Japan's biggest oil and gas explorer Inpex Corp raised its net profit forecast for 2021 by 40% on Thursday thanks to higher than expected oil prices but left its capital expenditure plans unchanged so it can repay more debt.
Inpex is now forecasting a net profit of 140 billion yen ($1.3 billion) this year, up from its February prediction of 100 billion yen, after it raised its assumption for average Brent oil prices this year to $60.3 a barrel from $53.0.
"This will mean a V-shaped earnings recovery from last year, when we were forced to book a hefty net loss as the COVID-19 pandemic hit fuel demand and oil prices," Inpex Managing Executive Officer Daisuke Yamada told a news conference.
The company is now predicting cash flow of 275 billion yen in 2021, up from its earlier estimate of 180 billion yen, but its annual spending plan of 250 billion yen will remain unchanged, Yamada said.
"We want to pay back more debts," he said.
Yamada said the company's net debt, including at a downstream unit of its key Ichthys liquefied natural gas (LNG) project in Australia, will probably fall to about 1.9 trillion yen by the end of 2021 from 2.1 trillion at the end of March.
"We want to eventually cut the debt to 1.5 trillion yen so that there will be considerable leeway in terms of financial management even if we need to make a large investment," he said.
Inpex said its net profit rose 13.7% to 38.2 billion yen in the first quarter.
($1 = 109.6500 yen)
(Reporting by Yuka Obayashi; Editing by David Clarke)
