Chevron Corp. and ExxonMobil Corp. are two energy giants expected to post billions in impairments as part of upcoming fourth-quarter 2023 earnings reports.
In early January, Chevron said it plans to record $3.5-4.0 billion in impairments associated with a portion of its US upstream assets.
The Jan. 2 filing to the Securities and Exchange Commission (SEC) pointed to assets “primarily in California, due to continuing regulatory challenges in the state that have resulted in lower anticipated future investment levels in [Chevron’s] business plans.”
In addition to the California asset impairment, the energy company said it will realize a loss related to abandonment and decommissioning obligations from previously sold oil and gas production assets in the US Gulf of Mexico. Chevron said that certain companies that purchased the assets “have filed for protection under Chapter 11 of the US Bankruptcy Code, and [Chevron] believe[s] it is now probable and estimable that a portion of these obligations will revert to the company.”
Chevron expects to continue to operate the impacted California assets “for many years to come,” while decommissioning activities on the Gulf of Mexico assets will be undertaken over the next decade.
Also in early January, ExxonMobil Corp. indicated it could record impairment charges of $2.4-2.6 billion for fourth-quarter 2023 related to its upstream division, tied mostly to the value of California assets.
The impairments “primarily reflect idle Upstream Santa Ynez Unit assets and associated facilities in California,” the operator said in the Jan. 4 filing to the SEC.
ExxonMobil said it is “progressing efforts to enable a restart of production” of the assets in the Santa Barbara Channel, but “continuing challenges in the state regulatory environment have impeded progress in restoring operations.” Production has been idled since a pipeline spill in 2015.
ExxonMobil and Mobil Pacific Pipeline Co. previously entered a deal to divest Santa Ynez oil field, including three oil and gas platforms, a pipeline, and oil and gas processing infrastructure, to Sable Offshore for $625 million.
Both Chevron and ExxonMobil are expected to release fourth-quarter 2023 financial reports on Feb. 2.
