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Johannesburg - Glencore [JSE:GLN], the mining and commodities company led by billionaire Ivan Glasenberg, expects to impair the value of its oil business in Chad by about $790m because of the slump in the price of crude.
“Following the sharp decline in oil prices in late 2014 and continuing into 2015, significant amendments were made to Chad’s work programme,” Glencore said on Thursday in a statement. “This included changes to the fields’ capex and production profiles and significantly reducing the number of drilling rigs in operation.”
Glencore agreed to buy Caracal Energy for about $1.35bn in April last year to take control of oil and gas assets in the central African nation of Chad. Crude slid back into a bear market last month amid an enduring supply glut, and slumped to a six-year low near $40 a barrel in New York on Tuesday.
The company also announced a cut to its full-year spending estimate, trimming previous guidance from a range of $6.5bn to $6.8bn to a new estimate of $6bn.
“We expect the company to unveil further capex reductions in 2016-17” when it reports earnings next week, “underlining the commitment to its credit rating and dividends,” Barclays analysts wrote in a note on Thursday.
It reported a 2% increase in copper production from its mines in the second quarter. Output was 380 200 metric tons compared with 371 700 tons a year earlier.
Glencore shares tumbled 5.7% on Wednesday in London to a record low of 180.2 pence. The stock is down 40% this year and has a market value of about $37bn.
The share price was up 2.38% at R36.60 at 10:20 on the JSE.
