New York Attorney General Eric Schneiderman is investigating why Exxon Mobil hasn't written down the value of its assets, two years into a pronounced crash in oil prices.
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Mr. Schneiderman's office, which has been probing Exxon's past knowledge of the impact of climate change and how it could affect its future business, is also examining the company's accounting practices, according to people familiar with the matter.
An Exxon spokesman declined to comment about the investigation by the Democratic attorney general but said Exxon follows all rules and regulations.
Since 2014, oil producers world-wide have been forced to recognize that wells they plan to drill in the future are worth $200 billion less than they once thought, according to consultancy Rystad Energy. Because the fall in prices means billions of barrels cannot be economically tapped, such revisions have become a staple of oil-patch earnings, helping to push losses to record levels in recent years.
Exxon hasn't taken any write-downs -- the only major oil producer not to do so -- which has led some analysts to question its accounting practices.
The company has played down the criticism, saying it is extremely conservative in booking the value of new potential fields and wells. That reduces its exposure to write-downs if the assets later prove to be worth less than expected, it says.
Exxon's ability to avoid write-downs -- and potential losses that come with them -- has been among the factors helping the company outperform rivals since prices began falling in mid-2014. Exxon shares have fallen by about half of the average of top peers Chevron, Royal Dutch Shell, Total and BP . Since 2014, those companies have booked more than $50 billion overall in write-downs and impairments.
Yet Exxon has lost money for six straight quarters in its U.S. drilling business. The company had to remove the equivalent of more than 900 million barrels of U.S. natural gas reserves from its books in 2015, an acknowledgment that wells on those properties cannot currently be economically drilled. When it agreed to purchase shale explorer XTO Energy Inc. in 2009 for $31 billion, natural gas sold for almost double what it does now.
For many producers, such losses in net income and reserves would make write-downs inevitable, but Exxon didn't write down the overall value of its reserves. The lack of such a step at Exxon "raises serious questions of financial stewardship," Paul Sankey, an oil analyst at Wolfe Research, wrote last month.
"It is impossible to believe that no assets have been impaired," he said.
The process for booking oil and gas reserves, and recognizing when they fall, is separate from accounting for how the value of those reserves changes over time on a company balance sheet.
John Herrlin, an analyst at Société Générale, came to a different conclusion in an investor note last month, writing that about three fourths of Exxon's reserves are from areas with producing wells, a factor that makes impairments less likely than in undeveloped areas.
Exxon Chief Executive Rex Tillerson told trade publication Energy Intelligence last year that the company has been able to avoid write-downs because it places a high burden on executives to ensure that projects can work at lower prices, and holds them accountable.
"We don't do write-downs," Mr. Tillerson told the publication. "We are not going to bail you out by writing it down. That is the message to our organization."
Out of the 40 biggest publicly traded oil companies in the world, Exxon is the only one that hasn't booked any impairments in the last 10 years, according to S&P Global Market Intelligence.
In 2013, the U.S. Securities and Exchange Commission asked Exxon why it hadn't booked any impairments in the previous year, citing a speech Mr. Tillerson gave in June 2012 in which he said the company was making "no money" due to declining natural-gas prices.
Exxon's response then mirrors its position now: That short-term price fluctuations aren't enough to render worthless wells that would potentially be drilled over decades. Another key to the company's assessment is the view that its assets will hold value when prices eventually rebound.
Natural gas rose substantially in 2013 after the SEC's inquiry, but many oil executives and forecasters have said they expect prices to remain low for some time.
Last year, Exxon scrutinized its assets most at risk for impairment and found that future cash flows anticipated from its fields were "substantially" higher than the book value of the asset. Exxon "does not view temporarily low prices or margins as a trigger event for conducting impairment tests," according to a company filing.
The company is known for its conservatism in recognizing the value of reserves, a practice that results in lower write-downs, said Sean Heinroth, a principal in the energy practice at management consultancy A.T. Kearney. Exxon is also known for rigidly interpreting regulations and sometimes pushing back against regulators if company leaders feel their practices follow the law, he said.
"I would have expected some write-downs, even to avoid being called out on it, on being the last company not to have write-downs," he said.
Exxon has previously faced a lawsuit over its impairment practices. Plaintiffs including the Ohio state pension system alleged in a 2004 class-action suit that the company's failure to impair its properties undercut shareholders of Mobil Corp. in the 1999 deal that combined the companies.
The suit alleged that Exxon should have seen write-downs of between $3 billion to $7 billion in the late 1990s, another period of historically low prices. It included an allegation from a former Exxon insider that the company "operated under an order" by former Chief Executive Lee Raymond that "no impairment would be recorded."
Exxon denied the allegations. The lawsuit was dismissed because the statute of limitations on such claims had passed.
--Dave Michaels contributed to this article.