BHP Billiton chief Andrew Mackenzie says the writedown is “disappointing”.
BHP Billiton has flagged a $10 billion writedown on its US onshore shale business following a deeper than expected rout in the oil price.
The mining giant warned shareholders to brace for a $US7.2 billion ($10.3 billion) pre-tax writedown on its US onshore division when it announces its half-year results next month.
The latest writedown to the value of the assets amounts to $US4.9 billion ($7 billion) post tax.
It is the second time BHP has written down is US onshore division — now valued at $US16 billion — over the past six months.
The Australian mining giant will also again cut the number of rigs working its oil and gas fields from seven to five by the end of March.
A year ago it was operating 26.
The latest writedown — the biggest yet — follows the price of oil plunging 30 per cent over the past three months and more than 70 per cent over the past 18 months.
BHP chief Andrew Mackenzie said oil and gas markets had been “significantly weaker” than the industry had expected.
“The dramatic fall in prices has led to the disappointing write down announced today,” Mr Mackenzie said.
“However, we remain confident in the long-term outlook and the quality of our acreage. We are well positioned to respond to a recovery.”
Former BHP chief Marius Kloppers shelled out $US20 billion to enter the US onshore market at the height of the fracking boom in 2011.
BHP is the largest foreign investor in the US onshore oil and gas industry.
Shares in BHP rallied in early trade as investors welcomed the group’s move to confront the impact of the oil rout.
They were trading 5.5 per cent higher at $15.66 about 11am.
john.dagge@news.com.au
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