Note: This document is an English translation of the Japanese-language original

Consolidated Financial Results
for the Nine Months Ended December 31, 2017
＜Supplementary Material＞
February 9, 2018

Japan Petroleum Exploration Co .,Ltd.

Cautionary Statement
This document contains future prospects such as plans, forecasts, strategies, and others
which are not historical fact and these are made by the management’s judgement
based on the obtainable information at the time of the disclosure. Actual results may
significantly differ from those future prospects due to various factors.
This document is not intended to invite investment.
Copyright : All information contained herein is protected by copyright, and may not be
copied or reproduced without prior consent of JAPEX.
Note: Abbreviations used herein are as follows:(a) = Actual results(f) = Forecasts
FY = Fiscal Year (FY3/18, for instance, means 12 months ending March 31, 2018)
Any inquiries about the information contained herein or other Investor Relations questions
are requested to be directed to:Investor Relations Group, Media & Investor Relations Dept.
Japan Petroleum Exploration Co., Ltd.
Tokyo, JAPANTEL: +81-3-6268-7111

22014-12
2015-01
2015-022015-032015-04
2015-05
2015-06
2015-072015-08
2015-09
2015-10
2015-11
2015-12
2016-01
2016-02
2016-03
2016-04
2016-05
2016-06
2016-072016-08
2016-09
2016-10
2016-11
2016-122017-012017-022017-032017-04
2017-05
2017-06
2017-072017-082017-092017-10
2017-112017-12［Crude Oil Price US$/bbl]
$110

$100

$70

Exchange Rate JPY/US$(Right axis)

Crude Oil Price US$/bbl (Left axis)

3

¥120

$90
¥110

$80
¥100

¥90

$60
¥80

$50
¥70

$40
¥60

$30
¥50

$20
¥40

Japan crude cocktail (JCC) price in the first 10 days of January 2018
on a prompt report basis: US$63.33/bbl JPY113.07/US$［Foreign Exchange Rate JPY/US$］

Trends in Crude Oil Price and Foreign Exchange Rate
¥130

Actual Results for 1Q-3Q and Forecasts for FY3/18＜Highlight＞
FY3/17[Billion JPY]

FY3/18

1Q-3Q (a)③

Full (f)Previousforecasts(November10, 2017)④

Full (f)Revisedforecasts(February 9,2018)⑤*

1Q-3Q（③-①）

Full（⑤-②）

Full（⑤-④）

230.5+13.5+23.4+16.7

4.3

6.7+6.0+6.1+2.4

4.1

0.6

5.4+3.8+3.1+4.7

3.4

-30.3

1.7-28.4-32.1

-31.9

-30.2

43.35

45.60

53.09

51.25

53.60

+9.74

+8.00

+2.35

106.06108.53111.79110.94111.30

+5.73

+2.77

+0.36

1Q-3Q (a)①Full (a)
②

144.6

207.1

158.2

213.8

Operating profit(loss)

-1.6

0.6

4.4

Ordinary profit(loss)

0.2

2.2

Profit (loss)
attributable toowners of parent

1.8

Net sales

ChangeAssumptions
JCC price(US$/bbl)
Exchange rate
(JPY/US$)*JAPEX announced the latest forecasts in “Notice of Financial Forecasts Revision and Non-operating Income and Extraordinary
Losses Recognition” on February 9, 2018, regarding the consolidated financial forecasts of the fiscal year ending March 31,2018

4Actual results

Losses on Overseas Projects in 3Q
Details of the Losses

Losses on thePacific NorthWest
LNG Project (thePNW LNG Project)

AmountClassification inStatement ofIncome

Equity method investment loss on PacificNorthWest LNG Ltd., a Canadian operatingcompany(*)

Approx. JPY3.3 billion(approx. C$36 million)

Non-operating
expenses

Contract cancellation loss due to termination ofapprox. 900 km pipeline construction plan(*)

Approx. JPY5.4 billion(approx. C$60 million)

Extraordinary
lossesImpairment loss due to the revision to thedevelopment plan of the shale gas project inCanada(**)

Approx. JPY68.0 billion(approx. C$750 million)

Extraordinary
lossesApprox. JPY7.8 billion(approx. US$69 million)

Non-operating
expenses→Details on page 6
Losses on the Oil
Sands Project atHangingstone
DEMO area

Depreciation of the whole amount of property,
plant and equipment for the Hangingstone DEMO
area in Canada, due to the decision not to restart SAGD operations at the DEMO area(***)(*) Refer to “Pacific NorthWest LNG Project in British Columbia, Canada, Is Not Proceeding” released on July 26, 2017(**) Refer to “Notice of Recognition of Impairment Loss (Consolidated) and Loss on Valuation of Shares of Subsidiaries and Associates (Non-Consolidated)”released on January 26, 2018(***) Refer to “Start of Production Operations in Oil Sands Project at Hangingstone in the Province of Alberta, Canada, and Decision not to Re-start SAGD
Operations in the 3.75 Section Area” released on August 8, 20175

Actual results

Impairment Loss on the Shale Gas Project in Canada
Billion (JPY)Background

Changes in PP&E balance of JAPEX Montney Ltd.

150

□ Revised the development plan of the shale gas
project (the Upstream Project) without theassumption of the PNW LNG Project (12 million tonsLNG/year): Reduced the estimated sales volume of theshale gas for the purpose of assessing therecoverable amount Reflected recent declines of gas prices inNorth America to the assumed sales price□ Measured the recoverable amount of the asset for
the Upstream Project based on the revision above： Recognized approx. JPY68.0 billion (C$750million) of impairment loss Reduced the balance of property, plant andequipment (PP&E) to less than approx.
JPY60.0 billion

Impairment loss
10050(Ref.) Account ofconsolidated B/S*
①Buildings andstructures②Wells③Mineral resources④Construction inprogress*Account name presented in Balance of PP&E
the Consolidated Financial
Less than approx.
Results

JPY60.0 billion（＝①+②+③+④）

Future of the Upstream Project□ Not reduced of total shale gas volume existing in thearea of the project□ Pursuing its efficient development and production aswell as maximizing the value of the project6Approx. JPY68.0
billion（＝①+②+③）0

Carrying amount
before impairment

Carrying amountafter impairment

Actual Sales of Natural Gas in 1Q-3Q FY3/18

Actual results( year-on-year )Sales volume : Million M3
Net sales : Million JPY

FY3/17

FY3/18

1Q-3Q (a)1Q-3Q (a)ChangeSales volume

1,321

1,272-49

Net sales

37,17042,433+5,262

Domestic gas

Sales volume867

908

+40

(Domesticallyproduced gas)

Sales volume（521）

（540）

（+18）

Overseas gas

Sales volume453

363-90Natural gas

Increase in domestic sales
volume, Increasing selling price

Breakdown

Million M3

1,500
1,200453363900

Sales volume ofoverseas gas

Decrease in shale gas sales volumein Canada

Sales volume ofdomestic gas

Increase in demand for local
distribution companies and industrialusers

600300-867908

3Q FY3/17(a)3Q FY3/18(a)Sales volume of “Overseas gas” stated herein are amounts of Japex(U.S.) Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries

7Actual Sales of Crude Oil in 1Q-3Q FY3/18

Actual results( year-on-year )FY3/17

Sales volume : Thousand KL
Net sales : Million JPYCrude Oil

FY3/18

1Q-3Q (a)Change1Q-3Q (a)Sales volume

2,320

1,767-553

Net sales

63,72062,341-1,378

Sales volume

224

215-8

Net sales

7,166

8,597

+1,430

Sales volume

1,167

821-346

Net sales

27,555

26,345-1,209

Sales volume

91

―

-91

Net sales

594

―

-594

Sales volume―

14Net sales―

390+14+390

Decrease in sales volume

Breakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)

Diluted bitumen (****)
Assumptions
JCC price

US$/bbl43.35

53.09+9.74

Bitumen price (***)

US$/bbl

9.94

―

―

Diluted bitumen (****)

US$/bbl

―

36.79

―

Exchange rate

JPY/US$

106.06111.79+5.73

8Decrease in sales volume from
Garraf Oil Field in Iraq
Not to re-start SAGD operations atthe Hangingstone DEMO area
Commencement of production
operations at the Hangingstone
Joint Venture area(*) Sales volume and net sales of “Domesticcrude oil” stated herein do not include
purchased crude oil(**) Sales volume and net sales of “Overseas
crude oil” stated herein are amounts of 3overseas subsidiaries (Japex (U.S.) Corp.,
JAPEX Montney Ltd. and Japex Garraf Ltd.)(***) ,(****) Royalty is excluded in the net
sales and price of both bitumen and diluted
bitumen

Actual Results for 1Q-3Q FY3/18 ( year-on-year )[ Million JPY]

FY3/17

FY3/18

1Q-3Q (a)1Q-3Q (a)ChangeActual results

Main factors for change
Increase factor (+) / Decrease factor (-)
Gross profit

Net sales

144,678

158,274+13,596

Domestic crude oil and natural gas + ¥3.2 billion
Overseas consolidated subsidiaries + ¥3.1 billion

Gross profit

20,66826,816+6,148

Non-operating income (expenses)

Exploration expenses

1,104996-108

SG&A expenses

21,24021,419+178

Operating profit (loss)-1,6764,400+6,077

Non-operating income(expenses)

1,951

-289

-2,240Ordinary profit (loss)

274

4,111+3,837

Not to re-start SAGD operations at the Hangingstone
DEMO area- ¥7.8 billion

Extraordinary income(losses)-288-73,583-73,295

Extraordinary losses

Income taxes

620-409-1,029-2,483-38,725-36,241

Profit (loss) attributable tonon-controlling interests
Profit (loss) attributable toowners of parent

1,848-30,337-32,186

9Equity in earnings+ ¥2.8 billion(Including: Not proceeding the PNW LNG Project- ¥3.3 billion)
Foreign currency translation adjustments on debt,
foreign currency exchange gains and losses(FY3/17)Profit of ¥0.6 billion→ (FY3/18)Profit of ¥3.8 billion+ ¥3.2 billion

Not proceeding the PNW LNG Project- ¥5.4 billion
Impairment loss on the shale gas project in Canada- ¥68.0 billion

Income taxes adjustments

Tax effect accounting regarding Oil Sands Project at theHangingstone DEMO area+ ¥2.0 billion

Revised forecasts

Revised Forecasts for FY3/18
20172018
Full year
Jan.-Mar. Apr.-Jun. Jul.-Sep. Oct.-Dec. Jan.-Mar.

[Assumptions]
JCC price

US$/bblExchange rate JPY/US$Previous forecasts
Revised forecasts
Previous forecasts
Revised forecasts

JACOS
Bitumen

US$/bblPrevious forecasts

JACOS

US$/bblPrevious forecasts

C$/mcfPrevious forecasts

Diluted bitumen

JMLGas
1.
2.
3.

54.63
49.88
50.00
50.00
51.25
54.63 49.88 54.49 55.00 53.60
112.12 111.38 110.00 110.00 110.94
112.12 111.38 111.77 110.00 111.30

Revised forecasts
Revised forecasts
Revised forecasts

2.71
2.71

2.67
2.67

37.46
36.79
1.29
1.37

32.83
39.63
1.94
1.24

33.15
39.37
2.21
2.05

“JACOS Bitumen” stated herein bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction of Royalty). Decided not
to re-start SAGD operations at the Hangingstone DEMO area in August 2017 and not estimated FY3/18 sales.
“JACOS Diluted bitumen” stated herein diluted bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction ofRoyalty). Commenced production operation at the Hangingstone Joint Venture area in August 2017, and started sales
thereafter.
“JML Gas” stated herein gas selling price of JAPEX Montney Ltd. (Deduction of Royalty)

10

Revised Forecasts Natural Gas Sales for FY3/18

Revised forecasts(vs Previous Forecasts)

FY3/18

FY3/18Previous forecasts Full (f)(November 10, 2017)

Revised forecasts Full (f)(February 9, 2018)

ChangeSales volume

1,757

1,759+2

Net sales

58,33359,457+1,124

Domestic gas

Sales volume

1,251

1,267+16(Domestically
produced gas)

Sales volume(723)

(731)

(+8)

Overseas gas

Sales volume506

492-14

Sales volume : Million M3Net sales : Million JPY

Natural gas

Increase in domestic sales volume,
Increasing selling price

Breakdown

Million M3

2,000
1,600

506

1,251

Decrease in shale gas sales volumein Canada

Sales volume ofdomestic gas

Increase in demand for local
distribution companies and industrial
users

492

1,200
800

Sales volume ofoverseas gas

1,267

400

Sales volume of “Overseas gas” stated herein are amounts of Japex (U.S.)
Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries

Previous forecasts(f)Revised forecasts(f)11Revised Forecasts Crude Oil Sales for FY3/18Revised forecasts(vs Previous Forecasts)

FY3/18

FY3/18Previous forecasts
Full (f) (November10, 2017)

Revised forecasts
Full (f) (February 9,2018)

Sales volume

2,603

2,624+20

Net sales

87,104

94,836+7,732

Sales volume

285

292+7

Net sales

10,831

11,754+922

Sales volume

1,154

993-162

Net sales

36,79033,609-3,182

Sales volume―――

Net sales―――

Sales volume

210

160

-50

Net sales

4,814

4,483-331

Sales volume : Thousand KL
Net sales : Million JPY

Crude Oil

ChangeBreakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)

Diluted bitumen (****)
Assumptions
JCC price

US$/bbl

51.25

53.60

+2.35

Bitumen price (***)

US$/bbl―――Diluted bitumen (****)

US$/bbl

33.15

39.37

+6.22

Exchange rate

JPY/US$110.94111.30+0.36

12Increase in sales volume ofpurchased overseas crude oil

Decrease in sales volume from
Garraf Oil Field in Iraq
Not to re-start SAGD operations atthe Hangingstone DEMO area
Adjustment of production volume
due to restriction on oil supply tothe U.S.
(*) Sales volume and net sales of “Domesticcrude oil” stated herein do not include
purchased crude oil(**) Sales volume and net sales of “Overseascrude oil” stated herein are amounts of 3
overseas subsidiaries (Japex (U.S.) Corp.,
JAPEX Montney Ltd. and Japex Garraf Ltd.)(***) ,(****) Royalty is excluded in the net
sales and price of both Bitumen and Diluted
bitumen

Revised forecasts

Revised Forecasts for FY3/18 (vs Previous Forecasts)
Million JPY

Previous
forecasts
Full (f)(November 10,2017)

Revisedforecasts
Full (f)(February 9,2018)

ChangeNet sales

213,802230,553+16,751

Gross profit

35,39137,354+1,963

Exploration expenses

1,362

1,277-85

SG&A expenses

29,71429,291-423

Operating profit (loss)

4,314

6,785

+2,471Non-operating income(expenses)-3,661-1,377+2,284

Ordinary profit (loss)

654

5,408

+4,755Extraordinary income(losses)-5,579-73,182-67,604

-720

-461

+259

Profit (loss) attributable tonon-controlling interests-5,941-38,846-32,905

Profit (loss) attributable toowners of parent

1,737-28,466-30,203

Income taxes

13Main factors for change
Increase factor (+) / Decrease factor (-)
Gross profit
Domestic crude oil and natural gas+ ¥2.2 billion
Overseas consolidated subsidiaries- ¥0.1 billion
Non-operating income (expenses)
Foreign currency translation adjustments
on debt, foreign currency exchange gains
and losses(FY3/17)Profit of ¥2.0 billion→(FY3/18)Profit of ¥3.6 billion+ ¥1.5 billion
Equity in earnings+ ¥1.1 billion

Extraordinary losses
Impairment loss on the shale gas projectin Canada- ¥67.4 billion

Revised Forecasts Natural Gas Sales for FY3/18

Revised forecasts(year-on-year)

Sales volume : Million M3
Net sales : Million JPY

FY3/17

FY3/18Full (a)Revised forecasts Full (f)(February 9, 2018)

ChangeSales volume

1,864

1,759

-106

Net sales

55,32959,457+4,127

Domestic gas

Sales volume

1,265

1,267+2(Domesticallyproduced gas)

Sales volume(744)

(731)

(-13)

Overseas gas

Sales volume599

492-108

Natural gas

Increasing selling price

Breakdown

Million M3

2,000
1,600

Sales volume ofoverseas gas

599

492
Sales volume ofdomestic gas

1,200800

Decrease in shale gas sales volumein Canada

1,265400

1,267
Sales volume of “Overseas gas” stated herein are amounts of Japex (U.S.)
Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries.

FY3/17(a)FY3/18(f)14Revised Forecasts Crude Oil Sales for FY3/18

Revised forecasts(year-on-year)
Sales volume : Thousand KL
Net sales : Million JPY

FY3/17

FY3/18Full (a)Revised forecasts
Full (f) (February 9,2018)

ChangeSales volume

2,762

2,624-138

Net sales

82,09894,836+12,738

Sales volume301

292-10Net sales

10,273

11,754+1,480

Sales volume

1,181

993

-189

Net sales

28,65333,609+4,955

Sales volume

91

―-91

Net sales

669

―

-669

Sales volume―160+160

Net sales

―

4,483

+4,483

JCC price

US$/bbl

45.60

53.60

+8.00

Bitumen price (***)

US$/bbl

9.94

―

―

Diluted bitumen (****)

US$/bbl

―

39.37

―

Exchange rate

JPY/US$108.53111.30+2.77

Crude OilBreakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)

Diluted bitumen (****)
Assumptions

15

Increasing selling price
Increase in sales volume fromthe Hangingstone Joint Venturearea

Increasing selling price fromGarraf Oil Field in Iraq
Not to re-start SAGD operations
at the Hangingstone DEMO area
Commencement of production
operations at the Hangingstone
Joint Venture area(*) Sales volume and net sales of“Domestic crude oil” stated herein do notinclude purchased crude oil(**) Sales volume and net sales of“Overseas crude oil” stated herein areamounts of 3 overseas subsidiaries (Japex(U.S.) Corp., JAPEX Montney Ltd. andJapex Garraf Ltd.)(***) ,(****) Royalty is excluded in thenet sales and price of both Bitumen and
Diluted bitumen

Revised Forecasts for FY3/18 (year-on-year)[Million JPY]

FY3/17

FY3/18Full (a)Revised forecasts
Full (f)(February 9,2018)

Change207,130

230,553+23,422

Gross profit

32,17237,354+5,181

Exploration expenses

1,512

1,277-235

SG&A expenses

29,97529,291-684

685

6,785+6,100

Non-operating income(expenses)

1,537-1,377-2,914

Ordinary profit (loss)

2,222

5,408

+3,186Extraordinary income(losses)

970-73,182-74,153

Income taxes

1,642-461-2,104Profit (loss) attributable
to non-controllinginterests-1,892-38,846-36,954

Profit (loss) attributableto owners of parent

3,443-28,466-31,909

16

Main factors for change
Increase factor(+) / Decrease factor (-)
Gross profit

Net sales

Operating profit (loss)

Revised forecasts

Domestic crude oil and natural gas + ¥2.5 billion
Overseas consolidated subsidiaries + ¥3.3 billion
Other- ¥0.8 billion

Non-operating income (expenses)

Equity in earnings+ ¥5.4 billion(Including: Not proceeding the PNW LNG Project- ¥3.3 billion)
Not to re-start SAGD operations at theHangingstone DEMO area
- ¥7.8 billion

Extraordinary losses

Not proceeding the PNW LNG Project- ¥5.4 billion
Impairment loss on the shale gas project inCanada- ¥67.4 billion

Income taxes adjustments
Tax effect accounting regarding Oil Sands Projectat the Hangingstone DEMO area+ ¥2.0 billion