Asset Retirement Obligations

3 Months Ended

Jul. 31, 2019

Asset Retirement Obligation Disclosure [Abstract]

The total future asset retirement obligations were estimated based on the Company’s ownership interest in all wells and facilities, the estimated legal obligations required to retire, dismantle, abandon and reclaim the wells and facilities and the estimated timing of such payments. The Company estimated the present value of its asset retirement obligations at both July 31, 2019 and April 30, 2019 based on a future undiscounted liability of $1,096,159 and $1,118,249, respectively. These costs are expected to be incurred within 1 to 42 years. A credit-adjusted risk-free discount rate of 10% and an inflation rate range of 1.5% to 2.66% were used to calculate the present value.

Changes to the asset retirement obligations were as follows:

	Three Months Ended July 31, 2019			Three Months Ended July 31, 2018
Balance, beginning of period	$	1,049,191		$	660,139
Additions		-			4,150
Change in estimates		(21,696	)		(1,088	)
Accretion		1,274			3,423
		1,028,769			666,624
Less: Current portion for cash flows expected to be incurred within one year		(720,214	)		(406,403	)
Long-term portion, end of period	$	308,555		$	260,221

Expected timing of asset retirement obligations:

Year Ending April 30,
2020	$	720,214
2021		-
2022		-
2023		-
2024		-
Thereafter		375,945
Subtotal		1,096,159
Effect of discount		(67,391	)
Total	$	1,028,768

Petro River Oil Corp. 10-Q