(Reuters) – Canada’s Imperial Oil Ltd will take an impairment charge of about C$900 million to C$1.2 billion ($923 million) in the fourth quarter as it no longer plans to develop a significant portion of its unconventional assets in Alberta, the company said on Monday.
The move by Imperial comes after France’s Total SE earlier this year said it would take an $8 billon impairment on the value of its assets, mainly in Canadian oil sands projects.
Global oil prices have remained low since the start of the pandemic, which spurred travel restrictions that crushed fuel demand. Recovery is expected to be gradual and the Organization of the Petroleum Exporting Countries (OPEC) and its allies this month revised scenarios for 2021 with oil demand weaker than previously anticipated.
Outlooks for continued soft demand and prices have left some oil and gas reserves uneconomic to develop.
Imperial said on Monday the assets that it will no longer develop are non-core, non-producing, undeveloped assets and it does not expect any material future cash expenditures related to the impairment.
The impairment excludes the high-value, liquids-rich portion of Imperial’s unconventional asset, which the company still plans to develop.
U.S. major Exxon Mobil Corp, a majority shareholder in Imperial, earlier said on Monday that it would write down the value of $17 billion to $20 billion in natural gas properties.
Reporting by Arunima Kumar in Bengaluru and Rod Nickel in Winnipeg; Editing by Devika Syamnath, Sriraj Kalluvila and Aurora Ellis