Company: TPET
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001641172-25-014516
Chunk: 17

Company: Trio Petroleum Corp.
Filing Date: 2025-06-10
Form: 10-Q
Item: Part I, Item 1
Chunk 17
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 Company acquired the plugging and abandonment liabilities associated with six non-producing
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 not subject to impairment. The Company plans to utilize the six wellbores acquired
in the SSP acquisition in future exploration, production and/or disposal (i.e., disposal of produced water or CO2 by injection) 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.

    9

Components
of the changes in ARO are shown below:

 SCHEDULE OF COMPONENTS OF CHANGES IN ARO

    ARO, ending balance – October 31, 2024 
    $53,869 
  
    Accretion expense 
     1,389 
  
    ARO, ending balance – April 30, 2025 
     55,258 
  
    Less: ARO – current 
     2,778 
  
    ARO, net of current portion – April 30, 2025 
    $52,480 

Revenue
Recognition

ASU
2014-09, “Revenue from Contracts with Customers” (“Topic 606”) requires an entity to recognize revenue
when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled
to in exchange for those goods or services; refer to Note 4 – Revenue from Contracts with Customers for additional information.

The
Company’s revenue is comprised of revenue from exploration and production activities to produce oil. The Company’s oil is
sold to one customer who is a marketer, and payment is received in the month following delivery.

The
Company recognizes sales revenues from oil when control transfers to the customer at the time of delivery. Revenue is measured based
on the contract price, which may include adjustments