US oil and gas company ExxonMobil has announced that it expects to write down up to $2.6bn of its assets in California in the fourth quarter (Q4) of 2023.
The company attributed the impairment primarily to its Santa Ynez operations off the coast of Santa Barbara, which have faced regulatory and operational hurdles.
In a statement, Exxon said: “Impairments primarily reflect idle Upstream Santa Ynez Unit assets and associated facilities in California. While the corporation is progressing efforts to enable a restart of production, continuing challenges in the state regulatory environment have impeded progress in restoring operations.”
The oil giant had to temporarily halt production at the Santa Ynez oil field following a pipeline leak in 2015, reported Bloomberg.
Although Exxon resumed crude shipments via trucks, regulatory restrictions on road transport were later imposed, raising concerns over safety and environmental impact.
According to Reuters’ report, the US oil producer’s operating results are anticipated to fall to around $8.9bn, a 30% decrease from the $12.7bn net profit reported in the previous year.
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This decline is partly due to lower energy prices affecting operating profits.
Exxon’s writedown is indicative of a broader trend of major oil companies withdrawing from California, a state known for its mature oilfields and stringent environmental and regulatory policies.
This news comes shortly after Chevron disclosed that it would also incur up to $4bn in writedowns, largely because of California’s energy policies.
Chevron produces around 75,000 barrels of oil and gas per day from its California fields.
In September 2023, California filed a lawsuit against five oil and gas companies – Exxon, Shell, Chevron, ConocoPhillips and BP – for allegedly causing harm related to climate change that affected the entire state.