ExxonMobil has alerted investors about an anticipated US$2.5 billion write-down, primarily linked to its California operations.
The revelation, disclosed in a Jan. 4 filing, aligns closely with Chevron Corp.’s recent announcement of substantial write-downs attributed significantly to California’s energy policies.
The impairment, slated for inclusion in fourth-quarter earnings, stems largely from Exxon’s Santa Ynez oil field. According to public reports, after a 2015 pipeline leak, production at the field was temporarily halted, later resuming through truck crude shipments. However, regulatory intervention ensued, restricting Exxon’s ability to transport oil by road, citing potential risks to both drivers and the environment.
“Continuing challenges in the state regulatory environment have impeded progress in restoring operations,” Exxon highlighted in the filing, emphasizing ongoing obstacles hindering the resumption of production despite ongoing efforts.
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Exxon clarified that its fourth-quarter earnings mirrored the previous three-month period, excluding the write-down. Lower oil prices resulted in a US$600 million earnings reduction, partially offset by an uptick in natural gas market performance.
Additionally, a US$1.6 billion decline in refining earnings found some mitigation through a gain of about US$1.2 billion in unsettled derivatives.
