Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 12, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | PEDEVCO CORP | |
Entity Central Index Key | 0001141197 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | TX | |
Entity File Number | 001-35922 | |
Entity Common Stock, Shares Outstanding | 72,125,328 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 10,209 | $ 22,415 |
Accounts receivable - oil and gas | 646 | 4,602 |
Prepaid expenses and other current assets | 33 | 73 |
Total current assets | 10,888 | 27,090 |
Oil and Gas Properties: | ||
Oil and gas properties, subject to amortization, net | 83,744 | 76,952 |
Oil and gas properties, not subject to amortization, net | 8,090 | 14,896 |
Total oil and gas properties, net | 91,834 | 91,848 |
Operating lease - right-of-use asset | 316 | 360 |
Other assets | 3,557 | 3,598 |
Total assets | 106,595 | 122,896 |
Current Liabilities: | ||
Accounts payable | 2,729 | 12,099 |
Accrued expenses | 299 | 1,972 |
Revenue payable | 799 | 827 |
PPP loan - current | 165 | 0 |
Operating lease liabilities - current | 101 | 97 |
Asset retirement obligations - current | 0 | 225 |
Total current liabilities | 4,093 | 15,220 |
Long-Term Liabilities: | ||
PPP loan | 205 | 0 |
Operating lease liabilities | 248 | 300 |
Asset retirement obligations | 1,973 | 1,874 |
Total liabilities | 6,519 | 17,394 |
Commitments and contingencies | ||
Shareholders' Equity: | ||
Common stock, $0.001 par value, 200,000,000 shares authorized; 72,125,328 and 71,061,328 shares issued and outstanding, respectively | 72 | 71 |
Additional paid-in-capital | 202,598 | 201,027 |
Accumulated deficit | (102,594) | (95,596) |
Total shareholders' equity | 100,076 | 105,502 |
Total liabilities and shareholders' equity | $ 106,595 | $ 122,896 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Stockholders' Equity: | ||
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 72,125,328 | 71,061,328 |
Common stock, shares outstanding | 72,125,328 | 71,061,328 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue: | ||||
Oil and gas sales | $ 656 | $ 4,070 | $ 3,488 | $ 5,638 |
Operating Expenses: | ||||
Lease operating costs | 750 | 2,095 | 2,272 | 3,065 |
Exploration expense | 0 | 13 | 30 | 23 |
Selling, general and administrative expense | 1,422 | 1,644 | 3,545 | 2,972 |
Depreciation, depletion, amortization and accretion | 1,912 | 2,784 | 5,349 | 5,033 |
Total operating expenses | 4,084 | 6,536 | 11,196 | 11,093 |
Gain on sale of oil and gas properties | 0 | 0 | 0 | 920 |
Operating loss | (3,428) | (2,466) | (7,708) | (4,535) |
Other Income (Expense): | ||||
Interest expense | 0 | 0 | 0 | (826) |
Interest income | 8 | 9 | 32 | 9 |
Other income (expense) | 679 | (3) | 678 | (103) |
Total other income (expense) | 687 | 6 | 710 | (920) |
Net loss | $ (2,741) | $ (2,460) | $ (6,998) | $ (5,455) |
Loss per common share: basic and diluted | $ (0.04) | $ (0.05) | $ (0.10) | $ (0.14) |
Weighted average number of common shares outstanding: basic and diluted | 72,125,328 | 49,198,625 | 72,060,812 | 38,572,537 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (6,998) | $ (5,455) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, depletion, amortization and accretion | 5,349 | 5,033 |
Share-based compensation expense | 1,572 | 697 |
Loss on disposal of fixed asset | 24 | 0 |
Amortization of right-of-use asset | 44 | 0 |
Gain on sale of oil and gas properties | 0 | (920) |
Amortization of debt discount | 0 | 161 |
Changes in operating assets and liabilities: | ||
Accounts receivable - oil and gas | 3,956 | (539) |
Prepaid expenses and other current assets | 40 | 142 |
Accounts payable | (2,199) | 4,373 |
Accrued expenses | (1,673) | (450) |
Accrued expenses - related parties | 0 | (943) |
Revenue payable | (28) | (14) |
Net cash provided by operating activities | 87 | 2,085 |
Cash Flows From Investing Activities: | ||
Cash paid for the acquisition of oil and gas properties | 0 | (1,056) |
Cash paid for property and equipment | 0 | (47) |
Cash paid for drilling and completion costs | (12,663) | (24,269) |
Proceeds from the sale of oil and gas property | 0 | 1,175 |
Net cash used in investing activities | (12,663) | (24,197) |
Cash Flows From Financing Activities: | ||
Proceeds from PPP loan | 740 | 0 |
Repayment of PPP loan | (370) | 0 |
Proceeds from the issuance of shares | 0 | 18,000 |
Proceeds from notes payable - related parties | 0 | 15,000 |
Net cash provided by financing activities | 370 | 33,000 |
Net (decrease) increase in cash and restricted cash | (12,206) | 10,888 |
Cash and restricted cash at beginning of period | 25,712 | 5,779 |
Cash and restricted cash at end of period | 13,506 | 16,667 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for: interest | 0 | 0 |
Cash paid for: income taxes | 0 | 0 |
Noncash Investing and Financing Activities: | ||
Change in accrued oil and gas development costs | 7,261 | 6,039 |
Changes in estimates of asset retirement obligations | 230 | 129 |
Issuance of restricted common stock | 1 | 0 |
Acquisition of asset retirement costs | 0 | 33 |
Common stock issued for debt conversion | $ 0 | $ 55,075 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 15,808,445 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 16 | $ 101,450 | $ (84,494) | $ 16,972 |
Issuance of common stock for debt conversion, shares | 29,480,383 | |||
Issuance of common stock for debt conversion, amount | $ 29 | 55,046 | 55,075 | |
Shared-based compensation | 299 | 299 | ||
Net loss | (2,995) | (2,995) | ||
Ending balance, shares at Mar. 31, 2019 | 45,288,828 | |||
Ending balance, amount at Mar. 31, 2019 | $ 45 | 156,795 | (87,489) | 69,351 |
Beginning balance, shares at Dec. 31, 2018 | 15,808,445 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 16 | 101,450 | (84,494) | 16,972 |
Net loss | (5,455) | |||
Ending balance, shares at Jun. 30, 2019 | 53,827,065 | |||
Ending balance, amount at Jun. 30, 2019 | $ 53 | 175,185 | (89,949) | 85,289 |
Beginning balance, shares at Mar. 31, 2019 | 45,288,828 | |||
Beginning balance, amount at Mar. 31, 2019 | $ 45 | 156,795 | (87,489) | 69,351 |
Issuance of restricted common stock, shares | 160,000 | |||
Issuance of restricted common stock, amount | 0 | |||
Issuance of common stock to non-affiliates, shares | 1,500,000 | |||
Issuance of common stock to non-affiliates, amount | $ 1 | 2,999 | 3,000 | |
Issuance of common stock to affiliate, shares | 6,818,181 | |||
Issuance of common stock to affiliate, amount | $ 7 | 14,993 | 15,000 | |
Warrants exercised, shares | 60,056 | |||
Warrants exercised, amount | 0 | |||
Shared-based compensation | 398 | 398 | ||
Net loss | (2,460) | (2,460) | ||
Ending balance, shares at Jun. 30, 2019 | 53,827,065 | |||
Ending balance, amount at Jun. 30, 2019 | $ 53 | 175,185 | (89,949) | 85,289 |
Beginning balance, shares at Dec. 31, 2019 | 71,061,328 | |||
Beginning balance, amount at Dec. 31, 2019 | $ 71 | 201,027 | (95,596) | 105,502 |
Issuance of restricted common stock, shares | 1,119,000 | |||
Issuance of restricted common stock, amount | $ 1 | (1) | 0 | |
Rescinded restricted common stock, shares | (55,000) | |||
Rescinded restricted common stock, amount | 0 | |||
Shared-based compensation | 853 | 853 | ||
Net loss | (4,257) | (4,257) | ||
Ending balance, shares at Mar. 31, 2020 | 72,125,328 | |||
Ending balance, amount at Mar. 31, 2020 | $ 72 | 201,879 | (99,853) | 102,098 |
Beginning balance, shares at Dec. 31, 2019 | 71,061,328 | |||
Beginning balance, amount at Dec. 31, 2019 | $ 71 | 201,027 | (95,596) | 105,502 |
Net loss | (6,998) | |||
Ending balance, shares at Jun. 30, 2020 | 72,125,328 | |||
Ending balance, amount at Jun. 30, 2020 | $ 72 | 202,598 | (102,594) | 100,076 |
Beginning balance, shares at Mar. 31, 2020 | 72,125,328 | |||
Beginning balance, amount at Mar. 31, 2020 | $ 72 | 201,879 | (99,853) | 102,098 |
Shared-based compensation | 719 | 719 | ||
Net loss | (2,741) | (2,741) | ||
Ending balance, shares at Jun. 30, 2020 | 72,125,328 | |||
Ending balance, amount at Jun. 30, 2020 | $ 72 | $ 202,598 | $ (102,594) | $ 100,076 |
1. BASIS OF PRESENTATION
1. BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 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 for the year ended December 31, 2019, filed with the SEC on March 30, 2020, 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, the prevailing prices for, and demand for, oil and natural gas. |
2. DESCRIPTION OF BUSINESS
2. DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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. 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, through its wholly-owned operating subsidiary, Red Hawk Petroleum, LLC (“Red Hawk”), 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. In December 2019, a novel strain of coronavirus, which causes the infectious disease known as COVID-19, was reported in Wuhan, China. The World Health Organization declared COVID-19 a “Public Health Emergency of International Concern” on January 30, 2020 and a global pandemic on March 11, 2020. As a result of the recent COVID-19 outbreak, and the recent sharp decline in oil prices which occurred partially as a result of the decreased demand for oil caused by such outbreak and the actions taken globally to stop the spread of such virus, in mid-April 2020, the Company temporarily shut-in all of its operated producing wells in its Permian Basin Asset and D-J Basin Asset to preserve the Company’s oil and gas reserves for production during a more favorable oil price environment, noting that most of the Company’s acreage is held by production with no drilling obligations, which provides the Company with flexibility to hold back on production and development during periods of low oil and gas prices. Following partial recovery in oil prices, commencing in early June 2020, the Company reactivated over 90% of its operated wells in the Permian Basin and the D-J Basin that the Company shut-in in mid-April 2020, and is now working to complete several carryover projects from 2019’s Phase II Permian Basin Asset development plan which it had put on hold due to the COVID-19 outbreak. The Company will continue to monitor oil prices with a view to reactivating all of its shut-in production and fully completing its 2019 carryover development plan. The outbreak of COVID-19 and decreases in commodity prices resulting from oversupply, government-imposed travel restrictions and other constraints on economic activity have caused a significant decrease in the demand for oil and has created disruptions and volatility in the global marketplace for oil and gas beginning in the first quarter of 2020, which negatively affected our results of operations and cash flows. These conditions persisted throughout the second quarter and continue to negatively affect our results of operations and cash flows. While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed in future quarters. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic; governmental, business, and individuals’ actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability. These factors may adversely impact the supply and demand for oil and gas and our ability to produce and transport oil and gas and perform operations at and on our properties. This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including investments, receivables, and forward-looking guidance. Refer to “Risk Factors” of this Form 10-Q) for a discussion of these factors and other risks. |
3. SUMMARY OF SIGNIFICANT ACCOU
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | The Company has provided a discussion of significant accounting policies, estimates and judgments in its 2019 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2019. Recently Issued Accounting Pronouncements The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. Subsequent Events The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration. |
4. REVENUE FROM CONTRACTS WITH
4. REVENUE FROM CONTRACTS WITH CUSTOMERS | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | Disaggregation of Revenue from Contracts with Customers. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Oil sales $ 605 $ 4,037 $ 3,307 $ 5,490 Natural gas sales 41 26 131 135 Natural gas liquids sales 10 7 50 13 Total revenue from customers $ 656 $ 4,070 $ 3,488 $ 5,638 There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of June 30, 2020. |
5. CASH
5. CASH | 6 Months Ended |
Jun. 30, 2020 | |
Receivables [Abstract] | |
CASH | The following table provides a reconciliation of cash and restricted cash reported within the balance sheets, which sum to the total of such amounts as of June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Cash $ 10,209 $ 22,415 Restricted cash included in other assets 3,297 3,297 Total cash and restricted cash $ 13,506 $ 25,712 |
6. OIL AND GAS PROPERTIES
6. OIL AND GAS PROPERTIES | 6 Months Ended |
Jun. 30, 2020 | |
Oil and Gas Property [Abstract] | |
OIL AND GAS PROPERTIES | The following table summarizes the Company’s oil and gas activities by classification for the six months ended June 30, 2020 (in thousands): Balance at December 31, Balance at June 30, 2019 Additions Disposals Transfers 2020 Oil and gas properties, subject to amortization $ 107,164 $ 4,924 $ - $ 7,284 $ 119,372 Oil and gas properties, not subject to amortization 14,896 478 - (7,284 ) 8,090 Asset retirement costs 1,547 (230 ) - - 1,317 Accumulated depreciation and depletion (31,759 ) (5,186 ) - - (36,945 ) Total oil and gas assets $ 91,848 $ (14) $ - $ - $ 91,834 For the six-month period ended June 30, 2020, the Company incurred $5,402,000 in capital costs primarily related to the drilling of a salt water disposal well (“SWD”) in our Permian Basin Asset in order to increase the produced water injection capacity for the Company’s Chaveroo field and, in turn, increase production of the corresponding wells therein. The drilling and completion of the SWD was postponed due to the downturn in the economic conditions in the oil and gas industry during the first quarter of 2020, but with the recent increases in oil prices, the Company now plans to complete the SWD in September 2020. The Company will continue to monitor the environment for future completion opportunities. Also, the Company transferred $7,284,000 in capital costs from three recently completed wells, for which production had not commenced, from unproved properties to proved properties, when production began during the early part of 2020. Additionally, drilling and completion costs of $8,090,000, the majority of which were incurred in the prior year and for the uncompleted SWD noted above, and one well in the Permian Asset, for which production had not yet commenced; were therefore included in the amount not subject to amortization at June 30, 2020. The depletion recorded for production on proved properties for the three and six months ended June 30, 2020 and 2019, amounted to $1,808,000 compared to $2,715,000, and $5,186,000, compared to $4,855,000, respectively. |
7. PPP LOAN
7. PPP LOAN | 6 Months Ended |
Jun. 30, 2020 | |
Loans Payable [Abstract] | |
PPP LOAN | On April 22, 2020, the Company received loan proceeds of $370,000 (the “Original PPP Loan”) under the U. S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) n April 23, 2020, the SBA issued guidance that cast doubt on the ability of public companies to qualify for a PPP loan. As a result, out of an abundance of caution, on May 1, 2020, the Company repaid the full amount of the Original PPP Loan to Upon the issuance of further guidance from the SBA, on June 2, 2020, the Company again received loan proceeds of $370,000 (the “New PPP Loan”) under the SBA PPP. The New PPP Loan is evidenced by a promissory note, dated as of May 28, 2020 (the “Note”), between the Company and Texas Capital Bank, N.A. The Note has a two-year term, bears interest at the rate of 1.00% per annum, and may be prepaid at any time without payment of any premium. No payments of principal or interest are due during the six-month period beginning on the date of the Note. The principal and accrued interest under the Note are forgivable after eight weeks if the Company uses the New PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise complies with PPP requirements, with the full principal and accrued interest expected to be forgiven in full by the Company. As of June 30, 2020, the Company has accrued $300 in interest. |
8. ASSET RETIREMENT OBLIGATIONS
8. ASSET RETIREMENT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2020 | |
Asset Retirement Obligation [Abstract] | |
ASSET RETIREMENT OBLIGATIONS | Activity related to the Company’s asset retirement obligations is as follows (in thousands): Six Months Ended June 30, 2020 Balance at the beginning of the period * $ 2,099 Accretion expense 146 Liabilities settled (42 ) Changes in estimates (230 ) Balance at end of period $ 1,973 * Includes $225,000 of current asset retirement obligations at December 31, 2019. There were no obligations due within the 12 months from June 30, 2020. |
9. COMMITMENTS AND CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 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, the Company currently maintains no debt, and in order to apply an appropriate discount rate, the Company used an average discount rate of eight publicly-traded peer group companies similar to it based on size, geographic location, asset types and/or operating characteristics. The Company has a sublease for its corporate offices in Houston, Texas on approximately 5,200 square feet of office space that expires on August 31, 2023 and has a base monthly rent of approximately $10,000. The Company also has a lease for 187 square feet of office space located in Danville, California for the Company’s Executive Vice President and General Counsel. The monthly rent is $1,200, and the lease expires on August 28, 2020. The Company does not plan to renew this lease upon expiration in an effort to further reduce Company expenses. The Company did not apply ASC Topic 842 to this lease, as the lease term and extension period are for 12-months or less, and we cannot currently conclude if the lease will be renewed or extended beyond a 12-month period. In April 2020, the Company was granted a 20% discount on the remaining lease term. Therefore, the total current obligation for the remainder of this lease through August 2020 is $1,000. For the six months ended June 30, 2020, the Company incurred lease expense of $55,000, for the combined leases. Supplemental cash flow information related to the Company’s operating lease is included in the table below (in thousands): Six Months Ended June 30, 2020 Cash paid for amounts included in the measurement of lease liabilities $ 58 Supplemental balance sheet information related to operating leases is included in the table below (in thousands): June 30, 2020 Operating lease – right-of-use asset $ 316 Operating lease liabilities - current $ 101 Operating lease liabilities - long-term 248 Total lease liability $ 349 The weighted-average remaining lease term for the Company’s operating lease is 3.2 years as of June 30, 2020, with a weighted-average discount rate of 5.35%. Lease liability with enforceable contract terms that have greater than one-year terms are as follows (in thousands): Remainder of 2020 $ 58 2021 118 2022 121 2023 82 Thereafter - Total lease payments 379 Less imputed interest (30 ) Total lease liability $ 349 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 exercises options to extend such leases, if available, in exchange for payment of additional cash consideration. In the D-J Basin Asset, 170 net acres expire during the remainder of 2020, and no significant net acres expire thereafter (net to our direct ownership interest only). In the Permian Basin Asset, 12 acres are due to expire in 2020 and 4,940 net acres expire thereafter (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 these or any other pending 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. |
10. SHAREHOLDERS' EQUITY
10. SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
Shareholders' Equity: | |
SHAREHOLDERS' EQUITY | Common Stock During the six months ended June 30, 2020, the Company granted an aggregate of 1,119,000 restricted stock awards to various employees and a consultant of the Company. Additionally, 55,000 shares of restricted common stock were forfeited to the Company and cancelled due to an employee termination (see Note 11 below). Warrants During the six months ended June 30, 2020, no warrants were granted, exercised or cancelled, and as of June 30, 2020, the Company had warrants to purchase 150,329 shares of common stock outstanding, with an exercise price of $0.32 per share and a June 25, 2021 expiration date. The intrinsic value of these outstanding, as well as exercisable, warrants on June 30, 2020 was $73,000. |
11. SHARE-BASED COMPENSATION
11. SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
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 13, 2020, restricted stock awards were granted to various employees and one consultant for an aggregate of 1,049,000 (including 924,000 restricted stock awards to officers of the Company) and 70,000 shares, respectively, of the Company’s common stock, under the Company’s Amended and Restated 2012 Equity Incentive Plan. The grant of the 1,049,000 shares of restricted stock vest as follows: 33.3% vest each subsequent year from the date of grant, contingent upon the recipient’s continued service with the Company. These shares have a total fair value of $1,172,000, based on the market price on the issuance date. The grant of the 70,000 shares of restricted stock vest as follows: 100% on the one-year anniversary of the grant date, subject to the recipient’s continued service with the Company. These consultant shares have a total fair value of $118,000, based on the market price on the issuance date. In February 2020, 55,000 shares of restricted common stock were forfeited to the Company and cancelled due to an employee termination. As a result, these shares are once again eligible to be awarded under the Company’s Amended and Restated 2012 Equity Incentive Plan. Share-based compensation expense recorded related to the vesting of restricted stock for the six months ended June 30, 2020 was $1,282,000. The remaining unamortized share-based compensation expense at June 30, 2020 related to restricted stock was $1,492,000. Options During the six months ended June 30, 2020, no options were exercised, options to purchase 733,000 shares of common stock were granted (discussed below), options to purchase 34,000 shares of common stock expired, and options to purchase 90,000 shares of common stock were cancelled. On January 13, 2020, the Company granted options to purchase an aggregate of 733,000 shares of common stock to various Company employees at an exercise price of $1.68 per share. The options have a term of five years and fully vest in January 2023, with 33.3% of each grant vesting each subsequent year from the date of grant, contingent upon each 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 $1,053,000. Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 1.63%, (2) expected term of 3.5 years, (3) expected volatility of 155%, and (4) zero expected dividends. During the six months ended June 30, 2020, the Company recognized stock option expense of $290,000. The remaining amount of unamortized stock options expense at June 30, 2020, was $655,000. The intrinsic value of outstanding and exercisable options on June 30, 2020 was $56,000. Option activity during the six months ended June 30, 2020 was: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (Years) Outstanding at December 31, 2019 753,349 $ 3.30 2.4 Granted 733,000 $ 1.68 Expired/Canceled (124,000 ) $ 2.23 Outstanding at June 30, 2020 1,362,349 $ 2.32 3.3 Exercisable at June 30, 2020 686,016 $ 2.97 2.1 |
12. INCOME TAXES
12. INCOME TAXES | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company has estimated that its effective tax rate for U.S. purposes will be zero for the 2020 and 2019 fiscal years as a result of net losses and a full valuation allowance against the net deferred tax assets. Consequently, the Company has recorded no provision or benefit for income taxes for the three months ended June 30, 2020 and 2019. |
13. SUBSEQUENT EVENTS
13. SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The recent outbreak of COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. A pandemic, including COVID-19, or other public health epidemic poses the risk that the Company or its employees, vendors, and other partners may be prevented from conducting business activities at full capacity for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities. While it is not possible at this time to estimate the full impact that COVID-19 will have on the Company’s business, the continued spread of COVID-19 and the measures taken by the governments of countries affected and in which the Company operates has disrupted, and may continue to disrupt, the operation of the Company’s business for a prolonged period of time. The COVID-19 outbreak and mitigation measures have also had an adverse impact on global economic conditions, as well as an adverse effect on the Company’s business and financial condition, and may continue to have an adverse effect on the Company, including on its potential to conduct financings on terms acceptable to the Company, if at all. In addition, the Company has taken temporary precautionary measures intended to help minimize the risk of the virus to its employees, vendors and guests, including limiting the number of occupants at the Company’s Houston headquarters and requiring all others to work remotely, and discouraging employee attendance at in-person work-related meetings, which could negatively affect the Company’s business. The extent to which the COVID-19 outbreak will continue to impact the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus, the availability and efficacy of vaccines, and the actions to contain its impact. |
3. SUMMARY OF SIGNIFICANT ACC_2
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. |
Subsequent Events | The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration. |
4. REVENUE FROM CONTRACTS WIT_2
4. REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue by significant product type | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Oil sales $ 605 $ 4,037 $ 3,307 $ 5,490 Natural gas sales 41 26 131 135 Natural gas liquids sales 10 7 50 13 Total revenue from customers $ 656 $ 4,070 $ 3,488 $ 5,638 |
5. CASH (Tables)
5. CASH (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Receivables [Abstract] | |
Cash and restricted cash | June 30, 2020 December 31, 2019 Cash $ 10,209 $ 22,415 Restricted cash included in other assets 3,297 3,297 Total cash and restricted cash $ 13,506 $ 25,712 |
6. OIL AND GAS PROPERTIES (Tabl
6. OIL AND GAS PROPERTIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Oil and Gas Property [Abstract] | |
Oil and gas interests | Balance at December 31, Balance at June 30, 2019 Additions Disposals Transfers 2020 Oil and gas properties, subject to amortization $ 107,164 $ 4,924 $ - $ 7,284 $ 119,372 Oil and gas properties, not subject to amortization 14,896 478 - (7,284 ) 8,090 Asset retirement costs 1,547 (230 ) - - 1,317 Accumulated depreciation and depletion (31,759 ) (5,186 ) - - (36,945 ) Total oil and gas assets $ 91,848 $ (14) $ - $ - $ 91,834 |
8. ASSET RETIREMENT OBLIGATIO_2
8. ASSET RETIREMENT OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Asset Retirement Obligation [Abstract] | |
Asset retirement obligation | Six Months Ended June 30, 2020 Balance at the beginning of the period * $ 2,099 Accretion expense 146 Liabilities settled (42 ) Changes in estimates (230 ) Balance at end of period $ 1,973 * Includes $225,000 of current asset retirement obligations at December 31, 2019. There were no obligations due within the 12 months from June 30, 2020. |
9. COMMITMENTS AND CONTINGENC_2
9. COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Supplemental information related to operating lease | Supplemental cash flow information related to the Company’s operating lease is included in the table below (in thousands): Six Months Ended June 30, 2020 Cash paid for amounts included in the measurement of lease liabilities $ 58 Supplemental balance sheet information related to operating leases is included in the table below (in thousands): June 30, 2020 Operating lease – right-of-use asset $ 316 Operating lease liabilities - current $ 101 Operating lease liabilities - long-term 248 Total lease liability $ 349 |
Lease liability maturity | Remainder of 2020 $ 58 2021 118 2022 121 2023 82 Thereafter - Total lease payments 379 Less imputed interest (30 ) Total lease liability $ 349 |
11. SHARE-BASED COMPENSATION (T
11. SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Warrant | |
Stock option activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (Years) Outstanding at December 31, 2019 753,349 $ 3.30 2.4 Granted 733,000 $ 1.68 Expired/Canceled (124,000 ) $ 2.23 Outstanding at June 30, 2020 1,362,349 $ 2.32 3.3 Exercisable at June 30, 2020 686,016 $ 2.97 2.1 |
4. REVENUE FROM CONTRACTS WIT_3
4. REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total revenue from customers | $ 656 | $ 4,070 | $ 3,488 | $ 5,638 |
Oil Sales | ||||
Total revenue from customers | 605 | 4,037 | 3,307 | 5,490 |
Natural Gas Sales | ||||
Total revenue from customers | 41 | 26 | 131 | 135 |
Natural Gas Liquids Sales | ||||
Total revenue from customers | $ 10 | $ 7 | $ 50 | $ 13 |
5. CASH (Details)
5. CASH (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||||
Cash | $ 10,209 | $ 22,415 | ||
Restricted cash included in other assets | 3,297 | 3,297 | ||
Total cash and restricted cash | $ 13,506 | $ 25,712 | $ 16,667 | $ 5,779 |
6. OIL AND GAS PROPERTIES (Deta
6. OIL AND GAS PROPERTIES (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Oil and gas properties, subject to amortization | $ 119,372 | $ 107,164 |
Oil and gas properties, not subject to amortization | 8,090 | 14,896 |
Asset retirement costs | 1,317 | 1,547 |
Accumulated depreciation, depletion and impairment | (36,945) | (31,759) |
Total oil and gas assets | 91,834 | $ 91,848 |
Additions | ||
Oil and gas properties, subject to amortization | 4,924 | |
Oil and gas properties, not subject to amortization | 478 | |
Asset retirement costs | (230) | |
Accumulated depreciation, depletion and impairment | (5,186) | |
Total oil and gas assets | (14) | |
Disposals | ||
Oil and gas properties, subject to amortization | 0 | |
Oil and gas properties, not subject to amortization | 0 | |
Asset retirement costs | 0 | |
Accumulated depreciation, depletion and impairment | 0 | |
Total oil and gas assets | 0 | |
Transfers | ||
Oil and gas properties, subject to amortization | 7,284 | |
Oil and gas properties, not subject to amortization | (7,284) | |
Asset retirement costs | 0 | |
Accumulated depreciation, depletion and impairment | 0 | |
Total oil and gas assets | $ 0 |
6. OIL AND GAS PROPERTIES (De_2
6. OIL AND GAS PROPERTIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Oil and Gas Property [Abstract] | ||||
Capital costs for recently completed wells | $ 5,402 | |||
Depletion | $ 1,808 | $ 2,715 | $ 5,186 | $ 4,855 |
8. ASSET RETIREMENT OBLIGATIO_3
8. ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | ||
Asset Retirement Obligation [Abstract] | |||
Balance at the beginning of the period | [1] | $ 2,099 | |
Accretion expense | 146 | ||
Liabilities settled | (42) | ||
Changes in estimates | (230) | $ (129) | |
Balance at end of period | $ 1,973 | ||
[1] | Includes $225,000 of current asset retirement obligations at December 31, 2019. There were no obligations due within 12 months from June 30, 2020. |
9. COMMITMENTS AND CONTINGENC_3
9. COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 58 | |
Operating lease - right-of-use asset | 316 | $ 360 |
Operating lease liabilities - current | 101 | 97 |
Operating lease liabilities - long-term | 248 | $ 300 |
Total lease liability | $ 349 |
9. COMMITMENTS AND CONTINGENC_4
9. COMMITMENTS AND CONTINGENCIES (Details 1) $ in Thousands | Jun. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2020 | $ 58 |
2021 | 118 |
2022 | 121 |
2023 | 82 |
Thereafter | 0 |
Total lease payments | 379 |
Less imputed interest | (30) |
Total lease liability | $ 349 |
9. COMMITMENTS AND CONTINGENC_5
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease expense | $ 55 |
Weighted-average remaining lease term | 3 years 2 months 12 days |
Weighted-average discount rate | 5.35% |
10. SHAREHOLDERS' EQUITY (Detai
10. SHAREHOLDERS' EQUITY (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($)shares | |
Shareholders' Equity: | |
Restricted stock awards granted | shares | 1,119,000 |
Warrants to purchase common stock | shares | 150,329 |
Intrinsic value of warrants outstanding | $ | $ 73 |
Intrinsic value of warrants exercisable | $ | $ 73 |
11. SHARE-BASED COMPENSATION (D
11. SHARE-BASED COMPENSATION (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Equity [Abstract] | |
Number of options outstanding, beginning | shares | 753,349 |
Granted | shares | 733,000 |
Expired/canceled | shares | (124,000) |
Number of options outstanding, ending | shares | 1,362,349 |
Number of options exercisable | shares | 686,016 |
Weighted average exercise price outstanding, beginning | $ / shares | $ 3.30 |
Granted | $ / shares | 1.68 |
Expired/canceled | $ / shares | 2.23 |
Weighted average exercise price outstanding, ending | $ / shares | 2.32 |
Weighted average exercise price exercisable | $ / shares | $ 2.97 |
Weighted average remaining contractual life (in years) outstanding, beginning | 2 years 4 months 24 days |
Weighted average remaining contractual life (in years) outstanding, ending | 3 years 3 months 18 days |
Weighted average remaining contractual life (in years) exercisable | 2 years 1 month 6 days |
11. SHARE-BASED COMPENSATION _2
11. SHARE-BASED COMPENSATION (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Equity [Abstract] | |
Stock-based compensation expense, restricted stock | $ 1,282 |
Unamortized stock-based compensation expense, restricted stock | 1,492 |
Stock-based compensation expense, stock option | 290 |
Unamortized stock-based compensation expense, stock option | 655 |
Intrinsic value of options exercisable | $ 56 |