The U.S. Securities and Exchange Commission is investigating how Exxon Mobil has valued its oil reserves in the wake of low prices and potential curbs on carbon emissions, the company said, confirming an earlier report.
Wall Street Journal, which first reported the news citing sources, said the regulator sought information from Exxon (XOM) and its auditor, PwC, in August.
“We are fully complying with the SEC request for information and are confident our financial reporting meets all legal and accounting requirements,” Exxon spokesman Alan Jeffers said.
PwC was not available for comment.
Exxon‘s shares closed down 1.5% at $82.54 on Tuesday.
The SEC inquiry mirrors one started last year by New York Attorney General Eric Schneiderman, whom Exxon has accused of overreaching in a politically driven push against fossil fuel companies.
Historically, investigations by New York’s attorney general have prodded the SEC to act.
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Schneiderman initially looked at whether Exxon misled investors in years past about the risk of climate change, then shifted his focus to oil assets that would be “stranded” in the ground if governments move to limit carbon emissions in a bid to halt climate change.
He recently began looking at why Exxon, unlike many of its peers, had not written down the value of its oil assets after a more than 60 percent fall in crude prices.
Schneiderman’s office did not comment. His own investigation faces an uphill battle against the oil giant because of the broad leeway that energy companies have under U.S. Accounting rules, industry experts have told Reuters.
Exxon, without specifying its price assumptions, has repeatedly said it uses very low price assumptions when booking reserves.
Last week, Exxon said it reviewed its asset valuations in 2015, well after oil prices sank in mid-2014, and stood by its valuations. It also said it satisfactorily answered valuation questions from the SEC as recently as 2013.
Legal scholars have said Schneiderman’s casting over the last year suggested he did not have a strong case to press in court or use to force Exxon into a settlement.
Exxon said in a February filing that an assessment of its major risky assets showed that future undiscounted cash flows associated with such assets “substantially exceed” their carrying value.
Environmental group Greenpeace called the SEC probe a “welcome opportunity for transparency from the fossil fuel industry,” in a Tuesday statement.
