Inpex Corporation

INPEX reported first-half net profit of JPY 263.1 billion, described as the highest on record. Daisuke Yamada said revenue was impacted by lower Abu Dhabi crude sales, with crude oil revenue down from JPY 780 billion last fiscal year to JPY 694.9 billion, while natural gas revenue rose from JPY 251.4 billion to JPY 271.9 billion. He said the oil price was between $70 and $87 during the half, the yen weakened, and Ichthys cash flow improved. For the full year, management kept net profit guidance at JPY 510 billion, expects operating cash flow of about JPY 1 trillion, investment cash flow of JPY 859 billion, dividend of JPY 112 per share, buybacks of about JPY 140 billion, and a total payout ratio of about 53%.

CEO Takayuki Ueda focused on the Middle East conflict and the Strait of Hormuz closure as the main external issue, saying Abu Dhabi sales were constrained but the company’s diversified portfolio offset much of the impact. He said the company is shifting toward a portfolio with more energy-security resilience, emphasizing gas assets that avoid chokepoints and continued investment in Abu Dhabi, Ichthys, and Abadi. His tone was confident and strategic, repeatedly describing INPEX as undervalued and stressing that growth and shareholder returns should both continue.

CFO Daisuke Yamada linked the record first-half profit to a mix of negatives and positives: Abu Dhabi sales volume fell, but higher oil and LNG prices, a weaker yen, stronger Ichthys output, and lower income tax more than offset the drag. He highlighted crude oil revenue of JPY 694.9 billion and natural gas revenue of JPY 271.9 billion, and said the full-year forecast of JPY 510 billion reflects assumptions of Brent around $80 in Q3 and around $70 in Q4, with FX around JPY 160. He also said operating cash flow is expected to exceed JPY 1 trillion, investment cash flow is JPY 859 billion, and the company is building cash reserves for Abadi, with about JPY 770 billion accumulated by year-end for upstream use.

Analysts pressed management on Abadi economics, asking what the biggest hurdle is to achieving a mid-teens equity IRR and whether the JPY 770 billion cash reserve is enough. Ueda said the key issues are project cost reduction during FEED/EPC negotiations and, if needed, incentives from the Indonesian government; he also said the reserve may not be fully sufficient and the final CapEx will become clearer after tendering. Other questions focused on the scope of long-term LNG contracting, where Ueda said INPEX intentionally wants some buffer and does not plan to maximize long-term take-up beyond the current plan, and on shareholder returns, where management defended the 53% payout and larger buyback as appropriate given perceived undervaluation. Analysts also asked about Australian country risk and future volatility; Ueda acknowledged concern over domestic gas reservation and tax debates in Australia, while Takimoto said the 53% payout is supportable because much of Ichthys’ earnings visibility is already locked in through long-term pricing.