The write-down warnings continue as ASX-listed companies soften up investors for bad news ahead of the formal June 30 full year and half year reporting season in August.
Three companies yesterday revealed multi-million dollar reductions in the carrying value of their key assets as impairment tests triggered the moves.
They won’t be the last. Media companies such as News Corp, Seven West Media, Southern Cross Austero and Nine Entertainment have either revealed write-downs already, or warned that they are coming.
Qantas has warned its write-downs of at least $2.8 billion for the year to June 30, Virgin Australia will have massive cuts, while Air NZ has made a cut of $NZ450 million in the value of some of its airliners.
The big banks plus the likes of Bendigo and Adelaide and Bank of Queensland have already revealed write down and provisions for possible business and housing loan losses of around $5 billion in total.
Oil Search yesterday warned of a multi-million-dollar asset impairment charge in an update to the ASX.
The company warned the non-cash impairment charge would be between $A517 million ($US360 million) and $A575 million ($US400 million), as the global recession, lockdowns, and the spreading impact of the COVID-19 pandemic slashed demand for oil and gas and prices.
A strategic review found that a number of assets in PNG were now of low priority either due to lower prospectivity or less than optimum project economics, Oil Search said. As a result, would not be currently pursued.
The impairment charge comes ahead of the group’s interim results which are scheduled to be released on August 25. The company has already cut 550 jobs across its businesses in PNG, the US, and Australia in the wake of the strategic review.
Oil Search said the writedowns were largely related to exploration activities in Papua New Guinea and Alaska.
“A number of exploration and evaluation assets in PNG have been identified as being of reduced priority due to lower prospectivity or sub-optimal economics,” the company said in an update to the ASX.
“As there is no current intention to pursue activities on these assets, the full value of these exploration assets is expected to be written down.”
The suspension of mining activities at its Porgera Project due to ongoing gas supply uncertainties has resulted in its gas to electricity endeavors to be fully impaired at the site.
Oil Search said it expects the impairment charge not to impact the group’s cash earnings and outflow.
The news saw the shares fall 2% to $42.94.