Company: TPET
Filing Date: 2025-01-17
Form Type: 10-K
Source: 0001493152-25-002760
Chunk: 329

Company: Trio Petroleum Corp.
Filing Date: 2025-01-17
Form: 10-K
Item: Item 1
Chunk 329
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 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. We currently have four wells that are producing
(one well in President’s Field in the South Salinas Project and three wells at the McCool Ranch Oil Field) and are evaluating the
impact of production on the reserve determination for those wells and fields. 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. As of October 31, 2024 and 2023, all of our oil
and gas properties were classified as unproved properties and were not subject to depreciation, depletion and amortization.

Impairment
of Other Long-lived Assets

We
review the carrying value of our long-lived assets annually or whenever events or changes in circumstances indicate that the historical
cost-carrying value of an asset may no longer be appropriate. We assess the recoverability of the carrying value of the asset by estimating
the future net undiscounted cash flows expected to result from the asset, including eventual disposition. If the future net undiscounted
cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s
carrying value and estimated fair value. With regards to oil and gas properties, this assessment applies to proved properties; unproved
properties are assessed for impairment either at an individual property basis or a group basis.

42

Asset
Retirement Obligations

ARO
consists of future plugging and abandonment expenses on oil and natural gas properties. In connection with the South Salinas 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