2Highlights

Financial and Operating Highlights(Compared with the year of establishment and the year ended March 31, 2013)

Results
Backed by stable production volumes, INPEX has maintained high levels of earnings. In the year ended March
31, 2014, consolidated net sales hit a record high. In the
period under review, net income also increased year on year.
Despite such negative factors as the absence of the one-off
gain on transfer of Ichthys mining rights reported in the year
ended March 31, 2013, and the downturn in crude oil prices,
this positive result reflected among other things the favorable flow-on effects of the weak yen.

Exploration and Development Expenditures

Development expenditures are for the most part directed
toward the production of crude oil and natural gas from theCompany’s reserve volume. Although these expenditures
have generally totaled around ¥200 billion each year, thisamount has increased of late since making a final investment
decision in connection with the Ichthys LNG Project in January 2012. Exploration expenditures aimed at discovering new
resources are expanding in line with aggressive exploration
activities undertaken since the year ended March 31, 2013.

Production and Reserve Vo
V lumes
INPEX has continued to maintain stable levels of productionffvolume, which serv
r e as the wellspring for the Company’s profrv
its and earnings. With the commencement of production inconnection with the Ichthys LNG Project, the Company’s net
production volume is projected to increase from its current
level of 400 thousand boed to 700 thousand boed. Thereafffter,
r INPEX is targeting one million boed by the early 2020s.
r,
Proved reserv
r es naturally decline in line with production
rv
activity (around 150 million barrels per year in the Compar proved reserv
r,
r es
rv
nyy’s current case). In overall terms, however,increase with new discoveries and the addition of resources.
INPEX is more than off
ffs
ff
fsetting any decline in reserv
r e volumes
rv
with additions and upgrades in its partr icipation in large-scalert
projects.

Crude Oil Prices, Foreign Currency Exchange
Rates and the Company’s Share Price

Fluctuations in the price of crude oil and foreign currency
exchange rates have a significant impact on the Company’s
profits and earnings. The price of Brent crude oil, which stoodat around US$60 –$70 per barrel in the year ended March 31,
2007, fluctuated dramatically before and after the financial crisis
in 2008. Since 2011, the price of crude oil has hovered at thehigh level of US$100 per barrel.
The Japanese yen exchange rate against the U.S. dollar
was weak during the year ended March 31, 2007, fluctuating
between ¥110 and ¥120. The yen then entered a period of prolonged appreciation up to 2013. Since the end of 2012, the yen
has exhibited a weak trend.

014

INPEX CORPORATION Annual Report 20142
Highlights

INPEX CORPORATION Annual Report 2014015

Financial and Operating Highlights (Five-Ye
Y ar Comparative Graphs)
Ye
As of or years ended March 31
Please refer to p. 81 for notes of major indices.

Profitability Indices} See p. 8 of Fact Book 2014 for more about profitability indices.

Net Sales (by product)

Net Income, EBIDAX■Crude oil ■Natural gas ■Other(¥ billion)
1,400
1,200
1,000

1,076.2
27.5

600

943.1

840.4

800

398.3

27.1

650.4

326.4

400

28.9

1,186.7

1,216.5

31.4

30.6

356.2

726.2

20.4

400

486.9

0

0

2009

2010

2011

2012

2014

2013

2009

Despite the impact of the yen’s appreciation, net sales increased owing mainly to firm
trends in crude oil prices between the period from the year ended March 31, 2010, tothe year ended March 31, 2012. In the year ended March 31, 2014, net sales reached
an all-time high largely reflecting the decline in the value of the yen.

Efficiency Indices} See p. 9 of Fact Book 2014 for more

ROE

Net ROACE

20

11.9

8.1

5

(¥ billion)
3,000

1,500

11.2

8.6
9.3

0

7.9

2012

-1,5002014

2013

Net ROACE is a profit ratio that includes net debt. With the Company’s negative net
debt position, net ROACE is higher than ROE.

Performance Indices

20

20.00
17.50

17.50

10

13.0
% 10.00 12.1
%

7.50
5

13.2
%

14.7
%

10.00

6.25

14.0
%

7.50

10.00

7.50

7.50

14.3
%

2010

-349.2-31.2%-30.6%-688.8-815.3-874.1-725.3

0

2009

2010

-48.9%
2011-60.7%
2012-43.9%

2013-31.9%
2014

-25
-50
-75

The Company’s net debt is negative because the sum of cash and cash equivalents
and public bonds is greater than the sum of interest-bearing debt. INPEX continues
to maintain financial strengths.

2011

2012

8.75
8.75

9.00

2013

20

15

15

10

10

5

5

0

0

2014

Note: The Company conducted a stock split at a ratio of 1:400 of its common stock on October 1,
2013. Cash dividends per share figures for each consolidated fiscal year have been retroactively
adjusted to reflect the impact of the stock split.

INPEX CORPORATION Annual Report 2014

PER

(Times)20

The Company, which is currently in an investment (Ichthys, etc.) phase, is placing
considerable emphasis on balancing the needs for growth and ensuring appropriate
returns to shareholders. After commencing production at the Ichthys LNG Project,
INPEX will provide a sound level of return to its shareholders befitting a top-classinternational oil and gas E&P company.

016

25

-324.1

15.1

PBR

15.5

11.1
9.00

0

2009

50

18.00

15.00

13.75

69.1% 75

1,387.5

Price Earnings Ratio (PER), Price Book-Value Ratio (PBR)■Cash dividends per share (2nd quarter end)
■Cash dividends per share (Fiscal year end) Payout ratio （%）

15

125
100

} See p. 12 of Fact Book 2014 for more about performance indices.

Cash Dividends per Share, Payout Ratio
(Yen)

68.9%

2,481.3
2,179.3
1,996.9
74.5%
71.1%
68.6%

7.0

0

2011

71.9%

（%）
150

2,791.1

500

-500

2010

■Net assets excluding minority interests Equity ratio■Net debt
Net debt/Net total capital employed

1,000 1,271.1-1,000

2009

2014

2013

more about stability indices.

2,000

10.8

7.6

2012

} See p. 11 of Fact Book 2014 for

2,500

16.0
10.5

2011

Net Assets Excluding Minority Interests, Equity Ratio,
Net Debt, Net Debt/Net Total Capital Employed

（%）

14.6

2010

EBIDAX is an index that is commonly used by resource development companies. It
is a measure of profit before interest payments, depreciation and amortization, andexploration expenses. EBIDAX provides an indication of the level of profit generated
without the impact of accounting treatment applied by individual companies.

Stability Indicesabout efficiency indices.

Return on Equity (ROE), Net ROACE

10

183.7

183.0

128.7

107.2

100

350.9

274.9

242.5

194.0
145.1

200

15

275.9

200

558.0

402.2

362.6

300

858.8

788.1

■Net income ■EBIDAX(¥ billion)
500

1,334.6

455.4

397.8

429.1

(Earnings before interest, depreciation and amortization, and exploration)

10.5

10.0

10.6

1.3

1.2

1.2

0.9

0.7

0.7

2009

2010

2011

2012

2013

2014

Despite the Company’s steady performance and stable cash dividend payment
record, PER and PBR until the previous year-end have remained entrenched at a low
level. More recently, both PER and PBR have exhibited a recovery trend.

} See p. 13 of Fact Book 2014 forReserve/Production Indices, Exploration and Development Expenditures■Crude oil ■Natural gas （％）
Reserve replacement ratio (3-year average) 400(Million boe)
3,000

282%

1,598

1,200

1,475

550
1,048

600

980

35%

61%

409
899

2,532

1,254
1,451

1,259
929

981

320

240

255%

1,308

495

5,000

1,278

3,176

2012

2013

1,945

1,907

2,000

80

1,000

1,598

26.7

0

years 2,432 years

1,475

1,308

8.5

years

2009

2,188

14.7
years

15.6

30.2 2,532
years

20

17.1

10

years

years

years

2010

27.5

27.4

years

10.0

years

2014

40

30

29.8
years

0

2011

4,095

1,823

2,818

4,477

32.3

25%

2010

4,256

4,126

2,929

3,000 years

160

0

2011

2012

2014

2013

Reserve replacement ratio (3-year average) = Proved reserves increase including acquisitions in the year
/ Production volume in the year

Reserves to production ratio (Years) = Reserves as of the end of the year / Production in the year

Proved reserves increased substantially for both the year ended March 31, 2012, andthe year ended March 31, 2014, after a final investment decision (FID) for the Ichthys
LNG Project was made and the concession agreement in the Upper Zakum Oil Fieldin the ADMA Block was extended. The RRR for the year ended March 31, 2014, was370%, the highest level recorded since INPEX publicly listed its shares.

The reserves-to-production ratio measures the current number of production volume
years of reserve volumes held. The Company’s current reserves-to-production ratio is17.1 years for net proved reserves and 30.2 years on the basis of proved and probable reserves. Both figures indicate sound levels of reserves.

Average Expenses per BOE Produced,
Exploration and Development Cost per BOE (3-year average)

Net Production (by product, barrels of oil equivalent)

Average expenses per boe produced
Exploration and development cost per boe (3-year average)(US$/boe)
80

2

50

4,404

4,000

10.8

0

2009

4,774

Highlights

1,800

2,188

■Proved reserves ■Probable reserves
Reserves (proved + probable) -to-production ratio (Years)
Proved reserves-to-production ratio(Million boe)

370%

2,432

2,400

more about reserve/production indices.

Net Proved and Probable Reserves, Reserves-to-Production Ratio

Net Proved Reserves (by product),
Reserve Replacement Ratio (3-year average)

78.6

450

405

405

182

187

223

218

2009

2010

360

60

■Crude oil ■Natural gas(Thousand boed)

423

426

184

175

239

2011

408

409

162

164

251

246

245

2012

2013

2014

55.4
270
40

28.3

180

0

12.4

11.2

11.4

2009

2010

2011

18.3

16.4

17.9
11.2

11.7

2012

2013

2014

20

6.3

90

0

Exploration and development cost per boe (3-year average) = The sum of total costs incurred for
exploration and development of oil and gas fields and total costs incurred for acquisitions divided by
the sum of proved reserve extensions, acquisitions and revisions.

The Company’s development expenditures have increased of late in line with thetransition to the Ichthys development phase. However, buoyed by the upswing
in proved reserves, exploration and development expenditures per barrel haveremained at a favorable level since the year ended March 31, 2012.

Net production volumes have remained at a stable level as the deterioration in existing production at oil and gas fields has been offset by the commencement of production at new oil fields. Looking ahead, production volume is projected to increase to
700 thousand boed as production commences at the Ichthys LNG and other projects.

The Environment
Volume of Water Consumption, Total GHG Emissions

Exploration Success Ratio (3-year average),
Number of Exploratory Wells（％）

Exploration success ratio (3-year average) （Number）■Number of exploratory wells
40

80

60

56.3%

64.5%
46.8%

24
40

59.5%
50.6%

15,000

512

473
439

10,000

392

381

700

500

14,292
300

20

15

13
20

2

0

2011

2012

2013

100

4,000
10

7

2010

651

30

45.0%

19

2009

Volume of water consumption (Thousand t-CO2)
Total GHG emissions(Thousand m3)
20,0000

2014

Exploration success ratio (3-year average) = The number of net productive exploratory wells drilled / The
number of net exploratory wells drilled. (An exploratory well is a well drilled to find a new field, to find a
new reservoir in a field previously found to be productive of oil or gas in another reservoir or to extend thelimits of a known reservoir.) The number of wells represents the completion of drilling operations for the
subject year. However, data for the year ended March 31, 2014, included operations currently in progress.

The number of exploratory wells in a working state has increased due to vigorous
exploration investment.

2,000

1,248

1,115

1,283

1,436

2009

2010

2011

2012

50

1,749
0

0

2013

2014

Volume of water consumption and total GHG emissions from our operator projects in Japan and overseas.

The volume of water consumption has jumped substantially in line with the commencement of operations mainly at the Naoetsu LNG Terminal. The vast majority of thisincrease largely reflects higher levels of seawater use for heating and cooling. Seawaterthat has been used is released back into the sea after taking steps to minimize theimpact on ecosystems. Greenhouse gas (GHG) emissions are showing a slight increase
due to a variety of factors including construction progress at the Ichthys LNG Project.

INPEX CORPORATION Annual Report 2014017

Business Topics
The Company issued press releases on the following business topics
during the period from April 1, 2013, to July 31, 2014.

Exploration Projects
2013 April Acquired an interest in the offshore Mozambique Exploration Block Areas 2 & 5
April Signed a new production-sharing contract for the 11-106 contract area of the Joint
Petroleum Development Area in the Timor Sea
May Acquired an interest in the offshore Uruguay Exploration Block Area 15
May Executed a cooperation agreement with Rosneft for exploration blocks in the Seaof Okhotsk, Russia
June Confirmed gas condensate in the Southern Offshore Vietnam Blocks 05-1b & 05-1c
June Won the tender for the offshore Western Australia Exploration Block WA-494-P
Aug. Confirmed the presence of crude oil through exploratory drilling at Walker Ridge inthe U.S. Gulf of Mexico
Sep. Participated in exploration activities in Irkutsk, Russia
Oct. Awarded an additional offshore exploration license in the U.K. Continental Shelf(27th Seaward Licensing Round)Dec. Entered into a licensing agreement for the Kanumas Area, Greenland
2014 May Won the tender for the offshore Western Australia Exploration Block WA-502-P
June Won the tender for the offshore Western Australia Exploration Block WA-504-P

Development andProduction Projects
2013 April Received approval for the recommencement of production at the Frade Oil Field,
BrazilSep. Commenced crude oil production at the
Kashagan Oil Field, Republic of Kazakhstan
Oct. Commenced production at the Sebuku
Block of the Ruby Gas Field, Indonesia
2014 Jan. Extended the concession agreement
for the Upper Zakum Oil Field, Offshore
Abu Dhabi, United Arab Emirates, andimproved financial terms and conditions
Jan. Commenced additional crude oil production at the ACG Oil Fields, the Caspian Sea,
Azerbaijan (Chirag Oil Project)

Ichthys LNG Project } Pleasee refer to the Special Report from p. 34 for details.
2013 June Entered into a contract for two new vessels, one to service the offtake and deliveryof LNG and the other as a time charter } P
Pleaselease rreferefer toto thethe SSpecialpecial F
FeatureeatureJune Held a steel-cutting ceremony for a floatingstorage and offloadingon production,
page 34 of details.
(FPSO) facility

May Commenced production at the SouthNatuna Sea Block B of the South Belut Gas
Field, Indonesia
July Acquired an additional interest in the
Lucius Oil Field, the U.S. Gulf of Mexico

June Agreed to transfer a partial equity interest in the Ichthys LNG Project to CPC
Corporation, Taiwan
Sep. Held a ceremony to open an accommodation facility for employees working at an
onshore gas liquefaction plant2014 Feb. Commenced full-scale operations on the assembly of an FPSO facility
April Began operations on the assembly of an offshore central processing facility (CPF)
June Announced that the Ichthys LNG Project had reached the halfway markJune Commenced installation works on a gas transport pipeline
July Launched the hull of the FPSO facility for the Ichthys LNG Project
July Commenced the installation of modules for the construction of an onshore gasliquefaction plant

Upper Zakum Oil Field, U.A.E.

Other LNG Projects
2013 May Announced changes to interests in the Abadi LNG Project (INPEX’s interest wentfrom 60% to 65%)
June Signed a Memorandum of Understanding in connection with the Vladivostok LNG
Project, Russia

018

Major Corporate Topics
2013 May Obtained new credit ratings from Moody’s

Nov. Awarded the exclusive right to move forward with the planning necessary to build the
LNG export infrastructure at Grassy Point for the shale gas LNG business in Canada

May Announced the establishment of the Gas Supply & Infrastructure Division as a part of theCompany’s organizational changes

2014 May Signed a heads of agreement (HOA) with Tokyo Electric Power Company, Inc., andShizuoka Gas Company, Ltd., for the sale and purchase of LNG from the Prelude
FLNG project

Oct. Conducted a stock split and lowered its sharetrading unit

INPEX CORPORATION Annual Report 2014

Strengthening Renewable Energy
and Other Initiatives } Please refer to p. 64 for details.
2013 April Started power generation via mega-solar Joetsu in Niigata, Japan
July Commenced drilling of exploratory wells for the development ofgeothermal energy in Hokkaido and Akita, Japan
Sep. Commenced a joint study for geothermal energy development in
Bandaisan, Fukushima, Japan
2014 March Decided to construct a second mega-solar Joetsu

2June Engaged in joint commissioned work entailing support operations
for production tests of methane hydrate

Highlights

Exploratory well drilling
work for geothermal energy
development in the Amemasudake region (July 2013)

Naoetsu LNG Terminal and Gas Pipeline in Japan } Please refer to pp. 62-64 for details.
2013 July Concluded extension work on the Naoetsu and Shin Nagaoka lines
July Signed an LNG sales and purchase agreement with Chubu ElectricPower Company, Inc., for INPEX’s Naoetsu LNG terminal, Japan
Aug. First LNG carrier arrived at the Naoetsu LNG Terminal
Dec. Concluded construction and commenced operations at the Naoetsu
LNG Terminal
2014 Feb. Commenced feasibility study on the extension of the existing natural gas trunk pipeline Shin Tokyo Line (Stage 5)
April Proceeded with construction of the natural gas trunk pipeline(Toyama Line: operations scheduled to commence in mid-2016)
Naoetsu LNG Terminal

2014

Jan. Established a wholly owned subsidiary and opened a local office in Singapore
March Selected as a Nadeshiko Brand in fiscal 2013 in recognition of the Company’s efforts to promote women in the workforce
June Established a wholly owned subsidiary and opened a local office in Norway
July JAPAN-GTL Consortium received the 2014 ENAA Engineering Commendation Award by the Engineering Advancement Association of Japan for
its JAPAN-GTL Process

INPEX CORPORATION Annual Report 2014019

Production Start-up Schedule100

In addition to the Ichthys LNG Project, plans are in place to commence production
at a number of projects currently under development or where preparations fordevelopment are under way.

Toward net production
volume of 1 million boed

Increase to around 700 thousand
70
boed with the start-up of production
at the Ichthys and other projects

Maintaining and expanding
net production volume(More than 400 thousand boed)Toy

Umm LuLu andNasr oil fields,
U.A.E.
Lucius Oil Field,
Coniston
U.S. Gulf of
Unit,
MexicoAustralia

Crude
oil

ence

mm

co
ions

erat

e op

Lin
ama

Ichthys LNG Project,
Australia

LianziOil Field,
AngolaToward domestic natural
gas supply volume of
2.5 billion m3/year

Prelude FLNG
Project,
Australia

JoslynAbadi LNG Shale Gas
Project/
Oil Sands
Project,Indonesia Cordova area, Project,
CanadaCanadaNaturalgas

Year Ending March 31, 2015, toYear Ending March 31, 2016

From the Year Ending March 31,
2017, Onward

New production is scheduled to commence at
crude oil projects in such regions as the Americas, the Middle East, and Africa up to the startup of production at the Ichthys LNG Project.

Beginning with the commencement of production at theIchthys project scheduled for the end of 2016, plans arein place for production to commence thereafter at the
Prelude, Abadi and other LNG projects.

Natural gas production volumes areprojected to increase mainly from
LNG projects. LNG projects are also
expected to contribute to the production of LPG and condensate.

INPEX CORPORATION Annual Report 2014

In addition to the start-up of theIchthys and other large-scale
projects, INPEX is looking toachieve net production volumeof one million boed by the early2020s through a variety of measures including further exploration investment and the acquisition of assets.

Unconventional resources including shale gas and oil sands from
Canada offer the expectation of
future growth.

Multiple new crude oil projects
are scheduled to commence production. Plans are also in place
to increase production volumes
at existing projects including theUpper Zakum Oil Field.

020

The Early 2020s

Expectations of further increases in
production will arise as resources
are uncovered at the 30-plus exploration projects being conductedacross regions worldwide.