Impairment Charge Disclosure
Woodside Energy Group Ltd WDS shares are trading lower following the announcement of a substantial impairment charge related to assets acquired during the merger with BHP Group Ltd BHP.
Details of the Impairment Charge
The company expects to recognize non-cash post-tax asset impairments of about $1.500 billion in 2023, including approximately $1.200 billion ($1.400 billion pre-tax) related to the Shenzi asset.
The charges stem mainly from goodwill and a portion of the purchase price assigned to Shenzi following the merger with BHP Petroleum.
Woodside Energy also anticipates a non-cash post-tax impairment of around $300 million for Wheatstone, primarily linked to short-term pricing in 2023.
Reserve Additions and Adjustments
The company revealed that it added 266 MMboe of proved oil and gas reserves in 2023, replacing 132% of production, and 318 MMboe of proved plus probable reserves, replacing 158% of production.
Woodside’s proven reserves life is 12.2 years, given 2023 production levels. The company reported reserve additions from deepwater projects sanctioned in the Gulf of Mexico and improved performance in North West Shelf and Pluto, partially offset by reserve reductions in Shenzi.
Latest Developments
The company disclosed terminating acquisition discussions with Santos Ltd SSLZY earlier this month, citing a lack of identified benefits.
Market Reaction
Following the disclosure, WDS shares are trading down by 1.25% at $19.82 premarket on the last check Thursday.