Ad
Ad
Ad

Exxon Mobil Corporation (XOM): Canadian Tar Sands Reserves Write-downs, Not a Threat to Climate

Pinterest LinkedIn Tumblr

Exxon’s latest move would not impact climate change, but it is likely to hamper investor confidence

Coming ahead of probes being launched against the largest US oil producer by market share for having prevented assets write-downs during the past ten years. Exxon Mobil Corporation (NYSE:XOM) has informed its investors that the energy giant may cut back on the estimates of its Canadian tar sands reserves. At one hand, where the latest announcement may hamper investor confidence, on the other hand, there remains little possibility of a climate impact anytime soon.

Only recently, the energy giant was accused of avoiding asset write downs for several years. With the oil prices crashing from $115 per barrel to around $27 per barrel in 2014, almost all the players in the industry including Royal Dutch Shell plc (ADR) (NYSE:RDS.A) made considerable large scale asset write-downs.

Amid the crude prices downturn, prevention of write downs by Exxon raised many doubts leading to inquiries being launched in the company. The energy giant argued that the worth of its reserves was the prime reason behind prevention write downs; however, in a financial disclosure on October 28, Exxon finally warned its stakeholders that the company may eradicate most of the reserves in the oil sands from its books.

Furthermore, the oil giant stated that it may have to write off around 1 billion barrels of oil & gas equivalent in North America along with 3.6 billion barrels of crude at Kearl tar sands field due to the low crude oil environment. The move comes at the back of accounting formulas derived by the Securities and Exchange Commission.

With the latest decision, around 20% of the company’s assets would be written down. Having posted disappointing financial results for the third quarter of fiscal 2016 (3QFY16), the move would further dent Exxon’s balance sheet position.

Comments are closed.