Key Takeaways
- ExxonMobil said it will take a $2.4 billion to $2.6 billion impairment charge for the fourth quarter, primarily because of an idle California unit.
- The company said that efforts to restart facilities in the Santa Ynez unit in California have been hampered by state regulators.
- ExxonMobil also said upstream earnings would be negatively affected by falling liquids prices, but helped by higher gas prices.
ExxonMobil (XOM) warned it would incur a $2.4 billion to $2.6 billion impairment charge for the fourth quarter, mainly because of the shutdown of a unit in Southern California.
The energy giant wrote in a Securities and Exchange Commission (SEC) regulatory filing that the charges to its upstream business “primarily reflect idle Upstream Santa Ynez Unit assets and associated facilities in California.”
ExxonMobil said that while it has been trying to restart production there, “continuing challenges in the state regulatory environment have impeded progress” in doing so.
The Santa Ynez Unit includes offshore oil platforms, an onshore processing facility, and pipeline. The company sold the assets in November 2022 to Sable Offshore Corp. for $643 million, providing 97% of the purchase price through a five-year loan.
ExxonMobil also said that because of falling liquids prices, it expects upstream earnings to be negatively affected by $400 million to $800 million. However, it anticipates a $400 million to $800 million upstream earnings benefit from higher gas prices.
Shares of ExxonMobil were 0.1% lower at $102.30 per share as of about 12:30 p.m. ET Friday, and have lost more than 6% of their value over the past year.
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