Exxon Faces Profit Decline With California Offshore Exit.

Written by Paulo Nogueira

Published on 04/01/2024 at 21:59

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Exxon Profit Will Instantly Drop In Q4 Due To California Offshore Exit And Impairments In Oil And Gas Properties.

Exxon announced on Thursday that it will have a write-down of about US$ 2.5 billion in California assets in the last quarter and stated that lower energy prices affected operating profits.

The report from Exxon Mobil Corp, the largest oil producer in the U.S., indicated that operating results could drop to about US$ 8.9 billion, a 30% decrease from the previous year’s net income of US$ 12.7 billion, and 3% weaker than in the third quarter.

Exxon Mobil Corp: The Largest Oil Producer In The U.S.

Exxon estimated to take a recoverable value reduction of US$ 2.4 billion to US$ 2.6 billion for oil and gas properties along the southern coast of California. Sable Offshore, a company established in 2020, agreed over a year ago to pay US$ 643 million for the assets.

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Ongoing challenges in the state regulatory environment and strong impediments have hindered progress in restoring operations at the company’s facilities in Santa Ynez, near Santa Barbara, it said. The company had previously disclosed that the properties would be sold for about US$ 643 million in a highly leveraged agreement to a start-up company.

The write-down marks another exit of major oil companies from California regarding the relatively mature oil fields and the state’s environmental and regulatory policies.

Chevron criticized the state’s energy policies in December for making ‘the country a tough place to invest’ and has led to ‘reducing spending by hundreds of millions of dollars since 2022.’ Earlier this month, the second largest oil producer in the U.S. also indicated that it would take a write-down of up to US$ 4 billion in assets, primarily in California.

Exxon also indicated that it will accept an impairment of about 250 million dollars in its chemical business.

Despite the accusations, RBC analyst Biraj Borkhataria expects investors to consider the update neutral. The snapshot puts the quarterly net income at about US$ 9 billion, or US$ 2.20 per share, he said.

Lower oil prices and a contraction in fuel margins will reduce Exxon’s operating profits by about US$ 2.2 billion compared to the third quarter, the process showed. Higher natural gas prices are expected to add US$ 600 million to operating profits.

Full results are expected on February 2.

Brent average prices in the fourth quarter were US$ 82.85, a 7% decrease compared to the same period last year and a 4% drop from the third quarter.

(Reuters – Reporting by Sabrina Valle in Houston, additional reporting by Tanay Dhumal in Bengaluru; editing by Sriraj Kalluvila and Richard Chang)

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Exxon Faces Profit Decline With California Offshore Exit.

Exxon Profit Will Instantly Drop In Q4 Due To California Offshore Exit And Impairments In Oil And Gas Properties.

Exxon Mobil Corp: The Largest Oil Producer In The U.S.

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Exxon Faces Profit Decline With California Offshore Exit.

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