Mining company BHP Billiton has taken a $7.2 billion (£4.6 billion) write-down on its US shale oil and gas assets.
The falling oil price driven by the OPEC countries’ high supply targets are to blame, the company said.
BHP Billiton’s oil price forecasts were wrong and they have had to change them.
“Although we expect prices to improve from their current lows, we have reduced our oil price assumptions for the short to medium term,” the company said.
BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: “Oil and gas markets have been significantly weaker than the industry expected. 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.”
BHP Billiton shares fell more than 2% on the news:
BHP Billiton timed the market all wrong.
It made big investments in oil in 2012 and spent more than $20 billion on US shale acquisitions, according to the FT. Since then, the oil price has collapsed from triple figures to around $30, wiping billions from its investment.