Company: TPET
Filing Date: 2025-01-17
Form Type: 10-K
Source: 0001493152-25-002760
Chunk: 546

Company: Trio Petroleum Corp.
Filing Date: 2025-01-17
Form: 10-K
Item: Item 1B
Chunk 546
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 2:
   Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable
  as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

  Level 3:
   Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with
  internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs
  used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted
  cash flow methodologies and similar techniques.

    F-10

There
are no assets or liabilities measured at fair value on a recurring basis. Assets and liabilities accounted for at fair value on a non-recurring
basis in accordance with the fair value hierarchy include the initial allocation of the asset acquisition purchase price, including asset
retirement obligations, the fair value of oil and natural gas properties and the assessment of impairment.

The
fair value measurements and allocation of assets acquired are measured on a nonrecurring basis on the acquisition date using an income
valuation technique based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs
used to determine the fair value include estimates of: (i) reserves; (ii) future commodity prices; (iii) operating and development costs;
and (iv) a market-based weighted average cost of capital rate. The underlying commodity prices embedded in the Company’s estimated
cash flows are the product of a process that begins with NYMEX forward curve pricing, adjusted for estimated location and quality differentials,
as well as other factors that the Company’s management believes will impact realizable prices. These inputs require significant
judgments and estimates by the Company’s management at the time of the valuation.

The
fair value of additions to the asset retirement obligation liabilities is measured using valuation techniques consistent with the income
approach, which converts future cash flows to a single discounted amount. Significant inputs to the valuation include: (i) estimated
plug and abandonment cost per well for all oil and natural gas wells and for all disposal wells; (ii) estimated remaining life per well;
(iii) future inflation factors; and (iv) the Company’s average credit-adjusted risk-free rate. These assumptions represent Level
3 inputs.

If
the carrying amount of its proved oil and natural gas properties, which are assessed for impairment under ASC 360 – Property,
Plant and Equipment