BHP Billiton Expects To Take US$2 Bln Write-down On Onshore U.S. Assets

(RTTNews) - Mining giant BHP Billiton Ltd. (BHP.AX, BLT.L, BBL, BHP) said that it expects to recognise an impairment charge of about US$2 billion post-tax or about US$2.8 billion pre-tax against the carrying value of its Onshore US assets as an exceptional item in the 2015 financial year results.

The company noted that the gas focused Hawkville field accounts for the substantial majority of this charge reflecting its geological complexity, product mix, acreage relinquishments and amended development plans. The remainder relates to the impairment of goodwill associated with the Petrohawk acquisition.

Following this impairment, the Group's Onshore US business will have net operating assets of about US$24 billion, which excludes about US$4 billion deferred tax liability.

BHP Billiton Petroleum President, Tim Cutt, said, "While the impairment of the Hawkville is disappointing, it does not reflect the quality of our broader Onshore US business. The Black Hawk continues to exceed expectations, the Permian offers significant upside across multiple zones and the Haynesville, one of the industry's premier dry gas positions, provides an excellent development option as market conditions improve."

BHP Billiton noted that it plans to invest US$1.5 billion in the Onshore US in the 2016 financial year, which will support a development program of 10 operated rigs.

At an oil price of US$60 per barrel (West Texas Intermediate) and a gas price of US$3.00 per Mscf (Henry Hub), the Group expects its Onshore US business to be free cash flow positive in the 2016 financial year. Associated production guidance will be provided in the June 2015 Operational Review to be released on 22 July 2015.