Company: NMEX
Filing Date: 2025-11-17
Form Type: 10-K
Source: 0001437749-25-035266
Chunk: 9

Company: NORTHERN MINERALS & EXPLORATION LTD.
Filing Date: 2025-11-17
Form: 10-K
Item: Item 8
Chunk 9
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 from the sale of oil and natural gas from its investment in Lost Creek Acquisitions LLC (Note 4). The Company owns a working interest in 14 oil and gas wells located in northeastern Oklahoma. These wells produce both oil and natural gas. As a working interest holder, revenue from the sale of oil and natural gas must first pay the production taxes to the state of Oklahoma, then the royalties to the mineral holders and then the expenses incurred to cause the oil and gas to produce. Operating expenses are typically administrative, pumper, electricity, water disposal, chemical and repairs. After taxes, royalties and expenses are paid, the remining amount is the net profit from the gross sales received from the 14 wells. The Company then receives its share of the revenues as per the percentage ownership as outlined per well in the purchase agreement.

Accounts Receivable

Accounts receivable consists of expected amounts due for its percentage of the sale of oil and natural gas from its investment in Lost Creek Acquisitions LLC. As of July 31, 2025, the Company has recorded $6,750 of accounts receivable.

Allowance for Credit Losses

The Company estimates its allowance for credit losses using the Current Expected Credit Loss (CECL) model under ASC 326. The CECL model requires recognition of expected credit losses over the contractual life of financial assets held at the reporting date, considering the nature of debt, industry expectations, current conditions, and reasonable and supportable forecasts.

Financial assets subject to CECL include trade receivables. The Company groups financial assets based on shared risk characteristics and evaluates them collectively. The allowance is measured using a combination of historical activity, industry expectations, adjusted for current economic trends and forward-looking factors such as industry outlook and macroeconomic indicators (e. g., unemployment rate, GDP).

Under CECL, the carrying amount of a financial asset (net of the allowance for credit losses) represents the amount the Company expects to collect. This means that when the CECL estimate is appropriately recorded, the net reported balance of financial assets reflects management’s best estimate of collectible cash flows, based on available and supportable information.

Management reviews the adequacy of the allowance at each reporting period and updates estimates as appropriate. Changes in estimates are recorded in the income statement as a component of credit loss expense. As of July 31, 2025, there was no indication that the Company required an allowance for credit losses.

Operating Segments

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly