Australia’s AGL writes down underperforming gas projects by $327 million

By DAVID STRINGER
Bloomberg

AGL Energy, Australia’s biggest power producer, will cut about A$435 million ($327 million) off the value of its underperforming gas operations and flagged additional asset sales.

The producer will write down its Moranbah assets in Queensland by about A$237 million after failing to find a buyer, according to a statement Monday. It will also lop about A$193 million off the value of the Gloucester gas project after production delays and further charges on the sale of its Cooper Oil business.

The company will “focus on a small number of gas projects including strategically important gas storage while avoiding significant capital expenditure,” Sydney-based AGL said in the statement.

The decisions follow a review of the upstream gas business and come after AGL previously committed to close its coal-fired power plants as it expands in renewable energy. AGL said in May that it would target about A$1 billion in asset sales.

AGL dropped 1.8% to A$15.54 in Sydney trading, trimming its advance this year to 16%.

The producer plans to sell its Hunter Gas Project, the Spring Gully and Moranbah assets as well as some petroleum exploration licenses, it said in the statement.

Plans to expand the Camden gas project in New South Wales, which have been on hold since February 2013, won’t now proceed as AGL focuses on reducing production costs at the operation.

AGL maintained its underlying profit guidance for the year to June 30 in the top half of a range of A$575 million to A$635 million.

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