Japanese Firm Itochu Suffer Losses in Buyout of U.S.-based Samson

Published Date : Apr 02, 2015

Japanese company Itochu Corp. has said that it has incurred a loss of nearly US$317 million (38 billion yen) from to a recent investment in a U.S. based shale oil and gas company, owing to the record downturn observed in global energy prices in the start of this year.

The loss has been incurred from Itochu’s 25% stake in the U.S. firm Samson Investment Co. and will be added in the earnings account for the financial year that ended on the March 31st, stated the Japanese firm.

Figuratively, the number is expected to rise to 43 billion yen on a non-consolidated basis. However, the losses have not affected the profit target of 300 billion yen set for the full financial year, Itochu has declared.

In 2011, Itochu’s stake in the KKR & Co. led acquisition of the largest privately United States-based firm of crude oil and natural gas topped as the biggest leveraged purchase in the oil and gas production at that time. The acquisition was also among Itochu’s third largest acquisition in the field of raw materials, resources say.

Itochu is Japan’s third biggest trading company. The company had paid nearly 78 billion yen for purchasing the equity, an amount that had a worth of nearly US$1.04 billion at that time. Due to the loss in the fourth quarter of the recent financial year, the balance of investment will reduce to nearly 4 billion yen, the company has said.
Itochu has shown a decline in the value of Samson’s shares at least two times in the past two years. The equity of Samson purchased by Itochu included oil producing regions in the U.S. northwest and North Dakota, and gas-producing fields in Louisiana and Texas.