BHP Billiton announced a “disappointing” $7.2 billion pre-tax writedown on its USA oil and gas assets, following a slump in prices.
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The resulting floods left 17 dead and the companies facing government claims of $5bn to pay for environmental damage and compensation.
It also follows a $US2.84 billion impairment in 2012 on Fayetteville, the asset that forged its entry into the U.S. shale business.
BHP Billiton said it would continue to operate three rigs in its Black Hawk field and two in the Permian.
The writedowns will reduce the book value of BHP’s USA net operating assets to about $16 billion.
BHP Billiton has written down the value of its USA shale assets by $7.2bn (£5bn) as a result of the dive in oil prices.
Shares in BHP fell 4% or 28.5p to 628.50p as BHP cut its value of the business to $12 billion following lower expectations for the price of oil, which fell $1.43 to $29.45. But it has now come under pressure as prices have tumbled across the board.
After taxes, the expected depreciation will be$ 4.9 billion according to by BHP Billiton.
Prices of key commodities such as iron ore and copper have fallen to their lowest in as much as a decade amid a global oversupply as concerns about China’s economy have increased.
“At this stage, the market would like to see them protecting the balance sheet by cutting both the dividend and their not-immediate capital requirements”, said Rohan Walsh, a portfolio manager at Karara Capital.
Barclays forecasts the miner will be forced to cut investor payouts by half.
The volatility in prices has increased the discount rates applied by BHP Billiton.
BHP will cut its rig count in the shale unit from seven to five by April and has put investment and development plans for the remainder of this fiscal year under review, it said in the statement.
Losses for oil prices deepened Friday, with USA crude futures dropping 3.5% to $30.11 and Brent crude down more than 2% to $30.18. As many as 130,000 jobs in the USA energy industry disappeared in 2015.
It was also lifted to a buy by Citi. This would add to the persistent oversupply of crude around the globe, analysts say.
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However, Morgan Stanley believes the miner has been oversold and upgraded it to overweight.
