What reviews does Petro Stopping Center perform on its refineries regarding decommissioning provisions?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
heir decommissioning obligations, whether the Company would then be responsible for decommissioning, and if so the extent of that responsibility. This typically requires assessment of the local legal requirements and the financial standing of the owner. If the standing deteriorates significantly, for example, bankruptcy of the owner, a provision may be required. The Company has $0.7 billion of decommissioning provisions recognized as at December 31, 2024 (2023 $0.6 billion) for assets previously sold to third parties where the sale transferred the decommissioning obligation to the new owner. See Note 27 for further information.
Decommissioning provisions associated with refineries are generally not recognized, as the potential obligations cannot be measured, given their indeterminate settlement dates. Obligations may arise if refineries cease manufacturing operations and any such obligations would be recognized in the period when sufficient information becomes available to determine potential settlement dates. See Note 27 for further information.
The Company performs periodic reviews of its refineries for any changes in facts and circumstances including those relating to the energy transition, that might require the recognition of a decommissioning provision. Portfolio strength and flexibility are such that the point of cessation of manufacturing at the Company's operating refineries is not yet expected within a determinate time period, as existing property plant and equipment is expected to be renewed or replaced.
The provision for environmental liabilities is estimated based on current legal and constructive requirements, technology, price levels and expected plans for remediation.
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to the 2025 FDD, Petro Stopping Center conducts periodic reviews of its refineries to account for changes in circumstances, including those related to the energy transition, that could necessitate the recognition of a decommissioning provision. However, decommissioning provisions associated with refineries are generally not recognized because the potential obligations cannot be measured due to their indeterminate settlement dates, which are typically driven by the cessation of manufacturing operations.
Petro Stopping Center's management does not anticipate manufacturing to cease at its refineries within a determinate period, as existing property, plant, and equipment are expected to be renewed or replaced. Despite this, management commits to continuously reviewing facts and circumstances, particularly when decisions about ceasing manufacturing have been made, to assess whether decommissioning provisions need to be recognized.
As of December 31, 2024, decommissioning provisions relating to refineries were not material. This indicates that while Petro Stopping Center monitors the situation and reviews its refineries periodically, the company does not currently foresee any significant decommissioning liabilities that need to be accounted for in their financial statements.