Services player Shawcor warned Monday it will book an “unexpected” $68 million impairment in the fourth quarter against assets in the Gulf of Mexico and a joint venture in Venezuela.
The charges are related to the goodwill and intangible assets of the Socotherm Gulf of Mexico coating facility in Channelview, Texas and the carrying value of Socotherm’s 50 percent joint venture interest in Venezuela.
The charges emerged after a recently conducted annual impairment testing of the carrying value of ShawCor’s long lived assets.
The company said the Gulf of Mexico writedown is based on anticipated market developments including delays stemming for weak oil prices and its intention to shift production from outside the Gulf of Mexico to its Pozzallo, Italy facility.
The impairment charge tied to the company’s joint venture interest in Venezuela is “primarily the result of the accelerating devaluation of the local currency in Venezuela,” Shawcor said.
Ontario-based Shawcor said the writedown is not expected to exceed $68 million but “there can be no assurance as to the amount of any writedown that may be taken.”
The impairments will be non-cash charges and will not impact the company’s ability to generate revenues from its Gulf of Mexico and Venezuela operations.
The final amount of the impairment is expected to be recorded in the fourth quarter.