Company: PED
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001654954-25-005762
Chunk: 5

Company: PEDEVCO CORP
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 5
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 through its New Mexico operating subsidiary Ridgeway Arizona Oil Corp. (“RAZO”), has entered into a Stipulated Final Order (“SFO”) with Director of the Oil and Gas Conservation Division of New Mexico (the “OCD”) pursuant to which, among other things, RAZO agreed to reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.  RAZO has been timely paying each reimbursement invoice received from the OCD in accordance with the SFO and is in full compliance with the SFO.  The SFO superseded all previous Agreed Compliance Orders, as amended, entered into by and between RAZO and the OCD. During the three months ended March 31, 2025, the Company reimbursed the OCD $53,000 and incurred an additional $173,000 in plugging and abandoning costs related to the SFO.

NOTE 9 – COMMITMENTS AND CONTINGENCIES Lease Agreements  Currently, the Company has one operating sublease 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 a borrowing rate obtained from a financial institution at which it maintains banking accounts. In December 2022, the Company entered into a lease agreement for approximately 5,200 square feet of office space in Houston, Texas, that commenced on September 1, 2023, which expires on February 28, 2027. The base monthly rent was approximately $9,200 for the first 18 months (through March 2025) and increased to approximately $9,500 for each month thereafter. The Company paid both a security deposit and prepaid rent for $14,700, respectively. Supplemental cash flow