Phillips Petroleum Co. last week disclosed it will take an estimated $280 million after tax writedown on assets related to giant Point Arguello field off California.
The writedown is to be charged against fourth quarter 1989 earnings, resulting in "substantial negative results" for the quarter, the company said.
Phillips holds 40% and 50% interests in Point Arguello field and related offshore and onshore production/processing facilities.
"We intend to begin production of Point Arguello as soon as possible, hopefully in 1990," said C.J. Silas, Phillips chairman and chief executive officer.
"Nevertheless, we are forced to significantly reduce the value of these assets because of protracted delays in beginning operation, especially the delay in gaining regulatory approval to transport Point Arguello oil to refineries by tankers."
Point Arguello, a 1981 discovery in the Santa Barbara Channel, has no pipeline connection. Production and processing facilities were ready for start-up in July 1988 in a $2 billion development project.
Santa Barbara County last May approved an interim plan by Point Arguello operator Chevron Corp. and partners to transport oil 10 miles to shore by tanker. But start of that operation has been delayed by opposition from organizations that appealed the county's action (OGJ, Dec. 18, 1989, p. 14).
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