Pedevco Corp Earnings Call Highlights Post-Merger Upside

Pedevco Corp ((PED)) has held its Q4 earnings call. Read on for the main highlights of the call.

Pedevco Corp’s latest earnings call struck a cautiously upbeat tone as management showcased the benefits of its Juniper merger while acknowledging near-term headwinds. Executives emphasized sharply higher scale, reserves and cash flow alongside sizable cost-saving initiatives, but also pointed to merger-related losses, elevated lease operating costs and tight liquidity as key risks investors must monitor.

Scale and Production Growth from Juniper Merger

The October 31 merger with Juniper rapidly transformed Pedevco from a small producer into a mid-sized platform. Fourth-quarter combined output averaged more than 5,300 BOE per day, up from roughly 1,500 BOE per day before the transaction and totaling 483,159 BOE produced in the quarter.

Large Proved Reserves and Development Inventory

Management highlighted that proved reserves nearly doubled to 32.1 million BOE, which they value at about $27 per share following a 1-for-20 reverse split. The company now controls over 310,000 net acres across the DJ, Powder River and Permian basins, with more than 1,000 identified drilling locations across multiple stacked formations.

Strong Adjusted EBITDA Growth

Despite weaker oil prices, Pedevco delivered a sharp jump in profitability on an adjusted basis, reporting fourth-quarter adjusted EBITDA of $15.4 million. That represented 203% year-over-year growth and underscored the immediate cash flow contribution from the acquired assets even in a softer commodity tape.

Material Cost Optimization Opportunity

Management outlined a focused set of capital projects, including pump conversions, compression optimization and recompletions, totaling about $10 million to $13 million. These efforts are expected to lower lease operating expense by up to $1 million per month, equating to roughly $10 million to $12 million in annual savings and driving a potential EBITDA uplift of $13 million to $15 million as projects mature.

Clear 2026 Financial Guidance and Capital Plan

The company laid out 2026 adjusted EBITDA guidance of $60 million to $70 million, assuming $65 oil and $3.50 gas, signaling confidence in the integrated platform. Known 2026 capital spending is pegged at $16 million to $20 million, with around $6 million to $7 million earmarked for DJ drilling and completions and $10 million to $13 million for optimization, meaning capital remains tightly targeted.

Liquidity and Leverage Targets

On the balance sheet, Pedevco reported $98 million drawn on its credit facility as of early February against a $120 million borrowing base and about $25 million of remaining liquidity. Management aims to keep leverage at or below 1.5 times EBITDA and projects net debt to EBITDA of roughly 1.2 to 1.3 times by year-end 2026 at $65 oil.

Operational Progress — Wells Online

Operationally, the company ramped activity in 2025, participating in 32 DJ Basin wells, with 31 coming online late in the year, and drilling and completing four operated Permian wells. These new wells are feeding a strong flush of production in the first quarter of 2026 and providing a near-term boost to volumes and cash flow.

Strong Insider Alignment and Sponsor Support

Pedevco underscored robust insider alignment, noting that management and insiders own a significant majority of the company. Juniper Capital further reinforced its commitment by injecting roughly $18.6 million of new equity at the time of the merger, a vote of confidence that may reassure shareholders weighing the elevated leverage.

GAAP Net Loss Driven by Merger-Related Items

On a GAAP basis, Pedevco posted a full-year 2025 net loss of $10.4 million, but the call stressed that this was largely driven by nonrecurring merger and accounting items. These included $7.5 million of merger costs, $8.1 million of deferred tax expense, $1.4 million in interest, a $1.4 million note receivable write-off and $2.8 million of accelerated share-based compensation, partly offset by derivative and asset sale gains.

Higher Unit LOE from Acquired Assets

Investors were reminded that integrating the Juniper assets has temporarily pushed unit costs higher, with full-year direct LOE rising to $11.62 per BOE from $10.36 per BOE, a 12.2% increase. Management expects these per-barrel costs to trend lower as optimization projects roll through the system and scale efficiencies are realized across the combined asset base.

Commodity Price Headwinds

The improved operating scale had to be achieved against a tougher pricing backdrop, with realized crude prices declining about 16% year over year. That drop weighed on revenue per barrel and highlighted Pedevco’s exposure to commodity volatility, even as production and adjusted EBITDA moved sharply higher.

Leverage and Liquidity Constraints

While management sounded confident about long-term returns, they acknowledged tight near-term liquidity and borrowing base risk. With $98 million outstanding against a $120 million borrowing base and roughly $25 million of available liquidity, the company remains reliant on disciplined capital allocation and favorable spring redetermination outcomes.

Timing and Execution Risk on Optimization and Development

The earnings call emphasized that cost reductions and efficiency gains will be phased in over time, with more meaningful LOE and G&A benefits expected from mid-2026 into 2027. Powder River development remains longer dated, Colorado permitting is progressing slowly and management cautioned that the elevated first-quarter 2026 flush production should not be extrapolated as a sustainable annual run rate.

Dependence on Commodity Assumptions for Outlook

Pedevco’s outlook is closely tied to its commodity deck, with 2026 EBITDA guidance and leverage projections explicitly based on $65 oil and $3.50 gas. Any significant deviation in prices or a decision to accelerate development could shift both the cash flow trajectory and leverage profile, creating upside or downside for equity investors.

Forward-Looking Guidance and Strategic Positioning

Looking ahead, management expects 2026 adjusted EBITDA of $60 million to $70 million, funded alongside $16 million to $20 million of capital spending primarily from operating cash flow, cash on hand and existing credit capacity. They anticipate LOE falling from the current $11.62 per BOE toward material savings, cash G&A stabilizing around $3.50 to $4.00 per BOE and pre-decline production normalizing near 6,400 to 6,500 BOE per day with leverage held at or below 1.5 times.

Pedevco’s call painted the picture of a small-cap E&P that has bulked up quickly through merger and now must execute on optimization and capital discipline. For investors, the story hinges on converting a larger reserve base and rich inventory into durable free cash flow while navigating commodity swings, tighter liquidity and timing risk, with early signs suggesting the upside may outweigh the near-term challenges.