Origin's pre-tax writedown on Ironbark will push its value in Origin's books number down by $514 million to a new carrying value of just $279 million.
The company said in a statement that the Ironbark writedown was due to a new assessment of the amount of gas it would produce.
Before the announcement, Origin had expected Ironbark to yield 249 petajoule equivalent of gas but that amount now has been almost halved to 129 petajoule equivalent.
Origin had also flagged previously the potential for less certain production of up to 635 petajoule equivalent but that number has been revised to 192 petajoule equivalent.
Wood Mackenzie oil and gas analyst Saul Kavonic said the announcement wasn't surprising.
"Ironbark is a relatively small gas resource and suffers from varying coal depth and quality changes across the acreage," Mr Kavonic said.
"Like the rest of the CSG acreage experience, the rocks are unlikely to produce anywhere near the levels envisaged a decade ago.
"Despite high gas prices, the economics for Ironbark still look poor."
RBC Capital Markets analyst Ben Wilson said the writedown would be positive for Origin in the long term.
"This impairment today is a continuation of the spending hangover that remains from the industry’s coal bed methane splurge over 2008 to 2010; Origin has also previously impaired around $600 million of its Poseidon asset which was purchased from Karoon Gas for about $650m in 2014," Mr Wilson said.
"We do note, however, that these upstream investments were made under the watch of former management. We think current management has taken positive steps to rationalise upstream activities and reduce gearing."
SXY Price at posting:
40.0¢ Sentiment: Buy Disclosure: Held
