With more than two years of falling, and fallen, oil prices, most oil producers have faced reality about what their businesses are worth.
The oil price was at $105 a barrel at the end of June 2014, before aggressively sliding as low as $29 in February this year.
That’s more than a two-thirds fall.
No one expects a business to write down its assets by two-thirds, not least of all because of where those assets might be scattered around the globe and what potential they have for a rebound as soon as oil prices make a convincing gain.
Typically, 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.
On Friday, the West Texas Intermediate, the US oil benchmark futures contract, was down another 1.5% at $43.24. It has been jobbing a tight range a $43-48 a barrel for the past month.
But when an oil company doesn’t “play ball” naturally it is going to attract attention, and not only from accountants. In the case of one notorious name, linked inextricably with the depths of the credit crisis of 2008 and the label "too big to fail", it will inevitably also attract the attention of regulators. Exxon Mobil Corp (NYSE:XOM).
Among the top 40 largest publicly-traded oil and gas companies, Exxon is the only one that has not written down its assets in the last 10 years, the Journal said, citing S&P Global Market Intelligence data.
Now 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 on Friday, citing people familiar with the matter.
This is on top of Schneiderman's probe of whether the oil giant's past research into climate change, which did not become public until recently, could impact its business and shareholders.
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."
This fighting talk, at very least, is consistent with the company’s heritage.
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.
Exxon shares closed down 1.2% at $84.03 on Friday.