15/07/2015 - 10:08

BHP flags $2.7bn impairment

15/07/2015 - 10:08

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Mining giant BHP Billiton has flagged an impairment of up to $US2 billion ($A2.7 billion) in its end of financial year results against the value of its onshore gas assets in the US.

BHP Billiton's gas operations in the Eagle Ford, Texas.

Mining giant BHP Billiton has flagged an impairment of up to $US2 billion ($A2.7 billion) in its end-of-financial-year results against the value of its onshore gas assets in the US.

The company said its Hawkville field in Texas was the main contributor to the impairment as a result of its geological complexity, product mix, acreage relinquishments and amended development plans, while the remainder accounted for an impairment of goodwill associated with its Petrohawk field in the Eagle Ford.

“Following this impairment, the group’s onshore US business will have net operating assets of about $US24 billion,” BHP said.

“The value of this business is supported by ongoing cost reductions and improving well performance, which help offset increased commodity price volatility and lower near-term capital expenditure.”

Petroleum president Tim Cutt said while the Hawkville impairment was disappointing, it didn’t reflect the quality of the company’s broader onshore US business.

BHP plans to invest $US1.5 billion in its onshore US business this financial year, supporting a development program of 10 operated rigs.

“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,” Mr Cutt said.

BHP expects to be free cash flow positive during the financial year at an oil price of $US60 per barrel, and at a gas price of $US3 per thousand standard cubic feet.

BHP shares were 1.5 per cent lower to $26.68 each at 10am.

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