OREANDA-NEWS. UK-Australian resources group BHP Billiton has cut $2bn from the carrying value of its onshore US shale fields and halved its annual exploration budget for the sector.

This is the third time that BHP Billiton has written down the value of its US onshore assets, which it acquired through the 2011 takeovers of US upstream independent Petrohawk for $15.1bn and of US independent Chesapeake Energy's Fayetteville shale gas assets for $4.75bn. The shale assets will have a book value of $24bn once the latest write-down is considered.

BHP Billiton has also cut its onshore US appraisal and development budget to $1.5bn in the 2015-16 fiscal year ending 30 June from $3.4bn for 2014-15. It plans to cut the number of onshore US rigs it operates to just 10 for 2015-16, having already cut it to 17 from 26 in the January-March quarter.

At an oil price of $60/bl for West Texas Intermediate and a Henry Hub gas price of $3/mn Btu, BHP Billiton expects its onshore US business will be cash flow positive for 2015-16.

The write-down of the value of the onshore US assets is largely associated with the Hawkville field in the Eagle Ford basin, where BHP Billiton in January cut all exploration funding other than that needed for the retention of core acreage.

"While the impairment of the Hawkville is disappointing, it does not reflect the quality of our broader onshore US business," BHP Petroleum president Tim Cutt said today. "The Black Hawk continues to exceed expectations, the Permian offers significant upside across multiple zones and the Haynesville, one of the industry's premier dry gas positions, provides an excellent development option as market conditions improve."

Cutt was last month relieved of his responsibility for BHP Billiton's potash projects, to allow him to focus on turning around the fortunes of the petroleum division and finding a way to stop the asset write-downs associated with its onshore US shale business.