What was the exploration and appraisal expenditure for Petro Stopping Center in 2023?

According to Petro Stopping Center's 2025 Franchise Disclosure Document, the intangible assets related to exploration and appraisal expenditure in 2023 amounted to $879 million. This figure reflects the company's investment in identifying and evaluating potential oil and natural gas resources. These costs are initially capitalized as intangible assets and are subject to regular review to ensure their recoverability.

These expenditures include costs directly associated with exploration wells, such as employee remuneration, materials, fuel, rig costs, and payments to contractors. If exploration efforts are unsuccessful, these costs are expensed. However, if hydrocarbons are found and likely to be commercially developed, the costs continue to be carried as an asset. This accounting treatment aligns with the successful efforts method, where only costs related to successful exploration activities are capitalized.

The FDD also details that geological and geophysical exploration costs are recognized as an expense when incurred. This means that not all exploration-related spending is capitalized; some costs are immediately expensed. The capitalized costs are later transferred to property, plant, and equipment upon internal approval for development and recognition of proved or sanctioned probable reserves.

For a prospective franchisee, understanding these accounting practices is crucial as they reflect the financial health and investment strategies of Petro Stopping Center. The level of exploration and appraisal expenditure can indicate the company's commitment to future growth and resource development. However, it's important to note that these figures are subject to management's estimates and judgments, particularly regarding future oil and natural gas prices and production levels, which can impact the recoverability of these assets.