Fri, 2014-08-15

Title: Quarterly update – maintained valuation based on development updates - Neutral rating and maintained target price of US$2.97

Synopsis: We believe PEDEVCO Corp. (PED) is currently on track with its 2014 development plan and has promising long-term prospects, given its ability to operate and fulfill development plans in the next 12 months. PED has begun to see significant increases in revenues over the past two quarters as a result of production from its Wattenberg and Niobrara assets, and we believe revenues will continue to grow at an increasing rate. However, PED is still in the investment stage and costs remain high. Though operating expenses grew at a lower rate than revenues over the past quarter, the firm still operated on a negative operating income and negative operating cash flows. While we look forward to the potential long-term upside to PED’s share price, the firm has to first achieve consistent and economic production to reach its fair value based on its reserve levels, operations, and management expertise.

Report length: 5 pages (excluding legal disclaimer)

Boris Miao