Inpex Sees $606 Million of Writedowns as Oil Prices Decline

  • Japan's largest oil, gas explorer sees income falling 67%
  • Company takes impairments on U.S. Gulf, Angola, Canada assets

Inpex Corp., Japan’s biggest oil and gas explorer, expects to book 67 billion yen ($606 million) in impairment charges for the year just ended following the collapse in oil and gas prices.

The charge will probably reduce net income to 26 billion yen for the 12 months ended March 31, half the 52 billion yen the company projected in February and 67 percent lower than the 77.8 billion yen in profit a year earlier, the Tokyo-based company said in a preliminary earnings statement Tuesday. Sales probably fell 14 percent on year to 1.01 trillion yen.

Inpex joins Mitsubishi Corp. and other companies reporting writedowns after oil prices fell more than 30 percent last year. Inpex is among a host of explorers and producers likely to report full-year net losses because of writedowns that may be equal to as much as 10 percent of book value, Sanford C. Bernstein & Co. said in February.

The company’s writedowns include about 25.5 billion yen on its Lucius oil field in the U.S. Gulf of Mexico, 19 billion yen on Block 14 offshore Angola and 8 billion yen on a shale gas project in Canada, the company said in a statement.

The Japanese oil and gas explorer is facing a number of challenges, most notably in Indonesia where the government is seeking changes to its Abadi liquefied natural gas project. Indonesia wants Inpex to build the massive liquefaction facility on a remote eastern island to help local economic development, instead of offshore as the Japanese company desires.

Inpex’s shares have dropped 34 percent since the beginning of the year, making them the worst-performer on the 58-member Bloomberg World Oil & Gas Index.

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