The $11 billion write-downs of Chevron is an admonishment for the oil industry
Chevron declared that it would write down $11 billion in assets in the fourth quarter, much of that is pledged to natural gas in Appalachia. Chevron’s deprivation charge is not a company-specific exception. The deprivation is a sign that the waters are getting rough enough for the oil and gas industry. The deprivation caused a concourse of supply surpluses, the struggling, low prices, and unproven business case for massive-scale shale drilling, and the looming threat of high demand. The write-down comes as Chevron diminished its long-term anticipation for oil and gas prices, which directly influenced the value of its assets.
Chevron and chief Executive Mike stated in an interview that they have to make the difficult choices to high-grade their portfolio and effuse in the highest-return projects in the world they see ahead of them, and that is a different world than the one that lies behind them. The WSJ states the admission that billions of dollars’ worth of assets. It worth a lot less than formerly thought could compel others to avowedly reassess the standard of their holdings in the face of a global supply glut and rising investor concerns about the long-term future of fossil fuels. The write-down is also a grumble of shale gas drilling in Appalachia. Low value and a track record of not conducting any profits have turned investors into the sector. A recent analysis by IEEFA discovered that the seven largest Appalachian gas drillers burned through a half a billion dollars in the third quarter.
Chevron is also writing down some worth in its LNG project in Canada. Chevron stated in a press release that as a result of his disciplined approach to capital outgoing and a downward revision in its longer-term commodity price outlook, the company would decrease funding. The company will reduce the funding to several gas-related opportunities along with Kitimat LNG, Appalachia shale, and other international projects. Chevron is weighing its strategic alternatives for these assets along with divestment.