Exxon Mobil, the largest oil company in the United States, announced that it will be taking an impairment charge in the fourth quarter due to issues in California. This comes just a week after another major firm, Chevron, made a similar announcement.

According to a filing made by Exxon on Thursday, the impairment is expected to be between $2.4 billion and $2.6 billion. Impairment charges are used as an accounting tool when the value of assets decreases and are not typically factored into adjusted earnings calculations.

The write-down is primarily due to idle Upstream Santa Ynez Unit assets. Exxon explained that efforts to restart production have been hindered by ongoing challenges in the state regulatory environment.

Chevron, earlier this week, also reported that it will take a charge of up to $4 billion for the quarter. The company cited environmental regulations in California and issues in some Gulf of Mexico fields as the reasons for the impairment.

Oil companies have voiced their grievances about California’s policies, such as restrictions on new drilling and penalties on excessive refiner margins, which they believe make it more challenging to invest in the state.

In addition, Exxon stated in the filing that changes in liquids prices may negatively impact upstream earnings by an estimated $400 million to $800 million. However, this may be offset by a gain of the same range from changes in natural gas prices.

On Friday, Exxon shares rose by 0.7% to $103.06 upon market opening, while Chevron gained 0.4%. European rivals BP and Shell also experienced an increase in share prices.

Leave a Reply

22  +    =  30