A view of the Exxon Mobil Refinery in Baytown, Texas.
Jessica Rinaldi | Reuters
Shares of Exxon fell more than 5% on Friday after The Wall Street Journal reported that the Securities and Exchange Commission opened an investigation into the oil giant on how it valued a major asset in the oil-rich Permian Basin.
The whistleblower complaint, filed by an employee, alleged that Exxon had prompted staff to make inaccurate predictions, including the speed at which wells could get online, according to the Journal, which reviewed a copy of the complaint.
In a statement, Exxon called the allegations “demonstrably false.”
The report follows a difficult year for Exxon and the broader oil and gas industry. In December, Exxon said it will write down the value of its assets by up to $ 20 billion in the fourth quarter.
As the pandemic wreaked havoc on oil prices in 2020, Exxon embarked on an aggressive cost-cutting strategy, including downsizing its workforce.
Wall Street analysts believe that some of these initiatives will eventually pay off and have recently become optimistic about the stocks.
Barclays upgraded the stock to an overweight rating on Thursday, saying that “a perfect storm of more constructive macro outlook and a structural repositioning of capex / costs provide a solid springboard for substantially improved financial metrics that are impossible to ignore.”
Earlier in the week, JPMorgan and Morgan Stanley each upgraded the stock to a buy equivalent.
Shares of Exxon are up 15% so far, but are down more than 30% in the last year.
Click here to read The Wall Street Journal’s full report.