Pedevco Q3 2026: Why a $16.6M Derivative Loss Hid a Strong Quarter

Pedevco's Q3 2026 GAAP loss of $0.70 per share, against an analyst estimate of $0.18, was driven almost entirely by a $16.6 million net loss on derivative contracts. Of that figure, $12.0 million was a non-cash unrealized mark-to-market charge that swelled as commodity prices climbed during the quarter, and $4.6 million reflected realized settlement losses. Neither touched the company's actual oil and gas operations.

Strip away the derivatives and the underlying business looked considerably healthier. Revenue of $35.54 million beat the $32.15 million consensus by 10.5% and represented a 411% year-over-year surge, with $26.7 million of that increase coming from higher production volumes and $1.9 million from a 31% rise in average realized oil prices to $83.81 per barrel. Operating income came in at $8.9 million.

The October 2025 merger with Juniper Capital Advisors-controlled assets is what produced that dramatic top-line expansion, lifting production 298% year over year to 538,231 Boe for the quarter, or 5,850 Boe per day. Sequential output did slip 14% from Q2, the result of temporary offset shut-ins, accelerated rod conversions, and the sale of non-core Northern Powder River Basin assets that curtailed more than 200 barrels of oil per day. CEO Reagan Dukes said the affected wells have since returned online and the company expects sequentially stronger production in Q4.

Beyond the derivative noise, Pedevco added more than 5,678 net acres in a BLM lease sale for roughly $5.9 million, nearly doubling its Mowry Shale position in that area to about 12,000 net acres. Three non-operated Powder River Basin wells completed by partners began producing in early November. Management is pointing to Rockies development as the engine for production growth in 2027.

Full-year 2026 Adjusted EBITDA guidance was reiterated at $60 million to $70 million, under a revised definition that excludes severance costs. Net capital expenditure guidance was raised to $37 million to $42 million, up from a prior ceiling of $20 million that had only reflected first-half activity, with the increase driven by Mowry Shale lease acquisitions and development through year-end. The company is also searching for a permanent CEO, with an announcement described as hoped for soon.