ExxonMobil and Chevron may be forced to write off large parts of their proven oil and gas reserves if commodity prices persist for the rest of the year. According to Exxon’s 10-Q filing, the oil major could write down about 20% of its proven reserves. Based on Exxon’s total reserves of 22.4 billion boe at year-end 2019, the writedown will equal to nearly 4.5 billion boe.
Exxon announced in April that it would cut 2020 capex by 30%, from $33 billion to $23 billion, and slash its opex by 15%. However, it had not offered guidance regarding possible write-offs. According to Exxon’s filing, this reduction will result in a write-down of 1 billion boe proven reserves, most of it from US shale, by the year-end.
Separately, Chevron’s filing dated August 5, indicated that it might write off about 10% of its proven reserves, mostly in the US Permian Basin and Australia should the current low commodity prices persist. Chevron took an upstream charge of $5.4 billion in the April-June quarter, mostly attributed to a non-operating field in the Gulf of Mexico, Permian shale operations, and various Asian and African producing assets. The charge also included a $2.6 billion impairment on assets in Venezuela.
