If our revenues decrease as a result of lower oil and natural gas prices, operating difficulties, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to sustain our operations at current levels, further develop and exploit our current properties or invest in additional exploration opportunities.
Such events have constrained the capital available to the energy industry in the past, and such events or similar events could adversely affect our access to funding for our operations in the future. 46 Table of Contents If our revenues decrease as a result of lower oil and natural gas prices, operating difficulties, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to sustain our operations at current levels, further develop and exploit our current properties or invest in additional exploration opportunities.
Our management team has identified and scheduled drilling locations in our operating areas over a multi-year period. Our ability to drill and develop these locations depends on a number of factors, including the availability of equipment and capital, approval by regulators, seasonal conditions, oil and natural gas prices, assessment of risks, costs and drilling results.
Our ability to drill and develop these locations depends on a number of factors, including the availability of equipment and capital, approval by regulators, seasonal conditions, oil and natural gas prices, assessment of risks, costs and drilling results.
We may need to raise additional funding to complete future potential acquisitions and may be required to raise additional funds through public or private debt or equity financing or other various means to fund our operations and complete exploration and drilling operations beyond 2025 and acquire assets.
We may need additional capital to complete future acquisitions and conduct our operations and fund our business in and beyond 2026, and will need to raise additional capital to repay outstanding liabilities, and may be required to raise additional funds through public or private debt or equity financing or other various means to repay outstanding liabilities, fund our operations and complete exploration and drilling operations in and beyond 2026 and acquire assets.
Kukes and our President and newly appointed Chief Executive Officer and a member of the board, Mr. J. Douglas Schick. Our performance and success are dependent to a large extent on the efforts and continued employment of Dr. Kukes and Mr. Schick. We do not believe that Dr. Kukes or Mr.
We depend to a significant degree upon the involvement of our management, specifically, our President and Chief Executive Officer, and member of the board, Mr. J. Douglas Schick. Our performance and success are dependent to a large extent on the efforts and continued employment of Mr. Schick. We do not believe that Mr.
We have entered into a Stipulated Final Order with the Director of the OCD which requires that the Company fund the plugging and abandonment of an aggregate of approximately 299 legacy vertical wells in our Permian Basin Asset, compliance with which may be costly and our failure to comply with the SFO may materially and adversely affect our business, results of operations and cash flows.
In the event required capital becomes unavailable in the future, or more costly, it could have a material adverse effect on our business, results of operations, and financial condition. 41 Table of Contents We have entered into a Stipulated Final Order with the Director of the OCD which requires that the Company fund the plugging and abandonment of an aggregate of approximately 299 legacy vertical wells in our Permian Basin Asset, compliance with which may be costly and our failure to comply with the SFO may materially and adversely affect our business, results of operations and cash flows.
Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “ controlled company ” and, as such, can elect to be exempt from certain corporate governance requirements, including requirements that: ● a majority of the Board of Directors consist of independent directors (or 50% in the case of a smaller reporting company such as the Company); ● the board maintain a nominations committee with prescribed duties and a written charter; and ● the board maintain a compensation committee with prescribed duties and a written charter and comprised solely of independent directors. 59 Table of Contents As a “ controlled company, ” we may elect to rely on some or all of these exemptions, provided that we have to date not taken advantage of any of these exemptions and do not currently intend to take advantage of any of these exemptions moving forward.
Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “ controlled company ” and, as such, can elect to be exempt from certain corporate governance requirements, including requirements that: · a majority of the Board of Directors consist of independent directors (or 50% in the case of a smaller reporting company such as the Company); · the board maintain a nominations committee with prescribed duties and a written charter; and · the board maintain a compensation committee with prescribed duties and a written charter and comprised solely of independent directors.
As of the date of this Report, the RBL has a balance of $0. Amounts, if any, that we borrow under the RBL, are due on September 11, 2028. 57 Table of Contents Our obligations under the RBL are secured by a first priority security interest in substantially all of our assets and various Company guarantees.
As of the date of this Report, the A&R Credit Agreement has a balance of $98.0 million. Amounts, if any, that we borrow under the A&R Credit Agreement, are due on October 31, 2029. Our obligations under the A&R Credit Agreement are secured by a first priority security interest in substantially all of our assets and various Company guarantees.
Kukes can control the outcome of all matters requiring a stockholder vote, including the election of directors, the adoption of amendments to our certificate of formation or bylaws and the approval of mergers and other significant corporate transactions. Subject to any fiduciary duties owed to the stockholders generally, while Dr.
As such, Juniper can control the outcome of all matters requiring a stockholder vote, including the election of directors, the adoption of amendments to our certificate of formation or bylaws and the approval of mergers and other significant corporate transactions.
Financial difficulties encountered by our oil and natural gas purchasers, third-party operators or other third parties could decrease our cash flow from operations and adversely affect the exploration and development of our prospects and assets.
As such, we will be exposed to any increase in such differentials. 53 Table of Contents Financial difficulties encountered by our oil and natural gas purchasers, third-party operators or other third parties could decrease our cash flow from operations and adversely affect the exploration and development of our prospects and assets.
If we choose to farm-out interests in our prospects, we may lose operating control over such prospects. 46 Table of Contents Our oil and natural gas reserves are estimated and may not reflect the actual volumes of oil and natural gas we will receive, and significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
Our oil and natural gas reserves are estimated and may not reflect the actual volumes of oil and natural gas we will receive, and significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
Prior write-offs have adversely affected our balance sheet and results of operations and any future significant write-offs would similarly adversely affect our balance sheet and results of operations. 45 Table of Contents Declining general economic, business or industry conditions have, and will continue to have, a material adverse effect on our results of operations, liquidity and financial condition, and are expected to continue having a material adverse effect for the foreseeable future.
Declining general economic, business or industry conditions have, and will continue to have, a material adverse effect on our results of operations, liquidity and financial condition, and are expected to continue having a material adverse effect for the foreseeable future.
If any of our directors resign or become unable to continue in their present role, it may be difficult to find replacements with the same knowledge and experience and as a result, our operations may be adversely affected. Dr. Simon G.
Members of our Board of Directors work closely with management to identify potential prospects, acquisitions and areas for further development. If any of our directors resign or become unable to continue in their present role, it may be difficult to find replacements with the same knowledge and experience and as a result, our operations may be adversely affected.
If funding is insufficient at any time in the future and we are unable to generate sufficient revenue from new business arrangements, to complete planned acquisitions or operations, our results of operations and the value of our securities could be adversely affected. 40 Table of Contents Additionally, due to the nature of oil and gas interests, i.e., that rates of production generally decline over time as oil and gas reserves are depleted, if we are unable to drill additional wells and develop our reserves, either because we are unable to raise sufficient funding for such development activities, or otherwise, or in the event we are unable to acquire additional operating properties, we believe that our revenues will continue to decline over time.
Additionally, due to the nature of oil and gas interests, i.e., that rates of production generally decline over time as oil and gas reserves are depleted, if we are unable to drill additional wells and develop our reserves, either because we are unable to raise sufficient funding for such development activities, or otherwise, or in the event we are unable to acquire additional operating properties, we believe that our revenues will continue to decline over time.
In the case of a working interest owner, we could be required to pay the working interest owner’s share of the project costs. We cannot assure you that we would be able to obtain the capital necessary to fund either of these contingencies or that we would be able to find a new farmout party.
We cannot assure you that we would be able to obtain the capital necessary to fund either of these contingencies or that we would be able to find a new farmout party.
Similarly, increased demand for low-carbon or renewable energy sources from consumers could reduce the demand for, and the price of, the products we produce. Technological changes, such as developments in renewable energy and low-carbon transportation, could also adversely affect demand for our products.
Similarly, increased demand for low-carbon or renewable energy sources from consumers could reduce the demand for, and the price of, the products we produce.
In the future, we may have difficulty acquiring new properties. During periods of low oil and/or natural gas prices, it will become more difficult to raise the capital necessary to finance expansion activities.
In the future, we may have difficulty acquiring new properties. During periods of low oil and/or natural gas prices, it will become more difficult to raise the capital necessary to finance expansion activities. If we are unable to replace our production, our reserves will decrease, and our business, financial condition and results of operations would be adversely affected.
SEC rules could limit our ability to book additional proved undeveloped reserves (“ PUDs ”) in the future. SEC rules require that, subject to limited exceptions, PUDs may only be booked if they relate to wells scheduled to be drilled within five years after the date of booking.
SEC rules require that, subject to limited exceptions, PUDs may only be booked if they relate to wells scheduled to be drilled within five years after the date of booking. This requirement has limited and may continue to limit our ability to book additional PUDs as we pursue our drilling program.
The below table highlights the recent volatility in oil and gas prices by summarizing the high and low daily NYMEX WTI oil spot price and daily NYMEX natural gas Henry Hub spot price for the periods presented: Daily NYMEX WTI oil spot price (per Bbl) Daily NYMEX natural gas Henry Hub spot price (per MMBtu) High Low High Low Year ended December 31, 2020 $ 63.27 $ (36.98 ) $ 3.14 $ 1.33 Year ended December 31, 2021 $ 85.64 $ 47.47 $ 23.86 $ 2.43 Year ended December 31, 2022 $ 123.64 $ 71.05 $ 9.85 $ 3.46 Year ended December 31, 2023 $ 93.67 $ 66.61 $ 3.78 $ 1.74 Year ended December 31, 2024 $ 87.69 $ 66.73 $ 13.20 $ 1.21 We have a limited operating history, have incurred net losses in the past and may incur net losses in the future.
The below table highlights the recent volatility in oil and gas prices by summarizing the high and low daily NYMEX WTI oil spot price and daily NYMEX natural gas Henry Hub spot price for the periods presented: Daily NYMEX WTI oil spot price (per Bbl) Daily NYMEX natural gas Henry Hub spot price (per MMBtu) High Low High Low Year ended December 31, 2021 $ 85.64 $ 47.47 $ 23.86 $ 2.43 Year ended December 31, 2022 $ 123.64 $ 71.05 $ 9.85 $ 3.46 Year ended December 31, 2023 $ 93.67 $ 66.61 $ 3.78 $ 1.74 Year ended December 31, 2024 $ 87.69 $ 66.73 $ 13.20 $ 1.21 Year ended December 31, 2025 $ 80.73 $ 55.44 $ 9.86 $ 2.65 Quarter ended March 31, 2026* $ 98.48 $ 56.01 $ 30.72 $ 2.82 * Through March 16, 2026.
Our working interest co-owners may be unwilling or unable to pay their share of the costs of projects as they become due. In the case of a farmout party, we would have to find a new farmout party or obtain alternative funding in order to complete the exploration and development of the prospects subject to a farmout agreement.
In the case of a farmout party, we would have to find a new farmout party or obtain alternative funding in order to complete the exploration and development of the prospects subject to a farmout agreement. In the case of a working interest owner, we could be required to pay the working interest owner’s share of the project costs.
Any significant variance to our estimates could materially affect the quantities and present value of our reserves. We may have accidents, equipment failures or mechanical problems while drilling or completing wells or in production activities, which could adversely affect our business.
We may have accidents, equipment failures or mechanical problems while drilling or completing wells or in production activities, which could adversely affect our business.
There are numerous operational hazards inherent in oil and natural gas exploration, development, production and gathering, including: · unusual or unexpected geologic formations; · natural disasters; · adverse weather conditions; · unanticipated pressures; · loss of drilling fluid circulation; · blowouts where oil or natural gas flows uncontrolled at a wellhead; · cratering or collapse of the formation; · pipe or cement leaks, failures or casing collapses; · fires or explosions; · releases of hazardous substances or other waste materials that cause environmental damage; · pressures or irregularities in formations; and · equipment failures or accidents. 47 Table of Contents In addition, there is an inherent risk of incurring significant environmental costs and liabilities in the performance of our operations, some of which may be material, due to our handling of petroleum hydrocarbons and wastes, our emissions to air and water, the underground injection or other disposal of our wastes, the use of hydraulic fracturing fluids and historical industry operations and waste disposal practices.
There are numerous operational hazards inherent in oil and natural gas exploration, development, production and gathering, including: · unusual or unexpected geologic formations; · natural disasters; · adverse weather conditions; · unanticipated pressures; · loss of drilling fluid circulation; · blowouts where oil or natural gas flows uncontrolled at a wellhead; · cratering or collapse of the formation; · pipe or cement leaks, failures or casing collapses; · fires or explosions; · releases of hazardous substances or other waste materials that cause environmental damage; · pressures or irregularities in formations; and · equipment failures or accidents.
We may not be able to compete successfully in the future in acquiring prospective reserves, developing reserves, marketing hydrocarbons, attracting and retaining quality personnel and raising additional capital, which could have a material adverse effect on our business, financial condition and results of operations.
We may not be able to compete successfully in the future in acquiring prospective reserves, developing reserves, marketing hydrocarbons, attracting and retaining quality personnel and raising additional capital, which could have a material adverse effect on our business, financial condition and results of operations. 54 Table of Contents Our competitors may use superior technology and data resources that we may be unable to afford or that would require a costly investment by us in order to compete with them more effectively.
Kukes, our former Chief Executive Officer and newly appointed Executive Chairman of the Company's Board of Directors, beneficially owns 65.4% of our common stock, which gives him majority voting control over stockholder matters and his interests may be different from your interests; and as a result of such ownership, we are a “ controlled company ” under applicable NYSE American rules.
Juniper beneficially owns 52% of our common stock, which gives Juniper majority voting control over stockholder matters and Juniper’s interests may be different from your interests; and as a result of such ownership, we are a “ controlled company ” under applicable NYSE American rules. Juniper beneficially owns approximately 52% of our issued and outstanding common stock.

… 183 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+4 added−2 removed8 unchanged
Biggest changeAdditional information regarding our oil and gas properties can be found in “ Part II ” - “ Item 8 Financial Statements and Supplementary Data ” – “ Supplemental Oil and Gas Disclosures (Unaudited) ”.
Biggest changeAdditional information regarding our oil and gas properties can be found in “ Part II ” - “ Item 8 Financial Statements and Supplementary Data ” – “Supplemental Oil and Gas Disclosures (Unaudited) ”. 80 Table of Contents Office Leases In December 2022, the Company entered into a lease agreement for approximately 5,200 square feet of office space in Houston, Texas, that commenced on September 1, 2023, which expires on February 28, 2027.
The Board will also be provided updates on any material incidents relating to information systems security and cybersecurity incidents. As of and for the year ended December 31, 2024, there have been no cybersecurity incidents that have materially affected the Company’s business strategy, results of operations, or financial condition.
The Board will also be provided updates on any material incidents relating to information systems security and cybersecurity incidents. As of and for the year ended December 31, 2025, there have been no cybersecurity incidents that have materially affected the Company’s business strategy, results of operations, or financial condition.
To defend, detect and respond to cybersecurity incidents, we, among other things, implemented (i) multi-factor authentication and password protection requirements for accessing all Company systems and applications such as Company electronic mail and the Company’s banking and accounting environments, (ii) a secure email gateway using GoSecure that combines machine learning, behavioral scanning, exploit detection, signature-based detection and structure heuristics to provide defense against phishing and business electronic mail compromise attacks, spam, polymorphic malware, theft and other dangerous offensive content, (iii) endpoint protection using Microsoft Defender on Company and employee computers and Company-provided devices, (iii) a physical networking room with restricted access to only authorized personnel, (iv) regular cybersecurity training, awareness, and threat updates programs to keep all Company personnel updated and informed regarding emerging threats and best practices, and (v) daily cloud backups of the Company’s accounting environment. 73 Table of Contents Incidents are evaluated to determine materiality as well as operational and business impact, and reviewed for privacy impact.
To defend, detect and respond to cybersecurity incidents, we, among other things, implemented (i) multi-factor authentication and password protection requirements for accessing all Company systems and applications such as Company electronic mail and the Company’s banking and accounting environments, (ii) a secure email gateway using GoSecure that combines machine learning, behavioral scanning, exploit detection, signature-based detection and structure heuristics to provide defense against phishing and business electronic mail compromise attacks, spam, polymorphic malware, theft and other dangerous offensive content, (iii) endpoint protection using Microsoft Defender on Company and employee computers and Company-provided devices, (iv) a physical networking room with restricted access to only authorized personnel, (v) regular cybersecurity training, awareness, and threat updates programs to keep all Company personnel updated and informed regarding emerging threats and best practices, and (vi) daily cloud backups of the Company’s accounting environment.
We describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “ Failure of our information technology systems, including cybersecurity attacks or other data security incidents, could significantly disrupt the operation of our business .” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K.
We describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “ Our business could be adversely affected by security threats, including cybersecurity threats .” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K.
For the years ended December 31, 2024 and 2023, the Company incurred lease expense of $110,000, for the lease. The Company believes its existing leased office space is suitable for the conduct of its business. We believe that this arrangement is suitable for the conduct of our business.
The Company believes its existing leased office space is suitable for the conduct of its business. We believe that this arrangement is suitable for the conduct of our business. ITEM 3.
Removed
Office Leases The Company had a lease for its corporate offices in Houston, Texas on approximately 5,200 square feet of office space that expired on August 31, 2023 and had a base monthly rent of approximately $10,000.
Added
Incidents are evaluated to determine materiality as well as operational and business impact and reviewed for privacy impact.
Removed
In December 2022, the Company entered into a lease agreement for its existing office space that commenced on September 1, 2023, and expires on February 28, 2027. The base monthly rent is approximately $9,200 for the first 18 months and increases to approximately $9,500 thereafter. The Company paid both a security deposit and prepaid rent for $14,700, respectively.
Added
The remaining monthly payments are approximately $15,800 through February 2026 and increase to approximately $16,000 through the end of the lease. The Company paid a security deposit of $14,700. For the years ended December 31, 2025 and 2024, the Company incurred lease expense of $168,000 and $110,000, respectively, for the lease.
Added
LEGAL PROCEEDINGS Legal Matters From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.
Added
Except as disclosed below, we are not currently involved in any legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “Part I,

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

0 edited+12 added−2 removed0 unchanged
Removed
ITEM 3. LEGAL PROCEEDINGS From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.
Added
Item 3. Legal Proceedings ” of this Annual Report from, “ Part II – Item 8. Financial Statements and Supplementary Data ” in the Notes to Consolidated Financial Statements in “ Note 13 – Commitments and Contingencies ”, under the heading Other Commitments.
Removed
We are not currently involved in any legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 74 Table of Contents PART II
Added
The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations.
Added
However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.
Added
Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
Added
Governmental Proceedings From time-to-time, we receive notices of violation from governmental and regulatory authorities, including notices relating to alleged violations of environmental statutes or the rules and regulations promulgated thereunder.
Added
While we cannot predict with certainty whether these notices of violation will result in fines, penalties or both, if fines or penalties are imposed, they may result in monetary sanctions, individually or in the aggregate, in excess of a specified threshold. We have elected to use a $1 million threshold for disclosing governmental proceedings of this nature.
Added
We believe proceedings under this threshold are not material to our business and financial condition. In 2022, two environmental advocacy groups filed suit against the U.S. Department of Interior and the BLM challenging certain lease sales by the BLM beginning in December of 2017.
Added
On January 17, 2025, a three-judge panel of the Ninth Circuit Court of Appeals upheld vacatur of various leases sold by the BLM, on grounds that the BLM violated the NEPA (defined herein) and the Federal Land Planning and Management Act when selling certain leases.
Added
It remains unclear whether parties involved in the BLM Litigation will seek en banc review of the decision.
Added
While the Company is not named in the BLM Litigation (as defendants, intervenors or otherwise), certain of the leases owned by the Company in the PRB have been “ placed in suspense ” pending a ruling by the Ninth Circuit Court of Appeals in the BLM Litigation.
Added
It is possible that the Ninth Circuit Court of Appeals ruling could result in the cancellation of some or all of these leases.
Added
In the event all of these leases are cancelled, the Company would lose leases covering approximately 84,362 net acres in the PRB, upon cancellation of which leases the Company would receive reimbursement for leasehold purchase amounts paid of approximately $79,253,934. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 81 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+3 added−1 removed5 unchanged
Biggest changePreferred Stock At December 31, 2024, and as of the date of this filing, the Company was authorized to issue 100,000,000 shares of preferred stock with a par value of $0.001 per share, of which 25,000,000 shares have been designated “Series A Convertible Preferred Stock”.
Biggest changePreferred Stock At December 31, 2025, the Company was authorized to issue 100,000,000 shares of preferred stock with a par value of $0.001 per share, of which 25,000,000 shares were designated “Series A Convertible Preferred Stock”. As of December 31, 2025, and 2024, there were 17,013,637 and 0 shares of the Company’s Series A Convertible Preferred Stock outstanding, respectively.
Any future determination to pay dividends, if any, on our common stock will be at the discretion of our Board of Directors and will depend on, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions. Common Stock The Company is authorized to issue 200,000,000 shares of common stock with $0.001 par value per share.
Any future determination to pay dividends, if any, on our common stock will be at the discretion of our Board of Directors and will depend on, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions. Common Stock The Company is authorized to issue 300,000,000 shares of common stock with $0.001 par value per share.
Market Information Since September 10, 2013, the Company’s shares of common stock have traded on the NYSE American under the ticker symbol “ PED. ” Stockholders As of March 28, 2025, there were 91,339,385 shares of our common stock issued and outstanding held by approximately 614 holders of record of our common stock, not including any persons who hold their stock in “ street name ”.
Market Information Since September 10, 2013, the Company’s shares of common stock have traded on the NYSE American under the ticker symbol “ PED. ” Stockholders As of March 27, 2026, there were 13,300,621 shares of our common stock issued and outstanding held by approximately 148 holders of record of our common stock, not including any persons who hold their stock in “ street name ”.
Purchases of Equity Securities by The Issuer and Affiliated Purchasers None.
Purchases of Equity Securities by The Issuer and Affiliated Purchasers None. ITEM 6. [RESERVED] 83 Table of Contents
Recent Sales of Unregistered Securities There have been no sales of unregistered securities during the quarter ended December 31, 2024 and from the period from January 1, 2025 to the filing date of this report, which have not previously been disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Stock Transfer Agent Our stock transfer agent is Equiniti Trust Company, LLC located at 48 Wall Street, Floor 23 New York, NY 10005. 82 Table of Contents Recent Sales of Unregistered Securities There have been no sales of unregistered securities during the quarter ended December 31, 2025 and from the period from January 1, 2026 to the filing date of this report, which have not previously been disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Removed
As of December 31, 2024, and 2023, there were no shares of the Company’s Series A Convertible Preferred Stock outstanding, respectively, and there are no outstanding shares of preferred stock as of the date of this filing. Stock Transfer Agent Our stock transfer agent is Equiniti Trust Company, LLC located at 48 Wall Street, Floor 23 New York, NY 10005.
Added
On February 27, 2026, the 17,013,637 outstanding shares of Series A Convertible Preferred Stock were automatically converted into 8,506,818 shares of common stock (see “ Item 8. Financial Statements and Supplementary Data ” - “ Note 19 - Subsequent Events ”). As a result, there are no outstanding shares of preferred stock as of the date of this filing.
Added
Additionally, on February 27, 2026, the Company, after approval of the Board of Directors and the stockholders pursuant to the Written Consent, filed a Second Amended and Restated Certificate of Formation of the Company, which among other things, terminated the designation of the Series A Preferred Stock.
Added
As such, as of the date of this Report, we have no Series A Preferred Stock outstanding or designated.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

10 edited+96 added−4 removed26 unchanged
Biggest changeThe following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of Adjusted EBITDA (in thousands): Years Ended December 31, 2023 2024 (As Restated) Net income $ 17,789 $ 1,699 Add (deduct) Income tax benefit (12,751 ) - Depreciation, depletion, amortization and accretion 15,920 9,440 EBITDA 20,958 11,139 Add (deduct) Share-based compensation 1,859 2,043 Loss on sale of oil and gas properties, net 76 4,268 Gain on sale of fixed assets (12 ) - Adjusted EBITDA $ 22,881 $ 17,450 82 Table of Contents Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Biggest changeThe following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of Adjusted EBITDA (in thousands): 91 Table of Contents Years Ended December 31, 2025 2024 Net (loss) income $ (10,362 ) $ 12,293 Add (deduct) Interest expense 1,407 - Income tax expense (benefit) 8,055 (7,255 ) Depreciation, depletion, amortization and accretion 18,009 15,920 EBITDA 17,109 20,958 Add (deduct) Share-based compensation 2,763 1,859 Merger acquisition costs 7,457 - Impairment of oil and gas properties 908 - (Gain) loss on sale of oil and gas properties (2,597 ) 76 Gain on sale of fixed asset - (12 ) Note receivable – credit loss 1,378 - Adjusted EBITDA $ 27,018 $ 22,881 Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is under way or firmly planned. Otherwise, the related well costs are expensed as dry holes.
For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is under way or firmly planned.
Sales on behalf of other working interest owners and royalty interest owners are not recognized as revenues. 83 Table of Contents Stock-Based Compensation.
Sales on behalf of other working interest owners and royalty interest owners are not recognized as revenues. Stock-Based Compensation.
“EBITDA” represents net income before interest, taxes, depreciation and amortization. “Adjusted EBITDA” represents EBITDA, less share-based compensation, loss on sale of oil and gas properties, net, and gain on sale of fixed assets.
“EBITDA” represents net income before interest, taxes, depreciation and amortization. “Adjusted EBITDA” represents EBITDA, less share-based compensation, impairment of oil and gas properties, gain on sale of oil and gas properties, gain on sale of fixed asset, merger acquisition costs and note receivable – credit loss.
Lease acquisition costs are amortized over the total estimated proved developed and undeveloped reserves and all other capitalized costs are amortized over proved developed reserves.
Depreciation, depletion and amortization of capitalized oil and gas properties is calculated on a field-by-field basis using the unit of production method. Lease acquisition costs are amortized over the total estimated proved developed and undeveloped reserves and all other capitalized costs are amortized over proved developed reserves.
Exploration and evaluation expenditures incurred subsequent to the acquisition of an exploration asset in a business combination are accounted for in accordance with the policy outlined above. Depreciation, depletion and amortization of capitalized oil and gas properties is calculated on a field-by-field basis using the unit of production method.
Otherwise, the related well costs are expensed as dry holes. 92 Table of Contents Exploration and evaluation expenditures incurred subsequent to the acquisition of an exploration asset in a business combination are accounted for in accordance with the policy outlined above.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing ” (under which we have sold no shares to date), and (vi) funding through other credit or loan facilities. In addition, we may seek additional funding through asset sales, farm-out arrangements, and partnerships to fund potential acquisitions during the remainder of 2025.
In addition, we may seek additional funding through asset sales, farm-out arrangements, and partnerships to fund potential acquisitions during the remainder of 2026.
Net cash used in investing activities decreased by $8.9 million for the current year’s period, when compared to the prior year’s period, primarily due to decreased cash outlays from our capital spending relating to our drilling and completion activities. Cash financing activities. There were no cash flow financing activities in the current or prior period.
Net cash used in investing activities increased by $106.3 million for the current year’s period, when compared to the prior year’s period, primarily due to our Mergers (see “ Item 8. Financial Statements and Supplementary Data ” - Note 6 – Merger Acquisition ”). Cash financing activities.
We have opted to use the simplified method for estimating expected term, which is equal to the midpoint between the vesting period and the contractual term. Recently Adopted Accounting Pronouncements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280).
We have opted to use the simplified method for estimating expected term, which is equal to the midpoint between the vesting period and the contractual term. Business Combinations. The Company accounts for business combinations using the acquisition method, recording oil and gas assets acquired and liabilities assumed at estimated fair values.
Cash Flows (in thousands) Year Ended December 31, 2024 2023 Cash flows provided by operating activities $ 12,766 $ 23,481 Cash flows used in investing activities (26,874 ) (35,743 ) Cash flows provided by financing activities - - Net decrease in cash and restricted cash $ (14,108 ) $ (12,262 ) Cash provided by operating activities.
The Company may hedge crude oil, natural gas, or natural gas liquids (on a barrel of oil equivalent basis) to meet these requirements, but may not hedge more than 75% of anticipated production (on a barrel of oil equivalent basis) for any month. 90 Table of Contents Cash Flows (in thousands) Year Ended December 31, 2025 2024 Cash flows provided by operating activities $ 10,758 $ 12,766 Cash flows used in investing activities (133,183 ) (26,874 ) Cash flows provided by financing activities 122,139 - Net decrease in cash and restricted cash $ (286 ) $ (14,108 ) Cash provided by operating activities.
Removed
Net cash provided by operating activities decreased by $10.7 million for the current year’s period, when compared to the prior year’s period, primarily due to our net income for the current period increasing by $5.6 million and from a $4.2 million increase in depreciation, depletion, amortization and accretion (primarily due to increased sales production, noted above), offset by a $4.2 million net loss on sale of oil and gas properties (primarily from a $4.3 million loss on the sale of our EOR Operating Company subsidiary and its corresponding assets in the prior period) and by a $16.3 million net decrease to our other components of working capital in the current period (due to increased cash payments and decreased payables and expenses outstanding from our drilling and completion activity) when comparing periods. 81 Table of Contents Cash used in investing activities.
Added
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Annual Report.
Removed
The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
Added
The following discussion contains “ forward-looking statements ” that reflect our future plans, estimates, beliefs and expected performance. We caution you that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material.
Removed
Adoption of this standard is on a modified retrospective basis and had no impact on the Company’s financial position, results of operations, cash flows or net income per share. Recently Issued Accounting Pronouncements .
Added
See “ Risk Factors ” and “ Forward-Looking Statements . ” Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.
Removed
This ASU will be effective for the annual period ending December 31, 2025. The Company is currently evaluating the timing and impacts of adoption of this ASU. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. Not required under Regulation S-K for “ smaller reporting companies .”
Added
Our MD&A is organized as follows: · Overview . Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of our MD&A. · Results of Operations . An analysis of our financial results comparing the years ended December 31, 2025 and 2024. · Liquidity and Capital Resources .
Added
An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition. · Critical Accounting Estimates . Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
Added
Overview We are an oil and gas company focused on the acquisition and development of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied.
Added
In particular, we focus 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.
Added
Our current properties are located in the Denver-Julesberg Basin (D-J Basin) in Colorado and Wyoming, and the Powder River Basin (PRB) in Wyoming, and in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (Permian Basin).
Added
As of December 31, 2025, we held approximately 99,561 net acres in the D-J Basin located in Weld and Morgan Counties, Colorado and Laramie County, Wyoming, through our wholly-owned subsidiaries, PRH Holdings LLC (PRH) and North Peak Oil & Gas, LLC (NPOG) (the D-J Basin Asset), which assets are operated by the Company’s wholly-owned operating subsidiaries, Red Hawk Petroleum, LLC (Red Hawk), North Silo Resources, LLC (NSR), and Longs Peak Resources, LLC (LPR).
Added
On April 3, 2025, effective January 1, 2025, the Company sold all of its legacy 17 gross (15.4 net) operated wells in the D-J Basin in order to reduce plugging and abandonment liabilities and recurring operating expenses. The Company retained ownership of the associated leasehold interests, as these legacy wells no longer provided meaningful oil and gas production.
Added
As of December 31, 2025, the Company held approximately 201,886 net acres in the Powder River Basin, predominantly located in Laramie and Campbell Counties, Wyoming, through its wholly-owned subsidiary Century Oil and Gas, LLC (COG).
Added
These assets are operated by the Company’s wholly-owned operating subsidiaries, COG, Navigation Powder River, LLC ( NPR ), and Pine Haven Resources, LLC (“ Pine Haven ”), and are referred to as the “Powder River Basin Asset” or the “PRB Asset.” As of December 31, 2025, we held approximately 14,105 net acres in the Permian Basin located in Chaves and Roosevelt Counties, New Mexico, through our wholly-owned subsidiary, Pacific Energy Development Corp.
Added
( PEDCO ”. These assets are operated by our wholly-owned operating subsidiary, Ridgeway Arizona Oil Corp.
Added
( RAZO ), and are collectively referred to as our “Permian Basin Asset.” 84 Table of Contents As of December 31, 2025, we held interests in 184 gross (79.4 net) wells, consisting of 170 producing wells, three saltwater disposal wells, and 11 drilled but uncompleted wells (“ DUCs ”) in the D-J Basin Asset.
Added
Of these wells, 74 gross (66.9 net) were operated and 110 gross (12.5 net) were non-operated. In the PRB Asset, we held interests in 156 gross (135.4 net) wells, consisting of 140 producing wells, 15 injection wells, and one saltwater disposal well. Of these wells, 16 gross (1.4 net) were non-operated.
Added
In the Permian Basin, we held interests in 38 gross (34.5 net) wells in, consisting of 34 producing wells, two injection wells, and two saltwater disposal wells. Detailed information about our business plans and operations, including our core D-J Basin, Powder River Basin, and Permian Basin Assets, is contained under “ Part 1 ” — “ Item 1.
Added
Business ” above. How We Conduct Our Business and Evaluate Our Operations Our use of capital for acquisitions and development allows us to direct our capital resources to what we believe to be the most attractive opportunities as market conditions evolve. We have historically acquired properties that we believe have significant appreciation potential.
Added
We intend to continue to acquire both operated and non-operated properties to the extent we believe they meet our return objectives.
Added
We will use a variety of financial and operational metrics to assess the performance of our oil and natural gas operations, including: · production volumes; · realized prices on the sale of oil and natural gas; · oil and natural gas production and operating expenses; · capital expenditures; · general and administrative expenses; · net cash provided by operating activities; and · net income.
Added
Reserves Our estimated net proved crude oil and natural gas reserves at December 31, 2025 and 2024 were approximately 32.1 million barrels of oil equivalent (“ MMBoe ”) and 18.1 MMBoe, respectively.
Added
The 14.0 MMBoe increase was primarily due to increase in proved developed producing reserves related to the acquisition of properties in the D-J and Powder River Basin, and proved undeveloped reserves related to the acquisition of properties in the D-J Basin.
Added
Using the average monthly crude oil price of $65.34 per barrel (“ Bbl ”) and natural gas price of $3.39 per thousand cubic feet (“ Mcf ”) for the twelve months ended December 31, 2025, our estimated discounted future net cash flow (“ PV-10 ”) for our proved reserves was approximately $357.7 million, of which approximately $100.2 million are proved undeveloped reserves.
Added
Total reserve value at December 31, 2025, represents an increase of approximately $178.8 million or 100% from approximately $178.9 million a year earlier using the same SEC pricing and reserves methodology.
Added
The increase is primarily attributable to the increase in proved reserves volumes related to the related to the acquisition of properties in the D-J Basin and Powder River Basin from the Mergers.
Added
The reserves as of December 31, 2025 were determined in accordance with standard industry practices and SEC regulations by the licensed independent petroleum engineering firm of Cawley, Gillespie & Associates, Inc. A large portion of the proved undeveloped crude oil reserves are associated with our D-J Basin Asset.
Added
Although these hydrocarbon quantities have been determined in accordance with industry standards, they are prepared using the subjective judgments of the independent engineers and may actually be more or less.
Added
Oil and Natural Gas Sales Volumes During the year ended December 31, 2025, our net crude oil, natural gas, and NGLs sales volumes increased to 910,068 Bbls, or 2,494 barrels of oil per day (“ Bopd ”), from 671,796 Bbls, or 1,835 Bopd, a 36% increase over the previous fiscal year.
Added
The rise in production volume is largely driven by our October 2025 Mergers, resulting in an additional 303 Mboe of production during November and December 2025 combined (see further details below). 85 Table of Contents Significant Capital Expenditures The table below sets out the significant components of capital expenditures for the year ended December 31, 2025 (in thousands): Capital Expenditures Leasehold Acquisitions $ 400 Mineral Acquisitions 200 Merger Acquisition 204,600 Drilling and Facilities 34,000 Total* $ 239,200 *see “ Item 8.
Added
Financial Statements and Supplementary Data ” - “ Note 6 – Merger Acquisition and Note 7 - Oil and Gas Properties ”. Market Conditions and Commodity Prices Our financial results depend on many factors, particularly the price of crude oil and natural gas and our ability to market our production on economically attractive terms.
Added
Commodity prices are affected by many factors outside of our control, including changes in market supply and demand, which are impacted by weather conditions, inventory storage levels, basis differentials and other factors.
Added
As a result, we cannot accurately predict future commodity prices and, therefore, we cannot determine with any degree of certainty what effect increases or decreases in these prices will have on our production volumes or revenues.
Added
In addition to production volumes and commodity prices, finding and developing sufficient amounts of crude oil and natural gas reserves at economical costs are critical to our long-term success. We expect prices to remain volatile for the remainder of the year.
Added
For information about the impact of realized commodity prices on our crude oil and natural gas and condensate revenues, refer to “ Results of Operations ” below.
Added
Results of Operations The following discussion and analysis of the results of operations for each of the two fiscal years in the years ended December 31, 2025 and 2024 should be read in conjunction with the consolidated financial statements of PEDEVCO Corp. and notes thereto included herein (see “ Item 8. Financial Statements and Supplementary Data ”).
Added
References to the “ current period ” mean the year ended December 31, 2025, whereas references to the “ prior period ” mean the year ended December 31, 2024.
Added
Net (Loss) Income We reported a net loss for the year ended December 31, 2025 of $10.4 million, or ($2.25) per share, compared to net income for the year ended December 31, 2024 of $12.3 million or $2.76 per share.
Added
The decrease in net income of $22.7 million was primarily due to our October 2025 Mergers, whereby all operating expenses increased, and we incurred interest expense on our A&R Credit Agreement (for which we drew down on for the first time in October 2025) offset by a gain on derivative contracts which were novated to us on upon closing of the Mergers.
Added
Additional decreases were due to the recognition of $1.4 million from a note receivable – credit loss related to the full write-off of the Tilloo Note receivable, corresponding accrued interest and posting closing adjustments owed to the Company related to the sale of our EOR Operating Company in November 2023, and a $0.9 million impairment to oil and gas properties, offset by a net $2.6 million gain on sale on oil and gas properties when comparing periods (each discussed in more detail below) and an income tax expense of $8.1 million (see in the notes to the consolidated financial statements under “ Item 8.
Added
Financial Statements and Supplementary Data ” - “ Note 17 – Income Taxes ”). 86 Table of Contents Net Revenues The following table sets forth the revenue and production data for the years ended December 31, 2025 and 2024: 2025 2024 Increase (Decrease) % Increase (Decrease) Sale Volumes: Crude Oil (Bbls) 672,924 492,396 180,528 37 % Natural Gas (Mcf) 770,919 608,382 162,537 27 % NGL (Bbls) 108,657 78,003 30,654 39 % Total (Boe) (1) 910,068 671,796 238,272 35 % Crude Oil (Bbls per day) 1,844 1,345 499 37 % Natural Gas (Mcf per day) 2,112 1,662 450 27 % NGL (Bbls per day) 298 213 85 40 % Total (Boe per day) (1) 2,494 1,835 659 36 % Average Sale Price: Crude Oil ($/Bbl) $ 59.78 $ 73.50 $ (13.72 ) (19 %) Natural Gas($/Mcf) 3.45 2.00 1.45 73 % NGL ($/Bbl) 26.30 27.48 (1.18 ) (4 %) Net Operating Revenues (In thousands): Crude Oil $ 40,230 $ 36,193 $ 4,037 11 % Natural Gas 2,663 1,216 1,447 119 % NGL 2,858 2,144 714 33 % Total Revenues $ 45,751 $ 39,553 $ 6,198 16 % (1) Assumes 6 Mcf of natural gas equivalents to 1 barrel of oil.
Added
Total crude oil, natural gas and NGL revenues for the year ended December 31, 2025, increased $6.2 million, or 16%, to $45.8 million, compared to $39.6 million for the same period a year ago, due to a favorable volume variance of $12.2 million, offset by an unfavorable price variance of $6.0 million, due primarily to the average sales price for crude oil realized by the Company decreasing compared to the year ended December 31, 2024.
Added
The increase in production volume is related to our October 2025 Mergers whereby we added a total 303 Mboe of oil and gas production sales for the months of November and December 2025 combined.
Added
Net Operating and Other (Income) Expenses The following table sets forth operating and other expenses for the years ended December 31, 2025 and 2024 (in thousands): Increase % Increase 2025 2024 (Decrease) (Decrease) Direct Lease Operating Expenses $ 10,578 $ 6,961 $ 3,617 52 % Workovers 1,289 839 450 54 % Other* 7,253 4,649 2,604 56 % Total Lease Operating Expenses $ 19,120 $ 12,449 $ 6,671 54 % Depreciation, Depletion, Amortization and Accretion $ 18,009 $ 15,920 $ 2,089 13 % Impairment of Oil and Gas Properties $ 908 $ - $ 908 100 % General and Administrative (Cash) $ 14,025 $ 4,532 $ 9,493 209 % Share-Based Compensation (Non-Cash) 2,763 1,859 904 49 % Total General and Administrative Expense $ 16,788 $ 6,391 $ 10,397 163 % Gain (Loss) on Sale of Oil and Gas Properties, net $ 2,597 $ (76 ) $ 2,673 3,517 % Gain on Sale of Fixed Asset $ - $ 12 $ (12 ) (100 %) Note Receivable – Credit Loss $ 1,378 $ - $ 1,378 100 % Net gain on derivative contracts $ 6,253 $ - $ 6,253 100 % Interest Expense $ 1,407 $ - $ 1,407 100 % Interest Income $ 274 $ 351 $ (77 ) (22 %) Other Income (Expense) $ 428 $ (42 ) $ 470 1,119 % * Includes severance, ad valorem taxes, assessment and gathering, transportation and processing costs. 87 Table of Contents Lease Operating Expenses.
Added
Lease operating expenses increased by $6.7 million for the year ended December 31, 2025, primarily as a result of the October 2025 Mergers.
Added
The acquired properties contributed $4.4 million of direct lease operating expenses, $0.3 million of workover expenses, and $2.9 million of other operating costs, during the two-month period ended December 31, 2025, offset by $0.9 million in lower direct and variable lease operating expenses associated with lower pre-merger production volumes. Depreciation, Depletion, Amortization and Accretion.
Added
Increased by $2.1 million for the year ended December 31, 2025, compared to the prior period, primarily due to the production increase noted above. Impairment of Oil and Gas Properties.
Added
The Company recorded an impairment of oil and gas properties of $0.9 million related to undeveloped leases representing 1,034 net acres in the D-J Basin that it allowed to expire or currently have no plans to drill prior to expiration, in the current period. There was no impairment in the prior period. General and Administrative Expenses (excluding share-based compensation).
Added
Expenses increased by $9.5 million for the year ended December 31, 2025, compared to the prior period, primarily due to approximately $7.5 million of merger-related expenses.
Added
The increase also reflects two additional months of payroll expense of approximately $0.5 million and $0.8 million in bonus accruals associated with the addition of 12 employees in connection with the Mergers, and higher legal and audit fees period over period. Share-Based Compensation.
Added
Share-based compensation expense, which is included in general and administrative expenses in the Consolidated Statements of Operations, increased by $0.9 million for the year ended December 31, 2025, compared to the prior period.
Added
The increase was primarily attributable to the accelerated vesting of outstanding restricted common stock held by certain Board members who resigned, as well as the grant of restricted common stock to newly appointed Board members in connection with the Mergers. Gain (Loss) on Sale of Oil and Gas Properties, net.
Added
Represents a g ain on sale of oil and gas properties of $1.0 million related to the Company’s sale of all of its legacy 17 gross (15.4 net) operated wells in its D-J Basin Asset during the year ended December 31, 2025.
Added
Also, the Company entered into a participation agreement under which a third party acquired 5%–22% working interests in 10 wellbores for which the purchaser carried the Company’s share of related capital expenditures for the drilling and completion of certain wells.
Added
As a result, the Company recognized an additional $1.6 million gain on the sale of oil and gas properties for a combined total of $2.6 million During the year ended December 31, 2024, the Company completed three oil and gas property sales transactions, resulting in a net loss on sale of oil and gas properties of $76,000.
Added
The transactions included (i) the sale of 30 gross (5.1 net) non-operated legacy well-bores in the D-J Basin for $90,000, resulting in a loss of $865,000 (with the Company retaining the related acreage), (ii) the sale of a legacy well-bore assignment for $25,000, resulting in a gain of $54,000, and (iii) the sale of 320 net acres of leasehold rights in the D-J Basin for $750,000, resulting in a gain of $735,000, as the associated leasehold costs were fully depleted.
Added
Gain on Sale of Fixed Asset. Relates to the sale of a vehicle and the subsequent purchase of another vehicle in the prior period. We had no sales of fixed assets during the current period. Note receivable – credit loss.
Added
Represents the full write-off our Tilloo Note receivable and accrued interest as well as a post-closing adjustments receivable related to the sale of our then wholly-owned subsidiary EOR Operating Company in November 2023. Net gain on derivative contracts. In connection with the Mergers, certain derivative contracts were novated to the Company on November 1, 2025.
Added
As of December 31, 2025, the Company recognized a total gain of $6.3 million related to these derivative contracts. Of this amount, the Company recorded a realized gain of $2.1 million from derivative contract settlements, primarily due to crude oil prices at the time of settlement being above the fixed prices specified in the contracts.
Added
The Company also recorded an unrealized gain of $4.1 million related to the mark-to-market valuation of outstanding derivative contracts. The unrealized gain primarily reflects the novation of favorable derivative contracts during late 2025. (see “ Item 8.
Added
Financial Statements and Supplementary Data ” - Note 6 – Merger Acquisition and “ Note 10 – Derivatives ”).There were no derivative contracts in the prior period. 88 Table of Contents Interest expense . Interest expense increased by $1.4 million for the year ended December 31, 2025, compared to the prior period.
Added
Interest expense for the current period consisted of $1.1 million of interest incurred under the Company’s credit facility and $0.3 million related to the amortization of deferred financing costs. No interest expense or amortization of deferred financing costs was recorded in the prior period. Interest Income and Other Income (Expense).
Added
Interest income, which includes interest earned on the Company’s interest-bearing cash accounts and interest on a note receivable, decreased compared to the prior period. The decrease was primarily attributable to lower average cash balances used to fund operations and the absence of interest income from the note receivable, which was fully written off in the current period.
Added
Other income in the current period primarily relates to sales tax refunds. Other expense in the prior period was primarily associated with the subsequent disposition of a cash escrow balance related to the sale of the Company’s former wholly owned subsidiary, EOR Operating Company.
Added
Liquidity and Capital Resources The primary sources of cash for the Company during the year ended December 31, 2025 were from a draw down from our A&R Credit Agreement of $87.0 million, a private placement of Series A Convertible Preferred Stock of $35.0 million and $45.0 million in sales of crude oil and natural gas.
Added
The primary uses of cash were funds used for our Mergers and drilling, completion, acquisition and operating costs. Working Capital At December 31, 2025, the Company’s total current liabilities of $64.5 million exceeded its total current assets of $37.8 million, resulting in a working capital deficit of $26.7 million.
Added
At December 31, 2024, the Company’s total current assets of $13.2 million exceeded its total current liabilities of $6.9 million, resulting in a working capital surplus of $6.3 million. The net decrease in our working capital is primarily related to our Mergers whereby the Company assumed an additional $23.5 million in net current liabilities (see “ Item 8.
Added
Financial Statements and Supplementary Data ” - “ Note 6 - Merger Acquisition ”). Additional decreases are primarily related to an increase in payables and expenses related to our current capital drilling program, when comparing the current period to the prior period (see “ Item 8.

… 30 more changes not shown on this page.

Other PED 10-K year-over-year comparisons