Oil and gas giant Woodside yesterday engaged in a bit of profit and loss spin by warning of a $1 billion write-down in the value of its western Canadian gas assets in its 2019 financial results to be released today.
The hit has been taken against the value of the 50%-owned undeveloped liquefied natural gas asset at Kitimat in Canada’s British Columbia. The project is operated by Chevron.
The move separates the impairment charge from the rest of the year’s results and will allow Woodside management to spin those rather than be forced to focus on the write-down.
Woodside told the market in a statement that it had written down the value of the assets by $US720 million ($1.07 billion) after-tax.
“Kitimat remains a world-class project and Woodside will continue to evaluate actively future development opportunities, including optimisation of gas supply into processing facilities,” the company said.
“However, the impairment reflects increased uncertainty, particularly in the timing of the development of the upstream Liard resource, following sustained depressed gas market conditions in Western Canada.”
Chevron wrote down the value of its Kitimat and other global assets by around $US10 billion in its fourth-quarter results issued in late January.
The Kitimat project includes upstream resource assets in the Liard and Horn River basins in northeast British Columbia and a natural gas liquefaction facility.
Woodside shares eased a few cents to $33.85.