On Wednesday, Japanese oil and gas explorer Inpex raised its full-year net profit forecast by 7% and announced measures to boost the company's value and shareholder returns, including a dividend increase and share buyback.
To address the country's number of undervalued stocks, the Tokyo Stock Exchange at the end of March called on companies to disclose plans to improve capital efficiency, which has led to a series of announcements of buybacks and dividend rises this year from Japanese companies.
The country's largest oil and gas exploration and production company said it would buy up to 6.12% of its own shares, worth 100 billion yen ($698 million), by Dec. 29. It would cancel them in early 2024, along with shares worth 120 billion yen that it bought in 2022, to increase shareholder returns.
It also raised its annual dividend forecast to 74 yen a share from its previous prediction of 64 yen.
"To boost PBR (price-to-book ratio) or corporate value, we'll work on improving capital efficiency, gaining market confidence for our growth, and strengthening shareholder returns," CEO Takayuki Ueda told a news conference.
To drive growth, Inpex, whose PBR stood at 0.49% as of June, will focus on its liquefied natural gas (LNG) business, including the Ichthys project in Australia and Indonesia's new Abadi project, as well as renewable energy and hydrogen, he said.
Indonesia's Pertamina and Malaysia's Petronas agreed with Shell last month to buy its 35% stake in the Abadi project, also known as the Masela gas block, for up to $650 million, moving the project forward after years of delay.
Inpex, which controls 65% of the project, has said it wants to make a final investment decision (FID) in the latter half of this decade and start production early in the next.
"We'll decide the timing of FID after discussing with new partners," Ueda said, adding it aims to secure around 15% of the internal rate of return (IRR) on the project.
Separately on Wednesday, Inpex said its net profit in the first six months rose by 38.1% from a year ago to 254.3 billion yen, boosted by higher natural and liquefied petroleum gas sales and a weaker yen.
The company raised its full year profit forecast by 20 billion yen to 320 billion yen, on expectations the currency will average 135 yen to the U.S. dollar this year, compared to 130 yen in its May forecast.
($1 = 143.2700 yen)
(Reuters - Reporting by Katya Golubkova and Yuka Obayashi; Editing by Conor Humphries and Barbara Lewis)