TOKYO, July 29 (Reuters) - Japanese state-backed oil producer Japan Petroleum Exploration Co (Japex) (1662.T) warned on Thursday of a 90 billion yen ($820 million) loss from exiting its Hangingston oil sands project in Canada, sending its shares down.
Japex has agreed to sell its entire stake in the oil sands project to Canadian oil sands developer and operator HE Acquisition Corp, as profits from the project have been weaker than expected with volatility in local prices and tight pipeline capacity, company spokesperson Yuki Goto said.
The decision also reflected expected waning demand for the fuel in the global push to cut carbon emissions, Goto said.
The company did not disclose the sale price.
The move follows several global oil majors which have rushed to sell Canadian oil sands assets over the past four years over concerns ranging from high production costs and emissions to scarcity of capital for fossil fuel projects.
Earlier this month, Japex said it was considering a sale among other options for its Hangingston oil sands project, and two sources told Reuters the Japanese company was seeking a buyer for its 75% stake in the oil sands facility. read more
Japex unit Japan Canada Oil Sands Ltd (JACOS) is majority owner of Hangingstone, with Chinese state-owned oil giant CNOOC (0883.HK) holding the remaining 25%.
JACOS has been producing around 20,000 barrels per day of bitumen, an extra-heavy oil, at Hangingstone, a steam-assisted oil production site that started up in 2017, Japex said.
Japex will book an extraordinary loss of about 90 billion yen in the July-September quarter from the sale, and revise its earnings estimate for the financial year to next March on Aug. 10 when it announces earnings for the April-June quarter, a company spokesperson Yuki Goto said.
The announcement, which came during afternoon trade in the Tokyo stock market, sent its shares down as much as 6.8%, before ending at 1,840 yen, down 1.1%. The stock underperformed the broader Nikkei 225 index (.N225), which closed up 0.7%.
Reporting by Yuka Obayashi; Editing by Sonali Paul
Our Standards: The Thomson Reuters Trust Principles.
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