Inpex, JGC Write Down Canadian Shale (Update)

Japan's JGC Corporation said it will write down its Canadian shale gas project by $77mn.  Update: Inpex has said it will impair the same project by $723mn (see final sentence).

JGC said March 26 that, following a revaluation of the project based on a weakening of gas prices in North America, it will recognise an extraordinary loss of yen 8.5bn [$65mn] in its consolidated account, and an extraordinary loss of yen 10bn [$77mn] in its non-consolidated account for the fiscal year ending March 31 2018. However it said the impact on profit attributable to shareholders would be "immaterial" given that JGC will realise extraordinary income from the sale of assets during the January-March 2018 quarter: "Therefore at this point, the company's consolidated financial forecasts for the fiscal year ending March 31 2018 remain unchanged."

In 2012 JGC and Inpex jointly, through Inpex Gas British Columbia, acquired from CNOOC-owned Nexen a 40% interest in the shale gas projects in the Horn River, Cordova and Liard shale basins in western Canada.  Inpex Gas British Columbia is 82%-owned by Inpex, 18% by JGC.

Update 2.30pm British Summer Time:

Japan's Inpex also said March 26 that impairment tests were conducted on assets of its shale gas project in Canada (believed to be the same asset above) in light of a forecast decline in natural gas prices in North America, prompting Inpex to record an impairment loss of some yen 76bn ($723mn). The impact on 2017 net income attributable to shareholders for the fiscal year to March 31, 2018 is expected to be around yen 52bn ($495mn) it added, following deduction of non-controlling interest impact. Inpex also reported a setback with its Australian Ichthys LNG project.