Company: TPET
Filing Date: 2025-03-14
Form Type: 10-Q
Source: 0001493152-25-010362
Chunk: 77

Company: Trio Petroleum Corp.
Filing Date: 2025-03-14
Form: 10-Q
Item: Part I, Item 8
Chunk 77
---
 data or assumptions that market participants would use in pricing the asset or liability, including assumptions about
risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or
generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and
the lowest priority to unobservable inputs (Level 3 measurement). This fair value measurement framework applies to both initial and subsequent
measurement.

    10

  Level 1:
  Quoted prices are available
  in active markets for identical assets or liabilities as of the reporting date.

  Level 2:
  Pricing inputs are other
  than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date.
  Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

  Level 3:
  Pricing inputs include significant
  inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies
  that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement
  for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar
  techniques.

There
are no assets or liabilities measured at fair value on a recurring basis. Assets and liabilities accounted for at fair value on a non-recurring
basis in accordance with the fair value hierarchy include the initial allocation of the asset acquisition purchase price, including asset
retirement obligations, the fair value of oil and natural gas properties and the assessment of impairment.

The
fair value measurements and allocation of assets acquired are measured on a nonrecurring basis on the acquisition date using an income
valuation technique based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs
used to determine the fair value include estimates of: (i) reserves; (ii) future commodity prices; (iii) operating and development costs;
and (iv) a market-based weighted average cost of capital rate. The underlying commodity prices embedded in the Company’s estimated
cash flows are the product of a process that begins with NYMEX forward curve pricing, adjusted for estimated location and quality differentials,
as well as other factors that the Company’s management believes will impact realizable prices.