Chevron has recently said that it is going to write the $11 billion in the assets in the final quarter of the year as a lot of it is tied to Appalachia’s natural gas. This impairment is an indication that the waters for the industry of oil and gas are getting extremely rough. This is a result of many factors like low prices, supply surpluses, shale drilling at a large scale and a threat of peak demand which is looming
This writing down has come as the company has been lowering their forecast for the long term of prices for oil and gas which has impacted the asset values directly. Their chief executive, Mike Wirth has said in an interview that they needed to take a few tough decisions to high-grade their portfolios and invest in the projects that yield a higher return in the world that they see a future in rather than the past that they have left behind.
There are reports which say that many of the assets worth billions of dollars but their worth has decreased considerably and now they are worth much less than what had been thought previously and this could force the others to reassess the value of the holdings publicly in the face of the glut that has been going on in the global supply and the concerns that the growing investors have about what the future lies in store for the fossil fuels particularly in the long term
This also is an indictment of the shale gas drilling that has been going on in Appalachia. The prices being low and a track record of not being very profitable has left the investors with a sour mood.