Company: OKMN
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001079973-25-001512
Chunk: 386

Company: OKMIN RESOURCES, INC.
Filing Date: 2025-09-29
Form: 10-K
Item: Item 15
Chunk 386
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 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 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