What were the finance costs for Petro Stopping Center in 2024?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
The timing and amount of future expenditures relating to decommissioning and environmental liabilities are reviewed annually. The interest rate used in discounting the cash flows is reviewed quarterly. The nominal interest rate used to determine the balance sheet obligations at the end of 2024 was 4.5% (2023 4%), which was based on long-dated US government bonds interpolated to reflect the expected weighted average time to decommissioning. The weighted average period over which decommissioning and environmental costs are generally expected to be incurred is estimated to be approximately 20 years (2023 20 years) and 7 years (2023 5 years) respectively. Costs at future prices are typically determined by applying an inflation rate of 1.5% (2023 1.5%) to decommissioning costs and 2% (2023 2%) for all other provisions.
The estimated phasing of undiscounted cash flows in real terms for upstream decommissioning is approximately $1.5 billion (2023 $1.9 billion) within the next 10 years, $3.3 billion (2023 $3.0 billion) in 10 to 20 years and the remainder of approximately $4.7 billion (2023 $4.6 billion) after 20 years. The timing and amount of decommissioning cash flows are inherently uncertain and therefore the phasing is management's current best estimate but may not be what will ultimately occur.
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 nominal interest rate used to determine the balance sheet obligations at the end of 2024 was 4.5%. This rate is used for discounting cash flows related to environmental liabilities and decommissioning. In 2023, the rate was 4%. The interest rate is reviewed quarterly and is based on long-dated US government bonds interpolated to reflect the expected weighted average time to decommissioning.
The weighted average period over which decommissioning and environmental costs are generally expected to be incurred is estimated to be approximately 20 years for decommissioning and 7 years for environmental costs. In 2023, these periods were 20 years and 5 years respectively. Costs at future prices are typically determined by applying an inflation rate of 1.5% to decommissioning costs and 2% for all other provisions.
The estimated phasing of undiscounted cash flows in real terms for upstream decommissioning is approximately $1.5 billion within the next 10 years, $3.3 billion in 10 to 20 years, and the remainder of approximately $4.7 billion after 20 years. These figures represent management's current best estimate, but the timing and amount of decommissioning cash flows are inherently uncertain.