Note: The following report is an English translation of the Japanese-language original.

Presentation Meeting ofConsolidated Financial Results
for the Fiscal Year Ended March 31, 2017
May 15 , 2017

Japan Petroleum Exploration Co .,Ltd.

Cautionary Statement
Any information contained herein with respect to JAPEX’s plans, forecasts, strategies
and other statements that are not historical facts are forward-looking statements about
the future performance of JAPEX. Readers should be aware that the actual results andevents may be different from these projections because of various factors that could
occur in the future.
The provision of this document should not be construed as a solicitation for 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:
1H = First half (1Q-2Q)
2H = Second half (3Q-4Q)(a) = Actual results(f) = Forecasts
FY = Fiscal Year (FY3/17, for instance, means 12 months ended March 31, 2017)
Any inquiries about the information contained herein or other Investor Relations questions arerequested to be directed to:Investor Relations Group, Media & Investor Relations Dept.
Japan Petroleum Exploration Co., Ltd.
Tokyo, JAPANTEL: +81-3-6268-7111

2

Contents

Ⅰ. Financial Highlights, Dividend Policy,
Follow-Up of the Mid-Term Business Plan
President Hideichi Okada

Ⅱ. Actual Results for the FY3/17
Managing Executive Officer Michiro Yamashita

Ⅲ. Forecasts for the FY3/18
Managing Executive Officer Michiro Yamashita

3

Ⅰ. Financial Highlights,
Dividend Policy,
Follow-Up of the Mid-TermBusiness Plan
President
Hideichi Okada
4

$110

$90

2014-032014-04
2014-05
2014-06
2014-072014-08
2014-09
2014-10
2014-11
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
2016-122017-012017-022017-03［Crude Oil Price US$/bbl]$120

Crude Oil Price US$/bbl (Left axis)$100

Exchange Rate JP¥/US$(Right axis)

5

¥150

¥140

¥130

$80
¥120

$70
¥110

$60
¥100

$50
¥90

$40
¥80

$30
¥70

［Foreign Exchange Rate JP¥/US$]＜ Financial Highlights ＞
Trends in Crude Oil Prices and Foreign Exchange Rate¥160

＜ Financial Highlights ＞
Actual Results for FY3/17 and Forecasts for FY3/18■ Actual Results for FY3/17 (vs FY3/16)

Billion ¥FY3/16(a)

FY3/17
(a)

240.3

207.1

-33.1

-13%

Operating Income

8.3

0.6

-7.6

-91%

Ordinary Income

4.6

2.2

-2.4

-52%

Profit attributableto owners of parent

2.0

3.4

+1.3

+64%

51.48

45.60

-5.88

-11%

Billion JP¥
Net Sales

JCC Price(US$/bbl)
Exchange Rate
(JP¥/US$)121.06108.53

Change-12.53

207.1

214.8

+7.7

+3%

Operating Income

0.6

2.9

+2.3

+336%

Ordinary Income

2.2

5.4

+3.2

+144%

Profit attributableto owners of parent

3.4

5.5

+2.1

+61%

45.60

50.00

+4.40

+9%

108.53110.00+1.47+1%Exchange Rate
(JP¥/US$)Net Sales (Left Axis)

240

13

220

207.1

8.3

180

FY3/18(f)

JCC Price(US$/bbl)

240.3

214.8

5.45.5

4.6

5Change

3.4

6

160

10

8

-10%

FY3/17(a)

Net Sales

15200■ Forecasts for FY3/18 (vs FY3/17)
Billion JP¥

Billion ¥

260

2.2

2.0

2.9
3

0.6
140

FY3/16 (a)FY3/17 (a)FY3/18 (f)Right Axis
Operating Income
Ordinary Income
Profit attributable to owners of parent-

＜Dividend Policy＞

Payments in FY3/17 and Forecasts in FY3/18■JAPEX’s Basic Policy Based on long-term and stable dividends for shareholders
 Amount of Dividends will be determined in each period for the time by comprehensively consideration with profit
conditions and future needs for funds, such as new investments to secure reserves, maintain and expand our
supply infrastructure, and others■Dividend Payments in FY3/17 and Dividend Forecasts in FY3/18
 In the amount of dividends in FY3/17, interim dividend
Payments in FY3/17, Forecasts in FY3/18
per share was 5.00 yen and its year-end dividend pershare is determined 10.00 yen accordance with theInterimYear-end
Total
above basic policy and the latest financial results
5.00 yen
10.00 yen
15.00 yen
 The forecast of total annual amount of dividends per FY3/17
FY3/18 (f)10.00 yen
10.00 yen
20.00 yenshare in FY3/18 is 20.00 yen, based on the above
basic policy■Measures for financial improvement
 Considering and implementing the company-wide level cost reductions including reduction of executive
compensation, sales of assets, and others
 Struggle for the transform of corporate structure to maintain the corporate soundness even in low oil priceenvironment, and pursue to enhance our corporate value As a result of cost reduction in FY3/17, SG&A expenses were reduced by 2.4 billion yen ( 3 billion yen by
JAPEX non-consolidated) . In addition, as a result of sales of real estate, recorded 0.8 billion yen in
extraordinary income
 In FY3/18, expecting to reduce SG&A expenses by 1.6 billion yen (1 billion yen by JAPEX non-consolidated)compared with FY3/17

7

＜Follow-Up of the Mid-Term Business Plan＞

Long-Term Business Vision and Medium-Term Business Plan
“Transformation to an Integrated Energy Company with a Focus on Oil and Gas E&P”
 Regarding our business as the tree, E&P will be “root” and “trunk” and the JAPEX group ispursuing to become a well-balanced integrated company like “the well-proportioned wood”
Power generation
business

1.2 million kW＋αPower generation business
FID

Domestic gas supply
business
Completion of Soma LNG
Terminal

Domestic gas supply
business

Environment and innovativetechnology businessStable execution of ongoing projects
Pursuing additional E&P potentials

E&P business

Improverevenue,
profit, andreturn toshareholders

E&P business

Establishment of re-Investment cycle
through the expansion of profits
CSR management

FY3/12- FY3/15
Previous Mid-TermBusiness Plan

Transaction volumeof natural gas
2.5 million ton(in LNG equivalent)

Environment andinnovative technology
business

RRR＞1

Production: 100,000 boed
Proved reserves: 550 million boe

Substantial
return toshareholders

Business prospect
Geothermal generation,
Methane hydrate, andCCS

E&P business

Reinvestment Cycle
CSR Management

FY3/16 – FY3/20
8

CSR Management

FY3/26

＜Follow-Up of the Mid-Term Business Plan＞
Outlook of Business Environment (1)Macro Environment
 Summary of Outlook at formulating the Mid-Term Business Plan
① Actualized volatility risk of global crude oil price② Geopolitical Risk
③ Intensifying competition of domestic gas business④ Measure for global environmental problems
 Since it is unlikely to reach the international agreement for drastic suppression of fossil fuelusage, in mid-long terms, demands for oil and natural gas particularly in emerging countries
will increase significantly, and oil and natural gas will continue to play major role globally as
primary energy

Changes in the macro environment afterward Low price of oil and natural gas ⇒ Prospect to continue its oversupply
 Adoption of COP21/Paris Agreement ⇒ Possibility to accelerate the movementof greenhouse gases reduction
 Brexit, Trumponomics ⇒ Changed the international political situation uncertain
 Amendment of JOGMEC law* ⇒ Expectation of strengthening support forresource development and expansion of opportunities to acquire interests

 Our current outlook
In consideration of concerns for future supply shortage caused by suppression of investments in E&P
industries as well as demand growth of energy in emerging countries, there is no change in our outlookof the macro environment at this time and we will continue to execute the basic strategy ofLong-Term Business Vision and Medium-Term Business Plan while paying close attention to
future trends* the Law Concerning the Japan Oil, Gas and Metals National Corporation

9

＜Follow-Up of the Mid-Term Business Plan＞

Outlook of Business Environment (2)Oil Price/Exchange Rate
 Revised our oil price and exchange rate forecasts lower than previous follow-up of the Mid-TermBusiness Plan on 2016
 Recognizing the harsh market environment, we assume that the range of rising oil price and exchange
rate will be even more limited than previous year regardless of expecting gradually market recovery
120

Positive Factors
・ Growth energy demands mainly in China and India
・ Steady implementation of oil producing reduction agreement in OPEC/non-OPEC countries

US$/bbl100

80

Forecast in 2016

Forecast in 2015

LatestForecast

60

40

Brent
WTI
JCC

20

0

2014

Negative Factors

About Upper Limit Level

・ Slowing growth pace of energy demands due to further stalling of Chinese economy,
reaching its demands peak・Unachieved the target of reduction agreement, increasing oil production in nonapplicable countries of the agreement such as Libya and others

2015

2016

2017

Productivity and its break-evenlevel of shale oil in the UnitedStates to be a “big burden” to oil
prices

2018

2019

2020

Base Case (figures in parentheses are previous forecasts)
Oil Price
Exchange Rate

US$/bbl

2016

2017

2018

2019

2020・2021- (45)

50 (55)55 (60)60 (65)60 (70)¥110/US$

(115)

10

・

¥85/C$(80)

＜Follow-Up of the Mid-Term Business Plan＞
Progress (1)Current Status of Ongoing Projects


E&P business

Domestic Natural Gas Supply Business<Highest Priority Challenges>
Stable execution of ongoing overseas projects<Highest Priority Challenges>
Establish “Integrated Natural Gas Supply System”
Diversification in both "Supply“ and “Procurement" sides

Canada: Shale Gas and LNG Project

Soma LNG Terminal

Upstream: Ongoing shale gas production and sales, and slowing
development speed due to delaying FID in midstream
Midstream: Approved Environmental Assessment by CEAA in
September, 2016 and under consideration of multiple options



Soma Natural Gas-Fired Power Generation ProjectMade decision of the commercialization on October, 2016
Signed a project finance contract by Fukushima Gas Power Co., Ltd.
on March, 2017

Environment and Innovative Technology Business

Canada: Oil Sands Project

Temporary suspension of bitumen production in Hangingstonedemonstration area
Planning to commence production of Hangingstone expansion
area in mid 2017<Highest Priority Challenges>
Large demonstration projects such as CCS, Methane Hydrate

CCS

Iraq : Garraf Project

Ongoing stable crude oil production of 100 thousands bbl/dUnder discussion with the government for step-by-stepdevelopment towards 230 thousands bbl/d production

Commencement of CO2 injection in large-scale CCS demonstration
project on April, 2016

Methane HydrateIndonesia: Kangean Project

Under stable construction toward the commercial commencement inMarch 2018
Launched the new operation organization for the commencement

Ongoing the second offshore production test from April, 2017

Geothermal Energy
Ongoing stable gas production in TSB Phase-1
Preparing for the commencement of gas production in TSB
Phase-2 in 2019 2Q



11Drilled the third exploratory well in Mt. Musa for geothermal
research

＜Follow-Up of the Mid-Term Business Plan＞
Progress (2)Action Plan Under the Low Oil Price

Based on risk analysis under continuously low oil & gas prices, conducting measures such as radically cost reduction

Canada Oil Sands
Hangingstone Demonstration Area

Canada Shale Gas and LNG

Temporary
Suspension of
Production

Upstream: shale gas exploration

 Temporary suspension of production operation from May
2016 to reserve preservation until recovering oil priceHangingstone Expansion Area

発Production
準 備 中
and Sales Implementation of development focused on
試areas
掘 with準 high備 中
investment efficiency through reevaluation of well drilling andproduction plan

Preparation for
Production

Midstream: LNG production

 Radical cost reduction by an improved business plan, andimplementation of operational efficiency improvement
 Considering to introduce improvement technology to enhance
productivity of bitumen

Iraq
Garraf Oil Field

開 Considering multiple development options and cost reduction
measures to improve competitiveness of LNG businessIndonesia
Kangean TSB Phase2

Productionand Sales

Productionand Sales

Preparation for
Development

 Impact of low oil price is minor in this project Planning to cover the development fund by own funds of the
project company.

 Formulating an additional investment plan to enable selfturnover of cash flow in the project company

Others Cost reduction mainly in exploration expenses and SG&A expenses in FY3/18 to decrease 6% in exploration expenses and SG&A
expenses compared to FY3/17, please see p.26 of its detail Continuation of capital expenditures suppression in FY3/18 to decrease 33% compared to FY3/17, see next page in detail Continuation to freeze new investment
 Considering and implementing the company-wide level cost reductions including reduction of executive compensation, sales ofassets, and others

12＜Follow-Up of the Mid-Term Business Plan＞
Progress (3)Timeline of Major Projects
Transition of capital investment and depreciation
FY3/17

Canada Oil Sands
Expansion project

FY3/18

FY3/19◆◆FY3/20FY3/21

FY3/22(Complement of theCommencement of production
facility)

Billion ¥20

Billion ¥150
130

16.8 17.0
15.6

110
Expansion development(Production and sale, and preparing for expanding
development)Indonesia Kangean(Development)

Iraq Garraf

TSB Phase 2◆Commencementof production

Upstream: Shale gas
development

15

90
70
50

Canada LNG

97.7(Production and Sales)

84.2

30

Midstream: LNG
production

Soma

45.6

LNG terminal / theconnecting pipeline

Soma(Proceeding the Environmental
Assessment and preparation)

Power generation

◆FID

10

◆Completion of the LNG terminal(Underconstruction)

10

68.3

Canada LNG(Consideration of Multiple Options)

16.6

▲10

FY3/15

FY3/16

FY3/17

FY3/18(f)◆Receiving 1st LNG◆Start of construction◆Commencementof operation

13

Capital
設備投資

investment(左軸)

Depreciation
減価償却費

5

＜Follow-Up of the Mid-Term Business Plan＞
Progress (4)Transition of Production Volume and Proved Reserves
 Actual on FY3/17; 72,000BOED of Production Volume / 352MMBOE of Proved Reserves
 Production volume was 2% decrease due to temporary suspension of production operation in the
Hangingstone Demonstration area in Canada.
 Proved reserves was 1% increase due to increase by cost reduction of Shale Gas Development Projectin Canada regardless of decrease by reducing production and review of domestic fields evaluations
 Due to delaying of Shale Gas Development in Canada and Garraf Oil Field development plan, keeping
nearly flat rates in both production volume and proved reserves. The JAPEX group will continue to work
toward achieving the mid-term targets while watching risks of delay or unachieved them related toprogress of each projects
Production
volumeProvedreserves(10 thousands BOED)■Domestic ■Overseas

FY3/12 FY3/13 FY3/14 FY3/15 FY3/16 FY3/17(MMBOE)■Domestic ■Overseas【Target 】【Target 】

10.0

550

FY3/20FY3/12 FY3/13 FY3/14 FY3/15 FY3/16 FY3/17
Previous Med-Term Business Plan

Previous Med-Term Business Plan

*These figures concerning production volume and proved reserves mean the amount by economic share of the JAPEX group.

14

FY3/20＜Follow-Up of the Mid-Term Business Plan＞
Prospects of Profit and Return to Shareholders

Due to the continuation of low oil price and expansion of loss of affiliated company accounted for by the equitymethod, consolidated profit attributable to owners of parent in FY3/17 was sluggish and FY3/18 is expected to be instill tough balance regardless of expecting slight recovery



The JAPEX group will struggle for the transformation of corporate structure to ensure profits even in continuing recent
low oil price environment through stable execution of ongoing projects and radically cost reductionIn our dividend policy, maintain long-term and stable dividends as the basic policy and dividend scale will be set ineach period for the time being through comprehensively consideration with the profit condition, future demand forfunds, and others

Transition of Profit attributable to owners of parent (100M Yen)

Actual290

Forecasts
295-Gradual oil price recovery-Profit contribution of ongoing projects

Impact of oil
price decline

170

Impairment loss
for Yufitsu
→

100

56
20

▲8
FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/1634

FY3/17

Previous Mid-Term Business Plan

15

FY3/18(f)Start up Power Generation ProjectStart up HE
Project

Promotion of shale gas development
in Canada

Beginning of FY3/20(f)＜Follow-Up Our Mid-Term Business Plan＞
CSR Management – Promotion of Core Policies “SHINE”
S
H
I
N
E

：Stable & Sustainable Energy Supply：HSE as Our Culture：Integrity & Governance：Being a Good Neighbor：The Employer of Choice

TARGET

Pursuing efforts to realize core CSR policies in
response to expectations and requirements from all
stakeholders and grow as a trusted global company

Ratio of Women in management positions【Target】
2014 2015 2016 ・・・・ 2020
3.4% 4.5% 4.5% ⇒ More than 10.0％
TOPIC

Named Nadeshiko Brand for the 2 year in a row

Selected as “Nadeshiko Brand 2017” enterprises for the second year in a row by METI
and the Tokyo Stock Exchange which is the first time to mining industry of TSE being
selected this brand for the second year in a row
TOPIC

Named the Excellent Enterprises of Health & Productivity Management

Selected as one of “the Excellent Enterprises of Health & Productivity Management ~White
500~” which is a program conducted by METI and Nippon Kenko Kaigi to award large
enterprises to pursue efforts for health and productivity management

16

Ⅱ. Actual Results for the FY3/17
Managing Executive Officer
Michiro Yamashita

17Actual Result

Actual Results for FY3/17 (Highlight)
Billion JP¥

FY3/17

FY3/16 (a)Initial Forecasts(f) (May 12, 2016)

Revised Forecasts(f) (Nov.8, 2016)

Revised Forecasts(f) (Feb.8, 2017)

240.3

194.5

189.5

210.3

207.1

Operating Income

8.3

0.4

-1.2

-0.8

0.6

Ordinary Income

4.6

1.0

-3.7

3.5

2.2

Profit attributable toowners of parent

2.0

1.9

-0.3

4.9

3.4

51.48

45.00

43.34

45.09

45.60

121.06115.00103.63107.20108.53

Net Sales(a)Assumptions
JCC Price(US$/bbl)

Exchange Rate
(JP¥/US$) Initial Forecasts (May 2016)
Revised Forecasts (November 2016)
Revised Forecasts (February 2017)【-】Decline in selling price, Fluctuation in foreign currency exchange gains/losses (Reason for revision in November
8, 2016).
【+】Rising selling price, Increase in crude oil sales volume from overseas, Fluctuations in foreign exchange
gains/losses, Sales of real estate (Reason for revision in February 8, 2017).
 Revised Forecasts (February 2017)
Second revision (April 2017) and Actual Result (May 2017)【+】Rising selling price, Increase in sales volume of domestic crude oil, Improvement of income balance ofdomestic contracting business.
【-】Decrease of crude oil sales volume from overseas, Recognizing non-operating expenses based on equity in lossof affiliates.

18

Actual Result

Actual Sales of Natural Gas for FY3/17 (year-on-year)
Sales volume : Million M3
Net sales : Million JP¥

FY3/16

FY3/17

ChangeFull (a)Full (a)FullSales volume

1,780

1,864

+84

Net sales

68,46955,329-13,139

Domestic gas

Sales volume

1,275

1,265

-10

(Domestically
produced gas)

Sales volume

(769)

(744)

(-24）

Overseas gas

Sales volume

504

599

+95

Natural gas

Decline in selling price

Breakdown(Million M3)

2,000
1,600

Sales volume ofoverseas gas

504

599

1,200
800

Increase in shale gas sales volume in
CanadaSales volume ofdomestic gas

1,275

1,265

400
-

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

FY3/16 (a)FY3/17 (a)19Actual Result

Actual Sales of Crude Oil for FY3/17 (year-on-year)
FY3/16
Full (a)FY3/17Full (a)ChangeFullSales volume

3,233

2,762

-470

Net sales

102,918

82,098-20,820

Sales volume

340

301

-38

Net sales

13,815

10,273-3,541

Sales volume

1,616

1,181

-434

Net sales

48,38428,653-19,730

Sales volume

306

91

-214

Net sales

4,894

669

-4,225

JCC price

US$/bbl

51.48

45.60

-5.88

Bitumen price (***)

US$/bbl

21.05

9.94

-11.11JP¥ / US$121.06108.53-12.53

Sales volume : Thousand KL
Net sales : Million JP¥
Crude oil
Breakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)

Decrease in crude oil sales volume from
Garraf Oil Field, Iraq.
Decrease in sales volume due to the temporary
suspension of the production operation at
the Hangingstone Demonstration area in
Canada.

Assumptions

Exchange rate
(*)
(**)
(***)

Sales volume and net sales of “Domestic crude oil” stated herein do not include purchased crude oil.
Sales volume and net sales of “Overseas crude 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 Bitumen.

20Actual Result

Actual Results for FY3/17 (year-on-year)
FY3/16

FY3/17(a)(a)

Net sales

240,302207,130-33,171

Gross profit

47,27932,172-15,107

Exploration expenses

6,516

1,512

-5,003

Million JP¥

ChangeSG&A expenses

32,42629,975-2,451

Operating income (loss)

8,336

685

-7,651Non-operating income(expenses)-3,684

1,537+5,221

Ordinary income (loss)

4,652

2,222

-2,429Extraordinary income(loss)-3,143970+4,113

Income taxes

6,388

1,642

-4,746

Profit (loss) attributable
to non-controllinginterests-6,970-1,892+5,077

Profit (loss) attributableto owners of parent

2,090

3,443

+1,35221

Main factors for change
Increase factor (+) / Decreasing factor (-)
Gross profit
Domestic crude oil and natural gas - ¥7.0 billion
Overseas consolidated subsidiaries - ¥7.0 billion
Reduction of consignment revenue - ¥2.8 billion
Other+ ¥1.4 billion
Exploration expenses
Reduction of domestic exploration
Reduction of overseas exploration+ ¥1.4 billion+ ¥3.5 billion

SG&A expenses
Reduction of G&A expenses of JAPEX (Non-consolidated),
Cost reduction+ ¥0.5 billion
Decrease in domestic selling expenses + ¥2.5 billion

Non-operating income (expenses)
Equity in earnings of affiliates- ¥5.8 billion
Foreign currency translation adjustments on debt,
foreign currency exchange gains and losses
Losses ¥8.8 billion (FY3/16)→ Gains ¥3.4 billion (FY3/17)+ ¥ 12.2 billion

Extraordinary income (loss)
Decrease in FY3/16 impairment loss + ¥3.0 billion
Sales of real estate+ ¥0.8 billion

Ⅲ. Forecasts for the FY3/18
Managing Executive Officer
Michiro Yamashita

22Forecasts for FY3/18

Full Year Forecasts for FY3/18[Assumptions for Crude Oil Prices and Exchange Rate]
Upper: from January 2016 to March 2017.
Lower: from January 2017 to March 2018.

Jan.-Mar. Apr.-Jun.
JCC price

US$/bblExchange rate JP\/US$

JACOS
Bitumen
JACOS
Diluted bitumen

JML
Gas
1.
2.
3.

US$/bbl
US$/bblC$/mcf2016(a)

37.17
45.92
46.72
52.00
45.60
50.00
50.00
50.00
50.00
50.00
110.71 105.32 103.24 114.38 108.53
110.00 110.00 110.00 110.00 110.00

2017(f)2016(a)2017(f)2016(a)2017(f)2016(a)2017(f)2016(a)2017(f)Jul.-Sep. Oct.-Dec. Jan.-Mar.

Full
year

7.12
1.58
2.23

16.95
1.36
2.23

33.78
2.20
2.23

33.65
2.73
2.23

9.94
33.81
1.95
2.23

“JACOS Bitumen” stated herein bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction of Royalty). Assuming a temporary
suspension of the production operation at the Hangingstone Demonstration Project area from May 2016, not estimate FY3/18 sales.
“JACOS Diluted bitumen” stated herein diluted bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction of Royalty).
Assuming a commencement of production operation at the “Hangingstone expansion area” from the middle of 2017, estimate 2Hsales.
“JML Gas” stated herein gas selling price of JAPEX Montney Ltd. (Deduction of Royalty)23

Forecasts for FY3/18

Natural Gas Sales Forecasts for FY3/18
Sales volume : Million M3
Net sales : Million JP¥

FY3/17

FY3/18ChangeFull (a)Full (f)FullSales volume

1,864

1,736

-129

Net sales

55,32956,572+1,242

Domestic gas

Sales volume

1,265

1,240

-26

(Domestically
produced gas)

Sales volume

(744)

(713)

(-32)

Overseas gas

Sales volume

599

496

-103

Natural gas ：Rising selling price

Breakdown(Million M3)

2,000
1,600

599

Sales volume ofoverseas gas

496

Sales volume ofdomestic gas

1,200
800

1,265

Reduction in shale gas sales volume in
Canada

1,240

400
-

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)24Forecasts for FY3/18

Crude Oil Sales Forecasts for FY3/18
FY3/17

FY3/18ChangeFull (a)Full (f)FullSales volume

2,762

2,898

+136

Net sales

82,09893,230+11,132

Sales volume

301

271

-31

Net sales

10,273

9,993

-281

Sales volume

1,181

1,329

+147

Net sales

28,65340,501+11,848

Sales volume

91

―

-91

Net sales

669

―

-669

Sales volume

―

339

+339

Net sales

―

7,929

+7,929

Sales volume : Thousand KL
Net sales : Million JP¥
Crude oil

Rising selling price

Breakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)

Diluted bitumen (****)
Assumptions
JCC price

US$/bbl

45.60

50.00

+4.40

Bitumen price (***)

US$/bbl

9.94

―

-9.94

Diluted bitumen (****)

US$/bbl―33.81+33.81

Exchange rateJP¥ /US$108.53110.00+1.47

25

Increase in crude oil sales volume from Garraf
Oil Field, Iraq.
Decrease in sales volume due to the temporary
suspension of the production operation at the
Hangingstone Demonstration area in Canada.
Increase sales volume because of thecommencement of production operation at the
Hangingstone Expansion Project in Canada.

(*) Sales volume and net sales of “Domestic
crude oil” stated herein do not include purchased
crude oil.
(**) Sales volume and net sales of “Overseas
crude oil” stated herein are amounts of 3 overseas
subsidiaries (Japex (U.S.) Corp., JAPEX MontneyLtd. and Japex Garraf Ltd.).
(***) ,(****) Royalty is excluded in the net
sales and price of both Bitumen and Diluted
bitumen.

Forecasts for FY3/18

Forecasts for FY3/18
FY3/17

FY3/18(a)(f)

Net sales

207,130

214,878+7,747Gross profit

32,172

32,660+487

Exploration expenses

1,512

1,373

-140

SG&A expenses

29,97528,300-1,675685

2,988+2,303Non-operating income(expenses)

1,537

2,437

+900

Ordinary income (loss)

2,222

5,424

+3,202Extraordinary income(loss)

970-31-1,002

1,642

2,301

+659

Million JP¥

Operating income(loss)

Income taxes

ChangeProfit (loss)
attributable to noncontrolling interests-1,892-2,472-579

Profit (loss)
attributable to ownersof parent

3,443

5,564

+2,12126

Main factors for change
Increase factor (+) / Decreasing factor (-)
Gross profit
Domestic crude oil and natural gas - ¥2.0 billion
Overseas consolidated subsidiaries + ¥3.5 billion
Other- ¥1.6 billion
SG&A expenses
Reduction of G&A expenses of JAPEX (Nonconsolidated)+ ¥1.0 billion
Non-operating income (expenses)
Equity in earnings of affiliates- ¥5.6 billion
Foreign currency translation adjustments on debt,
foreign currency exchange gains and losses
Gains ¥3.4 billion (FY3/17)→ Gains ¥0 billion (FY3/18)- ¥ 3.4 billion

Extraordinary income (loss)
Sales of real estate in FY3/17- ¥0.8 billion

Forecasts for FY3/18

Assumptions and Impacts on Profits
JCC price

Exchange rate

Canadian gas price

US$50.00/bbl

JP¥110.00 / US$

C$2.23/mcf(JP¥85.00/C$)

FY3/18Impact on Profits

US$1/bbl increase in JCC
prices would push profits
up by...

A weakening in JP¥1/US$
exchange rates would pushprofits up by…

C$1/mcf increase in gas
prices would push profits up
by…

Operating incomeJP¥ 530 millionJP¥ 230 millionJP¥ 1,740 millionJP¥ 380 millionJP¥ 130 millionJP¥ 760 million

Assumptions

Profit (loss)

attributable to owners ofparentAssumptions

FY3/17

FY3/18Full (a)Full (f)ChangeJCC price

US$/bbl

45.60

50.00

+4.40

Exchange rate

JP¥/US$108.53110.00+1.47

Canadian gas price

C$/mcf

1.95

2.23

+0.28

Note: In addition to the impact of exchange rate fluctuations shown on the above, translation adjustments of foreign-currency-denominatedreceivables and payables also occur.
Actual profits are influenced by a variety of other factors besides crude oil prices and exchange rates.

27

Ⅳ. Appendix

28

＜Appendix＞
E&P Business (1) Initiatives in Japan and Overseas
Oil Sands Project
U.K. North Sea Block(Exploration)(Temporary suspension of
production / Preparation for
production)

Sakhalin 1 Project(Production & Development)

Domestic oil and gas fields
Iraq Garraf Oil Field(Production)(Production)

Shale Gas/LNG Project(Production of natural gas /planning of LNG plant)

Shale Oil
Development Project(Production)

Indonesia Kangean Block(Production & Development)

Blocks owned by our consolidated subsidiaries or equity-method affiliates

29＜Appendix＞
E&P Business (2) Domestic Initiatives
Compensation of domestic reserves
and pursue the maintenance of
production volume

Operates 10 domestic oil and gas fields

Plan for the FY3/18••

Domestic exploration (Geophysics,
Exploration well) is not scheduled in
FY3/18Pursuing additional domestic E&P
potential by utilizing government basic
surveys

Yurihara
Oil and Gas Field

Yufutsu
Oil and Gas Field

Results for the FY3/17••

Domestic exploration (Geophysics,
Exploration well) is not scheduled in
FY3/17
Conclusion of the Verification Tests ofTight Oil Development at the Onnagawa
Formation of the Fukumezawa Oil Field

Katakai Gas Field

Iwafune-oki
Oil and Gas Field

Yoshii Gas Field

30

＜Appendix＞
E&P Business (3) Canada Shale Gas and LNG Project
Upstream: Shale Gas
development
and production project

Midstream: LNG project

Block /
Proposed site

North Montney Area,
British Columbia, Canada

Lelu Island,
The Port of Prince Rupert,
British Columbia, Canada

Interest

10% Interest

10% Equity

Operator

PETRONAS(Including subsidiaries)

PETRONAS(Including subsidiaries)

・Ongoing development work
focus on areas with highinvestment efficiency
Current status
・Ongoing shale gas
production and sales
approximately 570 mmcf/d

Calgary

Prince Rupert(Proposed LNG
plant site)

North Montney（Block)Pipeline・Considering development
options to improve
competitiveness of LNG
business

Vancouver Calgary
Export LNG to Japan■Project Schedule
April 2013

Signed a contract

June 2015

Conditional Final Investment Decision

September 2016

Approved Environmental Assessment by CEAA

Current Status

Considering development options

31

Lelu Island, LNG plant construction site＜Appendix＞
E&P Business (4) Canada Oil Sands Project
Project

Canada Oil Sands Co., Ltd. (CANOS)

Company

Operator : Japan Canada Oil Sands Ltd. (JACOS)

Hangingstone demonstration area

100％ interests

approximately 5,000 bbl/d(Suspending from May 2016)
Expansion project of undeveloped part ofHangingstone area
Block

75％ interests

additional production of 20,000 bbl/d atthe maximum
Corner JV lease

Temporary suspensionof production(Cumulative production：
35.23M bbl as of end of
May 2016)

Preparing toward
Production Start-up

12％ interests

In appraisal

Other bitumen leases(include Corner, Chard & Thornbury)

Considering future
activities

Calgary
FORT McMURRAY Area
Hangingstonedemonstration area

Hangingstone
expansiondevelopment area

Corner JV lease■Schedule of Hangingstone Expansion ProjectFebruary 2013

Started development works (early civil work)

February 2017

Completed construction of facilities

April 2017

Started steam injection to horizontal well pairs

Mid 2017 (plan)

To start bitumen production

Mid 2018 (plan)

To achieve peak bitumen production rate (20,000bbld)

32

Central Processing Facility for Hangingstone
Expansion Project＜Appendix＞
E&P Business (5) Iraq : Garraf Oil Field
Project
company

Japex Garraf Ltd.

Interest

30％ (cost share 40%)
Operator ： PETRONAS

Baghdad

Field

Garraf Oil Field

In Production

Garraf Oil Field
Samawah2013

Expected cumulative production :2030

Nasiriyah
Basraharound 1.1 billion bbl■ Time Schedule
First oil production on August 31
20132014 -

average daily production :approximately 64,000 bbl/d

Average daily production
2014 : approximately 84,000 bbl/d2017 April : approximately 100,000 bbl/d<Upcoming development plan>
Gradual increase from 100,000 bbl/d to 230,000 bbl/d subject to technical andcommercial viability

33

Garraf crude
oil hasoil
beensmoothly fromshippedfrom Oil
BasrahSteadyproduction
GarrafField

＜Appendix＞

E&P Business (6) Indonesia: Kangean BlockWest Kangean Gas Field(Exploration)

Pagerungan Utara Oil Field（Production suspended）

Jakarta
Pagerungan Gas Field (Production)
West Java Pipeline

Java Island
Bali Island
to Surabaya

Project
Company

Interest

Kangean Energy
Indonesia Ltd. (KEI)

Sepanｊang Island Oil Field(Production suspended)

TSB Gas Field（Production-partly）
Sirasun Gas Field

Terang Gas Field

Batur Gas Field+ 2 others, Equity-method affiliate

25％ (Operator : KEI)

■ production volume : approximately 40,000 boe/d□ the TSB Gas Field(Phase1: Terang ) : Production started in end-May 2012
Maximum production 0.3billion cf/d
(Approximately 50,000boed)(Phase2: Sirasun, Batur ) : Targeting the start of production in 2Q 2019
□South Saubi Structure : Drilling Campaign from August to November, 201634

FPU (Floating production unit) in the Terang Gas Field

＜Appendix＞

E&P Business (7) Sakhalin 1 Project
Sakhalin Oil and Gas Development
Co., Ltd. (SODECO)
Equity-method affiliate

Project
Company

OdoptuInterest
Sakhalin 1 Consortium

Exxon Neftegas Ltd.
30%
Others40%

SODECO
30%

SODECO
Arkutun-Dagi

JAPEX
METI 15.29%

50.00%

Others
34.71%

ChayvoIn Production at each fields

Block

Chayvo,* The Arkutun-Dagi Field commenced oil production in
January 2015.

Odoptu,* In 2015, the Chayvo field achieved a new world-record ofextended reach drilling, at a measured depth of 13,500m.

ArkutunDagi

Total production volume of crude oil：approximately 180,000 bbl/d* Average production volume per day on 2017, based on
JAPEX’s estimates.

35

The Arkutun-Dagi Offshore Field

＜Appendix＞ Domestic Natural Gas Supply Business (1)Construction of Soma LNG Terminal■Soma LNG Terminal
Site

Shinchi-Town, Fukushima Pref. (No.4 wharf area ofSoma Port)

Capacity

One LNG Tank of Aboveground Style/PC typecontaining 230,000kL

Receivingfacilities

LNG ocean vessel ：One (maximum 210,000m3
class)LPG coastal vessel ：One (maximum 2,500m3 class)

Vaporizers

Capacity ： 150t/h x7.0MPa

Shipping facilities

LNG coastal vessel ：maximum 4,800 m3 class
LNG tanker : 5 lanes, 30t/h

Commencementof operation

March 2018 (Plan)*In addition to the above, construct a new LNG vaporization equipment and LNG
storage tank (230,000kl) in accordance with the implementation of the power
generation project.

■Soma-Iwanuma Gas Pipeline
Start/End points

Start point ：Soma LNG Terminal
End point ：Iwanuma Valve Station

Caliber

20B

Pressure

7.0MpaLengthAround 39km

Commencementof operation

March 2018 (Plan)

Rendering of the Soma LNG Terminal and the NaturalGas-fired Power Generation Plant at Soma Port.

36

＜Appendix＞ Domestic natural gas supply business (2)Natural Gas-Fired Power Generation Project■Overview of the Natural Gas-fired Electric Power Generation

Plant

Company name

Fukushima Gas Power Co., Ltd.*

MethodGas Turbine and Steam Power (Combined Cycle)

Capacity

1.18 million kW (2 units of 0.59 million kW)

FuelNatural Gas (Vaporized LNG)
Amount 700,000-1,000,000 t/y (Utilization Ratio 60%-90%)

Thermal efficiency

Sending End 60.64% (LHV, Temperature 15°C)

Gas turbine

1,500°C Class

Steam turbine

Steam Condition (High-pressure/ Medium-pressure/ Lowpressure)
600/600/284°C 15.6/3.34/0.5MPa

Heat recovery boiler

Steam Flow 370/85/50t/h
NOx Emission concentration Less than 5ppm

■Schedule
April 23, 2015

Establishment of Fukushima Gas Power Co., Ltd.

October 11, 2016

Decision on commercialization2017 Summer

Commencement of construction after completion ofEnvironmental Assessment process2020 Spring

Commencement of commercial operations*Investment ratio: JAPEX 33%, Mitsui & Co., Ltd. 29%, Osaka Gas Co., Ltd. 20%,
Mitsubishi Gas Chemical Co., Inc. 9%, Hokkaido Electric Power Co., Inc. 9%37

Rendering of the Natural Gas-fired ElectricPower Generation Plant at Soma Port.

Targeting commercial operations toTokyo metropolitan area in 2020
Revitalization of local area
e.g. Creating employment, Attract
business

＜Appendix＞

Environment and Innovative Technology Business
CCS

Geothermal PowerMt. Musa area
（Shibetsu Town）

Tomakomai City

●
●

●
●
Mt. Furebetsu
south area
（Kushiro City)* Ongoing local negotiation.

Photo provided by Japan CCS Co., Ltd

Ground facilities of CCS demonstration
project in Tomakomai
Short-term flow test at Mt. Musa

Solar Power

Methane Hydrate● Bandai area

Hokkaido District Office’s megasolar power plant site

●Offshore Atsumi and
Shima peninsulas

38

Photo provided by JOGMEC

The world’s first offshore methane hydrate
gas production tests

Abbreviation


BOE(D)

Barrels of Oil Equivalent (per Day)

CCS

Carbon dioxide Capture and Storage

CIF

Cost, Insurance and Freight

COP

Conference Of the Parties

CSR

Corporate Social Responsibility



E&P

Exploration and Production



FID

Final Investment Decision



GHG

Greenhouse Gas

HE

Hangingstone Expansion



HSE

Health, Safety and EnvironmentIOR (EOR)

Improved (Enhanced) Oil Recovery



JCC

Japan Crude Cocktail



JOGMECJapan Oil, Gas and Minerals National Corporation



LNG

Liquefied Natural Gas

MH

Methane HydrateP/L

Pipeline

PNWL

Pacific North West LNGROE

Return on Equity

RRR

Reserves Replacement Ratio

SODECO

Sakhalin Oil & Gas Development Co., Ltd.

TSB

Terang, Sirasun, Batur



WTI

West Texas Intermediate39