PERTH (miningweekly.com) – ASX-listed Oil Search has warned of a non-cash impairment charge of between $360-million and $400-million for its interim results in 2020.
The company on Monday told shareholders that the impairment charge took into account the prevailing economic conditions, the outlook for oil and gas prices and the current status of other factors, which could impact value realization.
The impairment being recognised relates largely to Oil Search’s Papua New Guinea (PNG) exploration licences, with the company noting that a strategic review, which is currently under way to prioritise capital allocation, has identified a number of exploration and evaluation assets in PNG as being of reduced priority owing to lower prospectivity or suboptimal economics.
As there was no current intention to pursue activities on these assets, the full value of the exploration assets would be written down, Oil Search said.
The carrying value of the Hides gas-to-electricity project would also be fully impaired, given the ongoing supply uncertainties resulting from the suspension of mining activities at the Porgera project, the company added.