[miningmx] — BHP BILLITON has taken a $3.3bn hit on its nickel and shale gas
assets, a decision that has prompted CEO Marius Kloppers and the group’s head for
petroleum to forego their bonuses for the current financial year.
The global commodities giant said on Friday that low US gas prices prompted the
group to take an impairment of $2.84bn against the carrying value of its Fayetteville
shale gas operations acquired from Chesapeake Energy in February 2011.
The company will also make a $450m charge against the carrying value of its Nickel
West assets in Australia as a result of lower margins.
“The Fayetteville charge reflects the fall in United States domestic gas prices and the
company’s decision to adjust its development plans by shifting drilling from dry gas
to more liquid rich fields,’ Kloppers said in a statement, adding that the value of the
group’s more expensive onshore shale assets, acquired through the acquisition of
Petrohawk Energy in August last year, was not affected.
“Our decision to enter the North American shale hydrocarbon business about 18
months ago was taken after extensive deliberation and due diligence,’ Kloppers said.
“Our work convinced us that this significant, low-carbon fuel source would play a
meaningful role as the world makes its future energy choices.
“We are still of this view, particularly given the ongoing positive technological
advancements in the shale industry.’
BHP’s Chairman Jac Nasser said the board supported the executive team’s decision
to shift the company’s drilling plans from the dry gas fields in Fayetteville and
Haynesville to the liquids rich assets of Petrohawk.
“However, it is very disappointing that low US gas prices have impacted the carrying
value of the Fayetteville assets,’ Nasser said. “As a result of the write down, both
Marius Kloppers and Mike Yeager [CEO of BHP’s petroleum division] have advised
the Remuneration Committee that they do not wish to be considered for a bonus for
the 2012 financial year. The Remuneration Committee and the Board respect and
agree with that decision.’
