(Reuters) – The U.S Securities and Exchange Commission has launched an investigation into Exxon, following a whistleblower complaint that the oil major overvalued a key asset in Texas’ Permian Basin, the Wall street Journal reported on Friday.
Several people involved in valuing the asset, during an internal assessment in 2019, said employees were being forced to use unrealistic assumptions about how quickly the company could drill wells there to arrive at a higher value, the report said. (https://on.wsj.com/2LzpVjX)
The SEC began investigating the claims after receiving the complaint, and at least one of the employees who complained was fired last year, WSJ reported, citing people familiar with the matter.
Exxon and SEC did not immediately respond to Reuters requests for a comment.
The Journal in September reported that there had been internal disagreements over the valuation.
Some Exxon managers in 2018 had initially pegged the net present value of the Delaware Basin in Permian at about $60 billion. But a few employees involved in Exxon’s annual development planning estimated the value was closer to $40 billion during the summer of 2019, WSJ said.
The largest U.S. oil producer has posted losses in the first three quarters of 2020 on an ill-timed spending increase that collided with a downturn in fuel demand and prices. To cope, the company has cut employees and project spending.
Last month, Exxon also signaled an up to $20 billion writedown, mostly related to its natural gas properties.
Exxon shares were down 3.4% at $48.62 in premarket trading.
(Reporting by Rithika Krishna; Editing by Shinjini Ganguli)
