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
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?