PEDEVCO (PED) 10-Q 14 Nov 22 2022 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2022	Nov. 08, 2022
Cover [Abstract]
Entity Registrant Name	PEDEVCO Corp.
Entity Central Index Key	0001141197
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		85,790,267
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-35922
Entity Incorporation State Country Code	TX
Entity Tax Identification Number	22-3755993
Entity Interactive Data Current	Yes
Entity Address Address Line 1	575 N. Dairy Ashford
Entity Address Address Line 2	Suite 210
Entity Address City Or Town	Houston
Entity Address State Or Province	TX
Entity Address Postal Zip Code	77079
City Area Code	713
Local Phone Number	221-1768
Trading Symbol	PED
Security Exchange Name	NYSEAMER
Security 12b Title	Common Stock, $0.001 par value per share

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash	$ 27,361	$ 25,930
Accounts receivable - oil and gas	2,681	1,782
Prepaid expenses and other current assets	316	326
Total current assets	30,358	28,038
Oil and gas properties - successful efforts method:
Oil and gas properties, subject to amortization, net	69,699	63,908
Oil and gas properties, not subject to amortization, net	592	2,559
Total oil and gas properties, net	70,291	66,467
Operating lease - right-of-use asset	98	173
Other assets	3,722	3,543
Total assets	104,469	98,221
Current liabilities:
Accounts payable	719	2,626
Accrued expenses	1,820	1,454
Revenue payable	996	938
Operating lease liabilities - current	110	114
Asset retirement obligations - current	11	49
Total current liabilities	3,656	5,181
Long-term liabilities:
Operating lease liabilities, net of current portion	0	81
Asset retirement obligations, net of current portion	2,080	1,476
Total liabilities	5,736	6,738
Commitments and contingencies
Common stock, $0.001 par value, 200,000,000 shares authorized; 85,790,267 and 84,263,146 shares issued and outstanding, respectively	86	84
Additional paid-in capital	222,604	220,984
Accumulated deficit	(123,957)	(129,585)
Total shareholders' equity	98,733	91,483
Total liabilities and shareholders' equity	$ 104,469	$ 98,221

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	200,000,000	200,000,000
Common Stock, Shares Issued	85,790,267	84,263,146
Common Stock, Shares Outstanding	84,263,146	84,263,146

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Oil and gas sales	$ 7,472	$ 4,069	$ 24,109	$ 11,340
Operating expenses:
Lease operating costs	2,918	1,423	8,076	4,164
Selling, general and administrative expense	1,220	1,337	4,108	4,434
Depreciation, depletion, amortization and accretion	2,313	1,666	6,427	4,829
Total operating expenses	6,451	4,426	18,611	13,427
Gain on sale of oil and gas properties	0	0	0	1,805
Operating income (loss)	1,021	(357)	5,498	(282)
Interest expense	0	0	0	(1)
Interest income	33	4	40	11
Other income	25	28	90	76
Gain on forgiveness of PPP loan	0		0	374
Total other income	58	32	130	460
Net income (loss)	$ 1,079	$ (325)	$ 5,628	$ 178
Income (loss) per common share:
Basic	$ 0.01	$ 0	$ 0.07	$ 0
Diluted	$ 0.01	$ 0	$ 0.07	$ 0
Weighted average number of common shares outstanding:
Diluted	85,644,180	79,533,016	85,419,689	78,628,077
Basic	85,644,180	79,533,016	85,419,689	78,700,140

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Net income	$ 5,628	$ 178
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion	6,427	4,829
Gain on sale of oil and gas properties	0	(1,805)
Amortization of right-of-use asset	75	72
Share-based compensation expense	1,572	1,867
Gain on forgiveness of PPP loan	0	(374)
Changes in operating assets and liabilities:
Accounts receivable - oil and gas	(899)	(860)
Prepaid expenses and other current assets	10	(295)
Accounts payable	(243)	51
Accrued expenses	366	184
Revenue payable	58	124
Net cash provided by operating activities	12,994	3,971
Cash paid for drilling, completion, acquisition costs	(11,413)	(2,145)
Cash paid for property and equipment	0	(35)
Proceeds from the sale of oil and gas property	0	1,871
Net cash used in investing activities	(11,413)	(309)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net of offering costs	50	8,237
Net cash provided by financing activities	50	8,237
Net increase in cash and restricted cash	1,631	11,899
Cash and restricted cash at beginning of period	29,227	11,324
Cash and restricted cash at end of period	30,858	23,223
Cash paid for:
Interest	0	0
Income taxes	0	0
Noncash investing and financing activities:
Change in accrued oil and gas development costs	1,791	54
Changes in estimates of asset retirement costs, net	158	16
Issuance of restricted common stock	$ 2	$ 1

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Balance, shares at Dec. 31, 2020		72,463,340
Balance, amount at Dec. 31, 2020	$ 75,636	$ 72	$ 203,850	$ (128,286)
Issuance of restricted common stock, shares		960,000
Issuance of restricted common stock, amount	0	$ 1	(1)	0
Rescinded restricted common stock, shares		(16,667)
Rescinded restricted common stock, amount	0	$ 0	0	0
Issuance of common stock to non-affiliate, shares		5,968,500
Issuance of common stock to non-affiliate, amount	8,303	$ 6	8,297	0
Cashless exercise of stock options, shares		86,430
Cashless exercise of stock options, amount	0	$ 0	0	0
Share-based compensation	684	0	684	0
Net income	728	$ 0	0	728
Balance, shares at Mar. 31, 2021		79,461,603
Balance, amount at Mar. 31, 2021	85,351	$ 79	212,830	(127,558)
Balance, shares at Dec. 31, 2020		72,463,340
Balance, amount at Dec. 31, 2020	75,636	$ 72	203,850	(128,286)
Net income	(178)
Net loss	178
Balance, shares at Sep. 30, 2021		79,751,603
Balance, amount at Sep. 30, 2021	85,918	$ 80	213,946	(128,108)
Balance, shares at Mar. 31, 2021		79,461,603
Balance, amount at Mar. 31, 2021	85,351	$ 79	212,830	(127,558)
Share-based compensation	591	0	591	0
Offering costs incurred for issuance of common stock to non-affiliate	(66)	0	(66)	0
Net loss	(225)	$ 0	0	(225)
Balance, shares at Jun. 30, 2021		79,461,603
Balance, amount at Jun. 30, 2021	85,651	$ 79	213,355	(127,783)
Issuance of restricted common stock, shares		240,000
Issuance of restricted common stock, amount	0	$ 1	(1)	0
Issuance of common stock to non-affiliate, shares		50,000
Issuance of common stock to non-affiliate, amount	0	$ 0	0	0
Share-based compensation	592	0	592	0
Net loss	(325)	$ 0	0	(325)
Balance, shares at Sep. 30, 2021		79,751,603
Balance, amount at Sep. 30, 2021	85,918	$ 80	213,946	(128,108)
Balance, shares at Dec. 31, 2021		84,263,146
Balance, amount at Dec. 31, 2021	91,483	$ 84	220,984	(129,585)
Issuance of restricted common stock, shares		1,200,000
Issuance of restricted common stock, amount	0	$ 1	(1)	0
Share-based compensation	563	0	563	0
Net income	1,339	$ 0	0	1,339
Balance, shares at Mar. 31, 2022		85,463,146
Balance, amount at Mar. 31, 2022	93,385	$ 85	221,546	(128,246)
Balance, shares at Dec. 31, 2021		84,263,146
Balance, amount at Dec. 31, 2021	91,483	$ 84	220,984	(129,585)
Net income	(5,628)
Net loss	5,628
Balance, shares at Sep. 30, 2022		85,790,267
Balance, amount at Sep. 30, 2022	98,733	$ 86	222,604	(123,957)
Balance, shares at Mar. 31, 2022		85,463,146
Balance, amount at Mar. 31, 2022	93,385	$ 85	221,546	(128,246)
Issuance of common stock to non-affiliate, shares		87,121
Issuance of common stock to non-affiliate, amount	50	$ 0	50	0
Share-based compensation	537	0	537	0
Net income	3,210	$ 0	0	3,210
Balance, shares at Jun. 30, 2022		85,550,267
Balance, amount at Jun. 30, 2022	97,182	$ 85	222,133	(125,036)
Issuance of restricted common stock, shares		240,000
Issuance of restricted common stock, amount	0	$ 1	(1)	0
Share-based compensation	472	0	472	0
Net income	1,079	$ 0	0	1,079
Net loss	1,079
Balance, shares at Sep. 30, 2022		85,790,267
Balance, amount at Sep. 30, 2022	$ 98,733	$ 86	$ 222,604	$ (123,957)

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Sep. 30, 2022
BASIS OF PRESENTATION
Basis Of Presentation	NOTE 1 – BASIS OF PRESENTATION The accompanying interim unaudited condensed consolidated financial statements of PEDEVCO Corp. (“PEDEVCO” or the “Company”), have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in PEDEVCO’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 11, 2022 (the “2021 Annual Report”), have been omitted. The Company’s consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and subsidiaries in which the Company has a controlling financial interest. All significant inter-company accounts and transactions have been eliminated in consolidation. The Company's future financial condition and liquidity will be impacted by, among other factors, the success of our drilling program, the number of commercially viable oil and natural gas discoveries made and the quantities of oil and natural gas discovered, the speed with which we can bring such discoveries to production, the actual cost of exploration, appraisal and development of our prospects, the prevailing prices for, and demand for, oil and natural gas.

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	9 Months Ended
	Sep. 30, 2022
DESCRIPTION OF BUSINESS
Description Of Business	NOTE 2 – DESCRIPTION OF BUSINESS PEDEVCO is an oil and gas company focused on the development, acquisition and production of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied. In particular, the Company focuses on legacy proven properties where there is a long production history, well defined geology and existing infrastructure that can be leveraged when applying modern field management technologies. The Company’s current properties are located in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the “Permian Basin”) and in the Denver-Julesburg Basin (“D-J Basin”) in Colorado. The Company holds its Permian Basin acres located in Chaves and Roosevelt Counties, New Mexico, through its wholly-owned operating subsidiary, Pacific Energy Development Corp. (“PEDCO”), which asset the Company refers to as its “Permian Basin Asset,” and it holds its D-J Basin acres located in Weld and Morgan Counties, Colorado, through its wholly-owned operating subsidiary, Red Hawk Petroleum, LLC (“Red Hawk”), which asset the Company refers to as its “D-J Basin Asset.” The Company believes that horizontal development and exploitation of conventional assets in the Permian Basin and development of the Wattenberg and Wattenberg Extension in the D-J Basin represent among the most economic oil and natural gas plays in the United States (“U.S.”). Moving forward, the Company plans to optimize its existing assets and opportunistically seek additional acreage proximate to its currently held core acreage, as well as other attractive onshore U.S. oil and gas assets that fit the Company’s acquisition criteria, that Company management believes can be developed using its technical and operating expertise and be accretive to shareholder value.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary Of Significant Accounting Policies	NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company has provided a discussion of significant accounting policies, estimates and judgments in its 2021 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2021. Recently Issued Accounting Pronouncements The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. Subsequent Events The Company has evaluated all transactions through the date the condensed consolidated financial statements were issued for subsequent event disclosure consideration.

REVENUE FROM CONTRACTS WITH CUS

REVENUE FROM CONTRACTS WITH CUSTOMERS	9 Months Ended
	Sep. 30, 2022
REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue From Contracts With Customers	NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue from Contracts with Customers. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Oil sales $ 6,978 $ 3,697 $ 22,098 $ 10,635 Natural gas sales 398 319 1,292 604 Natural gas liquids sales 96 53 719 101 Total revenue from customers $ 7,472 $ 4,069 $ 24,109 $ 11,340 There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2022.

CASH

CASH	9 Months Ended
	Sep. 30, 2022
CASH
Cash	NOTE 5 – CASH The following table provides a reconciliation of cash and restricted cash reported within the balance sheets, which sum to the total of such amounts in the periods indicated (in thousands): September 30, 2022 December 31, 2021 Cash $ 27,361 $ 25,930 Restricted cash included in other assets 3,497 3,297 Total cash and restricted cash $ 30,858 $ 29,227 Total restricted cash increased $200,000 during the current period due to an additional collateralized deposit related to an increase in a plugging and abandonment bond with the State of New Mexico.

OIL AND GAS PROPERTIES

OIL AND GAS PROPERTIES	9 Months Ended
	Sep. 30, 2022
OIL AND GAS PROPERTIES
Oil And Gas Properties	NOTE 6 – OIL AND GAS PROPERTIES The following table summarizes the Company’s oil and gas activities by classification for the nine months ended September 30, 2022 (in thousands): Balance at December 31, 2021 Additions Disposals Transfers Balance at September 30, 2022 Oil and gas properties, subject to amortization $ 151,338 $ 9,030 $ - $ 2,559 $ 162,927 Oil and gas properties, not subject to amortization 2,559 592 - (2,559 ) 592 Asset retirement costs 789 158 - - 947 Accumulated depreciation, depletion and impairment (88,219 ) (5,956 ) - - (94,175 ) Total oil and gas properties, net $ 66,467 $ 3,824 $ - $ - $ 70,291 For the nine-month period ended September 30, 2022, the Company incurred $9,622,000 of capital costs primarily related to drilling operations, completion and facility construction for the two new wells started at the end of 2021 for our Permian Basin Asset and the acquisition and development of assets in the D-J Basin. In January 2022, the Company consummated the acquisition of certain additional assets located in the D-J Basin from a third-party effective July 1, 2021, for approximately $500,000 in cash consideration. These assets include approximately 46.6 net leasehold acres and interests in 14 horizontal wells currently producing from the acreage. The Company incurred $1.2 million (included in the total number above) in net capital costs for its working interest in these 14 new well interests during the nine months ended September 30, 2022. During the nine months ended September 30, 2022, the Company acquired approximately 289 net mineral acres and 612 net lease acres in and around its existing footprint in the D - The depletion recorded for production on proved properties for the three and nine months ended September 30, 2022 and 2021, amounted to $2,084,000, compared to $1,576,000, and $5,956,000, compared to $4,520,000, respectively.

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS	9 Months Ended
	Sep. 30, 2022
ASSET RETIREMENT OBLIGATIONS
Asset Retirement Obligations	NOTE 7 – ASSET RETIREMENT OBLIGATIONS Activity related to the Company’s asset retirement obligations is as follows (in thousands): Nine Months Ended September 30, 2022 Balance at the beginning of the period (1) $ 1,525 Accretion expense 450 Liabilities settled (42 ) Changes in estimates, net 158 Balance at end of period (2) $ 2,091 (1) Includes $49,000 of current asset retirement obligations at December 31, 2021. (2) Includes $11,000 of current asset retirement obligations at September 30, 2022.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2022
COMMITMENTS AND CONTINGENCIES
Commitments And Contingencies	NOTE 8 – COMMITMENTS AND CONTINGENCIES Lease Agreements Currently, the Company has one operating lease for office space that requires Accounting Standards Codification (“ASC”) Topic 842 treatment, discussed below. The Company’s leases typically do not provide an implicit rate. Accordingly, the Company is required to use its incremental borrowing rate in determining the present value of lease payments based on the information available at the commencement date. The Company’s incremental borrowing rate would reflect the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. However, the Company currently maintains no debt, and in order to apply an appropriate discount rate, the Company used an average discount rate of eight publicly-traded peer group companies similar to it based on size, geographic location, asset types, and/or operating characteristics. The Company has a sublease for its corporate offices in Houston, Texas on approximately 5,200 square feet of office space that expires on August 31, 2023 and has a base monthly rent of approximately $10,000. Supplemental cash flow information related to the Company’s operating lease is included in the table below (in thousands): Nine Months Ended September 30, 2022 Cash paid for amounts included in the measurement of lease liabilities $ 91 Supplemental balance sheet information related to operating leases is included in the table below (in thousands): September 30, 2022 Operating lease – right-of-use asset $ 98 Operating lease liabilities - current $ 110 Operating lease liabilities - long-term - Total lease liability $ 110 The weighted-average remaining lease term for the Company’s operating lease is 0.9 years as of September 30, 2022, with a weighted-average discount rate of 5.35%. Lease liability with enforceable contract terms that have greater than one-year terms are as follows (in thousands): Remainder of 2022 $ 30 2023 82 Thereafter - Total lease payments 112 Less imputed interest (2 ) Total lease liability $ 110 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, no net acres expire during the remainder of 2022, and 612 net acres expire thereafter (net to our direct ownership interest only). In the Permian Basin Asset, 63 acres are due to expire during the remainder of 2022 and 106 net acres expire thereafter (net to our direct ownership interest only). The Company plans to hold significantly all of this acreage through a program of drilling and completing producing wells. If the Company is not able to drill and complete a well sufficient to hold the acreage before lease expiration, the Company may seek to extend leases where able. Other Commitments Although the Company may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of business, the Company is not currently a party to any material legal proceeding. In addition, the Company is not aware of any material legal or governmental proceedings against it or contemplated to be brought against it. As part of its regular operations, the Company may become party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters. Although the Company provides no assurance about the outcome of any future legal and administrative proceedings and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on the Company’s financial condition or results of operations.

SHAREHOLDERS EQUITY

SHAREHOLDERS EQUITY	9 Months Ended
	Sep. 30, 2022
SHAREHOLDERS EQUITY
Shareholders' Equity	NOTE 9 – SHAREHOLDERS’ EQUITY Common Stock During the nine months ended September 30, 2022, the Company granted an aggregate of 1,440,000 restricted stock awards to various employees and board members of the Company (see Note 10 below). On June 10, 2022, the Company sold 87,121 shares of common stock at a sales price of $1.66 per share via an ongoing “at the market offering” (the “ATM Offering”) for net proceeds of $141,000, which includes $4,000 in commission fees. The Company also incurred $91,000 in initial legal and audit fees for registration and placement of the ATM Offering. The ATM Offering was made pursuant to the terms of that certain November 17, 2021, Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth Capital”, or the “Agent”). The Company will pay the sales agent a commission of 3.0% of the gross sales price of any shares sold under the Sales Agreement, less reimbursement of the first $40,000 of such gross proceeds. The Company has also provided the Agent with customary indemnification rights and has agreed to reimburse the sales agent for certain specified expenses up to $25,000. The Company currently has $3.5 million remaining available in securities which it may sell in the future under the Sales Agreement.

SHAREBASED COMPENSATION

SHAREBASED COMPENSATION	9 Months Ended
	Sep. 30, 2022
SHAREBASED COMPENSATION
Share-based Compensation	NOTE 10 – SHARE-BASED COMPENSATION The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award over the vesting period. Common Stock On January 25, 2022, an aggregate of 1,200,000 shares of restricted common stock were granted to officers of the Company, under the Company’s 2021 Equity Incentive Plan. The grant of the 1,200,000 shares of restricted common stock vest as follows: 33.3% vest each subsequent year from the date of grant, contingent upon the recipient’s continued service with the Company. These shares have a total fair value of $1,404,000 based on the market price on the issuance date. On August 25, 2022, restricted stock awards were granted to three board members for an aggregate of 240,000 shares of the Company’s restricted common stock, under the Company’s 2021 Equity Incentive Plan. The grant of the 240,000 shares of restricted common stock vest as follows: 100% of 170,000 shares and 100% of 70,000 shares vesting on July 12, 2023 and September 27, 2023, respectively, contingent upon each recipient’s continued service with the Company. These shares have a total fair value of $280,000, based on the market price on the grant date. Stock-based compensation expense recorded related to the vesting of restricted stock for the nine months ended September 30, 2022, was $1,260,000. The remaining unamortized stock-based compensation expense at September 30, 2022 related to restricted stock was $1,291,000. Options On January 25, 2022, the Company granted options to purchase an aggregate of 520,000 shares of common stock to various Company employees at an exercise price of $1.17 per share. The options have a term of five years and fully vest on January 2025, with 33.3% vesting each subsequent year from the date of grant, 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 $454,000. Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 1.56% based on the applicable US Treasury bill rate, (2) expected term of 3.5 years, (3) expected volatility of 120% based on the trading history of the Company, and (4) zero expected dividends. During the nine months ended September 30, 2022, the Company recognized stock option expense of $312,000. The remaining amount of unamortized stock options expense at September 30, 2022 was $318,000. The intrinsic value of outstanding and exercisable options at September 30, 2022 was $-0-. Option activity during the nine months ended September 30, 2022 was: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (Years) Outstanding at December 31, 2021 1,123,435 $ 1.80 3.0 Granted 520,000 $ 1.17 Expired/Canceled (187,435 ) $ 2.34 Outstanding at September 30, 2022 1,456,000 $ 1.51 2.8 Exercisable at September 30, 2022 624,000 $ 1.77 1.7

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	9 Months Ended
	Sep. 30, 2022
Income (loss) per common share:
Earnings Per Common Share	NOTE 11 – EARNINGS PER COMMON SHARE Earnings (loss) per common share-basic is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share-diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing net (loss) income by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net (loss) income per common share-diluted considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares, as defined above, would have an anti-dilutive effect. The calculation of earnings per share for the periods indicated below were as follows (amounts in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, Numerator: 2022 2021 2022 2021 Net income (loss) $ 1,079 $ (325 ) $ 5,628 $ 178 Denominator: Weighted average common shares – basic 85,644,180 79,533,016 85,419,689 78,628,077 Dilutive effect of common stock equivalents: Options - - - 72,063 Denominator: Weighted average common shares – diluted 85,644,180 79,533,016 85,419,689 78,700,140 Earnings (loss) per share – basic $ 0.01 $ (0.00 ) $ 0.07 $ 0.00 Earnings (loss) per share – diluted $ 0.01 $ (0.00 ) $ 0.07 $ 0.00 For the three and nine months ended September 30, 2022 and 2021, share equivalents related to options to purchase 1,456,000, compared to 1,143,436, and 1,456,000, compared to 1,126,769, shares of common stock, respectively, were excluded from the computation of diluted net income per share as the inclusion of such shares would be anti-dilutive.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2022
INCOME TAXES
Income Taxes	NOTE 12 – INCOME TAXES The Company has estimated that its effective tax rate for U.S. purposes will be zero for the 2022 and 2021 fiscal years as a result of prior net losses and a full valuation allowance against the net deferred tax assets. Consequently, the Company has recorded no provision or benefit for income taxes for the three and nine months ended September 30, 2022 and 2021, respectively.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2022
SUBSEQUENT EVENTS
Subsequent Events	NOTE 13 – SUBSEQUENT EVENTS On August 2, 2022, the Company received correspondence from the State of New Mexico Energy, Minerals and Natural Resources Department (“EMNRD”) alleging that the Company’s New Mexico operating subsidiaries, Ridgeway Arizona Oil Corp. (“Ridgeway”) and EOR Operating Company (“EOR”), failed to comply with certain requirements of Agreed Compliance Orders previously negotiated and entered into by each of Ridgeway and EOR with the EMNRD (the “ACOs”), specifically alleging that Ridgeway and EOR failed to provide reports and proof of conducting certain well tests by dates specified in the ACOs. Further, in the correspondence, the EMNRD notified us that the ACOs were now void due to alleged non-compliance, that an aggregate of approximately 333 legacy vertical wells inherited by the Company when it acquired the fields in 2018 were required to be brought back online or plugged immediately, and further demanded that Ridgway and EOR pay civil penalties totaling an aggregate of $850,500 no later than August 31, 2022, with additional penalties accruing thereafter as a result of our alleged non-compliance and interest accruing on unpaid portions thereof at 8.75% per annum. The Company immediately engaged in discussions with the EMNRD regarding the issues raised in the correspondence, and in mid-August 2022 the EMNRD confirmed that it had erred in alleging that Ridgeway was in violation of its ACO pertaining to approximately 284 legacy vertical wells operated by Ridgeway, and that the EMNRD’s demand letter related to the Ridgeway ACO was invalid and withdrawn. Following additional correspondence between the Company and the EMNRD related to EOR’s ACO pertaining to approximately 49 legacy vertical wells operated by EOR, on November 10, 2022, EOR entered into an amended ACO with the EMNRD (the “Amended EOR ACO”), which provides, among other things, that (i) the EMNRD’s demand for payment of penalties was resolved, (ii) EOR would restore to production, or plug and abandon, the 49 wells listed in the Amended EOR ACO by no later than December 31, 2024, (iii) EOR would provide monthly reports to the Director of the Oil Conservation Division (“OCD”) regarding actions taken for each well, (iv) EOR would maintain financial assurance for the wells and place $50,000 cash in an escrow account in New Mexico designating the OCD as beneficiary, which escrowed funds will be forfeit in the event EOR fails to meet any well plugging deadline, (v) EOR may request, and the OCD may grant, an extension of the deadlines under the Amended EOR ACO for good cause shown, and (vi) EOR may not transfer a well to another operator unless approved by the OCD. Accordingly, the Company believes that the issues raised in the August 2, 2022 correspondence from the EMNRD regarding compliance failures by its New Mexico operating subsidiaries, Ridgeway and EOR, have been favorably resolved.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recently Issued Accounting Pronouncements	The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.
Subsequent Events	The Company has evaluated all transactions through the date the condensed consolidated financial statements were issued for subsequent event disclosure consideration.

REVENUE FROM CONTRACTS WITH C_2

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)	9 Months Ended
	Sep. 30, 2022
REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue From Contract with Customers	Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Oil sales $ 6,978 $ 3,697 $ 22,098 $ 10,635 Natural gas sales 398 319 1,292 604 Natural gas liquids sales 96 53 719 101 Total revenue from customers $ 7,472 $ 4,069 $ 24,109 $ 11,340

CASH (Tables)

CASH (Tables)	9 Months Ended
	Sep. 30, 2022
CASH
Cash And Restricted Cash	September 30, 2022 December 31, 2021 Cash $ 27,361 $ 25,930 Restricted cash included in other assets 3,497 3,297 Total cash and restricted cash $ 30,858 $ 29,227

OIL AND GAS PROPERTIES (Tables)

OIL AND GAS PROPERTIES (Tables)	9 Months Ended
	Sep. 30, 2022
OIL AND GAS PROPERTIES
Oil And Gas Properties	Balance at December 31, 2021 Additions Disposals Transfers Balance at September 30, 2022 Oil and gas properties, subject to amortization $ 151,338 $ 9,030 $ - $ 2,559 $ 162,927 Oil and gas properties, not subject to amortization 2,559 592 - (2,559 ) 592 Asset retirement costs 789 158 - - 947 Accumulated depreciation, depletion and impairment (88,219 ) (5,956 ) - - (94,175 ) Total oil and gas properties, net $ 66,467 $ 3,824 $ - $ - $ 70,291

ASSET RETIREMENT OBLIGATIONS (T

ASSET RETIREMENT OBLIGATIONS (Tables)	9 Months Ended
	Sep. 30, 2022
ASSET RETIREMENT OBLIGATIONS
Asset Retirement Obligation	Nine Months Ended September 30, 2022 Balance at the beginning of the period (1) $ 1,525 Accretion expense 450 Liabilities settled (42 ) Changes in estimates, net 158 Balance at end of period (2) $ 2,091

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2022
COMMITMENTS AND CONTINGENCIES
Supplemental Information Related To Operating Lease	Nine Months Ended September 30, 2022 Cash paid for amounts included in the measurement of lease liabilities $ 91
Schedule Of Operating Lease	September 30, 2022 Operating lease – right-of-use asset $ 98 Operating lease liabilities - current $ 110 Operating lease liabilities - long-term - Total lease liability $ 110
Lease Liability Maturity	Remainder of 2022 $ 30 2023 82 Thereafter - Total lease payments 112 Less imputed interest (2 ) Total lease liability $ 110

SHAREBASED COMPENSATION (Tables

SHAREBASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2022
SHAREBASED COMPENSATION
Stock Option Activity	Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (Years) Outstanding at December 31, 2021 1,123,435 $ 1.80 3.0 Granted 520,000 $ 1.17 Expired/Canceled (187,435 ) $ 2.34 Outstanding at September 30, 2022 1,456,000 $ 1.51 2.8 Exercisable at September 30, 2022 624,000 $ 1.77 1.7

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2022
Income (loss) per common share:
Earnings Per Share	Three Months Ended September 30, Nine Months Ended September 30, Numerator: 2022 2021 2022 2021 Net income (loss) $ 1,079 $ (325 ) $ 5,628 $ 178 Denominator: Weighted average common shares – basic 85,644,180 79,533,016 85,419,689 78,628,077 Dilutive effect of common stock equivalents: Options - - - 72,063 Denominator: Weighted average common shares – diluted 85,644,180 79,533,016 85,419,689 78,700,140 Earnings (loss) per share – basic $ 0.01 $ (0.00 ) $ 0.07 $ 0.00 Earnings (loss) per share – diluted $ 0.01 $ (0.00 ) $ 0.07 $ 0.00

REVENUE FROM CONTRACTS WITH C_3

REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Total Revenue From Customers	$ 7,472	$ 4,069	$ 24,109	$ 11,340
Oil Sales
Total Revenue From Customers	6,978	3,697	22,098	10,635
Natural Gas Sales
Total Revenue From Customers	398	319	1,292	604
Natural Gas Liquids Sales
Total Revenue From Customers	$ 96	$ 53	$ 719	$ 101

CASH (Details)

CASH (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
CASH
Cash	$ 27,361	$ 25,930
Restricted Cash Included In Other Assets	3,497	3,297
Total cash and restricted cash	$ 30,858	$ 29,227

OIL AND GAS PROPERTIES (Details

OIL AND GAS PROPERTIES (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Oil And Gas Properties, Subject To Amortization	$ 162,927,000	$ 151,338,000
Oil And Gas Properties, Not Subject To Amortization	592,000	2,559,000
Asset Retirement Costs	947,000	789,000
Accumulated Depreciation, Depletion And Impairment	(94,175,000)	(88,219,000)
Total Oil And Gas Properties, Net	70,291,000	$ 66,467,000
Disposals
Oil And Gas Properties, Subject To Amortization	0
Oil And Gas Properties, Not Subject To Amortization	0
Asset Retirement Costs	0
Accumulated Depreciation, Depletion And Impairment	0
Total Oil And Gas Properties, Net	0
Transfers
Oil And Gas Properties, Subject To Amortization	2,559,000
Oil And Gas Properties, Not Subject To Amortization	(2,559,000)
Asset Retirement Costs	0
Accumulated Depreciation, Depletion And Impairment	0
Total Oil And Gas Properties, Net	0
Additions [Member]
Oil And Gas Properties, Subject To Amortization	9,030,000
Oil And Gas Properties, Not Subject To Amortization	592,000
Asset Retirement Costs	158,000
Accumulated Depreciation, Depletion And Impairment	(5,956,000)
Total Oil And Gas Properties, Net	$ 3,824,000

OIL AND GAS PROPERTIES (Detai_2

OIL AND GAS PROPERTIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
OIL AND GAS PROPERTIES
Capital Costs Primarily Related			$ 9,622,000
Depletion	$ 2,084,000	$ 1,576,000	5,956,000	$ 4,520,000
Cash Consideration			500,000
Diligence costs			534,000
Acquisition cost			443,000
Capital Cost			$ 1,200,000

ASSET RETIREMENT OBLIGATIONS (D

ASSET RETIREMENT OBLIGATIONS (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
ASSET RETIREMENT OBLIGATIONS
Balance At The Beginning Of The Period	$ 1,525
Accretion Expense	450
Liabilities settled	(42)
Changes In Estimates	158
Balance At The Ending Of The Period	$ 2,091

ASSET RETIREMENT OBLIGATIONS _2

ASSET RETIREMENT OBLIGATIONS (Details Narrative) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
ASSET RETIREMENT OBLIGATIONS
Cureent Asset Retirement	$ 11,000	$ 49,000

COMMITMENTS AND CONTINGENCIES_2

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
COMMITMENTS AND CONTINGENCIES
Cash Paid For Amounts Included In The Measurement Of Lease Liabilities	$ 91

COMMITMENTS AND CONTINGENCIES_3

COMMITMENTS AND CONTINGENCIES (Details 1) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
COMMITMENTS AND CONTINGENCIES
Operating Lease - Right-of-use Asset	$ 98	$ 173
Operating Lease Liabilities - Current	110
Operating Lease Liabilities - Long-term	0	$ 81
Total Lease Liability	$ 110

COMMITMENTS AND CONTINGENCIES_4

COMMITMENTS AND CONTINGENCIES (Details 2) $ in Thousands	Sep. 30, 2022 USD ($)
COMMITMENTS AND CONTINGENCIES
2022	$ 30
2023	82
Thereafter	0
Total Lease Payments	112
Less Imputed Interest	(2)
Total Lease Liability	$ 110

COMMITMENTS AND CONTINGENCIES_5

COMMITMENTS AND CONTINGENCIES (Details Narrative)	9 Months Ended
	Sep. 30, 2022 USD ($)
COMMITMENTS AND CONTINGENCIES
Rent Expenses	$ 10,000
Weighted-average Remaining Lease Term	10 months 24 days
Description Of Lease Hold Commitments	In the Permian Basin Asset, 63 acres are due to expire during the remainder of 2022 and 106 net acres expire thereafter (net to our direct ownership interest only)
Weighted-average Discount Rate	5.35%

SHAREHOLDERS EQUITY (Details Na

SHAREHOLDERS EQUITY (Details Narrative) - USD ($)		1 Months Ended	9 Months Ended
	Jun. 10, 2022	Nov. 17, 2021	Sep. 30, 2022
SHAREHOLDERS EQUITY
Available securities with company		$ 3,500,000
Restricted Stock Awards Granted			1,440,000
Shares of common stock	87,121
Sales price of share	$ 1.66
Commission fees	$ 40,000
Legal and audit fees	91,000
Reimbursement of gross proceeds		4,000
Reimburesement of certain specified expenses		$ 25,000
Sales agent commission		3%
Net proceeds	$ 141,000

SHAREBASED COMPENSATION (Detail

SHAREBASED COMPENSATION (Details)	9 Months Ended
	Sep. 30, 2022 $ / shares shares
SHAREBASED COMPENSATION
Number Of Options Outstanding, beginning balance	1,123,435
Number Of Options Granted	520,000
Number Of Options Expired/cancelled	(187,435)
Number Of Options Outstanding, ending balance	1,456,000
Number Of Options Exercisable	624,000
Weighted Average Exercise Price Outstanding, beginning balance | $ / shares	$ 1.80
Weighted Average Exercise Price Granted | $ / shares	1.17
Weighted Average Exercise Price Expired/cancelled | $ / shares	2.34
Weighted Average Exercise Price Outstanding, ending balance | $ / shares	$ 1.51
Weighted Average Remaining Contractual Life (in Years) Outstanding, beginning	3 years
Weighted Average Remaining Contractual Life (in Years) Outstanding, ending	2 years 9 months 18 days
Weighted Average Remaining Contractual Life (in Years) Exercisable	1 year 8 months 12 days

SHAREBASED COMPENSATION (Deta_2

SHAREBASED COMPENSATION (Details Narrative) - USD ($)	1 Months Ended		9 Months Ended
	Aug. 25, 2022	Jan. 25, 2022	Sep. 30, 2022	Sep. 30, 2021
Company Recognized Stock Option Expense			$ 312,000
Unamortized Stock-based Compensation Expense			318,000
Outstanding and exercisable options			0
Common Stock Shares		520,000
Common Stock Shares,exercise Price		$ 1.17
Aggregate Fair Value Of The Options		$ 454,000
Fair Value Of The Options Discount Rate		1.56%
Fair Value Of The Options, Expexted Term		3 years 6 months
Fair Value Of The Options, Expected Volatility		120%
Description Of Option Term		The options have a term of five years and fully vest on January 2025, with 33.3% vesting each subsequent year from the date of grant, contingent upon the recipient’s continued service with the Company
Stock-based compensation expense			1,572,000	$ 1,867,000
Common Stock, total Fair Value			2,000	$ 1,000
2021 Equity Incentive Plan [Member]
Stock-based compensation expense			1,260,000
Unamortized Stock-based Compensation Expense, Restricted Stock Option			$ 1,291,000
Common Stock Shares Issued	240,000	1,200,000
Restricted Common Stock Vesting Percentage		33.30%
Common Stock, total Fair Value	$ 280,000	$ 1,404,000
Share vesting description	The grant of the 240,000 shares of restricted common stock vest as follows: 100% of 170,000 shares and 100% of 70,000 shares vesting on July 12, 2023 and September 27, 2023, respectively, contingent upon each recipient’s continued service with the Company

EARNINGS PER COMMON SHARE (Deta

EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income (loss) per common share:
Net Income (loss)	$ 1,079	$ (325)	$ (225)	$ 5,628	$ 178
Numerator
Weighted Average Number Of Common Shares Outstanding: Basic	85,644,180	79,533,016		85,419,689	78,628,077
Dilutive Effect Of Common Stock Equivalents:
Options And Warrants	$ 0	$ 0		$ 0	$ 72,063
Denominator:
Weighted Average Number Of Common Shares Outstanding: Diluted	85,644,180	79,533,016		85,419,689	78,700,140
Loss Per Common Share: Basic	$ 0.01	$ 0		$ 0.07	$ 0
Loss Per Common Share: Diluted	$ 0.01	$ 0		$ 0.07	$ 0

EARNINGS PER COMMON SHARE (De_2

EARNINGS PER COMMON SHARE (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income (loss) per common share:
Share Equivalents Related To Options To Purchase	1,456,000	1,143,436	1,456,000	1,126,769

SUBSEQUENT EVENTS (Details Narr

SUBSEQUENT EVENTS (Details Narrative)	Aug. 02, 2022 USD ($)
SUBSEQUENT EVENTS
Aggregate civil penalties	$ 850,500
Minimum current estimated cost of well	$ 50,000
Interest accruing on unpaid portions	8.75%