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ExxonMobil accounting for oil crash probed in NY

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NEW YORK: ExxonMobil is being investigated by the New York attorney general for not writing down assets due to the oil price crash, a person familiar with the matter said Friday.

The probe undertaken by New York Attorney General Eric Schneiderman looks at ExxonMobil’s accounting in the wake of the US oil giant’s exceptionally good financial performance during the oil rout.

Rivals, including Royal Dutch Shell and Chevron, have taken large asset write-downs that have led them to report quarterly losses over the last two years.

Such writedowns are usually made when lower commodity prices make a company’s oilfields uneconomical, but ExxonMobil has not taken such steps.

The New York investigation was first reported by the Wall Street Journal and confirmed to AFP by a source who spoke on the condition of anonymity.

ExxonMobil declined to comment on the probe, but a spokesman cited longstanding company policy against downgrading assets in response to short-term drops in commodity prices.

The company in 2015 undertook an asset review based on commodity prices “that are generally consistent with the long-term price forecasts published by third-party industry experts,” ExxonMobil said in an annual securities filing.

“Critical to the long-term recoverability of certain assets is the assumption that either by supply and demand changes, or due to general inflation, prices will rise in the future,” ExxonMobil said.

“Should increases in long-term prices not materialize, certain of the corporation’s assets will be at risk for impairment.”

Schneiderman has also launched an investigation into whether ExxonMobil knowingly understated the risks of climate change to consumers and shareholders.

ExxonMobil has vigorously fought the climate probe, which has also been attacked by some congressional Republicans as an example of judicial overreach.

 

 

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