News and Updates from 5WPR CEO Ronn Torossian

ExxonMobil in trouble … again

ExxonMobil in trouble … again

Not long ago, the descendants of Standard Oil’s founder parted ways officially – and very publicly – with anything relating to their grandfather’s company, as it is today. They claimed the company was covering up climate change data they didn’t want the world to see, and the Rockefeller family was not interested in being a part of any cover up.

If that was the only PR issue facing ExxonMobil, it was plenty to deal with, even as lower gas prices have consumers happier about fossil fuels. But now things are getting worse. The New York Attorney General is going after ExxonMobil, intimating that he believes the company withheld information from shareholders as well as the public about the risks climate change poses to the company’s business.

But, according to AG Eric Schneiderman, trying to keep shareholders in the dark wasn’t enough for ExxonMobil. The AG says the company might be using some creative accounting when valuing its crude oil and natural gas reserves. Energy prices have fallen dramatically, and most oil companies are seeing profits plummet.

Where some of these companies have actually posted losses as a result. Complicating matters is that low oil prices also make it problematic to pay the cost of extracting new energy from company reserves. But Exxon has not done what others have done, i.e., taking a charge against its earnings. That piqued the NY AG’s interest, even though that’s not exactly his purview. Not that specific job description and previously outlined jurisdiction have stopped Schneiderman before. When he thinks there’s smoke, he grabs an extinguisher and heads inside to take a look.

When asked about the AG’s probe, ExxonMobil told CNN: “Our results are in accordance with the accounting and reporting standards … The corporation performs asset valuation analysis on an ongoing basis as a part of its asset management program…”

Doubling down on their “it’s all good” narrative, ExxonMobil concluded: “In general, the corporation does not view temporarily low prices or margins as a trigger event for conducting impairment tests…”

Not everyone believes that, however, and the longer this investigation continues, the more of a PR problem it could become for ExxonMobil. Worse, other companies are taking the charges, forcing ExxonMobil into a position to need to explain why they haven’t elected to do so. BP, according to CNN, has taken more than $2 billion in charges in the past two years, blaming the drop in gas prices.

At some point, more questions will be asked. If the AGs investigation continues, a lot more questions will be asked.

Ronn Torossian

Ronn Torossian is the founder and CEO of 5W Public Relations and one of the most well-respected Public Relations professionals in the United States. Ronn is the author of "For Immediate Release: Shape Minds, Build Brands, and Deliver Results with Game-Changing Public Relations."

View more posts from this author