What was the depreciation value of Petro Stopping Center's oil and gas properties at January 1, 2024?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
| Land and land improvements | Buildings | Oil and gas propertiesa | Plant, machinery and equipment | Fittings, fixtures and office equipment | Transportation | Oil depots, storage tanks and service stations | $ million Total | |
|---|---|---|---|---|---|---|---|---|
| Depreciation - owned PP&E | ||||||||
| At January 1, 2024 | 285 | 177 | 60,136 | 11,303 | 638 | 701 | 690 | 73,930 |
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, the depreciation value for owned property, plant, and equipment related to oil and gas properties was $60,136 million as of January 1, 2024. This figure represents the accumulated depreciation recognized on these assets up to that date. Depreciation is the systematic allocation of the cost of an asset over its useful life, reflecting the wear and tear or obsolescence of the asset. For oil and gas properties, depreciation, depletion, and amortization charges are typically calculated using estimates of oil and natural gas reserves determined in accordance with US Securities and Exchange Commission (SEC) regulations. This approach uses 12-month historical price data to assess the commercial viability of technical volumes.
For a prospective Petro Stopping Center franchisee, understanding the depreciation of oil and gas properties is crucial because it impacts the company's financial performance and the value of its assets. The depreciation expense reduces the company's taxable income, which can have tax benefits. Additionally, the net book amount (cost less accumulated depreciation) of these assets reflects their remaining value on the balance sheet.
The FDD also notes that the expected useful lives and depreciation method of property, plant, and equipment are reviewed annually, and changes are accounted for prospectively. This means that if there are significant changes in the estimated useful lives of the assets, the depreciation expense could be adjusted in future periods. Furthermore, the energy transition may curtail the expected useful lives of oil and gas industry assets thereby accelerating depreciation charges. However, management does not expect the useful lives of the Company's reported property, plant and equipment to change and do not consider this to be a significant accounting judgement or estimate. Significant capital expenditure is still required for ongoing projects as well as renewal and/or replacement of aged assets and therefore the useful lives of future capital expenditure may be different.