AWE Takes Impairment Hit on Indonesia Oil Project

MELBOURNE, Australia--AWE Ltd. (AWE.AU) said it expected an up to 230 million Australian dollars (US$182 million) hit after it impaired the carrying value of its stake in the Ande Ande Lumut oil project in Indonesia, due to lower crude prices and after operator Santos Ltd. (STO.AU) warned of delays to a final investment decision.

The AAL project in the Northwest Natuna Sea is one of AWE's major longterm growth projects, with plans for 33 horizontal wells and a floating production, storage and offloading vessel.

Further delays to the schedule for an investment decision, plans by Santos to sell its 50% stake in the project and the continued flattening of forward oil-price curves meant AWE would impair the value of its equal stake in the project by A$130 million-A$140 million, it said Wednesday. It added it had written down its US$88 million "carry" in the project, which would lead to a A$90 million impairment expense, although it didn't represent a relinquishment of contractual rights that depend on the project proceeding.

The company said it continued to see considerable value in AAL, and any potential change in the operator of the project or its timing could mean the impairment is later revised.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 08, 2017 20:48 ET (00:48 GMT)