(Bloomberg) -- Exxon Mobil Corp (NYSE:XOM). warned that low energy prices may wipe as much as one-fifth of its oil and natural gas reserves off the books.
If depressed prices persist for the rest of the year, “certain quantities of crude oil, bitumen and natural gas will not qualify as proved reserves at year-end 2020,” the company said in a regulatory filing on Wednesday. A 20% hit would impact the equivalent of almost 4.5 billion barrels of crude, or enough to supply every refinery on the U.S. Gulf Coast for 18 months.
Exxon’s shares gave up some gains, trading 0.3% higher at 1:34 p.m., after earlier climbing as much as 1.9%, bolstered by a gain in international crude futures.
Rivals Chevron Corp. (NYSE:CVX), Royal Dutch Shell (LON:RDSa) Plc, BP (NYSE:BP) Plc and Total SE have written off billions of dollars in reserves in recent weeks as the pandemic destroyed oil demand and prices, making some fields unprofitable to drill. Exxon has been the sole holdout, having not written down anything during the current crisis.
Exxon’s last significant reserves revision was in 2016, when it removed some of its oil-sands assets in Canada from its books, though it later added some of these back.
Exxon is currently undergoing its annual “very rigorous” process of reviewing the value of assets and should present the results to the board by November, Senior Vice President Neil Chapman said during a call with analysts July 31. While Exxon doesn’t publish commodity price forecasts, unlike European peers, Chapman said they’re “consistent with the range of third-party estimates.”
(Updates with company comment in second paragraph.)
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