AGL Energy Ltd. (ASX:AGL) announced that exploration for and production of natural gas will no longer be one of its core businesses. The decision comes after a review, and is a strategic decision for the company.
As quoted in the press release:
There is no change to AGL’s commercial or retail gas activities. AGL is confident that it has sufficient gas for its residential and small business customers following the recent contract with the Gippsland Basin Joint Venture and the planned expansion of the Eastern Gas Pipeline. Incremental future gas requirements are likely to be sourced from the southern markets.
AGL expects to recognise an impairment charge of $640 million after tax ($795 million pre-tax) against the carrying value of its gas exploration and production assets including an increase in rehabilitation provisions. This charge will be recognised as a significant item in the financial results for the six months ended 31 December 2016. The impairment has minimal impact on FY16 Underlying profit.
The FY16 cash impact of this strategic decision, excluding potential sale of assets, is expected to be less than $10 million and relates to rehabilitation, redundancy and other associated costs.
Click here to read the full AGL Energy Ltd. (ASX:AGL) press release.
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