Another day, another impairment

AGL Energy has announced a decision to cease exploration and production of natural gas assets at Moranbah, Silver Springs and Spring Gully. The company expects to sell all of these assets with the exception of the gas storage and related plant at Silver Springs, Moranbah. Note today's announcement indicates this may take some time. AGL will not proceed with the Gloucester Gas Project (including relinquishing its Petroleum Exploration License for the Gloucester region) and will cease production at the Camden Gas Project in 2023. The company expects to recognise an impairment charge of $640 million after tax against the carrying value of these assets in its 1H16 accounts, with this amount including an increase in its rehabilitation provisions.The company indicates this outcome will have minimal impact on its underlying profit for FY16, but of course that's simply by definition as UPAT excludes significant items. Per the 2015 AGM on 30 September 2015, FY16 UPAT guidance was $650 million to $720 million, ‘assuming normal trading conditions for the rest of FY2016.’ AGL Energy reports for 1H16 on 10 February.