PEDEVCO CORP

Previous wording

Certain capitalized terms used below but not otherwise defined, are defined in, and shall be read along with the meanings given to such terms in, the notes to the unaudited financial statements of the Company for the three and six months ended June 30, 2024, above.

Current wording

Certain capitalized terms used below but not otherwise defined, are defined in, and shall be read along with the meanings given to such terms in, the notes to the unaudited financial statements of the Company for the three and nine months ended September 30, 2024, above.

Previous wording

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the SEC. The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge at our website (www.pedevco.com) under “Investors” – “SEC Filings”, when such reports are available on the SEC’s website. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The Company periodically provides other information for investors on its corporate website, www.pedevco.com. This includes press releases and other information about financial performance, information on corporate governance and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.

Current wording

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the SEC. The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge at our website (www.pedevco.com) under “Investors” – “SEC Filings”, when such reports are available on the SEC’s website. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC atwww.sec.gov. The Company periodically provides other information for investors on its corporate website, www.pedevco.com. This includes press releases and other information about financial performance, information on corporate governance and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.

Previous wording

We are an oil and gas company focused on the acquisition and development of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied. In particular, we focus on legacy proven properties where there is a long production history, well defined geology and existing infrastructure that can be leveraged when applying modern field management technologies. Our current properties are located in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the “Permian Basin”) and in the Denver-Julesberg Basin (“D-J Basin”) in Colorado and Wyoming. As of June 30, 2024, we held approximately 22,721 net Permian Basin acres located in Chaves and Roosevelt Counties, New Mexico, through our wholly-owned subsidiary, Pacific Energy Development Corp. (“PEDCO”), and which are operated by our wholly-owned operating subsidiary, Ridgeway Arizona Oil Corp. (“RAZO”), which asset we refer to as our “Permian Basin Asset.” Also as of June 30, 2024, we held approximately 19,244 net D-J Basin acres located in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming, through our wholly-owned subsidiary, PRH Holdings LLC (“PRH”), and which are operated by our wholly-owned operating subsidiary, Red Hawk Petroleum, LLC (“Red Hawk”), which asset we refer to as our “D-J Basin Asset.” As of June 30, 2024, we held interests in 303 gross and 301.5 net wells in our Permian Basin Asset, of which 28 are active producers, two are active injectors and two are active salt water disposal wells, all of which are held by PEDCO and operated by RAZO, and interests in 110 gross (26.2 net) wells in our D-J Basin Asset held by PRH, all of which 18 gross (16.2 net) wells are operated by Red Hawk and currently producing, 75 gross (9.9 net) wells are non-operated, and 17 wells have an after-payout interest.

Current wording

We are an oil and gas company focused on the acquisition and development of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied. In particular, we focus on legacy proven properties where there is a long production history, well defined geology and existing infrastructure that can be leveraged when applying modern field management technologies. Our current properties are located in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the “Permian Basin”) and in the Denver-Julesberg Basin (“D-J Basin”) in Colorado and Wyoming. As of September 30, 2024, we held approximately 14,552 net Permian Basin acres located in Chaves and Roosevelt Counties, New Mexico, through our wholly-owned subsidiary, Pacific Energy Development Corp. (“PEDCO”), and which are operated by our wholly-owned operating subsidiary, Ridgeway Arizona Oil Corp. (“RAZO”), which asset we refer to as our “Permian Basin Asset.” Also as of September 30, 2024, we held approximately 19,453 net D-J Basin acres located in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming, through our wholly-owned subsidiary, PRH Holdings LLC (“PRH”), and which are operated by our wholly-owned operating subsidiary, Red Hawk Petroleum, LLC (“Red Hawk”), which asset we refer to as our “D-J Basin Asset.” As of September 30, 2024, we held interests in 300 gross and 298.5 net wells in our Permian Basin Asset, of which 28 are active producers, two are active injectors and two are active salt water disposal wells, all of which are held by PEDCO and operated by RAZO, and interests in 120 gross (27.8 net) wells in our D-J Basin Asset held by PRH, all of which 18 gross (16.2 net) wells are operated by Red Hawk and currently producing, 85 gross (11.6 net) wells are non-operated, and 17 wells have an after-payout interest.

Previous wording

Our strategy is to be the operator and/or a significant working interest owner, directly or through our subsidiaries and joint ventures, in the majority of our Permian Basin acreage so we can dictate the pace of development in order to execute our business plan. Our revised net capital expenditures for 2024 are estimated to range between $11 million to $18 million. This estimate includes a range of $8 million to $15 million for drilling and completion costs on our Permian Basin and D-J Basin Assets (of which we have incurred approximately $6.5 million through June 30, 2024) and approximately $3.0 million in estimated capital expenditures for electric submersible pump (ESP) purchases, rod pump conversions, recompletions, well cleanouts, leasing, facilities, remediation and other miscellaneous capital expenses (of which we have incurred approximately $0.5 million through June 30, 2024) . This estimate does not include expenditures for acquisitions or other projects that may arise but are not currently anticipated. We periodically review our capital expenditures and adjust our capital forecasts and allocations based on liquidity, drilling results, leasehold acquisition opportunities, partner non-consents, proposals from third party operators, and commodity prices, while prioritizing our financial strength and liquidity. Our revised 2024 capital expenditure estimate does not include expenditures for unanticipated expenses that may arise, including for opportunistic leasehold acquisitions and other extraordinary projects for which we have not budgeted (for which we have paid approximately $0.2 million for opportunistic leasing acquisitions through June 30, 2024). We also paid approximately $0.9 million in accrued capital expenditures for amounts related to our 2023 capital budget in 2024. We periodically review our capital expenditures and adjust our capital forecasts and allocations based on liquidity, drilling results, leasehold acquisition opportunities, partner non-consents, proposals from third party operators, and commodity prices, while prioritizing our financial strength and liquidity.

Current wording

Our strategy is to be the operator and/or a significant working interest owner, directly or through our subsidiaries and joint ventures, in the majority of our properties and acreage so we can dictate the pace of development in order to execute our business plan. Our revised net capital expenditures for 2024 are estimated to range between $21 million to $23 million. This estimate includes a range of $19 million to $22 million for drilling and completion costs on our Permian Basin and D-J Basin Assets (of which we have incurred approximately $16.4 million through September 30, 2024) and approximately $1.5 million in estimated capital expenditures for electric submersible pump (ESP) purchases, rod pump conversions, recompletions, well cleanouts, leasing, facilities, remediation and other miscellaneous capital expenses (of which we have incurred approximately $1.2 million through September 30, 2024) . This estimate does not include expenditures for acquisitions or other projects that may arise but are not currently anticipated. We periodically review our capital expenditures and adjust our capital forecasts and allocations based on liquidity, drilling results, leasehold acquisition opportunities, partner non-consents, proposals from third party operators, and commodity prices, while prioritizing our financial strength and liquidity. Our revised 2024 capital expenditure estimate does not include expenditures for unanticipated expenses that may arise, including for opportunistic leasehold acquisitions and other extraordinary projects for which we have not budgeted (for which we have paid approximately $0.5 million for opportunistic leasing acquisitions through September 30, 2024). We periodically review our capital expenditures and adjust our capital forecasts and allocations based on liquidity, drilling results, leasehold acquisition opportunities, partner non-consents, proposals from third party operators, and commodity prices, while prioritizing our financial strength and liquidity.

Previous wording

We plan to continue to evaluate D-J Basin well proposals as received from third party operators and participate in those we deem most economic and prospective. If new proposals are received that meet our economic thresholds and require material capital expenditures, we have flexibility to move capital from our Permian Asset to our D-J Basin Asset, or vice versa, as our Permian Asset is 100% operated and held by production (“HBP”), allowing for flexibility of timing on development. Our 2024 development program is based upon our current outlook for the year and is subject to revision, if and as necessary, to react to market conditions, product pricing, contractor availability, requisite permitting, capital availability, partner non-consents, capital allocation changes between assets, acquisitions, divestitures and other adjustments determined by the Company in the best interest of its shareholders while prioritizing our financial strength and liquidity.

Current wording

We plan to continue to evaluate D-J Basin well proposals as received from third party operators and participate in those we deem most economic and prospective. If new proposals are received that meet our economic thresholds and require material capital expenditures, we have flexibility to move capital from our Permian Asset to our D-J Basin Asset, or vice versa, as our Permian Asset is approximately 100% operated and held by production (“HBP”), allowing for flexibility of timing on development. Our 2024 development program is based upon our current outlook for the year and is subject to revision, if and as necessary, to react to market conditions, product pricing, contractor availability, requisite permitting, capital availability, partner non-consents, capital allocation changes between assets, acquisitions, divestitures and other adjustments determined by the Company in the best interest of its shareholders while prioritizing our financial strength and liquidity.

Previous wording

We expect that we will have sufficient cash available to meet our needs over the next 12 months after the filing of this Report and in the foreseeable future, including to fund the remainder of our 2024 development program, discussed above, which cash we anticipate being available from (i) projected cash flow from our operations, (ii) existing cash on hand, (iii) equity infusions or loans (which may be convertible) made available from Dr. Simon G. Kukes, our Chief Executive Officer and director, which funding Dr. Kukes is under no obligation to provide, and (iv) funding through credit or loan facilities. In addition, we may seek additional funding through asset sales, farm-out arrangements, and credit facilities to fund potential acquisitions during the remainder of 2024.

Current wording

We expect that we will have sufficient cash available to meet our needs over the next 12 months after the filing of this Report and in the foreseeable future, including to fund the remainder of our 2024 development program, discussed above, which cash we anticipate being available from (i) projected cash flow from our operations, (ii) existing cash on hand, (iii) funding available through our RBL, and (iv) equity infusions or loans (which may be convertible) made available from Dr. Simon G. Kukes, our Chief Executive Officer and director, which funding Dr. Kukes is under no obligation to provide, and/or other qualified investors. In addition, we may seek additional funding through asset sales and farm-out arrangements to fund potential acquisitions during the remainder of 2024 and into 2025.

Previous wording

The following discussion and analysis of the results of operations for the three-month and six-month periods ended June 30, 2024, and 2023, should be read in conjunction with our consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The majority of the numbers presented below are rounded numbers and should be considered as approximate.

Current wording

The following discussion and analysis of the results of operations for the three and nine-month periods ended September 30, 2024 and 2023, should be read in conjunction with our consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. The majority of the numbers presented below are rounded numbers and should be considered as approximate.

Previous wording

We reported net income for the three-month period ended June 30, 2024, of $2.7 million, or $0.03 per common share, compared to net income for the three-month period ended June 30, 2023 of $1.6 million or $0.02 per share. The increase in net income of $1.1 million, when comparing the current period to the prior year’s period, was primarily due to a $3.2 million increase in revenues offset by a $2.1 million increase in total operating expenses (each discussed in more detail below).

Current wording

We reported net income for the three-month period ended September 30, 2024, of $2.9 million, or $0.03 per common share, compared to net income for the three-month period ended September 30, 2023 of $0.9 million or $0.01 per share. The increase in net income of $2.0 million when comparing the current period to the prior year’s period was primarily due to a $1.7 million increase in revenues coupled with a $0.7 million gain on sale of oil and gas properties, offset by a $0.4 million increase in total operating expenses (each discussed in more detail below).

Previous wording

Total crude oil, natural gas and NGL revenues for the three-month period ended June 30, 2024, increased $3.3 million, or 38%, to $11.8 million, compared to $8.5 million for the same period a year ago, due to a favorable price variance of $1.1 million, due to the average sales price for crude oil and NGL realized by the Company increasing compared to the three-month period ended June 30, 2023, coupled with a favorable volume variance of $2.2 million. The increase in production volume is related to our participation in 13 new non-operated wells in the D-J Basin and the drilling and completion of three operated wells with a third-party in the Permian Basin both in the latter part of Q1 2024.

Current wording

Total crude oil, natural gas and NGL revenues for the three-month period ended September 30, 2024, increased $1.7 million, or 23%, to $9.0 million, compared to $7.3 million for the same period a year ago, due to a favorable volume variance of $1.7 million. There was a negligible price variance over the periods. The increase in overall production volume is related to our participation in 13 new non-operated wells in the D-J Basin and the drilling and completion of three operated wells with a third-party in the Permian Basin both in the latter part of Q1 2024. We also recognized additional production from our participating in another six wells in the D-J Basin which production began in latter part of Q3 2024.

Previous wording

*Includes severance, ad valorem taxes, assessment and marketing costs.

Current wording

* Includes severance, ad valorem taxes, workover adjustments and assessment and marketing costs.

Previous wording

*Lease Operating Expenses.*The increase of $0.7 million was primarily due to higher direct and variable lease operating expenses associated with the higher oil volume resulting from the increased number of wells and increased oil production during the current year’s period, compared to the prior year’s period, due to our participation in new wells in the D-J Basin, as well as production from our recently completed wells.

Current wording

Lease Operating Expenses.The increase of $0.3 million was primarily due to higher direct and variable lease operating expenses associated with the higher oil volume resulting from the increased number of wells and increased oil production during the current year’s period, compared to the prior year’s period, due to our participation in new wells in the D-J Basin, as well as production from our recently completed wells.

Previous wording

*Depreciation, Depletion, Amortization and Accretion.*The $2.2 million increase was primarily the result of higher crude oil, natural gas and NGL volumes resulting from the increased number of wells and increased oil production from our new wells, compared to the prior year’s period.

Current wording

*Depreciation, Depletion, Amortization and Accretion.*The $0.1 million increase was primarily the result of higher crude oil and NGL volumes resulting from the increased number of wells and increased oil production from our new wells, compared to the prior year’s period.

Previous wording

Interest Income and Other Expense. Includes interest earned from our interest-bearing cash accounts, for which interest rates have increased in the current period and interest on our note receivable. Other expense in the current period primarily relates to the subsequent disposition of a cash escrow bank balance related to the sale of our wholly-owned subsidiary EOR Operating Company.

Current wording

Interest Income. Includes interest earned from our interest-bearing cash accounts, for which interest rates have remained relatively flat in the current period, compared to the prior period and interest on our note receivable. There was no other income in the current period compared to a nominal amount in the prior period.

Previous wording

We reported net income for the six-month period ended June 30, 2024 of $3.4 million, or $0.04 per share, compared to net income for the six-month period ended June 30, 2023 of $3.3 million or $0.04 per share. The increase in net income of $0.1 million was primarily due to a $3.2 million increase in revenue, offset by an increase of $3.1 million in total operating expenses in the current period (all of which are discussed in more detail below).

Current wording

We reported net income for the nine-month period ended September 30, 2024 of $6.4 million, or $0.07 per share, compared to net income for the nine-month period ended September 30, 2023 of $4.3 million or $0.05 per share. The increase in net income of $2.1 million when comparing the current period to the prior year’s period was primarily due to a $4.9 million increase in revenues coupled with a $0.7 million gain on sale of oil and gas properties, offset by a $3.5 million increase in total operating expenses (each discussed in more detail below).

Previous wording

Total crude oil, natural gas and NGL revenues for the six-month period ended June 30, 2024, increased $3.2 million, or 19%, to $19.9 million, compared to $16.7 million for the same period a year ago, due to a favorable price variance of $1.1 million, due to the average sales price for crude oil and NGL realized by the Company increasing compared to the six-month period ended June 30, 2023, coupled with a favorable volume variance of $2.1 million. The increase in production volume is related to our participation in 13 new non-operated wells in the D-J Basin and the drilling and completion of three operated wells with a third-party in the Permian Basin both in the latter part of Q1 2024.

Current wording

Total crude oil, natural gas and NGL revenues for the nine-month period ended September 30, 2024, increased $4.9 million, or 21%, to $29.0 million, compared to $24.1 million for the same period a year ago, due to a favorable price variance of $1.1 million, coupled with a favorable volume variance of $3.8 million. The increase in production volume is related to our participation in 13 new non-operated wells in the D-J Basin and the drilling and completion of three operated wells with a third-party in the Permian Basin, both in the latter part of Q1 2024. The increase in production volume is related to our participation in 13 new non-operated wells in the D-J Basin and the drilling and completion of three operated wells with a third-party in the Permian Basin both in the latter part of Q1 2024. We also recognized additional production from our participation in another six wells in the D-J Basin which production began in the latter part of Q2 2024.

Previous wording

*Includes severance, ad valorem taxes, assessment and marketing costs.

Current wording

* Includes severance, ad valorem taxes, workover adjustments and assessment and marketing costs.

Previous wording

*Lease Operating Expenses.*The increase of $0.8 million was primarily due to higher direct and variable lease operating expenses associated with the higher oil volume resulting from the increased number of wells and increased oil production during the current year’s period, compared to the prior year’s period, due to our participation in new wells in the D-J Basin, as well as production from our recently completed wells.

Current wording

Lease Operating Expenses. The increase of $1.1 million was primarily due to higher direct and variable lease operating expenses associated with the higher oil volume resulting from the increased number of wells and increased oil production during the current year’s period, compared to the prior year’s period, due to our participation in new wells in the D-J Basin, as well as production from our recently completed wells.

Previous wording

*Depreciation, Depletion, Amortization and Accretion.*The $1.3 million increase was primarily the result of higher crude oil, natural gas and NGL volumes resulting from the increased number of wells and increased oil production from our new wells, compared to the prior year’s period.

Current wording

*Depreciation, Depletion, Amortization and Accretion.*The $2.4 million increase was primarily the result of higher crude oil, natural gas and NGL volumes resulting from the increased number of wells and increased oil production from our new wells, compared to the prior year’s period.

Previous wording

*General and Administrative Expenses (excluding share-based compensation).*The $0.1 million increase was primarily the result of additional payroll and software licensing fees.

Current wording

*General and Administrative Expenses (excluding share-based compensation).*The $0.2 million increase was primarily the result of additional payroll and software licensing fees.

Previous wording

Interest Income and Other (Expense) Income. Includes interest earned from our interest-bearing cash accounts, for which interest rates have increased significantly in the current period, compared to the prior period. Other expense in the current period primarily relates to the subsequent disposition of a cash escrow bank balance related to the sale of our wholly-owned subsidiary EOR Operating Company. Other income in the prior period is primarily related to the sale of used pipe.

Current wording

Interest Income and Other (Expense) Income. Includes interest earned from our interest-bearing cash accounts, for which interest rates have remained relatively flat in the current period, compared to the prior period, and interest on our note receivable. Other expense in the current period primarily relates to the subsequent disposition of a cash escrow bank balance related to the sale of our wholly-owned subsidiary EOR Operating Company. Other income in the prior period is primarily related to the sale of used pipe.

Previous wording

The primary sources of cash for the Company during the six-month period ended June 30, 2024 were from $19.9 million in sales of crude oil and natural gas. The primary uses of cash were funds used for drilling, completion and operating costs.

Current wording

The primary sources of cash for the Company during the nine-month period ended September 30, 2024, were from $29.0 million in sales of crude oil and natural gas and $0.8 million from a sale of oil and gas properties. The primary uses of cash were funds used for drilling, completion and operating costs.

Previous wording

At June 30, 2024, the Company’s total current assets of $15.0 million exceeded its total current liabilities of $5.1 million, resulting in a working capital surplus of $9.9 million, while at December 31, 2023, the Company’s total current assets of $24.6 million exceeded its total current liabilities of $18.9 million, resulting in a working capital surplus of $5.7 million. The $4.2 million increase in our working capital surplus is primarily related to an increase in oil and gas receivables from production sales, offset by cash used to reduce payables related to our current capital drilling program (described above).

Current wording

At September 30, 2024, the Company’s total current assets of $11.0 million exceeded its total current liabilities of $5.2 million, resulting in a working capital surplus of $5.8 million, while at December 31, 2023, the Company’s total current assets of $24.6 million exceeded its total current liabilities of $18.9 million, resulting in a working capital surplus of $5.7 million. The $0.1 million increase in our working capital surplus is primarily related to an increase in oil and gas receivables from production sales, offset by cash used to reduce payables related to our current capital drilling program (described above).

Previous wording

We expect that we will have sufficient cash available to meet our needs over the next 12 months after the filing of this report and in the foreseeable future, including to fund the remainder of our 2024 development program, discussed above, which cash we anticipate being available from (i) projected cash flow from our operations, (ii) existing cash on hand, (iii) equity infusions or loans (which may be convertible) made available from Dr. Simon G. Kukes, our Chief Executive Officer and director, which funding Dr. Kukes is under no obligation to provide, and (iv) funding through credit or loan facilities. In addition, we may seek additional funding through asset sales, farm-out arrangements, and credit facilities to fund potential acquisitions during the remainder of 2024.

Current wording

We expect that we will have sufficient cash available to meet our needs over the next 12 months after the filing of this Report and in the foreseeable future, including to fund the remainder of our 2024 development program, discussed above, which cash we anticipate being available from (i) projected cash flow from our operations, (ii) existing cash on hand, (iii) funding available through our RBL, and (iv) equity infusions or loans (which may be convertible) made available from Dr. Simon G. Kukes, our Chief Executive Officer and director, which funding Dr. Kukes is under no obligation to provide, and/or other qualified investors. In addition, we may seek additional funding through asset sales and farm-out arrangements to fund potential acquisitions during the remainder of 2024 and into 2025.

Previous wording

**Cash flows used in operating activities.**Net cash used in operating activities decreased by $8.1 million for the current year’s period, when compared to the prior year’s period, primarily due to a $2.2 million increase in depreciation, depletion and amortization (predominantly from production increases noted above) and offset by a $10.3 million net decrease to our other components of working capital (predominantly from additional sales receivables and a corresponding decrease in payables from our recent drilling and completion activity which was largely completed in Q1 2024).

Current wording

**Cash flows provided by operating activities.**Net cash provided by operating activities decreased by $2.9 million for the current year’s period, when compared to the prior year’s period, primarily due to an increase in net income of $2.1 million and a $2.4 million increase in depreciation, depletion and amortization (predominantly from production increases noted above), offset by a $0.7 million gain on sale of oil and gas properties and a fixed asset and a $6.7 million net decrease to our other components of working capital (predominantly from an increase in accruals and payables from our recent drilling and completion activity).

Previous wording

Cash flows used in investing activities. Net cash used in investing activities decreased by $13.0 million for the current year’s period, when compared to the prior year’s period, primarily due to the timing of cash payment amounts versus accrual amounts for capital spending relating to our drilling and completion activities. In the current period, we paid $12.3 million in cash for drilling and completion activities and incurred a decrease in the change in accrued oil and gas development costs of $5.1 million, for a total of $7.2 million of capital costs, while compared to the prior period, where we paid $25.3 million in cash for drilling and completion activities and incurred a decrease in the change in accrued oil and gas development costs of $13.0 million for a total of $12.3 million of capital costs. Taken together, there was a net decrease of $5.1 million in capital costs incurred in the current period, compared to the prior period.

Current wording

Cash flows used in investing activities. Net cash used in investing activities decreased by $5.6 million for the current year’s period, when compared to the prior year’s period, primarily due to $4.8 million less in capital spending, coupled with $0.8 million in proceeds from the sale of oil and gas properties in the current period.

Previous wording

We have included EBITDA and Adjusted EBITDA in this Report as supplements to generally accepted accounting principles in the United States of America (“GAAP”) measures of performance to provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations. “EBITDA” represents net income before interest, taxes, depreciation and amortization. “Adjusted EBITDA” represents EBITDA, less share-based compensation and gain on sale of fixed assets. Adjusted EBITDA excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, future requirements for capital expenditures, or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments. For example, although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Additionally, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than PEDEVCO Corp. does, limiting its usefulness as a comparative measure. You should not consider EBITDA and Adjusted EBITDA in isolation, or as substitutes for analysis of the Company’s results as reported under GAAP. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most di…

Excerpt shortened here; the source contains the full paragraph.

Current wording

We have included EBITDA and Adjusted EBITDA in this Report as supplements to generally accepted accounting principles in the United States of America (“GAAP”) measures of performance to provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations. “EBITDA” represents net income before interest, taxes, depreciation and amortization. “Adjusted EBITDA” represents EBITDA, less share-based compensation, gain on sale of oil and gas properties and gain on sale of fixed assets. Adjusted EBITDA excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, future requirements for capital expenditures, or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments. For example, although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Additionally, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than PEDEVCO Corp. does, limiting its usefulness as a comparative measure. You should not consider EBITDA and Adjusted EBITDA in isolation, or as substitutes for analysis of the Company’s results as reported under GAAP. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Recently Adopted and Recently Issued Accounting Pronouncements.

Current wording

Recently Issued Accounting Pronouncements.