Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 22, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | PEDEVCO CORP | ||
Entity Central Index Key | 1,141,197 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 54,931,117 | ||
Entity Public Float | $ 12,094,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 659 | $ 1,138 |
Accounts receivable | 25 | 406 |
Accounts receivable - oil and gas | 439 | 208 |
Accounts receivable - related party | 0 | 19 |
Prepaid expenses and other current assets | 173 | 150 |
Total current assets | 1,296 | 1,921 |
Oil and gas properties: | ||
Oil and gas properties, subject to amortization, net | 57,395 | 58,767 |
Oil and gas properties, not subject to amortization, net | 0 | 0 |
Total oil and gas properties, net | 57,395 | 58,767 |
Other assets | 85 | 85 |
Investments - cost method | 4 | 4 |
Total assets | 58,780 | 60,777 |
Current liabilities: | ||
Accounts payable | 103 | 3,380 |
Accrued expenses | 1,802 | 2,178 |
Accrued expenses - related party | 0 | 187 |
Revenue payable | 517 | 475 |
Convertible – notes payable – Bridge Notes, net of premiums of $113,000 and $113,000, respectively | 588 | 588 |
Notes payable – Secured Promissory Notes, net of discounts of $50,000 and $7,800,000, respectively | 300 | 625 |
Notes payable – Secured Promissory Notes – related party, net of discounts of $0 and $1,713,000, respectively | 0 | 134 |
Total current liabilities | 3,310 | 7,567 |
Long-term liabilities: | ||
Accrued expenses | 589 | 0 |
Accrued expenses – related party | 677 | 0 |
Notes payable – Secured Promissory Notes, net of discounts of $4,600,000 and $1,861,000, respectively | 27,497 | 19,420 |
Notes payable – Secured Promissory Notes – related party, net of discounts of $2,338,000 and $409,000, respectively | 13,319 | 4,721 |
Notes payable - Subordinated - related party | 10,173 | 8,918 |
Notes payable - other | 4,925 | 4,925 |
Asset retirement obligations | 246 | 189 |
Total liabilities | 60,736 | 45,740 |
Commitments and contingencies | ||
Shareholders' equity (deficit): | ||
Series A convertible preferred stock, $0.001 par value, 100,000,000 shares authorized, 66,625 and 66,625 shares issued and outstanding at December 31, 2016 and 2015, respectively | 0 | 0 |
Common stock, $0.001 par value, 200,000,000 shares authorized, 54,931,117 and 45,236,497 shares issued and outstanding at December 31, 2016 and 2015, respectively | 55 | 45 |
Additional paid-in-capital | 99,720 | 97,163 |
Accumulated deficit | (101,731) | (82,112) |
Non-controlling interests | 0 | (59) |
Total shareholders' equity (deficit) | (1,956) | 15,037 |
Total liabilities and shareholders' equity (deficit) | $ 58,780 | $ 60,777 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current liabilities: | ||
Premium on Convertible notes payable - Bridge Notes | $ 113 | $ 113 |
Discount on Notes payable - Secured Promissory Notes | 50 | 7,800 |
Discount on notes payable, related party | 0 | 1,713 |
Long-term liabilities: | ||
Discount on Notes payable - Secured Promissory Notes | 4,600 | 1,861 |
Discount on notes payable | $ 2,338 | $ 409 |
Stockholders' equity (deficit): | ||
Series A convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series A convertible preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Series A convertible preferred stock, shares issued | 66,625 | 66,625 |
Series A convertible preferred stock, shares outstanding | 66,625 | 66,625 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 54,931,117 | 45,236,497 |
Common stock, shares outstanding | 54,931,117 | 45,236,497 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue: | ||
Oil and gas sales | $ 3,968 | $ 5,326 |
Operating expenses: | ||
Lease operating costs | 1,687 | 1,830 |
Exploration expense | 231 | 701 |
Selling, general and administrative expense | 3,912 | 6,962 |
Impairment of oil and gas properties | 0 | 1,337 |
Depreciation, depletion, amortization and accretion | 5,080 | 5,145 |
Gain on settlement of payables | (1,282) | 0 |
Total operating expenses | 9,628 | 15,975 |
Gain on sale of oil and gas properties | 0 | 526 |
Gain on sale of equity investment | 0 | 566 |
Loss from equity method investments | 0 | (91) |
Operating Loss | (5,660) | (9,648) |
Other income (expense): | ||
Interest expense | (13,959) | (13,904) |
Interest income | 0 | 40 |
Gain on debt extinguishment | 0 | 2,192 |
Total other expense | (13,959) | (11,672) |
Net loss | (19,619) | (21,320) |
Less: net loss attributable to non-controlling interests | 0 | (4) |
Net loss attributable to PEDEVCO common shareholders | $ (19,619) | $ (21,316) |
Net loss per common share: | ||
Basic and diluted | $ (0.40) | $ (0.51) |
Weighted average number of common shares outstanding: | ||
Basic and diluted | 48,860,252 | 41,533,800 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Series A Convertible Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Deficit | Non-controlling Interests | Total |
Beginning Balance, Amount at Dec. 31, 2014 | $ 0 | $ 33 | $ 59,395 | $ (60,796) | $ (55) | $ (1,423) |
Beginning Balance, Shares at Dec. 31, 2014 | 0 | 33,117,516 | ||||
Issuance of common stock for cash, Amount | $ 7 | 2,773 | 2,780 | |||
Issuance of common stock for cash, Shares | 6,366,197 | |||||
Stock-based compensation expense, Amount | 3,602 | 3,602 | ||||
Stock-based compensation expense, Shares | 390,000 | |||||
Issuance of common stock to Bridge Note holders for debt conversion, Amount | 102 | 102 | ||||
Issuance of common stock to Bridge Note holders for debt conversion, Shares | 165,431 | |||||
Cashless exercise of options, Amount | $ 0 | 0 | ||||
Cashless exercise of options, Shares | 19,445 | |||||
Issuance of restricted common stock for services, Amount | $ 2 | (2) | 0 | |||
Issuance of restricted common stock for services, Shares | 1,816,408 | |||||
Forfeiture of restricted stock, Amount | $ 0 | 0 | ||||
Forfeiture of restricted stock, shares | (13,500) | |||||
Issuance of common and preferred stock for oil and gas properties, Amount | $ 0 | $ 3 | 31,133 | 31,136 | ||
Issuance of common and preferred stock for oil and gas properties, Shares | 66,625 | 3,375,000 | ||||
Fair value of warrants issued as debt discount | 160 | 160 | ||||
Net loss | (21,316) | (4) | (21,320) | |||
Ending Balance, Amount at Dec. 31, 2015 | $ 0 | $ 45 | 97,163 | (82,112) | (59) | 15,037 |
Ending Balance, Shares at Dec. 31, 2015 | 66,625 | 45,236,497 | ||||
Issuance of common stock for settlement of payables, Amount | $ 2 | 586 | 588 | |||
Issuance of common stock for settlement of payables, Shares | 2,450,000 | |||||
Stock-based compensation expense, Amount | $ 1 | 1,475 | 1,476 | |||
Stock-based compensation expense, Shares | 900,000 | |||||
Cashless exercise of options, Amount | $ 0 | |||||
Cashless exercise of options, Shares | 81,290 | |||||
Issuance of restricted common stock for services, Amount | $ 7 | (7) | ||||
Issuance of restricted common stock for services, Shares | 6,631,820 | |||||
Forfeiture of restricted stock, Amount | $ 0 | |||||
Forfeiture of restricted stock, shares | (45,000) | |||||
Stock repurchase and retirement, Amount | $ 0 | (74) | ||||
Stock repurchase and retirement, shares | (323,490) | |||||
Fair value of warrants issued as debt discount | (59) | (59) | ||||
Net loss | (19,619) | (19,619) | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 0 | $ 55 | $ 99,720 | $ (101,731) | $ 0 | $ (1,956) |
Ending Balance, Shares at Dec. 31, 2016 | 66,625 | 54,931,117 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (19,619) | $ (21,316) |
Net loss attributable to non-controlling interests | 0 | (4) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 1,476 | 3,602 |
Impairment of oil and gas properties | 0 | 1,337 |
Depreciation, depletion, amortization and accretion | 5,080 | 5,144 |
Gain on settlement of payables | (1,282) | 0 |
Gain on sale of oil and gas properties | 0 | (525) |
Gain on sale of equity investment | 0 | (566) |
Loss from equity method investments | 0 | 91 |
Interest expense deferred and capitalized in restructuring | 6,887 | 2,527 |
Amortization of debt discount | 5,576 | 6,519 |
(Gain) loss on debt extinguishment | 0 | (2,192) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 381 | (156) |
Accounts receivable - oil and gas | 562 | 2,051 |
Accounts receivable - oil and gas - related party | 0 | 21 |
Accounts receivable - related party | 19 | 39 |
Prepaid expenses and other current assets | (23) | (69) |
Accounts payable | (3,277) | (4,050) |
Accrued expenses | (2,286) | 630 |
Accrued expenses - related parties | 490 | 227 |
Revenue payable | 42 | (272) |
Advances for joint operations | 0 | (657) |
Net cash used in operating activities | (5,974) | (7,619) |
Cash Flows From Investing Activities: | ||
Cash paid for drilling costs | (75) | (235) |
Proceeds from sale of equity investment | 0 | 500 |
Net cash provided by (used in) investing activities | (75) | 265 |
Cash Flows From Financing Activities: | ||
Proceeds from issuance of common stock, net of offering costs | 0 | 2,780 |
Proceeds from notes payable | 6,295 | 0 |
Cash paid for deferred financing costs | 0 | |
Repayment of notes payable | (651) | (863) |
Repayment of notes payable - related party | 0 | (100) |
Cash paid for stock repurchase and retirement | (74) | 0 |
Net cash provided by financing activities | 5,570 | 1,817 |
Net decrease in cash | (479) | (5,537) |
Cash at beginning of year | 1,138 | 6,675 |
Cash at end of year | 659 | 1,138 |
Cash paid for: | ||
Interest | 553 | 5,077 |
Income taxes | 0 | 0 |
Noncash investing and financing activities: | ||
Accrual of oil and gas development costs | 8 | 3,851 |
Acquisition of oil and gas properties for assumption of accounts payable | 3,587 | 0 |
Issuance of restricted common stock for services upon vesting maturity | 7 | 0 |
Issuance of common stock in settlement of payables | 588 | 0 |
Issuance of common stock to Bridge Note holders due to conversion | 0 | 102 |
Rescission of common stock issued in private placement | 0 | |
Deferred financing costs related to warrants issued in conjunction with notes payable | 0 | |
Reclass of notes payable - Bridge Notes to convertible notes | 0 | |
Consolidation of non-controlling interest in PEDCO MSL | 0 | |
Reclass of deposit for business acquisitions to notes receivable | 0 | |
Beneficial conversion feature of convertible - notes payable - Bridge Notes | 0 | |
Reclass of notes payable - related parties to - Bridge Notes | 0 | |
Debt discount related to the warrants issued to Bridge Notes | 0 | |
Changes in estimates of asset retirement obligations | (7) | 24 |
Accounts receivable from purchase of oil and gas property | 0 | 1,678 |
Accounts payable from purchase of oil and gas property | 0 | 751 |
Note receivable sold for purchase of oil and gas properties | 0 | 5,000 |
Notes payable - Subordinated assumed as part of purchase of oil and gas properties | 0 | 8,353 |
Issuance of Redeemable Series A Convertible Preferred Stock for purchase of oil and gas properties | 0 | 28,402 |
Issuance of common stock for purchase of oil and gas properties | 0 | 2,734 |
Sale of oil and gas properties for promisory note | 0 | 4,101 |
Minority interest capitalized from PEDCO MSL | (59) | 0 |
Fair value of warrants issued as debt discount | $ 636 | $ 160 |
1. BASIS OF PRESENTATION
1. BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | The accompanying consolidated financial statements of PEDEVCO CORP. (“PEDEVCO” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). 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. |
2. DESCRIPTION OF BUSINESS
2. DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | PEDEVCO’s primary business plan is engaging in the acquisition, exploration, development and production of oil and natural gas shale plays in the United States, with a secondary focus on conventional oil and natural gas plays. The Company’s principal operating properties are located in the Wattenberg, Wattenberg Extension, and Niobrara formation in the Denver-Julesburg Basin (the “D-J Basin” and the “D-J Basin Asset”) in Weld County, Colorado, all of which properties are owned by the Company through its wholly-owned subsidiary, Red Hawk Petroleum, LLC (“Red Hawk”). The Company plans to focus on the development of shale oil and gas assets held by the Company in its D-J Basin Asset. The Company plans to seek additional shale oil and gas and conventional oil and gas asset acquisition opportunities in the U.S. utilizing its strategic relationships and technologies that may provide the Company a competitive advantage in accessing and exploring such assets. Some or all of these assets may be acquired by existing subsidiaries or other entities that may be formed at a future date. |
3. SUMMARY OF SIGNIFICANT ACCOU
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation and Principles of Consolidation. Equity Method Accounting for Joint Ventures Non-Controlling Interests. Use of Estimates in Financial Statement Preparation. Cash and Cash Equivalents. Concentrations of Credit Risk. Sales to two customers comprised 47% and 42% of the Company’s total oil and gas revenues for the year ended December 31, 2016. Sales to two customers comprised 64% and 21% of the Company’s total oil and gas revenues for the year ended December 31, 2015. The Company believes that, in the event that its primary customers are unable or unwilling to continue to purchase the Company’s production, there are a substantial number of alternative buyers for its production at comparable prices. Accounts Receivable. Bad Debt Expense. Equipment. Oil and Gas Properties, Successful Efforts Method. Exploratory wells in areas not requiring major capital expenditures are evaluated for economic viability within one year of completion of drilling. The related well costs are expensed as dry holes if it is determined that such economic viability is not attained. Otherwise, the related well costs are reclassified to oil and gas properties and subject to impairment review. For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is under way or firmly planned. Otherwise the related well costs are expensed as dry holes. Exploration and evaluation expenditures incurred subsequent to the acquisition of an exploration asset in a business combination are accounted for in accordance with the policy outlined above. Depreciation, depletion and amortization of capitalized oil and gas properties is calculated on a field by field basis using the unit of production method. Lease acquisition costs are amortized over the total estimated proved developed and undeveloped reserves and all other capitalized costs are amortized over proved developed reserves. Impairment of Long-Lived Assets. Asset Retirement Obligations. The following table describes changes in our asset retirement obligations during the years ended December 31, 2016 and 2015 (in thousands): 2016 2015 Asset retirement obligations at January 1, $ 189 $ 89 Accretion expense 31 40 Obligations incurred for acquisition 19 87 Obligations settled - assets sold - (3 ) Changes in estimates 7 (24 ) Asset retirement obligations at December 31, $ 246 $ 189 Revenue Recognition. Income Taxes. Stock-Based Compensation. The Company estimates volatility by considering the historical stock volatility. The Company has opted to use the simplified method for estimating expected term, which is generally equal to the midpoint between the vesting period and the contractual term. Loss per Common Share. Fair Value of Financial Instruments. Fair Value Measurement As defined in ASC 820, fair value, clarified as an exit price, represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering these assumptions, ASC 820 defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value. Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Recently Issued Accounting Pronouncements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 amends previous guidance to require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The affected amounts shown on the Company’s balance sheet were a result of reclassifications within the balance sheet upon adoption of this ASU to conform to this standard. The Company adopted this ASU during the first quarter of 2016 and the adoption of this ASU did not have a material impact on its financial statements (balance sheet amounts as of December 31, 2015 were also reclassified for comparability purposes). In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern Subsequent Events. |
4. GOING CONCERN
4. GOING CONCERN | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | Although the Company’s senior Tranche A Notes (as defined and discussed below under “Note 9- Notes Payable - 2016 Senior Note Financing”) do not mature until May 11, 2019, with all of the Comapny’s other debt expressly subordinated thereto with no amounts due or owing under such subordinated debt until June 11, 2019 at the earliest, with the exception of the New MIEJ Note (as defined and discussed below under “Note 9 - Notes Payable - MIE Jurassic Energy Corporation”), which matures on March 8, 2019 and with interest accruing thru March 8, 2018 being payable on such date, the realization of the Company’s assets and satisfaction of its liabilities remains contingent on the completion of a financing. The Company anticipates that it will need approximately $11 million in 2017 to execute its current business plan and is currently actively negotiating the necessary financing. In the event that the Company is unable to complete the financing currently under consideration, and is otherwise unable to replace such financing on a timely basis, it would materially affect the Company’s ability to continue as a going concern. If such financing is not completed, among other things, the Company expects that it would incur an impairment of its oil and gas properties in the range of $29 million and the Company’s ability to meet its obligations from existing cash flows would be significantly affected. If the Company would be required to seek financing from other sources, such financings may not be available or, if available, may not be on terms acceptable to the Company or its existing lenders. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets or classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to raise capital to meet its debt obligations, working capital needs, and develop its oil and gas properties to attain profitable operations. Management has concluded that there is substantial doubt as to the company’s ability to continue as a going concern within one year after the issue date of these financial statements. |
5. OIL AND GAS PROPERTIES
5. OIL AND GAS PROPERTIES | 12 Months Ended |
Dec. 31, 2016 | |
Extractive Industries [Abstract] | |
OIL AND GAS PROPERTIES | The following tables summarize the Company’s oil and gas activities by classification for the years ended December 31, 2016 and 2015 (in thousands): January 1, 2016 Additions Disposals Transfers December 31, 2016 Oil and gas properties subject to amortization $ 64,655 $ 3,651 $ - $ - $ 68,306 Oil and gas properties not subject to amortization - - - - - Asset retirement costs 137 26 - - 163 Accumulated depreciation, depletion and impairment (6,025 ) (5,049 ) - - (11,074 ) Total oil and gas properties, net $ 58,767 $ (1,372 ) $ - $ - $ 57,395 January 1, 2015 Additions Disposals Transfers December 31, 2015 Oil and gas properties subject to amortization $ 24,057 $ 47,561 $ (7,252 ) $ 289 $ 64,655 Oil and gas properties not subject to amortization 8,159 - (7,870 ) (289 ) - Asset retirement costs 76 63 (2 ) - 137 Accumulated depreciation, depletion and impairment (10,237 ) (6,441 ) 10,653 - (6,025 ) Total oil and gas properties, net $ 22,055 $ 41,183 $ (4,471 ) $ - $ 58,767 The depletion recorded for production on properties subject to amortization for the years ended December 31, 2016 and 2015 amounted to $5,049,000 and $5,104,000, respectively. The Company recorded impairment of leases for the years ended December 31, 2016 and 2015 of $-0- and $1,337,000, respectively, for lease acreage that expired during the year due to non-renewals or non-utilization of leases. The Company did not record any impairment of properties subject to amortization for the years ended December 31, 2016 and 2015. During the year ended December 31, 2016, net additions to oil and gas properties subject to amortization were $3,651,000, comprised of the development of the Company’s oil and gas properties of $83,000 and drilling and completion costs related to the acquisition of oil and gas properties of $3,568,000 with respect to eight non-operated wells drilled and completed by a third party operator. During the year ended December 31, 2015, additions to oil and gas properties subject to amortization consisted of completion costs of $235,000 primarily related to the operated wells in the DJ Basin, the acquisition of oil and gas properties and interests in 53 gross wells located in the DenverJulesburg Basin, Colorado from Golden Globe Energy (US), LLC (“GGE”) in February 2015 valued at $43,562,000 (see below for more details), and $3,851,000 of nonoperating well development costs were incurred on eight wells drilled by third party operators during the year ended December 31, 2015 which was subsequently assigned to Dome Energy (see below). Upon completion of the three Loomis wells, the Company assessed its unproved properties, and determined that $289,000 of costs had been proved through these drilling operations. As a result, the Company reclassified these costs to proved property as of December 31, 2015. Acquisition of Properties from Dome Energy, Inc. On November 19, 2015, the Company entered into a Letter Agreement with certain parties including Dome Energy AB and its wholly-owned subsidiary Dome Energy, Inc. (collectively “Dome Energy”), pursuant to which Dome Energy agreed to acquire the Company’s interests in eight wells and fully fund the Company’s proportionate share of all the corresponding working interest owner expenses with respect to these eight wells. The Company assigned its interests in these wells to Dome Energy effective November 18, 2015, and Dome Energy assumed all amounts owed for the drilling and completion costs corresponding to these interests acquired from the Company. On March 29, 2016, the Company entered into a Settlement Agreement with Dome Energy, pursuant to which Dome Energy re-conveyed to the Company the interests in these eight wells assigned to Dome Energy by the Company on November 18, 2015, with the Company becoming responsible for its proportionate share of all the working interest owner expenses, and having the right to receive all corresponding revenues with respect to these eight wells, from the initial production date of the wells. As part of this transaction, the Company also settled $659,000 of outstanding payables due from the Company to Dome Energy that was accounted for as a purchase price adjustment to the value of the oil and gas properties acquired. The transaction was closed on May 12, 2016. The following table summarizes the purchase price and allocation of the purchase price to the net assets acquired in May 2016 (in thousands): Assets Acquired Accounts receivable – oil and gas $ 793 Oil and gas properties, subject to amortization 3,587 Total assets $ 4,380 Liabilities Assumed Accounts payable $ (4,361 ) Asset retirement obligation (19 ) Total liabilities (4,380 ) Net purchase price $ - Acquisition of Properties from Golden Globe Energy (US) LLC On February 23, 2015 (the “Closing”), the Company’s wholly-owned subsidiary, Red Hawk, completed the acquisition of approximately 12,977 net acres of oil and gas properties and interests in 53 gross wells located in the Denver-Julesburg Basin, Colorado (the “GGE Acquired Assets”) from Golden Globe Energy (US), LLC (“GGE”). As consideration for the acquisition of the GGE Acquired Assets, the Company (i) issued to GGE 3,375,000 restricted shares of the Company’s common stock and 66,625 restricted shares of the Company’s then newly-designated Series A Convertible Preferred Stock (the “Series A Preferred”) (see Note 11), (ii) assumed approximately $8.35 million of subordinated notes payable from GGE, and (iii) provided GGE with a one-year option to acquire the Company’s interest in its Kazakhstan opportunity for $100,000 payable upon exercise of the option pursuant to a Call Option Agreement. The effective date of the transaction was January 1, 2015, with the exception of all revenues and refunds attributable to GGE’s approximate 49.7% interest in each of the Loomis 2-1H, Loomis 2-3H and Loomis 2-6H wells, which revenues and refunds the Company owned from the date of first production, and which totaled approximately $467,000 through January 1, 2015. The following tables summarize the purchase price and allocation of the purchase price to the net assets acquired (in thousands): Purchase price on February 23, 2015 Fair value of common stock issued $ 2,734 Fair value of Series A Preferred stock issued 28,402 Assumption of subordinated notes payable 8,353 Kazakhstan option issued 5,000 Total purchase price $ 44,489 Fair value of net assets at February 23, 2015 Accounts receivable – oil and gas $ 1,578 Oil and gas properties, subject to amortization 43,562 Prepaid expenses and other assets 100 Total assets 45,240 Accounts payable (664 ) Asset retirement obligations (87 ) Total liabilities (751 ) Net assets acquired $ 44,489 The following table presents the Company’s supplemental consolidated pro forma total revenues, lease operating costs, net income (loss) and net loss per common share as if the GGE Acquisition completed in February 2015 had occurred on January 1, 2015. For the Year Ended December 31, 2015 PEDEVCO Net Acquisitions/Dispositions Pro Forma Combined Revenue $ 5,326 $ 780 $ 6,106 Lease operating costs $ (1,830 ) $ (275 ) $ (2,105 ) Net income (loss) $ (20,484 ) $ 505 $ (19,979 ) Net income (loss) per common share $ (0.49 ) $ 0.01 $ (0.48 ) Disposition of Oil and Gas Properties In February 2015, the Company sold to MIE Jurassic Energy Corporation (“MIEJ”), an affiliate of MIE Holdings, all of the direct interests in approximately 945 net acres and interests in three wells owned by the Company with a recorded net book value of $620,000 resulting in a gain on sale of oil and gas properties of $275,000. |
6. ACCOUNTS RECEIVABLE
6. ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable | |
ACCOUNTS RECEIVABLE | On November 18, 2015 when the Company assigned its interests in the eight wells to Dome Energy, Dome Energy also agreed to pay an additional $250,000 to the Company in the event the anticipated merger was not consummated. In connection with the assignment of these well interests, Dome Energy issued a contingent promissory note to the Company, dated November 19, 2015 (the “Dome Promissory Note”), with a principal amount of $250,000, which was due to mature on December 29, 2015, upon the termination of the anticipated merger with Dome Energy. To guarantee payment of the Dome Promissory Note, Dome Energy deposited $250,000 into an escrow account. During the year ending December 31, 2016, the Company collected this receivable of $250,000 in full satisfaction of the Dome Promissory Note. On March 24, 2015, Red Hawk and Dome Energy entered into a Service Agreement (the “Service Agreement”), pursuant to which Red Hawk agreed to provide certain human resource and accounting services to Dome Energy, of which $156,000 remained due and payable by Dome Energy to Red Hawk as of December 31, 2015. On March 29, 2016, the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Dome Energy and certain of its affiliated entities, pursuant to which the Company and Dome Energy agreed to terminate and cancel the Service Agreement and settle a number of outstanding matters, with Dome Energy agreeing to pay to Red Hawk $50,000 on May 2, 2016, in full satisfaction of the amounts due under the Service Agreement, with all remaining amounts owed forgiven by Red Hawk. As of December 31, 2015, the receivable due from Dome Energy totaled $406,000. During the year ended December 31, 2016, the net receivable created by the Dome Promissory Note was reduced to $25,000 by (i) the collection of the $250,000 as described above, (ii) forgiveness by the Company of $106,000 due from Dome Energy pursuant to the Settlement Agreement, and (iii) the recording of an allowance of $25,000 as a doubtful account (which was recognized as bad debt expense in selling, general and administrative expense on the Company’s income statement). As of December 31, 2016, the $50,000 was still due from Dome to Red Hawk as a part of the Settlement Agreement. The Company recorded an allowance for doubtful accounts related to this outstanding amount of $25,000, as $25,000 was collected in early 2017. |
7. OTHER CURRENT ASSETS
7. OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Other Current Assets | |
OTHER CURRENT ASSETS | On September 11, 2013, the Company entered into a Shares Subscription Agreement (“SSA”) to acquire an approximate 51% ownership in Asia Sixth Energy Resources Limited (“Asia Sixth”), which held an approximate 60% ownership interest in Aral Petroleum Capital Limited Partnership (“Aral”), a Kazakhstan entity. In August 2014 the SSA was restructured (the “Aral Restructuring”), in connection with which the Company received a promissory note in the principal amount of $10.0 million from Asia Sixth (the “A6 Promissory Note”), which would be converted into a 10.0% interest in Caspian Energy, Inc. (“Caspian Energy”), an Ontario, Canada company listed on the NEX board of the TSX Venture Exchange, upon the consummation of the Aral Restructuring. The Company entered into an agreement with GGE to convey 50% of our interests in Asia Sixth in connection with an acquisition transaction in March 2014. The Aral Restructuring was consummated on May 20, 2015, upon which date the A6 Promissory Note was converted into 23,182,880 shares of common stock of Caspian Energy. In addition, on the date of conversion of the A6 Promissory Note, Mr. Frank Ingriselli, our Chairman and then Chief Executive Officer, was appointed as a non-executive director of Caspian Energy and currently serves as the Chairman of its Board of Directors. In connection with our GGE Acquisition, on February 23, 2015, we provided GGE a one-year option to acquire our interest in Caspian Energy for $100,000 payable upon exercise of the option recorded in prepaid expenses and other current assets. As a result, the carrying value of the 23,182,880 shares of common stock of Caspian Energy which were issued upon conversion of the A6 Promissory Note at December 31, 2015 was $100,000. The option provided to GGE was not exercised and expired on February 23, 2016, resulting in the Company retaining ownership of the 23,182,880 shares of Caspian Energy. In connection with the Company’s May 2016 debt restructuring as more fully described below, the Company entered into a new Call Option Agreement with GGE, dated May 12, 2016 (the “GGE Option Agreement”), pursuant to which the Company provided GGE an option to purchase the 23,182,880 common shares of Caspian Energy upon payment of $100,000 by GGE to the Company and is callable by GGE at any time. The option expires on May 12, 2019, which is the maturity date of the debt evidenced by that certain Note and Security Agreement, dated April 10, 2014, as amended on February 23, 2015, and May 12, 2016, issued by the Company to RJ Credit LLC (“RJC” and the “RJC Junior Note”), as described below. The $100,000 option is classified as part of other current assets as of December 31, 2016. |
8. EQUITY METHOD INVESTMENTS
8. EQUITY METHOD INVESTMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
EQUITY METHOD INVESTMENTS | Condor Energy Technology, LLC In October 2011, the Company formed a new subsidiary, Condor Energy Technology LLC (“Condor”), a limited liability company organized under the laws of the State of Nevada. The Company owned 20% of Condor and a subsidiary of MIE Holdings Corporation (“MIE Holdings”) owned 80%. The Company determined that Condor qualified as a variable interest entity (“VIE”) as defined in ASC 810-10, however, the Company concluded that MIE Holdings was the primary beneficiary as a result of being in control of the Board and its ability to control the funding commitments to Condor. Accordingly, the Company accounted for its 20% ownership in Condor using the equity method. Settlement Agreement with MIEJ On February 19, 2015, the Company entered into a Settlement Agreement with MIEJ (the “MIEJ Settlement Agreement”), the 80% partner in Condor and the lender under the Amended and Restated Secured Subordinated Promissory Note, dated March 25, 2013, in the principal amount of $6,170,065 (the “MIEJ Note”). The Settlement Agreement and related agreements for the disposition of the Company’s interest in Condor contained the following terms: ● The Company and MIEJ entered into a new Amended and Restated Secured Subordinated Promissory Note, dated February 19, 2015 (the “New MIEJ Note”), with a principal amount of $4.925 million, extinguishing the original MIEJ Note which had a principal amount of $6,070,000 after cash payments of $100,000; ● The Company sold to MIEJ (i) its 20% interest in Condor, and (ii) all of the direct interests in approximately 945 net acres and working interests in three wells separately owned by the Company; ● The Company’s employees were removed as officers of Condor, and the Company agreed to assist with Condor’s accounting and audits and perform joint interest billing accounting for a monthly fee of $55,000 for January 2015, $0 for February 2015, $10,000 for March 2015 and $30,000 per month thereafter, pro-rated for partial months, for up to six months; ● MIEJ paid $500,000 to the Company’s Senior Note Investors (defined below) as a principal reduction on the Company’s Senior Notes; ● Condor forgave approximately $1.8 million in previous working interest expenses related to the drilling and completion of certain wells operated by Condor that the Company owed to Condor; ● The Company paid MIEJ $100,000 as a principal reduction under the original MIEJ Note; and ● The parties fully released each other from every claim, demand or cause of action arising on or before February 19, 2015. The net effect of these transactions with MIEJ was to reduce approximately $9.4 million in aggregate liabilities due from the Company to MIEJ and Condor to $4.925 million, which is now the new principal amount of the New MIEJ Note. The following table reflects the activity related to the Company’s settlement with MIEJ (in thousands): Items Received by PEDEVCO Extinguishment of accrued liabilities $ 3,280 Extinguishment of original debt with MIE net of cash payments of $100,000 6,070 Proceeds from cash payments made by MIE to RJ Credit and the Agent 500 Total $ 9,850 Items Received by MIEJ Issuance of new MIEJ note $ 4,925 Extinguishment of note receivable with Condor 1,272 Historical cost of oil and gas property sold to Condor 620 Total 6,817 Net gain on settlement $ 3,033 The following table presents the allocation of the gain on settlement with MIEJ described above (in thousands): Allocated Value Historical Cost Gain on Settlement Oil and gas properties $ 895 $ 620 $ 275 Investment in Condor 1,838 1,272 566 Note payable – MIEJ 7,117 4,925 2,192 Total $ 9,850 $ 6,817 $ 3,033 The Company recognized a gain on sale of equity investments during the year ended December 31, 2015 in the amount of $566,000. Total fees billed to Condor were $-0- for the year ended December 31, 2016, and $273,000 for the year ended December 31, 2015. Under the equity method, the Company was subject to recording its 20% proportionate share of Condor’s income or losses. The Company was obligated to maintain, under the membership agreement of Condor, its proportionate share of capital contributions. Below is summarized financial information for Condor for the period ending on the date of disposition. Summarized statements of operations (in thousands): For the Period from January 1-February 23, 2015 Revenue $ 108 Operating expenses (368 ) Operating income (loss) (260 ) Interest expense (195 ) Net loss $ (455 ) During the period from January 1, 2015 through February 23, 2015 (the date the Company’s interests in Condor were divested), the Company recorded $91,000 as its 20% share of Condor’s net losses for that period. |
9. NOTES PAYABLE
9. NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | Note Purchase Agreement and Sale of Secured Promissory Notes On March 7, 2014, the Company entered into a $50 million financing facility (the “Notes Purchase Agreement”) between the Company, BRe BCLIC Primary, BRe BCLIC Sub, BRe WNIC 2013 LTC Primary, BRe WNIC 2013 LTC Sub, and RJC, as investors (collectively, the “Investors”), and BAM Administrative Services LLC, as agent for the Investors (the “Agent”). The Company issued the Investors Secured Promissory Notes in the aggregate principal amount of $34.5 million (the “Initial Notes”), which also provided for an additional $15.5 million available under the financing agreement to fund the Company’s future drilling costs to be evidenced by notes with substantially similar terms as the Initial Notes (the “Subsequent Notes,” and together with the Initial Notes, the “Senior Notes”). On March 19, 2015, BRe WNIC 2013 LTC Primary transferred a portion of its Initial Note to HEARTLAND Bank, and effective April 1, 2015, BRe BCLIC Primary transferred its Initial Note to Senior Health Insurance Company of Pennsylvania (“SHIP”), with each of HEARTLAND Bank and SHIP becoming an “Investor” for purposes of the discussion below. Certain of the Investors made additional transfers of some or all of the principal outstanding under Senior Notes held by them The Initial Notes, as originally issued, accrued interest at the rate of 15% per annum, payable monthly, in arrears, required us to make certain mandatory principal payments and was originally to mature on March 7, 2017. On April 24, 2015, certain of the Investors in our Senior Notes agreed to defer certain mandatory principal repayments and interest payments that would otherwise be payable in the months of May and June 2015, with such deferred amounts to be used by us solely to renew, extend, re-lease or otherwise acquire leases which would then become additional collateral under the Senior Notes. The aggregate principal and interest that was deferred was approximately $354,000, which amount was added to the principal due under the Senior Notes as of July 31, 2015 and was due upon maturity ($320,000 of which was expensed as additional interest expense). The Company was also charged an additional deferral fee of $354,000, the amount of the principal and interest deferred under this agreement, which was added to the principal and due upon maturity. As consideration for the deferral, on September 10, 2015, the Company granted warrants exercisable for an aggregate of 349,111 shares of our common stock to the Investors participating in the deferral. Each warrant has a 3-year term and is exercisable on a cashless basis at an exercise price of $1.50 per share. The fair value of these warrants of approximately $40,000 was recorded as additional debt discount. On August 28, 2015, the Company entered into agreements with the holders of the Senior Notes to (i) defer until the maturity date of the Senior Notes the mandatory principal payments that would otherwise be due and payable by the Company on payment dates occurring during the six month period of August 1, 2015 through January 31, 2016, (ii) HEARTLAND Bank agreed to change the frequency of payment of accrued interest and mandatory principal repayments from monthly to semi-annually, with the next interest payment due February 1, 2016 and the next mandatory principal repayment due August 3, 2016, and with the Company agreeing to place an amount equal to 1/6th of the semi-annual principal and interest payments due into a sinking fund starting in February 2016 which the Company shall pay to HEARTLAND Bank every six months when due and owing, (iii) RJC agreed to defer all interest payments otherwise due and payable by the Company to RJC during the period commencing on August 1, 2015 through January 31, 2016 (the “Waiver Period”), which deferred interest was added to principal each month during the Waiver Period, (iv) certain other holders agreed to (a) defer until the maturity date of their Senior Notes 12/17ths of the interest payments that would otherwise be due and payable by the Company to them on payment dates occurring during the six month period of August 1, 2015 through January 31, 2016, and (b) have the Company pay in cash 5/17ths of such interest payments per month, with all deferred interest being added to principal each month until the maturity date of the Senior Notes, and (v) SHIP, BRe BCLIC Sub, BRe WINIC 2013 LTC Primary, BRe WNIC 2013 LTC Sub and RJC increased the interest rate under their Senior Notes from 15% to 17% per annum on all outstanding principal under their Senior Notes during the Waiver Period. These deferrals (the “August-January Deferrals”) reduced the Company’s monthly cash interest payments and mandatory principal repayments from approximately $600,000 per month to approximately $100,000 per month during the Waiver Period. As additional consideration for these agreements, on September 10, 2015, the Company granted warrants exercisable on a cash-only basis for an aggregate of 1,201,004 shares to the lenders, proportionately based on their individual principal. The warrants have a three year term and are exercisable on a cash-only basis at a price of $0.75 per share. The fair value of these 1,201,004 warrants of approximately $120,000 was recorded as additional debt discount. As of December 31, 2015, the amount of deferred interest and deferred principal was $2,527,000 and $519,000, respectively. There were no borrowings made under the Senior Notes during the year ended December 31, 2015. As of December 31, 2015, amortization of the deferred financing costs and the original issue discount was $148,000. During the year ended December 31, 2015, there were $863,000 of payments made to reduce the outstanding Initial Notes. On August 28, 2015, January 29, 2016, March 7, 2016 and April 1, 2016, the Company entered into several letter agreements and amendments with certain of the holders to, (i) defer until the maturity date of their Senior Notes the mandatory principal payments that would otherwise be due and payable by the Company to them on payment dates occurring from August 2015 through April 2016; and (ii) defer until the maturity date of their Senior Notes and the RJC Junior Note all of the interest payments that would otherwise be due and payable by the Company to them from August 2015 to April 2016, with all interest amounts deferred being added to principal on the first business day of the month following the month in which such deferred interest is accrued. The purpose of these deferrals was to provide the Company with temporary relief from cash requirements to focus and execute upon its contemplated business combinations. During the year ended December 31, 2016, there were no payments made to reduce the outstanding principal due under the Initial Notes, however, such Notes were restructured as described below. As a result of the issuance of common and preferred shares in the acquisition of the assets from GGE in 2015, GGE became a related party of the Company. 2016 Senior Note Restructuring Following a series of temporary payment deferrals as described above, on May 12, 2016 (the “Closing Date”), the Company entered into an Amended and Restated Note Purchase Agreement (the “Amended NPA”), with existing lenders SHIP, BRe BCLIC Sub, BRe WINIC 2013 LTC Primary, BRe WNIC 2013 LTC Sub, Heartland Bank, and RJC, and new lenders BHLN-Pedco Corp. (“BHLN”) and BBLN-Pedco Corp. (“BBLN,” and together with BHLN and RJC, the “Tranche A Investors”) (the investors in the Tranche B Notes (defined below) and the Tranche A Investors, collectively, the “Lenders”), and the Agent, as agent for the Lenders. The Amended NPA amended and restated the Senior Notes held by the Tranche B Investors, and the Company issued new Senior Secured Promissory Notes to each of the Tranche B Investors (collectively, the “Tranche B Notes”) in a transaction that qualified as a troubled debt restructuring. RJC is also a party to the RJC Junior Note (discussed below under Notes Payable - Related Party Financings - The Subordinated Note Payable Assumed). The Amended NPA amended the Senior Notes as follows: ● Created and issued to the Tranche A Investors new “Tranche A Notes,” in substantially the same form and with similar terms as the Tranche B Notes, except as discussed below, consisting of a term loan issuable in tranches with a maximum aggregate principal amount of $25,960,000, with borrowed funds accruing interest at 15% per annum, and maturing on May 11, 2019 (the “Tranche A Maturity Date”) (the “Tranche A Notes,” and together with the Tranche B Notes, the “New Senior Notes”); ● The Company capitalized all accrued and unpaid interest under the Tranche B Notes as a term loan with an aggregate outstanding principal balance as of May 12, 2016 equal to $39,065,000 (as of December 31, 2016, the aggregate outstanding principal balance is $42,333,000).The Tranche B Notes mature on June 11, 2019 except for the Tranche B Note issued to RJC, which matures on July 11, 2019; ● Amended the provisions of the Senior Notes which required mandatory prepayments from our revenues, replacing them with a Net Revenue Sweep as described below; and ● Provides that interest on the Tranche B Notes will continue to accrue at the rate of 15% per annum, but all accrued interest through December 31, 2017 shall be deferred until due and payable on the maturity date, with all interest amounts deferred being added to the principal of the Tranche B Notes on a monthly basis and that following December 31, 2017, all interest will accrue and be paid monthly in arrears in cash to the Tranche B Note holders, provided, however, no payment may be made on the Tranche B Notes unless and until the Tranche A Notes are repaid in full. The Tranche A Notes are substantially similar to the Tranche B Notes, except that such notes are senior to the Tranche B Notes, accrue interest until maturity and have priority to the payment of Monthly Net Revenues as discussed below. On the Closing Date, Tranche A Investors BHLN and BBLN loaned the Company their pro rata share of an aggregate of $6,422,000 (the “Initial Tranche A Funding”). The Initial Tranche A Funding net proceeds (amounting to $6,422,000 less legal fees of $127,000) were used by the Company to (i) fund approximately $5.1 million due to a third party operator for drilling and completion expenses related to the acquired working interests in eight wells from Dome Energy, (ii) pay $750,000 of the Company’s past due payables to Liberty (defined below under “Note 10 – Commitments and Contingencies” – “Other Commitments”), (iii) pay $445,000 of unpaid interest payments due to Heartland Bank under its Tranche B Note through February 29, 2016, and (iv) pay fees and expenses of $127,000. Subject to the terms and conditions of the Amended NPA, the Company may request each Tranche A Investor, from time to time, to advance to the Company additional amounts of funding (each, a “Subsequent Tranche A Funding”), provided that: (i) the Company may not request a Subsequent Tranche A Funding more than one time in any calendar month; (ii) Agent shall have received a written request from the Company at least 15 business days prior to the requested date of such advance (the “Advance Request”); (iii) no Event of Default shall have occurred and be continuing; and (iv) the Company shall provide to the Agent such documents, instruments, certificates and other writings as the Agent shall reasonably require in its sole and absolute discretion. The advancement of all or any portion of the Subsequent Tranche A Funding is in the sole and absolute discretion of the Agent and the Investors and no Investor is obligated to fund all or any part of the Subsequent Tranche A Funding. Each Subsequent Tranche A Funding shall be in a minimum amount of $500,000 and multiples of $100,000 in excess thereof. The aggregate amount of Subsequent Tranche A Fundings that may be made by the Investors under the Amended NPA shall not exceed $18,577,876 and any Subsequent Tranche A Funding repaid may not be re-borrowed. In addition, subject to the terms and conditions of the Amended NPA, RJC agreed to loan to the Company $240,000, within 30 days of the Closing Date and within 30 days of each of July 1, 2016, October 1, 2016 and January 1, 2017 (collectively, the “RJC Fundings” and collectively with the Investor Tranche A Fundings, the “Fundings”), provided that no Event of Default or Default shall exist. The aggregate amount of the RJC Fundings made by RJC under the Amended NPA shall not exceed $960,000 and any Funding repaid may not be re-borrowed. As of December 31, 2016, the Company has received no loan proceeds under this agreement, and RJC is in default of its funding obligations thereunder. To guarantee RJC’s obligation in connection with the RJC Fundings as required under the Amended NPA, GGE entered into a Share Pledge Agreement with the Company, dated May 12, 2016 (the “GGE Pledge Agreement”), pursuant to which GGE agreed to pledge an aggregate of 10,000 shares of the Company’s Series A Convertible Preferred Stock held by GGE (convertible into 10,000,000 shares of Company common stock), which pledged shares are subject to automatic cancellation and forfeiture based on a schedule set forth in the GGE Share Pledge Agreement, in the event RJC fails to meet each of its RJC Funding obligations pursuant to the Amended NPA. To date, RJC has not met its RJC Funding obligations under the Amended NPA and the Company is entitled to cancel and forfeit 10,000 shares of the Company’s Series A Convertible Preferred Stock held by GGE pursuant to the terms of the GGE Pledge Agreement, which determination to cancel shares has not been made, and which shares have not been cancelled, as of the date of this filing. As additional consideration for the entry into the Amended NPA, the Company granted to BHLN and BBLN, warrants exercisable for an aggregate of 5,962,800 shares of common stock of the Company (the “Investor Warrants”). The warrants have a 3 year term, are transferrable, and are exercisable on a cashless basis at any time at $0.25 per share (as amended). The Investor Warrants include a beneficial ownership limitation that prohibits the exercise of the Investor Warrants to the extent such exercise would result in the holder, together with its affiliates, holding more than 9.99% of the Company’s outstanding voting stock (the “Blocker Provision”). The estimated fair value of the Investor Warrants issued is approximately $707,000 based on the Black-Scholes option pricing model. The relative fair value allocated to the Tranche A Notes and recorded as debt discount was $636,000. Other than the Investor Warrants, no additional warrants exercisable for common stock of the Company are due, owing, or shall be granted to the Lenders pursuant to the Senior Notes, as amended. In addition, warrants exercisable for an aggregate of 349,111 shares of the Company’s common stock at an exercise price of $1.50 per share and warrants exercisable for an aggregate of 1,201,004 shares of the Company’s common stock at an exercise price of $0.75 per share previously granted by the Company to certain of the Lenders on September 10, 2015 in connection with prior interest payment deferrals have been amended and restated to provide that all such warrants are exercisable on a cashless basis and to include a Blocker Provision (the “Amended and Restated Warrants”). Additionally, the Company also agreed to (a) provide to the Agent and the Investors a monthly projected general and administrative expense report (the “Projected G&A”) and a monthly comparison report of the Projected G&A provided for the preceding month, with an explanation of any variances, provided that in no event shall such variances exceed $150,000, and (b) pay to the Agent within 2 business days following the end of each calendar month all of the Company’s oil and gas revenue received by the Company during such month (the “Net Revenue Sweep”), less (i) lease operating expenses, (ii) interest payments due to Investors under the New Senior Notes, (iii) general and administrative expenses not to exceed $150,000 per month unless preapproved by the Agent (the “G&A Cap”), and (iv) preapproved extraordinary expenses (together the “Monthly Net Revenues”). Amounts paid to the Agent through the Net Revenue Sweep are applied first to the repayment of principal and interest due under the Tranche A Notes until such notes are paid in full and then to the repayment of principal and interest amounts due under the Tranche B Notes. During the year ended December 31, 2016, the Company has paid $651,000 of principal under the Net Revenue Sweep. The amount of interest deferred under the Tranche A and Tranche B Notes as of December 31, 2016 equaled $1,266,000 and was accounted for on the balance sheet under long-term accrued expenses and accrued expenses - related party. The amounts outstanding under the New Senior Notes are secured by a first priority security interest in all of the Company’s and its subsidiaries’ assets, property, real property, intellectual property, securities and proceeds therefrom, granted in favor of the Agent for the benefit of the Lenders, pursuant to a Security Agreement and a Patent Security Agreement, each entered into as of March 7, 2014, as amended on May 12, 2016 (the “Amended Security Agreement” and “Amended Patent Agreement,” respectively). Additionally, the Agent, for the benefit of the Lenders, was granted a mortgage and security interest in all of the Company’s and its subsidiaries real property as located in the State of Colorado and the State of Texas pursuant to (i) a Leasehold Deed of Trust, Fixture Filing, Assignment of Rents and Leases, and Security Agreements, dated March 7, 2014, as amended May 12, 2016, filed in Weld County and Morgan County, Colorado; and (ii) a Mortgage, Deed of Trust, Security Agreement, Financing Statement and Assignment of Production filed in Matagorda County, Texas (collectively, the “Amended Mortgages”). Other than as described above, the terms of the Amended NPA (including the covenants and obligations thereunder) are substantially the same as the Notes Purchase Agreement, and the terms of the Tranche A Notes and Tranche B Notes (including the events of default, interest rates and conditions associated therewith) are substantially the same as the Senior Notes. All debt discount amounts are amortized using the effective interest rate method. The total amount of the remaining debt discount reflected on the accompanying balance sheet as of December 31, 2016 was $6,988,000. Amortization of debt discount and total interest expense for the initial notes was $5,576,000 and $7,832,000, respectively, for the year ended December 31, 2016. The amount of the debt discount reflected on the accompanying balance sheet as of December 31, 2015 was $11,801,000. Amortization of debt discount and interest expense, related to the Initial Notes and the first advance, were $6,519,000 and $4,869,000, respectively, for the year ended December 31, 2015. Junior Debt Restructuring On May 12, 2016, the Company entered into an Amendment No. 2 to Note and Security Agreement with RJC (the “Second Amendment”). The Company and RJC agreed to amend the RJC Junior Note to (i) capitalize all accrued and unpaid interest under the RJC Junior Note as of May 12, 2016, and add it to the note principal, making the outstanding principal amount of the RJC Junior Note as of May 12, 2016 equal to $9,379,000, (ii) extend the maturity date (“Termination Date”) from December 31, 2017 to July 11, 2019, (iii) provide that all future interest accruing under the RJC Junior Note is deferred until payable on the Termination Date, with all future interest amounts deferred being added to the principal on a monthly basis, and (iv) subordinate the RJC Junior Note to the New Senior Notes. Bridge Note Financing As of December 31, 2016, the Company had Bridge Notes with an aggregate principal amount of $475,000 remaining outstanding, plus accrued interest of $173,000 and additional payment-in-kind (“PIK”) of $48,000. The aggregate principal and accrued and unpaid interest and PIK amounts are available for conversion into common stock pursuant to the terms of the Bridge Notes into common stock of the Company, subject to no more than 19.99% of the Company’s outstanding common stock on the date the Second Amended Notes were entered into. Upon a conversion, the applicable holder shall receive that number of shares of common stock as is determined by dividing the Conversion Amount by a conversion price (the “Conversion Price”) as follows: (A) prior to June 1, 2014, the Conversion Price was $2.15 per share; and (B) following June 1, 2014, the Conversion Price is the greater of (i) 80% of the average of the closing price per share of the Company’s publicly-traded common stock for the five (5) trading days immediately preceding the date of the conversion notice provided by the holder; and (ii) $0.50 per share. Additionally, each Bridge Note holder entered into a Subordination and Intercreditor Agreement in favor of the Agent, subordinating and deferring the repayment of the Bridge Notes until full repayment of certain senior notes. The Subordination and Intercreditor Agreements also prohibit the Company from repaying the Bridge Notes until certain senior notes have been paid in full, except that we are allowed to repay the Bridge Notes from net proceeds received from the sale of common or preferred stock (i) in calendar year 2014 if such net proceeds received in such calendar year exceeds $35,000,000, (ii) in calendar year 2015 if such net proceeds received in such calendar year exceeds $50,000,000, and (iii) in calendar year 2016 if such net proceeds actually received in such calendar year exceeds $50,000,000, none of which has occurred to date. The interest expense related to these notes for the year ended December 31, 2016 was $57,000 compared to $58,000 for 2015. The unamortized debt premium as of December 31, 2016 and 2015 was $113,000 and $113,000, respectively. MIE Jurassic Energy Corporation On February 14, 2013, PEDCO entered into a Secured Subordinated Promissory Note, which was amended on March 25, 2013 and July 9, 2013 (the “MIEJ Note”, as amended through December 31, 2014) with MIEJ. In February 2015, the Company and PEDCO entered into a Settlement Agreement with MIEJ and the New MIEJ Note in the amount of $4.925 million, as discussed in Note 8. As of December 31, 2016, the amount outstanding under the New MIEJ Note was $4,925,000. The Company recognized a gain on debt extinguishment during the three months ended March 31, 2015 related to these transactions of $2,192,000. The New MIEJ Note has an interest rate of 10.0%, with no interest due until maturity, is secured by all of the Company’s assets, and is subordinated to the Senior Notes. MIEJ also agreed to subordinate its note up to an additional $60 million of new senior lending, with any portion of new senior lending in excess of this amount requiring to be paid first to MIEJ until the New MIEJ Note is paid in full. Further, for every $20 million in new senior lending the Company raises, MIEJ is required to be paid all interest and fees accrued on the New MIEJ Note through such date. The New MIEJ Note was due and payable on March 8, 2017, subject to automatic extensions upon the occurrence of a Long Term Financing (defined below), which as described below has occurred to date. On a onetime basis, the Secured Promissory Notes may be refinanced by a new loan (“Long-Term Financing”) by one or more third party replacement lenders (“Replacement Lenders”), and in such event the Company shall undertake commercially reasonable best efforts to cause the Replacement Lenders to simultaneously refinance both the Senior Notes and the New MIEJ Note as part of such Long-Term Financing. If the Replacement Lenders are unable or unwilling to include the New MIEJ Note in such financing, then the Long-Term Financing may proceed without including the New MIEJ Note, and the New MIEJ Note shall remain in place and shall be automatically subordinated, without further consent of MIEJ, to such Long-Term Financing. Furthermore, upon the occurrence of a Long-Term Financing, the maturity of the New MIEJ Note is automatically extended to the same maturity date of the Long-Term Financing, but to no later than March 8, 2020. Additionally, in connection with a contemplated Long-Term Financing: ● The Long-Term Financing must not exceed $95 million; ● The Company must make commercially reasonable best efforts to include adequate reserves or other payment provisions whereby MIEJ is paid all interest and fees accrued on the New MIEJ Note commencing as of March 8, 2017 and annually thereafter, and to allow for quarterly interest payments starting March 31, 2017 of not less than 5% per annum on the outstanding balance of the New MIEJ Note, plus a one-time payment of accrued interest (not to exceed $500,000) as of March 31, 2017; and ● Commencing on March 8, 2017, MIEJ shall have the right to convert the balance of the New MIEJ Note into the Company’s common stock at a price equal to 80% of the average closing price per share of our stock over the then previous 60 days, subject to a minimum conversion price of $0.30 per share. MIEJ shall not be permitted to convert if the conversion would result in MIEJ holding more than 19.9% of the Company’s outstanding common stock without approval from the Company’s shareholders, which the Company has agreed to seek at its 2016 annual shareholder meeting or, if not approved then, at its 2017 annual shareholder meeting. In the event the Secured Promissory Notes are not refinanced, restructured or extended by the existing Investors, the maturity of both the New MIEJ Note and the Secured Promissory Notes may be extended to no later than March 8, 2019, without requiring the consent of MIEJ. However, (i) any such maturity extension of the New MIEJ Note will give MIEJ the right to convert the note into our common stock as described above, commencing on March 8, 2017, and (ii) such extension agreement must provide that MIEJ is paid all interest and fees accrued on the New MIEJ Note as of March 8, 2018. The New MIEJ Note may be prepaid any time without penalty. As a result of the Company’s May 2016 senior debt restructuring pursuant to the Amended NPA (as described above under “Note Purchase Agreement and Sale of Secured Promissory Notes” – “2016 Senior Note Restructuring”), the maturity date of the New MIEJ Note has automatically been extended to March 8, 2019, and as a result of the Company’s shareholders approving the conversion terms of the MIEJ Note at the Company’s annual shareholder meeting held on December 28, 2016, MIEJ has the Right of Conversion (described above) beginning on March 8, 2017. The interest expense related to this note for the year ended December 31, 2016 was $494,000, and for the year ended December 31, 2015 was $574,000. For financial reporting purposes, MIEJ was considered a related party for all periods presented prior to the MIEJ Settlement Agreement signed in February 2015. After that date, MIEJ is no longer considered a related party. Related Party Financings The Subordinated Note Payable Assumed In 2015, the Company assumed approximately $8.35 million of subordinated note payable from GGE in the acquisition of the GGE Acquired Assets (the “RJC Junior Note”). The amount outstanding on the RJC Junior Note as of December 31, 2016 equaled $10,173,000. The lender under the RJC Junior Note is RJC, which is one of the lenders under the Senior Notes and is an affiliate of GGE. The note was originally due and payable on December 31, 2017, but has been extended to July 11, 2019 in connection with the May 2016 restructuring as described above. The assumed note payable is subordinate to the Senior Notes, as well as any future secured indebtedness from a lender with an aggregate principal amount of at least $20,000,000. Should the Company repay the Senior Notes or replace them with secured indebtedness from a lender with an aggregate principal amount of at least $20,000,000, RJC agreed to further amend the subordinated note payable to adjust the frequency of interest payments or to eliminate the payments and replace them with a single payment of the accrued interest to be paid at maturity. As consideration for deferral of payments and related note amendments, on September 10, 2015, the Company granted RJC warrants exercisable on a cash-only basis for an aggregate of 265,241 shares of Company common stock (which are included in the aggregate total of 1,201,004 shares issuable upon exercise of warrants issued to the Investors as described above under “Note Purchase Agreement and Sale of Secured Promissory Notes” above). The warrants have a three year term and were exercisable on a cash-only basis at a price of $0.75 per share prior to the amendments described below. The interest expense related to the RJC Junior Note for the year December 31, 2016 was $1,164,000, and for the year ended December 31, 2015 was $1,058,000. 2016 RJC Subordinated Note Deferrals On January 29, 2016 and March 7, 2016, the Company entered into agreements with RJC to defer until maturity the payment of interest and principal due under the RJC Junior Note through March 31, 2016, and reduce the interest rate to 12% per annum effective January 31, 2016. The deferral period was further extended on May 12, 2016, on which date the Company entered into an Amendment No. 2 to Note and Security Agreement with RJC (the “Second Amendment”). The Company and RJC agreed to amend the RJC Junior Note to (i) capitalize all accrued and unpaid interest under the RJC Junior Note as of May 12, 2016, and add it to the note principal, making the outstanding principal amount of the RJC Junior Note as of June 12, 2016 equal to $9,379,432, (ii) extend the maturity date from December 31, 2017 to July 11, 2019, (iii) provide that all future interest accruing under the RJC Junior Note is deferred until payable on the maturity date, with all future interest amounts deferred being added to the principal on a monthly basis, and (iv) subordinate the RJC Junior Note to the New Senior Notes. The warrants previously granted to RJC on September 10, 2015 were also amended to provide that such warrants are exercisable on a cashless basis and to include a Blocker Provision (as defined above). For the year ended December 31, 2016, interest deferred and capitalized since May 12, 2016, under Amendment No. 2 to the Note amounted to $794,000 and amounted to total deferred interest of $1,255,000 since January 1, 2016. The outstanding principal amount of the RJC Junior Note as of December 31, 2016 was equal to $10,173,000. |
10. COMMITMENTS AND CONTINGENCI
10. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Office Lease In May 2016, the Company entered into a lease addendum to the original lease agreement signed in July 2012, as amended, which extends the term of the lease by an additional one year, now ending in July 2017, for its corporate office space located in Danville, California. The obligation under this one year lease extension for the remainder of the lease through the first seven months of 2017 is $33,000. In September 2014, the Company entered into a lease agreement for office space located in Houston, Texas, with a term of five years ending on March 1, 2020, which location served as the Company’s operations office. Effective April 1, 2016, the Company terminated this lease agreement and issued the landlord 700,000 shares of common stock valued at $161,000, with no further obligations due thereunder. 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, 415 net acres are due to expire in 2017, 561 net acres expire in 2018, 129 net acres expire in 2019, and 1,288 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. Where the Company is not able to drill and complete a well before lease expiration, the Company may seek to extend leases where able. As of December 31, 2016, the Company had fully impaired its unproved leasehold costs based on management’s revised re-leasing program. Other Commitments On December 18, 2015, a complaint was filed against Red Hawk, our wholly-owned subsidiary, in the District Court, County of Weld, State of Colorado (Case Number: 2015CV31079) (the “Court”), pursuant to which Liberty Oilfield Services, LLC (“Liberty”) made various claims against Red Hawk in connection with certain completion services provided by Liberty to Red Hawk in November and December 2014, and accrued in accounts payable as of December 31, 2014. The complaint alleges causes of action for foreclosure of lien, breach of contract, quantum meruit and account stated, and seeks payment of amounts allegedly owed, pre- and post-judgment interest, attorneys’ fees and court costs in connection with Red Hawk’s alleged failure to pay Liberty approximately $2.9 million in fees due for completion services provided by Liberty. On May 12, 2016, the Company and Liberty entered into a settlement agreement, pursuant to which the Company paid to Liberty $750,000 and issued 2,450,000 fully-vested shares of the Company’s restricted common stock, valued at $588,000, based on the market price on the grant date, as full settlement of all amounts due for the services previously rendered, for which the Company owed approximately $2.6 million. As a result of the settlement, the Company recognized a gain on settlement of payables of $1,282,000 during the year ended December 31, 2016. Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us, or contemplated to be brought against us. 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. |
11 . SHAREHOLDERS' EQUITY (DEFI
11 . SHAREHOLDERS' EQUITY (DEFICIT) | 12 Months Ended |
Dec. 31, 2016 | |
Historical Cost | |
SHAREHOLDERS' EQUITY (DEFICIT) | PREFERRED STOCK At December 31, 2016, the Company was authorized to issue 100,000,000 shares of its preferred stock with a par value of $0.001 per share, of which 25,000,000 shares have been designated “Series A” preferred stock. On February 23, 2015, the Company issued 66,625 Series A Preferred shares to GGE as part of the consideration paid for the GGE Assets. The fair value of the Series A Preferred stock was $28,402,000 based on a calculation using a binomial lattice option pricing model. See Note 14 below. The 66,625 shares of Series A Preferred stock issued to GGE were originally contingently redeemable in 4 tranches as follows: (i) 15,000 shares in Tranche One; (ii) 15,000 shares in Tranche Two; (iii) 11,625 shares in Tranche Three; and (iv) 25,000 shares in Tranche Four. In addition, upon the original issuance of the 66,625 shares of Series A Preferred stock issued to GGE, the Series A preferred stock had the following features: ● a liquidation preference senior to all of the Company’s common stock equal to $400 per share; ● a dividend, payable annually, of 10% of the liquidation preference; ● voting rights on all matters, with each share having 1 vote; and ● a conversion feature at GGE’s option which would allow the Series A Preferred stock to be converted into shares of the Company’s common stock on a 1,000:1 basis. However, following the October 7, 2015 approval of the Company shareholders of the issuance of shares of common stock upon the conversion of the Series A Preferred stock, the Series A Preferred features have been modified as follows: ● the Series A Preferred stock ceased accruing dividends and all accrued and unpaid dividends have been automatically forfeited and forgiven; and ● the liquidation preference of the Series A Preferred stock has been reduced to $0.001 per share from $400 per share. GGE was also subject to a lock-up provision that prohibited it from selling the shares of common stock through the public markets for less than $1 per share (on an as-converted to common stock basis) until February 23, 2016, and subject a provision which prohibits GGE from converting shares of Series A Preferred stock if upon such conversion it would beneficially own more than 9.99% of our outstanding common stock or voting stock, subject to waiver by the Company. On November 23, 2015, the Company lost the right to redeem any of the Series A Preferred and the holder also lost the right to force any redemption because, pursuant to the Series A Certificate of Designations, the Company did not repurchase any shares within nine months of the initial Series A issuance. Accordingly, the Series A Preferred is no longer redeemable. As of December 31, 2016 and December 31, 2015, there were 66,625 shares of the Company’s Series A Preferred outstanding, 10,000 shares of which are now subject to cancellation and forfeiture as described further in Note 9 above due to RJC’s failure to meet its RJC Funding obligations under the Amended NPA. COMMON STOCK At December 31, 2016, the Company was authorized to issue 200,000,000 shares of its common stock with a par value of $0.001 per share. During the year ended December 31, 2015, the Company issued shares of common stock or restricted common stock as follows: ● On January 7, 2015, the Company granted 965,000 shares of its restricted common stock with a fair value of $357,000, based on the market price on the date of grant, to certain of its employees, including 370,000 shares to Chairman and then Chief Executive Officer, Frank C. Ingriselli, 325,000 shares to President and then Chief Financial Officer, Michael L. Peterson, and 270,000 shares to Executive Vice President and General Counsel, Clark R. Moore, all pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan and in connection with the Company’s 2014 annual equity incentive compensation review process. 40% of the shares vest on the nine month anniversary of the grant date, 20% vest on the twelve month anniversary of the grant date, 20% vest on the eighteen month anniversary of the grant date and 20% vest on the twenty-four month anniversary of the grant date, all contingent upon the recipient’s continued service with the Company. The vesting of the securities granted to Messrs. Ingriselli, Peterson and Moore is subject to the terms of certain Vesting Agreements. ● On January 27, 2015, a holder of Bridge Notes converted an aggregate of $83,000 (principal and accrued interest amounts) due under the Bridge Notes into an aggregate of 165,431 shares of common stock of the Company. ● On February 6, 2015, the Company granted 193,550 shares of its restricted common stock with a fair value of $120,000, based on the market price on the date of grant, to certain members of its board of directors, pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan, of which $29,000 was expensed as of March 31, 2015. 100% of the shares vested on September 10, 2015, contingent upon the recipient being a Director of, or employee of or consultant to, the Company on such vesting date. ● On February 23, 2015, the Company issued 3,375,000 restricted common shares to GGE valued at $0.81 per share, based on the market price on the date of grant, as part of the consideration paid for the assets acquired from GGE. ● On March 6, 2015, the Company granted 15,000 fully-vested shares of its restricted common stock with a fair value of $10,000, based on the market price on the date of grant, to a consultant pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan. ● On April 16, 2015, the Company issued 19,445 shares of common stock to a former employee in connection with the exercise of 19,445 options on a cashless basis. ● On May 13, 2015, the Company announced the pricing of an underwritten public offering of an aggregate of 5,600,000 shares of common stock at price of $0.50 per share to the public (the “May 2015 Offering”). The underwriter in the offering was granted an option to purchase up to 840,000 shares of common stock to cover overallotments. On May 18, 2015, the Company closed this underwritten offering of an aggregate of 5,600,000 shares of common stock, and on May 19, 2015 the underwriter exercised a portion of its overallotment option and purchased 766,197 shares of common stock. With the exercise of a portion of the overallotment option, the Company sold 6,366,197 total shares of common stock in the May 2015 Offering for net proceeds of approximately $2.78 million. The Company received gross proceeds of $3,183,000 before deducting underwriting discounts and offering expenses as a result of the offering. ● On September 10, 2015, the Company issued 390,000 shares of common stock to a financial and professional relations advisor valued at $0.35 per share, based on the fair value of the stock on the date granted, in connection with the Company’s entry into a consulting services agreement in the amount of $137,000. ● On October 7, 2015, the Company issued 214,286 shares of restricted common stock under the Company’s 2012 Amended and Restated Equity Incentive Plan to each of Mr. David C. Crikelair, Ms. Elizabeth P. Smith, and Mr. David Z. Steinberg, Company’s then independent directors, as annual equity compensation grants made in accordance with the Company’s Board of Director’s Compensation Plan. 100% of the shares issued to Mr. Crikelair and Ms. Smith will become vested and non-forfeitable on September 10, 2016, and 100% of the shares issued to Mr. Steinberg were to become vested and non-forfeitable on July 15, 2016 (which vesting date Mr. Steinberg subsequently delayed to July 15, 2017), for so long as the holder remains a director, employee of, or consultant to the Company, with a stock price on the grant date of $0.28 per share, and a total grant date fair value of $180,000. During the year ended December 31, 2016, the Company issued shares of common stock or restricted common stock as follows: ● On January 7, 2016, the Company issued 1,750,000 shares of its restricted common stock with a fair value of $385,000, based on the market price on the date of issuance, to certain of its employees, including 600,000 shares to its Chairman and then Chief Executive Officer, Frank C. Ingriselli, 600,000 shares to its President and then Chief Financial Officer, Michael L. Peterson, and 550,000 shares to its Executive Vice President and General Counsel, Clark R. Moore, all pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan and in connection with the Company’s 2015 annual equity incentive compensation review process. 50% of the shares vest on the six month anniversary of the grant date, 30% vest on the twelve month anniversary of the grant date and 20% vest on the eighteen month anniversary of the grant date, all contingent upon the recipient’s continued service with the Company. ● On April 5, 2016, the Company issued 700,000 shares of Company common stock to the Company’s Houston office landlord in connection with the termination of the Company’s Houston office lease, valued at $161,000, based on the market price on the date of grant. ● On April 15, 2016, there were 45,000 shares of unvested restricted common stock forfeited in connection with the termination of an employee. ● On April 28, 2016, there were 323,490 total shares of common stock repurchased and retired by the Company from two employees at $0.23 per share. ● On May 12, 2016, the Company and Liberty entered into a settlement agreement, pursuant to which the Company paid to Liberty $750,000 and issued 2,450,000 fully-vested shares of the Company’s restricted common stock, valued at $588,000, based on the market price on the grant date, as full settlement of all amounts due for the services previously rendered, for which the Company owed approximately $2.6 million. As of December 31, 2015 and March 31, 2016, the Company had accrued $2,620,000 in accounts payable. As a result of the settlement, the Company recognized a gain on settlement of payables of $1,282,000 during the year ended December 31, 2016. ● On July 5, 2016, the Company issued 81,290 shares of the Company’s common stock to Mr. Frank C. Ingriselli, the Company’s Chairman, member of the Board of Directors, and then Chief Executive Officer, in connection with the cashless net exercise of stock options by Mr. Ingriselli. ● On December 28, 2016, the Company issued 4,881,820 shares of its restricted common stock with a fair value of $537,000, based on the market price on the date of issuance, to certain of its employees and four Directors, including 1,650,000 shares to its Chief Executive Officer and President, Michael L. Peterson, and 1,050,000 shares to its Executive Vice President and General Counsel, Clark R. Moore, all pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan and in connection with the Company’s 2015 annual equity incentive compensation review process. For the employee shares, 50% of the shares vest on the six month anniversary of the grant date, 30% vest on the twelve month anniversary of the grant date and 20% vest on the eighteen month anniversary of the grant date, all contingent upon the recipient’s continued service with the Company. ● On December 28, 2016, the Company issued 200,000 shares of common stock to a financial advisor valued at $0.11 per share, based on the fair value of the stock on the date granted, for consulting services. Stockbased compensation expense recorded related to restricted stock during the year ended December 31, 2016 was $995,000. The remaining amount of unamortized stockbased compensation expense related to restricted stock at December 31, 2016 was $600,000. |
12. STOCK OPTIONS AND WARRANTS
12. STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
STOCK OPTIONS AND WARRANTS | Blast 2003 Stock Option Plan and 2009 Stock Incentive Plan Under Blast’s 2003 Stock Option Plan and 2009 Stock Incentive Plan, options to acquire 3,424 shares of common stock were granted and remained outstanding and exercisable as of December 31, 2016 and 2015. No new options were issued under these plans in 2015 or 2016. 2012 Incentive Plan On July 27, 2012, the shareholders of the Company approved the 2012 Equity Incentive Plan (the “2012 Incentive Plan”), which was previously approved by the Board of Directors on June 27, 2012, and authorizes the issuance of various forms of stock-based awards, including incentive or non-qualified options, restricted stock awards, performance shares and other securities as described in greater detail in the 2012 Incentive Plan, to the Company’s employees, officers, directors and consultants. The 2012 Incentive Plan was amended on June 27, 2014, October 7, 2015 and December 28, 2016 to increase by 5,000,000, 3,000,000 and 5,000,000, respectively, the number of shares of common stock reserved for issuance under the Plan. A total of 15,000,000 shares of common stock are eligible to be issued under the 2012 Incentive Plan as of December 31, 2016, of which 11,020,990 shares have been issued as restricted stock, 3,967,000 shares are subject to issuance upon exercise of issued and outstanding options, and 12,010 remain available for future issuance as of December 31, 2016. PEDCO 2012 Equity Incentive Plan As a result of the July 27, 2012 merger by and between the Company, Blast Acquisition Corp., a wholly-owned Nevada subsidiary of the Company (“MergerCo”), and Pacific Energy Development Corp., a privately-held Nevada corporation (“PEDCO”) pursuant to which MergerCo was merged with and into PEDCO, with PEDCO continuing as the surviving entity and becoming a wholly-owned subsidiary of the Company, in a transaction structured to qualify as a tax-free reorganization (the “Merger”), the Company assumed the PEDCO 2012 Equity Incentive Plan (the “PEDCO Incentive Plan”), which was adopted by PEDCO on February 9, 2012. The PEDCO Incentive Plan authorized PEDCO to issue an aggregate of 1,000,000 shares of common stock in the form of restricted shares, incentive stock options, non-qualified stock options, share appreciation rights, performance shares, and performance units under the PEDCO Incentive Plan. As of December 31, 2016, options to purchase an aggregate of 310,136 shares of the Company’s common stock and 665,829 shares of the Company’s restricted common stock have been granted under this plan (all of which were granted by PEDCO prior to the closing of the merger with the Company, with such grants being assumed by the Company and remaining subject to the PEDCO Incentive Plan following the consummation of the merger). The Company does not plan to grant any additional awards under the PEDCO Incentive Plan. Options On January 7, 2015, the Company granted options to purchase an aggregate of 1,265,000 shares of common stock to certain of its consultants and employees at an exercise and market price of $0.37 per share, including an option to purchase 370,000 shares to Chairman and then Chief Executive Officer, Frank C. Ingriselli, an option to purchase 325,000 shares to President and then Chief Financial Officer, Michael L. Peterson, and an option to purchase 270,000 shares to Executive Vice President and General Counsel, Clark R. Moore, all pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan and in connection with the Company’s 2014 annual equity incentive compensation review process. The options have terms of five years and fully vest in January 2017. 50% vest six months from the date of grant, 20% vest one year from the date of grant, 20% vest eighteen months from the date of grant and 10% vest 2 years from the date of grant, all contingent upon the recipient’s continued service with the Company, subject in all cases to the terms of the Vesting Agreements. The aggregate fair value of the options on the date of grant, using the Black-Scholes model, was $213,000. Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 1.47%, (2) expected term of 3.8 years, (3) expected volatility of 60%, and (4) zero expected dividends. On January 7, 2016, the Company granted options to purchase an aggregate of 1,660,000 shares of common stock to certain of its consultants and employees at an exercise price of $0.22 per share, including an option to purchase 280,000 shares to its Chairman and then Chief Executive Officer (prior to his retirement) Frank C. Ingriselli, an option to purchase 300,000 shares to its President and then Chief Financial Officer Michael L. Peterson, and an option to purchase 280,000 shares to its Executive Vice President and General Counsel Clark R. Moore, all pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan and in connection with the Company’s 2014 annual equity incentive compensation review process. The options have terms of five years and fully vest in January 2018. 50% vest six months from the date of grant, 30% vest one year from the date of grant and 20% vest eighteen months from the date of grant, all 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 $183,000. Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 1.61%, (2) expected term of 3.5 years, (3) expected volatility of 69%, and (4) zero expected dividends. On December 28, 2016, the Company granted options to purchase an aggregate of 900,000 shares of common stock to certain of its employees at an exercise price of $0.11 per share, including an option to purchase 600,000 shares to its Chief Financial Officer Gregory L. Overholtzer, all pursuant to the Company’s 2012 Amended and Restated Equity Incentive Plan and in connection with the Company’s 2016 annual equity incentive compensation review process. The options have terms of five years and fully vest in June 2018. 50% vest six months from the date of grant, 30% vest one year from the date of grant and 20% vest eighteen months from the date of grant, all 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 $60,000. Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 2.02%, (2) expected term of 3.5 years, (3) expected volatility of 89%, and (4) zero expected dividends. During the year ended December 31, 2016, the Company recognized option stock-based compensation expense related to options of $298,000. The remaining amount of unamortized stock options expense at December 31, 2016 was $73,000. The Black-Scholes option-pricing model was used to determine fair value. Variables used in the Black-Scholes option-pricing model for the options issued in 2016 included: (1) a discount rate of 1.61% to 2.02%, (2) expected term of 3.5 years, (3) expected volatility of 69% to 89%, and (4) zero expected dividends. The intrinsic value of outstanding and exercisable options at December 31, 2016 was $-0- and $-0-, respectively. Option activity during the year ended December 31, 2016 was: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (years) Outstanding at January 1, 2016 3,058,890 $ 0.80 4.8 Granted 2,560,000 0.18 Exercised (81,290 ) 0.22 Forfeited and cancelled (350,377 ) 0.89 Outstanding at December 31, 2016 5,187,223 $ 0.50 4.3 Exercisable at December 31, 2016 3,672,473 $ 0.61 4.2 Option activity during the year ended December 31, 2015 was: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (years) Outstanding at January 1, 2015 1,827,224 $ $1.08 6.5 Granted 1,265,000 0.37 Exercised (19,445 ) 0.30 Forfeited and cancelled (13,889 ) 0.30 $ - - Outstanding at December 31, 2015 3,058,890 0.80 4.8 Exercisable at December 31, 2015 2,177,540 0.76 5.1 Summary of options outstanding and exercisable as of December 31, 2016 was as follows: Exercise Price Weighted Average Remaining Life (Years) Options Outstanding Options Exercisable $ 0.11 0.9 900,000 - 0.22 1.1 1,380,000 890,000 0.24 0.1 100,000 100,000 0.30 0.1 26,001 26,001 0.37 0.8 1,225,000 1,150,500 0.51 1.1 1,090,800 1,090,800 1.41 0.1 100,000 100,000 1.94 0.1 217,500 167,250 2.50 - 80,000 80,000 3.75 - 64,500 64,500 30.24 - 2,976 2,976 67.20 - 446 446 $ 0.11 to $67.20 4.3 5,187,223 3,672,473 Summary of options outstanding and exercisable as of December 31, 2015 was as follows: Exercise Price Weighted Average Remaining Life (Years) Options Outstanding Options Exercisable $ 0.24 0.2 121,667 121,667 0.30 0.1 26,001 26,001 0.37 1.6 1,265,000 647,500 0.51 2.3 1,090,800 1,090,800 1.41 0.1 100,000 40,000 1.94 0.3 267,500 131,000 2.50 0.1 80,000 32,000 3.75 0.1 104,500 85,150 30.24 - 2,976 2,976 67.20 - 446 446 $ 0.24 to $67.20 4.8 3,058,890 2,177,540 Warrants Issuance of Warrants On April 24, 2015, the Company granted warrants exercisable for an aggregate of 349,111 shares of common stock to certain of the Senior Notes lenders related to the deferral of approximately $524,000 of principal and interest under the Senior Notes and subordinated note held by RJC. Each warrant has a 3-year term and is exercisable on a cashless basis at an exercise price of $1.50 per share. The fair value of these warrants of $40,000 was recorded as additional deferred financing costs. On July 1, 2015, the Company granted a warrant exercisable for an aggregate of 100,000 shares of common stock valued at $18,000, recorded as stock-based compensation, to an investor relations firm as sole consideration for its future services. The warrant has a 3-year term and is exercisable on a cashless basis at an exercise price of $0.44 per share with respect to 50% of the shares issuable thereunder following the date of grant and with respect to the balance of 50% of the shares issuable thereunder on or after October 1, 2015. On August 28, 2015, the Company granted warrants exercisable for an aggregate of 1,201,004 shares of common stock to certain of the Senior Notes lenders related to the current and future deferral of principal and interest under the Senior Notes and subordinated note held by RJC. Each warrant has a 3-year term and will be exercisable on a cashless basis at an exercise price of $0.75 per share. The fair value of these 1,201,004 warrants of $120,000 was recorded as additional deferred financing costs. On May 12, 2016, as consideration for the entry into the Amended NPA, the Company granted to BHLN and BBLN warrants exercisable for an aggregate of 5,962,800 shares of common stock of the Company (the “Investor Warrants”). The warrants have a 3-year term, are transferrable, and are exercisable on a cashless basis at any time at $0.25 per share, subject to receipt of additional listing approval of such underlying shares of common stock from the NYSE MKT (which additional listing approval was received from the NYSE MKT on June 1, 2016). The Investor Warrants include a beneficial ownership limitation that prohibits the exercise of the Investor Warrants to the extent such exercise would result in the holder, together with its affiliates, holding more than 9.99% of the Company’s outstanding voting stock (the “Blocker Provision”). The estimated fair value of the Investor Warrants issued is approximately $707,000 based on the Black-Scholes option pricing model. The relative fair value allocated to the Tranche A Notes and recorded as debt discount was $636,000. Other than the Investor Warrants, no additional warrants exercisable for common stock of the Company are due, owing, or shall be granted to the Lenders pursuant to the Senior Notes. In addition, warrants exercisable for an aggregate of 349,111 shares of the Company’s common stock at an exercise price of $1.50 per share and warrants exercisable for an aggregate of 1,201,004 shares of the Company’s common stock at an exercise price of $0.75 per share previously granted by the Company to certain of the Lenders on September 10, 2015 in connection with prior interest payment deferrals have been amended and restated to provide that all of such warrants are exercisable on a cashless basis and include a Blocker Provision. During the years ended December 31, 2016 and 2015, the Company recognized warrant stock-based compensation expense of $-0- and $702,000, respectively. The intrinsic value of outstanding and exercisable warrants at December 31, 2016 and December 31, 2015 was $-0- and $-0-, respectively. Warrant activity during the year ended December 31, 2016 was: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Outstanding at January 1, 2016 7,803,282 $ 1.78 3.0 Granted 5,962,800 0.25 Forfeited and cancelled (1,200,003 ) 4.50 Outstanding at December 31, 2016 12,566,079 $ 0.80 2.4 Exercisable at December 31, 2016 12,566,079 $ 0.80 2.4 Warrant activity during the year ended December 31, 2015 was: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Outstanding at January 1, 2015 6,594,129 $ 2.13 3.9 Granted 1,650,115 0.89 Forfeited and cancelled (440,962 ) 3.67 Outstanding at December 31, 2015 7,803,282 $ 1.78 3.0 Exercisable at December 31, 2015 7,803,282 $ 1.78 3.0 Summary of warrants outstanding and exercisable as of December 31, 2016 was as follows: Exercise Price Weighted Average Remaining Life (years) Warrants Outstanding Warrants Exercisable $ 0.25 1.1 5,962,800 5,962,800 0.44 - 100,000 100,000 0.75 0.2 1,201,004 1,201,004 1.00 0.8 3,700,758 3,700,758 1.50 0.1 349,111 349,111 2.34 - 166,684 166,684 2.50 0.2 1,000,000 1,000,000 5.25 - 85,722 85,722 $ 0.25 to $5.25 2.4 12,566,079 12,566,079 Summary of warrants outstanding and exercisable as of December 31, 2015 was as follows: Exercise Price Weighted Average Remaining Life (years) Warrants Outstanding Warrants Exercisable $ 0.44 - 100,000 100,000 0.75 0.4 1,201,004 1,201,004 1.00 1.9 3,700,758 3,700,758 1.50 0.1 349,111 349,111 2.34 - 166,684 166,684 2.50 0.4 1,000,000 1,000,000 3.75 0.1 400,001 400,001 4.50 - 400,001 400,001 5.25 0.1 485,723 485,723 $ 0.44 to $5.25 3.0 7,803,282 7,803,282 |
13. RELATED PARTY TRANSACTIONS
13. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Note Amendments and Warrant Issuances to RJC See Notes above for a discussion of certain amendments to the Senior Note and RJC Junior Note held by RJC. See Notes above for a discussion of certain warrants issued to RJC by the Company in connection with the amendment of the Senior Note and RJC Junior Note held by RJC. GGE Acquisition As a result of the 66,625 restricted shares of the Company’s Series A Convertible Preferred Stock issued to GGE which can be converted into shares of the Company’s common stock on a 1,000:1 basis as described below in greater detail, and the appointment by GGE of a representative to the Company’s Board of Directors, GGE became a related party to the Company in 2015. The following table reflects the related party amounts for GGE included in the December 31, 2016 balance sheet (in thousands): As of December 31, 2016 Long-term notes payable-Secured Promissory Notes, net of discount of $2,338,000 $ (13,319 ) Long-term notes payable-Subordinated (10,173 ) Net assets $ (23,492 ) |
14. FAIR VALUE
14. FAIR VALUE | 12 Months Ended |
Dec. 31, 2016 | |
Historical Cost | |
FAIR VALUE | As defined in our accounting policy on the fair value of financial instruments, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following table sets forth by level within the fair value hierarchy our financial instruments that were accounted for at fair value as of December 31, 2016 (in thousands): Fair Value Measurements At December 31, 2016 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total Carrying (Level 1) (Level 2) (Level 3) Value Series A Convertible Preferred Stock $ - $ - $ 28,402 $ 28,402 The Company believes there is no active market or significant other market data for the Series A Preferred stock as it is held by a limited number of closely held entities, therefore the Company has determined it should use Level 3 inputs. The Series A Convertible Preferred Stock was valued using a binomial lattice option pricing model for which the significant assumptions were expected term and expected volatility. The binomial lattice model used a probabilistic approach in which the Company assigned percentages to each scenario based on the chance of repayment. The percentages used were as follows: the non-repayment scenario was assigned a 25% probability and the repayment scenario was assigned a 75% probability. |
15. INCOME TAXES
15. INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Due to the Company’s net losses, there were no provisions for income taxes for the years ended December 31, 2016 and 2015. The difference between the income tax expense of zero shown in the statement of operations and pre-tax book net loss times the federal statutory rate of 34% is principally due to the change in the valuation allowance. Deferred income tax assets for years ended December 31, 2016 and 2015 are as follows (in thousands): Deferred Tax Assets (Liabilities) Year ended December 31, 2016 Year ended December 31, 2015 Difference in depreciation, depletion, and capitalization methods – oil and natural gas properties $ 479 $ 1,863 Net operating losses 5,507 4,131 Impairment – oil and natural gas properties - (1,122 ) Other 438 753 Total deferred tax asset 6,424 5,625 Less valuation allowance (6,424 ) (5,625 ) Total deferred tax assets $ - $ - In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of deferred assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, management has applied a full valuation allowance against its net deferred tax assets at December 31, 2016 and 2015. The net change in the total valuation allowance from December 31, 2015 to December 31, 2016, was an increase of $799,000. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2016 and 2015, the Company did not have any significant uncertain tax positions or unrecognized tax benefits. The Company did not have associated accrued interest or penalties, nor was any interest expense or penalties recognized for the years ended December 31, 2016 and 2015. As of December 31, 2016, the Company has federal net operating loss carryforwards of approximately $79,212,000 and $49,922,000 (subject to limitations) for federal and state tax purposes, respectively, which if not utilized, will expire beginning in 2033 and 2023, respectively, for both federal and state purposes. Utilization of NOL and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by the Internal Revenue Code (the “Code”), as amended, as well as similar state provisions. In general, an “ownership change” as defined by the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain shareholders or public groups. Due to the impact of temporary and permanent differences between the book and tax calculations of net loss, the Company experiences an effective tax rate above the federal statutory rate of 34%. The Company currently has tax returns open for examination by the Internal Revenue Service for all years since 2009. |
3. SUMMARY OF SIGNIFICANT ACC22
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | The consolidated financial statements herein have been prepared in accordance with GAAP and include the accounts of the Company and those of its wholly and partially-owned subsidiaries as follows: (i) Blast AFJ, Inc., a Delaware corporation; (ii) Pacific Energy Development Corp., a Nevada corporation; (iii) Pacific Energy Technology Services, LLC, a Nevada limited liability company (owned 70% by us) (which was dissolved in April 2016 with an effective date of December 31, 2015); (iv) Pacific Energy & Rare Earth Limited, a Hong Kong company; (v) Blackhawk Energy Limited, a British Virgin Islands company; (vi) White Hawk Petroleum, LLC, a Nevada limited liability company (dissolved on November 30, 2016); (vii) Red Hawk Petroleum, LLC, a Nevada limited liability company; (viii) Pacific Energy Development MSL, LLC (owned 50% by us) (which was dissolved in September 2016) and is included in our consolidated results for the periods prior to its dissolution (“PEDCO MSL”); (ix) PEDEVCO Acquisition Subsidiary, Inc., a Texas corporation which was formed on May 21, 2015 in connection with the planned reorganization transaction with Dome Energy, Inc. (“Dome Energy”), which was subsequently terminated (which was dissolved in April 2016); and (x) White Hawk Energy, LLC, a Delaware limited liability company, formed on January 4, 2016 in connection with the contemplated reorganization transaction with GOM Holdings, LLC (“GOM”). All significant intercompany accounts and transactions have been eliminated. |
Equity Method Accounting for Joint Ventures | A portion of the Company’s oil and gas interests were held in Condor Energy Technology, LLC (“Condor”), a joint venture collectively owned with an affiliate of MIE Holdings Corporation (“MIE Holdings”, Hong Kong Stock Exchange code: 1555.HK). Condor was a Nevada limited liability company owned 20% by the Company and 80% by an affiliate of MIE Holdings. The Company accounted for its 20% ownership in Condor using the equity method. In February 2015, the Company divested its interest in Condor. |
Non-Controlling Interests | The Company is required to report its non-controlling interests as a separate component of shareholders’ equity. The Company is also required to present the consolidated net income and the portion of the consolidated net income allocable to the non-controlling interests and to the shareholders of the Company separately in its consolidated statements of operations. Losses applicable to the non-controlling interests are allocated to the non-controlling interests even when those losses are in excess of the non-controlling interests’ investment basis. |
Use of Estimates in Financial Statement Preparation | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates. Significant estimates generally include those with respect to the amount of recoverable oil and gas reserves, the fair value of financial instruments, oil and gas depletion, asset retirement obligations, and stock-based compensation. |
Cash and Cash Equivalents | Cash and Cash Equivalents. |
Concentrations of Credit Risk | Sales to two customers comprised 47% and 42% of the Company’s total oil and gas revenues for the year ended December 31, 2016. Sales to two customers comprised 64% and 21% of the Company’s total oil and gas revenues for the year ended December 31, 2015. The Company believes that, in the event that its primary customers are unable or unwilling to continue to purchase the Company’s production, there are a substantial number of alternative buyers for its production at comparable prices. |
Accounts Receivable | |
Bad Debt Expense | The Company’s ability to collect outstanding receivables is critical to its operating performance and cash flows. Accounts receivable are stated at an amount management expects to collect from outstanding balances. The Company extends credit in the normal course of business. The Company regularly reviews outstanding receivables and when the Company determines that a party may not be able to make required payments a charge to bad debt expense in the period of determination is made. Though the Company’s bad debts have not historically been significant, the Company could experience increased bad debt expense should a financial downturn occur. |
Equipment | Equipment is stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the life or improve existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 3 to 10 years. |
Oil and Gas Properties, Successful Efforts Method | The successful efforts method of accounting is used for oil and gas exploration and production activities. Under this method, all costs for development wells, support equipment and facilities, and proved mineral interests in oil and gas properties are capitalized. Geological and geophysical costs are expensed when incurred. Costs of exploratory wells are capitalized as exploration and evaluation assets pending determination of whether the wells find proved oil and gas reserves. Proved oil and gas reserves are the estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, (i.e., prices and costs as of the date the estimate is made). Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions. Exploratory wells in areas not requiring major capital expenditures are evaluated for economic viability within one year of completion of drilling. The related well costs are expensed as dry holes if it is determined that such economic viability is not attained. Otherwise, the related well costs are reclassified to oil and gas properties and subject to impairment review. For exploratory wells that are found to have economically viable reserves in areas where major capital expenditure will be required before production can commence, the related well costs remain capitalized only if additional drilling is under way or firmly planned. Otherwise the related well costs are expensed as dry holes. Exploration and evaluation expenditures incurred subsequent to the acquisition of an exploration asset in a business combination are accounted for in accordance with the policy outlined above. Depreciation, depletion and amortization of capitalized oil and gas properties is calculated on a field by field basis using the unit of production method. Lease acquisition costs are amortized over the total estimated proved developed and undeveloped reserves and all other capitalized costs are amortized over proved developed reserves. |
Impairment of Long-Lived Assets | The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the future net undiscounted cash flows expected to result from the asset, including eventual disposition. If the future net undiscounted cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and estimated fair value. The Company recorded impairment of leases for the years ended December 31, 2016 and 2015 of $-0- and $1,337,000, respectively, for lease acreage that expired during the year due to non-renewals or non-utilization of leases. |
Asset Retirement Obligations | If a reasonable estimate of the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon wells can be made, the Company will record a liability (an asset retirement obligation or “ARO”) on its consolidated balance sheet and capitalize the present value of the asset retirement cost in oil and gas properties in the period in which the retirement obligation is incurred. In general, the amount of an ARO and the costs capitalized will be equal to the estimated future cost to satisfy the abandonment obligation assuming the normal operation of the asset, using current prices that are escalated by an assumed inflation factor up to the estimated settlement date, which is then discounted back to the date that the abandonment obligation was incurred using an assumed cost of funds for the Company. After recording these amounts, the ARO will be accreted to its future estimated value using the same assumed cost of funds and the capitalized costs are depreciated on a unit-of-production basis over the estimated proved developed reserves. Both the accretion and the depreciation will be included in depreciation, depletion and amortization expense on our consolidated statements of operations. The following table describes changes in our asset retirement obligations during the years ended December 31, 2016 and 2015 (in thousands): 2016 2015 Asset retirement obligations at January 1, $ 189 $ 89 Accretion expense 31 40 Obligations incurred for acquisition 19 87 Obligations settled - assets sold - (3 ) Changes in estimates 7 (24 ) Asset retirement obligations at December 31, $ 246 $ 189 |
Revenue Recognition | All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derived from the sale of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the “sales method” of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers, regardless of whether the sales are proportionate to its ownership in the property. A receivable or liability is recognized only to the extent that the Company has an imbalance on a specific property greater than its share of the expected remaining proved reserves. If collection is uncertain, revenue is recognized when cash is collected. |
Income Taxes | The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized. |
Stock-Based Compensation | The Company utilizes the Black-Scholes option pricing model to estimate the fair value of employee stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company estimates volatility by considering the historical stock volatility. The Company has opted to use the simplified method for estimating expected term, which is generally equal to the midpoint between the vesting period and the contractual term. |
Loss per Common Share | Basic loss per common share equals net loss divided by weighted average common shares outstanding during the period. Diluted income per share includes the impact on dilution from all contingently issuable shares, including options, warrants and convertible securities. The common stock equivalents from contingent shares are determined by the treasury stock method. The Company incurred net losses for the years ended December 31, 2016 and 2015, and therefore, basic and diluted loss per share for those periods are the same as all potential common equivalent shares would be anti-dilutive. The Company excluded 3,672,473 and 2,177,540 potentially issuable shares of common stock related to options and 12,566,079 and 7,803,282 potentially issuable shares of common stock related to warrants and 1,391,686 and 2,027,302 potentially issuable shares of common stock related to the conversion of Bridge Notes, due to their anti-dilutive effect for the years ended December 31, 2016 and 2015, respectively. |
Fair Value of Financial Instruments | The Company follows FASB ASC 820, Fair Value Measurement As defined in ASC 820, fair value, clarified as an exit price, represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering these assumptions, ASC 820 defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value. Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
Recently Issued Accounting Pronouncements | In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 amends previous guidance to require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The affected amounts shown on the Company’s balance sheet were a result of reclassifications within the balance sheet upon adoption of this ASU to conform to this standard. The Company adopted this ASU during the first quarter of 2016 and the adoption of this ASU did not have a material impact on its financial statements (balance sheet amounts as of December 31, 2015 were also reclassified for comparability purposes). In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern |
Subsequent Events | The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration. |
3. SUMMARY OF SIGNIFICANT ACC23
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Tables | |
Asset retirement obligation | 2016 2015 Asset retirement obligations at January 1, $ 189 $ 89 Accretion expense 31 40 Obligations incurred for acquisition 19 87 Obligations settled - assets sold - (3 ) Changes in estimates 7 (24 ) Asset retirement obligations at December 31, $ 246 $ 189 |
5. OIL AND GAS PROPERTIES (Tabl
5. OIL AND GAS PROPERTIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Oil and gas interests | January 1, 2016 Additions Disposals Transfers December 31, 2016 Oil and gas properties subject to amortization $ 64,655 $ 3,651 $ - $ - $ 68,306 Oil and gas properties not subject to amortization - - - - - Asset retirement costs 137 26 - - 163 Accumulated depreciation, depletion and impairment (6,025 ) (5,049 ) - - (11,074 ) Total oil and gas properties, net $ 58,767 $ (1,372 ) $ - $ - $ 57,395 January 1, 2015 Additions Disposals Transfers December 31, 2015 Oil and gas properties subject to amortization $ 24,057 $ 47,561 $ (7,252 ) $ 289 $ 64,655 Oil and gas properties not subject to amortization 8,159 - (7,870 ) (289 ) - Asset retirement costs 76 63 (2 ) - 137 Accumulated depreciation, depletion and impairment (10,237 ) (6,441 ) 10,653 - (6,025 ) Total oil and gas properties, net $ 22,055 $ 41,183 $ (4,471 ) $ - $ 58,767 |
Summary of Purchase Price | Assets Acquired Accounts receivable – oil and gas $ 793 Oil and gas properties, subject to amortization 3,587 Total assets $ 4,380 Liabilities Assumed Accounts payable $ (4,361 ) Asset retirement obligation (19 ) Total liabilities (4,380 ) Net purchase price $ - |
Golden Globe Energy [Member] | |
Summary of Purchase Price | Purchase price on February 23, 2015 Fair value of common stock issued $ 2,734 Fair value of Series A Preferred stock issued 28,402 Assumption of subordinated notes payable 8,353 Kazakhstan option issued 5,000 Total purchase price $ 44,489 Fair value of net assets at February 23, 2015 Accounts receivable – oil and gas $ 1,578 Oil and gas properties, subject to amortization 43,562 Prepaid expenses and other assets 100 Total assets 45,240 Accounts payable (664 ) Asset retirement obligations (87 ) Total liabilities (751 ) Net assets acquired $ 44,489 |
Summary of pro forma sale | For the Year Ended December 31, 2015 PEDEVCO Net Acquisitions/Dispositions Pro Forma Combined Revenue $ 5,326 $ 780 $ 6,106 Lease operating costs $ (1,830 ) $ (275 ) $ (2,105 ) Net income (loss) $ (20,484 ) $ 505 $ (19,979 ) Net income (loss) per common share $ (0.49 ) $ 0.01 $ (0.48 ) |
8. EQUITY METHOD INVESTMENTS (T
8. EQUITY METHOD INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Interest expense related to the PIK and Additional PIK | |
Activity related to settlement | Items Received by PEDEVCO Extinguishment of accrued liabilities $ 3,280 Extinguishment of original debt with MIE net of cash payments of $100,000 6,070 Proceeds from cash payments made by MIE to RJ Credit and the Agent 500 Total $ 9,850 Items Received by MIEJ Issuance of new MIEJ note $ 4,925 Extinguishment of note receivable with Condor 1,272 Historical cost of oil and gas property sold to Condor 620 Total 6,817 Net gain on settlement $ 3,033 |
Shedule of allocation of gain on settlement | Allocated Value Historical Cost Gain on Settlement Oil and gas properties $ 895 $ 620 $ 275 Investment in Condor 1,838 1,272 566 Note payable – MIEJ 7,117 4,925 2,192 Total $ 9,850 $ 6,817 $ 3,033 |
Condors financial information | For the Period from January 1-February 23, 2015 Revenue $ 108 Operating expenses (368 ) Operating income (loss) (260 ) Interest expense (195 ) Net loss $ (455 ) |
12. STOCK OPTIONS AND WARRANTS
12. STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Warrant [Member] | |
Schedule of Stock Option and Warrant Activity | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Outstanding at January 1, 2016 7,803,282 $ 1.78 3.0 Granted 5,962,800 0.25 Forfeited and cancelled (1,200,003 ) 4.50 Outstanding at December 31, 2016 12,566,079 $ 0.80 2.4 Exercisable at December 31, 2016 12,566,079 $ 0.80 2.4 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Outstanding at January 1, 2015 6,594,129 $ 2.13 3.9 Granted 1,650,115 0.89 Forfeited and cancelled (440,962 ) 3.67 Outstanding at December 31, 2015 7,803,282 $ 1.78 3.0 Exercisable at December 31, 2015 7,803,282 $ 1.78 3.0 |
Schedule of Stock Option and Warrant Exercisable | Exercise Price Weighted Average Remaining Life (years) Warrants Outstanding Warrants Exercisable $ 0.25 1.1 5,962,800 5,962,800 0.44 - 100,000 100,000 0.75 0.2 1,201,004 1,201,004 1.00 0.8 3,700,758 3,700,758 1.50 0.1 349,111 349,111 2.34 - 166,684 166,684 2.50 0.2 1,000,000 1,000,000 5.25 - 85,722 85,722 $ 0.25 to $5.25 2.4 12,566,079 12,566,079 Exercise Price Weighted Average Remaining Life (years) Warrants Outstanding Warrants Exercisable $ 0.44 - 100,000 100,000 0.75 0.4 1,201,004 1,201,004 1.00 1.9 3,700,758 3,700,758 1.50 0.1 349,111 349,111 2.34 - 166,684 166,684 2.50 0.4 1,000,000 1,000,000 3.75 0.1 400,001 400,001 4.50 - 400,001 400,001 5.25 0.1 485,723 485,723 $ 0.44 to $5.25 3.0 7,803,282 7,803,282 |
Stock Option [Member] | |
Schedule of Stock Option and Warrant Activity | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (years) Outstanding at January 1, 2016 3,058,890 $ 0.80 4.8 Granted 2,560,000 0.18 Exercised (81,290 ) 0.22 Forfeited and cancelled (350,377 ) 0.89 Outstanding at December 31, 2016 5,187,223 $ 0.50 4.3 Exercisable at December 31, 2016 3,672,473 $ 0.61 4.2 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (years) Outstanding at January 1, 2015 1,827,224 $ $1.08 6.5 Granted 1,265,000 0.37 Exercised (19,445 ) 0.30 Forfeited and cancelled (13,889 ) 0.30 $ - - Outstanding at December 31, 2015 3,058,890 0.80 4.8 $ - Exercisable at December 31, 2015 2,177,540 0.76 5.1 |
Schedule of Stock Option and Warrant Exercisable | Summary of options outstanding and exercisable as of December 31, 2016 was as follows: Exercise Price Weighted Average Remaining Life (Years) Options Outstanding Options Exercisable $ 0.11 0.9 900,000 - 0.22 1.1 1,380,000 890,000 0.24 0.1 100,000 100,000 0.30 0.1 26,001 26,001 0.37 0.8 1,225,000 1,150,500 0.51 1.1 1,090,800 1,090,800 1.41 0.1 100,000 100,000 1.94 0.1 217,500 167,250 2.50 - 80,000 80,000 3.75 - 64,500 64,500 30.24 - 2,976 2,976 67.20 - 446 446 $ 0.11 to $67.20 4.3 5,187,223 3,672,473 Summary of options outstanding and exercisable as of December 31, 2015 was as follows: Exercise Price Weighted Average Remaining Life (Years) Options Outstanding Options Exercisable $ 0.24 0.2 121,667 121,667 0.30 0.1 26,001 26,001 0.37 1.6 1,265,000 647,500 0.51 2.3 1,090,800 1,090,800 1.41 0.1 100,000 40,000 1.94 0.3 267,500 131,000 2.50 0.1 80,000 32,000 3.75 0.1 104,500 85,150 30.24 - 2,976 2,976 67.20 - 446 446 $ 0.24 to $67.20 4.8 3,058,890 2,177,540 |
13. RELATED PARTY TRANSACTIONS
13. RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions Tables | |
Schedule Of Related Party Transactions Table | As of December 31, 2016 Long-term notes payable-Secured Promissory Notes, net of discount of $2,338,000 $ (13,319 ) Long-term notes payable-Subordinated (10,173 ) Net assets $ (23,492 ) |
14. FAIR VALUE (Tables)
14. FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Tables | |
Fair Value Option Qualitative Measurements Table | Fair Value Measurements At December 31, 2016 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Total Carrying (Level 1) (Level 2) (Level 3) Value Series A Convertible Preferred Stock $ - $ - $ 28,402 $ 28,402 |
15. INCOME TAXES (Tables)
15. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Deferred income taxes assets | Deferred Tax Assets (Liabilities) Year ended December 31, 2016 Year ended December 31, 2015 Difference in depreciation, depletion, and capitalization methods – oil and natural gas properties $ 479 $ 1,863 Net operating losses 5,507 4,131 Impairment – oil and natural gas properties - (1,122 ) Other 438 753 Total deferred tax asset 6,424 5,625 Less valuation allowance (6,424 ) (5,625 ) Total deferred tax assets $ - $ - |
3. SUMMARY OF SIGNIFICANT ACC30
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Tables | ||
Asset retirement obligation at January 1, | $ 189 | $ 89 |
Accretion expense | 31 | 40 |
Obligations incurred for acquisition | 19 | 87 |
Obligations settled - assets sold | 0 | (3) |
Changes in estimates | 7 | (24) |
Asset retirement obligation at December 31, | $ 246 | $ 189 |
3. SUMMARY OF SIGNIFICANT ACC31
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash uninsured amount | $ 404 | |
Potentially issuable shares of common stock related to options | 3,672,473 | 2,177,540 |
Potentially issuable shares of common stock related to warrants | 12,566,079 | 7,803,282 |
Potentially issuable shares of common stock related to the conversion of Bridge Notes | 1,391,686 | 2,027,302 |
Impairment of leases | $ 0 | $ 1,337 |
Customers one [Member] | ||
Oil and gas revenues, (in percentage) | 47.00% | 64.00% |
Customers two [Member] | ||
Oil and gas revenues, (in percentage) | 42.00% | 21.00% |
5. OIL AND GAS PROPERTIES (Deta
5. OIL AND GAS PROPERTIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Oil and gas properties subject to amortization | $ 68,306 | $ 64,655 | $ 24,057 |
Oil and gas properties not subject to amortization | 0 | 0 | 8,159 |
Asset retirement costs | 163 | 137 | 76 |
Accumulated depreciation, depletion and impairment | (11,074) | (6,025) | (10,237) |
Total oil and gas properties, net | 57,395 | 58,767 | $ 22,055 |
Additions [Member] | |||
Oil and gas properties subject to amortization | 3,651 | 47,561 | |
Oil and gas properties not subject to amortization | 0 | 0 | |
Asset retirement costs | 26 | 63 | |
Accumulated depreciation, depletion and impairment | (5,049) | (6,441) | |
Total oil and gas properties, net | (1,372) | 41,183 | |
Disposals [Member] | |||
Oil and gas properties subject to amortization | 0 | (7,252) | |
Oil and gas properties not subject to amortization | 0 | (7,870) | |
Asset retirement costs | 0 | (2) | |
Accumulated depreciation, depletion and impairment | 0 | 10,653 | |
Total oil and gas properties, net | 0 | (4,471) | |
Transfers [Member] | |||
Oil and gas properties subject to amortization | 0 | 289 | |
Oil and gas properties not subject to amortization | 0 | (289) | |
Asset retirement costs | 0 | 0 | |
Accumulated depreciation, depletion and impairment | 0 | 0 | |
Total oil and gas properties, net | $ 0 | $ 0 |
5. OIL AND GAS PROPERTIES (De33
5. OIL AND GAS PROPERTIES (Details 1) - USD ($) $ in Thousands | May 01, 2016 | Feb. 23, 2015 |
Fair value at May 2016: | ||
Accounts receivable - oil and gas | $ 793 | $ 1,578 |
Oil and gas properties, subject to amortization | 3,587 | 43,562 |
Total assets | 4,380 | 45,240 |
Accounts payable | (4,361) | 664 |
Asset retirement obligations | (19) | (87) |
Total liabilities | (4,380) | (751) |
Final Purchase price | $ 3,587 | $ 44,489 |
5. OIL AND GAS PROPERTIES (De34
5. OIL AND GAS PROPERTIES (Details 2) - USD ($) $ in Thousands | May 01, 2016 | Feb. 23, 2015 |
Purchase price on February 23, 2015 | ||
Fair value of common stock issued | $ 2,734 | |
Fair value of Series A Preferred stock issued | 28,402 | |
Assumption of subordinated notes payable | 8,353 | |
Kazakhstan option issued | 5,000 | |
Total purchase price | 44,489 | |
Fair value of net assets at February 23, 2015 | ||
Accounts receivable - oil and gas | $ 793 | 1,578 |
Oil and gas properties, subject to amortization | 3,587 | 43,562 |
Prepaid expenses and other assets | 100 | |
Total assets | 4,380 | 45,240 |
Accounts payable | 4,361 | (664) |
Asset retirement obligations | (19) | (87) |
Total liabilities | (4,380) | (751) |
Net assets acquired | $ 3,587 | $ 44,489 |
5. OIL AND GAS PROPERTIES (De35
5. OIL AND GAS PROPERTIES (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net income (loss) | $ (19,619) | $ (21,320) |
Net income (loss) per common share | $ (0.40) | $ (0.51) |
PEDEVCO [Member] | ||
Revenue | $ 5,326 | |
Lease operating costs | (1,830) | |
Net income (loss) | $ (20,484) | |
Net income (loss) per common share | $ (0.49) | |
Net Acquisitions/Dispositions [Member] | ||
Revenue | $ 780 | |
Lease operating costs | (275) | |
Net income (loss) | $ 505 | |
Net income (loss) per common share | $ 0.01 | |
Combined [Member] | ||
Revenue | $ 6,106 | |
Lease operating costs | (2,105) | |
Net income (loss) | $ (19,979) | |
Net income (loss) per common share | $ (0.48) |
5. OIL AND GAS PROPERTIES (De36
5. OIL AND GAS PROPERTIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Depletion | $ 5,049 | $ 5,104 |
Impairment expense for expired leasehold costs | 0 | 1,337 |
Property impairment | 0 | 0 |
Completion costs | 3,651 | 235 |
Drilling costs | $ 3,568 | |
Escrow deposit | $ 250 |
8. EQUITY METHOD INVESTMENTS (D
8. EQUITY METHOD INVESTMENTS (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Items Issued / Sold | $ 6,817 |
Items Received | 9,850 |
Net gain on settlement | 3,033 |
New MIEJ note [Member] | |
Items Issued / Sold | 4,925 |
Note receivable with Condor [Member] | |
Items Issued / Sold | 1,272 |
Oil and gas property operated by Condor [Member] | |
Items Issued / Sold | 620 |
Accrued Liabilities [Member] | |
Items Received | 3,280 |
Original debt with MIE net of cash payments [Member] | |
Items Received | 6,070 |
Proceeds from cash payments made by MIE to RJ Credit and BAM [Member] | |
Items Received | $ 500 |
8. EQUITY METHOD INVESTMENTS 38
8. EQUITY METHOD INVESTMENTS (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Gain on Settlement | $ 0 | $ 526 |
Oil and gas properties [Member] | ||
Allocated Proceeds | 895 | |
Historical Cost | 620 | |
Gain on Settlement | 275 | |
Investment in Condor [Member] | ||
Allocated Proceeds | 1,838 | |
Historical Cost | 1,272 | |
Gain on Settlement | 566 | |
Note payable - MIEJ [Member] | ||
Allocated Proceeds | 7,117 | |
Historical Cost | 4,925 | |
Gain on Settlement | 2,192 | |
Total [Member] | ||
Allocated Proceeds | 9,850 | |
Historical Cost | 6,817 | |
Gain on Settlement | $ 3,033 |
8. EQUITY METHOD INVESTMENTS 39
8. EQUITY METHOD INVESTMENTS (Details 2) - USD ($) $ in Thousands | 2 Months Ended | 12 Months Ended | |
Feb. 23, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating income (loss) | $ (5,660) | $ (9,648) | |
Interest expense | (13,959) | (13,904) | |
Net loss | $ (19,619) | $ (21,320) | |
Condor Energy | |||
Revenues | $ 108 | ||
Operating expenses | (368) | ||
Operating income (loss) | (260) | ||
Interest expense | (195) | ||
Net loss | $ (455) |
8. EQUITY METHOD INVESTMENTS 40
8. EQUITY METHOD INVESTMENTS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Gain on sale of equity investments | $ 0 | $ 566 |
Condor [Member] | ||
Equity share of net loss | 91 | |
Management services fee | 0 | |
Total fees billed to Condor | $ 0 | 273 |
Gain on sale of equity investments | $ 566 |
9. NOTES PAYABLE (Details Narra
9. NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Deferred interest | $ 2,527 | |
Deferred principal | $ 519 | |
Number of warrant shares issued | 3,100,000 | |
Net proceeds from drilling activities | $ 1,593 | |
Amortization of the deferred financing costs | 148 | |
Fees and expenses | 13,500 | |
Amortization of debt discount | $ 5,576 | 4,418 |
Amortization of deferred financing costs | 2,101 | |
Interest expense | 7,832 | 4,869 |
Unamortized debt discount | 113 | 113 |
Unamortized debt discount and deferred financing costs | 6,988 | 11,801 |
Debt premium | 5,576 | 6,519 |
Payment of outstandng Initial Notes | 0 | 863 |
Bridge Note Financing | ||
Accrued Interest | 491 | |
Principal and interest balance | 475 | |
Interest expense | 57 | 58 |
Unamortized debt premium | 113 | 113 |
Additional PIK | 48 | 48 |
MIE Jurassic Energy Corporation | ||
Interest expense | 494 | 574 |
Loss on debt extinguishment | 2,192 | |
Available borrowings | $ 4,925 | |
Subordinated Note Payable Assumed [Member] | ||
Balance owed with accrued interest | 10,173 | |
Deferred interest | 794 | |
Interest expense | $ 1,164 |
11. SHAREHOLDERS' EQUITY (DEFI
11. SHAREHOLDERS' EQUITY (DEFICIT) (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Shareholders Equity Deficit Details Narrative | ||
Series A convertible preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Series A convertible preferred stock, par value | $ 0.001 | $ 0.001 |
Series A preferred stock outstanding | 66,625 | 66,625 |
Common stock issued | 200,000,000 | 200,000,000 |
Common stock issued per share | $ 0.001 | $ 0.001 |
Stock compensation expense | $ 998 | |
Unamortized stock compensation expense | $ 600 |
12. STOCK OPTIONS AND WARRANT43
12. STOCK OPTIONS AND WARRANTS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Warrant [Member] | ||
Number of Shares | ||
Number of Options Outstanding, Beginning | 7,803,282 | 6,594,129 |
Number of Options Granted | 5,962,800 | 1,650,115 |
Number of Options Forfeited and cancelled | (1,200,003) | (440,962) |
Number of Options Outstanding, Ending | 12,566,079 | 7,803,282 |
Exercisable | 12,566,079 | 7,803,282 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 1.78 | $ 2.13 |
Weighted Average Exercise Price Granted | 0.25 | 0.89 |
Weighted Average Exercise Price Forfeited and cancelled | 4.50 | 3.67 |
Weighted Average Exercise Price Outstanding, Ending | 0.80 | 1.78 |
Weighted Average Exercise Price Exercisable | $ 0.80 | $ 1.78 |
Weighted Average Remaining Contract Term (years) | ||
Weighted Average Remaining Contract Term (years), Beginning | 3 years | 3 years 10 months 24 days |
Weighted Average Remaining Contract Term (years), Ending | 2 years 4 months 24 days | 3 years |
Weighted Average Remaining Contract Term (years), Exercisable | 2 years 4 months 24 days | 3 years |
Stock Options [Member] | ||
Number of Shares | ||
Number of Options Outstanding, Beginning | 3,058,890 | 1,827,224 |
Number of Options Granted | 2,560,000 | 1,265,000 |
Number of Options Exercised | (81,290) | (19,445) |
Number of Options Forfeited and cancelled | (350,377) | (13,889) |
Number of Options Outstanding, Ending | 5,187,223 | 3,058,890 |
Exercisable | 3,672,473 | 2,177,540 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.80 | $ 1.08 |
Weighted Average Exercise Price Granted | 0.18 | 0.37 |
Weighted Average Exercise Price Exercised | 0.22 | 0.30 |
Weighted Average Exercise Price Forfeited and cancelled | 0.89 | 0.30 |
Weighted Average Exercise Price Outstanding, Ending | 0.50 | 0.80 |
Weighted Average Exercise Price Exercisable | $ .61 | $ 0.76 |
Weighted Average Remaining Contract Term (years) | ||
Weighted Average Remaining Contract Term (years), Beginning | 4 years 9 months 18 days | 6 years 6 months |
Weighted Average Remaining Contract Term (years), Ending | 4 years 3 months 18 days | 4 years 9 months 18 days |
Weighted Average Remaining Contract Term (years), Exercisable | 4 years 2 months 12 days | 5 years 1 month 6 days |
12. STOCK OPTIONS AND WARRANT44
12. STOCK OPTIONS AND WARRANTS (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Option 1 [Member] | ||
Exercise Price | $ 0.11 | $ 0.24 |
Weighted Average Remaining Life (years) | 10 months 24 days | 2 months 12 days |
Options Outstanding | 900,000 | 121,667 |
Options Exercisable | 0 | 121,667 |
Stock Option 2 [Member] | ||
Exercise Price | $ 0.22 | $ 0.30 |
Weighted Average Remaining Life (years) | 1 year 1 month 6 days | 1 month 6 days |
Options Outstanding | 1,380,000 | 26,001 |
Options Exercisable | 890,000 | 26,001 |
Stock Option 3 [Member] | ||
Exercise Price | $ 0.24 | $ 0.37 |
Weighted Average Remaining Life (years) | 1 month 6 days | 1 year 7 months 6 days |
Options Outstanding | 100,000 | 1,265,000 |
Options Exercisable | 100,000 | 647,500 |
Stock Option 4 [Member] | ||
Exercise Price | $ 0.3 | $ 0.51 |
Weighted Average Remaining Life (years) | 1 month 6 days | 2 years 3 months 18 days |
Options Outstanding | 26,001 | 1,090,800 |
Options Exercisable | 26,001 | 1,090,800 |
Stock Option 5 [Member] | ||
Exercise Price | $ 0.37 | $ 1.41 |
Weighted Average Remaining Life (years) | 9 months 18 days | 1 month 6 days |
Options Outstanding | 1,225,000 | 100,000 |
Options Exercisable | 1,150,500 | 40,000 |
Stock Option 6 [Member] | ||
Exercise Price | $ 0.51 | $ 1.94 |
Weighted Average Remaining Life (years) | 1 month 6 days | 3 months 18 days |
Options Outstanding | 1,090,800 | 267,500 |
Options Exercisable | 1,090,800 | 131,000 |
Stock Option 7 [Member] | ||
Exercise Price | $ 1.41 | $ 2.50 |
Weighted Average Remaining Life (years) | 1 month 6 days | |
Options Outstanding | 100,000 | 80,000 |
Options Exercisable | 100,000 | 32,000 |
Stock Option 8 [Member] | ||
Exercise Price | $ 1.94 | $ 3.75 |
Weighted Average Remaining Life (years) | 1 month 6 days | |
Options Outstanding | 217,500 | 104,500 |
Options Exercisable | 167,250 | 85,150 |
Stock Option 9 [Member] | ||
Exercise Price | $ 2.5 | $ 30.24 |
Options Outstanding | 80,000 | 2,976 |
Options Exercisable | 80,000 | 2,976 |
Stock Option 10 [Member] | ||
Exercise Price | $ 3.75 | $ 67.20 |
Options Outstanding | 64,500 | 446 |
Options Exercisable | 64,500 | 446 |
Stock Option 11 [Member] | ||
Exercise Price | $ 30.24 | |
Options Outstanding | 2,976 | |
Options Exercisable | 2,976 | |
Stock Option 12 [Member] | ||
Exercise Price | $ 67.2 | |
Options Outstanding | 446 | |
Options Exercisable | 446 | |
Stock Options [Member] | ||
Weighted Average Remaining Life (years) | 4 years 3 months 18 days | 4 years 9 months 18 days |
Options Outstanding | 5,187,223 | 3,058,890 |
Options Exercisable | 3,672,473 | 2,177,540 |
Stock Options [Member] | Minimum [Member] | ||
Exercise Price | $ 11 | $ 0.24 |
Stock Options [Member] | Maximum [Member] | ||
Exercise Price | $ 67.20 | $ 67.20 |
12. STOCK OPTIONS AND WARRANT45
12. STOCK OPTIONS AND WARRANTS (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Warrant 1 [Member] | ||
Warrants Exercise Price | $ 0.25 | $ 0.44 |
Weighted Average Remaining Life (years) | 1 year 1 month 6 days | |
Warrants Outstanding | 5,962,800 | 100,000 |
Warrants Exercisable | 5,962,800 | 100,000 |
Warrants 2 [Member] | ||
Warrants Exercise Price | $ 0.44 | $ 0.75 |
Weighted Average Remaining Life (years) | 4 months 24 days | |
Warrants Outstanding | 100,000 | 1,201,004 |
Warrants Exercisable | 100,000 | 1,201,004 |
Warrant 3[Member] | ||
Warrants Exercise Price | $ 0.75 | $ 1 |
Weighted Average Remaining Life (years) | 2 months 12 days | 1 year 10 months 24 days |
Warrants Outstanding | 1,201,004 | 3,700,758 |
Warrants Exercisable | 1,201,004 | 3,700,758 |
Warrant 4[Member] | ||
Warrants Exercise Price | $ 1 | $ 1.5 |
Weighted Average Remaining Life (years) | 9 months 18 days | 1 month 6 days |
Warrants Outstanding | 3,700,758 | 349,111 |
Warrants Exercisable | 3,700,758 | 349,111 |
Warrant 5[Member] | ||
Warrants Exercise Price | $ 1.5 | $ 2.34 |
Weighted Average Remaining Life (years) | 1 month 6 days | |
Warrants Outstanding | 349,111 | 166,684 |
Warrants Exercisable | 349,111 | 166,684 |
Warrant 6[Member] | ||
Warrants Exercise Price | $ 2.34 | $ 2.5 |
Weighted Average Remaining Life (years) | 4 months 24 days | |
Warrants Outstanding | 166,684 | 1,000,000 |
Warrants Exercisable | 166,684 | 1,000,000 |
Warrant 7[Member] | ||
Warrants Exercise Price | $ 2.5 | $ 3.75 |
Weighted Average Remaining Life (years) | 2 months 12 days | 1 month 6 days |
Warrants Outstanding | 1,000,000 | 400,001 |
Warrants Exercisable | 1,000,000 | 400,001 |
Warrant 8 [Member] | ||
Warrants Exercise Price | $ 5.25 | $ 4.5 |
Warrants Outstanding | 85,722 | 400,001 |
Warrants Exercisable | 85,722 | 400,001 |
Warrant 9[Member] | ||
Warrants Exercise Price | $ 5.25 | |
Weighted Average Remaining Life (years) | 1 month 6 days | |
Warrants Outstanding | 12,566,079 | 485,723 |
Warrants Exercisable | 12,566,079 | 485,723 |
Warrant [Member] | ||
Weighted Average Remaining Life (years) | 2 years 4 months 24 days | 3 years |
Warrants Outstanding | 7,803,282 | |
Warrants Exercisable | 7,803,282 | |
Minimum [Member] | Warrant [Member] | ||
Warrants Exercise Price | $ 0.25 | $ 0.44 |
Maximum [Member] | Warrant [Member] | ||
Warrants Exercise Price | $ 5.25 | $ 5.25 |
12. STOCK OPTIONS AND WARRANT46
12. STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Recognized stock option based compensation expense | $ 298 | |
Unamortized stock options expense | 73 | |
Intrinsic value of options outstanding | 0 | $ 0 |
Intrinsic value of options exercisable | $ 0 | $ 0 |
Blast 2003 Stock Option Plan and 2009 Stock Incentive Plan | ||
Number of Options Granted | 3,424 | 3,424 |
Number of Options Outstanding | 3,424 | 3,424 |
Number of Options Exercisable | 3,424 | 3,424 |
2012 Incentive Plan | ||
Common stock authorized to issue | 15,000,000 | |
Restricted stock issued | 11,020,990 | |
Shares issued upon exercise | 3,967,000 | |
Shares remain available for future issuance | 12,010 | |
PEDCO 2012 Equity Incentive Plan | ||
Restricted stock granted | 665,829 | |
Common stock granted | 310,136 | |
Warrant [Member] | ||
Recognized stock option based compensation expense | $ 0 | $ 702 |
Intrinsic value of options outstanding | 0 | |
Intrinsic value of options exercisable | $ 0 |
13. RELATED PARTY TRANSACTION47
13. RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | May 01, 2016 | Dec. 31, 2015 | Feb. 23, 2015 |
Accounts receivable | $ 793 | $ 1,578 | ||
Long-term notes payable-Subordinated | $ 10,173 | $ 8,918 | ||
GGE [Member] | ||||
Long-term notes payable-Secured Promissory Notes, net of discount | (13,319) | |||
Long-term notes payable-Subordinated | (10,173) | |||
Net assets | $ (23,492) |
13. RELATED PARTY TRANSACTION48
13. RELATED PARTY TRANSACTIONS (Details Narrative) - Condor [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Accrued interest | $ 491 |
Accounts payable | 4,925 |
Expenses related to a management services | 56 |
Accrued management fees | $ 0 |
14. FAIR VALUE (Details)
14. FAIR VALUE (Details) - Series A Convertible Preferred Stock $ in Thousands | Dec. 31, 2016USD ($) |
Fair value Liability | $ 28,402 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |
Fair value Liability | 0 |
Significant Other Observable Inputs (Level 2) | |
Fair value Liability | 0 |
Significant Unobservable Inputs (Level 3) | |
Fair value Liability | $ 28,402 |
15. INCOME TAXES (Details)
15. INCOME TAXES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Tax Assets (Liabilities) | ||
Difference in depreciation, depletion, and capitalization methods - oil and natural gas properties | $ 479 | $ 1,863 |
Net operating losses | 5,507 | 4,131 |
Impairment - oil and natural gas properties | 0 | (1,122) |
Other | 438 | 753 |
Total deferred tax asset | 6,424 | 5,625 |
Less valuation allowance | (6,424) | (5,625) |
Total deferred tax assets | $ 0 | $ 0 |
15. INCOME TAXES (Details Narra
15. INCOME TAXES (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Income Taxes Details Narrative | |
Net change in valuation allowance | $ 799,000 |
Federal net operating loss carryforwards | 79,212,000 |
State operating loss carryforward | $ 49,922,000 |