S-1/A: Trio Petroleum Corp. Seeks Up to $8 Million in Public Offering to Fund Oil and Gas Projects

Trio Petroleum Corp. announces a reasonable best-efforts public offering of up to 5,882,353 shares of common stock and pre-funded warrants to fund its oil and gas exploration and development projects.

Summary

• Trio Petroleum Corp. is undertaking a public offering to sell up to 5,882,353 shares of common stock and pre-funded warrants.
• The assumed public offering price is $1.36 per share, based on the closing price on February 24, 2025.
• The company intends to use the net proceeds to repay approximately $141,000 of outstanding indebtedness, exercise an option for $1,775,000 to acquire an additional working interest in its Asphalt Ridge Project, and for working capital and general corporate purposes.
• The offering is on a reasonable best-efforts basis, with no minimum amount required to be sold.
• Spartan Capital Securities, LLC is acting as the exclusive placement agent for the offering.
• The company's stock is listed on the NYSE American under the symbol TPET.
• The company is an emerging growth company and a smaller reporting company, which allows for reduced reporting requirements.

Sentiment

Score: 4

Explanation: The document presents a mixed outlook. While there are positive developments such as the public offering and potential for project expansion, the company's financial struggles and going concern uncertainty weigh heavily on the sentiment.

Positives

• The company has identified specific uses for the proceeds, including debt repayment and project investment.
• The company has an existing listing on the NYSE American, providing liquidity for investors.
• The company has the potential to increase its working interest in the Asphalt Ridge Project.

Negatives

• The offering is on a reasonable best-efforts basis, with no guarantee of raising the full amount.
• The company's share price has been volatile in the past.
• The company is dependent on raising additional capital to fund its operations.
• The company's management has concluded that factors raise substantial doubt about its ability to continue as a going concern.

Risks

• The company may not raise the amount of capital it believes is required for its business plans.
• The company's share price may be volatile, and purchasers of its common stock could incur substantial losses.
• The company may face delays and/or obstacles in project development due to difficulties in obtaining necessary permits.
• The company has a history of operating losses, and its management has concluded that factors raise substantial doubt about its ability to continue as a going concern.
• The company may face conflicts of interest in negotiations with related parties.

Future Outlook

The company's future performance is uncertain and dependent on the successful development of its assets and the acquisition of new projects. The company's ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional capital and financing.

Industry Context

The oil and gas industry is operationally challenging in California due to regulatory issues and efforts to facilitate an energy transition away from fossil fuels. The oil and gas industry currently appears operationally favorable in Utah.

Comparison to Industry Standards

• The document mentions KLS Petroleum Consulting LLC (KLSP), a third-party, independent engineering firm, recommends that McCool Ranch be developed with horizontal wells, each landed in the Lombardi Oil Sand with a 1,000-foot lateral.
• The document mentions J. Wallace Gwynn of Energy News, is estimated to be the largest measured tar sand resource in the United States, and is unique given its low wax and negligible sulfur content, which is expected to make the oil produced very desirable for many industries, including shipping.

Management Changes

Related Party Transactions

• TPET and Lafayette Energy Corp (LEC) both have equity interests in the Asphalt Ridge Project, Utah.
• TPET and Trio LLC both have equity interests in the South Salinas Project and the McCool Ranch Oil Field, California.
• Gregory L. Overholtzer, our Chief Financial Officer, is also employed by Lafayette Energy Corp (LEC) as its Chief Financial Officer.
• Stanford Eschner, who we employed as our Vice Chairman until December 31, 2024 and who continues as our Vice Chairman in a non-employee capacity, and Steven Rowlee, who we employed as our Chief Operating Officer until December 31, 2024 and was officially released from his duties by the Board as of January 2, 2025, are also employed by Trio LLC.
• Stanford Eschner is Trio LLCs Chairman and Steven Rowlee is its Vice President.
• Terence B. Eschner, who we employed as our President until December 31, 2024 and was officially released from his duties by the Board as of January 2, 2025, also works as a consultant to Trio LLC through his company Sarlan Resources, Inc.
• Trio LLC and its management team are part owners of the Company and will continue as Operator of the South Salinas Project and the McCool Ranch Oil Field on behalf of Trio Corp and of the other working interest partners.
• In October 2023, the Company acquired an approximate 22% working interest in the McCool Ranch Oil Field from Trio LLC, which the Company announced in a press release on October 18, 2023.
• The Company is acquiring this interest in the McCool Ranch Oil Field primarily through work commitment expenditures that will be allocated to restart production at the field.
• Since Trio LLC is partly owned and controlled by members of our management, acquisitions of Trio LLCs assets by the Company constitute related party transactions and, therefore, a special committee of our board of directors, currently comprised of Mr. Ross, Mr. Randall and Mr. Hunter (the Trio Special Committee) was formed to evaluate and negotiate the terms of such acquisitions.
• In addition, in accordance with our Related Person Transaction Policy, we will have any such transactions reviewed and approved by our Boards Audit Committee.
• TPET has engaged KLS Petroleum Consulting LLC (KLSP) to conduct comprehensive analyses and to provide valuations of such assets, which analyses have been delivered to the Company and evaluated by the Trio Special Committee.
• Since LEC is partly owned and controlled by current and former members of our management, transactions including acquisitions between TPET and LEC relating to the Asphalt Ridge Asset and/or to other assets constitute related party transactions, we have formed a special committee of our board of directors, comprised of Mr. Pernice, Mr. Randall and Mr. Hunter (the Lafayette Special Committee) to evaluate and negotiate the terms of any such future transactions.
• In addition, in accordance with our Related Person Transaction Policy, we will have any such transactions reviewed and approved by our Boards Audit Committee.
• TPET will engage KLS Petroleum Consulting LLC (KLSP) or other third-party experts, as deemed necessary by TPETs management and/or by the Lafayette Special Committee, to conduct comprehensive analyses and to provide valuations of such assets, which analyses will be delivered to the Company and evaluated by the Trio Special Committee.
• On March 26, 2024, our former Chief Executive Officer, Michael L. Peterson, who then served as a consultant to the Company, until October 11, 2024, made a loan to us in the principal amount of $125,000 (the Peterson Loan).

Stakeholder Impact

• The offering will impact shareholders through potential dilution.
• The success of the company's projects will impact employees, customers, and suppliers.
• The company's ability to repay debt will impact creditors.

Next Steps

• The company intends to use the net proceeds from the offering to repay debt, exercise an option in the Asphalt Ridge Project, and for general corporate purposes.
• The company is assessing the transition of each well from cold to cyclic-steam production, also known as huff and puff, which is expected to significantly increase production.
• The Company is assessing the viability of restarting the last two wells in the restart program, the HH-3 and HH-4 wells, in the first half of 2025.

Key Dates