Company: TPET
Filing Date: 2025-09-12
Form Type: 10-Q
Source: 0001493152-25-013189
Chunk: 195

Company: Trio Petroleum Corp.
Filing Date: 2025-09-12
Form: 10-Q
Item: Part I, Item 8
Chunk 195
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inas Project
acquisition described above, we acquired the plugging and abandonment liabilities associated with six temporarily shut-in, idle wells.
The fair value of the ARO was recorded as a liability in the period in which the wells were acquired with a corresponding increase in
the carrying amount of oil and natural gas properties. We plan to utilize the six wellbores acquired in the South Salinas Project acquisition
in future production, development and/or exploration activities. The liability is accreted for the change in its present value each period
based on the expected dates that the wellbores will be required to be plugged and abandoned. The capitalized cost of ARO is included
in oil and gas properties and is a component of oil and gas property costs for purposes of impairment and, if proved reserves are found,
such capitalized costs will be depreciated using the units-of-production method. The asset and liability are adjusted for changes resulting
from revisions to the timing or the amount of the original estimate when deemed necessary. If the liability is settled for an amount
other than the recorded amount, a gain or loss is recognized.

Fair
Value Measurements

The
carrying values of financial instruments comprising cash and cash equivalents, payables, and notes payable-related party approximate
fair values due to the short-term maturities of these instruments. The notes payable- related party is considered a level 3 measurement.
As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company
utilizes market 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.

    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