Exxon sees historic dip in reserves
chicago — Exxon Mobil Corp warned it may be facing the biggest reserves revision in its history as production sank to a seven-year low and profit slid amid a prolonged slump in energy markets.
About 3.6 billion barrels of reserves in the Canadian oil sands and the equivalent of another one billion barrels of oil in other North American fields may be in jeopardy if the average energy prices seen during the first nine months of 2016 persist, Exxon said in a statement on Friday.
That would equate to 19 per cent of Exxon’s reserves and would be the largest de-booking since the 1999 merger that created the company in its modern form.
Exxon’s accounting has prompted a US Securities and Exchange Commission (SEC) investigation into whether the company should have written down assets as a result of the oil slump, a person with knowledge of the matter said last month.
“The fact that everyone else has recorded charges and they have not created a red flag,” said Brian Youngberg, an analyst at Edward Jones & Co. “In the big picture, it doesn’t mean those reserves won’t eventually get produced.”
Profit declines
The Irving, Texas-based driller extended its longest streak of profit declines in almost three decades. Third-quarter net income was $2.65 billion, or 63 cents a share, compared with $4.24 billion, or $1.01, a year earlier, Exxon said on Friday.
The per-share results exceeded the 59-cent average of 20 estimates in a Bloomberg survey, though the company pumped less crude and natural gas than analysts expected.
The year-on-year decline in quarterly profit was the eighth in a row, a pattern of dwindling returns Exxon hasn’t posted since at least 1988. Exxon shares fell 2.5 per cent to $84.78 at the close in New York Friday, trimming