TOKYO - Japanese trading house Itochu Corp (8001.T: Quote, Profile, Research, Stock Buzz) said on Monday it had suspended development of the Entrada oil and gas field in the Gulf of Mexico as it found that the reserves there were short its estimates.
Itochu, the fourth-biggest trading house in Japan, bought 50 percent stakes in the Garden Banks Blocks 738, 782, 785, 826 and 827 from Callon Petroleum Co in April for $155 million. Altogether it has spent $350 million for the project, including $195 million on the development work.
It had expected the oil and gas field to start producing 28,000 barrels per day of crude oil equivalent by the end of 2009.
The company said it would now consider whether to sell the blocks, set up a new development plan or close the project altogether. The impact of the move on its earnings this business year is not yet clear, Itochu said.
Before the news, Itochu's shares ended down 1.7 percent compared with a 1.4 percent fall in the Nikkei 225 .N225.
Itochu, the fourth-biggest trading house in Japan, bought 50 percent stakes in the Garden Banks Blocks 738, 782, 785, 826 and 827 from Callon Petroleum Co in April for $155 million. Altogether it has spent $350 million for the project, including $195 million on the development work.
It had expected the oil and gas field to start producing 28,000 barrels per day of crude oil equivalent by the end of 2009.
The company said it would now consider whether to sell the blocks, set up a new development plan or close the project altogether. The impact of the move on its earnings this business year is not yet clear, Itochu said.
Before the news, Itochu's shares ended down 1.7 percent compared with a 1.4 percent fall in the Nikkei 225 .N225.
