PetroGas Co SEC 10-K Report

PetroGas Co, a company engaged in the oil and gas exploration industry, has released its annual 10-K report for the fiscal year ended March 31, 2025. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the current market environment.

Financial Highlights

Revenue: $0 million. The company did not recognize any revenue during the fiscal years ended March 31, 2025, and 2024.

Operating Expenses: $24,692,000 for 2025 and $38,040,000 for 2024, reflecting a decrease of $13,348,000 primarily due to reduced professional fees.

Net Income (Loss): $8,978 for 2025 and $(90,588) for 2024, indicating a significant improvement of $99,566, mainly due to a gain on asset retirement obligations of $83,580 in 2025.

Basic Net Income (Loss) Per Share: $0.00 for 2025 and $(0.00) for 2024, reflecting the net income improvement.

Diluted Net Income Per Share: $0.00 for 2025, indicating no dilution effect due to the absence of convertible securities impacting the earnings per share.

Business Highlights

Company Evolution: Originally incorporated as Alazzio Entertainment Corp. in 2014, the company underwent several transformations, including a name change to America Resources Exploration Inc. in 2015 and later to PetroGas Company in 2016, reflecting its shift from photo booth rentals to oil and gas exploration.

Asset Acquisitions: The company acquired significant oil and gas leases in Texas, Oklahoma, and Utah, including a 99.5% working interest in leases covering 714 acres in Atascosa and Frio Counties, Texas, situated in the Eagle Ford Shale formation.

Operational Challenges: Despite holding interests in several oil wells, none are currently operational due to depressed oil prices, making it uneconomical to bring these wells online.

Future Operations Strategy: The company plans to acquire additional producing and non-producing leases, explore high-profile pay zones, and commence drilling operations, anticipating an eventual increase in oil prices.

Lease Data: The Burns and Rogers Leases in Texas offer exploration opportunities in the Kyote Field pay zone, with existing infrastructure including pumping units and oil tanks, although current operations are halted.

Management's Outlook: Management is focused on strategic acquisitions of distressed oil and gas leases at discounted prices to enhance shareholder value and is planning to drill new wells and acquire deeper drilling rights.

Asset Retirement Obligations: The company recorded a gain on asset retirement obligations of $83,580, reflecting the derecognition of liabilities for wells with no expectation of future economic benefit.

Going Concern Uncertainty: The company faces substantial doubt about its ability to continue as a going concern due to its accumulated deficit and lack of significant revenue, necessitating additional working capital funding.

Segment Reporting: The company operates as a single segment in the oil and gas industry, with all operations and revenue sources located within the United States.

Strategic Initiatives

Strategic Initiatives: The company has developed a strategy to address operational shortfalls, which may include equity funding, short-term or long-term financing, or debt financing to enable the company to reach profitable operations. This is crucial given the company's current financial position, which includes a significant accumulated deficit and a negative working capital.

Capital Management: The company did not recognize any revenue during the fiscal years ended March 31, 2025, and 2024, and has relied on advances from related parties for operational expenses. The company issued 1,948,240 shares of common stock for the conversion of convertible notes worth $19,483. As of March 31, 2025, the company had a negative working capital of $790,250, compared to $715,648 as of March 31, 2024. The increase in working capital deficiency is attributed to the increase in amounts due to the director and accrued interest. The company has not paid any cash dividends and does not anticipate doing so in the foreseeable future, opting instead to reinvest earnings into business operations.

Future Outlook: The company faces substantial doubt about its ability to continue as a going concern due to its financial condition, including an accumulated deficit of $142,283,195 and a negative working capital. Management plans to address these challenges through potential equity funding, financing, or debt financing. The company is dependent on obtaining additional working capital funding from related and unaffiliated parties to execute its plans and continue operations. The company does not have any material subsequent events to disclose that would impact its strategic initiatives or capital management.

Challenges and Risks

Operational and Market Risks: The company has transitioned from its original business plan of photo booth rentals to the oil and gas industry, which involves significant operational and market risks. The concentration of properties in a limited number of counties increases vulnerability to regional disruptions.

Exploration and Development Risks: The company faces numerous risks related to its oil and gas operations, including the high-risk nature of exploration and development, fluctuations in commodity prices, and intense competition from larger, more established companies.

Regulatory Risks: Regulatory risks are significant, with evolving environmental laws potentially increasing operational costs.

Financial Risks: The company also faces financial risks due to its reliance on capital expenditures and potential difficulties in obtaining financing. Additionally, the concentration of operations in specific geographic areas exposes the company to localized risks.

Going Concern Risks: The company has not generated revenue and has experienced net losses, raising substantial doubt about its ability to continue as a going concern. Management plans to address these challenges through potential equity funding and financing to reach profitable operations. The company also aims to acquire distressed oil and gas leases at a discount, anticipating future increases in oil prices.

Market Risks: The company is exposed to market risks, particularly the volatility of oil prices, which can significantly impact revenues and profitability. The lack of revenue generation and the need for additional working capital highlight the financial risks associated with the company's current operations.

SEC Filing: PetroGas Co [ PTCO ] - 10-K - Jun. 30, 2025