Global mining giant BHP Billiton said Friday it’s writing-down the value of its U.S. shale assets by $7.2 billion pre-tax due to the ongoing price plunge in crude oil and natural gas.
The huge impairment charge is the third BHP has taken due to the company’s push into shale in 2011, when it spent $20.6 billion (including assumed debt) on two acquisitions at a time when oil and gas prices were much higher than now.
“Oil and gas markets have been significantly weaker than the industry expected,” said Andrew Mackenzie, BHP’s chief executive.
The impairment charge will reduce the value of BHP’s onshore US operating assets to roughly $16 billion, including deferred tax liabilities, Kallanish Energy finds.
Due to the collapse in oil prices over the past 18 months, BHP has chopped its operating costs and capital spending in the U.S., and reduced the number of rigs from 26 to five by March 31.
“While we have made significant progress, the dramatic fall in prices has led to the disappointing write-down announced today,” Mackenzie said.
BHP said it has cut its oil price assumptions for the short- to medium- term and lowered its medium- and long-term gas price assumptions, leading to the write-down.
WB Xpress is an interstate pipeline between West Virginia and Virginia that includes roughly 26 miles of pipeline replacement and approximately three miles of new line, along with two new compressor stations. Line capacity will top off at 1.3 billion cubic feet per day (Bcf/d), Kallanish Energy learns.
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