Australia’s Origin Energy expects to book an impairment charge of approximately A$1.2 billion ($945.3 million) for the second half of FY2017.
A portion of the impairment charge, amounting to A$815 million will come from the company’s 37.5 percent stake in the Australia Pacific LNG project.
Since the last APLNG assessment at 31 December 2016, while there has been a change in a number of relevant assumptions, the principal change is a reduction in oil price assumptions to $67/bbl from 2022.
APLNG considers a range of assumptions when it reviews the carrying value of its assets, including oil price, AUD/USD exchange rates, discount rates and costs.
Origin also expects an impairment charge of $357 million for Lattice Energy, its conventional gas assets currently held for sale. The sale process is progressing well towards execution by the end of 2017.
As a result, when the first half and second half 2017 impairment charges are aggregated, Origin expects to report a total impairment charge of A$3.1 billion.
To remind, Origin’s impairment in the first half of 2017 of A$1.9 billion comprised of Origin’s 37.5 per cent share of Australia Pacific LNG’s impairment of its assets (A$1.03 billion), and impairment of investments in Browse Basin, conventional exploration assets and Energía Austral.