Thank you so much. Okay, we will now begin with our next presentation. Please give a warm welcome to the CEO and President of PEDEVCO, Doug Schick.
Hello, everyone. Here today to talk about PEDEVCO company. Well, while we're on the disclaimer to keep you guys awake, I'll give you a little history of the background of the company. PEDEVCO's been around for a long time. I'm sure some of you have probably heard of it. I think it's been around since about 2014. However, in 2018, my group, an investor, myself, and our management team got control of the company. It was significantly distressed at the time. Had about $75 million worth of debt. The production was under 100 barrels a day. It was about to be delisted from the New York Stock Exchange. We came in, bought out the debt for $7.7 million, $0.10 on the dollar.
Ended up converting it to equity and rolling in some other assets that we had under contract to form, you know, what would be the basis of what PEDEVCO is today. From 2018 until October of this year or October of 2025, we grew the company from 100 barrels a day to a peak of about 3,000 barrels a day. In October 2025, we merged with four portfolio companies of a major private equity fund in Houston called Juniper Capital to build a Rockies consolidation vehicle. Turning to the highlights of the merger, At merger time, we were producing about 6,500 BOE, barrels of oil equivalent per day of oil and gas production.
The merger created 32 million barrels of proved reserves across 310,000 acres in the D-J Basin, the Powder River Basin, which are both part of the Rocky Mountains, and about 14,000 acres in the Permian Basin. Our production is heavily oil weighted. We have 88% oil cut on our production. Balance sheet's very simple. All we have is public equity and straight conforming RBL debt. The merger created significant cost synergies. We think we're gonna be able to wring about $3 million-$4 million a year of G&A reductions from the merger and about $8 million-$10 million, possibly up to $12 million of annualized lease operating expenses in the merger that we're working on now that will be fully realized in 2027.
Like I said before, our basis here is we're trying to build a Rockies Basin-focused consolidator of E&P companies. The company at a glance. Post-merger, we have 13.3 million shares. At the time of the merger, we had 6,500 barrels a day of production. Fourth quarter CapEx was pretty heavy, we had a lot of projects coming online in the fourth quarter that helped us in the fourth quarter. We exited at 7,700 barrels a day into the first quarter of this year, which our full year or full quarter rate this year was 8,100 barrels of oil a day. Current debt's about $87 million, which on our targeted EBITDA guidance of $60 million-$70 million is about $1.3 million debt to EBITDA.
That $60 million-$70 million of EBITDA is at $65 and $3.50 price decks. Those of you who follow the oil markets know that oil is trading at 106 today, I think we're gonna be, you know, on the very top side of that EBITDA guidance. Once we know what prices look for the remainder of the year, we'll issue additional guidance on that. Total asset value of the company at year-end 2025, which again was at, I think, a $63 price deck, is $357 million. First quarter highlights. 8,100 barrels a day, which is a 374% increase year-over-year. Some of that's due to the merger, some of that's due to our own organic development. Revenue, 360% year-over-year increase.
Adjusted EBITDA, which is our measure of cash flow, 404% increase year-over-year to $21.5 million. Just for context, PEDEVCO before the merger, generally our EBITDA was usually $18 million-$25 million a year, so we essentially quadrupled the size of the company. CapEx was light in the quarter. That's because the beginning of the quarter, oil prices were under $60 a barrel, so all of our plans for the year were around optimization and not really drilling. Our plans were to optimize assets, pay down debt from the merger, and get going. CapEx will ramp in the back half of the year, and I'll talk about that a little later. I do wanna address the net loss 'cause it's $25.6 million.
However, $27 million of that is based on negative mark to markets on our hedge position. Anytime you do a deal, you have to get bank financing. The banks are gonna require you to hedge. Our hedge is, you know, our hedge book's all over the place. It's usually floors at 55, ceilings at 65, and then we bought calls at 80 to participate in the high upside. Well, anyways, over a three-year period, that hedge book has projected losses because we're hedged at, you know, 65 and oil's 100. They mark that all to market, and it shows up as a loss on our hedge, on our net income. The number I like to look at here is EBITDA because that's really the closest cash flow figure that we have. This is what the asset base looks like.
The orange colors are legacy PEDEVCO positions. The yellow colors are legacy Juniper positions. In our biggest core area, which is in the Rockies, D-J Basin, we've got 90,000 acres producing about 6,000 barrels a day. You know, about 2,500 to 3,000 of that is legacy PEDEVCO, and the rest is legacy Juniper. In the Powder River Basin, we have 202,000 net acres, an absolute enormous acreage position, but we're only producing about 800-900 barrels a day there. A lot of this acreage is actually held by federal suspense and production, that gives us a lot of optionality on this acreage position.
When I say we're gonna be a consolidator of assets in the Rockies, these are the two basins we're primarily focusing on, is the D-J Basin and the Powder River Basin. Especially the Powder River Basin going forward because we believe it's the next major basin, as kind of things develop more in the Permian. Also, there's a lot of small operators in the Powder River Basin that, you know, it's kind of ripe for consolidation. We also have our Permian Basin asset that produces about 1,200 barrels a day gross. Of that, 600-800 net. That's kind of in, north or east central New Mexico, right near the Texas border. Year-end reserves, I guess $65.34 and $3.30 was what year-end pricing was at.
Under that scenario, we have 32 million barrels of oil equivalent in reserves. In our proved developed producing reserves, meaning the value of our current production as it sits today at year-end 2025 was $257 million. We have about $100 million in PUD value for $357 million. I'll address it on the next slide, but our PUD value, I would say we're very conservative on our, on our proved undeveloped bookings, just due to the way that the SEC allows you to book reserves. We like to be conservative, so we don't ever have to write off reserves. Really more what our inventory looks like besides our PUDs, these are the identified locations we currently have. In the D-J Basin, we think we have about 515 gross locations to be drilled.
In the Powder River Basin on our current asset, we think we have 455 locations to be drilled. On the Permian, I mean, it's varies a little. We've got 70 guaranteed locations, and that could be possibly double because there's another formation there that we're evaluating currently. Over to the right, these are just kind of the break-even prices for drilling completions all in cost baked. D-J Basin, you need oil to be above $50 a barrel to get a 10% rate of return, right? In the Permian, we need oil to be above $45 to get a 10% rate of return. On the Powder, which has our lowest break-even cost in the Sussex and Turner, you need $32.
We've got about seven or eight other formations that we target in the Powder that have higher, break evens. That's just the very best of them. Just looking back on what the scale of the merger created, right before merger time, we were rough like 1,500 barrels a day. I said 3,000 because we had 29 wells in progress on the PEDEVCO side that if you look at PEDEVCO standalone in January, we were at like 3,300 barrels a day. Juniper added about 5,000 barrels of production through the merger. At merger time, that got us up to 6,500 barrels a day, and like I said before, 7,700 exit rate, Q1, we averaged 8,100 barrels a day. On our reserves, we basically doubled our reserves.
However, like I said, we only book what we can drill over the next five years out of cash flow as proved reserves. Very light reserve bookings. First quarter brought 31 wells online. Those significantly exceeded our expectations. During the merger, we brought in $35 million of new equity. $18 million of that was brought in by Juniper, our new partner, and the rest of it was brought in by basically existing equity holders and management. Also at the merger, we redid our reserve-based loan, increasing it from $20 million to $120 million, and we currently have net debt of $87 million. Looking to what the cost synergies of the merger, if you look at the two companies standalone, we would have been $11 million-$12 million in G&A.
Through rationalizations in the merger, both duplicated systems, you know, public company expenses being cut out, loan costs being cut out, all of those type of issues. Pulling those out, we think we're gonna have an $8million -$9 million run rate in late 2026 and 2027 going forward. The merger created 25%-30% reduction in G&A, right? Standalone PEDEVCO, G&A was always right around $7 per BOE, and now in the first quarter, we were $3.59 cash BOE, and our target's $3.50. In 1 quarter, we have pretty much gotten our cost rationalizations down to our target. Also this year, we announced a $10 million-$13 million capital program for production optimization and expense optimization.
We think after that program is fully spent, we think we're going to get $800,000 to $1 million per month in LOE reduction. What we're doing there is on a lot of the older Juniper assets, you know, they might have electric submersible pumps that are very expensive. They, you know, electricity on those pumps can be up to $30,000 a month. Every time you have to do a workover, it's a $250,000 workover. Very expensive, right? When you have production on a well that gets below 600, 500, 600 barrels of total fluid, you can convert those larger pumps to rod pumps. You know, the pumps you're used to seeing driving along West Texas, right? Rod pumps are fairly cheap to operate, $9,000 a month maybe.
You get $20,000-$30,000 per month per well in electricity savings. On workover savings, a rod pump workover is $25,000-$30,000, where an ESP workover is $250,000. Through this program, we think we're gonna be able to optimize things to where we're gonna save roughly $10 million-$12 million. It says $8 million-$10 million, but I think we'll be more $10 million-$12 million over the long term on lease operating cost. That combined with LOE, we think by mid 2027, we're gonna have $12 million-$15 million EBITDA uplift just from expense optimizations through the merger. This is just kind of a recap of what I've said before. The 2025 development program is really being realized in early 2026.
So 2026 CapEx on the front half of the year is a little bit light. As oil prices stay up, when we get in order, we will announce what our second half development's gonna look like. We do have well proposals and things that are coming through, so there will be development in the second half that will be realized in early 2027. Also Q1 2026 was kind of the peak production month for the year at 8,100 barrels, and that's because all of those wells basically came online in early 2026. When we give guidance of, like, 6,500-7,000 a year, that is our guidance, right? We're not gonna grow from 8,100-9,000 barrels this year.
I just wanna make sure investors understand that our guidance is an average production for the full year. Do not extrapolate first quarter. Just back to the whole reason we did the merger in the first place. Lots of discussions with our main private equity backer here. You know, we all have a very large interest in consolidating a large Rocky Mountain-focused E&P company. For anyone who's been investing in oil and gas for 20+ years, you might remember 15, 20 years ago, there were multiple small public companies operating in the D-J Basin, Powder River Basin. Well, a lot of small companies have gone away, right?
A lot of the bigger companies have shifted their focus to strictly the Permian Basin, which we think, well, not think, I mean, leaves a huge opportunity up here. I mean, the Powder River Basin is ginormous. The D-J Basin is ginormous. There's not a natural consolidator in the Powder River for sure. I mean, the D-J has Chevron, in the Powder River, there's lots of opportunity for consolidation, and we're gonna look to take advantage of that. We have a strong balance sheet, you know, public equity, two good financial backers that can help us backstop acquisitions, accretive acquisitions. We're not looking to, you know, we're not looking to do anything that's not additive on a per share basis. Why investment in PEDEVCO? Company is 6,500+ BOE a day, 32 million in proved reserves.
I don't think there's another small cap E&P company that has an asset base anything close to ours. $358 million PV-10 at $65 oil. I mean, I think our enterprise value right now is $290 million roughly. You know, I think we're selling at a pretty good discount. We're highly levered to oil. We're not a gas producer. 88% of our production is oil and liquids. Conservative balance sheet. In the first quarter, you know, exiting the year, just to tell you what our cash flow profile looks like. Exiting the year, we had $34 million in negative working capital. At the end of the first quarter, we had $7 million in negative working capital. You know, we have the ability to pay down debt.
We have the ability to pay our bills. We have the ability to grow within cash flows. Our management, our other shareholders are aligned with the public shareholders because we own 85% of the company. We're looking to build a Rockies consolidation platform. Just real quick, management team. Almost every person on the management team has over 20 years of experience, all deep oil and gas experience, with companies from majors down to small independents down to, you know Several of us started our own companies that ended up merging into PEDEVCO, right? Board of directors is myself, two, directors from Juniper, which like I said, holds 51% of the common equity, and then three independent directors. A majority independent board. With that, I'll open it up to any questions.
You mentioned, there's been, you know, a lot of carnage in those basins in the last 10+ years. There's a lot of private players when you kind of look at their stock holders, I'm just curious where expectations of valuation relative. [audio distortion]
Yeah. The question was there's been a lot of carnage in really the entire oil and gas markets in the last really since 2014. It's been up and down. What are price expectations? Tell me if I'm answering this wrong. You know, in the Permian, prices are extremely expensive, right? I mean, you might if you're looking at depending on what metric you're looking at, you might be willing to pay PV-10 or PV-12 for an asset, give a little bit of upside for acreage, right? Looking at it on a different metric, like dollar per flowing barrel. In the Permian, you might be willing to spend anywhere from $55,000 - $70,000 per flowing barrel, right?
Whereas in the D-J Basin, we're looking at buying assets on a flowing barrel basis for like $32,000 per flowing barrel, right? We're looking at buying assets for PV-10 to or PV-15 to PV-20, right? Just a lot cheaper to buy assets in the Rockies than it is in the Permian. You know, we've dealt a lot in distress, right? When we bought a controlling interest in PEDEVCO, it was severely distressed, and we turned it around. Our Permian assets were severely distressed when we bought them and turned them around. You know, when we did the Juniper merger, they had a lot of debt and we had no debt, and we fixed that situation, right?
We look for opportunities where companies are distressed and where there are issues to where we can use our balance sheet and our expertise to turn things around. That's just the nature of what I've been doing for the last 15 years. I don't know if that answers your question perfectly.
I'm just curious, relative to where you want to buy assets relative to where sellers.
Oh, you mean the bid-ask spread?
Yeah.
Yeah. I mean, the bid-ask spread was, you know, three months ago, there was no problem with bid-ask spreads. I mean, we were buying assets for what we wanted to buy them for. We have not put an offer out on anything recently to know exactly if buyers' expectations have increased a lot. My guess is they probably have, right? They probably will be. I'm sure things are gonna get more expensive. As the back of the commodity curve comes up, right? I mean, it was heavily backwardated. As the back of the curve comes up and you can hedge some of those volumes out, I mean, you can solve for that and still lock in rates of return if you can put those hedges on properly.
How do you think about capital allocation between buybacks, debt reduction and reinvestment at the current trading multiple? What's priority for you guys?
Well, debt reduction was a big one. I mean, right now we're just over 1 time levered, which is kind of our target. That's not as much of a concern as it was at $60 oil. Buybacks, just because of the nature of our capital structure, buybacks aren't really in the card. We only have like an 11% float, we'd like to increase our float, not decrease it, because, you know, we wanna be a viable public company. While I would love to buy, you know, when the stock's cheap and I think it's good to do it, I'd love to buy back shares, it just doesn't really necessarily work for our structure right now. Did you ask about dividends?
Reinvestments.
Oh, well, reinvestment is at current oil prices, reinvestment's where it's at, right? I mean, our average project at 65 and $3. 65 and $3.50 gas is 30%-40% rate of return. At $100 oil, it's multiple hundred IR. You know, the rates of return are so high that you have to look at reinvestment. With that said, you know, we're not gonna go blow through all of our inventory in a few years, right? I mean, we wanna grow steadily through organic growth and then target acquisitions to get to the scale that we think we need to be at.
What does that look like for you guys?
I mean, ultimately, 50,000 barrels a day is where we'd like to be.
50,000 barrels.