Inpex Shares Climb on Indonesia Rights, Oil Prices

By Alex Devine and Masaki Kondo

Nov. 14 (Bloomberg) -- Inpex Corp., Japan's largest energy explorer, rose in Tokyo trading after it won rights to explore an offshore oil field in Indonesia and as crude prices gained.

The shares climbed 9.2 percent in Tokyo trading to close at 498,000 yen, the biggest gain since Nov. 5. The benchmark Topix index gained 1.1 percent.

The Tokyo-based company and its partners, Arizona-based Murphy Oil Corp. and Thailand's PTT Exploration & Production Pcl, won rights to explore the Semai II block off the coast of West Papua province, Inpex said yesterday. Oil rose for a second day in New York, extending its rebound from a 21-month low as gains in equities spurred expectations that fuel demand will increase.

``Even though initial investment costs are big, they will pay off eventually throughout the project, which usually lasts decades,'' said Fumiyuki Nakanishi, an equity strategist at Tokyo-based SMBC Friend Securities Co. ``Oil prices will likely bottom out soon.''

Inpex and its partners will each hold a 33 percent stake, with Murphy operating the field in Indonesia's Ceram Sea. The Semai II block covers an area of 3,379 square kilometers (1,305 square miles) at depths of up to 1,500 meters, according to yesterday's statement.

Oil Prices

``Explorers can't do anything without drilling rights,'' Nakanishi said. ``Given natural resources run out sooner or later, only those who have rights will survive at the end of the day.''

Oil has climbed back from $54.67 a barrel yesterday, the lowest since Jan. 30, 2007, after U.S. markets gained. Asian stocks are up today as investors took advantage of cheap valuations. Crude also rose on plans by OPEC members to meet in Cairo at the end of the month to discuss further production cuts.

Oil for December delivery rose as much as $1.72, or 3 percent, to $59.96 a barrel on the New York Mercantile Exchange. It was at $57.93 a barrel at 3:15 a.m. Tokyo time. Prices have tumbled 60 percent from a record $147.27 on July 11.

A $1 price gain for a barrel of crude boosts Inpex's annual earnings by 2.2 billion yen ($23 million), the company said in May. Inpex's stock had a correlation of 0.97 with oil prices in the past year, meaning the two moved almost in tandem.

To contact the reporters on this story: Alex Devine in Tokyo at adevine3@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.