Inpex Corporation

INPEX said first-half net profit attributable to owners was JPY 263.1 billion, the highest on record. Revenue moved lower overall because Abu Dhabi crude sales were down about JPY 85 billion to JPY 694.9 billion, while natural gas revenue rose from JPY 251.4 billion to JPY 271.9 billion. Management said oil traded between $70 and $87 in the period and the yen weakened, helping offset lower sales volumes; the company also cited roughly JPY 50 billion of upside from Ichthys-related equity income and lower taxes. For the full year, INPEX kept net profit guidance at JPY 510 billion, operating cash flow at about JPY 1 trillion, investment cash flow at JPY 859 billion, dividend guidance at JPY 112 per share, and buybacks at about JPY 140 billion, with a total payout ratio of about 53%.

CEO Takayuki Ueda framed the quarter around resilience in a more security-focused energy environment, saying the Strait of Hormuz closure has mainly constrained Abu Dhabi sales while the diversified portfolio offset the hit. He repeatedly emphasized that INPEX is investing through the cycle in core growth areas such as Abadi, Ichthys, Abu Dhabi, CCS, and other producing assets, and said the company is building a portfolio with higher security and long-term growth. His tone was upbeat but also candid that security comes with higher costs and that the stock appears undervalued relative to the growth strategy.

CFO Daisuke Yamada highlighted that the first half produced record profit despite a revenue mix that was pressured by lower Abu Dhabi crude sales. He explained that crude revenue fell to JPY 694.9 billion from JPY 780 billion last year, while natural gas revenue increased to JPY 271.9 billion from JPY 251.4 billion, aided by Ichthys performance and a weaker yen. He said the full-year forecast assumes Brent around $80 in Q3 and about $70 in Q4, FX around JPY 160, operating cash flow of more than JPY 1 trillion, investment cash flow of JPY 859 billion, and that the company has accumulated about JPY 770 billion of cash reserves for Abadi development.

Analysts focused heavily on Abadi economics, asking what the biggest hurdle is to achieving mid-teens equity IRR and whether JPY 770 billion of cash reserves is enough. Management said the main hurdles are reducing project cost through FEED/EPC negotiations and, if needed, securing better incentives from the Indonesian government; it also said the cash reserve is not yet clearly sufficient because the final CapEx depends on tender outcomes and inflation-adjusted costs. Questions also probed Abadi marketing and long-term contracts, with management saying it could sell more long-term LNG but is deliberately keeping about 1.5 million tonnes as buffer rather than locking in all volumes. Analysts also pressed on Australia country risk and shareholder returns; management acknowledged concern about Australian domestic gas reservation policy and said 53% total payout is appropriate given the company’s growth strategy and current stock-price discount.