BHP Billiton sheds 6 per cent, after it said it would write down the value of its U.S. shale assets by $7.2 billion, cementing expectations it will be forced to cut its dividend for the first time in 25 years. Kirsty Basset reports.
With oil prices hovering near 12 year lows, BHP has taken a big hit. 7.2 billion dollars to be precise. That's how much it says it will need to write down its U.S. shale assets by. The charge means BHP has wiped out nearly two-thirds of what it has spent on the business, which it entered in 2011. Brenda Kelly is from London Capital Group. SOUNDBITE: London Capital Group Head Analyst, Brenda Kelly, saying (English): "The fact that BHP is actually looking to pull back on its rig count and focus on capital preservation rather than capital expenditure is noteworthy." And expectations are growing the company will be forced to cut its dividend for the first time in more than 25 years. SOUNDBITE: London Capital Group Head Analyst, Brenda Kelly, saying (English): "It will have to look at where it can actually make cost savings and of course the first thing there will more than likely be among the shareholders." With Brent and U.S. crude falling below $30 a barrel, and markets bracing for more oil out of Iran, Kelly believes it could be the start of a new trend. SOUNDBITE: London Capital Group Head Analyst, Brenda Kelly, saying (English): "I think we could very much expect to see other corporate entities looking at writedowns as a way of breaking and holding through this current meltdown that we're seeing in the oil price sector." The writedown adds to BHP's recent woes - including a fatal dam collapse in Brazil and the tumbling price of iron ore. BHP Billiton shares fell 6 per cent on the news.