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Exxon Says, 'We Don't Do Write-Downs'; NY Attorney General Investigating Whether Or Not They Should

Exxon Says, 'We Don't Do Write-Downs'; NY Attorney General Investigating Whether Or Not They Should

Why is Exxon Mobil Corporation (NYSE: XOM) the only oil firm that doesn't write down the value of its assets? According to the Wall Street Journal, this is the exact same question that New York Attorney General Eric Schneiderman is asking.

The Journal, citing "people familiar with the matter," reported on Friday that Schneiderman is examining Exxon's accounting practices, which may be raising red flags. Specifically, oil producers have been forced to recognize that oil wells that will be subject to drilling in the future are valued at $200 billion less than previously assumed.

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Companies including Chevron Corporation (NYSE: CVX), Royal Dutch Shell plc (ADR) (NYSE: RDS-A) (NYSE: RDS-B), Total SA (ADR) (NYSE: TOT) and BP plc (ADR) (NYSE: BP) have booked more than $50 billion in write-downs and impairments combined since 2014. Analysts have also taken notice of Exxon's absence of write-downs, including Paul Sankey, an oil analyst at Wolfe Research.

Exxon has been notably absent in write-downs, but the company claims it is acting in an extremely conservative manner in booking the value of new potential fields and wells. Doing so could reduce its exposure to write-downs if the assets prove to be worth less than expected.

The Wall Street Journal quoted the analyst as saying last month that Exxon "raises serious questions of financial stewardship" and that "it is impossible to believe that no assets have been impaired."

Finally, Exxon CEO Rex Tillerson told Energy Intelligence last year that it avoids write-downs because it ensures it can operate projects at lower prices and executives are held accountable.

"We don't do write-downs," Tillerson told the publication. "We are not going to bail you out by writing it down. That is the message to our organization."

Nevertheless, Schneiderman has broad authority to investigate corporations under New York state's Martin Act.

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Posted-In: Energy Intelligence Eric Schneiderman ExxonNews Commodities Legal Markets Media Best of Benzinga


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