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

Financial Results
Fiscal Year Ended March 31, 2018
May 14 , 2018

Japan Petroleum Exploration Co., Ltd.
0

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 ended 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

1

Contents
Ⅰ. Financial Highlights, Long-term Vision 2030 and
Mid-term Business Plan 2018-2022
Hideichi Okada, President
Ⅱ. Actual Results for the FY3/18
Michiro Yamashita, Managing Executive Officer
Ⅲ. Forecasts for the FY3/19
Michiro Yamashita, Managing Executive Officer2

Ⅰ. Financial Highlights,

Long-Term Vision 2030
and Mid-term Business Plan 2018-2022
Hideichi Okada
President3

2015-04
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
2017-112017-122018-012018-022018-03［Crude Oil Prices US$/bbl]
$110

$70
¥130

$100

Exchange Rate JPY/US$

Crude Oil price US$/bbl

4

¥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 April 2018
on a prompt report basis: US$66.01/bbl JPY105.68/US$［Foreign Exchange Rate JP¥/US$］

Financial
Highlights

Trends in Crude Oil Price and Foreign Exchange Rate

Financial
Highlights

Actual Results for FY3/18 and Forecasts for FY3/19■ Actual Results for FY3/18 (vs FY3/17)
Billion JPY

FY3/17(a)

FY3/18(a)Billion ¥270.0

Change

230.6

+23.4

+11%

Operating profit

0.6

8.7

+8.0

-%

Ordinary profit

2.2

3.8

+1.6

+72%

Profit (loss) attributableto owners of parent

3.4

-30.9

-34.4

-%

180.0

45.60

56.20

+10.60

+23%

150.0

JCC price(US$/bbl)
Exchange rate
(JPY/US$)108.53111.67+3.14+2%■ Forecasts for FY3/19 (vs FY3/18)

18.0

230.6

240.0

207.1

Net sales

Billion ¥

210.0

120.0

207.1

Net Sales (Left Axis)

2.2
0.6

12.0

6.0

0.6

3.0

90.0

0.0

60.0

-3.0

230.6

265.6

+35.0

+15%

Operating profit

8.7

0.6

-8.1

-92%

Ordinary profit

3.8

9.9

+6.1

+159%

Profit (loss) attributableto owners of parent

-30.9

9.4

+40.4

-%

JCC price(US$/bbl)

56.20

60.00

+3.80

+6%

Right Axis
Operating profit

111.67110.00-1.67-1%Ordinary profit

Exchange rate
(JPY/US$)

15.0

9.0

3.8

3.4

FY3/19(f)

Net sales

9.99.4

8.7

FY3/18(a)Billion JPY

265.6

Change

-30.9

30.0

-6.0

0.0

-9.0

FY3/17 (a)FY3/18 (a)FY3/19 (f)Profit (loss) attributable to owners of parent

5

Long-term
Vision2030

Background

Current Status

Need to revise quantitative targets of Long-Term Business Vision
and Medium-Term Business Plan (proved reserves, production
volumes, natural gas handled volume) formulated in May 2015,
due to deterioration in E&P* business profit caused by low oil andgas prices and not proceeding the PNW LNG Project **.

Changes in
Social Needs

It is necessary to redefine our social role based on changing
social needs for the energy industry, including the United Nations'The 2030 Agenda for Sustainable Development' and the Paris
Agreement.

Long-term
Vision 2030 and
Mid-term
Business Plan

Newly formulated “Long-term Vision 2030 and Mid-term Business
Plan 2018-2022". Realize sustainable energy supply by reforming
business structure to respond to long-term social structuralchanges and improve profitability in the oil price range of US$5060/bbl.

(*) E&P: Exploration & Production(**) Refer to “Pacific NorthWest LNG Project in British Columbia, Canada, Is Not Proceeding” released on July 26, 2017

6

Long-term
Vision2030

Corporate Vision

Contribute to society through stable supply of energy, and solve
social issues to realize sustainable development agendas.
Explore, develop,
produce and deliver
oil and natural gas inJapan and overseas.

Further enhance natural
gas supply chain,consisting of ourdomestic
infrastructures, bypower supply business.

Contribute to solve problems
for sustainable society onenergy and climate change,
through development andcommercialization of newtechnology utilizing ourexisting technology andexpertise.

Trust with stakeholder as first priority
Achieve sustainable growth and maximize corporate value

E&P Business

Infrastructure
Utility Business
7

New Business
Development

Long-term
Vision2030

What JAPEX Aims for by 2030

Growth to the Integrated Energy
Company Utilizing Oil and Gas E&P
and its Supply Base

Meet the Local communities and clients’ demands for stable
oil and Gas supply as well as play an active role to solve
global issues such as low-carbonization and decarbonization.

8

Long-term
Vision2030

Profit Composition

Business portfolio that enables sustainable growth••

Global oil and gas demand in 2050 is considered as similar to the current level
It is necessary to develop both E&P and non-E&P business for future uncertainty

 By creating new environmentally-friendly businesses utilizing full use
of our competence, JAPEX will transform our business structure andaim for the profit composition “6 : 4 of E&P to Non-E&P” in 2030
[Corporate profit composition**]2030 Ratio

：

4
E&P事業
 Maintaining “RRR＞1” * Infrastructure/Utility Business New Business Development（*）RRR：Reserve Replacement Ratio ＝Increase in reserves (during a certain period) ÷Production volume（**）Operating profit + Equity method investment income/loss basis

96Long-term
Vision2030

Social Agendas JAPEX Address

Focus on solving three social agendas of sustainable development goals(SDGs)* leveraging oil and gas E&P and its supply baseSocialAgendasOur
Efforts

Stable supply to meetprimary energy
demand, for the needsof local communities
and customers

Contribute to thereconstruction of Fukushima
prefecture and local
communities through arobust supply base startingfrom the Soma LNG
Terminal and the Fukushima
Natural Gas Power Plant

Play an active role tosolve global issues forlow carbonization anddecarbonization(*) Sustainable Development Goals：Agenda adopted at UN Headquarters in September 2015. Toward realization of asustainable society it consists of 17 goals to be achieved by 2030 and 169 targets

10Long-term
Vision2030

Business Environment Surrounding JAPEXOur Business
Opportunities

$/bbl
120

Decarbonization

Trends and Forecasts for International
Crude Oil Prices and US Gas Prices

ESG$/MMbtu
20

Crude Oil Price

CCS*, **

90

15

60

10

Renewable Energy
Liberalizationof Electricity
and Gas Market

Power Supply
Energy Service

Business
Environment
Surrounding
JAPEX

Oil & Gas
Price Trend

30

Oil & Gas continue tobe the primary energy0Natural Gas Price

Future prospects

50Source: EIA

 Most predictions insist rise of oil and gas prices
 Current volatility is highDistributed
Power Supply
IoT・AI

Domestic
Population
DeclineNatural Gas –Fired Power
Generation as Flexible Power
SupplySmart Community
Compact City BusinessTransformation to a businessstructure capable of sustainablegrowth is necessary on the premise ofcontinuing the oil price of $50-60/bbl(*) CCS: Carbon dioxide Capture and Storage(**) There is also the concept of CCUS (Carbon dioxide Capture, Utilization and Storage) including the use of CO2

11

Long-term
Vision2030

Towards Integrated Energy Company
Allocation of Management Resources to Realize the Target••

Secure funds for new investment under financial discipline “Debt/EBITDA*< 2”Allocate approximately half of new investment resources to non-E&P business in the medium tolong term[Profit Contribution Image of Business Portfolio]
Example of
new project

LNG Overseas Rail Transport, Bunkering

Seafloor
Hydrothermal
Deposits

Non-E&P
Business

Creation and Promotion of New Business
CCS

Renewable Energy
Soma LNG Terminal /Power Generation

CO2-EOR
Underground storage of gas

Portfolio Review
Operation
Efficiency Improved
2018

Mid-term Business Plan

Methane Hydrate

E&P
Business“RRR＞1” on new projects

2022

2030

Long-term Vision(*) EBITDA: Earnings before Interest, Taxes, Depreciation and Amortization

122040-50

Post Long-term Vision

Long-term
Vision2030[Priority Business] CCS

 According to the International Energy Agency (IEA), CCS is expected to contribute
14% of the total CO2 reductions by 2060 in order to achieve the "2 °C target" of theParis Agreement
 If CCS is commercialized, there is the possibility of offsetting the substantial
amount of CO2 emitted at the time of combustion of oil and natural gas on theclient side, in addition to CO2 emitted during our business process.
Through Japan CCS Co., Ltd., we utilize the E&P underground technology we have accumulated so far andare leading the project of pioneering CCS technology development that is gaining global attention.
• Achieved 150,000 ton cumulative injected CO2 volume by large-scale CCS demonstration project at Tomakomai, Hokkaido.
About 2,000 visitors per year. (as of March 31, 2018)

Provided by Japan CCS Co., Ltd.

13

Long-term
Vision2030

ESG Efforts for Sustainable Growth
Relationship with
SHINE*

Environment

SocialGovernance• Commercialization of CCS• Energy saving and diffusion of natural gas as a clean energy• Create environmentally friendly new business

•
•
•
•

Safety first priority
Regional promotion through stable energy supply
Contribution to Fukushima reconstruction through Soma Project
Local production and local consumption of energy and disasterresistant community planning• Diversity & inclusion• Dialogue with stakeholders• Disclosure of ESG information under international standards（*）Five core CSR themes as “SHINE” initiatives[S]: Stable and sustainable energy supply [H]: HSE as our culture[N]: Being a good Neighbor [E]: The Employer of choice

14[I]: Integrity and governance

S
H

H
N

I
E

Long-term
Vision2030

Transformation of Corporate Culture- Transforming mindsets and Human Resource Development -While aiming to increasing the creativity and challenging spirit ofeach of the executives and employees, JAPEX aim to transform
into a company with abundant mobility and diversity.

Work Style
Reform
Employee
Training

Diversity &Inclusion

KGI・KPI
PDCA Cycle

15

Personnel
System Reform

Flexible
Personnel ShiftLong-term
Vision2030

JAPEX’s ”Integrated Energy Company”
E&P Business• Review portfolio• Improve operation efficiency• Additional proved reserves(RRR>1)

Infrastructure / Utility Business• Improvement of operating rate of
LNG terminal and power plant• Pursuit of additional power
generation business• Secure competitive gas source

SocialContribution
through
Sustainable
GrowthSource of competitive
advantage• E&P underground technology• Infrastructure of gas supply• Knowledge obtained throughcommissioned research

CSR Management
Change in Corporate Culture
16

Environmentally Friendly
New Business• Promote commercialization of CCS• Establishment of new businessspecialized organization• Proposal of new valueMid-term
BusinessPlan
2018-2022

Relationship Between Long-term Vision andMid-term Business Plan

Social Contribution throughSustainable Growth
Achieve
ROE=>5％Long-term
Vision2040-2050

2030

Mid-term
Business Plan

2022

Building a sustainable growth
portfolio

2018• Review portfolio• Financial soundness• Improve profitability ofexisting business

Pursuit of new business
opportunities

17

Compliance of stable supply ofenergy and low carbon societyMid-term
BusinessPlan
2018-2022

Mid-Term Tactics and Targets

LatterHalf

Achieve “ROE => 5%” level in 2022
(crude oil prices US$60/bbl)•

Active Investment 1 : 1 of E&P to Non-E&P (Investment allocation)•

Secure Investment Resources
Own funds 30 to 60 billion yen + Reserve capacity of borrowing
Domestic

Overseas

First Half

• Improve profitability thoroughly ofoverseas existing E&P project•

Maximizing the value of domestic
resources•

Sales expansion• Improve financial indicators
including asset sales

Gas:1.6 million ton
Power: 2.8 billion kWh

 Debt / EBITDA < 2•

18

Reduction of G&A expenses: 1
billion yen

Mid-term
BusinessPlan
2018-2022(1) E&P Business[Long-term Targets] Aim to achieve “RRR＞1”*

Overseas E&P

Domestic E&P• Maximize production rate /Additional development• Maximize the value of existing
projects / contribution to earnings• Maintenance and improvement offield operation capability andoperation efficiency• Appropriate portfolio including
asset sales• Discover new investment
opportunities• Promote offshore exploration
based on national researchCompatibility of E&P business and low-carbon society
Acceleration of CCS efforts utilizing E&P technology
Establishment of investment evaluation standard taking account ofclimate change response*(*) Considering introducing internal carbon pricing (Risk management system that quantitatively evaluates the impact ofcarbon emissions in current or future business activities)

19Mid-term
BusinessPlan
2018-2022(2) Infrastructure & Utility Business[2022 Target]
・Domestic natural gas sales volume: 1.6 million ton(Including LNG for power generation)・Electricity sales volume: 2.8 billion kWh(Equivalent to the annual electricity consumption of about 930,000 households in general households)

Domestic
gas supply
business• Promote natural gas use as clean energy• Construct robust supply base by adding gas undergroundstorage to the network Soma LNG Terminal and gas pipeline• Secure stable supply by domestically produced gas anddiversification LNG procurement sourcePowergeneration/
Electricity
sales• Establish electric power business structure through the
Fukushima Natural Gas Power Plant* and improvement ofoperating rate
• Pursuit of renewable energy development(*)Owned by Fukushima Gas Power Co., Ltd. (JAPEX investment ratio 33%)

20

Mid-term
BusinessPlan
2018-2022(3) New Business Development[Target] Commercialization by "new business model" utilizing thecompetitive advantage of JAPEX

Methane Hydrate
CCS

Energy Service

Seafloor
Hydrothermal Deposits

Accumulatetechnology
throughcommissioned
research

Establish
department for
creating new
business

LNG Rail Transport
at overseas
Bunkering

Developopportunity
utilizing
competitive
advantage

Commercialization
21

Underground gas storage
CO2-EOR
Merge existing
technology,
knowledge, knowhow
Smart community

RenewableenergyAppropriate humanresource allocation anddevelopment

Mid-term
BusinessPlan
2018-2022

Profit Target and Return to Shareholders

Profit Target and Return to Shareholders for Medium Term Business Plan Period••

JAPEX is aiming to achieve “ROE => 5%” as the minimum profit target corresponding
to our business size under the oil price of US$60/bbl around FY2022.
JAPEX will firmly maintain its policy for long-term and stable dividends to shareholders.
【Transition of Profit attributable to owners of parent (100M Yen)】
ActualImpairment loss on
Yufutsu Oil and Gas
Field

170

295

Effects ofdownfallin crudeoil prices
20-8
2011年度FY3/12

2012年度FY3/13Losses on the PNW
LNG Project290

Outlook

2013年度FY3/14

Medium-Term Business Plan (FY3/12-FY3/15)

2014年度FY3/152015年度FY3/169434-309
2016年度FY3/172017年度FY3/18/ Medium-Term Business Plan (FY3/16-FY3/18)

FY3/192018年度(Plan)(予想)

Commencement ofoperation at the
Fukushima Natural
Gas Power Plant
Commencement of
production of ashallow reservoir of
the Yufutsu Oil and
Gas Field

22

2022年度目安
Estimated
FY3/23(Target)Expansion ofoverseas project
earnings
Expansion of nonE&P businessearnings

Mid-term
BusinessPlan
2018-2022

Transition of Production Volume and Proved Reserves•

Both production volume and proved reserves decreased due to development delay ofoverseas projects and re-evaluation due to the decision of not to proceed the PNW LNG
Project•

For the time being, we will aim to achieve long-term "RRR> 1" by compensating proved
reserves with high profitability without setting production volume and proved reserves target.
Production volume (10 thousands BOED)

Proved reserves (MMBOE)■Domestic ■Overseas■Domestic ■Overseas

7.4

7.3

7.2
6.0

4.8
3.8
0.8
3.0

3.6
1.1
2.5

5.4

5.4

5.2

2.7
2.1

2.0

307
223

4.2

38
185

1.9

1.9

1.8

160

147

349

352

305

313

193

203

255

277

112

110

94

74

302

229

73

FY3/12
FY3/13
FY3/16
FY3/14
FY3/17
FY3/15
FY3/18
2011年度
2012年度
2013年度
2014年度
2015年度
2016年度
2017年度

2011年度
2012年度
2014年度
2015年度
2016年度
2017年度FY3/16
FY3/17
FY3/18
FY3/12
FY3/13 2013年度
FY3/14
FY3/1523

Ⅱ. Actual Results for the FY3/18
Michiro Yamashita
Managing Executive Officer

24

ActualResults

Actual Results for FY3/18 (Summary)Billion JPY

FY3/18

FY3/17 (a)Initial Forecasts(f) (May 12, 2017)

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

Revised Forecasts(f) (Feb.9, 2018)

207.1

214.8

211.0

230.5

230.6

Operating profit

0.6

2.9

4.4

6.7

8.7

Ordinary profit

2.2

5.4

-0.9

5.4

3.8

Profit (loss) attributableto owners of parent

3.4

5.5

1.2

-28.4

-30.9

45.60

50.00

51.27

53.60

56.20

108.53110.00110.62111.30111.67

Net sales(a)Assumptions
JCC price(US$/bbl)

Exchange rate
(JPY/US$) Initial Forecasts (May 2017)

Revised Forecasts (August 2017)

Revised Forecasts (February 2018)【+】Increase in sales price and volume, Fluctuation in foreign currency exchange gains/losses【-】Losses on the Pacific NorthWest LNG Project (the PNW LNG Project), Losses on the Oil Sands Project at
Hangingstone DEMO area, Impairment loss on the Shale Gas Project in Canada

 Revised Forecasts (February 2018)

Second Revision (April 2018) and Actual Result (May 2018)【+】Increase in sales price, Increase in sales volume of domestic crude oil【-】Share of loss of entities accounted for using equity method, related to Japan Drilling Co., Ltd.
25

ActualResults

Natural Gas sales for FY3/18 (year-on-year)

Sales volume : Million M3
Net sales : Million JPY

FY3/17

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

1,864

1,773

-91

Net sales

55,32960,431+5,101

Domestic gas

Sales volume

1,265

1,284

+19

(Domestically
produced gas)

Sales volume

(744)

(739)

(-5)

Overseas gas

Sales volume

599

488

-111

Natural gas

Increase in sales price

Breakdown(Million M3)

2,000
1,600

599

1,265

Decrease in shale gas sales volume in
CanadaSales volume ofdomestic gas

Increase in sales volume due to severe
winter

488

1,200
800

Sales volume ofoverseas gas

1,284

400
-

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

FY3/18 (a)26ActualResults

Crude Oil sales for FY3/18 (year-on-year)
FY3/17Full (a)FY3/18Full (a)ChangeFullSales volume

2,762

2,506

-255

Net sales

82,09893,685+11,587

Sales volume

301

291

-10

Net sales

10,273

12,265+1,991

Sales volume

1,181

991

-189

Net sales

28,65333,749+5,095

Sales volume

91

―

-91

Net sales

669

―

-669

Sales volume

―

160

+160

Net sales

―

4,512

+4,512

Sales volume : Thousand KL
Net sales : Million JPY
Crude oil

Increase in sales price

Breakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)

Diluted bitumen (****)
Assumptions
JCC price

US$/bbl

45.60

56.20

+10.60

Bitumen (***)

US$/bbl

9.94

―

―

Diluted bitumen price (****)

US$/bbl

―

39.63

―

JPY / US$108.53111.67+3.14

Exchange rate

27

Increase in crude oil sales volume from
Garraf Oil Field, 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. and Japex
Garraf Ltd.).
(***),(****) Royalty is excluded in the
net sales and price of bitumen and diluted
bitumen.

ActualResults

Actual Results for FY3/18 (year-on-year)
Main factors for change
Increase factor (+) / Decreasing factor (-)

FY3/17

FY3/18(a)(a)

Net sales

207,130

230,629+23,499

Gross profit

32,17239,263+7,090Exploration expenses

1,512

1,324

-188

Non-operating income (expenses)
Equity in earnings+ ¥1.6 billion

SG&A expenses

29,97529,173-801(FY3/17) Loss of ¥4.2 billion → (FY3/18) Loss of ¥2.6 billion

Operating profit (loss)

685

8,764

+8,079Non-operating income(expenses)

Foreign currency translation adjustments on debt,
foreign currency exchange gains and losses

1,537-4,936-6,473(FY3/17) Profit of ¥3.4 billion → (FY3/18) Profit of ¥2.7 billion

Ordinary profit (loss)

2,222

3,828

+1,606Extraordinary income(losses)

970-73,231-74,202

1,642

239

-1,402Million JPY

Income taxes
Profit (loss) attributable
to non-controllinginterests-1,892

Profit (loss) attributableto owners of parent

3,443-38,683-30,958

Change-36,791-34,401

28

Gross profit
Domestic crude oil and natural gas + ¥3.9 billion
Overseas consolidated subsidiaries + ¥3.3 billion- ¥ 0.7 billion
Depreciation expenses related to the Hangingstone
DEMO area- ¥ 7.8 billion

Extraordinary losses
Loss on the PNW LNG ProjectContract cancellation loss due to termination of pipeline
construction plan- ¥ 5.4 billion
Impairment loss due to the revision to the development planof the shale gas project- ¥ 67.4 billion

Ⅲ. Forecasts for the FY3/19
Managing Executive Officer
Michiro Yamashita29Forecasts
for FY3/19

Full Year Forecasts for FY3/19[Assumptions for Crude Oil Price and Exchange Rate]
Upper: from January 2017 to March 2018.
Lower: from January 2018 to March 2019.

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

US$/bblExchange rate JPY/US$

JACOS
Diluted bitumen

JML
gas
1.
2.

US$/bblC$/mcf2017(a)

54.63
49.88
54.49
64.89
56.20
60.00
60.00
60.00
60.00
60.00
112.12 111.38 111.77 111.39 111.67
110.00 110.00 110.00 110.00 110.00

2018(f)2017(a)2018(f)2017(a)2018(f)2017(a)2018(f)Jul.-Sep. Oct.-Dec. Jan.-Mar.

Full
year

35.50
2.71
2.00

36.95
2.67
2.00

36.79
37.23
1.37
2.00

39.76
37.26
1.29
2.00

39.63
36.79
2.07
2.00

“JACOS Diluted bitumen” stated herein is the diluted bitumen sales price of Japan Canada Oil Sands Ltd. (Royalty excluded)
Production operation at the “Hangingstone expansion area” commenced in the middle of 2017.
“JML gas” stated herein is the gas sales price of JAPEX Montney Ltd. (Royalty excluded)30

Forecasts
for FY3/19

Natural Gas Sales Forecasts for FY3/19

Sales volume : Million M3
Net sales : Million JPY

FY3/18

FY3/19ChangeFull (a)Full (f)FullSales volume

1,773

1,780

+7

Net sales

60,43164,102+3,670

Domestic gas

Sales volume

1,284

1,270

-14

(Domestically
produced gas)

Sales volume

(739)

(666)

(-73)

Overseas gas

Sales volume

488

510

+21

Natural gas ：Increase in selling price

Breakdown(Million M3)

2,000
1,600

488

510

1,200

Sales volume ofoverseas gas

Increase in shale gas sales volume in
CanadaSales volume ofdomestic gas

Decrease from the increase in sales
volume due to severe winter in theprevious term

800
400
-

1,284

1,270
Sales volume of “Overseas gas” stated herein are amounts of Japex (U.S.)
Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries.

FY3/18 (a)FY3/19 (f)31Forecasts
for FY3/19

Crude Oil Sales Forecasts for FY3/19
FY3/18

FY3/19ChangeFull (a)Full (f)FullSales volume

2,506

3,368

+861

Net sales

93,685

119,835+26,149

Sales volume

291

265

-27

Net sales

12,265

11,622-643

Sales volume

991

851

-141

Net sales

33,74932,894-855

Sales volume

160

1,197

+1,037

Net sales

4,512

30,472+25,960

JCC price

US$/bbl

56.20

60.00

+3.80

Diluted bitumen (***)

US$/bbl

39.63

36.79

-2.84

Exchange rate

JPY /US$111.67110.00-1.67

Sales volume : Thousand KL
Net sales : Million JPY
Crude oil

Increase in sales price

Breakdown
Domestic crude oil (*)

Overseas crude oil (**)

Diluted bitumen (***)

Decrease in crude oil sales volume from Garraf
Oil Field, Iraq.
Increase in sales volume due to thecommencement of full year production
operation at the Hangingstone Expansion
Project in Canada.

Assumptions

(*)
(**)
(***)

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 diluted bitumen

32

Forecasts
for FY3/19

Million JPY

Forecasts for FY3/19
FY3/18

FY3/19(a)(f)

ChangeNet sales

230,629

265,649+35,019

Gross profit

39,263

32,951-6,312

Exploration expenses

1,324

1,073

-252

SG&A expenses

29,173

31,234+2,060Operating profit (loss)

8,764

644

-8,121Non-operating income(expenses)-4,9369,303+14,240

Main factors for change
Increase factor (+) / Decreasing factor (-)
Gross profit
Domestic crude oil and natural gas - ¥1.5 billion
Overseas consolidated subsidiaries + ¥2.0 billion
Operating cost in the Soma LNG Terminal - ¥0.6 billion

SG&A expenses

Reduction of G&A expenses of JAPEX (Non-consolidated)+ ¥0.7 billion
Increase in transportation cost because of the all year
production operation at the Hangingstone Expansion
Project in Canada- ¥2.5 billion

Non-operating income (expenses)
Equity in earnings+ ¥8.9 billion(FY3/18) Loss of ¥2.6 billion → (FY3/19) Profit of ¥6.3 billion

Ordinary profit (loss)

3,828

9,947

+6,119Extraordinary income(losses)-73,231632+73,864

239

1,495

+1,256

Profit (loss) attributable
to non-controllinginterests-38,683-403+38,280

Profit (loss) attributableto owners of parent-30,958

Income taxes

Foreign currency translation adjustments on debt,
foreign currency exchange gains and losses(FY3/18) Profit of ¥2.7 billion → (FY3/19) Not estimated- ¥2.7 billion
Decrease in amortization expenses related to the
Hangingstone DEMO area in FY3/18 + ¥7.8 billion

Extraordinary income (loss)
9,487+40,446

33

Decrease in losses on the PNW LNG Project in FY3/18+ ¥72.9 billion

Forecasts
for FY3/19

Assumptions and Impact on Profits
JCC price

Exchange rate

Canadian gas prices

US$60.00/bbl

JP¥110.00 / US$

C$2.00/mcf(JPY88.00/C$)

FY3/19Impact on Profits

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

A weakening in JPY1/US$
exchange rates would pushprofits up by…

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

Operating profit

JPY 610 million

JPY 270 million

JPY 550 million

Profit (loss)
attributable to ownersof parent

JPY 500 million

JPY 180 million

JPY 410 million

Assumptions

Assumptions

FY3/18

FY3/19Full (a)Full (f)ChangeJCC price

US$/bbl

56.20

60.00

+3.8

Exchange rate

JPY/US$111.67110.00-1.67

Canadian gas prices

C$/mcf

2.07

2.00

-0.07

Note:

In addition to the impact of exchange rate fluctuations shown above, translation adjustments of foreigncurrency-denominated receivables and payables also occur.
Actual profits are influenced by a variety of other factors besides crude oil prices and exchange rates.

34

Ⅳ. Appendix

35

Appendix

FY3/18 Overview of Key Projects in Progress

 E&P business Infrastructure・Utility Business

Domestic

Soma LNG Terminal







Investment decision on commencement of oil development of ashallow reservoir of the Yufutsu Oil and Gas Field in June 2017
Pursuing additional domestic E&P potential including utilizing
government basic surveys

Soma Natural Gas-Fired Power Generation Project

Canada: Shale Gas Development and Production Project

Upstream: Producing and marketing gas. Formulated
development plan to preferentially develop high economic
efficiency
Midstream: Decided not to proceed PNWL project in July 2017

CCS

Sold the Hangingstone Demonstration area in April 2018
Commenced production in the Hangingstone Joint Venture areain August 2017; expected to reach 20,000 bbl/d in second halfof 2018



Iraq : Garraf ProjectProceeding of CO2 injection in large-scale CCS demonstration
project from April 2016
Achieved 150,000 ton cumulative injected CO2 volume in
March 2018

Methane Hydrate

Ongoing stable crude oil production of approx. 90,000 bbl/dCommencement of further development to increase theproduction to 230,000 bbl/d under the Final Development Plan

Indonesia: Kangean ProjectCommenced of construction in October 2017

 New Business

Canada: Oil Sands Project in Hangingstone LeasesCommenced operation at Soma LNG Terminal in March 2018
Commenced operation on the Soma-Iwanuma Gas Pipeline in
November 2017

Completed the second offshore production test from April toJune 2017. Achieved 260,000 m3 cumulative production
volume during 36 days production test

Geothermal Power

Ongoing stable gas production from the Terang Gas Field
Under development of the Sirasun and Batur Gas Fields
expected to start production in 2Q 2019




36

Completed of evaluation work in the Mt. Musa area, Hokkaido
Ongoing study and evaluation work in other projects

Appendix

E&P Business (1)Projects in Japan and Overseas
Oil Sands Project(Production) Shale Gas

U.K. North Sea Offshore Block Sakhalin-1 Project(Planned to Development)(Production &Development)

Iraq Garraf Project(Production & Development)

Domestic Oil and Gas Fields(Production)

Indonesia Kangean Project(Production & Development)

Blocks owned by our consolidated subsidiaries or equity-method affiliate

37

Development andProduction Project(Production)
Shale Oil Development
Project(Production)

Appendix

E&P Business (2)Domestic Activities

Operating 10 domestic oil and gas fields
Pursuing compensation ofdomestic reserves andmaintenance of the production
volumePlan for the FY3/19••

Domestic exploration (Geophysics,
Exploration well) is not planned in
FY3/19Pursuing additional domestic E&P
potential including utilizing
government basic surveys

Yurihara
Oil and Gas Field

Yufutsu
Oil and Gas Field

Results for the FY3/18••

Domestic exploration (Geophysics,
Exploration well) is not performed in
FY3/18Investment decision oncommencement of oil development ofa shallow reservoir of the Yufutsu Oiland Gas Field in June 2017

Katakai Gas Field

Iwafune-oki
Oil and Gas Field

Yoshii Gas Field

38

Appendix

Block /
Proposed site

E&P Business (3)Canada Shale Gas Development and Production Project
Upstream: Shale gas project

Midstream: LNG projectNorth 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)

・Producing and marketinggas approx. 500 mmcf/d
Current status ・Executing the development
plan prioritizes the area withhigh economic

Decided not to proceed with
the LNG project on July 25,
2017.

Calgary

The North Montney Region(Production & Development)

VancouverCalgary■Project Schedule
April 2013

Signed a contract

July 2017

Decided not to proceed with the LNG projectCurrent status

Executing upstream development plan and pursuinginvestment focus on efficient development

39

Shale gas drilling site

E&P Business (4)Canada Oil Sands Project

Appendix
Project

Canada Oil Sands Co., Ltd. (CANOS)

Company

Operator ： Japan Canada Oil Sands Ltd. (JACOS)

Calgary

The Hangingstone area

75% interests

Ongoing Production

Gradual increase from 20,000 bbl/dCorner JV Lease
Block

12% interests
Other bitumen leases(includes Corner & Chard)

Undergoing appraisal

FORT McMURRAY Area
The Hangingstone
Joint Venture
Area

Considering future activities

Current status
January 2018; Relinquished Thornbury & Chard North (25% interests)
April 2018; Sold the Hangingstone Demonstration area(100% interests)

Corner JV Lease Schedule of Hangingstone ProjectFebruary 2013

Commenced development works (early civil work)

February 2017

Completed construction of facilities

April 2017

Commenced steam injection to horizontal well pairs

August 2017

Commenced production

Second half of 2018
(planned)

Reaching production rate (20,000 bbl/d)

40

Rachel Notley, Premier of Alberta (second fromthe left) celebrating the opening ceremony of
production startup

E&P Business (5)Iraq Garraf Project

Appendix

Project
company

Interest

Japex Garraf Ltd.

30％ (cost share 40%)

BaghdadOperator ： PETRONAS

Garraf Oil Field
Samawah

Field

Garraf Oil Field

In Production

Nasiriyah
Basrah■ Time Schedule
20132014 -2020 4Q

First oil production on August 31
Average daily production :Approx. 64,000 bbl/d
Average daily production2018 April: approx. 90,000 bbl/d*Gradual increase from 100,000 bbl/d to 230,000 bbl/d2020 4Q

Achievement of plateau production target of 230,000 bbl/d

41

Steady crude oil production from Garraf Oil Field

E&P Business (6)Indonesia Kangean Project

Appendix

Kangean Energy

West Kangean Gas Field(Discovered/Undeveloped)

Pagerungan Utara Oil Field（Production suspended）
Pagerungan Gas Field (Production)

ProjectIndonesia Ltd. (KEI)
Company+ 2 others, Equity-method affiliate

Interest

25％ (Operator : KEI)

West Java Pipeline
TSB Gas Field（Production-partly）
Sepanｊang Island Oil Field
Sirasun Gas Field(Production suspended)
Terang Gas Field

Batur Gas Field

FPU (Floating production unit) in the
Terang Gas Field

Production volume : Approx. 36,000 boe/d□ the TSB Gas Field(Phase1: Terang): Production started in end of May 2012
Production rate 210 million cf/d
(approx. 36,000 boe/d)(Phase2: Sirasun, Batur): Targeting the production start in 2Q 201942

E&P Business (7)Sakhalin-1 Project

Appendix

Sakhalin Oil and Gas Development
Co., Ltd. (SODECO)
Equity-method affiliate

Project
Company

OdoptuInterest
Sakhalin 1 Consortium

SODECO
Arktun-Dagi

Exxon Neftegas Ltd.
30％
Others40%

SODECO

30％

METI50.00%

JAPEX
15.29％
Others
34.71%

ChayvoChayvo, In Production at each fields
Block

Odoptu,*The Arkutun-Dagi Oil and Gas Field
commenced oil production in January 2015

Arkutun-Dagi*In 2015, the Chayvo Oil and Gas Field
achieved a new world-record of extended
reach drilling, at a measured depth of
13,500m

The Arkutun-Dagi Offshore Field
Provided by Exxon Neftegas Limited,
Sakhalin-1 project operator

43

Infrastructure・Utility Business (1)Construction of the Soma LNG Terminal

Appendix■Soma LNG Terminal
Site

Shinchi-Town, Fukushima Pref. (No.4 wharf areaof Soma Port)

Capacity

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

Receiving
Capacity

LNG ocean-going vessel ：Full set (maximum
210,000m3 class)
LPG domestic vessel ：Full set (maximum
2,500m3 class)

Vaporizers

Sending power ： 7.0MPa 75t/h x2

Shipping
Facilities

LNG domestic vessel ：maximum 4,800 m3 class
Tanker truck ：5 lanes, 30t/h

Commencementof Operation

March 2018

Soma-Iwanuma
Gas Pipeline

Soma LNG Terminal*In addition to the above, construction for another LNG vaporizationequipment and LNG tank (230,000kl) is ongoing■Soma-Iwanuma Gas Pipeline
Starting / End point

Starting point ：the Soma LNG terminal
End point ：the Iwanuma Valve station

Caliber

20B

Pressure

7Mpa

LengthApprox. 40km

Commencement of Operationfrom the Soma LNG Terminal

February 2018

Panoramic view of the Soma LNG Terminal

44

Infrastructure・Utility Business (2)Natural Gas-Fired Power Generation Project

Appendix■The overview of Fukushima Natural Gas Power Plant
Head Office

Fukushima Gas Power Co., Ltd.* (Founded April 2015)

MethodGas Turbine and Steam Power (Combined Cycle)

Capacity

1.18 million kW (2 units of 0.59 million kW)

FuelNatural Gas (Vaporized LNG)
Amount 700,000-1,000,000t/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
Steam Flow 370/85/50t/h
NOx Emission concentration Less than 5ppm

Heat Recovery
Boiler■Schedule
October 2016

FID

June 2017

Approved Environmental Assessment

October 2017

Commencement of construction

2020 Spring

Commencement of commercial operations (planned)*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%45Rendering of the Soma LNG Terminal and the Fukushima
Natural Gas Power Plant

Revitalization of local area
e.g. Job creation, Enterpriseattractions

Appendix

Geothermal Power, Methane Hydrate,
CCS, Solar Power

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

Solar Power

Testing at Mt. Musa area

Methane Hydrate● Bandai area

Solar panels at Hokkaido District
Office●Offshore Atsumi and
Shima peninsulas

46

Photo provided by MH21

The second offshore production tests

Appendix

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 Metals National Corporation



LNG

Liquefied Natural Gas

MH

Methane HydrateP/L

Pipeline

PNWL

Pacific North West LNGROE

Return on Equity

RRR

Reserve Replacement Ratio

SODECO

Sakhalin Oil & Gas Development Co., Ltd.

TSB

Terang, Sirasun, Batur



WTI

West Texas Intermediate47