(Bloomberg) -- Exxon Mobil Corp. slumped after a newspaper report said the company is being investigated by the U.S. Securities and Exchange Commission for allegedly overvaluing a key asset in the Permian Basin.The probe stems from a whistleblower complaint that during a 2019 internal assessment workers were forced to use unrealistic assumptions about how quickly wells could be drilled to reach a higher valuation, the Wall Street Journal reported, citing people familiar with the matter. At least one of the workers who complained was fired in 2020, the Journal said.In response, Exxon said the reported claims are “demonstrably false” and that the company “stands by” its statements to investors.Still, the probe may cast a shadow over Exxon’s efforts to turn a corner after its shares posted their worst annual performance in 40 years in 2020 amid a collapse in oil prices. Chief Executive Officer Darren Woods has been forced to slash spending, and last month the company said it will write down the value of North and South American natural gas fields by as much as $20 billion.Exxon fell as much as 6% before paring losses to trade 4.1% lower at $48.25 at 12:12 p.m. in New York, snapping a nine-day rally. The SEC declined to comment.What Bloomberg Intelligence SaysThe SEC probe “shows the fragile foundation for the company’s $15 billion dividend. It’s a difficult case to prove, as oil companies are allowed to set their own assumptions on asset valuation, but suggests the company’s pre-pandemic plan to double underlying earnings by 2025 may be more aspirational than tangible.”\-- Fernando Valle, BI analystRead the research here.“If the company were to be asked about this matter by authorities, it would provide information that shows the accuracy of its valuation of the company’s Permian assets, and that actual drilling performance exceeded the plans,” Exxon said in a statement on Friday.It’s not the first time Exxon has been probed by the SEC over how it values assets. In 2016, Exxon was questioned by the regulator about why the company appeared immune from the multi-billion write downs affecting the rest of the industry. The issue was resolved without any action being taken.The SEC requires oil companies to report with reasonable certainty the volume of reserves in wells that are profitable at a price set by the agency the year before. Those wells must be drilled within five years of being added to a company’s books. The calculations take into account the rate at which a well’s production is likely to decline, how closely the wells are drilled, land and capital costs, as well as the price per barrel of crude.The SEC adopted new reporting rules in 2009, lobbied by Chesapeake Energy Corp. and others who said the old ones weren’t fit for the coming shale boom. Before the rule change, there was a series of reserve scandals that involved Royal Dutch Shell Plc, which the agency fined $120 million in 2004, leading to the exit of top executives, and a few years later El Paso Corp., which settled charges for inflating reserves. Both companies settled without admitting or denying wrongdoing.(Updates with Exxon response from third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.