10-K: Trio Petroleum Shifts Focus to Canada Amid California Challenges

Trio Petroleum Corp. reported increased revenue and reduced net loss for fiscal 2025, driven by Canadian acquisitions, while facing ongoing liquidity concerns and strategic shifts away from high-cost California operations.

Summary

• Trio Petroleum Corp. (TPET) is a California-based oil and gas exploration and development company with operations in California, Utah, and Canada.
• The company generated revenues of $398,734 for the year ended October 31, 2025, an 87.0% increase from $213,204 in 2024.
• Net loss for fiscal 2025 was $7,282,133, a 24.4% reduction from $9,626,797 in 2024.
• Cash flows used in operating activities decreased to $2,604,749 in 2025 from $3,840,744 in 2024.
• The company has an accumulated deficit of $27,355,812 and a working capital deficit of $785,902 as of October 31, 2025.
• TPET has strategically shifted its focus beyond California due to rising drilling costs and regulatory challenges, pursuing opportunities in Utah and Canada.
• Acquired heavy oil assets in the Lloydminster, Saskatchewan region from Novacor in April 2025, which are now the source of all five active wells.
• Expanded Canadian presence with a second acquisition from Capital Land in Alberta in November 2025 (subsequent event).
• Terminated McCool Ranch Oil Field leases in May 2025, writing off $500,614 in capitalized costs due to uneconomical cyclic-steam operations.
• Retained a 2.25% working interest in the Asphalt Ridge Project in Utah but did not exercise the option for an additional 17.75% interest.
• Progressing efforts to obtain conditional use permits and a full field development permit for the South Salinas Project in California, including a water disposal project.
• Restarted production testing at the HV-3A discovery well in South Salinas on March 22, 2024, with first oil sales in Q3 2024, but the well is currently idled pending joint venture discussions.
• Initiated steps to launch a Carbon Capture and Storage (CCS) project as part of the South Salinas Project.
• Raised significant capital through convertible notes and at-the-market (ATM) offerings, including $606,000 in April 2025 and $1,020,000 in August 2025 from convertible debt, and $3,475,650 net proceeds from the Spartan ATM in fiscal 2025.
• The company's independent auditor included an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: While revenue increased and net loss decreased, the company faces significant financial challenges, including a going concern warning from its auditor, an accumulated deficit, and a working capital deficit. Reliance on continuous capital raises and project delays in California indicate ongoing operational and financial instability, despite strategic shifts to Canada and Utah.

Positives

• Revenue increased by 87.0% to $398,734 in fiscal 2025, primarily due to new Canadian properties.
• Net loss decreased by 24.4% to $7,282,133 in fiscal 2025.
• Cash used in operating activities decreased by $1,235,995 in fiscal 2025.
• Successful acquisition of revenue-generating heavy oil assets in Saskatchewan from Novacor, with all five active wells now in this property.
• Expanded Canadian operations with a second acquisition from Capital Land in Alberta.
• Progressing efforts to obtain necessary permits for the South Salinas Project, including conditional use and water disposal permits.
• Initiated a Carbon Capture and Storage (CCS) project at South Salinas, aligning with environmental goals.
• Successful capital raises through convertible notes and ATM offerings, providing liquidity.
• General and administrative expenses decreased by approximately $1.9 million due to structural and strategic actions.

Negatives

• History of operating losses and an accumulated deficit of $27,355,812 as of October 31, 2025.
• Working capital deficit of $785,902 as of October 31, 2025.
• Auditor included an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern.
• McCool Ranch Oil Field leases were terminated and $500,614 in capitalized costs were written off due to uneconomical operations.
• HV-3A discovery well in South Salinas is currently idled pending joint venture discussions, despite restarted production testing and initial oil sales.
• Did not exercise the option to acquire an additional 17.75% working interest in the Asphalt Ridge Project, retaining only 2.25%.
• Dependence on external financing to sustain operations and fund planned development activities, with no assurance of future funding availability on favorable terms.
• Stock-based compensation expense increased by $1.1 million, primarily due to immediate recognition of expense for 1,552,500 options issued in Q4 2025.
• Significant losses on conversion of convertible notes, totaling $640,276 in fiscal 2025.

Risks

• History of operating losses and substantial doubt about the ability to continue as a going concern.
• Potential delays and/or obstacles in project development due to difficulties in obtaining necessary permits from federal, state, county, and/or local agencies.
• Vulnerability to inability to engage drilling rigs and associated personnel due to a contractor model.
• Operating in a highly capital-intensive industry, with potential for insufficient sales to fund, sustain, or expand operations.
• Substantial uncertainties in estimating asset characteristics, leading to potential inaccuracies in measures.
• Uncertainties and risks in the drilling of wells, often involving significant costs that may be more than estimates, and drilling may not result in any discoveries or additions to future production or reserves, or it may result in disproving or diminishing current reserves.
• Future performance is uncertain as an exploration stage entity.
• Dependence on certain members of management and the technical team.
• Seismic studies do not guarantee the presence or, if present, economic production of oil or gas.
• The potential lack of availability of, or cost of, drilling rigs, equipment, supplies, personnel, and crude oil field services could adversely affect the ability to execute on a timely basis exploration and development plans within any budget.
• Business plan requires substantial additional capital, which may be unable to be raised on acceptable terms in the future, limiting the ability to develop exploration, appraisal, development, and production activities.
• A substantial or extended decline in global and/or local oil and/or natural gas prices may adversely affect business, financial condition, and results of operations.
• Unless petroleum reserves are replaced, reserves and production will decline over time.
• Inability to access appropriate equipment and infrastructure in a timely manner may hinder access to oil and natural gas markets or delay future oil and natural gas production.
• Subject to numerous risks inherent to the exploration and production of oil and natural gas.
• Subject to drilling and other operational environmental hazards.
• The development schedule of oil and natural gas projects, including the availability and cost of drilling rigs, equipment, supplies, personnel, and oilfield services, is subject to delays and cost overruns.
• Participants in the oil and gas industry are subject to numerous laws that can affect the cost, manner, or feasibility of doing business.
• Operations are subject to numerous environmental, health, and safety regulations which may result in material liabilities and costs.
• Operations may be dependent on sources of electricity and/or natural gas that may be unreliable or costly.
• Continued and increasing attention to climate change and energy transition issues and associated regulations are expected to constrain and impede the oil/gas industry.
• May incur substantial losses and become subject to liability claims as a result of future oil and natural gas operations, for which there may not be adequate insurance coverage.
• Subject to risks in connection with acquisitions and the integration of significant acquisitions may be difficult.
• Failure to realize the anticipated benefits of a significant acquisition may adversely affect results of operations.
• The requirements of being a public company may strain resources, result in more litigation, and divert management's attention.
• Subject to the examination of tax returns and other tax matters by the U.S. Internal Revenue Service, states, and other tax authorities, potentially increasing effective tax rates or taxes owed.
• Amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes, which could limit stockholders' ability to obtain a favorable judicial forum.
• No assurance that an active and liquid trading market for common stock will continue or that NYSE American continued listing standards will be met.
• Share price may be volatile, and purchasers of common stock could incur substantial losses.
• A substantial portion of total issued and outstanding shares may be sold into the market at any time, which could cause the market price of common stock to drop significantly.
• Common stock may be subject to the penny stock rules in the future, making it more difficult to resell securities.
• As an emerging growth company, not required to comply with certain reporting requirements, which may make common stock less attractive.
• No intention to pay dividends on common stock, so the only opportunity to achieve a return on investment is if the price of shares appreciates.
• Business and results of operations may be materially adversely affected by inflationary pressures.

Future Outlook

Trio Petroleum aims to aggressively grow its Canadian assets by acquiring projects that generate immediate cash flow or offer transformative growth potential, such as the P.R. Spring option in Utah. The company's strategy for the South Salinas Project is to seek a joint venture partner and secure permits for full field development and a Carbon Capture and Storage project. Future capital requirements are substantial and depend on successful capital raises and operating revenues, with current cash and cash flow sufficient for not more than six months.

Management Comments

• Our Canadian projects represent a significant growth opportunity, driven primarily by planned workovers intended to enhance production across the acquired assets.
• Our strategy continues to focus on acquiring assets that generate immediate cash flow, provide meaningful long-term development potential, and offer the potential for transformative value creation through targeted strategic investment.
• Initially, California was a significant part of our geographic focus; however, due to rising drilling costs and the negative impact on potential profitability, we have strategically shifted our efforts beyond California to pursue more economically viable opportunities.
• We believe it is feasible to develop the major oil and gas resources of the South Salinas Project and to concurrently establish a substantial CCS project and potentially a CO2 storage hub and/or Direct Air Capture (DAC) hub.
• Trio believes expanding operations into Canada offers economic development and low operational costs. Trio also believes that the market accessibility combined with a favorable regulatory process makes this area very attractive for continued and future development.
• TPET believes that given the size and future anticipated costs of exploration, it is best to seek out a joint venture partner who has the capacity to continue to operate in California with the expectation that the market for oil and gas in California will remain strong for the foreseeable future.
• The Company hopes and expects TPETs commitment to reduce carbon footprint through a Carbon Capture and Storage Project to be viewed favorably by California regulatory bodies, perhaps helping to facilitate operations at the South Salinas Project and elsewhere.
• TPET believes that the overall operating environment and the market for oil and gas in Utah should remain favorable for the foreseeable future.
• TPETs operations may help meet the USAs demanding oil and gas needs that are expected to remain strong for the foreseeable future, while supporting the countrys goal of energy independence, and supporting local and state economies with tax revenue and jobs.
• TPETs goal is the building and growing of a substantial independent oil and gas company by acquiring projects that generate immediate cash flow as in our Canadian assets or offer transformative growth potential with strategic investment such as our option on P.R. Spring in Utah.
• Our management has concluded that our accumulated deficit and limited source of revenue sufficient to cover our cost of operation as well as our dependence on private equity and other financings raise substantial doubt about our ability to continue as a going concern.

Industry Context

Trio Petroleum is navigating a challenging U.S. oil and gas regulatory environment, particularly in California, which has prompted a strategic pivot towards more favorable jurisdictions like Canada and Utah. The company's focus on heavy oil assets in Saskatchewan aligns with North America's promising heavy oil basins, characterized by lower operational costs and market accessibility. The pursuit of a Carbon Capture and Storage (CCS) project in California reflects a broader industry trend towards environmental responsibility and could potentially improve regulatory relations in the state. The company faces intense competition from larger, more established players with greater resources and operational histories.

Comparison to Industry Standards

• Novacor Exploration Ltd. is recognized as one of the lowest-cost operators in the Lloydminster, Saskatchewan heavy oil region. Trio's acquisition of assets from Novacor positions it favorably in terms of operational efficiency.
• Operating costs for the December 2025 Novacor Assets are to be held at levels detailed in the auditor's report for the 18-month period prior to closing, and thereafter remain competitive with other operators in the area.
• The South Salinas Project's estimated 40.2 million barrels of oil (MMBO) plus 42.4 billion cubic feet of gas (BCFG) in Probable (P2) Undeveloped reserves, and 100.7 MMBO and 168.5 BCFG in Possible (P3) Undeveloped reserves, are significant, with the Humpback Oil Field and Presidents Oil Field being comparable to other large and prolific oil and gas fields in California.
• The San Ardo Oil Field, located near South Salinas, is a giant oilfield with cumulative oil recovery of approximately 500 million barrels, ranking among the largest 100 oilfields in the U.S. and top ten in California, suggesting a rich geological context for Trio's adjacent project.
• The average annual pay in the oil industry in Monterey County is $107,000, more than double the $51,900 average for all private sector jobs, indicating the industry's significant economic contribution compared to other sectors.

Management Changes

Corporate Governance

Legal Proceedings

• No pending legal proceedings or claims that are believed to have a material adverse effect on the business, financial condition, or operating results.
• No directors, officers, or affiliates are involved in proceedings adverse to the business or have a material interest adverse to the business.

Related Party Transactions

• Transactions between TPET and Trio LLC are related party transactions due to shared management (Stanford Eschner and Steven Rowlee are former TPET management and current Trio LLC management/owners; Terence B. Eschner, former TPET President, consults for Trio LLC).
• TPET acquired an approximate 82.75% (later 85.775%) working interest in the South Salinas Project from Trio LLC.
• TPET acquired an approximate 22% working interest in the McCool Ranch Oil Field from Trio LLC, which was later terminated.
• TPET provides funds to Trio LLC to develop and operate South Salinas assets; as of October 31, 2025, $5,668 was due to operators.
• The Asphalt Ridge Option Agreement with Heavy Sweet Oil LLC (HSO) is related to Lafayette Energy Corp (LEC), where Michael Peterson (former TPET CEO) is CEO and director, making transactions between TPET and LEC related party transactions.
• A special committee of the board (Mr. Ross, Mr. Randall, Mr. Hunter) was formed to evaluate and negotiate related party transactions with Trio LLC.
• A special committee (Mr. Pernice, Mr. Randall, Mr. Hunter) was formed to evaluate and negotiate related party transactions with LEC.
• Loan of $1,131,000 from Trio Petroleum Corp to its wholly-owned subsidiary Trio Canada Corp.
• Stanford Eschner, upon resignation, entered into a consulting agreement with the company for a monthly cash fee of $4,167 and a one-time grant of 15,000 shares.
• Gregory L. Overholtzer, CFO, transitioned to an independent contractor agreement with a monthly fee of $12,500, later increased to $15,000.
• Michael L. Peterson, former CEO, borrowed $125,000 from the company, which was repaid.
• Robin Ross, CEO, received an increased annual base salary to $400,000 and a one-time award of 625,000 RSUs.
• Gregory Overholtzer, CFO, received a one-time grant of 62,500 RSUs.
• Non-employee directors received significant RSU grants (e.g., John Randall 175,000, Thomas J. Pernice 250,000, William J. Hunter 175,000, James H. Blake 250,000) that vested immediately in August 2025.
• Insider trading plans (10b5-1 sales plans) were entered into by Robin Ross, Thomas J. Pernice, and John W. Randall.

Stakeholder Impact

• Shareholders face substantial doubt about the company's ability to continue as a going concern, potential for further dilution from capital raises, and volatility in share price. The exclusive forum provision may limit their ability to bring claims. No dividends are planned.
• Employees: Management team changes, including elimination of President and COO roles. The company had only one employee in Canada as of December 31, 2025, indicating a very lean operational structure.
• Customers: Continued oil and gas production from Canadian assets aims to meet energy supply needs. The idling of the HV-3A well and termination of McCool Ranch operations could impact local supply from California.
• Suppliers/Contractors: Dependence on independent drilling contractors and oilfield service companies, with risks of unavailability or increased costs, particularly in California.
• Creditors: Convertible note holders have rights to request repayment from future equity financings. The going concern warning poses a risk to debt repayment.
• Regulatory Authorities: The company's strategic shift away from California is partly due to regulatory challenges. The Carbon Capture and Storage project is an attempt to be viewed favorably by California regulators.
• Local Economies (Monterey County, CA): The company highlights the positive economic impact of the oil industry in Monterey County, including jobs and tax revenue, but the idling of the HV-3A well and termination of McCool Ranch operations could reduce this impact.

Next Steps

• Continue efforts to obtain conditional use permits and a full field development permit for the South Salinas Project.
• Continue efforts to obtain a permit for a water disposal project at the South Salinas Project from CalGEM and California Water Boards.
• Assess steps to attempt to increase the HV-3A well's gross production rate (e.g., additional perforations, acidizing) and further discussions with local oil and gas companies to joint venture the project.
• Aggressively grow Canadian assets by acquiring projects that generate immediate cash flow and/or offer workover opportunities.
• Monitor results of new 2-4 and 8-4 wells at the Asphalt Ridge project to determine if production attains 40 barrels per day for thirty days to exercise the P.R. Spring option.
• Engage a third-party expert consulting company to prepare a Full Environmental Impact Report (Full EIR) for the South Salinas full-field development plan during Phase 1 or shortly thereafter.
• Evaluate whether to directionally drill the HV-2 and HV-4 wells into the Presidents Oil Field, or one into Presidents and one into Humpback Oil Field, when appropriate funding is in place.
• Assess plans to return the BM 2-2 well to oil and gas production, reenter and sidetrack three other existing wells (HV 1-35, BM 2-6, HV 3-6) to optimal locations, and utilize BM 1-2-RD1 as a water disposal well, when appropriate permits and funding are in-hand (anticipated perhaps in 2026).
• Evaluate options (e.g., deepening, sidetracking, recompleting) at the new HV-1 well.
• Drill one or both of the HV-2 and HV-4 wells in 2026.
• Work toward obtaining permits for full field development, including long-term production and water disposal.
• Negotiate an agreement with Aera Energy to utilize their existing idle gas and oil pipelines, or seek permits for new pipelines if necessary.
• File a registration statement on or before March 31, 2026, to register the resale of restricted shares issued in the December 2025 Novacor Acquisition, if not included in a Piggyback Registration Statement.
• Utilize the new At Market Issuance Sales Agreement (ATM Agreement) with Ladenburg Thalmann & Co. Inc. to sell shares of common stock for up to $3,600,000.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by a going concern warning from its auditor, a significant accumulated deficit, and a working capital deficit. While revenue increased, it remains insufficient to cover operating costs, necessitating continuous reliance on dilutive equity and debt financings. The strategic shift away from California due to regulatory and cost challenges, coupled with project terminations and idling of key wells, indicates fundamental operational difficulties. The extensive list of risk factors, including high capital intensity, uncertainties in reserve estimation, and potential for further delays, underscores the precarious nature of the business. Insider sales plans by key executives further suggest a lack of confidence. Given the high risk of insolvency and continued dilution, a strong sell recommendation is warranted.

Keywords

Oil and Gas, Exploration, Development, Saskatchewan, Canada, California, Utah, Heavy Oil, SEC Filing, 10-K, Energy, Petroleum, Carbon Capture, Going Concern, Acquisition, Convertible Debt, ATM Offering, South Salinas Project, Novacor, Capital Land