BHP Billiton is again cutting back on the number of its onshore oil and gas rigs and is writing down the value of its US assets by $US4.9 billion ($A7 billion)post-tax as weaker oil prices continue to cut into its business.
The latest impairment is about $US$7.2 billion ($A10.2 billion) pre-tax which would take the total writedowns on the oil shale assets to about $US10 billion ($A14.3 billion).
“Oil and gas markets have been significantly weaker than the industry expected,” says CEO Andrew Mackenzie.
“We responded quickly by dramatically cutting our operating and capital costs, and reducing the number of operated rigs in the onshore US business from 26 a year ago to five by the end of the current quarter.
“While we have made significant progress, the dramatic fall in prices has led to the disappointing write down announced today. However, we remain confident in the
long-term outlook and the quality of our acreage. We are well positioned to respond to a recovery.”
A short time ago, BHP’s shares were up 4.5% to $15.55.
The latest impairment follows a bi-annual review of asset values and reflects changes to price assumptions, discount rates and development plans which have more than offset substantial productivity improvements.
BHP will further reduce the number of operated rigs in its onshore US business to 5 from 7 in the March quarter. In January last year the world’s biggest miner announced it was shutting 40% of its US oil shale operations following sharp falls in prices. It originally operated 26 rigs.
The price of oil price has fallen by more than 30% over the last three months.