BHP takes $7.2 billion hit on US shale assets

Plunging global energy prices forced BHP Billiton to book today a $7.2 billion pre-tax writedown against the value of its struggling onshore US assets, as the mining giant works to reign in costs and reduce risk.

The decision came as miners globally struggle to cope with collapsing commodity prices and China's once insatiable appetite -- boosted by an unprecedented investment boom in the world's second-largest economy -- waning.

Sharp falls in oil prices have ravaged the bottom line of miners across the world, pushing smaller players to the brink while tearing billions in revenue out of the budgets of resources-dependent economies such as Australia.

BHP spent $20 billion in 2011 on shale oil and gas assets in the United States, but the move increasingly appears to have backfired with a dramatic fall in prices over the past 18 months hammering profits.

The hefty writedown, which will be booked in its next half-yearly accounts due in February, equates to $4.9 billion after tax and follows BHP, a major player in the US oil and gas industry, taking a $2.8 billion pre-tax hit on the same assets last year.

Chief executive Andrew Mackenzie blamed "significant volatility and much weaker" prices, adding that the company had been forced to reduce its medium- and long-term price assumptions.

"Oil and gas markets have been significantly weaker than the industry expected," he said in a statement to the market.

"We responded quickly by dramatically cutting our operating and capital costs, and reducing the number of operated rigs in the onshore US business from 26 a year ago to five by the end of the current quarter.

"While we have made significant progress, the dramatic fall in prices has led to the disappointing writedown announced today."

The writedowns will reduce the book value of BHP's US net operating assets to about $16 billion.