Adelaide's independent news


BHP prepares $A10b shock writedown


Mining giant BHP Billiton expects to writedown its US onshore oil and gas assets by $US7.2 billion ($A10.31 billion) in its half year results.

Comments Print article

It is the second writedown on its US oil and gas assets in six months.

The company will also reduce the number of operated rigs in the onshore US business from seven to five in the March 2016 quarter, and said it is reviewing investment and development plans for the remainder of the 2016 financial year.

Investors, however, seemed to welcome the decision, pushing up its beaten-down shares more than 5 per cent to $15.70 each, in early trade on Friday.

“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,” chief executive Andrew Mackenzie said in a statement.

“While we have made significant progress, the dramatic fall in prices has led to the disappointing writedown announced today.”

Oil prices fell to a 12-year low of $US30 a barrel this week, compared to the $100 level it traded at in mid 2014, hit by weakening global demand and a supply glut.

BHP said it has also reduced its medium and long-term gas price assumptions. However, its long-term price assumptions continue to reflect the market’s attractive supply and demand fundamentals.

The mining giant has been under pressure over a deadly dam disaster in Brazil in November, which could result in hefty fines and payment of damages for the company.

Ahead of today’s announcement, BHP shares had slipped below $15 each to trade at 11-year lows.

Their resilience on Friday came despite a one per cent fall in the overnight price of iron ore, down to $US38.40 a tonne.


We value local independent journalism. We hope you do too.

InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.

Powered by PressPatron


Show comments Hide comments
Will my comment be published? Read the guidelines.

More Business stories

Loading next article

Subscribe to InDaily – it’s free!

South Australia’s locally owned, independent source of digital news.

Subscribe now and go in the monthly draw* for your chance to WIN a $100 Foodland voucher!

Subscribe free here

*Terms and conditions apply

Welcome back!

Did you know it’s FREE to subscribe?

Subscribe now and go in the monthly draw* for your chance to WIN a $100 voucher!


*Terms and conditions apply