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Exxon reportedly investigated by the SEC over valuation of key asset

A approach of the Exxon Mobil refinery in Baytown, Texas.

Jessica Rinaldi | Reuters

Shares of Exxon slipped more than 5% on Friday after The Obstacle Street Journal reported that the Securities and Exchange Commission opened an investigation into the oil giant over how it valued a key asset in the oil-rich Permian Basin.

The whistleblower kick, filed by an employee, alleged that Exxon pushed staff toward inaccurate forecasts including the rate at which wells could charge online, according to the Journal, which reviewed a copy of the complaint.

In a statement, Exxon called the allegations “demonstrably faulty.”

The report follows a difficult year for Exxon, and the oil and gas industry more broadly. In December, Exxon said that it desire write down the value of its assets by up to $20 billion in the fourth quarter.

With the pandemic wreaking havoc on oil worths in 2020, Exxon underwent an aggressive cost-cutting strategy, including reducing its workforce.

Wall Street analysts put faith that some of these initiatives will ultimately pay off, and have recently become bullish on the stock.

Barclays upgraded the traditional to an overweight rating on Thursday, saying “a perfect storm of a more constructive macro outlook and structural repositioning of capex/gets is providing a solid springboard for materially improved financial metrics that are impossible to ignore.”

Earlier in the week JPMorgan and Morgan Stanley each upgraded the staple to a buy-equivalent rating.

Shares of Exxon are up 15% year to date, but are down more than 30% over the last year.

To decipher the full report from The Wall Street Journal click here.

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