PEDEVCO (PED) 10-Q 9 Nov 23 2023 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 08, 2023
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, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		87,250,267
Entity File Number	001-35922
Entity Incorporation State Country Code	TX
Entity Tax Identification Number	22-3755993
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
Security 12b Title	Common Stock, $0.001 par value per share
Trading Symbol	PED
Security Exchange Name	NYSE
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash	$ 13,200	$ 29,430
Accounts receivable - oil and gas	5,615	2,430
Prepaid expenses and other current assets	342	249
Total current assets	19,157	32,109
Oil and gas properties - successful efforts method:
Oil and gas properties, subject to amortization, net	81,606	79,372
Oil and gas properties, not subject to amortization, net	5,980	775
Total oil and gas properties, net	87,586	80,147
Operating lease - right-of-use asset	337	71
Other assets	3,803	3,783
Total assets	110,883	116,110
Current liabilities:
Accounts payable	1,054	1,556
Accrued expenses	2,354	13,835
Revenue payable	956	1,018
Operating lease liabilities - current	87	81
Asset retirement obligations - current	896	472
Total current liabilities	5,347	16,962
Long-term liabilities:
Operating lease liabilities, net of current portion	250	0
Asset retirement obligations, net of current portion	2,996	2,689
Total liabilities	8,593	19,651
Shareholders' equity:
Common stock, $0.001 par value, 200,000,000 shares authorized; 87,250,267 and 85,790,267 shares issued and outstanding, respectively	87	86
Additional paid-in capital	224,659	223,114
Accumulated deficit	(122,456)	(126,741)
Total shareholders' equity	102,290	96,459
Total liabilities and shareholders' equity	$ 110,883	$ 116,110

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
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	87,250,267	85,790,267
Common Stock, Shares Outstanding	87,250,267	85,790,267

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue :
Oil and gas sales	$ 7,330	$ 7,472	$ 24,042	$ 24,109
Operating expenses:
Lease operating costs	2,245	2,918	7,540	8,076
Selling, general and administrative expense	1,297	1,220	4,118	4,108
Depreciation, depletion, amortization and accretion	2,932	2,313	8,411	6,427
Total operating expenses	6,474	6,451	20,069	18,611
Operating income	856	1,021	3,973	5,498
Other income:
Interest income	88	33	272	40
Other income	5	25	40	90
Total other income	93	58	312	130
Net income	$ 949	$ 1,079	$ 4,285	$ 5,628
Income per common share:
Basic	$ 0.01	$ 0.01	$ 0.05	$ 0.07
Diluted	$ 0.01	$ 0.01	$ 0.05	$ 0.07
Weighted average number of common shares outstanding:
Basic	87,108,745	85,644,180	86,958,033	85,419,689
Diluted	87,108,745	85,644,180	86,958,033	85,419,689

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash Flows From Operating Activities:
Net income	$ 4,285	$ 5,628
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion	8,411	6,427
Amortization of right-of-use asset	86	75
Share-based compensation expense	1,546	1,572
Changes in operating assets and liabilities:
Accounts receivable - oil and gas	(3,185)	(899)
Prepaid expenses and other current assets	(93)	10
Accounts payable	(232)	(243)
Accrued expenses	669	366
Revenue payable	(62)	58
Net cash provided by operating activities	11,425	12,994
Cash Flows From Investing Activities:
Cash paid for drilling and completion costs	(27,985)	(11,413)
Cash received from the sale of oil and gas property	366	0
Cash received from security deposit reimbursement	9	0
Cash paid for vehicle	(45)	0
Net cash used in investing activities	(27,655)	(11,413)
Cash Flows From Financing Activities:
Proceeds from issuance of shares, net of offering costs	0	50
Net cash provided by financing activities	0	50
Net (decrease) increase in cash and restricted cash	(16,230)	1,631
Cash and restricted cash at beginning of period	32,977	29,227
Cash and restricted cash at end of period	16,747	30,858
Cash paid for:
Interest	0	0
Income taxes	0	0
Noncash investing and financing activities:
Change in accrued oil and gas development costs	12,558	1,791
Changes in estimates of asset retirement costs, net	131	158
Issuance of restricted common stock	$ 1	$ 2

CONSOLIDATED STATEMENTS OF CHAN

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, 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)
Share-based compensation	1,572
Net income	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)
Share-based compensation	537	0	537	0
Net income	3,210	$ 0	0	3,210
Sale of common stock to non-affiliate, shares		87,121
Sale of common stock to non-affiliate, amount	50	$ 0	50	0
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
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 Dec. 31, 2022		85,790,267
Balance, amount at Dec. 31, 2022	96,459	$ 86	223,114	(126,741)
Issuance of restricted common stock, shares		1,250,000
Issuance of restricted common stock, amount	0	$ 1	(1)	0
Share-based compensation	518	0	518	0
Net income	1,762	$ 0	0	1,762
Balance, shares at Mar. 31, 2023		87,040,267
Balance, amount at Mar. 31, 2023	98,739	$ 87	223,631	(124,979)
Balance, shares at Dec. 31, 2022		85,790,267
Balance, amount at Dec. 31, 2022	96,459	$ 86	223,114	(126,741)
Share-based compensation	1,546
Net income	4,285
Balance, shares at Sep. 30, 2023		87,250,267
Balance, amount at Sep. 30, 2023	102,290	$ 87	224,659	(122,456)
Balance, shares at Mar. 31, 2023		87,040,267
Balance, amount at Mar. 31, 2023	98,739	$ 87	223,631	(124,979)
Share-based compensation	517	0	517	0
Net income	1,574	$ 0	0	1,574
Balance, shares at Jun. 30, 2023		87,040,267
Balance, amount at Jun. 30, 2023	100,830	$ 87	224,148	(123,405)
Issuance of restricted common stock, shares		210,000
Issuance of restricted common stock, amount	0	$ 0	0	0
Share-based compensation	511	0	511	0
Net income	949	$ 0	0	949
Balance, shares at Sep. 30, 2023		87,250,267
Balance, amount at Sep. 30, 2023	$ 102,290	$ 87	$ 224,659	$ (122,456)

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2023
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTE 1 – BASIS OF PRESENTATION The accompanying interim unaudited consolidated financial statements of PEDEVCO Corp. (“PEDEVCO” or the “Company”), have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in PEDEVCO’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the 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, 2022, filed with the SEC on March 29, 2023 (the “2022 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, 2023
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 and Wyoming. The Company holds its Permian Basin leasehold acres located in Chaves and Roosevelt Counties, New Mexico, through its wholly-owned subsidiary, Pacific Energy Development Corp. (“PEDCO”), which asset the Company refers to as its “Permian Basin Asset,” and operates its Permian Basin Asset through its wholly-owned operating subsidiaries EOR Operating Company and Ridgeway Arizona Oil Corp. The Company holds its D-J Basin leasehold acres located in Weld and Morgan Counties, Colorado, and Laramie County, Wyoming, through its wholly-owned subsidiary PRH Holdings LLC, which asset the Company refers to as its “D-J Basin Asset,” and operates its D-J Basin Asset through its wholly-owned operating subsidiary Red Hawk Petroleum, LLC (“Red Hawk”). 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, 2023
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 2022 Annual Report. There have been no changes to the Company’s significant accounting policies since December 31, 2022. Recently Issued Accounting Pronouncements On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments Subsequent Events The Company has evaluated all transactions through the date the 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, 2023
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, 2023 2022 2023 2022 Oil sales $ 6,705 $ 6,978 $ 21,977 $ 22,098 Natural gas sales 330 398 1,099 1,292 Natural gas liquids sales 295 96 966 719 Total revenue from customers $ 7,330 $ 7,472 $ 24,042 $ 24,109 There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2023.

CASH

CASH	9 Months Ended
	Sep. 30, 2023
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, 2023 December 31, 2022 Cash $ 13,200 $ 29,430 Restricted cash included in other assets 3,547 3,547 Total cash and restricted cash $ 16,747 $ 32,977

OIL AND GAS PROPERTIES

OIL AND GAS PROPERTIES	9 Months Ended
	Sep. 30, 2023
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, 2023 (in thousands): Balance at December 31, 2022 Additions Disposals Transfers Balance at September 30, 2023 Oil and gas properties, subject to amortization $ 176,253 $ 10,221 $ (366 ) $ - $ 186,108 Oil and gas properties, not subject to amortization 775 5,206 - - 5,981 Asset retirement costs 1,407 131 - - 1,538 Accumulated depreciation, depletion and impairment (98,288 ) (7,753 ) - - (106,041 ) Total oil and gas assets $ 80,147 $ 7,805 $ (366 ) $ - $ 87,586 For the nine-month period ended September 30, 2023, the Company incurred $9,985,000 of capital costs primarily related to non-operated drilling and completion costs related to the Company’s participation in eight new non-operated wells in the D-J Basin Asset in which the Company participated, together with costs related to certain workovers for lift conversions and cleanouts in the Company’s Permian Basin Asset. The Company also acquired approximately 282 net mineral acres, and 6,305 net lease acres, in and around its existing footprint in the D-J Basin through multiple transactions with total acquisition and due diligence costs of $493,000 for the net mineral acres and $4,946,000 for the net lease acres. On September 12, 2023, the Company and Evolution Petroleum Corporation (“Evolution”) entered into a Participation Agreement for the joint development of approximately 16,000 gross leasehold acres divided into twelve “Development Blocks” within the Company’s Permian Basin Asset, in which the parties may jointly develop by drilling and completion of up to nine horizontal San Andres wells in each Development Block. The Company received net proceeds of $366,000 and will serve as the operator. Evolution acquired a 50% working interest share in existing leases, covering the initial two Development Blocks (which equals Evolution’s share of the acreage portion for nine drilling locations therein), and upon completion of the wells in each Development Block, Evolution will have the right, but not the obligation, to acquire a 50% working interest share in the next Development Block in exchange for the payment of $450 per net acre of existing leases held by the Company in such block, and participate on a 50% working interest share basis in the drilling and completion of up to nine horizontal San Andres wells in such Development Block. The depletion recorded for production on proved properties for the three and nine months ended September 30, 2023 and 2022, amounted to $2,616,000, compared to $2,084,000, and $7,753,000, compared to $5,956,000, respectively.

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS	9 Months Ended
	Sep. 30, 2023
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, 2023 Balance at the beginning of the period (1) $ 3,161 Accretion expense 642 Liabilities settled (42 ) Changes in estimates, net 131 Balance at end of period (2) $ 3,892 (1) Includes $472,000 of current asset retirement obligations at December 31, 2022. (2) Includes $896,000 of current asset retirement obligations at September 30, 2023.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2023
Commitments and contingencies
COMMITMENTS AND CONTINGENCIES	NOTE 8 – COMMITMENTS AND CONTINGENCIES Lease Agreements Currently, the Company has one operating sublease for office space that requires 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 a borrowing rate obtained from a financial institution at which it maintains banking accounts. The Company had a lease for its corporate offices in Houston, Texas on approximately 5,200 square feet of office space that expired on August 31, 2023 and had a base monthly rent of approximately $10,000. In December 2022, the Company entered into a new lease agreement for its existing office space that commenced on September 1, 2023, which expires on February 28, 2027. The base monthly rent will be approximately $9,200 for the first 18 months and increase to approximately $9,500 thereafter. The Company paid both a security deposit and prepaid rent for $14,700, respectively. Supplemental cash flow information related to the Company’s operating lease is included in the table below (in thousands): Nine Months Ended September 30, 2023 Cash paid for amounts included in the measurement of lease liabilities $ 77 Supplemental balance sheet information related to operating leases is included in the table below (in thousands): September 30, 2023 Operating lease – right-of-use asset $ 337 Operating lease liabilities - current $ 87 Operating lease liabilities - long-term 250 Total lease liability $ 337 The weighted-average remaining lease term for the Company’s operating lease is 3.4 years as of September 30, 2023, with a weighted-average discount rate of 7.90%. Lease liability with enforceable contract terms that have greater than one-year terms are as follows (in thousands): Remainder of 2023 $ 28 2024 110 2025 112 2026 115 Thereafter 19 Total lease payments 384 Less imputed interest (47 ) Total lease liability $ 337 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 2023, and no significant net acres expire within the next two-year period (net to our direct ownership interest only). In the Permian Basin Asset, 32 acres are due to expire during the remainder of 2023 and 40 net acres expire thereafter (net to our direct ownership interest only). The Company plans to hold significantly all of this acreage through a program of drilling and completing producing wells. If the Company is not able to drill and complete a well before lease expiration, the Company may seek to extend leases where able. Other Commitments Although the Company may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of business, the Company is not currently a party to any material legal proceeding. In addition, the Company is not aware of any material legal or governmental proceedings against it or contemplated to be brought against it. As part of its regular operations, the Company may become party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters. Although the Company provides no assurance about the outcome of 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, 2023
Shareholders' equity:
SHAREHOLDERS' EQUITY	NOTE 9 – SHAREHOLDERS’ EQUITY Common Stock During the nine months ended September 30, 2023, the Company granted an aggregate of 1,460,000 restricted stock awards to various employees and board members of the Company (see Note 10 below).

SHARE BASED COMPENSATION

SHARE BASED COMPENSATION	9 Months Ended
	Sep. 30, 2023
SHARE BASED 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 23, 2023, an aggregate of 1,250,000 shares of restricted common stock were granted to officers of the Company under the Company’s 2021 Equity Incentive Plan. The grant of the 1,250,000 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 had a total fair value of $1,363,000 based on the market price on the issuance date. On August 31, 2023, an aggregate of 210,000 restricted stock awards were granted to two board members under the Company’s 2021 Equity Incentive Plan. The grant of the 210,000 shares of restricted common stock vest as follows: 100% of 125,000 shares and 100% of 85,000 shares vesting on July 12, 2024 and September 27, 2024, respectively, contingent upon each recipient’s continued service with the Company. These shares have a total fair value of $200,000, 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, 2023, was $1,229,000. The remaining unamortized stock-based compensation expense at September 30, 2023 related to restricted stock was $1,211,000. Options On January 23, 2023, the Company granted options to purchase an aggregate of 540,000 shares of common stock to various Company employees at an exercise price of $1.09 per share under the Company’s 2021 Equity Incentive Plan. The options have a term of five years and fully vest in January 2026. 33.3% vest 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 $429,000. Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 3.61% based on the applicable US Treasury bill rate, (2) expected term of 3.5 years, (3) expected volatility of 113% based on the trading history of the Company, and (4) zero expected dividends. During the nine months ended September 30, 2023, the Company recognized stock option expense of $317,000. The remaining amount of unamortized stock options expense at September 30, 2023 was $316,000. The intrinsic value of outstanding and exercisable options at September 30, 2023 was $-0-. Option activity during the nine months ended September 30, 2023 was: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (Years) Outstanding at December 31, 2022 1,407,667 $ 1.51 2.7 Granted 540,000 $ 1.09 Expired/Canceled (241,666 ) $ 2.14 Outstanding at September 30, 2023 1,706,001 $ 1.29 3.0 Exercisable at September 30, 2023 739,334 $ 1.46 1.9

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	9 Months Ended
	Sep. 30, 2023
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE	NOTE 11 – EARNINGS PER COMMON SHARE Earnings per common share-basic is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Net income per common share-diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing net income by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net income 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: 2023 2022 2023 2022 Net income $ 949 $ 1,079 $ 4,285 $ 5,628 Denominator: Weighted average common shares – basic 87,108,745 85,644,180 86,958,033 85,419,689 Dilutive effect of common stock equivalents: Options - - - - Denominator: Weighted average common shares – diluted 87,108,745 85,644,180 86,958,033 85,419,689 Earnings per share – basic $ 0.01 $ 0.01 $ 0.05 $ 0.07 Earnings per share – diluted $ 0.01 $ 0.01 $ 0.05 $ 0.07 For the three and nine months ended September 30, 2023 and 2022, share equivalents related to options to purchase 1,706,001, compared to 1,456,000, and 1,706,001 compared to 1,456,000, 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, 2023
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 2023 and 2022 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 months ended September 30, 2023 and 2022, respectively.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recently Issued Accounting Pronouncements	On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments
Subsequent Events	The Company has evaluated all transactions through the date the 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, 2023
REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of revenue from Contract with Customers	Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Oil sales $ 6,705 $ 6,978 $ 21,977 $ 22,098 Natural gas sales 330 398 1,099 1,292 Natural gas liquids sales 295 96 966 719 Total revenue from customers $ 7,330 $ 7,472 $ 24,042 $ 24,109

CASH (Tables)

CASH (Tables)	9 Months Ended
	Sep. 30, 2023
CASH
Schedule of Cash And Restricted Cash	September 30, 2023 December 31, 2022 Cash $ 13,200 $ 29,430 Restricted cash included in other assets 3,547 3,547 Total cash and restricted cash $ 16,747 $ 32,977

OIL AND GAS PROPERTIES (Tables)

OIL AND GAS PROPERTIES (Tables)	9 Months Ended
	Sep. 30, 2023
OIL AND GAS PROPERTIES
Schedule Oil And Gas Properties	Balance at December 31, 2022 Additions Disposals Transfers Balance at September 30, 2023 Oil and gas properties, subject to amortization $ 176,253 $ 10,221 $ (366 ) $ - $ 186,108 Oil and gas properties, not subject to amortization 775 5,206 - - 5,981 Asset retirement costs 1,407 131 - - 1,538 Accumulated depreciation, depletion and impairment (98,288 ) (7,753 ) - - (106,041 ) Total oil and gas assets $ 80,147 $ 7,805 $ (366 ) $ - $ 87,586

ASSET RETIREMENT OBLIGATIONS (T

ASSET RETIREMENT OBLIGATIONS (Tables)	9 Months Ended
	Sep. 30, 2023
ASSET RETIREMENT OBLIGATIONS
Schedule of Asset Retirement Obligation	Nine Months Ended September 30, 2023 Balance at the beginning of the period (1) $ 3,161 Accretion expense 642 Liabilities settled (42 ) Changes in estimates, net 131 Balance at end of period (2) $ 3,892

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2023
Commitments and contingencies
Schedule Of supplemental Cash flow information	Nine Months Ended September 30, 2023 Cash paid for amounts included in the measurement of lease liabilities $ 77
Schedule of supplemental balance sheet information	September 30, 2023 Operating lease – right-of-use asset $ 337 Operating lease liabilities - current $ 87 Operating lease liabilities - long-term 250 Total lease liability $ 337
Supplemental Information Related To Operating Lease	Remainder of 2023 $ 28 2024 110 2025 112 2026 115 Thereafter 19 Total lease payments 384 Less imputed interest (47 ) Total lease liability $ 337

SHARE BASED COMPENSATION (Table

SHARE BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2023
SHARE BASED COMPENSATION
Schedule of Stock Option Activity	Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (Years) Outstanding at December 31, 2022 1,407,667 $ 1.51 2.7 Granted 540,000 $ 1.09 Expired/Canceled (241,666 ) $ 2.14 Outstanding at September 30, 2023 1,706,001 $ 1.29 3.0 Exercisable at September 30, 2023 739,334 $ 1.46 1.9

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2023
EARNINGS PER COMMON SHARE
Shedule of Earnings Per Share	Three Months Ended September 30, Nine Months Ended September 30, Numerator: 2023 2022 2023 2022 Net income $ 949 $ 1,079 $ 4,285 $ 5,628 Denominator: Weighted average common shares – basic 87,108,745 85,644,180 86,958,033 85,419,689 Dilutive effect of common stock equivalents: Options - - - - Denominator: Weighted average common shares – diluted 87,108,745 85,644,180 86,958,033 85,419,689 Earnings per share – basic $ 0.01 $ 0.01 $ 0.05 $ 0.07 Earnings per share – diluted $ 0.01 $ 0.01 $ 0.05 $ 0.07

REVENUE FROM CONTRACTS WITH C_3

REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Total revenue from customers	$ 7,330	$ 7,472	$ 24,042	$ 24,109
Oil Sales
Total revenue from customers	6,705	6,978	21,977	22,098
Natural Gas Sales
Total revenue from customers	330	398	1,099	1,292
Natural Gas Liquids Sales
Total revenue from customers	$ 295	$ 96	$ 966	$ 719

CASH (Details)

CASH (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
CASH
Cash and Cash Equivalents	$ 13,200	$ 29,430
Restricted cash included in other assets	3,547	3,547
Total cash and cash equivalents and restricted cash	$ 16,747	$ 32,977

OIL AND GAS PROPERTIES (Details

OIL AND GAS PROPERTIES (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Oil and gas properties, subject to amortization	$ 186,108	$ 176,253
Oil and gas properties, subject to amortization	(186,108)	(176,253)
Oil and gas properties, not subject to amortization	5,981	775
Asset retirement costs	1,538	1,407
Accumulated depreciation, depletion and impairment	(106,041)	(98,288)
Total oil and gas properties, net	87,586	$ 80,147
Additions
Oil and gas properties, subject to amortization	10,221
Oil and gas properties, subject to amortization	(10,221)
Oil and gas properties, not subject to amortization	5,206
Asset retirement costs	131
Accumulated depreciation, depletion and impairment	(7,753)
Total oil and gas properties, net	7,805
Disposals
Oil and gas properties, subject to amortization	366
Oil and gas properties, subject to amortization	(366)
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	366
Transfers
Oil and gas properties, subject to amortization	0
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

OIL AND GAS PROPERTIES (Detai_2

OIL AND GAS PROPERTIES (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Sep. 12, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
OIL AND GAS PROPERTIES
Capital cost of drilling and completion				$ 9,985,000
Due deligance cost		$ 493,000		493,000		$ 4,946,000
Depletion		$ 2,616,000	$ 2,084,000	$ 7,753,000	$ 5,956,000
Description of additional acquired	Evolution acquired a 50% working interest share in existing leases, covering the initial two Development Blocks (which equals Evolution’s share of the acreage portion for nine drilling locations therein), and upon completion of the wells in each Development Block, Evolution will have the right, but not the obligation, to acquire a 50% working interest			The Company also acquired approximately 282 net mineral acres, and 6,305 net lease acres
Development	$ 16,000
Net proceeds	$ 366,000
working interest	50%

ASSET RETIREMENT OBLIGATIONS (D

ASSET RETIREMENT OBLIGATIONS (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
ASSET RETIREMENT OBLIGATIONS
Balance at the beginning of the period	$ 3,161
Accretion expense	642
Liabilities settled	(42)
Changes in estimates, net	131
Balance at end of period	$ 3,892

ASSET RETIREMENT OBLIGATIONS _2

ASSET RETIREMENT OBLIGATIONS (Details Narrative) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
ASSET RETIREMENT OBLIGATIONS
Cureent asset retirement	$ 896,000	$ 472,000

COMMITMENTS AND CONTINGENCIES_2

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Commitments and contingencies
Cash paid for amounts included in the measurement of lease liabilities	$ 77
Operating lease - right-of-use asset	337	$ 337	$ 71
Operating lease liabilities - current		87
Operating lease liabilities - long-term	250	250	$ 0
Total lease liability	$ 337	$ 337

COMMITMENTS AND CONTINGENCIES_3

COMMITMENTS AND CONTINGENCIES (Details 1) - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023
Commitments and contingencies
2023	$ 28
2024	110
2025	112
2026	115
Thereafter	19
Total lease payments	384
Less imputed interest	47
Total lease liability	$ (337)	$ (337)

COMMITMENTS AND CONTINGENCIES_4

COMMITMENTS AND CONTINGENCIES (Details Narrative)	9 Months Ended
	Sep. 30, 2023 USD ($) ft²
Commitments and contingencies
Weighted-average discount rate	7.90%
Expiry of lease date	Feb. 28, 2027
Office space | ft²	5,200
Expiry of lease of office space	Aug. 31, 2023
Rent expenses | $	$ 10,000
Weighted-average remaining lease term	3 years 4 months 24 days
Description of lease hold commitments	In the Permian Basin Asset, 32 acres are due to expire during the remainder of 2023 and 40 net acres expire thereafter (net to our direct ownership interest only)
Description of lease payments	The base monthly rent will be approximately $9,200 for the first 18 months and increase to approximately $9,500 thereafter. The Company paid both a security deposit and prepaid rent for $14,700, respectively

SHAREHOLDERS EQUITY (Details Na

SHAREHOLDERS EQUITY (Details Narrative)	9 Months Ended
	Sep. 30, 2023 shares
Shareholders' equity:
Restricted stock awards granted	1,460,000

SHAREBASED COMPENSATION (Detail

SHAREBASED COMPENSATION (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2023 $ / shares shares
SHARE BASED COMPENSATION
Number of options outstanding,beginning | shares	1,407,667
Number of options granted | shares	540,000
Number of options expired/cancelled | shares	(241,666)
Number of options outstanding, Ending | shares	1,706,001
Number of options exercisable | shares	739,334
Weighted average exercise price outstanding, beginning | $ / shares	$ 1.51
Weighted average exercise price granted | $ / shares	1.09
Weighted average exercise price expired/cancelled | $ / shares	2.14
Weighted average exercise price outstanding, ending | $ / shares	1.29
Weighted average exercise price exercisable | $ / shares	$ 1.46
Weighted average remaining contractual life (in years) outstanding, beginning	2 years 8 months 12 days
Weighted average remaining contractual life (in years) outstanding, ending	3 years
Weighted average remaining contractual life (in years) exercisable	1 year 10 months 24 days

SHAREBASED COMPENSATION (Deta_2

SHAREBASED COMPENSATION (Details Narrative) - USD ($)	1 Months Ended		9 Months Ended
	Aug. 31, 2023	Jan. 23, 2023	Sep. 30, 2023	Sep. 30, 2022
Unamortized stock-based compensation expense, restricted stock			$ 1,211,000
Stock-based compensation expense			1,229,000
Intrinsic value of outstanding and exercisable			0
Common stock, total fair value			1,000	$ 2,000
2021 Equity Incentive Plan [Member]
Description of restricted stock		The grant of the 1,250,000 shares of restricted common stock vest as follows: 33.3% vest each subsequent year from the date of grant
Common stock shares issued		1,250,000
Common stock, total fair value		$ 1,363,000
Amended and Restated 2012 Equity Incentive Plan [Member]
Description of restricted stock	The grant of the 210,000 shares of restricted common stock vest as follows: 100% of 125,000 shares and 100% of 85,000 shares vesting on July 12, 2024 and September 27, 2024
Common stock shares issued	210,000
Common stock, total fair value	$ 200,000
Option [Member]
Unamortized stock-based compensation expense, restricted stock			317,000
Stock-based compensation expense, stock option			$ 316,000
Common stock shares		540,000
Common stock shares, exercise price		$ 1.09
Aggregate fair value of the options		$ 429,000
Fair value of the options discount rate		3.61%
Fair value of the options, expexted term		3 years 6 months
Fair value of the options, expected volatility		113%
Description of option term		The options have a term of five years and fully vest in January 2026. 33.3% vest each subsequent year from the date of grant, contingent upon the 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, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator
Net income	$ 949	$ 1,574	$ 1,762	$ 1,079	$ 3,210	$ 1,339	$ 4,285	$ 5,628
Weighted average common shares - basic	87,108,745			85,644,180			86,958,033	85,419,689
Dilutive Effect Of Common Stock Equivalents:
Dilutive effect of common stock equivalents: Options	$ 0			$ 0			$ 0	$ 0
Weighted average common shares - diluted	87,108,745			85,644,180			86,958,033	85,419,689
Earnings per common share - basic	$ 0.01			$ 0.01			$ 0.05	$ 0.07
Earnings per common share - diluted	$ 0.01			$ 0.01			$ 0.05	$ 0.07

EARNINGS PER COMMON SHARE (De_2

EARNINGS PER COMMON SHARE (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
EARNINGS PER COMMON SHARE
Share Equivalents Related To Options To Purchase	1,706,001	1,706,001	1,456,000	1,456,000