UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of Earliest Event Reported): March 11, 2020

  

PEDEVCO CORP.

(Exact name of registrant as specified in its charter)

 

Texas		001-35922		22-3755993
(State or other jurisdiction of incorporation or organization)		(Commission file number)		(IRS Employer Identification No.)

 

575 N. Dairy Ashford

Energy Center II, Suite 210

Houston, Texas 77079

 (Address of principal executive offices)

 

(713) 221-1768

 (Registrant’s telephone number)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	PED	NYSE American

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Item 7.01 Regulation FD Disclosure.

 

PEDEVCO Corp. (the “Company”, “PEDEVCO”, “we” and “us”) published an updated Company presentation on its website at www.pedevco.com, a copy of which is furnished herewith as Exhibit 99.1 and incorporated by reference herein. In addition, the Company’s reserve report dated March 6, 2020, relating to the proved oil and gas reserves estimates and future net revenue of the Company’s oil and gas properties in Colorado and New Mexico as of December 31, 2019, as referenced in the Company’s presentation, is filed herewith as Exhibit 99.2 and incorporated by reference herein.

 

Item 9.01    Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.	Description
23.1*	Consent of Cawley, Gillespie & Associates, Inc.
99.1**	Company presentation dated March 11, 2020.
99.2*	Reserve Report prepared by Cawley, Gillespie & Associates, Inc.

 

* Filed herewith.

 ** Furnished herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	PEDEVCO CORP.
Date:  March 11, 2020	By:	/s/ Dr. Simon Kukes
		Dr. Simon Kukes
		Chief Executive Officer

 

 

EXHIBIT INDEX

 

Exhibit No.	Description
23.1*	Consent of Cawley, Gillespie & Associates, Inc.
99.1**	Company presentation dated March 11, 2020.
99.2*	Reserve Report prepared by Cawley, Gillespie & Associates, Inc.

  

* Filed herewith.

 ** Furnished herewith.

 

 

 

CONSENT OF PETROLEUM ENGINEERS

 

We consent to the incorporation by reference in (a) Registration Statement No. 333-227566 on Form S-8 of PEDEVCO Corp. (the “Company”), (b) Registration Statement No. 333-192002 on Form S-8 of the Company, (c) Registration Statement No. 333-214415 on Form S-3 of the Company, (d) Registration Statement No. 333-201098 on Form S-8 of the Company, (e) Registration Statement No. 333-207529 on Form S-8 of the Company, (f) Registration Statement No. 333-215349 on Form S-8 of the Company, (g) Registration Statement No. 333-222335 on Form S-8 of the Company, and (h) Registration Statement No. 333-233525 on Form S-8 of the Company, of our report dated March 6, 2020, relating to the Company’s proved oil and gas reserves estimates and future net revenue of various oil and gas properties in Colorado and New Mexico as of December 31, 2019, as referenced in, and filed as Exhibit 99.2 to, the Company’s Current Report on Form 8-K dated on or about March 11, 2020.

 

 

Cawley, Gillespie & Associates, Inc.

Texas Registered Engineering Firm F-693

By:

Name: W. Todd Brooker

Title: President

 

Cawley, Gillespie & Associates, Inc.

13640 Briarwick Drive, Suite 100

Austin, Texas 78729

March 11, 2020

 

Cawley, Gillespie & Associates, Inc.

petroleum consultants

13640 BRIARWICK DRIVE, SUITE 100	306 WEST SEVENTH STREET, SUITE 302	1000 LOUISIANA STREET, SUITE 1900
AUSTIN, TEXAS 78729-1107	FORT WORTH, TEXAS, 76102-4987	HOUSTON, TEXAS 77002-5008
512-249-7000	817-336-2461	713-651-9944
	www.cgaus.com

 

 

 

March 6, 2020

Mr. Clayton J. Riddle

PEDEVCO Corp.

1250 Wood Branch Park Dr. Suite 400

Houston, TX 77079

Re:

Evaluation Summary PEDEVCO Corp. Interests Various Oil Properties in Colorado & New Mexico Total Proved Reserves As of December 31, 2019   Pursuant to the Guidelines of the Securities and Exchange Commission for Reporting Corporate Reserves and Future Net Revenue

Dear Mr. Riddle:

 

As requested, this report was completed on March 6, 2020 for PEDEVCO Corp. (“PEDEVCO”), for the purpose of public disclosure by PEDEVCO in filings made with the Securities and Exchange Commission (SEC) in accordance with the disclosure requirements set forth in the SEC regulations. We evaluated 100% of the Colorado and New Mexico proved reserves, as per information from PEDEVCO. This report, with an effective date of December 31, 2019, was prepared using constant prices and costs and conforms to the guidelines of the SEC. A composite summary of the results of this evaluation are presented below:

		Proved Developed Producing	Proved Developed Non-Producing	Proved Undeveloped	Total Proved
Net Reserves
Oil	- Mbbl	938.2	1,044.80	10,376.30	12,359.30
Gas	- MMcf	982.7	619.1	8,144.20	9,746.00
NGL	- Mbbl	47.9	0	0	47.9
Future Revenue
Oil	- M$	50,610.7	57,497.00	570,523.50	678,631.20
Gas	- M$	2,139.1	1,349.40	13,532.50	17,021.00
NGL	- M$	477.5	0	0	477.5
Severance Taxes	- M$	3,297.2	3,942.90	38,910.10	46,150.10
Ad Valorem Taxes	- M$	2,224.0	2,772.50	27,298.90	32,295.50
Operating Expenses	- M$	15,320.8	9,082.80	97,511.60	121,915.20
Other Deductions	- M$	3,887.2	6,572.20	61,802.30	72,261.70
Investments	- M$	2,168.1	3,607.00	168,626.30	174,401.40
Net Operating Income (BFIT)	- M$	26,330.1	32,869.00	189,906.80	249,105.90
Discounted @ 10%	- M$	19,024.6	20,960.40	82,757.90	122,742.90

        (Present Worth)

 

Future revenue is prior to deducting state production taxes and ad valorem taxes. Future net cash flow (net operating income) is after deducting these taxes, future capital costs, and operating expenses, but before consideration of federal income taxes. In accordance with SEC guidelines, the future net cash flow has been discounted at an annual rate of ten percent to determine its “present worth”. The present worth is shown to indicate the effect of time on the value of money and should not be construed as being the fair market value of the properties.

 

The oil reserves include oil and condensate. Oil and natural gas liquid (NGL) volumes are expressed in barrels (42 U.S. gallons). Gas volumes are expressed in thousands of standard cubic feet (Mcf) at contract temperature and pressure base.

 

Our estimates are for proved reserves only and do not include any probable or possible reserves nor have any values been attributed to interest in acreage beyond the location for which undeveloped reserves have been estimated. The Proved Developed category is the summation of the Proved Developed Producing and Proved Developed Non-Producing estimates.

 

Presentation

The report contains summaries by reserve category. The reserve categories presented are: Total Proved (TP), Proved Developed Producing (PDP), Proved Developed Non-Producing (PDNP), and Proved Undeveloped (PUD).

 

Hydrocarbon Pricing

 The base SEC oil and gas prices calculated for December 31, 2019 were $55.69 per barrel and $2.58 per MMBTU, respectively. As specified by the SEC, a company must use a 12-month average price, calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period. The SEC base oil price is based upon WTI-Cushing spot prices (EIA) during 2019 and the SEC base gas price is based upon Henry Hub spot prices (Platts Gas Daily) during 2019. A summary of pricing parameters for the New Mexico assets is shown in the table below.

	Crude Oil	Natural Gas
	Price	Price
Base Price ($/BBL, $/MMBtu)	55.69	2.58
Chaveroo Differential ($/BBL, $/MMBtu)	-0.66	-0.4
Milnesand Differential ($/BBL, $/MMBtu)	-0.61	-1.62
Chaveroo Net Price ($/BBL, $/Mcf)	55.03	2.18
Milnesand Net Price ($/BBL, $/Mcf)	55.08	0.96

The base prices were adjusted for differentials on a per-field basis for the New Mexico assets and on a per-operator basis for the Colorado assets, which may include local basis differentials, transportation, gas shrinkage, gas heating value (BTU content) and/or crude quality and gravity corrections. After these adjustments, the net realized prices over the life of the proved properties were estimated to be $54.908 per barrel for oil, $1.746 per MCF for gas, and $9.977 per barrel for NGLs. All economic factors were held constant in accordance with SEC guidelines.

 

 

  

Colorado Assets:

Lease operating expenses (LOE) were estimated from 2019 monthly lease operating statements and applied on a per operator basis. All economic parameters, including lease operating expenses and investments, were held constant (not escalated) throughout the life of these properties.

 

Severance taxes were applied at Colorado rates of 5.00% of oil revenue and 5.00% of gas revenue. Ad valorem taxes were applied at 3.00% of total revenue as per PEDEVCO.

 

SEC Conformance and Regulations

The reserve classifications and the economic considerations used herein conform to the criteria of the SEC. The reserves and economics are predicated on regulatory agency classifications, rules, policies, laws, taxes, and royalties currently in effect except as noted herein. PEDEVCO’s operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include matters relating to land tenure, drilling, production practices, environmental protection, marketing and pricing policies, royalties, various taxes and levies including income tax and are subject to change from time to time.  Such changes in governmental regulations and policies may cause volumes of reserves actually recovered and amounts of income actually received to differ significantly from the estimated quantities.

 

This evaluation includes five (5) proved undeveloped locations in Colorado, of which all are commercial in this evaluation, and 88 proved undeveloped locations in New Mexico, of which 58 are commercial in this evaluation. Each of these commercial drilling locations proposed as part of PEDEVCO’s development plans conforms to the proved undeveloped standards as set forth by the SEC. In our opinion, PEDEVCO has indicated they have every intent to complete this development plan as scheduled. Furthermore, PEDEVCO has demonstrated that they have the proper company staffing, financial backing and prior development success to ensure this development plan will be fully executed.

 

Reserves Estimation Methods

The methods employed in estimating reserves are industry standard methods that are appropriate for the assets evaluated. PDP reserves were forecast using production performance reserve estimation methods. PDNP and PUD reserves for each field were estimated using a blend of type curve analysis, material balance calculations, volumetric estimates and analogy forecasting techniques. These methods provide a relatively high degree of accuracy for predicting proved undeveloped reserves for PEDEVCO properties, due to the mature nature of their properties targeted for development and an abundance of subsurface control data. The assumptions, data, methods and procedures used herein are appropriate for the purpose served by this report.

 

General Discussion

The estimates and forecasts were based upon interpretations of data furnished by your office and available from our files. To some extent information from public records has been used to check and/or supplement these data. The basic engineering and geological data were subject to third-party reservations and qualifications. Nothing has come to our attention, however, that would cause us to believe that we are not justified in relying on such data. All estimates represent our best judgment based on the data available at the time of preparation. Reserves estimates will generally be revised as additional geologic or engineering data become available or as economic conditions change.  Moreover, estimates of reserves may increase or decrease as a result of future operations, effects of regulation by governmental agencies or geopolitical or economic risks.  As a result, the estimates of oil and gas reserves have an intrinsic uncertainty.  The reserves included in this report are therefore estimates only and should not be construed as being exact quantities. They may or may not be actually recovered, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.

 

An on-site field inspection of the properties has not been performed. The mechanical operation or condition of the wells and their related facilities have not been examined nor have the wells been tested by Cawley, Gillespie & Associates, Inc. Possible environmental liability related to the properties has not been investigated nor considered. The cost of plugging and the salvage value of equipment at abandonment have been included in this evaluation.

 

Cawley, Gillespie & Associates, Inc. is a Texas Registered Engineering Firm (F-693), made up of independent registered professional engineers and geologists that have provided petroleum consulting services to the oil and gas industry for over 50 years. This evaluation was supervised by W. Todd Brooker, President at Cawley, Gillespie & Associates, Inc. and a State of Texas Licensed Professional Engineer (License #83462). We do not own an interest in the properties or PEDEVCO Corp. and are not employed on a contingent basis. We have used all methods and procedures that we consider necessary under the circumstances to prepare this report. Our work-papers and related data utilized in the preparation of these estimates are available in our office.

  

Yours very truly,   CAWLEY, GILLESPIE & ASSOCIATES, INC. Texas Registered Engineering Firm F-693