Company: TPET
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001641172-25-014516
Chunk: 138

Company: Trio Petroleum Corp.
Filing Date: 2025-06-10
Form: 10-Q
Item: Part I, Item 8
Chunk 138
---
. 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 April 30, 2025, we had five 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.

34

Proved
and unproved oil and natural gas properties

Unproved
oil and natural gas properties have unproved lease acquisition costs, which are capitalized until the lease expires or otherwise until
we specifically identify a lease that will revert to the lessor, at which time we charge the associated unproved lease acquisition costs
to exploration costs.

Unproved
oil and natural gas properties are not subject to amortization and are assessed periodically for impairment on a property-by-property
basis based on remaining lease terms, drilling results or future plans to develop acreage. As of April 30, 2025 and October 31, 2024, such oil and gas properties were classified as unproved properties
and were not subject to depreciation, depletion and amortization.

Proved
oil and natural gas properties include developed and undeveloped reserves that have been confirmed through drilling and production activities.
These properties are subject to DD&A, which is calculated using the unit-of-production method based on total proved reserves.

    ●
    Proved
    developed reserves are amortized over the expected production life of