×

ExxonMobil accounting practices probed by New York attorney general

Rex Tillerson, CEO of Exxon Mobil.
Martin Simon | CNBC
Rex Tillerson, CEO of Exxon Mobil.

New York Attorney General Eric Schneiderman has opened a new line of investigation into why ExxonMobil has declined to write down the value of its assets following a two-year oil price rout, The Wall Street Journal reported, citing people familiar with the matter.

The probe of Exxon's accounting practices comes as Schneiderman's office is already looking into whether the oil giant's past research into climate change, which did not become public until recently, could impact its business and shareholders.

Exxon declined to comment to the Journal about the investigation, but told the newspaper it follows all rules and regulations. In the past, Exxon has said the company is conservative in its assessments of new assets and requires executives to make sure projects remain viable in low-price environments, according to the Journal.

"We don't do write-downs," CEO Rex Tillerson told trade publication Energy Intelligence last year. "We are not going to bail you out by writing it down. That is the message to our organization."

Among the top 40 largest publicly traded oil and gas companies, Exxon is the only only that has not written down its assets in the last 10 years, the Journal said, citing S&P Global Market Intelligence data.

Energy companies write down the value of their reserves when commodity-price declines make it uneconomical to extract oil and gas from those reserves. They are therefore unable to bring that product to market and profit from it.

Exxon, the world's largest publicly traded integrated oil company, has previously faced questions about its approach to writing down assets during a 2013 Securities and Exchange Committee inquiry following a drop in natural gas prices, as well as in a 2004 class action lawsuit following Exxon's merger with Mobil Corp., the Journal reported.

Read the Journal's full story here.