Company: OKMN
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001079973-25-001512
Chunk: 71

Company: OKMIN RESOURCES, INC.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1
Chunk 71
---
 cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (“SEC”).
Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized
as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development
activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the
sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship
between capitalized costs and proved reserves. 

Oil and gas properties include costs that are excluded
from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and
include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling
costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred
to the full cost pool as the properties are evaluated over the life of the reservoir. Unevaluated properties are reviewed for impairment
annually and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage,
drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions.

Gains and losses on the sale of oil and gas properties
are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and
proved reserves. Sales of less than 100% of the Company’s interest in the oil and gas property are treated as a reduction of the
capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion
rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation.

Depreciation, depletion, and amortization

The depreciable base for oil and natural gas properties
includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (“DD&A”), estimated
future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization.
The depreciable base of oil and natural gas properties is amortized on a unit-of-production method.

Asset retirement obligations

The fair value of a liability for an asset’s
retirement obligation (“ARO”) is recognized in the period in which it is incurred