COPENHAGEN, Denmark, July 8 (UPI) -- Maersk Oil said Tuesday it was giving up on plans in Brazil after taking a $1.7 billion impairment on its assets there.
The company in July 2011 bought stakes in three Brazilian reserve areas from SK Energy for $2.4 billion. Maersk said it now views the assets as under-performing based on appraisal drilling results and increased development costs.
The company said it decided to make a $1.7 billion write-down of its Brazilian assets, which will show up in its second quarterly statement.
Chief Executive Officer Nils Anderson said in a statement the Brazilian investment "was made at a time when the outlook for the oil industry and oil prices were more positive than today and we had growth ambitions for our Brazilian oil business."
Maersk said it was giving up on its Brazilian ambitions. There remains "significant" potential reserves at some Brazilian fields and Maersk said operators staying behind should be able to present a commercially viable development plan at some point in the future.
"Maersk Oil has revised its strategy and will no longer pursue growth or operatorship for its business in Brazil," the company said.