US Law Firm probing ExxonMobil for allegedly misleading investors

Jan 22, 2021 News

Inflated value of Permian Basin Asset…

ExxonMobil President and CEO, Darren Woods.

Kaieteur News – Rosen Law Firm, a global investor rights law firm, announced yesterday that it has launched an investigation of potential securities claims on behalf of shareholders of ExxonMobil Corporation. The probe stems from allegations that the oil titan may have issued materially misleading business information regarding its Permian Basin asset to the investing public.
Kaieteur News would have reported that on January 15, 2021, the Wall Street Journal published an article titled, “Exxon Draws SEC Probe Over Permian Basin Asset Valuation.” The article reported that the U.S. Securities Commission probe is premised on a whistleblower complaint that during a 2019 internal assessment, workers were forced to use unrealistic assumptions about how quickly wells in the Permian Basin could be drilled to reach a higher valuation, and that at least one worker who complained about the assumptions was fired. On this news, Exxon’s stock price fell US$2.42 per share, or 4.81%, to close at $47.89 per share on January 15, 2021.
Following the release of the WSJ report, ExxonMobil was quick to inform the media and its shareholders that the claims made by an alleged whistleblower are demonstrably false. It said that actual and provable performance exceeded drilling plans for the Permian, and such performance has been accurately represented to the investment community while noting that the Wall Street Journal has been aware of these facts since September.
Further to this, ExxonMobil said it has an extensive and rigorous planning and budgeting process that considers many sensitivities and ranges of outcomes. The oil giant said it takes into account thousands of inputs including hundreds of drilling curves over a seven-month period. The Stabroek Block operator said, “Learning curves were developed as a collaborative effort between the drilling team executing the work, who had the most expertise with current drilling performance, and the development team, who leveraged data from demonstrated learning curve performance in other unconventional projects. There were multiple learning curves considered and evaluated throughout the process.”
Taking this into account, Exxon said it is obvious that the employees who are alleged to have made the false claims lack the breadth and depth of experience to understand how and why drilling curves are routinely revised as technologies improve and understanding of the resource base expands. Exxon was keen to note as well that historically, the company’s unconventional drilling performance has increased in short timeframes as engineers and planners gather more data in basins across its portfolio.
In conclusion, Exxon said that it stands by its statements to investors, and, if it were to be asked about this matter by authorities, it would provide information that shows the accuracy of its valuation of the Permian assets, and that actual drilling performance exceeded the plans.