Description: Exxon, the giant oil company, seems ready to write down between $17 billion and $20 billion in assets. With collapsing oil prices, Exxon’s natural gas deposits in the Americas are over-valued. About 10 years ago Exxon acquired XTO Energy for about $35 billion, and with it, XTO’s gas fields. In the rear-view mirror, one might second guess this decision.

Date:  December 1, 2020

Source:  thestar.com

 Link: https://www.thestar.com/business/2020/12/01/exxon-faces-historic-writedown-after-energy-markets-implode.html?source=newsletter&utm_content=a04&utm_source=ts_nl&utm_medium=email&utm_email=760BE779956395955CFBBA5C497D22A3&utm_campaign=sbj_37933

Discussion points:

1) How do you wrap your mind around a write-down of $20 billion?

2) What have other energy producers been doing with their asset values in the time of the Corona virus?

3) Chapter 9 of Wiley’s Financial Accounting: Tools for Business Decision-Making discusses depreciation, including depreciation for natural resources. What is depreciation called when you are dealing with natural resources?