Pedevco (PED) Q3 2026 earnings review
Pedevco's production fell 14% while its spending plan doubled
Pedevco, a Rocky Mountain oil producer, pumped less oil this summer but set aside a much bigger drilling budget. Daily output fell 14% from the previous quarter, and the company blamed wells it closed while drilling next door. By our math, those closures explain only about a quarter of the lost oil. Interim chief executive R.T. Dukes still expects "sequentially stronger production results in the fourth quarter".
| Sales vs. both merged companies a year ago | $35.5M +20% (by our math) |
|---|---|
| Daily production | 5,850 barrels of oil equivalent −14% from last quarter |
| Cash operating profit (Adjusted EBITDA) | $14.7M −21% from last quarter |
| Full-year spending plan | Raised to $37–42M up to $20M before |
⚖️ Verdict: 🔴 Bearish
The story got worse, because output kept falling while the growth Pedevco expects from new drilling arrives only in 2027. One relief: its banks kept the $125 million credit line, and the company held its cash-profit target for the year.
The question now is whether new wells can lift output faster than old ones lose it. If they can, the heavier spending pays off; if not, Pedevco carries larger bills with no added production. Its 2027 budget and well count, not yet published, will tell.
🐂 Bull Case
Spending Plan Doubles to Drill New Wells
Interim chief executive R.T. Dukes wants Pedevco to turn its drilling sites into output. He calls this next phase "translating that inventory into production growth".
The oil producer more than doubled its full-year spending plan. Dukes's team drilled a new well in Wyoming's Powder River Basin and bought 5,678 acres in the Mowry, a shale layer there. Partners started pumping from three new wells in early November.
This matters because older wells lose output every quarter, so only new wells can lift production. But the Wyoming well "is not expected to be brought online before year-end", and Pedevco expects the production growth in 2027.
What to watch: a 2027 budget with a well count, which Pedevco has not yet published. It would show how much production the extra money buys.
Cash Profit Stayed Within the Year's Plan
Pedevco tracks Adjusted EBITDA, its cash operating profit after hedge payments and before one-offs. The $14.7 million it earned this quarter sits inside the range its full-year target left, by our math.
Sales rose 20% against both merged companies a year ago, mainly because oil fetched 31% more. Hedge contracts that lost value as oil climbed caused most of the net loss. Without them and other one-offs, the oil producer earned about $2.6 million, by our math.
But that shows the target was within reach, not that output recovered. Pedevco also began leaving severance out of the measure; on the old basis, the figure was $12.6 million, still inside the range.
What to watch: fourth-quarter cash profit against what the full-year target leaves. A shortfall would mean Pedevco missed a target it has repeated four times.
🐻 Bear Case
Shut-Ins Explain Only a Quarter of Lost Oil
Pedevco's output peaked in the first quarter and has dropped since. It counts oil and gas together in barrels of oil equivalent (Boe), with six thousand cubic feet of gas making one barrel.
Daily output fell 14% from the second quarter, to 5,850 Boe. Pedevco blamed "temporary offset shut-ins associated with drilling and completion activity", meaning wells it closed while working next door. It also cited earlier pump replacements and the sale of northern Wyoming acreage.
- Oil output: 4,216 barrels a day, from 4,952
- Lost to shut-ins and pump work: over 200 barrels a day
- Lost to asset sales and decline: about 536 barrels a day, by our math
- Shut-ins' share of the drop: about 27%, by our math
The closed wells have returned, but the larger loss came from asset sales and older wells running down, so it will not come back. The oil producer did not say how much oil left with the sold acreage.
What to watch: fourth-quarter daily output, which interim chief executive R.T. Dukes expects to recover. Output near the third-quarter level would mean decline is outrunning the new wells.
Field Costs and Hedges Took a Bigger Share
Running the wells, including pumping, repairs, local taxes and transport, is Pedevco's largest cost. Its filing says the pump replacements are "expected to materially lower lease operating expenses on our operated assets going forward".
- Cost of running the wells: 40.3% of sales, 4.7 percentage points above the second quarter
- Same cost a year ago: 30.1% of sales
- Cost per barrel of oil equivalent: $26.61, against $26.51
- Hedge payments: $4.6 million, or 13% of sales
- Oil price received: $83.81 a barrel, 11% below the second quarter
Direct field costs dropped 17%, but output shrank almost as fast, so the cost per barrel stood still. Hedges, contracts that fix the price on part of the oil, still cost money because oil stayed above their prices.
What to watch: direct field costs in the fourth quarter, the first full quarter after the pump work. A drop below the third quarter while output recovers would show savings reaching each barrel.
Unpaid Bills Rose While Bank Debt Fell
Pedevco expects to grow production in 2027 while "preserving balance sheet strength". It repaid $5 million of its bank loan, leaving $80 million. In October, its banks kept the credit line at $125 million.
Leaving out hedge contracts, debts due within a year exceeded short-term assets by $19.8 million, against $8.6 million in June. Drilling work the oil producer has received but not yet paid for makes up $10.3 million of those debts.
So part of the loan repayment came from paying suppliers later, not from spare cash. Net debt, the bank loan minus cash, edged up to $74.3 million from $72.9 million.
What to watch: the bank loan at year-end, after the unpaid drilling bills come due. A larger loan would show spending running ahead of oil income.
Risks this quarter didn't answer
Four risks that weighed on Pedevco before this quarter got news in the last three months, but no answer. Each item names the disclosure that would settle it.
- Leadership: chief executive J. Douglas Schick left on September 21, and R.T. Dukes leads on an interim basis; Pedevco "hopes to make an announcement soon"
- Juniper Capital: the private-equity seller in the merger held about 52% of shares in February; a filing letting holders resell converted shares took effect on September 8, and a sale would show its plans
- Expiring leases: 34,999 Powder River Basin acres lapse in 2027 unless drilled; a drilling plan for them would settle it
- Tilloo lawsuit: the buyer of a former New Mexico unit claims Pedevco misled it; the March 2027 trial would settle it
👓 Other Themes
Asset Sales Added a $4.7 Million Gain
Pedevco closed three asset deals in July. A lawsuit settlement with Phoenix Energy One brought $6.75 million for Wyoming properties, and it sold Weld County acreage in Colorado for $2.5 million. The oil producer also paid a buyer $3.8 million to take over its Pine Haven subsidiary, including future well-closure costs. Together the deals produced a net gain of $4.7 million.
New Hedges Fix 2028 Oil Near $71
On October 1, Pedevco agreed to sell 340,000 barrels of its 2028 oil at a fixed $70.95 a barrel. A smaller contract covers part of 2027 at $77.45. Both prices sit above the $65 oil price behind its original 2026 profit target. So the contracts protect cash for drilling but give up gains if oil prices climb.
💲 Other KPIs
Depletion, the accounting charge for oil taken out of the ground, rose to $18.03 per barrel of oil equivalent from $16.40 in the second quarter. The charge had eased from $17.10 in the first quarter. It totalled $9.7 million, a non-cash cost that cuts net income but not cash profit.
The share count held at 13.3 million from the second quarter but sits 188% above a year ago. Preferred shares issued for the merger turned into common stock in February. The oil producer bought back no shares and has not sold new shares on the exchange since June 2025.
Office and staff costs paid in cash, leaving out the chief executive's severance, fell to $2.25 million from $3.0 million in the second quarter. Total overhead, including share awards and severance, came to 14% of sales. The fourth quarter will carry $1.4 million of share-award cost from the former chief executive's early vesting.
🔮 Guidance
Raised. Pedevco now plans $37–42 million of net capital spending this year, mostly on new Mowry shale leases and wells through the fourth quarter. By our math, nine months used $32.5 million, which leaves $4.5–9.5 million for the last quarter. That remainder sits far below the $23.3 million spent in the third quarter, so most of the year's spending is done.
Unchanged. The plan still calls for $60–70 million of cash operating profit, now counted without severance costs. By our math, nine months brought $51.5 million, which leaves $8.5–18.5 million for the fourth quarter. The middle of that range sits 8% below the third quarter. The oil producer has repeated this range in all four releases since setting it.
Held. Interim chief executive R.T. Dukes expects production to recover in the fourth quarter as closed wells return. The release left out the full-year production range of 6,500–7,000 barrels of oil equivalent a day. By our math, the middle of that range needs about 6,290 a day in the fourth quarter, 7% above the third.
❓ Key Questions
How much oil left with the sold Wyoming acreage?
Pedevco named shut-ins, earlier pump work and asset sales as causes of the drop, but put a number only on the shut-ins. The split shows how fast its older wells are declining.
Does the full-year production target still stand?
The release repeated the cash-profit target but left out the production range Pedevco gave earlier this year. Investors need to know whether that range still applies after the asset sales.
How many wells will the 2027 budget pay for?
In the summer, Pedevco said it planned to drill or join more than 20 wells. The release gives a dollar budget for 2026 but no well count or expected output for next year.
How will Pedevco pay its unpaid drilling bills?
Unpaid drilling work and the former chief executive's severance fall due in the coming months. Investors need to know whether cash flow covers them or the bank loan climbs again.
How much field-cost saving already shows in the numbers?
Pedevco moved pump replacements into the third quarter to cut the cost of running its wells. It has not said how much monthly saving it has achieved so far against its goal.