Mining giant BHP Billiton will write down the value of its US shale assets by $US7.2 billion ($A10.31 billion) amid collapsing oil and gas prices and a gloomy short term outlook.
The company is also reviewing all further investment in its onshore US business, as it focuses on preserving cash to ride out the sharper-than-expected downturn.
"Oil and gas markets have been significantly weaker than the industry expected," chief executive Andrew Mackenzie said in a statement.
"While we have made significant progress, the dramatic fall in prices has led to the disappointing writedown announced today."
BHP said on Friday it expects to book the impairment charge in its half year results, its second writedown on the US oil and gas assets in six months. The assets will now be valued 30 per cent lower in its books, at $US16 billion.
The resources giant has raced to stay ahead of falling oil and gas prices, slashing its rig count in the onshore US business to seven from 26 a year ago, paring back capital expenditure and booking a $US2.8 billion write-down in June.
But weakening global demand and a supply glut pushed oil prices to a 12-year low of $US30 a barrel this week, putting further pressure on the company to correct the book value of its ill-timed push into the US shale market.
The global miner had paid $US20.6 billion on two major acquisitions in 2011, and is estimated to have spent another $US15 billion on the business since then.
"I wouldn't be surprised if there are more writedowns in the value," Morningstar resources analyst Matthew Hodge said.
"It just reflects that there were large investments made at the wrong time and the wrong price."
BHP said it will further reduce the number of operated rigs in the onshore US business to five in the March 2016 quarter, indicating it is stripping the shale drilling program to a minimum until oil prices recover.
The company is also expected to further cut capex for the business, after it said it is reviewing investment and development plans for the remainder of the 2016 financial year.
The writedown comes at a time when the mining giant has been under pressure over its push to increase iron ore supplies despite a slump in prices, and comes soon after a deadly dam disaster in Brazil that could lead to hefty fines and payment of damages by the company.
"The market is unconcerned about BHP writing down the value of its onshore US assets," CMC Markets chief analyst Ric Spooner said.
"While many may regret the timing and pricing of this investment, its reduced value has already been reflected in the company's lower share price."
Shares in the company, which have been hammered down to 11-year lows, staged a small bounceback on Friday. The stock surged more than five per cent in early trade, but closed 1.3 per cent higher, at $15.07.
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