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Business

Itochu dumps shale gas stake for $1

TOKYO -- Itochu has walked out on the shale gas development business, selling off its 25% interest in Samson Resources for $1 back to the U.S. company.

     The Japanese trading house took a stake in Samson back in 2011, spending 78 billion yen (about $1 billion at the time) as part of a joint acquisition with partners including an American investment fund.

     But with crude oil prices having fallen sharply, Itochu had racked up roughly 100 billion yen in impairment losses in the business as of March. With Samson unlikely to generate stable earnings for the time being, Itochu decided to let go of the business.

     Itochu has already written off its shareholdings, so there is no additional impact expected on earnings. The company sold off its stake in another American exploration company, and has no shale gas operations outside the U.S.

     Among leading Japanese trading houses, Itochu is the first to pull out of the shale gas development business. Sumitomo plans to sell stakes in large projects after booking 199.2 billion yen in related losses last fiscal year.

     Mitsubishi Corp. and Mitsui & Co., meanwhile, are seen continuing their operations. They booked impairment losses of 30 billion yen and 39 billion yen, respectively, owing to the drop in crude oil prices.

(Nikkei)

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