Exxon Rebuts Allegations it Misled Investors on Climate -- Update
June 09 2017 - 4:22PM
Dow Jones News
By Bradley Olson
Exxon Mobil Corp. pushed back on Friday against accusations that
it misled investors on how it accounts for climate-change risks,
saying in a legal filing that the claims by New York's attorney
general are "inflammatory, reckless and false."
The oil giant was responding to a motion filed by New York
Attorney General Eric Schneiderman in state court last week that
seeks to force Exxon to turn over reams of additional documents to
aid the state's ongoing probe of the company. As part of that
motion, Mr. Schneiderman said he had found evidence suggesting that
the way Exxon evaluates the impact of future climate regulations on
its business was a "sham."
Mr. Schneiderman claimed Exxon has used two sets of estimates
for potential future carbon prices -- a public number given to
investors, and another internal figure used privately for
decision-making. That could mislead investors by making Exxon seem
more resilient to potential climate risks than it really is, he
argued.
In its response Friday, Exxon acknowledged that it has used
varying carbon price figures in the past, but said the numbers were
used for different purposes. One process, the one used in an oil
outlook shared publicly, involved estimates of potential future
carbon costs to assess energy demand and future prices, while
another, the one used internally, related to gauging the
profitability of specific oil and gas projects.
"ExxonMobil's use of different metrics, in different
circumstances, to accomplish different goals evinces prudent
financial stewardship, applying appropriate assumptions in
appropriate cases," Exxon's lead lawyer, Ted Wells of law firm
Paul, Weiss, Rifkind, Wharton & Garrison LLP, wrote in the
brief. "There is nothing untoward or surprising about any of
this."
Mr. Wells reiterated Exxon's claim that the investigation by the
attorney general, a Democrat, is politically motivated, saying he
has been "working backwards from an assumption of Exxon Mobil's
guilt, searching in vain for some theory to support his
prejudgment."
The state "has a substantial basis to suspect that Exxon's proxy
cost analysis may have been a sham," said Amy Spitalnick, a
spokeswoman for Mr. Schneiderman. "This office takes potential
misrepresentations to investors very seriously."
Exxon's arguments underscore the challenge New York's top
prosecutor may face in asserting that the company is guilty of
fraud in how it has accounted for climate risks.
Regulations on such disclosure are in the early stages of being
developed, and many oil-and-gas companies have been slow to make
changes or meet increasing investor demands for transparency on the
subject.
Exxon and Mr. Schneiderman have repeatedly crossed swords over
how Exxon has complied with the investigation's subpoenas. Mr.
Schneiderman has alleged that Exxon is attempting to stall and
delay the progress of the probe.
He has argued that, despite a subpoena issued in late 2015 when
the investigation started, Exxon appears to have permanently
deleted emails used by former Chief Executive Rex Tillerson under
the alias "Wayne Tracker."
New Chief Executive Darren Woods also had an alias account under
the name "J.E. Gray," although he doesn't appear to have used it,
documents in the investigation show.
Exxon has acknowledged that several months of emails from the
alias account of Mr. Tillerson, now U.S. secretary of state, were
inadvertently deleted, but said it was able to recover most of the
requested documents.
The company has submitted nearly 3 million pages of documents
for the investigation and asked the New York court to reject Mr.
Schneiderman's pursuit of additional documents and information.
Write to Bradley Olson at Bradley.Olson@wsj.com
(END) Dow Jones Newswires
June 09, 2017 17:07 ET (21:07 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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