2015 already a record year for writedowns, IHS says

HOUSTON — Exploration and production companies have already made 2015 a record year for writedowns and impairments, according to energy consulting group IHS.

Beleaguered drillers wrote off $29 billion in the first quarter of the year alone, more than the 2014 full-year total of about $25 billion. Halfway through reporting on the second-quarter, the total value of writedowns has jumped to about $49 billion, surpassing the $48 billion in writedowns companies took when oil markets last seriously tanked in 2008, according to IHS numbers.

“2015 is going to be a record year for impairments,” said Paul O’Donnell, a principal analyst at IHS, in an interview.

Impairments or writedowns are the result of companies adjusting down the value of assets they list on their books. In the oil and gas industry, the U.S. Securities and Exchange Commission allows companies to value their reserves using the average of oil prices from the last 12 months. As that price has fallen, so has the value of the reserves oil companies keep on their books. IHS’ figures come from a study of 66 small, medium and large North American companies. (by Robert Grattan, Houston Chronicle)