Japan’s Top Oil and Gas Explorer Raises Shareholder Returns Despite Profit Drop

The largest Japanese oil and gas explorer, Inpex, is raising returns for shareholders to a record-high, despite posting a decline in its first-half net profit.

On Thursday, Inpex reported a net profit of $1.5 billion (212.5 billion Japanese yen) for the six months ending June 30, 2024, which was down by 14.5% compared to the same period last year.

However, Inpex’s revenues and operating profit rose by 10.4% and 15.3%, compared to the year-ago levels, respectively.

The decline in the net profit was attributed to increased tax payments and raised exploration expenses in Australia.

Inpex has decided to significantly boost shareholder returns and deepen dialogue with investors, after analyzing what the drags on its stock performance have been so far.

The company launched a “Sustainable Growth of Corporate Value” initiative in August 2023 and is looking to strengthen shareholder returns after receiving feedback about uncertainty about returns for investors.

For 2024, Inpex now forecasts shareholder returns at a record high in terms of value, and a record total payout ratio of around 65%.

That’s up from 60.6% for 2023, and a previous high of 61.9% for 2021.

Inpex raised its per share dividend forecast for 2024 and announced an additional share buyback which brings the total share repurchases for the year to $884 million (130 billion yen).

“Given our strong full-year earnings outlook, we decided to buy back additional shares and significantly increase the dividend,” Daisuke Yamada, senior vice president, told a news conference, as carried by Reuters.

One of Inpex’s most important projects outside Japan is the Ichthys LNG facility offshore Australia. Inpex is the operator of the export plant and has France’s TotalEnergies as a major partner, plus the Australian subsidiaries of CPC Corporation Taiwan, Osaka Gas, Kansai Electric Power, JERA, and Toho Gas.

Ichthys’s annual production capacity is 8.9 million metric tons of LNG.

By Charles Kennedy for Oilprice.com

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