A.P. Moeller-Maersk A/S said its oil and gas business will take a $1.7 billion writedown on its assets in Brazil, becoming the latest explorer to draw a blank in the country’s energy boom.
Maersk in 2011 purchased stakes in three oil blocks in Brazil for $2.4 billion, which it has now written down to $600 million, it said in a statement. The Copenhagen-based company, which said it will ax plans to acquire the operatorship of the three fields, maintained 2014 guidance for an “underlying profit” of about $4 billion.
After state oil company Petroleo Brasileiro SA made several massive offshore discoveries, explorers rushed to acquire Brazil assets. Results have been mixed. BP axed staff after poor exploration results and OGX Petroleo & Gas Participacoes SA went bankrupt when fields failed to perform as expected. While others including Repsol SA and BG Group Plc have had more success increasing production, Petrobras has become the world’s most indebted oil explorer through a $220 billion plan to develop fields.
The investment “was made at a time when the outlook for the oil industry and oil prices were more positive than today and we had growth ambitions for our Brazilian oil business,” Chief Executive Officer Nils S. Andersen said in the statement. “It’s of course clearly unsatisfactory that the oil volumes in the acquired fields Itaipu and Wahoo after appraisal drilling has proved to be in the low end of our original expectations.”
Shares of Maersk, which runs the world’s biggest container line, fell 1.4 percent to 13,420 kroner in Copenhagen.
The Danish company sold a stake in the producing field Polvo to the operator, HRT O&G Exploracao e Producao de Petroleo Ltda., and is writing down the value in the other two fields, Wahoo and Itaipu, which are being planned for development. Wahoo is operated by Anadarko Petroleum Corp. and BP manages Itaipu.
“Maersk Oil now expects that these plans will result in a lower value than originally anticipated as the appraisal drilling performed have come out at the low end of the original expectations and additional adverse impacts from increased development costs and lower oil price also must be expected,” Maersk said.