Stonegate Capital Partners Initiates Coverage on Pedevco Corp. (NYSE: PED)

DALLAS, TX -- April 7th, 2026 -- Pedevco Corp. (NYSE: PED): Stonegate Capital Partners Initiates Coverage on Pedevco Corp. (NYSE: PED). PEDEVCO exited FY25 as a much larger, oil-weighted Rockies platform following the Juniper merger. For FY25, production increased 35% y/y to 910.1 Mboe (2,494 Boe/d), revenue rose 16% to $45.8M, and adjusted EBITDA increased 18% to $27.0M despite a 19% decline in realized crude oil prices. Reported earnings moved to a net loss of $(10.4)M (vs. net income of $12.3M in FY24), driven by merger costs, accelerated share-based compensation, new interest expense, a note write-off, and tax expense. In 4Q25, the first quarter reflecting the combined platform, production increased 143% y/y to 483.2 Mboe (5,310 Boe/d), revenue more than doubled to $23.1M, and adjusted EBITDA nearly tripled to $15.4M. Management emphasized that the quarter included only two months of acquired contribution, making normalized earnings power the better lens, while the merger-close bridge to 6,500+ Boe/d and roughly over 310,000 net acres helps frame the larger earnings base now embedded in the portfolio.

The Inventory is the Story: In our view, the key differentiator is not simply greater scale, but the depth of PED’s inventory relative to its market cap. Since closing the merger, management has framed the combined company as a 310,000+ net acre platform with an ~88% liquids mix, more than a decade of runway, and over 1,100 gross identified drilling locations. At year-end 2025, proved reserves increased 77% y/y to 32.1 MMBoe and PV-10 rose 100% y/y to $357.7M, with management citing reserve value of roughly $26.90/share on a post-split basis. Just as importantly, PED does not need M&A to make the story work as the current asset base supports years of development, cash flow, and reserve conversion, with acquisitions no longer required. In our view, that also leaves the Company well positioned in a stronger commodity backdrop, as higher oil prices can make acquisitions more competitive and expensive, while PED already has ample internal inventory to lean more heavily on owned drilling opportunities.

D-J Now, Powder River Next:  The D-J is the clear near-term engine, driving the large majority of 4Q and FY25 volumes and is expected to receive the most capital. PED participated in 32 D-J wells during 2025; 31 began contributing in late 2025, and 31 of 32 wells in progress at merger close are now online, with the majority outperforming type curves. By contrast, the Powder River is the longerdated growth leg, with management indicating near-term activity will stay concentrated in the D-J while the PRB becomes a larger focus over time as returns, cash flow, and commodity prices support broader development. Management also cautioned that 1Q26 should be viewed as a peak production quarter and not annualized, with volumes expected to settle closer to 6,400 - 6,500 Boe/d before new activity.

Visible Self-Help:  Beyond scale and inventory, cost-out is key. Management has identified meaningful optimization opportunities and is targeting approximately $10M-$12M of annualized LOE savings, with full run-rate benefits expected forv2027, though the full EBITDA uplift is more of a late-2026 to 2027 event. The balance sheet also matters more post-merger: PEDEVCO ended 2025 with $3.2M of cash and $87.0M drawn on its revolver, with $98.0M drawn as of the 10-K filing, partly offset by $10.7M net derivative assets with hedges through October 2028. This mix supports a clearer path to cleaner margins, stronger cash generation, and a better multiple if execution follows.

Valuation:  We use a DCF Model and a EV/EBITDA comp analysis to guide our valuation. Our DCF analysis produces a valuation range of $17.94 to $22.83 with a mid-point of $20.02. Our EV/EBITDA valuation results in a range of $15.00 to $25.65 with a mid-point of $20.32.

SOURCE: Stonegate, Inc.