How PEDEVCO is delivering profitable growth by focusing on the development of conventional assets using unconventional technologies
PEDEVCO Corp. (NYSE American: PED) is a publicly traded energy company engaged in the acquisition and development of strategic, high growth energy projects in the United States. The company’s principal assets are its Permian Basin asset located in eastern New Mexico and its D-J Basin asset located in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming. PEDEVCO is headquartered in Houston, Texas.
J. Douglas Schick, President & Chief Executive Officer of PEDEVCO, has over 25 years of experience in the oil and gas industry. Prior to joining the company, he was employed by American Resources, Inc., a Houston, Texas-based privately held oil and gas investment, development and operating company which he co-founded. Prior to starting American Resources, Mr. Schick held management positions at Highland Oil and Gas and Mariner Energy, Inc. and served in various roles of increasing responsibility in finance, planning, M&A, treasury and accounting at The Houston Exploration Company, ConocoPhillips, and Shell Oil Company.
“PEDEVCO was originally established as an oil and gas company in 2010,” Mr. Schick begins. “However, the current iteration of the company began in 2018, when the company was heavily distressed and overladen with approximately $75 million in debt following its 2014 acquisition of all of Continental Resources’ D-J Basin assets. My partners and I bought the company’s debt for roughly $0.10 on the dollar, converted all the company’s debt into equity which resulted in us taking ownership control of the company, and we reconstituted the company’s Board of Directors and management team. Shortly after taking control of the company, the company acquired its Permian Basin assets, which we continue to develop today along with our D-J Basin assets. These properties serve as our core assets and provided 1,729 barrels of oil equivalent per day of production over the first 9 months of 2024.”
Horizontal drilling
The company’s Permian Basin asset currently consists of approximately 14,550 net acres, substantially all held by production with over 100 additional drilling locations, situated in the Chaveroo and the Chaveroo NE fields in the northwest shelf of the Permian Basin, which are legacy oil fields that have produced over 49 million barrels of oil equivalent to date from the San Andres formation via 40-acre vertical well spacing. By applying modern horizontal drilling and completion techniques and down spacing to 20-acre infill drilling locations, the company has realized significantly better recoveries and achieved lower development costs than can be achieved through traditional vertical development. The company has drilled 18 horizontal wells since 2019 on its Permian Basin asset.
Mr. Schick continues, “With one horizontal well in the Permian Basin, we unlock the reserves of roughly eight vertical wells. Horizontal development is currently our primary focus in the Permian. To accelerate development of this asset, in late 2023 we brought in a partner, Evolution Petroleum, to buy 50 percent of all future development on this project. Not only does this help accelerate the development of our Permian Basin asset, but it allows us to allocate funds to further develop our D-J Basin asset.”
The company’s D-J Basin asset consists of approximately 19,500 net acres, approximately 60 percent held by production with over 150 additional drilling locations, situated in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming. The company operates 17 wells and has a working interest in 69 wells. The acreage offsets prolific and exceptional recent production performance by some of the largest and most successful operators in the Basin, with increasingly greater production rates and higher reserves being achieved as improved drilling and completion designs and techniques are applied.
“In the last two years, we’ve been focusing our acquisition and leasing efforts in the D-J Basin in an effort to expand our position there because the economics are
superior to other opportunities we have evaluated,” Mr Schick reveals. “Consistent with this effort, the company recently announced entry into a five-year participation agreement and area of mutual interest (AMI) with a large private operator where they own 70 percent, and we own 30 percent. This is an excellent opportunity as this acreage was not in the company’s five-year development plan, and now positions the company to significantly accelerate the development of its D-J Basin asset. The deal requires the operator to drill a minimum of five wells per year, but the company estimates that up to three drilling units (DSU’s) with up to 18 wells total could be developed under this project per year.
“In parallel, we’re working to permit at least two drilling units per year in the D-J Basin, thereby significantly increasing the value of our acreage, and then either drill those DSU’s ourselves or work with partners to develop them, which is often our preferred option, as many of the larger operators in the D-J Basin are able to operate with better economies of scale and realize significantly lower expenses, with increasingly strong results.”
2025 priorities
Looking to the future, Mr. Schick elaborates on the company’s priorities for the coming year, stating: “We’re very focused on production growth, but we’re also striving to continue to simplify our business and accelerate our growth by creating partnerships with other companies to leverage economies of scale and consolidate asset positions, as we have been doing in both the Permian Basin and the D-J Basin. Consistent with this focus, this year we hope to divest more of our non-core assets that are time and resource consuming and don’t add a great deal of value, while focusing on developing our position in the D-J Basin alongside the development of our Permian Basin assets.
“When we first invested in the company back in 2018,” Mr. Schick concludes, “our long-term goal was to build a significant public company. Looking ahead, we plan to facilitate and accelerate the growth of our existing asset base to 10,000-plus barrels of oil equivalent per day through organic growth while searching for acquisition and consolidation opportunities to accelerate scale.”