SEC probes Exxon’s cli­mate change, ac­count­ing prac­tices

The Sun (Malaysia) - - SUNBIZ -

HOUS­TON: The US Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) is in­ves­ti­gat­ing how ExxonMo­bil has val­ued its oil re­serves in the wake of low prices and po­ten­tial curbs on car­bon emis­sions, the com­pany said, con­firm­ing an ear­lier re­port.

The Wall Street Jour­nal, which first re­ported the news cit­ing sources, said the reg­u­la­tor sought in­for­ma­tion from Exxon and its au­di­tor, PwC, in Au­gust.

“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. PwC was not avail­able for com­ment. Exxon’s shares closed down 1.5% at US$82.54 (RM341.30) on Tues­day.

The SEC in­quiry mir­rors one started last year by New York at­tor­ney-gen­eral Eric Sch­nei­der­man, whom Exxon has ac­cused of over­reach­ing in a po­lit­i­cally driven push against fos­sil fuel com­pa­nies.

His­tor­i­cally, in­ves­ti­ga­tions by New York’s at­tor­ney-gen­eral have prod­ded the SEC to act.

Sch­nei­der­man ini­tially looked at whether Exxon mis­led in­vestors in years past about the risk of cli­mate change, then shifted his fo­cus to oil as­sets that would be “stranded” in the ground if govern­ments move to limit car­bon emis­sions in a bid to halt cli­mate change.

He re­cently be­gan look­ing at why Exxon, un­like many of its peers, had not writ­ten down the value of its oil as­sets after a more than 60% fall in crude prices.

Sch­nei­der­man’s of­fice did not com­ment. His own in­ves­ti­ga­tion faces an up­hill bat­tle against the oil gi­ant be­cause of the broad lee­way that en­ergy com­pa­nies have un­der US ac­count­ing rules, in­dus­try ex­perts have told Reuters.

Exxon, with­out spec­i­fy­ing its price as­sump­tions, has re­peat­edly said it uses very low price as­sump­tions when book­ing re­serves.

Last week, Exxon said it re­viewed its as­set val­u­a­tions in 2015, well after oil prices sank in mid-2014, and stood by its val­u­a­tions. It also said it sat­is­fac­to­rily an­swered val­u­a­tion ques­tions from the SEC as re­cently as 2013.

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