Australian Origin to Take A$1.9bn Write-down

Australian Origin Energy expects to recognise an impairment charge of approximately A$1.9bn (US$1.46bn) in its 1H 2017 results after revision to values at its Australia Pacific LNG joint venture and its investments in the Browse Basin. But it had some good news on shale exploration.

Providing details in a statement issued February 15, Origin said APLNG has recognised an impairment charge on its assets of which Origin expects to reflect its 37.5% share (A$1.03bn post tax) in the financial statements. In addition, Origin expects to impair its investments in the Browse Basin to the tune of A$578mn, NewCo conventional exploration assets to the extent of A$170mn and Energía Austral A$114mn.

“In determining the carrying value of its assets, APLNG considers a range of project and macro assumptions – including oil price, A$/US$ exchange rates, discount rates and costs. The cumulative net effect of these has reduced the valuation over time but had not warranted a revision by APLNG of the carrying value of its assets until now,” Origin said.

The company has lifted its underlying earnings guidance from A$2.45bn to A$2.65bn for the full year.

Beetaloo Basin drilling

Meanwhile, Origin in a separate statement said that 2C reserves at Beetaloo's Velkerri B shale pool are 6.6 trillion ft³, “a material gas resource”. The company submitted the report titled Results of Evaluation of the Discovery and Preliminary Estimate of Petroleum in Place for the Amungee NW-1H Velkerri B Shale Gas Pool to the Northern Territory government.

The submission follows the completion of extended production testing at the Amungee NW-1H exploration well of the "B Shale" member of the Middle Velkerri Formation.

Beetaloo joint venture is as follows: Origin is operator with a 35% interest, South African Sasol has 35% and Canadian independent Falcon Oil and Gas 30%. Falcon said it was pleased with the declaration; its CEO Philip O'Quigley said February 15: "It is interesting to note that in Origin’s opinion the Marcellus and Barnett Shales in the USA are analogous, commercially-productive fields that are similar to the Middle Velkerri B shale reservoir.”

Shardul Sharma