Company: TPET
Filing Date: 2025-09-12
Form Type: 10-Q
Source: 0001493152-25-013189
Chunk: 103

Company: Trio Petroleum Corp.
Filing Date: 2025-09-12
Form: 10-Q
Item: Part I, Item 2
Chunk 103
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our condensed consolidated financial statements.

Oil
and Gas Assets and Exploration Costs – Successful Efforts

Our
projects are in exploration and/or early production stages and we began generating revenue from its operations during the quarterly period
ended April 30, 2024. We apply the successful efforts method of accounting for crude oil and natural gas properties. Under this method,
exploration costs such as exploratory, geological, and geophysical costs, delay rentals and exploratory overhead are expensed as incurred.
If an exploratory property provides evidence to justify potential development of reserves, drilling costs associated with the property
are initially capitalized, or suspended, pending a determination as to whether a commercially sufficient quantity of proved reserves
can be attributed to the area as a result of drilling. At the end of each quarter, management reviews the status of all suspended exploratory
property costs considering ongoing exploration activities; in particular, whether we are making sufficient progress in our ongoing exploration
and appraisal efforts. If management determines that future appraisal drilling or development activities are unlikely to occur, associated
exploratory well costs are expensed.

Costs
to acquire mineral interests in crude oil and/or natural gas properties, drill and equip exploratory wells that find proved reserves
and drill and equip development wells are capitalized. Acquisition costs of unproved leaseholds are assessed for impairment during the
holding period and transferred to proven crude oil and/or natural gas properties to the extent associated with successful exploration
activities. Significant undeveloped leases are assessed individually for impairment, based on our current exploration plans, and a valuation
allowance is provided if impairment is indicated. Capitalized costs from successful exploration and development activities associated
with producing crude oil and/or natural gas leases, along with capitalized costs for support equipment and facilities, are amortized
to expense using the unit-of-production method based on proved crude oil and/or natural gas reserves on a field-by-field basis, as estimated
by qualified petroleum engineers.

As
of July 31, 2025, we had seven wells that are producing, all of which are located in the newly acquired Saskatchewan property, plus
two workovers. We expect to add the reserve value of such fields to our reserve report after a further period of observation and review
of the oil production; once this has been determined, we will estimate the necessary depreciation, depletion and amortization (“DD&A”)
for such wells.

35

Proved
and unproved oil and natural gas properties

Unproved
oil and natural gas properties have unproved lease acquisition