What was the exploration expenditure written off by Petro Stopping Center in 2022?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Exploration and evaluation costs | |||
| Exploration expenditure written off | 374 | 272 | 69 |
| Other exploration costs | 107 | 86 | 87 |
| Exploration expense for the year | 481 | 358 | 156 |
| Intangible assets – exploration and appraisal expenditurea | 871 | 879 | 773 |
| Liabilities | 57 | 84 | 67 |
| Net assets | 814 | 795 | 706 |
| Cash used in operating activities | 107 | 85 | 86 |
| Cash used in investing activities | 734 | 392 | 375 |
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 exploration expenditure written off in 2022 was $69 million. This figure represents the amount of costs associated with oil and natural gas exploration that were deemed unsuccessful and therefore expensed during that year. These costs are related to the company's activities in exploring and evaluating oil and natural gas resources, specifically within the gas & low carbon energy and oil production & operations businesses.
For a potential Petro Stopping Center franchisee, understanding these write-offs can provide insight into the risk and capital-intensive nature of the oil and gas exploration industry. Exploration expenditures are initially capitalized as intangible assets, but if exploration efforts are unsuccessful, these costs are written off, impacting the company's financial performance. This accounting practice reflects the inherent uncertainty in discovering commercially viable hydrocarbon reserves.
The FDD also details the accounting methods used for oil and natural gas exploration and appraisal expenditure, emphasizing the 'successful efforts method.' This method dictates that costs directly associated with exploration wells are capitalized until the well is complete and evaluated. If commercial quantities of hydrocarbons are not found, the costs are written off. This approach aligns with industry standards for accounting for exploration activities, where costs are expensed when the efforts are deemed unsuccessful.
Furthermore, the FDD provides additional context regarding the company's capital commitments and the factors influencing the recoverability of oil and natural gas properties. These factors include management's estimates of future oil and natural gas prices, production and reserves, and the impact of emission reduction projects. Monitoring these factors and understanding the company's accounting practices can help a franchisee assess the financial health and stability of Petro Stopping Center.