Inpex Cuts Profit Guidance Amid Price Crunch

Japanese oil and gas firm Inpex has slashed its net profit forecast for 2020 by 93%, after seeing a slump in first-quarter earnings owing to low oil prices, it said on May 12.

Inpex now expects a net profit of yen 10bn ($93mn) for the year, down from a February forecast of 145bn yen. It has also cut its dividend guidance to yen 24/share from 36. The company said it had lowered its projections based on the assumption that Brent oil will average $35.2/b in 2020, down from an earlier forecast of $60.

"Due to the substantial decline in crude oil prices, Inpex is currently reevaluating the assets of the Inpex Group," it said. "The company may recognise impairment losses on some assets mainly consisting of producing projects, depending on the outlook of crude oil prices and project plan reviews."

Net income in the three months ending March 31 dropped 32% year on year (yr/yr) to yen 33.6bn owing to the collapse in oil prices in March. Inpex is looking to protect its cash flow by reining in development spending by more than 20% and exploration investment by over 40%, compared with its plans in February.

Inpex has security liquidity in the form of cash and a credit line from banks, but is seeking further bank loans to shore up its financial position.