BHP Billiton to write down £5bn shale assets
In a move that could have repercussions for the UK economy in its own drive towards expanding shale extraction operations, leading firm BHP Billiton has written down the value of its US shale assets by £5bn ($7.2bn).
The news comes on the back of the company having already had to deal with a fatal dam collapse in Brazil and other falling commodity prices.
The latest move from BHP effectively means that the company has written down nearly two-thirds of its total investment in US shale.
With the oil price now standing at around $30 a barrel, it represents a dramatic drop of 70% since June 2014. The pressure this is putting on a wide range of companies operating across the energy sectors is highlighted by BHP's write-down.
BHP chief executive, Andrew Mackenzie, released a statement saying: "Oil and gas markets have been significantly weaker than the industry expected."
"Although we expect prices to improve from their current lows, we have reduced our oil price assumptions for the short to medium term. Our long-term price assumptions continue to reflect the market's attractive supply and demand fundamentals," the statement added.
In fact, a wide range of oil companies of all sizes have been writing down the value of shale assets over the past 20 months.
Iron ore, coal, copper and other commodity prices are also falling, adding increasing pressure to BHP's portfolio, having already negatively affected its earnings last year.