BHP Billiton Plummets After U.S. Asset Review, Notes 'Oil And Gas Markets Have Been Significantly Weaker Than The Industry Expected'

Shares of BHP Billiton Limited (ADR) BHP were trading lower by more than 8 percent Friday morning and hit a new 52-week low of $19.89.

BHP Billiton disclosed that it expects to recognize an impairment charge of around $4.9 billion post-tax (approximately $7.2 billion pre-tax) against the carrying value of its Onshore U.S. assets. The company added that the impairment will reduce its Onshore U.S. net operating assets to around $16 billion which excluded a deferred tax liability of $4 billion.

Following its asset review, BHP Billiton said it will lower the number of operated rigs in its Onshore U.S. business to five from seven in the March 2016 quarter. In addition, the company stated that further investment and development plans for the remainder of 2016 are "under review, with a focus on preserving cash flow."

BHP Billiton Chief Executive Officer, Andrew Mackenzie, said "Oil and gas markets have been significantly weaker than the industry expected. We responded quickly by dramatically cutting our operating and capital costs, and reducing the number of operated rigs in the Onshore U.S. business from 26 a year ago to five by the end of the current quarter.

Mackenzie also stated: "While we have made significant progress, the dramatic fall in prices has led to the disappointing write down announced today. However, we remain confident in the long-term outlook and the quality of our acreage. We are well positioned to respond to a recovery."