BHP Billiton, the world's largest mining company and a major player in the US oil and gas industry, has written down the value of its struggling shale assets in the United States by $7.2 billion.
The write-down comes as the company tries to reign in costs and reduce its exposure to low oil prices and sclerotic economic growth in China.
BHP's chief executive, Andrew Mackenzie, also said Friday he planned to reduce the number of onshore rigs in the US, citing "significant volatility and much weaker" energy prices.
BHP spent $20 billion (18.3 billion euros) in 2011 to expand its foothold in the US shale oil and gas industry. Last year, the company owned 26 rigs. Now it plans to reduce that number to five by the end of the current fiscal quarter.
"While we have made significant progress, the dramatic fall in prices has led to the disappointing write-down announced today," Mackenzie said in a statement.
Write down, stocks up
BHP said the write-down would be booked in its next half-yearly accounts, which are due in February. The loss, which is pre-tax, will come out to $4.9 billion after taxes. BHP took another pre-tax hit on the same assets last year of $2.8 billion.
Despite the announcement, stock in the company climbed by more than 1 percent. According to analysts, this was attributable to the markets having already priced in more bad news from the mining sector.
"While many may regret the timing and pricing of this investment, its reduced value has already been reflected in BHP's lower share price," CMC Markets chief analyst Ric Spooner told AFP.
BHP shares fell more than 40 percent last year on slumping commodity prices.
cjc/pad (AFP, Reuters)