10-29-2016, 01:38 AM
Exxon warns of historic reserves reduction, with 4.6B barrels at risk
- ExxonMobil (XOM -1.2%) warns it may be facing the biggest reserves revision in its history, as it may be forced to recognize that as much as 4.6B barrels are no longer profitable to produce.
- XOM says ~3.6B barrels of reserves in the Canadian oil sands and the equivalent of another 1B barrels in other North American fields may be in jeopardy if the average YTD energy prices persist, which would equate to 19% of the company’s reserves.
- “The fact that everyone else has recorded charges and they have not created a red flag,” says Edward Jones analyst Brian Youngberg; XOM is under state and federal investigation for how it accounts for the value of its oil and gas wells.
- The disclosure comes as XOM's Q3 earnings declined for the eighth straight quarter and production hits seven-year lows, with Q3 output of 3.81M boe/day below analyst expectations of ~3.99M boe/day.
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