Exxon Mobil (NYSE: XOM), which has not written down the value of its assets despite a 60% fall in oil prices over the past two years, faces increased scrutiny of its accounting practices.
The SEC late on Tuesday opened an investigation – adding to several ongoing ones including one by the New York attorney general – to find out if the world’s largest oil company’s accounting may have misled investors. A separate and earlier probe by N.Y. Attorney General Eric Schneiderman focuses on whether or not Exxon has warned investors about climate change risks including potential curbs on oil exploration.
"We are fully complying with the SEC request for information and are confident our financial reporting meets all legal and accounting requirements," Exxon spokesman Alan Jeffers said.
According to the Wall Street Journal, which first reported the SEC probe, the stock market watchdog has also sought information from Exxon’s auditor PriceWaterhouseCoopers.
The SEC declined comment on the investigation, while PwC has not publicly commented on the probe.
On Tuesday, Exxon shares closed at $82.54 per share, down 1.5%.
According to Morningstar, the world’s largest oil companies have booked a combined “more than $50 billion in write-downs and impairments” since 2014. The amount likely includes about $10 billion in BP plc’s (ADR) (NYSE: BP) writedowns on account of the Deepwater Horizon disaster. Still, the number is huge and companies that have revalued their assets include, besides BP, Chevron Corp. (NYSE: CVX), Royal Dutch Shell plc (ADR) (NYSE: RDS-A) (NYSE: RDS-B) and Total SA (ADR) (NYSE: TOT).
In the past, Exxon CEO Rex Tillerson has defended his company’s accounting practices.
"We don't do write-downs," he told Energy Intelligence journal last year. "We are not going to bail you out by writing it down. That is the message to our organization."
Earlier this month, Exxon said it stood by its valuations after a review its assets in 2015. That comment came after the New York probe was announced.
Based on its 2015 reserves, Exxon’s assets could generate revenues of between $800 billion and $2.9 trillion, according to 24/7 Wall Street.
