Woodside writing-down Western Canada investments

A partner in the proposed Kitimat LNG project on the British Columbia coast said it will record a $720 million after-tax writedown on its investments in Western Canada, Kallanish Energy learns.

Australia-based Woodside Petroleum said the charge against 2019 earnings reflects uncertainty in timing of when it will be able to develop its natural gas fields in northern B.C. to feed the planned liquefied natural gas export terminal, The Canadian Press reported.

The proposed project would export as much as 2.3 billion cubic feet of gas per day. Last December, California-based Chevron Corp., Kitimat’s operator, said it would try to sell its 50% stake in Kitimat LNG and cut funding to its gas-related ventures.

Chevron is not the first company to want out of Kitimat LNG. It bought its 50% stake from Calgary-based Encana Corp. (now known as Ovintiv and based in Denver, Colorado) and Houston-based EOG Resources Inc., in December 2012.

In the same transaction, Houston-based independent producer Apache Corp. raised its stake in Kitimat LNG from 40% to 50%. But two years later, under pressure from activist investors, it sold that stake to Woodside.

Woodside said Tuesday the impairment “reflects increased uncertainty, particularly in the timing of the development of the upstream Liard resource (Basin), following sustained depressed gas market conditions in Western Canada.”

This post appeared first on Kallanish Energy News.