Company: OKMN
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001079973-25-001512
Chunk: 72

Company: OKMIN RESOURCES, INC.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1
Chunk 72
---
 if a reasonable estimate of fair value can
be made, with the corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted
to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment
costs incurred are recorded as a reduction of the ARO liability.

Inherent in the fair value calculation of an ARO are
numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing
of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these
assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance.
Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.

Fair Value

The Company measures and discloses the estimated fair
value of financial assets and liabilities using the fair value hierarchy in accordance with ASC 820, “Fair Value Measurements
and Disclosures”. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data.
The hierarchy requires the use of observable market data when available.

ASC 820 requires
that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:

Level 1—Quoted market
prices for identical assets or liabilities in active markets or observable inputs.

Level 2—Significant
other observable inputs that observable market data can corroborate; and

Level 3—Significant
unobservable inputs that observable market data cannot corroborate.

Financial instruments consist principally of cash
and cash equivalents, accounts receivable, prepaid expenses, oil and gas properties, accounts payable, accrued liabilities, note payable,
and interest payable. The recorded values of all financial instruments approximate their current fair values because of their nature and
respective relatively short maturity dates or durations.

Fair value estimates are made at a specific point
in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.

    F-8 
    OKMIN RESOURCES INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJune 30, 2025 
    
Revenue recognition

The Company is not the operator of