BHP Billiton Ltd. expects to book a pretax impairment charge of $7.2 billion, or $4.9 billion post-tax, against the carrying value of its onshore US assets, which will total $16 billion after the move.
The writedown “reflects changes to price assumptions, discount rates, and development plans that have more than offset substantial productivity improvements,” the company said.
BHP will reduce the number of operated rigs onshore US from 7 to 5 in this year’s first quarter, comprising 3 rigs in the Eagle Ford shale’s Black Hawk field and 2 in the Permian. The company operated 26 rigs onshore US only a year ago.
The company has reduced its medium and long-term gas price assumptions. It previously suspended development of its dry gas acreage.
In July 2015, BHP wrote down $2.8 billion pretax in US onshore assets, primarily in the gas-focused Hawkville field of the Eagle Ford. In August 2012, it reported a $2.8-billion pretax writedown of its Fayetteville shale assets (OGJ Online, Aug. 3, 2012).
BHP has also cut its oil-price assumptions for the short to medium-term. “Our long-term price assumptions continue to reflect the market’s attractive supply and demand fundamentals,” it said.