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Nov. 8 — ExxonMobil Corp. is misleading investors about the drop in its oil and gas reserves resulting from climate change risks and the decline in oil prices, according to a class action filed in federal court ( Ramirez v. ExxonMobil Corp. , N.D. Tex., No. 16-cv-03111, complaint filed 11/7/16 ).
Pedro Ramirez Jr. filed the class suit Nov. 7 in the U.S. District Court for the Northern District of Texas on behalf of investors, holding the company responsible for the drop in stock price in September, and accusing the company of overstating the size of its recoverable oil and gas reserves.
In a series of misleading statements made between February and October, ExxonMobil posted positive projections about its oil reserves even though it was aware that it wouldn’t be able to extract as much due to potential carbon limits arising from climate change, the lawsuit charged. The investors also said the company refused to write down—or reduce the value of—any of its oil and gas reserves, which the lawsuit said had been overstated, in the face of declining global oil prices.
As a result, the investors allege that the price of Exxon common stock plummeted to a close of $82.54 per share on Sept. 20, down more than 13 percent from the stock’s high of more than $90 per share, erasing billions of dollars of market capitalization.
On Oct. 28, Exxon publicly acknowledged that “it might have to write down 3.6 billion barrels of oil sand reserves and one billion barrels of other North American reserves that Exxon now conceded were not profitable to produce under current prices,” the lawsuit said.
ExxonMobil sent Bloomberg BNA a statement Nov. 8 describing the lawsuit as “frivolous” and the allegations as “false and completely without merit.”
The company said it would defend its financial reporting practices, saying it was confident it fully complied with all legal and accounting requirements.
“This lawsuit misstates our financial reporting and repeats the same tired allegations pushed by activists and inaccurate media reports that claim we reached definitive conclusions about climate change decades before the world’s experts and while climate science was in an early stage of development,” the company said. “This is simply not credible.”
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The complaint is available at http://www.bloomberglaw.com/public/document/Ramirez_Jr_v_Exxon_Mobil_Corporation_et_al_Docket_No_316cv03111_N.
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