Origin expecting to recognise impairment for second half
Origin Energy has advised that it expects to recognise an impairment charge of approximately $1.2 B post-tax for the second half of the 2017 financial year in its full-year results, related to Australia Pacific LNG (APLNG) and Lattice Energy.
Origin stated that APLNG is expected to recognise an impairment charge on its assets, of which Origin expects to reflect its 37.5% share, being $815 MM post-tax.
“When Australia Pacific LNG reviews the carrying value of its assets, it considers a range of assumptions, including oil price, AUD/USD exchange rates, discount rates and costs,” Origin advised.
“Since the last assessment at 31 December 2016, while there has been a change in a number of relevant assumptions, the principal change is a reduction in oil price assumptions to US$67/bbl (real 2017) from 2022.”
Origin stated that it also expects an impairment charge of $357 MM post-tax for Lattice, its conventional gas assets currently held for sale.
Origin stated that the sale process is progressing well towards execution by the end of the year, with the impairment charge arising as a result of assessing the current carrying value of Lattice against the expected proceeds from divestment net of the estimated cost of disposal, with it partly reflecting the cessation of depreciation and amortisation from December 7 last year.
With the first and second-half impairment charges aggregated, Origin stated that it expects to report a total impairment charge of $3.1 B, subject to finalisation of its full-year financial statements, with it being an after-tax, non-cash item with no impact on cash flow or underlying EBITDA.