Pedevco Trades For Current Production But Can Grow A Lot More

Mar. 14, 2023 3:59 AM ETPEDEVCO Corp. (PED) StockPED3 Comments
Quipus Capital
1.56K Followers

Summary

  • PEDEVCO is an O&G E&P company with assets in the Permian and the D-J basins. The company is financing horizontal well development with cash flows from vertical wells.
  • The company has a history of losses and value destruction, but most of it comes from legacy business. The company's new owners and managers initiated a different strategy in 2018.
  • The new strategy has proven profitable and conservative. I also like high insider ownership, low managerial compensation, and SG&A cost containment.
  • Considering the company's expected production for FY23 and oil prices between $75 and $80, PED can generate a 7.5% to 12.5% earnings yield on its current market cap.
  • Profits can then be reinvested in its properties, with good future prospects as reflected in the company's PV-10 calculations.
Drilling Fracking Rig at Night

grandriver

PEDEVCO (NYSE:PED) is an asset owner of oil properties in New Mexico and Colorado.

The company's current CEO purchased more than half of the company's shares in 2018 and started a strategic shift that implies financing investment in horizontal developments

This article was written by

Quipus Capital
1.56K Followers
Long-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future price action. Instead, our articles focus on operational aspects, understanding the long-term earnings power of companies, the competitive dynamics of the industries where they participate, and buying companies that we would like to hold independently of how the price moves in the future. Most QC calls will be holds, and that is by design. Only a very small fraction of companies should be a buy at any point in time. However, hold articles provide important information for future investors and a healthy dose of skepticism to a relatively bullish-biased market.Disclaimer: All of the author's articles are written on an "as is" basis and without warranty. They represent the author's opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions. The author disclaims all liability for any actions taken based on the information contained in any articles published.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PED either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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