Shenzi Sinks: Woodside Takes $1.2B Asset Impairment Charge On BHP Merger

Woodside Energy Group Ltd WDS shares are trading lower after disclosing an impairment charge related to assets acquired under the 2021 transaction with BHP Group Ltd BHP.

In particular, the company expects to recognize non-cash post-tax asset impairments of about $1.500 billion in 2023, which includes around $1.200 billion ($1.400 billion pre-tax) related to the Shenzi asset. 

The charges are mainly related to goodwill and a portion of the purchase price assigned to Shenzi after completing the merger with BHP Petroleum.

Woodside Energy also sees a non-cash post-tax impairment of around $300 million for Wheatstone, mainly related to short-term pricing in 2023.

Apart from this, the company stated 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 in 2023, replacing 158% of production.

The company’s proven reserves life is 12.2 years, given 2023 production levels.

Notably, the company disclosed reserve additions from deepwater projects sanctioned in the Gulf of Mexico and improved performance in North West Shelf and Pluto, partly offset by reserve reductions in Shenzi.

As of 2023, Woodside’s remaining proved (1P) reserves stood at 2,450.1 MMboe, proved plus probable (2P) reserves remaining were 3,757.1 MMboe. 

Also Read: Australia’s Woodside Pockets 5-Year LNG Supply Deal With Pilbara Minerals

Earlier this month, Woodside Energy terminated acquisition discussions with Santos Ltd SSLZY, citing a lack of identified benefits.

Price Action: WDS shares are trading lower by 1.25% at $19.82 premarket on the last check Thursday.