In filings submitted Jan. 2 to the Security and Exchange Commission, Chevron announced it’s reducing the value of its assets by $3.5 billion to $4 billion—blaming California’s regulatory policies and old investments in the Gulf of Mexico for the substantial change.

Headquartered in San Ramon, east of San Francisco, the oil giant has been based in California for more than 140 years.

The filing did not distinguish how much of the loss is related to California, though it noted the adjustment is “due to continuing regulatory challenges in the state that have resulted in lower anticipated future investment levels.”

A letter sent by Andy Walz, Chevron’s president of products, Dec. 12 to the state’s energy commission described investment uncertainty in recent years and decried the state’s new gas price gouging law—intended to lower the price at the pump by regulating gas profits.

“Regulations make investment here perilous ... This is not hyperbole, nor is it merely hypothetical,” Mr. Walz said in the letter. “Poorly designed policies have created uncertainty in businesses’ confidence in in-state investments, leading to reluctance to commit funds to long-term renewable energy projects.”

Suggesting the policies are also detrimental to the state’s clean energy agendas, he said uncertainty is causing oil businesses to avoid projects, while opportunities in other regions are attracting capital.

“California’s policies have made Chevron’s investments in its home state riskier than investing in other states, with projects being lower in quality and higher in cost,” Mr. Walz said.

Shifts in oil production strategies at the company have seen Colorado overtake California in barrels of oil produced per day—jumping from 36,000 barrels in 2020 to 144,000 daily in 2022, according to the company’s 2022 annual report.

The data reveals a downward trend in oil production in the Golden State—dropping year-over-year from 144,000 barrels per day in 2020 to 88,000 daily in 2022.

Totals from California represent a fraction of the company’s production—falling from 9.83 to 7.45 percent of U.S. production and 3.37 to 2.85 percent worldwide in the same period.

An oil company with long-standing roots in California and one of the state’s first oil producers, the original predecessor of Chevron was founded in 1879 in San Francisco as the Pacific Coast Oil Company.

“Chevron has a unique perspective on California’s transportation-fuels market,” Mr. Walz said. “We have the most extensive business here, from wellheads to retail storefronts.”

While the firm has divested hundreds of millions of dollars from California since 2022, according to the letter, the company said in its January filing that it expects to continue operating in the state “for many years to come.”

Regulatory hurdles have persisted for decades, with complications dating back more than 40 years that could be worsened by new regulations, according to Mr. Walz.

“Since the 1980s, dozens of refineries have closed due to an increasingly harsh regulatory environment, which has resulted in increased gasoline price volatility and reduced production,” he said in the letter. “A margin penalty will only exacerbate this troubling trend,” referring to a fine being considered for companies that exceed profit margin caps set by the new price gouging law.

Critics, however, point to the oil company’s $11.2 billion in profit in 2022—the second highest in company history—and $75 billion in stock buybacks in 2023 made possible by significant cash reserves as evidence the company is profiting handsomely from operations.

On multiple occasions in 2023, California Gov. Gavin Newsom addressed what he says is excessive profit-taking by oil companies, seeking to cap margins and reduce prices paid by consumers.

Additionally, the company is listed among a host of oil companies facing a lawsuit filed in September by the governor and attorney general seeking billions of dollars in damages for pollution that allegedly sickened Californians and damaged the environment.

“For more than 50 years, Big Oil has been lying to us—covering up the fact that they’ve long known how dangerous the fossil fuels they produce are for our planet,” Mr. Newsom said in a press release announcing the lawsuit. “It has been decades of damage and deception.”