PEDEVCO CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS P EDEVCO CORP. CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per share data) Assets September 30, 2025 (Unaudited) December 31, 2024 (Restated) Current assets: Cash and cash equivalents $ 10,922 $ 4,010 Note receivable, current - 293 Accounts receivable – oil and gas 5,002 7,995 Prepaid expenses and other current assets 229 917 Total current assets 16,153 13,215 Oil and gas properties: Oil and gas properties, subject to amortization, net 93,431 95,070 Oil and gas properties, not subject to amortization, net 14,400 8,442 Total oil and gas properties, net 107,831 103,512 Note receivable - 933 Operating lease – right-of-use asset 256 224 Deferred income taxes 7,833 7,255 Other assets 3,815 3,210 Total assets $ 135,888 $ 128,349 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 10,295 $ 2,625 Accrued expenses 1,339 2,255 Revenue payable 2,208 1,266 Operating lease liabilities – current 178 99 Asset retirement obligations – current 616 663 Total current liabilities 14,636 6,908 Long-term liabilities: Operating lease liabilities, net of current portion 79 129 Asset retirement obligations, net of current portion 5,805 5,708 Total liabilities 20,520 12,745 Commitments and contingencies Shareholders’ equity: Common stock, $ 0.001 par value, 200,000,000 shares authorized; 92,519,352 and 89,495,267 shares issued and outstanding, respectively 93 89 Additional paid-in capital 228,634 227,013 Accumulated deficit ( 113,359 ) ( 111,498 ) Total shareholders’ equity 115,368 115,604 Total liabilities and shareholders’ equity $ 135,888 $ 128,349 See accompanying notes to unaudited consolidated financial statements. 4 Table of Contents P EDEVCO CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (amounts in thousands, except share and per share data) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Revenue: Oil and gas sales $ 6,961 $ 9,050 $ 22,669 $ 28,977 Operating expenses: Lease operating costs 2,095 2,556 8,305 8,635 Selling, general and administrative expense 1,525 1,343 4,815 4,221 Impairment of oil and gas properties 165 - 907 - Depreciation, depletion, amortization and accretion 4,010 3,055 11,213 10,782 Total operating expenses 7,795 6,954 25,240 23,638 Gain on sale of oil and gas properties - 735 1,021 735 Note receivable – credit loss - - ( 1,378 ) - Operating income (loss) ( 834 ) 2,831 ( 2,928 ) 6,074 Other income (expense), net: Interest income 69 84 196 326 Interest expense ( 102 ) - ( 102 ) - Gain on sale of fixed asset - - - 12 Other income (expense) 378 - 395 ( 43 ) Total other income 345 84 489 295 Income (loss) before income taxes ( 489 ) 2,915 ( 2,439 ) 6,369 Income tax benefit 164 - 578 - Net (loss) income $ ( 325 ) $ 2,915 $ ( 1,861 ) $ 6,369 Earnings (loss) per common share: Basic $ ( 0.00 ) $ 0.03 $ ( 0.02 ) $ 0.07 Diluted $ ( 0.00 ) $ 0.03 $ ( 0.02 ) $ 0.07 Weighted average number of common shares outstanding: Basic 92,161,635 89,428,310 91,482,504 89,147,092 Diluted 92,161,635 89,428,310 91,482,504 89,147,092 See accompanying notes to unaudited consolidated financial statements. 5 Table of Contents P EDEVCO CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (amounts in thousands) Nine Months Ended September 30, 2025 2024 Cash Flows From Operating Activities: Net (loss) income $ ( 1,861 ) $ 6,369 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization and accretion 11,213 10,782 Impairment of oil and gas properties 907 - Note receivable – credit loss 1,378 - Amortization of right-of-use asset 122 83 Amortization of deferred financing costs 102 - Share-based compensation expense 1,486 1,401 Disposition of escrow cash account - 50 Deferred income taxes ( 578 ) - Gain on sale of oil and gas properties, net ( 1,021 ) ( 735 ) Gain on disposal of fixed asset - ( 12 ) Changes in operating assets and liabilities: Accounts receivable – oil and gas 2,882 467 Note receivable accrued interest ( 41 ) ( 78 ) Prepaid expenses and other assets ( 62 ) ( 543 ) Accounts payable 7,271 ( 1,088 ) Accrued expenses ( 9,835 ) ( 6,041 ) Revenue payable 942 ( 2,108 ) Net cash provided by operating activities 12,905 8,547 Cash Flows From Investing Activities: Cash paid for drilling and completion costs ( 8,905 ) ( 23,134 ) Cash received for sale of oil and gas properties 2,923 1,115 Cash received for sale of vehicle - 12 Cash paid for vehicle - ( 91 ) Net cash used in investing activities ( 5,982 ) ( 22,098 ) Cash Flows From Financing Activities: Proceeds from issuance of shares, net of offering costs 139 - Net cash provided by investing activities 139 - Net increase (decrease) in cash and restricted cash 7,062 ( 13,551 ) Cash and restricted cash at beginning of period 6,607 20,715 Cash and restricted cash at end of period $ 13,669 $ 7,164 Supplemental Disclosure of Cash Flow Information Noncash investing and financing activities: Change in accrued oil and gas development costs $ ( 8,843 ) $ 5,009 Changes in estimates of asset retirement costs, net $ 476 $ 56 Issuance of restricted common stock $ 4 $ 2 See accompanying notes to unaudited consolidated financial statements. 6 Table of Contents P EDEVCO CORP. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (Unaudited) (amounts in thousands, except share amounts) Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit Totals Balances at December 31, 2024 (Restated) 89,495,267 $ 89 $ 227,013 ( 111,498 ) $ 115,604 Issuance of restricted common stock 1,844,118 2 ( 2 ) - - Share-based compensation - - 475 - 475 Net income - - - 140 140 Balances at March 31, 2025 91,339,385 91 227,486 ( 111,358 ) $ 116,219 Issuance of common stock for cash proceeds, net 489,967 1 138 - 139 Share-based compensation - - 474 - 474 Net loss - - - ( 1,676 ) ( 1,676 ) Balances at June 30, 2025 91,829,352 92 228,098 ( 113,034 ) $ 115,156 Issuance of restricted common stock 690,000 1 ( 1 ) - - Share-based compensation - - 537 - 537 Net income - - - ( 325 ) ( 325 ) Balances at September 30, 2025 92,519,352 $ 93 $ 228,634 $ ( 113,359 ) $ 115,368 Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit Totals Balances at December 31, 2023 87,250,267 $ 87 $ 225,156 $ ( 126,477 ) $ 98,766 Issuance of restricted common stock 2,105,000 2 ( 2 ) - - Share-based compensation - - 475 - 475 Net income - - - 773 773 Balances at March 31, 2024 89,355,267 89 225,629 ( 125,704 ) 100,014 Rescinded restricted common stock ( 70,000 ) Share-based compensation - - 462 - 462 Net income - - - 2,681 2,681 Balances at June 30, 2024 89,285,267 89 226,091 ( 123,023 ) 103,157 Issuance of restricted common stock 210,000 - - - - Share-based compensation - - 464 - 464 Net income - - - 2,915 2,915 Balances at September 30, 2024 89,495,267 $ 89 $ 226,555 $ ( 120,108 ) $ 106,536 See accompanying notes to unaudited consolidated financial statements. 7 Table of Contents P EDEVCO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 – BASIS OF PRESENTATION The accompanying interim unaudited consolidated financial statements of PEDEVCO Corp. (“PEDEVCO” or the “Company”), have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in PEDEVCO’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the interim unaudited consolidated financial statements that would substantially duplicate disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Annual Report on Form 10-K/A (Amendment No. 3) for the year ended December 31, 2024, filed with the SEC on October 31, 2025 (the “2024 Annual Report”), have been omitted. The Company’s consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and subsidiaries in which the Company has a controlling financial interest. All significant inter-company accounts and transactions have been eliminated in consolidation. The Company’s future financial condition and liquidity will be impacted by, among other factors, the success of our drilling program, the number of commercially viable oil and natural gas discoveries made and the quantities of oil and natural gas discovered, the speed with which we can bring such discoveries to production, the actual cost of exploration, appraisal and development of our prospects, and the prevailing prices and demand for oil and natural gas. In connection with the preparation of the Company’s Consolidated Financial Statements as of and for the interim period ended September 30, 2025, the Company discovered that it had not accurately calculated the income tax benefit upon release of its existing valuation against net deferred assets as of December 31, 2024. The error resulted in an overstatement of its tax benefit and deferred income taxes asset account of approximately $ 5,496,000 as of December 31, 2024. The error was primarily the result of the Company not appropriately applying an excess amount of prior period net operating losses (“NOLs”) in the tax benefit calculation. The error did not impact total revenue, cash flow from operations and cash balances for the fiscal year ended December 31, 2024. The consolidated balance sheet as of September 30, 2025 reflects the amounts from the December 31, 2024 consolidated financial statements that were corrected and restated based on the following (in thousands): As of December 31, 2024 CORRECTED CONSOLIDATED BALANCE SHEET As Previously Reported Impact of Adjustment As Restated Deferred income taxes $ 12,751 $ ( 5,496 ) $ 7,255 Total assets 133,845 ( 5,496 ) 128,349 Accumulated deficit ( 106,002 ) ( 5,496 ) ( 111,498 ) Total shareholders’ equity 121,100 ( 5,496 ) 115,604 Total liabilities and shareholders’ equity 133,845 (5,496 ) 128,349 NOTE 2 – DESCRIPTION OF BUSINESS PEDEVCO is an oil and gas company focused on the development, acquisition and production of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied. In particular, the Company focuses 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. The Company’s 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. The Company holds its Permian Basin acres located in Chaves and Roosevelt Counties, New Mexico, through its wholly-owned operating subsidiary, Pacific Energy Development Corp. (“PEDCO”), which asset the Company refers to as its “Permian Basin Asset,” and it holds its D-J Basin acres located in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming, through its wholly-owned subsidiary, PRH Holdings LLC, and which asset the Company refers to as its “D-J Basin Asset.” The Company believes that horizontal development and exploitation of conventional assets in the Permian Basin and development of the Wattenberg and Wattenberg Extension in the D-J Basin represent among the most economic oil and natural gas plays in the United States (“U.S.”). Moving forward, the Company plans to optimize its existing assets and opportunistically seek additional acreage proximate to its currently held core acreage, as well as other attractive onshore U.S. oil and gas assets that fit the Company’s acquisition criteria, that Company management believes can be developed using its technical and operating expertise and be accretive to shareholder value. As discussed in greater detail below in Note 16, on October 31, 2025, the Company closed the transactions contemplated by an Agreement and Plan of Merger dated October 31, 2025 (the “Merger Agreement”), between the Company, NP Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“First Merger Sub”), COG Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Second Merger Sub,” and together with First Merger Sub, the “Merger Subs”), North Peak Oil & Gas, LLC, a Delaware limited liability company (“NPOG”), Century Oil and Gas Sub-Holdings, LLC, a Delaware limited liability company (“COG,” and together with NPOG, the “Acquired Companies”), and, solely for purposes of the specified provisions therein, North Peak Oil & Gas Holdings, LLC, a Delaware limited partnership (“North Peak”). 8 Table of Contents Pursuant to the Merger Agreement, (a) First Merger Sub merged with and into NPOG, with NPOG being the surviving entity and a wholly-owned subsidiary of PEDEVCO and (b) Second Merger Sub merged with and into COG, with COG being the surviving entity and a wholly-owned subsidiary of PEDEVCO (the “Mergers”). Because the Mergers closed on October 31, 2025, after the period covered by this Report, the operations, assets, liabilities and other financial information of the Acquired Companies are not included in the consolidated financial statements included herein. NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company has provided a discussion of significant accounting policies, estimates and judgments in its 2024 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2024. Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU will be effective for the annual period ending December 31, 2025. While the adoption of this ASU will modify the Company’s disclosures, it will not have an impact on the Company’s consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows in its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires additional disclosure about specified categories of expenses included in relevant expense captions presented on the income statement. The amendments are effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively or retrospectively. The Company does not expect the standard to have a material effect on its consolidated financial statements and has begun evaluating disclosure presentation alternatives. NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue from Contracts with Customers. The following table disaggregates revenue by significant product type in the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Oil sales $ 6,176 $ 8,250 $ 19,430 $ 26,656 Natural gas sales 377 176 1,542 799 Natural gas liquids sales 408 624 1,697 1,522 Total oil and gas sales $ 6,961 $ 9,050 $ 22,669 $ 28,977 There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2025. 9 Table of Contents NOTE 5 – CASH The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the consolidated statements of cash flows (in thousands): September 30, 2025 December 31, 2024 Cash $ 10,922 $ 4,010 Restricted cash included in other assets* 2,747 2,597 Total cash and restricted cash $ 13,669 $ 6,607 * Increase in restricted cash is related to additional collateral for a surety bond required by the Colorado Bureau of Land Management with respect to the Company’s Colorado operations. NOTE 6 – OIL AND GAS PROPERTIES The following table summarizes the Company’s oil and gas activities by classification for the nine months ended September 30, 2025 (in thousands): December 31, 2024* Additions Disposals Transfers September 30, 2025 Oil and gas properties, subject to amortization $ 210,039 $ 3,296 $ ( 288 ) $ 5,561 $ 218,608 Oil and gas properties, not subject to amortization 14,738 14,452 ( 2,028 ) ( 5,561 ) 21,601 Asset retirement costs 4,326 476 ( 91 ) - 4,711 Accumulated depreciation and depletion ( 81,015 ) ( 10,591 ) - - ( 91,606 ) Accumulated impairment ( 44,576 ) ( 907 ) - - ( 45,483 ) Total oil and gas properties, net $ 103,512 $ 6,726 $ ( 2,407 ) $ - $ 107,831 *Certain reclassifications have been made to prior period amounts to conform to the current period’s presentation, which had no effect on the previously reported total assets, total liabilities, total shareholders’ equity, results of operations or cash flows. For the nine-month period ended September 30, 2025, the Company incurred $ 17,220,000 of capital costs primarily related to the Company’s completion operations with respect to four operated wells drilled and completed with a third-party as well as five lift conversions in the Permian Basin. The Company also participated in the drilling and/or completion of 23 non-operated wells in the D-J Basin for which production has yet to begin ranging from 8% to 44% working interest. Additionally, the Company acquired approximately 100 net mineral acres and 296 net lease acres in and around its existing footprint in the D-J Basin through multiple transactions at total acquisition and due diligence costs of $ 194,000 and $ 334,000 , respectively. For the nine-month period ended September 30, 2025, the Company recorded an impairment of oil and gas properties of $ 907,000 related to undeveloped leases representing 1,034 net acres in the D-J Basin that it allowed to expire or had no plans to drill prior to expiration. In February 2025, the Company entered into a joint development agreement with a private equity-backed D-J Basin E&P Company (“Operator”), pursuant to which the parties agreed to jointly participate in the expansion and development of the Company’s Roth and Amber drilling and spacing units (“DSUs”) located in Weld County, Colorado. The Operator paid to the Company $ 1.7 million, and the Company agreed to amend the Company’s existing Roth and Amber DSUs to increase each to 1,600 acres and transfer operatorship of the DSUs to the Operator. In February 2025, the Company recognized $ 0.3 million in disposition expense related to the sale of certain capitalized equipment to a third-party in the D-J Basin. In April 2025, the Company sold all of its operated production in Weld County, Colorado to a private buyer for an adjusted price of $ 606,000 . The sale included wellbore and surface equipment only for the Company’s 17 operated wells in its D-J Basin Asset, with the Company retaining ownership in all its existing leasehold. The effective date of the sale is January 1, 2025. As a result, the Company recorded a gain on sale of oil and gas properties of $ 1,021,000 in its consolidated statements of operations for the nine months ended September 30, 2025. 10 Table of Contents On September 12, 2023, the Company and Evolution Petroleum Corporation (“Evolution”) entered into a Participation Agreement for the joint development of approximately 16,000 gross leasehold acres divided into twelve “Development Blocks” within the Company’s Permian Basin Asset, in which the parties may jointly develop by drilling and completion of up to nine horizontal San Andres wells in each Development Block. The Company received net proceeds of $ 366,000 and serves as the operator. Evolution acquired a 50% working interest share in existing leases, covering the initial two Development Blocks (which equals Evolution’s share of the acreage portion for nine drilling locations therein), and upon completion of the wells in each Development Block, Evolution will have the right, but not the obligation, to acquire a 50% working interest share in the next Development Block in exchange for the payment of $450 per net acre of existing leases held by the Company in such block, and participate on a 50% working interest share basis in the drilling and completion of up to nine horizontal San Andres wells in such Development Block. Pursuant to the Participation Agreement, in June 2024, Evolution acquired a 50% working interest share in Existing Leases covering approximately 811 net acres located in the third, fourth and fifth Development Blocks in exchange for the payment of $ 365,000 in total proceeds to the Company. Additionally, in September 2025, Evolution acquired a 50% working interest share in Existing Leases covering approximately 640 net acres located in the eighth Development Block in exchange for the payment of $ 288,000 in total proceeds to the Company. Depletion expense recorded for production on proved properties for the three and nine months ended September 30, 2025 and 2024, amounted to $ 3,783,000 , compared to $ 3,100,000 , and $ 10,591,000 , compared to $ 10,307,000 , respectively. NOTE 7 – NOTE RECEIVABLE On November 9, 2023, in accordance with the sale of our then wholly-owned subsidiary EOR Operating Company (“EOR”) to Tilloo Exploration and Production LLC (“Tilloo”), the Company entered into a five-year secured promissory note (the “Note”) with Tilloo, bearing interest at 10 % per annum, with no payments due until January 8, 2025, and fully-amortized payments due monthly over the remaining four years of the term thereafter until maturity. The Note contains customary events of default and is secured by a lien over all the assets and capital shares of EOR created under a Security Agreement, a Security Agreement (Pledge of Corporate Securities), and a Mortgage entered into by and between the Company and Tilloo. Tilloo failed to make its initial installment payment on January 8, 2025, and has not made any subsequent payments as of September 30, 2025. The Company issued a notice of default under the Note to Tilloo in mid-January 2025 and sought to work with Tilloo into April 2025 in an effort to either restructure the Note or arrange for the sale of the assets securing the same to an unaffiliated third-party buyer, with proceeds of such sale to be applied toward repayment of the Note. On September 18, 2025, Tilloo filed a civil lawsuit against the Company in the District Court of Harris County, Texas, alleging breach of contract, fraudulent inducement, and negligent misrepresentation. The Company is currently in the process of preparing a response and intends to vigorously defend against these allegations, and make appropriate counterclaims against Tilloo, where available. Due to Tilloo’s sustained default and a determination by the Company that the prospect of recovery is remote, the Company wrote off the outstanding balance of the Note in the second quarter of 2025. As such, the outstanding balance of the Note as of September 30, 2025 is nil. Accordingly, a $ 1,267,000 note receivable – credit loss has been recognized in the consolidated statements of operations for the nine months ended September 30, 2025. However, the Company continues to consider avenues and remedies available to collect on all amounts due and owing to the Company from Tilloo. Additionally, the Company has fully written off post-closing adjustments receivable due from Tilloo related to the sale of EOR in the amount of $ 111,000 . These write-offs reflect the Company's decision that the carrying value of the Note and post-closing adjustments receivable are no longer recoverable. Taken together, the Company recognized a total of $ 1,378,000 in note receivable – credit loss in the consolidated statements of operations for the nine months ended September 30, 2025. 11 Table of Contents NOTE 8 – ASSET RETIREMENT OBLIGATIONS Activity related to the Company’s asset retirement obligations is as follows (in thousands): Nine Months Ended September 30, 2025 Balance at the beginning of the period (1) $ 6,371 Accretion expense 583 Liabilities settled ( 504 ) Disposition of liabilities ( 505 ) Changes in estimates, net 476 Balance at end of period (2) $ 6,421 (1) Includes $ 663,000 of current asset retirement obligations at December 31, 2024. (2) Includes $ 616,000 of current asset retirement obligations at September 30, 2025. In New Mexico, the Company, through its New Mexico operating subsidiary Ridgeway Arizona Oil Corp. (“RAZO”), has entered into a Stipulated Final Order (“SFO”) with Director of the Oil and Gas Conservation Division of New Mexico (the “OCD”) pursuant to which, among other things, RAZO agreed to reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $ 2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $ 30,000 per month by RAZO. RAZO has been timely paying each reimbursement invoice received from the OCD in accordance with the SFO and is in full compliance with the SFO. The SFO superseded all previous Agreed Compliance Orders, as amended, entered into by and between RAZO and the OCD. During the nine months ended September 30, 2025, the Company reimbursed the OCD $ 504,000 in plugging and abandoning costs related to the SFO. NOTE 9 – COMMITMENTS AND CONTINGENCIES Lease Agreements Currently, the Company has one operating lease for office space that requires Accounting Standards Codification (“ASC”) Topic 842 treatment, discussed below. The Company’s leases typically do not provide an implicit rate. Accordingly, the Company is required to use its incremental borrowing rate in determining the present value of lease payments based on the information available at the commencement date. The Company’s incremental borrowing rate would reflect the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. However, at the time of implementation the Company maintained no debt, and in order to apply an appropriate discount rate, the Company used a borrowing rate obtained from a financial institution at which it maintains banking accounts. In December 2022, the Company entered into a lease agreement for approximately 5,200 square feet of office space in Houston, Texas, that commenced on September 1, 2023 , which expires on February 28, 2027 . The remaining monthly payments are approximately $ 15,800 through February 2026 and increase to approximately $ 16,000 through the end of the lease. The Company paid a security deposit of $ 14,700 . Supplemental cash flow information related to the Company’s operating office lease is included in the table below (in thousands): Nine Months Ended September 30, 2025 Cash paid for amounts included in the measurement of lease liabilities $ 122 12 Table of Contents Supplemental balance sheet information related to operating leases is included in the table below (in thousands): September 30, 2025 Operating lease – right-of-use asset $ 256 Operating lease liabilities - current $ 178 Operating lease liabilities - long-term 79 Total lease liability $ 257 The weighted-average remaining lease term for the Company’s operating lease is 1.4 years as of September 30, 2025, with a weighted-average discount rate of 7.90 %. Lease liability with enforceable contract terms that have greater than one-year terms are as follows (in thousands): Remainder of 2025 $ 47 2026 191 Thereafter 32 Total lease payments 270 Less imputed interest ( 13 ) Total lease liability $ 257 Leasehold Drilling Commitments The Company’s oil and gas leasehold acreage is subject to expiration of leases if the Company does not drill and hold such acreage by production or otherwise exercise options to extend such leases, if available, in exchange for payment of additional cash consideration. In the D-J Basin, no net acres expire during the remainder of 2025, and 7,229 net acres expire within the next two-year period (net to our direct ownership interest only). In the Permian Basin, no net acres are due to expire during the remainder of 2025, and no net acres expire within the next two-year period (net to our direct ownership interest only) . The Company plans to hold significantly all of this acreage through a program of drilling and completing producing wells. If the Company is not able to drill and complete a well before lease expiration, the Company may seek to extend leases where able. Other Commitments Although the Company may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of business, the Company is not currently a party to any material legal proceeding. In addition, the Company is not aware of any material legal or governmental proceedings against it or contemplated to be brought against it. As part of its regular operations, the Company may become party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters. Although the Company provides no assurance about the outcome of any future legal and administrative proceedings and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on the Company’s financial condition or results of operations. 13 Table of Contents Milnesand Sale Dispute and Tilloo Note Default and Litigation On November 4, 2024, the Company received correspondence from legal counsel to Tilloo Exploration & Production, LLC seeking to recover damages which Tilloo is alleging were caused by alleged intentional misrepresentations made by principals of the Company to principals of Tilloo in connection with Tilloo’s acquisition of the Milnesand and Sawyer fields in New Mexico from the Company for aggregate consideration of $ 1,122,436 effective August 1, 2023 (the “Milnesand Sale”), which consideration was paid to the Company by Tilloo via a five-year secured promissory note with 10 % annual interest and no payments due until January 8, 2025 (the “Tilloo Note”). The Company does not believe any misrepresentations were made by the Company or its principals in the Milnesand Sale and that the claims will fail as a matter of law. The Company has not received any correspondence from Tilloo regarding the allegations made in November 4, 2024 correspondence subsequent to receipt of the same from Tilloo, and Tilloo failed to make the initial installment payment due under the Tilloo Note on January 8, 2025. The Company issued a notice of default under the Tilloo Note to Tilloo in mid-January 2025. On September 18, 2025, Tilloo filed a civil lawsuit against the Company in the District Court of Harris County, Texas, alleging breach of contract, fraudulent inducement, and negligent misrepresentation. The Company is currently in the process of preparing a response and intends to vigorously defend against these allegations, and make appropriate counterclaims against Tilloo, where available. The Company does not anticipate that the Company will incur any material losses related thereto. Phoenix Litigation Upon the consummation of the Mergers, effective October 31, 2025, a wholly-owned subsidiary of NPOG, Navigation Powder River, LLC (“NPRLLC”), became an indirect wholly-owned subsidiary of the Company. On July 31, 2025, NPRLLC and Phoenix Energy One, LLC (“Phoenix”) entered into that certain Purchase and Sale Agreement (the “Phoenix PSA”) whereby NPRLLC agreed to sell to Phoenix certain oil and gas properties located in Campbell and Converse Counties. On September 10, 2025, NPRLLC filed a Petition against Phoenix in the Business Court of Texas (Navigation Powder River, LLC v. Phoenix Energy One, LLC, Eleventh Business District, Texas Business Court, Houston, TX) alleging a breach of contract by Phoenix Energy for its failure to consummate the transactions contemplated by the Phoenix PSA. The Company intends to vigorously pursue its claims in an effort to secure a favorable ruling from the court. If the matter is ultimately not resolved in the Company’s favor, the Company estimates that its potential loss will be the approximately $7.7 million purchase price consideration due from Phoenix under the Phoenix PSA, provided that NPRLLC would retain the oil and gas properties in full. NOTE 10 – SHAREHOLDERS’ EQUITY Common Stock During the nine months ended September 30, 2025, the Company granted an aggregate of 2,534,118 restricted stock awards to various employees and board members of the Company (see Note 11 below). During the month of June 2025, the Company sold an aggregate of 489,967 shares of common stock in five separate sales at sales prices ranging between $ 0.716 to $ 0.801 per share via an ongoing “at the market offering” (the “ATM Offering”) for net proceeds of $ 354,000 , which includes $ 11,000 in commission fees. The Company also incurred $ 214,000 in initial and subsequent legal and audit-related fees and expenses incurred in connection with the registration and placement of the ATM Offering. The ATM Offering was made pursuant to the terms of that certain December 20, 2024, Sales Agreement (the “Sales Agreement”) entered into with Roth Capital Partners, LLC (the “Lead Agent”) and A.G.P./Alliance Global Partners (“AGP”, and collectively with the Lead Agent, the “Agents”), pursuant to which the Company may sell securities from time to time in an “at the market offering” (the “ATM Offering”). The Company will pay the Lead Agent a commission of 3.0% of the gross sales price of any shares sold under the Sales Agreement. The Company also agreed to reimburse the Agents for their reasonable and documented out-of-pocket expenses in an amount not to exceed $75,000, in connection with entering into the Sales Agreement and for the Agents’ reasonable and documented out-of-pocket expenses related to quarterly maintenance of the Sales Agreement on a quarterly basis in an amount not to exceed $5,000 . 14 Table of Contents NOTE 11 – SHARE-BASED COMPENSATION The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award over the vesting period. Common Stock On January 23, 2025, restricted stock awards were granted to officers and employees of the Company for an aggregate of 1,844,118 shares of the Company’s restricted common stock under the Company’s 2021 Plan. The grant for the 1,844,118 shares of restricted common stock vest as follows: 33.3% vesting on the 10-month anniversary of the vesting commencement date, 33.3% vesting on the 22-month anniversary date of the vesting commencement and 33.4% vesting on the 34-month anniversary date of the vesting, contingent upon the recipient’s continued service with the Company . These shares have a total fair value of $ 1,568,000 based on the market price on the grant date. On July 7, 2025, the Company appointed John K. Howie to the Company's Board of Directors and as consideration for Mr. Howie joining the Board of Directors, the Board granted Mr. Howie 150,000 shares of restricted common stock of the Company under the Company’s 2021 Equity Incentive Plan, as amended, which shares vest on July 7, 2026, contingent to Mr. Howie’s continued service with the Company. These shares have a total fair value of $ 92,000 , based on the market price on the grant date. On August 28, 2025, an aggregate of 540,000 restricted stock awards were granted to three board members under the Company’s 2021 Equity Incentive Plan, as amended. The grant of the 540,000 shares of restricted common stock vest as follows: 100% of 200,000 shares, 100% of 200,000 shares and 100% of 140,000 shares vesting on January 1, 2026, July 12, 2026 and September 27, 2026, respectively , contingent upon each recipient’s continued service with the Company. These shares have a total fair value of $ 313,000 , based on the market price on the grant date. Stock-based compensation expense recorded relating to the vesting of restricted stock for the three and nine months ended September 30, 2025 and 2024, was $ 482,000 and $ 396,000 and $ 1,320,000 and $ 1,191,000 , respectively. The remaining unamortized stock-based compensation expense at September 30, 2025 related to restricted stock was $ 1,460,400 . Options On January 23, 2025, the Company granted options to purchase an aggregate of 464,000 shares of common stock to various Company employees at an exercise price of $ 0.85 per share under the Company’s 2021 Plan. The options have a term of five years and fully vest in November 2027, with 33.3% vesting on the 10-month anniversary of the vesting commencement date, 33.3% vesting on the 22-month anniversary date of the vesting commencement and 33.4% vesting on the 34-month anniversary date of the vesting, contingent upon the recipient’s continued service with the Company . The aggregate fair value of the options on the date of grant, using the Black-Scholes model, was $ 195,000 . Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 4.45 % based on the applicable US Treasury bill rate, (2) expected term of 3.5 years, (3) expected volatility of 64.5 % based on the trading history of the Company, and (4) zero expected dividends. During the three and nine months ended September 30, 2025 and 2024, the Company recognized stock option expense of $ 55,000 and $ 68,000 and $ 166,000 and $ 210,000 , respectively. The remaining amount of unamortized stock options expense at September 30, 2025 was $155,000. The intrinsic value of outstanding and exercisable options at September 30, 2025 was $- 0 -. 15 Table of Contents Option activity during the nine months ended September 30, 2025, was: Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (Years) Outstanding at December 31, 2024 1,835,667 $ 1.12 2.4 Granted 464,000 $ 0.85 Expired/Canceled ( 215,667 ) $ 1.68 Outstanding at September 30, 2025 2,084,000 $ 1.00 2.5 Exercisable at September 30, 2025 1,156,666 $ 1.14 1.6 NOTE 12 – EARNINGS (LOSS) PER COMMON SHARE Earnings (loss) per common share-basic is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share-diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing net income by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net income (loss) per common share-diluted considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares, as defined above, would have an anti-dilutive effect. The calculation of earnings (loss) per share for the periods indicated below were as follows (amounts in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Numerator: Net (loss) income $ ( 325 ) $ 2,915 $ ( 1,861 ) $ 6,369 Denominator: Weighted average common shares – basic 92,161,635 89,428,310 91,482,504 89,147,092 Dilutive effect of common stock equivalents: Options - - - - Denominator: Weighted average common shares – diluted 92,161,635 89,428,310 91,482,504 89,147,092 Earnings per share – basic $ ( 0.00 ) $ 0.03 $ ( 0.02 ) $ 0.07 Earnings per share – diluted $ ( 0.00 ) $ 0.03 $ ( 0.02 ) $ 0.07 For the three and nine months ended September 30, 2025 and 2024, share equivalents related to options to purchase 2,294,000 , compared to 1,835,667 , and 2,294,000 compared to 1,835,667 , shares of common stock, respectively, were excluded from the computation of diluted net income per share as the inclusion of such shares would be anti-dilutive. 16 Table of Contents NOTE 13 – INCOME TAXES The Company’s effective tax rate was approximately 23.7 % and 0.0 % for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rate was primarily due to recognized tax benefits in the current period compared to the impact of the full valuation allowance recorded in the prior period. As a result, the Company recognized an income tax benefit of $ 578,000 for the period ended September 30, 2025. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”) into law. The OBBBA includes, among other things, a permanent extension of 100% bonus depreciation for certain capital expenditures and modifications to the interest expense limitation under Section 163(j). In accordance with ASC Topic 740, Income Taxes, the effects of the tax law are recognized in the period of enactment and therefore not reflected in the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025. The Company is evaluating the potential tax impacts of the OBBBA on the consolidated financial statements. NOTE 14 — SEGMENT INFORMATION Operating segments are defined as components of an enterprise for which separate financial information is available and regularly evaluated by the Chief Operating Decision Maker (“CODM”) for the purpose of making key operating decisions, allocating resources, and assessing operating performance. The Company operates in one reportable operating segment, oil and natural gas development, exploration and production. The Company’s oil and gas properties are managed as a whole rather than through discrete operating segments. Financial and operational information is tracked by geographic area; however, financial performance is assessed as a single enterprise and not on a geographic basis. Allocation of resources is made on a project basis across the Company’s entire portfolio without regard to geographic area, and considers among other things, return on investment, current market conditions, including commodity prices and market supply, availability of services and human resources, and contractual commitments. The Company’s President and Chief Executive Officer is its CODM. The Company’s profitability measure is consolidated net income which is used to assess budgeted versus actual results and drives the Company’s operating cash flow. The CODM reviews significant consolidated forecasts and results of operations, including return on capital, operating expenses, and cash flow when making decisions such as the allocation of capital. The financial position, results of operations and cash flows of the Company’s reportable operating segment are consistent with the Company’s consolidated financial statements included herein. NOTE 15 – SUBSEQUENT EVENTS Merger Agreement On October 31, 2025 (the “Closing”) we entered into an Agreement and Plan of Merger, with NP Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, COG Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, North Peak Oil & Gas, LLC, a Delaware limited liability company, Century Oil and Gas Sub-Holdings, LLC, a Delaware limited liability company, and, solely for purposes of the specified provisions therein, North Peak Oil & Gas Holdings, LLC, a Delaware limited partnership. Pursuant to the Merger Agreement, (a) First Merger Sub merged with and into NPOG, with NPOG being the surviving entity and a wholly owned subsidiary of PEDEVCO and (b) Second Merger Sub merged with and into COG, with COG being the surviving entity and a wholly owned subsidiary of PEDEVCO. Subject to the terms and conditions of the Merger Agreement, all of the issued and outstanding limited liability company interests of each of the Acquired Companies were automatically converted into the right to receive an aggregate of 10,650,000 validly issued, fully paid and nonassessable shares of newly designated Series A Convertible Preferred Stock of PEDEVCO (the “Merger Preferred Shares”), par value $ 0.001 per share (the “PEDEVCO Series A Preferred Stock”), which shares were issued to Century Oil and Gas Holdings, LLC, a Delaware limited liability company (“Century”) and North Peak. The PEDEVCO Series A Preferred Stock will automatically convert into shares of common stock of PEDEVCO, par value $ 0.001 per share (the “PEDEVCO common stock” and an “Automatic Conversion”), at a ratio of 10-to-1 , immediately following the expiration of the twenty calendar day period commencing on the distribution of an information statement to PEDEVCO’s shareholders in accordance with Rule 14c-2 of Regulation 14C promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (the “Automatic Conversion Date”). The Merger Preferred Shares will convert on the Automatic Conversion Date into an aggregate of 106,500,000 shares of PEDEVCO common stock. Pursuant to the Merger Agreement, we agreed to prepare and file with the SEC, as promptly as reasonably practicable, but in any event within 20 days after the Closing Date, in a form mutually agreeable to the parties to the Merger Agreement, an information statement pursuant to Schedule 14C of the Exchange Act (the “Information Statement”) and to use commercially reasonable efforts to resolve any SEC comments on such Information Statement after receipt thereof, and to have the Information Statement cleared by the SEC staff as promptly as reasonably practicable. On November 13, 2024, the Company, the Merger Subs, the Acquired Companies and North Peak, entered into a First Amendment to Agreement and Plan of Merger, pursuant to which each of the parties agreed that the Information Statement shall be prepared and filed with the SEC, as soon as reasonably practicable by the Company. The acquisition will be accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805. The initial accounting for the business combination is in process, which includes a valuation analysis to value the assets and liabilities assumed as a result of the transaction. As such, the impact on the condensed consolidated financial statements cannot be estimated at this time. 17 Table of Contents Shareholder Agreement At the Closing, PEDEVCO entered into a Shareholder Agreement with Century, North Peak (together, the “Juniper Shareholder”), and, for certain limited provisions, Dr. Simon G. Kukes, the then Executive Chairman of PEDEVCO and The SGK 2018 Revocable Trust (a trust which Dr. Simon serves as trustee and beneficiary of). The agreement grants the Juniper Shareholder board nomination rights from the Closing until the Automatic Conversion Date, including the ability to designate one board nominee and one non-voting observer. Following the Automatic Conversion Date, the Board will consist of six directors, with Juniper’s nominees determined by their ownership percentage of Conversion Shares. The Juniper Shareholder may nominate up to three directors, including one independent director, with rights decreasing as ownership declines. The Juniper Shareholder also retains the right to remove or replace its directors, subject to Board approval and suitability requirements under SEC and NYSE standards. At least one Juniper Shareholder director will serve on each Board committee (except the audit committee), and will chair the Compensation and Governance Committees, subject to limited exceptions. The Shareholder Agreement also grants the shareholders registration rights, requiring PEDEVCO to use commercially reasonable efforts to file a registration statement covering the resale of the shares of common stock issuable upon conversion of the PEDEVCO Series A Preferred Stock within 45 days of the Automatic Conversion Date, using Form S-3 or Form S-1 if necessary. Shareholders may request underwritten offerings of at least $10 million, subject to customary agreements and underwriter approval, with limits on frequency and “grace periods” for delays . Piggyback registration rights allow participation in offerings by the Company or other holders, subject to underwriter and priority rules. The Company will pay related expenses and indemnify shareholders against certain Securities Act of 1933, as amended liabilities. The Shareholder Agreement became effective at the Closing and will terminate according to its terms. PIPE Offering Concurrently with the Closing of the Mergers, certain investors (the “PIPE Investors”) subscribed for and purchased an aggregate of 6,363,637 shares of PEDEVCO Series A Preferred Stock (the “PIPE Preferred Shares”), at a price per share equal to $ 5.50 per share (the “Purchase Price”), pursuant to their entry into Series A Convertible Preferred Stock Subscription Agreements in favor of the Company (the “Subscription Agreements”). When converted in full, the PIPE Preferred Shares will convert into 63,636,370 shares of PEDEVCO common stock (the “PIPE Conversion Shares”). The PIPE Investors included (a) The SGK 2018 Revocable Trust, a family trust of which Dr. Simon Kukes, the then Executive Chairman of PEDEVCO is trustee and beneficiary ($15,409,977); (b) American Resources, Inc., an entity partially owned and controlled by J. Douglas Schick, the Chief Executive Officer, President and member of the Board ($250,003); (c) Clark R. Moore, the Executive Vice President, General Counsel and Secretary of PEDEVCO ($25,003); (d) John J. Scelfo Revocable Trust Dated October 8, 2003, a trust of which John J. Scelfo, a member of the Board, is trustee and beneficiary ($550,000); (f) Jody D. Crook, the Chief Commercial Officer of PEDEVCO ($25,003); (g) J PED, LLC, an entity affiliated with Juniper Capital Advisors, L.P. (“Juniper”) ($18,550,004); (h) Reagan T. Dukes, the then Chief Executive Officer of the Acquired Companies, who was appointed Chief Operating Officer of PEDEVCO at the Closing ($52,503) and (i) Robert J. Long, the then Chief Financial Officer of the Acquired Companies, who was appointed Chief Financial Officer, Treasurer and Principal Accounting/Financial Officer of PEDEVCO at the Closing ($52,503) . The PIPE Financing closed concurrently with the Mergers and the $ 35,000,004 of net proceeds raised by the Company pursuant to the PIPE Financing was used to pay off certain liabilities of the Acquired Companies in connection with the Mergers and certain expenses of the PIPE Financing and Mergers. 18 Table of Contents Second Amended and Restated Designation of Series A Convertible Preferred Stock In preparation for the Closing, the Board of Directors approved the Second Amended and Restated Certificate of Designations establishing the rights, preferences, and limitations of PEDEVCO’s Series A Convertible Preferred Stock (the “Series A Preferred Stock”) on October 29, 2025, which was filed with the Texas Secretary of State on October 31, 2025. A total of 17,013,637 shares of Series A Preferred Stock were designated. Except as required by law or the designation, Series A Preferred Stock holders have no voting rights, except the right to elect one director (the “Series A Director”) until the Automatic Conversion Date, with Josh Schmidt serving as the initial director. Holders of Series A Preferred Stock are entitled to certain protective provisions, requiring approval by a majority in interest of outstanding shares for actions such as amending governing documents, changing board composition, issuing new securities, major acquisitions or disposals, indebtedness above $500,000, executive appointments, and other material corporate actions . The holders of Series A Preferred Stock are provided no dividend rights, and in the event of liquidation, dissolution, or winding-up, Series A holders receive distributions pari passu with common shareholders, as if their shares were converted to common stock. The Series A Preferred Stock converts into PEDEVCO common stock automatically on the Automatic Conversion Date in a ratio of 10-for-1, subject to standard adjustments for splits, dividends, or recapitalizations. Support Agreements At the Closing, PEDEVCO entered into a Support Agreement with North Peak and certain officers, directors, and employees of the Company (collectively, the “Supporting Persons”), including Dr. Kukes, the SGK 2018 Revocable Trust, Mr. Schick, Mr. Moore, Mr. Paul Pinkston (Chief Accounting Officer), Mr. Crook, Mr. Howie (a then member of the Board), Mr. Scelfo (a then member of the Board), and Mr. Evans (a then member of the Board). Under the agreement, the Supporting Persons irrevocably delivered a written consent to approve certain corporate actions and agreed not to withdraw it, to refrain from any actions that could hinder or delay the transactions contemplated by the Merger Agreement, and to take all reasonable steps to ensure completion, including the Automatic Conversion of PEDEVCO Series A Preferred Stock. Until the Automatic Conversion occurs, they may not transfer, pledge, or encumber their PEDEVCO equity or act contrary to the agreement, except for transfers to controlled affiliates, estate planning vehicles, or bona fide gifts with transferee compliance. Support Agreements with Dr. Kukes and the SGK 2018 Revocable Trust also permit them to sell or transfer up to three million shares of PEDEVCO common stock without restriction. Restricted Stock Awards Contingent and effective upon the Closing, the Company granted (i) 2,000,000 shares of restricted PEDEVCO common stock under the Company’s 2021 Equity Incentive Plan, as amended (the “2021 Plan”) to Mr. J. Douglas Schick, a member of the Board and the President and Chief Executive Officer of the Company, (ii) 500,000 shares of restricted PEDEVCO common stock under the 2021 Plan to Mr. Clark R. Moore, the Company’s Executive Vice President, General Counsel and Secretary, (iii) 300,000 shares of restricted PEDEVCO common stock under the 2021 Plan to Mr. Jody Crook, the Chief Commercial Officer of the Company, and (iv) an aggregate of 200,000 shares of restricted PEDEVCO common stock under the 2021 Plan to two other PEDEVCO employees. Each of the restricted shares granted to Mr. Moore, Mr. Crook, and the two other employees, and 1,000,000 of the shares granted to Mr. Schick, vest (i) 1/3 on the one year anniversary of the grant date; (ii) 1/3 on the two year anniversary of the grant date; and (iii) 1/3 on three year anniversary of the grant date; in each case subject to the recipient being an employee of or consultant to the Company on such vesting date, and further subject to the terms and conditions of a Restricted Shares Grant Agreement entered into by and between the Company and each recipient . A total of 1,000,000 of the restricted shares issued to Mr. Schick vest if the 30-day average closing price of the PEDEVCO common stock equals or exceeds $0.90 (as adjusted for stock splits) within four years after the Closing (the “price trigger”), with the earliest possible vesting date being 30 days after the one year anniversary of the Closing, and subject to the following further vesting provisions: (a) if the price trigger is met between 1 year and 30 days and two years after Closing, one-third of the shares vest immediately and the rest vest on the second and third anniversaries of the grant date; (b) if the price trigger is met between years 2 and 3 after Closing, two-thirds of the shares vest immediately and one-third vests on the third anniversary of the Closing; and (c) if the price trigger is met after the third anniversary of the Closing, all shares will vest immediately. If the price trigger is not met by the fourth anniversary of the Closing, all 1,000,000 shares subject to the price trigger will be forfeited. Such share vesting is also further subject to the terms and conditions of a Restricted Shares Grant Agreement entered into by and between the Company and Mr. Schick. 19 Table of Contents Amended and Restated Credit Agreement On October 31, 2025, the Company entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”), which amended and restated that prior senior secured revolving credit agreement entered into on September 11, 2024 (the “Original Credit Agreement”) among the Company, as borrower, Citibank, N.A., as administrative agent (the “Administrative Agent”), and the lenders from time to time party thereto (the “Lenders”). The A&R Credit Agreement has a maturity date of October 31, 2029 . The A&R Credit Agreement provides for an initial borrowing base and aggregate elected commitments of $ 120 million and an aggregate maximum revolving credit amount of $ 250 million. The borrowing base is scheduled to be redetermined on December 1, 2025, and thereafter semiannually on or about April 1 and October 1 of each calendar year, commencing on April 1, 2026, and is subject to additional adjustments from time to time, including for certain asset sales, elimination or reduction of hedge positions and title defects. The A&R Credit Agreement contains additional restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, incur additional liens, enter into mergers and consolidations, make or declare dividends, make investments and loans, engage in transactions with affiliates, sell assets and enter into certain hedging transactions. In addition, the A&R Credit Agreement is subject to customary events of default for a facility of this size and type, including a change in control. If an event of default occurs and is continuing, the administrative agent may, with the consent of majority lenders, or shall, at the request of the majority lenders, accelerate any amounts outstanding and terminate lender commitments. Borrowings under the A&R Credit Agreement may be alternate base rate (“ABR”) loans or SOFR loans, at the election of the Company. Interest is payable quarterly for ABR loans and at the end of the applicable interest period for SOFR loans. SOFR loans bear interest at the forward- looking term rate based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) for a one, three or six-month interest period plus an applicable margin ranging from 300 to 400 basis points, depending on the percentage of the borrowing base utilized. ABR loans bear interest at a rate per annum equal to the greatest of: (i) the prime rate as publicly announced by Citibank; (ii) the federal funds effective rate plus 50 basis points; and (iii) the adjusted forward-looking term rate based on SOFR for a one-month interest period plus 100 basis points, plus an applicable margin ranging from 200 to 300 basis points, depending on the percentage of the borrowing base utilized. The Company also pays a commitment fee on unused commitment amounts under its facility of 37.5 basis points or 50 basis points, depending on the percentage of the borrowing base utilized. The Company may repay any amounts borrowed under the A&R Credit Agreement prior to the maturity date without any premium or penalty, and is required to repay certain portions of the amounts borrowed under the A&R Credit Agreement upon the occurrence of certain events. The A&R Credit Agreement provides for certain representations and warranties, and affirmative and negative covenants of the Company, in each case as are customary for a facility of this size and type, including the maintenance of the following financial ratios: (i) a current ratio, which is the ratio of the Company’s consolidated current assets (including unused commitments under the A&R Credit Agreement and excluding non- cash derivative assets) to its consolidated current liabilities (excluding the current portion of long-term debt under the A&R Credit Agreement and non-cash derivative liabilities), of not less than 1.0 to 1.0; and (ii) a leverage ratio, which is the ratio of Total Net Debt to EBITDAX (each as defined in the A&R Credit Agreement) for the prior four fiscal quarters, of not greater than 3.0 to 1.0. The Company is required to hedge at least 75 % of its projected proved developed producing reserves (PDP) oil and gas production at the time of entry into the A&R Credit Agreement, for the first 24 months of the agreement, and 50 % of its projected PDP of oil and gas production for months 25-36. Afterward, within 60 days after each fiscal quarter, the Company must show it has hedged at least 50% of expected oil and gas production for the next 18 months. The Company may hedge crude oil, natural gas, or natural gas liquids (on a barrel of oil equivalent basis) to meet these requirements, but may not hedge more than 75% of anticipated production (on a barrel of oil equivalent basis) for any month. 20 Table of Contents Executive Employment Agreements On October 31, 2025, the Company entered into Employment Agreements (the “Employment Agreements”), with each of (a) J. Douglas Schick, its President and Chief Executive Officer; (b) Clark R. Moore, its Executive Vice President, General Counsel and Secretary; and (c) Jody D. Crook, its Chief Commercial Officer (the “Executives”). All of the agreements were substantially identical, other than as to: Salary: Mr. Schick ($ 425,000 per year); Mr. Moore ($ 294,000 per year); and Mr. Crook ($ 280,000 per year); Targeted Bonus: Mr. Schick ( 60 % of his salary per year); Mr. Moore ( 50 % of his salary per year); and Mr. Crook ( 50 % of his salary per year); Paid time off: Mr. Schick ( five weeks ); Mr. Moore ( five weeks ); and Mr. Crook ( four weeks ); Severance: Mr. Schick (2.5 times his annual base salary and targeted annual bonus); Mr. Moore (2 times his annual base salary and targeted annual bonus); and Mr. Crook (1 times his annual base salary and targeted annual bonus); and Section 280G gross-up (as discussed below): Mr. Schick ($ 1,500,000 ); Mr. Moore ($ 600,000 ); and Mr. Crook (none). Pursuant to the Employment Agreements, which replaced and superseded all prior employment agreements and offer letters between the Company and the Executives, Mr. Schick will continue to serve as President and Chief Executive Officer of the Company; Mr. Moore will continue to serve as Executive Vice President, General Counsel and Secretary; and Mr. Crook will continue to serve as Chief Commercial Officer of the Company. Additionally, for so long as Mr. Schick serves as Chief Executive Officer of the Company, he is required to be nominated for re-election to the Board. Pursuant to the Employment Agreements, each Executive’s salary is payable in accordance with the Company’s normal payroll practices, and is subject to annual review, with no reduction in salary permitted. The Executives are each also eligible to receive an annual bonus with a targeted percentage of base salary as described above, payable based on achievement of performance objectives and provided that each Executive remains employed through the end of the applicable fiscal year to which the annual bonus relates. Separately, each Executive is eligible for grants of equity awards, including options, restricted stock, restricted stock units, or similar awards, pursuant to terms to be agreed in writing. The agreements provide for certain payments and benefits upon the termination of employment of each Executive. If the Executive’s employment is terminated by the Company without cause, due to a Disability, by the Executive for Good Reason, or due to death, the Executive is entitled to receive a lump sum cash payment equal to the amount of base salary and target annual bonus as discussed above under “severance”, acceleration of all unvested equity awards (with performance-based awards vesting at the greater of target or actual achievement through the termination date), and any stock options remaining exercisable for 12 months following such termination, and, if elected, reimbursement of COBRA premiums for up to (30 months - Mr. Schick; 24 months - Mr. Moore; and 12 months - Mr. Crook), subject to certain conditions. Severance payments are conditioned on the applicable Executive signing a standard separation agreement, which includes customary releases and covenants, and any cash severance will be paid on the second regular payroll date following the release becoming effective. Equity acceleration will occur within fourteen days of the release, subject to applicable tax and plan timing rules. Each Employment Agreement also contains provisions intended to minimize excise taxes under Section 4999 of the Internal Revenue Code, including a gross-up payment subject to a cap through December 31, 2026 (discussed above, except for Mr. Crook, whose agreement does not include a gross-up right) and a “best results” alternative if applicable. Executive Offer Letters In connection with the closing of the Mergers, the Company entered into offer letters with each of (a) Reagan Tuck (R.T.) Dukes; and (b) Robert “Bobby” J. Long, which replaced and superseded all prior employment agreements between such persons and the Acquired Companies (the “Offer Letters”). Pursuant to the Offer Letters, Mr. Dukes agreed to serve as Chief Operating Officer of the Company and Mr. Long agreed to serve as Chief Financial Officer of the Company, and to report to the Company’s President and Chief Executive Officer. Each executive’s employment is at- will and may be terminated by either the executive or the Company at any time, with or without cause. The officers will receive a base salary of (a) $ 300,000 per year (Mr. Dukes); and (b) $ 280,000 per year (Mr. Long), payable in accordance with the Company’s normal payroll practices, subject to annual review. Each officer is eligible for a discretionary annual cash performance bonus of up to 50% of his base salary, pro-rated for partial years, in the sole discretion of the Company. The executives may also be considered for equity awards, including restricted stock or options, at the discretion of the Board. Each officer also will receive a one-time bonus of $ 1,750 , payable within thirty days of their employment start date, subject to continued employment with the Company on such payment date. Each officer is required to maintain the confidentiality of the Company’s proprietary information and to perform the duties of their position, as assigned, to the satisfaction of the President and Chief Executive Officer. The offer letters provide for certain severance benefits if the Company terminates an officer without cause including (a) six months of base salary and 100% of the executive’s 2025 annual bonus, if terminated prior to December 31, 2025, and (b) 100% of the 2025 bonus (if terminated after December 31, 2025, and prior to the payment of such 2025 bonus), plus the targeted annual bonus for any subsequent year of termination , and, if elected by the executive, continuation of health coverage under COBRA for six months, subject to the officer’s execution of a customary release of claims. 21 Table of Contents