12/01/2024 by Richard
US oil major ExxonMobil has warned that it may be necessary to write down the California assets of the company by around $2.5 billion, after it agreed to sell them to an independent energy organisation.
In a filing, the company referred to its Californian Santa Ynez field, saying:
“Continuing challenges in the state regulatory environment have impeded progress in restoring operations.”
Established in 2020, energy independent Sable Offshore agreed to buy the assets about a year ago, for $643 million. According to Reuters, this caused Exxon, which also makes the Mobil lubricant and metalworking range, to determine an impairment of $2.4–2.6 billion.
California-based Chevron also recently announced write downs of $3.5–4.0 million, due to in part to continuing regulatory challenges, with that figure also including dispersed assets in the Gulf of Mexico. The challenges refer to state legislation that was recently brought into law, imposing a penalty on refiners in California after allegations of price gouging, although oil companies dispute that this was the case, and Chevron has opposed the legislation.
In a letter written to the California Energy Commission, the president of the Americas products division at Chevron wrote:
“These arbitrary attacks on a disfavoured industry do more than this—they signal to every industry, entrepreneur, manufacturer and employer that California is closed for business.”
California is said to have the highest fuel costs in the United States combined with heavy taxation on fuel as it seeks to decarbonise by electrifying transport.
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