BHP Billiton writes down value of US oil and gas assets by $7.2bn due to weak oil prices

BHP Billiton has written down the value of its oil and gas assets in the US by $7.2bn due to a slump in oil prices.

The impairment, which follows the bi-annual review of the company’s asset values, will cut onshore US net operating assets to about $16bn.

During the March 2016 quarter, the company plans to reduce the number of operated rigs in its onshore US business from seven to five which will consist of three rigs in the Black Hawk and two rigs in the Permian.

BHP Billiton CEO 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."

Earlier, BHP Billiton had suspended development of its dry gas acreage and has now reduced its medium and long-term gas price assumptions.

The impairment charge adds to BHP Billiton’s recent woes following a dam collapse in Brazil which reportedly claimed the lives of 17 people.

BHP invested about $20bn in US shale gas in 2011 and 2012 but the value of these assets collapsed along with the oil prices.

Due to higher output from OPEC and stronger than anticipated non-OPEC production the oil prices declined by over 30% over the last three months.