Next, we're going to work on the cash flow statement, but in preparation for the cashflow statement, we're gonna start with the balance sheet. Because the key principle of the cashflow statement is to reconcile all of the changes in the balance sheet within the cashflow statement. So we're gonna go through every balance sheet item except for cash, and we're gonna classify them across three categories, operating, investing, and financing activities. So starting with accounts receivable, this will be an operating activity. In fact, this is part of operating working capital. The same is true for inventory. This will be an operating activity net PP&E will be operating because of the depletion or depreciation, but it'll also be an investing activity because of the CapEx costs. Soft costs, similar to net PP&E will be both operating and investing our asset retirement obligation asset. In this case, this will be an operating asset.

Moving on to our liability side, our revolving credit facility. This will be a financing activity and payables, of course, operating. Since this is part of working capital, our syndicated loan does another financing account and our asset retirement obligation liability. This will be operating as these liabilities are related to future shutdown costs.

And finally, our shareholders equity. Well, this one has net income in there, which means that it will be operating, but it also has the investment by sponsors the equity contribution. So it'll be financing, and it also contains dividends, which is also financing. So now we have prepared our balance sheet so that we can start building our cashflow statement, and we can use this classification as a checklist.