Origin warns of $1.9bn impairment

PERTH (miningweekly.com) – Oil and gas major Origin Energy has warned of a A$1.9-billion post-tax impairment charge for the 2017 financial year.

The company told shareholders that its Australia Pacific liquefied natural gas (APLNG) joint venture recognised an impairment charge on its assets, with Origin expected to reflect its 37.5% share, or some A$1-billion post tax, in its financial statement.

In addition, the company expects to impair its investment in the Browse basin by A$578-million, with a further A$170-million impairment expected from the NewCo conventional exploration assets, and a A$114-million impairment from Energia Austral.

The impairment to the APLNG assets relates to a number of assumptions, including the oil price, the US/Australian dollar exchange rate, discount rates and costs, while the impairment in the Browse basin assets was made following an assessment of the likely timing and potential commercialisation of the resource.

Origin said that, based on new information, the company has formed the view that the Caldita-Barossa fields are now the lead prospect to be developed to backfill Darwin LNG, and other commercial alternatives are unlikely in the near term.

Origin’s underlying earnings before interest, taxes, depreciation and amortisation for the full year are expected to be between $2.45-billion and A$2.61-billion, subject to market conditions.