Japan Petroleum Exploration (JAPEX) has decided to sell its 10 per cent stake in the North Montney shale gas project in Canada to Petronas.
The interest is owned by JAPEX Montney (JML), JAPEX’s unit, the company said in its statement.
The company added that the North Montney project proceeds with shale gas development and production in the North Montney area of British Columbia, Canada.
JAPEX participated in the project through JML in April 2013 and had proceeded with a feasibility study of the LNG project in addition to the shale gas development and production.
Even after the decision not to proceed with the LNG project in July 2017 due to changes in the business environment, JAPEX has been working with Petronas and its partners to maximize the value of the project by optimizing the development plan.
On the other hand, JAPEX formulated the medium-term business plan in 2018 with the recognition of the necessity to transform its business structure for sustainable growth even in the market environment of $50-$60 per barrel.
Based on the recognition, JAPEX said its E&P projects have been striving to improve their profitability by optimizing the business portfolio, including the sale of the asset.
The environment surrounding the E&P business is expected to become even more severe due to the prolonging effects of the COVID-19 since early last year, including the structural changes by the new normal after the COVID-19 and accelerating the global decarbonization.
Therefore, JAPEX has decided to sell 10 per cent of all ownership interest in the North Montney joint venture.
All procedures of this sale are expected to complete by the end of June 2021, the company said.
As a result of this transaction, JAPEX expects to record an extraordinary loss of approximately 493 million Canadian dollars ($408.2 million) in the consolidated financial results for the second quarter of the fiscal year ending March 31, 2022.