U.S. securities regulators are investigating whether ExxonMobil may be misleading investors about the value of its holdings in Alberta’s tar sands/oil sands, InsideClimate News reports.
Those assets, held largely through the fossil giant’s Canadian subsidiary, Imperial Oil, have gone from representing about 17% of ExxonMobil’s total reserves in 2007, to 35% of its 5.1-billion-barrel portfolio today.
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An oil company’s reserves are a key metric for investors analyzing its value. “The complicated measurement is based on geology and the economics of oil,” InsideClimate notes, “with high prices opening up harder-to-access stores.”
However, as oil prices have fallen from highs of about US$140 to currently around US$45, ExxonMobil’s “position may put the company on shaky ground,” said Tom Sanzillo of the Institute for Energy Economics and Financial Analysis (IEEFA). Extracting synthetic crude from Alberta bitumen, Sanzillo said, “is a very expensive process that requires a very high price of oil. So it is the least likely of the Exxon investment portfolio to produce the expected results.”
With that risk apparently in mind, “state and federal investigators are zeroing in on ExxonMobil’s accounting practices as part of two independent probes,” ICN notes, “asking whether the energy giant might have misled investors about the value of its [Canadian] assets.”
Meanwhile, DeSmog Blog reports, the company lobbied Republican state attorneys general in private meetings earlier this year to resist investigations by the FBI and as many as 20 of their state-level counterparts into Exxon’s decades-long effort to conceal from the public what its scientists knew about the climate-disrupting effects of using its products. In secret meetings with state prosecutors held in Colorado, DeSmog says, the company denounced the investigations as a “politically motivated” “climate inquisition.”
The same outlet revealed in July that Exxon continued to fund climate denial groups as recently as last year.