Exxon write down reserves due to large concentration in the oilsands

[Mangosteen]

Tax Evasion? Is that fair to Albertans? Can that work? A loss in reserves only.

[fishtank]

Exxon just report their earning profit is down 38% .

The company reported third-quarter net income of $2.65 billion, or 63 cents per share, compared with $4.24 billion, or $1.01 per share, a year earlier.

[Walleyedude]

It's pretty clear that some people here, the OP included, have a very poor understanding of how reserves are evaluated and the role they play in corporate economics.

There are many different categories of "reserves", each with very specific definitions and financial implications. The current commodity prices can have major impacts on some categories of reserves at this moment in time or in the short term corporate reporting cycle, but they in no way affect the fact that the oil is in the ground and recoverable at some point in time.

There have been numerous cycles like this in both oil and gas reserves reporting over the years, it's nothing new. Those with a long term view will likely see it as an opportunity...

[avb3]

Originally Posted by Walleyedude

It's pretty clear that some people here, the OP included, have a very poor understanding of how reserves are evaluated and the role they play in corporate economics.

There are many different categories of "reserves", each with very specific definitions and financial implications. The current commodity prices can have major impacts on some categories of reserves at this moment in time or in the short term corporate reporting cycle, but they in no way affect the fact that the oil is in the ground and recoverable at some point in time.

There have been numerous cycles like this in both oil and gas reserves reporting over the years, it's nothing new. Those with a long term view will likely see it as an opportunity...

I agree, the oil is in the ground. And that it is recoverable.

But that is not the issue. The issue is that what are the economics involved? Exxon has too many eggs in the oilsands basket, hence, the call from SEC to reevaluate.

Their own 2015 financial statements allude to the issues at play; impairment measurements and unit-of-production depreciation. As other major oil companies did right down their reserves, Exxon is making the argument that the price dip is temporary, and as such, they felt no adjustments were needed. If they maintain a high reserve evaluation, then their depreciation is lower than it would be with a more realistic one. In other words, their profit is over stated.

Obviously SEC felt this needed to be reassessed. Do you think they were wrong?