BHP Billiton said it expects to be hit with an impairment charge of $4.9billion post-tax against the carrying value of its onshore US assets.
The company said the charge will be recognised as an exceptional item in the financial results for the half year ended December 31, 2015.
The impairment follows the bi-annual review of the company’s asset values and reflects changes to price assumptions, discount rates and development plans which BHP said had more than offset “substantial productivity” improvements.
The move will reduce onshore US operating assets to $16billion.
BHP Billiton chief executive, 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 said it will also reduce the number of operated rigs in its onshore US business from seven to five in the first quarter of the year.
This will include three rigs in the Black Hawk and two rigs in the Permian Basin.
Investments and plans for the remainder of the year are also under review, the company said.