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BIL 201601150002A
Onshore US Asset Review
BHP Billiton Plc
Registration number 3196209
Registered in England and Wales
Share code: BIL
ISIN: GB0000566504
NEWS RELEASE
Release Time IMMEDIATE
Date 15 January 2016
Location Melbourne, Australia
Release Number 1/16
ONSHORE US ASSET REVIEW
BHP Billiton expects to recognise an impairment charge of approximately
US$4.9 billion post-tax (or approximately US$7.2 billion pre-tax) against the carrying
value of its Onshore US assets. This charge will be recognised as an exceptional
item in the financial results for the half year ended 31 December 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
have more than offset substantial productivity improvements. The impairment will
reduce Onshore US net operating assets to approximately US$16 billion(1).
The oil and gas industry has recently experienced significant volatility and much
weaker prices.
The US gas price remains low as industry-wide productivity improvements have
resulted in higher than expected supply at lower cost. BHP Billiton has previously
suspended development of its dry gas acreage. The Company has now also reduced
its medium and long-term gas price assumptions.
In addition, the oil price has fallen by more than 30 per cent over the last three
months following the disruption of OPEC and stronger than anticipated non-OPEC
production. Although we expect prices to improve from their current lows, we have
reduced our oil price assumptions for the short to medium term. Our long-term price
assumptions continue to reflect the market’s attractive supply and demand
fundamentals.
The increased volatility in prices has also increased the discount rates applied by
BHP Billiton, which has a significant flow through impact on the Company’s
assessment of its Onshore US asset value.
The Group will reduce the number of operated rigs in its Onshore US business from
seven to five in the March 2016 quarter. This will comprise three rigs in the Black
Hawk and two rigs in the Permian. Beyond this, investment and development plans
for the remainder of the 2016 financial year are under review, with a focus on
preserving cash flow.
BHP Billiton Chief Executive Officer, 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.”
The broader carrying value assessment of the Group’s assets will be finalised in
conjunction with the interim financial results to be released on 23 February 2016.
(1) This excludes a deferred tax liability of approximately US$4 billion.
Sponsor: Merrill Lynch South Africa Proprietary Limited
Further information on BHP Billiton can be found at: bhpbilliton.com
Media Relations Investor Relations
Australia and Asia Australia and Asia
Emily Perry Tara Dines
T +61 3 9609 2800 Mobile +61 477 325 803 Tel: +61 3 9609 2222 Mobile: +61 499 249 005
Email : Emily.Perry@bhpbilliton.com email: Tara.Dines@bhpbilliton.com
Eleanor Colonico Andrew Gunn
T +61 3 9609 2360 Mobile +61 407 064 748 Tel: +61 3 9609 3575 Mobile: +61 402 087 354
Email: Eleanor.Colonico@bhpbilliton.com email: Andrew.Gunn@bhpbilliton.com
Paul Hitchins United Kingdom and South Africa
T +61 3 9609 2592 Mobile +61 419 315 001
Email: Paul.Hitchins@bhpbilliton.com Jonathan Price
Tel: +44 20 7802 4131 Mobile: +44 7990 527 726
United Kingdom and South Africa email: Jonathan.H.Price@bhpbilliton.com
Ruban Yogarajah Americas
T +44 207 802 4033 Mobile +44 7827 082 022
Email: Ruban.Yogarajah@bhpbilliton.com James Wear
Tel: +61 3 9609 2693 Mobile: +61 429 124 209
Jennifer White email: James.Wear@bhpbilliton.com
T +44 207 802 7462 Mobile +44 7827 253 764
Email: Jennifer.White@bhpbilliton.com Joseph Suarez
Tel: +1 212 310 1422 Mobile: +1 646 400 3803
North America email: Joseph.Suarez@bhpbilliton.com
Jaryl Strong
Tel: +1 713 499 5548 Mobile: +1 281 222 6627
email: Jaryl.Strong@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209
Registered in Australia Registered in England and Wales
Registered Office: Level 16, 171 Collins Street Registered Office: Neathouse Place
Melbourne Victoria 3000 Australia London SW1V 1LH United Kingdom
Tel +61 1300 55 4757 Fax +61 3 9609 3015 Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Billiton Group which is
headquartered in Australia
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