Revision of Financial Forecasts for the year ending March 31, 2007 and Management Policy ofINPEX Holdings Inc.
(The following report is an English translation of the Japanese-language original.)
May 16, 2006
Company name

INPEX Holdings Inc.

Code number1605

Stock Exchange on
which the Company islisted
Location of the headoffice

Tokyo Stock Exchange
Tokyo(URL http://www.inpexhd.co.jp/)
Representative
Naoki Kuroda, President
Contact person
Shuhei Miyamoto, General Manager, Corporate Communications Unit.
TEL+81-3-5448-0205
Date of the meeting of the Board ofDirectors for the year ended March May 16, 2006
31, 2006 financial results
Prepared in accordance withaccounting principles generallyNo
accepted in the United States ofAmerica

Ⅰ. Revision of Financial Forecasts
INPEX Holdings Inc. has revised its financial forecasts for the year ending March 31, 2007, which were previously
announced on April 3, 2006. For your information, financial forecasts for the six months ending September 30, 2006
and dividend forecasts for the year ending March 31, 2007 were not announced on April 3, 2006.
1. Forecasts for consolidated financial results for the six months ending September 30, 2006
（Millions of yen）
Previous Forecasts : A
Revised Forecasts : B
Increase (Decrease) : B-A
Rate of Increase (%)

Net Sales

Ordinary income

Net income―375,000―――
209,000―――
48,000――2. Forecasts for consolidated financial results for the year ending March 31, 2007
（Millions of yen）
Previous Forecasts : A

Net Sales
769,000

Ordinary income
379,000

Net income
90,000

Revised Forecasts : B

794,000

419,000

97,000

Increase (Decrease) : B-A

25,00040,0007,000

Rate of Increase (%)
3.3
10.6
7.8
Reference: Net income per share for the year ending March 31, 2007 : ¥41,516.71 (Based on the number of shares issued on April 3,2006 : 2,336,408 shares)

3. Forecasts for non-consolidated financial results for the six months ending September 30, 2006
（Millions of yen）
Previous Forecasts : A
Revised Forecasts : B
Increase (Decrease) : B-A
Rate of Increase (%)

Operational revenue

Ordinary income

Net income―
1,500―――
0―――0――

4. Forecasts for non-consolidated financial results for the year ending March 31, 2007
（Millions of yen）
Previous Forecasts : A

Operational revenue
29,000Ordinary income
26,500Net income
26,500

Revised Forecasts : B

30,00027,50027,500

Increase (Decrease) : B-A

1,000

1,000

1,000

Rate of Increase (%)
3.4
3.8
3.8
Reference: Net income per share for the year ending March 31, 2007: ¥11,770.20 (Based on the number of shares issued on April 3,2006 : 2,336,408 shares)

5. Forecasts for dividend per share for the year ending March 31, 2007
Previous Forecasts : A
Revised Forecasts : B
Increase (Decrease) : B-A
Rate of Increase (%)

InterimYear End

Annual―――――
6,250 JPY―――6,250 JPY――

6. Reasons for the revisions
Based on the business environment such as increase of crude oil price and yen appreciation, INPEX Holdings Inc.
revised its financial forecasts for the year ending March 31, 2007.
The above forecasts are calculated based on the following assumptions:
Previous Forecasts
Crude Oil Price（Brent）
Exchange rates

Full year

US$50/bbl¥115/US$1

Revised Forecasts
Full year

US$55/bbl¥110/US$1

Note: The aforementioned forecasts are based on currently available information and contain many uncertainties. Changing businessconditions including oil and gas price levels, production and sales plans, projects development schedules, government
regulations and financial and tax schemes may cause actual results to differ from the above forecasts.

I. Management Policy
1.

Management Strategy
On April 3, 2006, INPEX Corporation and Teikoku Oil Co., Ltd. integrated their businesses, and established ajoint holding company, INPEX Holdings Inc. (the Company). INPEX Corporation and Teikoku Oil Co., Ltd. arewholly owned subsidiaries of the Company.
In pursuit of development of petroleum and natural gas which is the fundamental business of the Company, weseek to improve the productivity and profitability of our existing oil and gas fields in Japan and overseas. At thesame time, we are working steadily and proactively to commercialize undeveloped oil and gas projects, particularly
our operator projects. Furthermore, to ensure sustainable growth from the medium- to long-term perspective, we areleveraging to the maximum our substantially strengthened ability to obtain upstream interests as a consequence ofthe business integration by building a more balanced asset portfolio, further strengthening our solid financial base,and mobilizing our practical operational and technical capabilities. By maintaining and increasing our reserves andproduction of petroleum and natural gas, we will endeavor to secure stable profits over the medium to long term andto achieve enhanced corporate value over time.

2.

Dividend Policy
In order to secure a stable supply of petroleum and natural gas resources efficiently, the Company aims to expand
its operating base. To this end, we are reinforcing investments in exploration and development in Japan and overseas,
as well as in maintenance and expansion of the supply infrastructure. The robust financial base of the Company iscrucial for maintaining this level of investment. Therefore, our basic policy is to maximize corporate value throughongoing maintenance and enlargement of our reserves and production of petroleum and natural gas, while paying out
cash dividends as direct compensation to shareholders, in light of the medium- to long-term prospects for theCompany.
With the enactment of the Corporation Law, restrictions on the number of times for paying dividends have beeneliminated. However, currently, we do not plan to pay quarterly.

3.

Share Trading Unit
In order to improve the liquidity of our shares and to expand the diversity of shareholders participating in theequity market, including individual investors, the Company deems it necessary to establish a fair and stable stock
price on the equity market. Although we have no plans to lower our minimum share trading unit for the time being,
we carefully review it as necessary in the light of liquidity of shares, trends in transaction volume, and distributionof shareholders.

4.

Medium-to Long Term Management Key Initiatives
The key management initiatives for the Company in developing petroleum and natural gas resources is achieving
sustainable growth by maintaining and expanding reserves through reinvesting the cash flow obtained from existing
oil and gas fields. By combining overseas projects that promise high growth potential due to expansion of reserveswith domestic projects without the attendant country risk and foreign currency risk, we are seeking qualitative
improvements in our asset portfolio. At the same time, by leveraging our business resources more effectively
through an organic linkage of our overseas assets and domestic infrastructure, we aim to further enhance corporatevalue.
With the tougher conditions associated with acquiring resources overseas, the Company must take the opportunityof business integration to become a more robust enterprise possessing an enhanced ability to acquire interests inpromising projects. The foremost management task is to achieve smooth integration of the two companies’organizations, with transition to an operational holding company after two years. As international competition
intensifies, this represents the surest path to ensuring long-term growth by building a robust position for theCompany.
We will continue to move forward with exploration and development in new and existing projects such as theMasela Block(Abadi) gas project in Indonesia and the WA-285-P (Ichthys) gas and condensate project in Australia,
the Abu Dhabi offshore oil fields in the UAE, and the Azadegan field in Iran, Kashagan and ACG fields in theCaspian Sea. Domestically, we are working to increase the scale of our natural gas business by exploiting domestic
reserves located close to a strong market and by expanding our natural gas supply infrastructure. This involves plansto build a major pipeline as a substantial reinforcement of supply capacity to the North Kanto region where demandis expected to substantially exceed previous estimates, and where the Company already operates a network ofpipelines. Since we anticipate continuous substantial investment in order to achieve the growth strategy of theCompany, we must take all possible measures to raise the capital required.

We will undertake operations according to the following policies in order to implement the business strategy ofthe Company.
(1) Achieve Well Balanced Asset Portfolio① Regional Diversification
Through business integration, the operating area of the Company has diversified to include Asia, Oceania, theMiddle East, the Caspian Sea, Central and South America, and Africa, besides Japan, and the regional balance of
our asset portfolio has improved significantly. However, we recognize the need to reduce our dependence on
specific regions from the viewpoint of country and operating risks, and we will continue to be proactive inconsidering investment in other new promising areas.
② Balance between Crude Oil and Gas
In terms of output by products, the share of crude oil is about 60% compared with about 40% for natural gas asa result of business integration.
Since crude oil is a commodity highly sensitive to various factors, the selling price fluctuates in themarketplace. On the other hand, the term of sales contract with customers are for a short period(one year), therequired investment for production and transportation facilities is relatively small and the development period iscomparatively short compared with the natural gas projects. Accordingly, profitability can be achieved
comparatively soon after discovery in the case of oil fields.
Commercial production of natural gas requires substantial investments and a long lead time of preparation for
constructing liquefaction plants and pipelines. Because the buyer also must make large investments in LNG
receiving facilities, stable and long-term sales contracts are essential. With an assurance of long term LNG
supply to the customers, profitability can be maintained.
Regarding a new project, we focus on a balance between crude oil and natural gas to ensure efficientinvestment with a view to long-term cash flow.
③ Balancing the Project Phases among Exploration, Development and Production
Because crude oil and gas reserves are limited, we continuously seek to acquire new reserves in order to ensurestable profitability. Therefore, we reinvest in exploration to discover new reserves while maintaining our cash
flow from production. Projects must be carried out continuously in order to allocate and balance our assets
among exploration, development and production stages. To achieve this balance, we invest in exploration andundeveloped oil and gas assets.
④ Enhance Activities and Capabilities as an Operator
In acting as an operator, we face managerial issues such as the difficulty in securing manpower and the heavy
burden of financing. However, involvement as an operator also increases our opportunities to obtain newworking interests by improving our technical capabilities and winning recognition from oil and gas producing
countries and international oil campaniles. The Company is pursuing opportunities to act as operator with thesubstantially enhanced technical capabilities resulting from business integration, while addressing the effective
utilization of management resources.
⑤ Balancing Contractual Arrangements
We intend to diversify the risk of oil price volatility by balancing contractual arrangements among production

sharing contracts, or concession contracts, for which profit is linked to the price of oil, with service contracts,
such as buyback or fixed margin contracts, for which profitability is less influenced by oil prices and amounts arefixed.
(2) Investments through Acquisition relative to the Expiration of Working Interests
The production sharing contract for the offshore Mahakam area, which is the Company’s major gas production
project, expires in 2017. Although we will negotiate to extend the contract, production is expected to decline in thelong term as the remaining reserves decline even if the contract is renewed. We intend to maintain and increase
production beyond 2017 by acquiring obtaining working interests from other companies or participating in newprojects or taking over companies that have substantial production and stable cash flow.
(3) Enlarging the Company’s Business Domain through Organic Linkage of Domestic and Foreign Assets
The Company aims to expand operations in the domestic natural gas market, which represents a stable base ofearnings that is expected to grow. As well as building a natural gas pipeline network to supply the promisingmarket in the Kanto-Koshinetsu region, we plan to expand production in the key Minami Nagaoka gas field. We
also own promising undeveloped assets, primarily natural gas, in Indonesia and Australia, and to ensure their longterm growth, we will consider the possibilities of gas business integration that organically links these overseas gas
assets with our domestic infrastructure, in aggressive pursuit of an enlarged business domain.
(4) Strengthening Relationships with Leading Domestic and International Oil and Gas Companies
Developing petroleum and gas involves considerable risks. Large-scale projects in particular require hugeinvestments, presenting an insuperable obstacle for a single company. Typically, several companies form aconsortium to share the risk, and this is the case internationally too. The Company plans to expand its business anddiversify risk by increasing opportunities for participation in projects through enhanced cooperation with the majorinternational oil companies, the national oil companies of oil and gas producing countries and leading private oil
resource developers, trading companies and other energy-related companies.
(5) Promote an Efficient and Transparent Corporate Management
The Company bears the heavy responsibility of assuring a stable supply of energy to Japan in an efficientmanner. Consequently, we recognize not only that our corporate social responsibility is increasing but also that it isessential that we exercise sensitivity in conducting business in communities in Japan and around the world.
Therefore, we intend to manage our business efficiently and transparently in line with global standards.
(6) Environmental Efforts
Environmental issues, particularly global warming, are a matter of worldwide concern. We make every effort tominimize the effects on surrounding areas when we explore, develop, produce and sell energy resources. Also weare working to reduce our greenhouse gas emission reduction unit, reduce emissions of chemical substances,suppress emissions into the atmosphere and river systems, and to take measures to prevent soil pollution andreduce waste. Combustion of natural gas involves relatively small emissions of CO2 and NOx compared withcombustion of other fossil fuels. Positioning natural gas as our core business, we intend to further promote the useof this clean fuel.
(7) Development of New Business
New technologies such as GTL (Gas to Liquids) and DME (Dimethyl Ether) produce synthesizing liquid fuel as
oil substitute form by reforming natural gas at normal temperature. Their environmental benefits have attracted
attention because the GTL products contain almost no pollutants. As the Company has large reserves of natural gas,
we are participating in R&D projects for GTL and DME. Introduction of these new technologies is considered in
our plans to develop a new gas fields.
In order to supply energy in a stable and efficient manner and thereby contribute to the good of society, theCompany aims to maintain and expand its reserves and production by rapidly achieving synergy through businessintegration between INPEX and Teikoku Oil. We will seek to allocate our business resources optimally andmaintain the soundness of our financial position with a view to securing steady growth.
In addition, to fulfill our corporate social responsibility, we will strengthen corporate governance andcompliance, and carry out strict safety management throughout our operations. Recognizing our obligation toprotect the environment and to become an integral part of the communities where we operate, we aim to improve
our corporate value over the long term.
5.

Matters regarding the Parent Company
None applicable.