Valuation of Shares of Subsidiaries and Associates (Non-Consolidated)
Japan Petroleum Exploration Co. Ltd announced that it will recognise an impairment loss, and a loss on valuation of shares of subsidiaries and associates and a provision of allowance for overseas investment loss (non-consolidated) in the third quarter of the fiscal year ending 31st March 2018 (from 1st October 2017 to 31st December 2017) concerning the shale gas project in British Colombia, Canada (hereinafter "the Upstream Project") in which JAPEX has been participating in its overseas subsidiary, JAPEX Montney Ltd.
Following the decision of not proceeding with the Pacific NorthWest LNG Project (hereinafter "the PNW LNG Project") which had pursued the possibility of producing LNG from the shale gas in the Upstream Project, JML has decided to reduce the carrying amount of its asset to the recoverable amount based on the revised development plan of the Upstream Project without the assumption of the PNW LNG Project. According to the decision as above, JAPEX will recognise 750 million Canadian dollars (approximately ¥68 billion) of impairment loss as an extraordinary loss in the third quarter of the fiscal year ending 31st March 2018.
Owing to the significant decline of the value of JML's stock resulting from the recognition of the above-mentioned impairment loss, JAPEX will recognise ¥39 billion of a loss on valuation of shares of subsidiaries and associates and ¥4.4 billion of a provision of the allowance for overseas investment loss as an extraordinary loss in the third quarter of the fiscal year ending 31st March 2018.
The estimated impact to profit (loss) attributable to owners of parent for the nine months ended 31st December 2017 will be a loss of approximately ¥34 billion due to the recognition of an impairment loss as above-mentioned. The above-mentioned losses recognised in the non-consolidated financial statements will have no impact on the consolidated financial results because those losses are eliminated in the consolidated financial statements. The consolidated financial forecasts for the fiscal year ending 31st March 2018 are under examination and will be disclosed promptly if and when it becomes necessary.
Due to not having the assumption of the PNW LNG Project, the estimated sales volume of the shale gas for the purpose of assessing the recoverable amount of JML’s assets was reduced, but the total shale gas volume existing in the area of the Upstream Project is not reduced. The Upstream Project will continue to pursue its efficient development and production as well as maximising the value of the project. JAPEX and JML remain committed to maximising the value of the Upstream Project taking advantage of the company’s strengths and expertise in the exploration and production business.