Imperial Oil says it will write down between $900 million and $1.2 billion this quarter as it no longer plans to develop “a significant portion” of its unconventional assets in Alberta.
The Calgary-based company said the assets are non-producing and undeveloped, so Imperial doesn’t expect any future cash expenditures related to the impairment charge.
The impairment doesn’t include the high-value, liquids-rich portion of the company’s unconventional asset portfolio which it said it still plans to develop.
“This decision is consistent with Imperial’s strategy of focusing its upstream resources and efforts on its key oilsands assets as well as on only the most attractive portions of its unconventional portfolio. As such, the decision will not impact previously provided production estimates,” the company said in a Monday release.
Global demand for oil plummeted earlier this year as the pandemic struck. Prices have yet to truly bounce back.
Organization of the Petroleum Exporting Countries (OPEC) has predicted that global demand will return more slowly next year than previously thought, but that access to a vaccine could bring less uncertainty and economic growth. That and other outlooks have seen some companies scale back development plans.
Exxon Mobil, which has a majority stake in Imperial, also announced an impairment Monday — its biggest ever — saying it would write down the value of natural gas properties by $17 billion to $20 billion US, as well as slash project spending next year to its lowest level in 15 years.
Last week, Imperial said it would lay off about 200 of its 6,000 employees as part of a cost-cutting initiative. It has also reduced the number of contractors it employs by about 450 since the start of the year.
CBC News has reached out to Alberta’s energy minister for comment.