Chevron to book $3.5 billion to $4.0 billion of non-cash charges in Q4 due to impairment of U.S. upstream assets

Chevron Corp.
CVX,
+1.37%
said Tuesday it expects to book $3.5 billion to $4.0 billion of non-cash, after-tax charges in its fourth-quarter results due to the impairment of some of its U.S. upstream assets. In a regulatory filing, the oil major said most of the impairment will be on California assets, due to regulatory challenges in that state that have resulted in lower expected future investment levels in its business plans.  “In addition, the company will be recognizing a loss related to abandonment and decommissioning obligations from previously sold oil and gas production assets in the U.S. Gulf of Mexico, as companies that purchased these assets have filed for protection under Chapter 11 of the U.S. Bankruptcy Code, and we believe it is now probable and estimable that a portion of these obligations will revert to the company,” Chevron said in the filing. It expects to conduct the decommissioning of those assets over the next decade. The company is still finalizing the full impact of the actions, which it expects to treat as special items and exclude from adjusted earnings. The stock was up 0.6% premarket but has fallen 17% in the last 12 months, while the S&P 500
SPX,
+0.08%
has gained 24%.