BHP is writing down its US oil shale assets by $US2.8 billion

An oil rig drilling into the Bakken shale formation in North Dakota. Andrew Burton/Getty Images

BHP Billiton is further writing down the value of its US shale oil operations by about $US2.8 billion ($AU3.76 billion) following falling global prices.

In January the world’s biggest miner announced it was shutting 40% of its US oil shale operations following sharp falls in prices. It started the current financial years with just ten rigs in operation from 26 last year.

The latest slip in value of its US shale assets follows a $US328 million writedown in February and $US2.84 billion in 2012 on the gas assets. BHP bought into the US shale business in 2011, investing about $20 billion.

The price of oil has fallen by about half over the last year. Bent crude is currently at $US58.37 a barrel

BHP says the latest writedowns are mostly due to the Hawkville operations in Texas because of its geological complexity, product mix, acreage relinquishments and amended development plans. The rest relates to the impairment of goodwill associated with the Petrohawk acquisition.

The latest impairment charge will be approximately $US2 billion post tax.

After the writedowns, BHP’s US business will have net assets of about $US24 billion.

Tim Cutt, BHP’s petroleum president, says the impairment of the Hawkville operation is disappointing but does not reflect the quality of the onshore US business.

BHP plans to invest $US1.5 billion in its US onshore business in the 2016 financial year. This will support a development program of 10 operated rigs.

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