Japan’s largest oil and gas explorer Inpex is increasing returns for its shareholders to a record high despite reporting a decline in net profit in the first half of the year.

On Thursday, Inpex reported net profit of $1.5 billion (212.5 billion Japanese yen) for the six months ended June 30, 2024, a decrease of 14.5% from the same period last year.

However, Inpex’s revenue and operating profit increased by 10.4% and 15.3% respectively compared to the same period last year.

The decrease in net profit was due to higher tax payments and increased exploration costs in Australia.

Inpex has decided to significantly increase shareholder returns and intensify dialogue with investors after analyzing the factors that have so far slowed the performance of its shares.

The company launched a “sustainable increase in shareholder value” initiative in August 2023 and aims to increase shareholder returns after receiving feedback about uncertainty about returns for investors.

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

This is up from 60.6% in 2023 and the previous high of 61.9% in 2021.

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

“Given our strong full-year earnings outlook, we have decided to repurchase additional shares and significantly increase the dividend,” Daisuke Yamada, senior vice president, said at a news conference broadcast by Reuters.

One of Inpex’s most important projects outside Japan is the Ichthys LNG plant off the coast of Australia. Inpex is the operator of the export plant and its main partner is the French company TotalEnergies and its Australian subsidiaries CPC Corporation Taiwan, Osaka Gas, Kansai Electric Power, JERA and Toho Gas.

Ichthys’ annual production capacity is 8.9 million tonnes of liquefied natural gas.

By Charles Kennedy for Oilprice.com

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