Code No. 1662
June 3, 2008
Yuji Tanahashi, Representative Director – President
Japan Petroleum Exploration Co., Ltd. (JAPEX)
1-7-12 Marunouchi, Chiyoda-ku, Tokyo
To All Shareholders:

Notification of the Convocation to
the 38 Ordinary General Meeting of the Shareholdersth

The 38th Ordinary General Meeting of the Shareholders of JAPEX will be held according to the details below,
and we kindly ask for your attendance.
If you cannot attend on the day of the meeting, you may exercise your voting rights through a written
document. Please review the “Reference Document for Shareholders Meeting” described below, and express
your vote on the enclosed Voting Right Exercise Form. When sending the Voting Right Exercise Form, please
send so it will arrive at our office by Tuesday, June 24, 2008.
Thank you very much for your attention and cooperation.
Details:
1. Date and Time:
2. Location:

10:00 a.m., June 25, 2008 (Wednesday)
Tokyo Station Conference “Sapia Hall” (Sapia Tower 5F)
1-7-12 Marunouchi, Chiyoda-ku, Tokyo

3. Agenda:
Announcements: 1) Business report and consolidated financial report of the 38th Term (from April 1, 2007 to
March 31, 2008), and audit reports from the accounting auditor and Board of Statutory
Auditors on the consolidated financial report2) Financial report of the 38th Term (from April 1, 2007 to March 31, 2008)
Resolution items:
Item 1: Appropriation of surplus
Item 2: Amendments to the Articles of Incorporation
Item 3: Election of two (2) Directors
Item 4: Awarding of Retirement Benefits to Retiring Director
Item 5: Payment of Bonuses to Directors and Auditors
Item 6: Introduction of Measures to Prevent Large-scale Acquisition of JAPEX Shares (Takeover
Defense Measures)*Upon on your arrival at the Ordinary General Meeting of Shareholders, please submit the enclosed Voting Rights
Exercise Form to the venue reception. Thank you.
*In case the Reference Document for Shareholders Meeting, or business report, financial report or consolidated
financial report is modified, such modification shall be posted on the JAPEX website (http://www.japex.co.jp/)

NOTE: This document is an abridged translation of the Japanese “Notification of the Convocation to the 38th
Ordinary General Meeting of the Shareholders” “Reference Documents for Shareholders Meeting” and“Financial Report” of Japan Petroleum Exploration Co., Ltd. This translation is intended for reference andconvenience purposes only. In the event of any discrepancy between this translation and the Japanese original,
the original shall prevail. Japan Petroleum Exploration Co., Ltd. does not guarantee the accuracy and/or thecompleteness of this translation and shall have no liability for any errors or omissions therein.

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Reference Documents for Shareholders Meeting
Item 1: Appropriation of Surplus
1. Details concerning the Year-end Dividends
JAPEX employs the basic policy of long-term, stable distribution of dividends in considering theretained earnings for investment in new oil and gas reserves and the development of transportation
systems, including pipelines, as well as respecting the return of profits to our shareholders.
The 38th term dividends will be as follows:(1) Type of dividend property:

Money(2) Distribution and amount of dividend property:
20 yen per share of common stock
Total amount of dividends:

1,143,067,380 yen(3) Effective date of distribution of surplus: June 26, 2008
2. Other Appropriations of Surplus(1) Item and amount of reduced surplus:
Accumulated deficit carried forward: 10,000,000,000 yen(2) Item and amount of increased surplus:
Contingent reserves: 10,000,000,000 yen
Item 2: Amendments to the Articles of Incorporation
1. Reasons for Amendment
The Board of Directors of JAPEX considers the need to introduce the allotment of share options
without contribution, as a takeover defense measure, inevitable, in order to prevent inappropriate
takeovers that are detrimental to the corporate value of JAPEX and the common interest of ourshareholders. This will also ensure and improve JAPEX’s corporate value and the common interest of
our shareholders on account of the reasons described in 1 of Item 6 of the agenda (Introduction of
Measures to Prevent Large-scale Acquisition of JAPEX Shares).
However, the final decision on proposals for takeovers, which indicate a transfer of corporate control,
shall be made based on the intention of our shareholders as a whole.
According to the above idea, the suggested amendments Article 13 Clause 1 and 2 for the Articles ofIncorporation is to enable introduction of the takeover defense measure based on the resolution at thegeneral meeting of the shareholders. Furthermore, while the Companies Act stipulates, unlessotherwise determined, the resolution of the Board of Directors as sufficient for the allotment of shareoptions without contribution (Article 278-3, Companies Act), the Board of Directors deems it
preferable that delegation of the allotment, under certain conditions, be made to the Board of Directors
by the shareholders at the general meeting of shareholders. In case of executing the allotment of shareoptions without contribution as part of a takeover defense measure, it shall be based on the intention ofshareholders and not solely on the resolution of the Board of Directors. Therefore, the Board of
Directors consider it preferable to (1) have a resolution passed at the general meeting of shareholders
for approval concerning the allotment of share options without contribution, or (2) have theshareholders delegate execution of the allotment of share options without contribution to the Board of
Directors with certain conditions attached, which the Board of Directors shall follow when executing
the delegated allotment. Hence, based on the premise that the takeover defense measure may be-2-

introduced through the resolution at the general meeting of shareholders, a supporting provisionaccording to the proviso in Article 278-3 of the Companies Act is necessitated in order to enable themethods described in (1) and (2) above concerning the allotment of share options without contribution.
The suggested amendments Article 13 Clause 3 for the Articles of Incorporation stipulate and clarify
the restrictive conditions for the acquisition and the exercise of share options upon the allotment ofshare options without contribution as part of takeover defense measure, in relation to the persons who
deemed inappropriate under the provision of the takeover defense measure.

2. Content of Amendments
The suggested amendments are described in the following comparison chart.
(differing parts are underlined)
Suggested Amendments

Current Articles of Incorporation(New)

Article 13 (Convocation) ~Article 43 (Statute of Limitation for Dividend Payments)[skipped](Takeover Defense Measure)
Article 13 The Company may introduce a takeover defense
measure based on the resolution of a general meeting ofshareholders. “Takeover defense measure” refers to ameasure which serves the purpose of ensuring andimproving the corporate value of the Company andconsequently the common interest of the shareholders,among those which interfere with the realization of
takeovers against the Company, including issue or
allotment of share options executed by the Company that
does not have business purposes such as financing as its
main purpose.
The Company may decide on matters concerning the2
allotment of share options without contribution as a partof the takeover defense measure, by the resolution of theBoard of Directors based on the resolution of a general
meeting of shareholders or the delegation by the
resolution of a general meeting of shareholders, or by the
resolution of the Board of Directors.
3
In case of determining the matters regarding theallotment of share options without contribution bases on
the preceding clause, the Company may stipulate thefollowing matters as a content of the share options:
1. That certain persons specified in the takeover
defense measure (hereinafter as “Unqualified Persons”)
may not exercise the share options; and2. That, upon the acquisition of such share options by
the Company, the presence and content of theconsideration delivered in exchange for such shareoptions may be treated separately and differently
between Unqualified Persons and persons other than the
Unqualified Persons.
Article 14 (Convocation) ~Article 44 (Statute of Limitation for Dividend Payments)[same as current]

Item 3: Election of two (2) Directors
Upon closing of this general meeting of shareholders, Mr. Tadashi Sagai, one of our
Directors, will be resigning, and therefore in order to fill his vacancy one (1) Director of theBoard will be elected, along with addition of one (1) Director position to strengthen the-3-management base. We kindly ask our shareholders to elect two (2) new Directors of the Board.
The candidates for the Directors are as listed below:
Candidate No.

Brief history, Position and responsibilities in JAPEX or
representations in other corporations
April 1973 Joined JAPEX
June 2006 Executive officer at JAPEX
June 2007 Managing executive officer, General Manager
of Development Division(up to the present date)
April 1975 Joined JAPEX
April 2001 General Manager of Exploration Division,
Overseas Exploration Dept. II
April 2003 General Manager of Exploration Division,
Overseas Exploration Dept.
June 2006 Executive Officer at JAPEX(up to the present date)Jan. 2007 Executive Vice President of Japex Libya Ltd.
(up to the present date)

Name(Date of birth)

Junichi1

Matsumoto(September 27, 1949)

Nobuyuki
2

Ogura(May 14, 1952)

JAPEX shares
owned

200 shares

100 shares(Note) No significant interest-based relationship exists between candidates for directors and JAPEX.

Item 4: Awarding Retirement Benefits to Retiring Director
Upon closing of this general meeting of shareholders, Director Tadashi Sagai will be
resigning from his post.
Therefore, retirement benefits shall be awarded according to the standards specified by
JAPEX in recognition of services during his tenure. We kindly ask our shareholders to allow
discretion to the Board of Directors with regard to the specific amount, period and method ofawarding, etc.
Mr. Tadashi Sagai’s brief history is as follows:
Name

Tadashi Sagai

Brief History
June 1997
June 1999
June 2002
June 2004
Feb. 2005
June 2006
Jan. 2007

Director; Manager of Production Dept.
Director; General Manager of Nagaoka Division Office
Managing Director; President of Development Division
Senior Managing Director; President of Development Division
Senior Managing Director; President of Development Division,
also General Manager of International Oil & Gas Division
Executive Vice President(up to the present date)President of Japan Canada Oil Sands Limited(JACOS)(up to the present date)

Item 5: Payment of Bonuses to Directors and Auditors
A total amount of bonus of 87,000,000 yen (82,934,000 yen to Directors, 4,066,000 yen to
Auditors) will be paid to seventeen (17) Directors (including 1 Outside Director) and four (4)Auditors tenured during the fiscal year ended March 31, 2008, in view of the traditionally paidbonus amounts and the performance of the fiscal year ended March 31, 2008.
Item 6: Introduction of Measures to Prevent Large-scale Acquisition of JAPEX Shares (Takeover Defense
Measures)
JAPEX has, at the meeting of the Board of Directors held on May 21, 2008, passed a
resolution to introduce the “Measures to Prevent Large-scale Acquisition of JAPEX Shares(Takeover Defense Measures)” (hereinafter as the “Plan”) on the condition that it is approved-4-

by our shareholders in this ordinary general meeting of shareholders. Therefore, we kindly ask
our shareholders to introduce the Plan and delegate the decision-making of the mattersconcerning the allotment of share options without contribution according to the guidelines
described in 3. The contents of the Plan (below) to the Board of Directors, based on Article 13of the Articles of Incorporation (post-amendment), provided that ‘Item 2: Amendments to the
Articles of Incorporation’ will be approved and voted for.

1. Basic Policy of How the Person Controlling the Decision of the Policies for Our Finances and Business
JAPEX considers that the person controlling our financial and business policy decisions should
fully understand the content of our finances and business and the source of our corporate value, and iseligible to ensure and improve the corporate value and consequently, the common interest of theshareholders in a continuing, sustainable manner.
JAPEX believes the decision on an acquisition proposal with which is associated the transfer ofcorporate control should ultimately be made based on the general decision of our shareholders.
Furthermore, JAPEX does not disapprove of large-scale share acquisition that contributes to our
corporate value and consequently the common interest of the shareholders.
Nevertheless, among large-scale share acquisitions, there are many that do not contribute to thecorporate value and the common interest of the shareholders, in the light of their purpose, including
such that cause a clear infringement on the corporate value and the common interest of theshareholders, such that has the risk of a de facto coercion against the shareholders to sell their shares,
such that does not provide sufficient time and/or information for the Board of Directors and theshareholders consideration of the content of the large-scale share acquisition or for the Board of
Directors to propose an alternative plan, and such that require consultation and negotiation with theacquirer to draw out a more favorable condition than the conditions presented from the acquirer.
The large-scale share acquirer should understand the source of our corporate value, not to mention
the content of JAPEX’s finances and business, and unless he or she ensures and improves them for the
medium-and-long term, our corporate value, and consequently the common interest of theshareholders will be damaged.
JAPEX considers such a large-scale acquirer that does not contribute to our corporate value and thecommon interest of our shareholders inappropriate as the controlling person to determine the policies
of our finances and business, and thus consider necessary to protect our corporate value andconsequently the common interest of our shareholders by taking essential and substantial measuresagainst such attempts.

2. The Purpose of the Plan
The Plan aims to ensure and improve our corporate value and the common interest of our shareholders,and shall be introduced according to the Basic Policy described above 1.
The Board of Directors, as set forth in the Basic Policy, considers a person who performs large-scaleacquisition that do not contribute to our corporate value and/or the common interest of our shareholders-5-inappropriate as a person controlling our financial and business policy decisions. Furthermore, it has
been decided that, in order to prevent the control of our financial and business policies decisions by such
impropriate persons and deter large-scale acquisition that is detrimental to our corporate value and/or thecommon interest of our shareholders, information and time required for the proposal of an alternativeplan from our Board of Directors to our shareholders or for the judgment by our shareholders whether toaccept the large-scale acquisition must be ensured upon the large-scale share acquisition. We also
consider a framework that enables negotiation and other measures to be taken on behalf of ourshareholders to be essential for such prevention.
3. Contents of the Plan
(1) Overview of the Plan(a) Procedural Setup
The Plan determines the necessary procedure for achieving the objective described in the above(a), such as demanding the prior provision of information from the acquirer, upon the emergence ofa person who intends to acquire 20% or more of the company’s share (Please refer to the following(2) “Procedure for the Implementation of the Plan” for details.). Meanwhile, in case the proceduresof the Plan commence, the acquirer is prohibited from pursuing the takeover of JAPEX shares, until
the decision to not implement the Plan has been made in the Board of Directors or at the General
Meeting of the Shareholders.
(b) Implementation of the Plan by Allotment of Share Options without Contribution
In case the acquirer pursues the takeover of JAPEX share without conforming to the procedure set
forth in the Plan, or in case there is a risk of clear infringement on our corporate value and/or thecommon interest of our shareholders (please refer to the following (3) “Requirements for the
Allotment of Share Options without Contribution” for details of the requirements), JAPEX shallallot share options with restrictive conditions in which the exercise of rights by the acquirer isimpermissible or with acquisition clauses where JAPEX may acquire share options from persons
other than the acquirer in exchange for the company shares (the main details will be described in thefollowing (4) “Overview of the Allotment of Share Options without Contribution”, and it shall bereferred to as “Share Option” hereinafter), to all shareholders excluding JAPEX at that point of time,
without contribution.
In the event that the allotment of share options without contribution is executed according to thePlan, and associated by its execution or acquisition by JAPEX, when JAPEX shares are issued to allshareholders except for the acquirer, the percentage of voting rights the acquirer has held may bediluted by, at most, approximately 50%.
(c) Setup of the Mechanism that Enhances the Rationality of the Plan
With regard to the decision whether to implement or not implement the allotment of share options
without contribution, or to acquire, according to the Plan, in order to eliminate the arbitrary decisionof directors, it shall undergo the objective decision of the independent committee (please refer to the-6-following (5) “Establishment of the Independent Committee” for the details) constituted byindependent outside directors and other persons of an independent nature.
Moreover, in case the independent committee suspends the implementation of the allotment ofshare options without contribution by reason of undergoing the decision at the general meeting of
the shareholders, the Board of Directors is to convoke a general meeting of shareholders andconfirm the intention of the shareholders concerning the implementation of the allotment of shareoptions without contribution (please refer to the following (2) “Procedure for the Implementation of
the Plan” for its details). Furthermore, we aim to ensure transparency of the process of theseprocedures through information disclosure to our shareholders.
(2) Procedure for the Implementation of the Plan(a) Share purchase that are the Subject of the Plan’s Application
The Plan shall be applied when an act that falls under 1) or 2) described subsequently or a similar
act is pursued, or when such acts are suggested 1 (excluding those that have been otherwise
approved by the Board of Directors; hereinafter shall be referred to as “Acquisitions”). Persons
pursing share acquisition (hereinafter as “Acquirers”) shall act in compliance with the procedures
predefined in the Plan.
1) Share purchase or other acquisition with an ownership ratio2 of 20% or more of the holder3, withregard to share certificates, etc4 issued by JAPEX.
2) Tender offers5 with a total ownership ratio6 of 20% or more of the persons pursuing tender offers
and their special associated persons7, with regard to share certificates, etc8 issued by JAPEX.
(b) Demand for Information Provision towards Acquirers
Acquirers who perform Acquisitions shall, prior to the relevant Acquisition, submit a document
written in Japanese, in a format specified by JAPEX, that includes the information stipulated in thefollowing (hereinafter as “Required Information”) and covenant wordings, etc that express theintention to comply with the procedure set forth in the Plan upon the Acquisition of the relevant
Acquirers, to JAPEX (Board of Directors and the Independent Committee).
When the Independent Committee has decided that the description on the relevant acquisition
statement falls short as Required Information, JAPEX may request additional information from theAcquirers, with an appropriate reply deadline. In this case, the Acquirers shall additionally submit
such information to JAPEX by the relevant deadline.
1“Suggested acts” shall include solicitation acts.
Defined in Article 27-23-4 of Financial Instruments and Exchange Act. The term herein is subject to its definition.
3
Includes persons included in holders, based on Article 27-23-3 of Financial Instruments and Exchange Act (includes
persons the Board of Directors deemed that they will fall under the definition). The term herein is subject to its definition.
4
Defined in Article 27-23-1 of Financial Instruments and Exchange Act. The term herein is subject to its definition, unlessotherwise specified.
5
Defined in Article 27-2-6 of Financial Instruments and Exchange Act. The term herein is subject to its definition.
6
Defined in Article 27-2-8 of Financial Instruments and Exchange Act. The term herein is subject to its definition.
7
Defined in Article 27-2-7 of Financial Instruments and Exchange Act (includes persons the Board of Directors deemed thatthey will fall under the definition). However, with regard to the persons stipulated in Article 27-2-7 (1), those who fall under
Article 3-2 of the Cabinet Office order concerning the disclosure of tender offers of share certificates by persons other than
the issuer, shall be excluded. The term herein is subject to its definition.
8
Defined in Article 27-2-1 of Financial Instruments and Exchange Act.
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1) Details (includes specific names, capital structure, financial content, compliance with laws andother regulations, details of previous trade similar to the Acquisition of the relevant Acquirers,
and the resulting influence on corporate value of the target company) of the Acquirers, and theirgroup (includes joint shareholders9, special associated persons, and (in case of funds) each union
member or other members)
2) Purpose, method, and content of the acquisition (includes value and type in consideration of theacquisition, time of acquisition, mechanism of related trade, legality of the method of acquisition,and the possibility of the execution of acquisition)3) Basis of the valuation of the acquisition price (includes facts and presumptions the valuation isbased on, valuation methods, numerical information used for the valuation, the content ofsynergy expected to emerge from the series of trade in connection with the acquisition (including
the content of synergy allocated to minority shareholders) and its basis for valuation)4) Proof of funds for the acquisition (includes the specific names of providers of the funds for theacquisition (including the beneficial providers), procurement methods, and content of relatedtrade)
5) Management policy, business plans, capital policy, and distribution policy, for JAPEX group after
the acquisition
6) Details of the previous acquisition condition of JAPEX shares, etc, and the details on theagreements with a third party concerning JAPEX shares (includes the other party, time, andcontent)7) Post-acquisition policy regarding our shareholders, employees, labor union, business partners,
customers, and other stakeholders related to JAPEX group8) Specific information regarding the risk of infringement by the acquirer to the laws and regulationsin and out of Japan (includes the Act of Prohibition of Private Monopolization and Maintenanceof Fair Trade and foreign competition law)9) Specific measures to prevent conflicts of interest with other shareholders of JAPEX shares
10) Other information reasonably decided by the Independent Committee as necessary
The Independent Committee shall, when it deems that the acquirer has commenced the acquisition
without conforming to the procedure set forth in the Plan, in principle, advise the Board of Directors
to implement the allotment of share options without contribution as prescribed in the following 1) ofd), unless there is a particular reason to consult and/or negotiate with the acquirer to continue
requesting the submission of the acquisition statement (including additional information).
(c) Consideration of the Content of Acquisition / Consideration of Negotiation with the Acquirer or ofan Alternative Plan
1) Request to the Board of Directors for the submission of information
The Independent Committee may, when the acquisition statement and (if applicable) the
additional information are submitted by the Acquirer, also request the Board of Directors topresent its opinion (includes suspension of opinion; hereinafter the same applies) on the content
9Refers to the joint holders stipulated in Article 27-23-5 of Financial Instruments and Exchange Act, and includes persons
deemed joint holder based on Article 27-23-6 (includes persons the Board of Directors deemed that they will fall under thedefinition). The term herein is subject to its definition.

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of the Acquisition of the Acquirer and the supporting materials, (if available) alternative plans,
and other information deemed necessary by the Independent Committee, as appropriate, with anappropriate reply deadline (in principle, 60 days maximum).
2) Reviews and other considerations by the Independent Committee
The Independent Committee shall, in principle, within a maximum of 60 days (hereinafter as“Reviewing Period of the Independent Committee”) after the receipt of the information from theAcquirer and the Board of Directors, review the content of the Acquisition, collect information on
and comparatively investigate the management and business plans of the Acquirer and the Boardof Directors, and review the alternative plan presented by the Board of Directors. Furthermore,
the Independent Committee shall, directly or indirectly, consult and/or negotiate with the Acquirer,
or present or otherwise inform our shareholders of the alternative plan submitted by the Board of
Directors, if necessary to improve the content of the relevant Acquisition in view of ensuring andimproving our corporate value and the common interest of our shareholders.
In order to ensure that the Independent Committee makes the decision to the benefit of thecorporate value and the common interest of our shareholders, the Independent Committee may
seek advice from an independent third party (includes financial advisors, certified public
accountants, lawyers, consultants, and other experts) at the expense of the company. The Acquirer
shall promptly respond to the direct or indirect request of the Independent Committee to provide
reviewing materials or other information, or for consultation, negotiation, or othercommunication.
3) Information Disclosure
JAPEX shall disclose information at the point of time the Independent Committee decides
appropriate, with regard to the fact that the submission of the acquisition statement has been
made by the Acquirer, the fact that the Reviewing Period of the Independent Committee has
begun, and information included and not included in the Required Information that the
Independent Committee deems appropriate to disclose.
(d) Advisory of the Independent Committee
The Independent Committee shall advise the Board of Directors as follows in case of an
emergence of an Acquirer. Furthermore, in case the Independent Committee issues an advisory or
holds other communication with according to the following 1) or 3) to the Board of Directors, orotherwise deems appropriate, the Independent Committee shall promptly disclose information withregard to the overview of the relevant advice and other matters (if the Reviewing Period of the
Independent Committee is extended, includes the period and reason for extension) deemed
appropriate by the Independent Committee.
1) When advising the implementation of the Plan
The Independent Committee shall advise the implementation of the allotment of share options
without contribution to the Board of Directors, irrespective of whether the Reviewing Period of
the Independent Committee has commenced or has finished, when the Acquisition by the
Acquirer falls under any of the requirements set forth in the following (3) “Requirements for the
allotment of share options without contribution” and has been deemed suitable to implement theallotment of share options without contribution.
However, even after the implementation of the allotment of share options without contribution-9-has been advised, if the Independent Committee deems that any of the conditions specified below
applies, the Independent Committee may pause the allotment of share options without
contribution by two business days before the ex-rights day of the allotment of share options
without contribution, or, may issue a new advisory to acquire all share options without
contribution by one day before the commencing of the execution period after the effective date of
the allotment of share options without contribution (defined in (4) under the following (4)“Overview of the allotment of share options without contribution”).
(i) When the Acquisition is withdrawn by the Acquirer after the advisory or when the
Acquisition is otherwise no longer existent; or(ii) When a change occurs in the facts the decision of the advisory was based on, and thus the
Acquisition by the Acquirer no longer falls under any of the requirements set forth in thefollowing (3) “Requirements of the allotment of share options without contribution”, or even
if it remains applicable, the implementation or execution of the allotment of share options
without contribution are no longer appropriate.
Furthermore, the Independent Committee may, upon the issuance of an advisory for the
implementation of the allotment of share options without contribution, issue a suspension/reservation
for a prior approval of the relevant implementation at the general meeting of the shareholders, withconsideration to whether the Acquisition conforms to the procedure set forth in the Plan, the degree of
detriment to the corporate value or the common interest of our shareholders caused by the Acquisition,and the circumstances including the time allowed for the holding of the general meeting ofshareholders.
2) When advising not to implement the Plan
The Independent Committee shall advise not to implement the allotment of share options
without contribution to the Board of Directors, irrespective of whether the Reviewing Period of
the Independent Committee has commenced or has finished, when it has been deemed that theAcquisition by the Acquirer does not fall under any of the requirements set forth in the following(3) “Requirements for the allotment of share options without contribution” or even if any applied,
it has been deemed unsuitable to implement the allotment of share options without contribution,
as a result of the review on the content of the Acquisition of the Acquirer or of the consultation
and/or negotiation with the Acquirer.
However, even after not implementing the allotment of share options without contribution has
been advised, if a change occurs in the facts the decision of the advisory was based on, and thus
the requirement in above 1) is appropriated, the Independent Committee may issue a newadvisory to implement the allotment of share options without contribution.
3) When extending the Reviewing Period of the Independent Committee
When the Independent Committee deems that there is a reasonable reason for not reaching thepoint of issuing an advisory of implementation of non-implementation of the allotment of shareoptions without contribution before the expiration of the initial Reviewing Period of the
Independent Committee (if already has been extended, includes the term after the extension; same
applies hereinafter), the Independent Committee shall execute a resolution for an extension of the
Reviewing Period of the Independent Committee, within the reasonable range (in principle, shallnot exceed 30 days) required for the reviewing of the content of the Acquisition by the Acquirer
and/or for the negotiation or other communication with the Acquirer.

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In case the Reviewing Period of the Independent Committee is extended due to the above
resolution, the Independent Committee shall continue on with the collection of information,
reviewing and other activities, and shall exert its up most effort to issue the advisory of
implementation or non-implementation of the allotment of share options without contribution
within the extended period.
(e) Resolution of Board of Directors / Convocation of General Meeting of Shareholders for Decision
Hearing
The Board of Directors shall make a resolution as a body under the Companies Act regarding theimplementation or non-implementation of the allotment of share options without contribution, in
utmost deference to the above advisory of the Independent Committee.
However, in the case the Independent Committee issued a reservation for the approval at thegeneral meeting of shareholders, the Board of Directors shall, upon the implementation of theallotment of share options without contribution according to the Plan, convoke a general meeting ofshareholders (hereinafter as “General Meeting of Shareholders for Decision Hearing”) and hear theshareholders’ decision regarding the implementation of the allotment of share options without
contribution, unless the holding of the general meeting of shareholders is practically difficult (in thiscase, the Board of Directors shall make the above resolution regarding the implementation or
non-implementation of the allotment of share options without contribution, in the light of theintention of the advisory issued from the Independent Committee).
The Acquirer, and its joint shareholders and special associated persons shall not pursue theAcquisition until the Board of Directors has made its resolution to not implement the allotment ofshare options without contribution, or until the agenda to implement the allotment of share options
without contribution is voted down at the General Meeting of Shareholders for Decision Hearing.
(f) Information disclosure regarding the resolution and other decisions of the Board of Directors
The Board of Directors shall promptly disclose information regarding the outline of the resolution
and other matters deemed appropriate by the Board of Directors (in case of proviso in the above (e),when the holding of the general meeting of shareholders is practically difficult, the reason shall be
provided as such), when the Board of Directors has made a resolution to implement or not
implement the allotment of share options without contribution, or when it has made a resolution to
convoke the General Meeting of Shareholders for Decision Hearing.
(3) Requirements of the allotment of share options without contribution
JAPEX plans to implement the allotment of share options without contribution upon the resolution of
the Board of Directors or at the General Meeting of Shareholders for Decision Hearing prescribed in (e)under (2) “Procedure for the Implementation of the Plan”, when the Acquisition by the Acquirer falls
under any of the following and deemed suitable to implement the allotment of share options without
contribution. Furthermore, as set forth in (d) under (2) “Procedure for the Implementation of the Plan”,
whether the Acquisition falls under the following requirements and whether the implementation of theallotment of share options without contribution is appropriate or not will always be decided with andafter the advisory of the Independent Committee.

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(a) When the Acquisition is not in conformity with the procedures prescribed in the Plan;(b) When the Acquisition clearly risks infringing on our corporate value and consequently to thecommon interest of our shareholders, by reason of the acts listed below:
1) Act in which the Acquirer corners the share certificates and such, and demands that JAPEX
purchase such share certificates for a high price;2) Act in which the Acquirer temporarily controls the management of JAPEX to perform
management for the benefit of the Acquirer that is based on the sacrifice of JAPEX, such as
acquiring JAPEX’s important assets and other properties at low cost;3) Act in which the Acquirer appropriates the assets of JAPEX group as collateral for debt and/or asa resource to perform obligations of the Acquirer or its group companies, etc.; or
4) Act in which the Acquirer temporarily controls the management of JAPEX to dispose of
expensive assets and/or other properties that are not active in the business of JAPEX group for
the foreseeable future, and with the disposal income, perform temporary high dividend payouts or
sell-out of shares on the occasion of sharp rises in share prices due to such temporary highdividend payouts.
(c) When the Acquisition has a risk of a de facto coercion towards the shareholders to sell their shares,
such as coercive two-tiered tender offers (refers to an act in which shares are purchased in tender
offers and such, without soliciting/offering the purchase of all shares in the initial purchase, but set
the second tier purchase condition disadvantageously or without clarifying the second tier purchasecondition);(d) When the Acquisition is such that does not provide the reasonable period of time required for the
Board of Directors to present an alternative plan for the Acquisition;(e) When the Acquisition is such that does not sufficiently provide the Required Information or otherinformation reasonably required to make judgments on the content of the Acquisition;(f) When the Acquisition is such that the condition of the Acquisition (includes value and type inconsideration of the acquisition, time of acquisition, legality of the method of acquisition, and thepossibility of the execution of acquisition, post-Acquisition management policy and business plans,post-Acquisition shareholders other than JAPEX, and policy regarding the employees, customers,
business partners, and other stakeholders related to JAPEX group) is insufficient or inadequate withconsideration to JAPEX’s intrinsic value; or(g) When the Acquisition has a risk of causing a serious hindrance in ensuring a stable supply of energy
or ensuring customer convenience, due to the insufficiency or inadequacy of the content of
post-Acquisition management policy or business plans.
(4) Overview of the Allotment of Share Options without Contribution
The overview of the allotment of share options without contribution planned to be implemented
based on the Plan is as follows:(a) Number of share options
The number of share options shall be equal to the final total number of shares (provided, however,that the number of JAPEX shares held by JAPEX at point of certain date is deducted) issued as of acertain date (hereinafter as “Allotment Date”) otherwise decided by resolution of the Board of
Directors or by resolution at the general meeting of shareholders concerning the allotment of share- 12 -

options without contribution (hereinafter as “Resolution for the Allotment of Share Options without
Contribution”).
(b) Shareholders eligible for allotment
The share options shall be allotted to shareholders other than JAPEX who are listed or registeredon the final shareholder registry or practical shareholder registry as of the Allotment Date, in
proportion of one share option per one JAPEX share held by the shareholder.
(c) Effective date of the allotment of share options without contribution
The effective date shall be otherwise decided by the Resolution for the Allotment of Share
Options without Contribution.
(d) Number of shares as object of the share option
The number of JAPEX shares as object of each share option (hereinafter as “Target Share
Number”) is, in principle, one share.
(e) Value of assets contributed upon the exercise of share option
The object of contribution upon the exercise of share option shall be money. The value per
JAPEX share of the property to be contributed upon the exercise of the share option shall beotherwise decided in the Resolution for the Allotment of Share Options without Contribution, within
the value range of one yen as lower limit and one half of the market value of one JAPEX share as
higher limit. Furthermore, “market value” is equivalent to the value corresponding to the averageclosing price (includes quotations) for 90 days (excludes dates without contracted trade) of ordinary
exchange dates for ordinary JAPEX shares at the Tokyo Stock Exchange, prior to the Resolution for
the Allotment of Share Options without Contribution, and fractions shall be rounded up.
(f) Exercising period of the share options
The date otherwise prescribed in the Resolution for the Allotment of Share Options without
Contribution shall be the initial date (hereinafter the initial date of such period of exercise will bereferred to as the “Commencing Date of the Period of Exercise”) of the exercising period, and theperiod otherwise prescribed in the Resolution for the Allotment of Share Options without
Contribution within the range of one to three months shall be the exercising period. However, incase JAPEX acquires the share options based on the provision of the following clause (i), theexercising period of the share options for such acquisition shall be until the day before suchacquisition date. Furthermore, if the final date of the exercising period falls on a non-business day ofthe payment handling institution where the money shall be paid upon the exercise, the last business
day before such date shall be the final date of the exercising period.
(g) Condition of exercise of share options(I) Specific large-scale holders10, (II) joint holders of specific large-scale holders, (III) specific10

In principle, refers to holders of share certificates issued by JAPEX and the ratio of whose ownership of such shares is
20% or more (includes persons the Board of Directors deemed that they will fall under the definition). However, persons
whose acquisition or holding of the shares are deemed harmless to our corporate value or the common interest of ourshareholders by the Board of Directors, and other persons who are otherwise designated by the Board of Directors in the- 13 -

large-scale acquirers11, (IV) special associated persons of specific large-scale acquirers, or (V)persons who was assigned or succeeded the share options from persons that fall under (I) or (IV)without the approval of the Board of Directors, or (VI) persons who are in relation12 to persons thatfall under (I) or (V) (hereinafter collectively referred to persons that fall under (I) or (VI) as“Unqualified persons”) may not, in principle, exercise the share options. Furthermore, under theapplicable foreign law, non-residents, as they require prescribed procedures for the exercise of theshare options, may not, in principle, exercise the share options. (However, on the condition that theshare options held by the non-resident shall also comply with the applicable law, they may become
the object of acquisition by JAPEX in consideration of JAPEX shares as described in the following(i) 2).) In addition, persons who do not submit a covenant in a form prescribed by JAPEX containing
a representation warrant clause with regard to that the person satisfies the requirements for exerciseof the share options, compensation clause and other covenant wordings, may not exercise the shareoptions.
(h) Assignment of share options
The acquisition of share options through assignment requires the approval of our Board of
Directors.
(i) Acquisition of share options by JAPEX
1) In case the Board of Directors deem it appropriate for JAPEX to acquire share options, JAPEX
may acquire all share options without contribution upon the coming of the date otherwiseprescribed by the Board of Directors, until the day before the Commencing Date of the
Exercising Period.
2) JAPEX may, upon the coming of the date otherwise prescribed by the Board of Directors, acquire
all share options held by persons other than unqualified persons, which are not exercised by the
day before the date prescribed by the Board of Directors, and in exchange of such share options,
may delivery the number of JAPEX shares equivalent to the Target Share Number per one shareoption.
Furthermore, in the event that the Board of Directors acknowledges the presence of persons
other than the unqualified persons among the holders of the share options after the date of such anacquisition, upon the coming of the date prescribed by the Board of Directors that is after the date

Resolution for the Allotment of Share Options without Contribution, shall not fall under specific large-scale holders. The
term herein is subject to its definition.
11
In principle, refers to persons who made a public notice to purchase (Defined in Article 27-2-1 of Financial Instruments
and Exchange Act. The term herein is subject to its definition.) shares issued by JAPEX (Defined in Article 27-2-1 ofFinancial Instruments and Exchange Act. The term herein is subject to its definition.) by tender offer and whose ratio of shareownership (as pursuant to this, shall include cases stipulated in Article 7-1 of Enforcement Order of Financial Instruments
and Exchange Act) combined that of the person’s special associated person become 20% or more after such purchase(includes persons the Board of Directors deemed that they will fall under the definition). However, persons whose acquisitionor holding of the shares are deemed harmless to our corporate value or the common interest of our shareholders by the Boardof Directors, and other persons who are otherwise designated by the Board of Directors in the Resolution for the Allotment of
Share Options without Contribution, shall not fall under specific large-scale acquirers. The term herein is subject to its
definition.
12“Those who are in relation” to refers to a person who substantially control the other person, or is controlled by the otherperson, or under the same control as the other person (includes persons the Board of Directors deemed that they will fallunder the definition), or a person approved by the Board of Directors as acting substantially in cooperation with the otherperson. Furthermore, “control” refers to “the case where controlling the determination of financial and business policies” ofanother organization (defined in Article 3-3 of Regulation for Enforcement of Companies Act).

- 14 -

of the above acquisition, all share options held by such persons that remained unexercised as ofthe date before the date assigned by the Board of Directors shall be acquired by JAPEX and in
exchange for this, JAPEX may deliver shares equivalent to the Target Share Number per one
share option, and the same principle shall apply hereafter.
(j) Delivery of share options in case of merger, demerger, incorporation-type company split, shareexchange, and share transfer
They shall be otherwise prescribed in the Resolution for the Allotment of Share Options without
Contribution.
(k) Issuance of share option certificate
Share option certificates will not be issued for the share options.
(l) Other
Details on the content of the share option (includes matters concerning the handling of the shareoptions held by unqualified persons) other than prescribed above shall be otherwise stipulated in the
Resolution for the Allotment of Share Options without Contribution.
(5) Establishment of the Independent Committee
JAPEX establishes the Independent Committee as a body to objectively make practical judgments forour shareholders upon the operation of the implementation of the Plan, eliminating the arbitrary
decision of the Board of Directors. The members of the Independent Committee at the point of theintroduction of the Plan consist of one outside director, one outside auditor, and one outside expert,
whom are independent from the management of JAPEX. (The appointment criteria of the Independent
Committee members, requirements for resolution, matters of resolution, and other details of the
Independent Committee are as described in the separate document 2 “Overview of the Articles ofIndependent Committee” and the Independent Committee members at the point of the introduction of
the Plan are as described in the separate document 3 “Brief History of the Independent Committee
Members”.)(6) Effective period, abolition, and modification of the Plan
The effective period of the Plan shall be until the end of the ordinary general meeting of shareholders
regarding the latest fiscal year ending within three years after the end of the ordinary general meeting ofshareholders, the same as the delegation period of the authority to decide the matters concerning theallotment of share options without contribution in the Plan based on the resolution of the ordinary
general meeting of shareholders.
However, even when before the expiration of the effective period, 1) if a resolution withdrawing theabove delegation to the Board of Directors with regard to the decision on matters concerning theallotment of share options without contribution in the Plan is made at the general meeting ofshareholders, or 2) if a resolution to abolish the Plan is made by the Board of Directors, the Plan shallbe abolished at that point in time.
Furthermore, even during the effective period of the Plan, when an addition, revision, and/or
abolishment of laws, financial instruments, or stock exchange rules concerning the Plan are appropriate- 15 -

to reflect on the Plan, when appropriate to correct the wordings by reason of typographical errors, orwhen the change of the Plan does not act against the intention to delegate based on the resolution of an
ordinary general meeting of shareholders, such as when such changes are not detrimental to ourshareholders, the Board of Directors may revise or modify the Plan upon the approval of the
Independent Committee.
JAPEX shall promptly disclose information regarding the fact of the abolition, revision or
modification of the Plan, (in case of a revision and/or a modification) the content of such revision
and/or modification, and other matters.
(7) Revision due to amendments in law
The provision of law referenced in the Plan is assumed as the provision in effect as of May 21, 2008,
and should any addition, revision, or abolition of the law occur after the date and thus necessitates arevision to the clauses prescribed above or meaning of terms, such clauses or meaning of terms shall beappropriately interpreted within a reasonable range, upon consideration of the intention of the addition,
revision, or abolition.

- 16 -

Overview of the Independent Committee Provision
・The Independent Committee shall be established by the resolution of the Board of Directors.
・The members of the Independent Committee shall be three or more, whom are appointed by the Board of
Directors from persons who are independent of management involved in business operations of JAPEX
and are any of the following: (i) Outside director (includes persons planned to be elected), (ii) Outside
auditor (includes persons planned to be elected), or (iii) outside expert. However, an expert must be aproven business administrator, post-bureaucrat, expert in investment banking, lawyer, certified public
accountant, or a researcher with his or her main field of research as corporate law or such, or must be
pursuant to the aforementioned. Furthermore, the members of the Independent Committee must enter
into an agreement with JAPEX that includes provisions for the duty of care of a good manager, otherwise
designated by the Board of Director.
・The term of office for Independent Committee members shall be to the close of the ordinary general
meeting of shareholders for the last fiscal year which ends within three years after this ordinary general
meeting of shareholders, provided that there is no resolution by the Board of Directors otherwise
determining the term. Furthermore, in case a Independent Committee member who was a outsider
director or outside auditor is no longer an outsider director or outside auditor (excludes cases where he or
she is re-elected as one), the term of office as an Independent Committee member shall terminate at thesame time.
・The Independent Committee shall decide on the matters described in the following, and issue advisory to
the Board of Directors with the content of the decision and its reasoning. The Board of Directors shall
pay utmost respect to the advisory of the Independent Committee described and make decision as a bodyunder the Companies Act. (However, for the implementation of the allotment of share options without
contribution set forth in 1), if a resolution is made at the general meeting of shareholders that otherwise
decided, then the Independent Committee shall abide by such resolution.) Furthermore, each member of
the Independent Committee and each director of JAPEX is required to make such decisions from theexclusive perspective of whether it will contribute to the corporate value of JAPEX and the common
interest of our shareholders, and shall not consider the personal benefits of the member or the
management.
1) Implementation or non-implementation of the allotment of share options without contribution2) Pause of allotment of share options without contribution or Acquisition of share options without
contribution3) Other matters to be decided by the Board of Directors, which the Board of Directors seek the adviceof the Independent Committee
・In addition to the above, the Independent Committee shall perform the matters listed below:
1) Judgment of whether the Acquisition falls under the object of the Plan
2) Decision on the information to be submitted to the Independent Committee by the Acquirer and theBoard of Directors and its reply deadline
3) Investigation and review on the content of the Acquisition by the Acquirer
4) Direct or indirect negotiation and/or consultation with the Acquirer5) Request of submission of an alternative plan / Review of alternative plan
6) Extension of the Reviewing Period of the Independent Committee
7) Information disclosure concerning the overview of the advisory to the Board of Directors- 17 -

8) Approval of the revision of or modifications to the Plan
9) Other matters prescribed in the Plan as executable by the Independent Committee10) Matters otherwise prescribed by the Board of Directors as executable by the Independent Committee
・When the Independent Committee has decided that the description on the relevant acquisition statement
falls short as Required Information, JAPEX may request additional information from the Acquirers.
Furthermore, when the Acquirer has submitted the acquisition statement and the additional information
requested, the Independent Committee may also request as appropriate from the Board of Directors thesubmission of opinion on the content of the Acquisition by the Acquirer and its supporting materials, (ifavailable) alternative plans, and other information deemed necessary, within the prescribed period.
・The Independent Committee shall directly or indirectly hold consultations and/or negotiations with theAcquirer and/or present the alternative plan of the Board of Directors to the shareholders, when it isnecessary to improve the content of the Acquisition by the Acquirer from the perspective of ensuring andimproving our corporate value and the common interest of our shareholders.
・The Independent Committee may disclose information received from the Acquirer to the Board of
Directors.
・The Independent Committee may request the attendance of directors, auditors, executive officers,
employees, and other persons the Independent Committee deem necessary for the collection of necessary
information, and may request explanation regarding matters requested by the Independent Committee.
・The Independent Committee may seek advice from an independent third party (includes financial advisors,certified public accountants, lawyers, consultants, and other experts) at the expense of the company.
・Each member of the Independent Committee may convene the Independent Committee when an
Acquisition has taken place or at any other time.
・The resolution of the Independent Committee shall, in principle, be made upon the full attendance(includes attendance by TV conferences and telephone conferences; same applies hereinafter) of themembers of the Independent Committee and with a majority vote. However, under unavoidable
circumstances, a majority of the voting rights of a majority attendance shall produce a resolution.

- 18 -

Brief History of Independent Committee Members
The initial members of the Independent Committee as of the introduction of the Plan are planned to be thefollowing three persons:Kazuo Kawakami(Born April 26, 1933)
April 1958
January 1983
September 1989
May 1991
June 2007

CAREER
Appointed prosecutor
Head of Special Investigation Force, The Tokyo District Public Prosecutors Office
Chief of Trial Proceedings, Supreme Public Prosecutors’ Office
Recorded attorney at the Daiichi Tokyo Bar Association (up to the present date)Director at JAPEX (up to the present date)*Mr. Kazuo Kawakami is JAPEX’s outside director as stipulated in Number 15 of Article 2 under theCompanies Act.
*No particular relationship is existent between Mr. Kawakami and JAPEX.

Masahiko Kadotani(Born February 14, 1936)
April 1958
June 1990
December 1994
April 2002
June 2003
June 2004

CAREER
Joined the Ministry of FinanceDirector-General of the National Tax Agency
President of the Japan Finance Corporation for Small Business
Advisor at Mizuho Corporate Bank, Ltd.
Auditor at JAPEX (up to the present date)
Auditor at Mizuho Financial Group, Inc. (up to the present date)*Mr. Masahiko Kadotani is JAPEX’s outside auditor as stipulated in Number 16 of Article 2 under theCompanies Act.
*No particular relationship is existent between Mr. Kadotani and JAPEX.

Keizo Sakata(Born January 4, 1940)
CAREER
April 1966
April 1969
June 1969
July 1974
April 1980
July 2006
July 2006

Appointed prosecutor
Full-time instructor at College of Law, Nihon University
Recorded attorney at Tokyo Bar Association (up to the present date)
Assistant professor at College of Law, Nihon University
Professor at College of Law, Nihon University (up to the present date)
Dean of College of Law at Nihon University (up to the present date)
Trustee of Nihon University (up to the present date)*No particular relationship is existent between Mr. Sakata and JAPEX.

- 19 -

(Reference)
Q’s &A’s Concerning the Allotment of Share Options without Contribution in Takeover Defense Measures* This Q’s &A’s are not attached as part of the Reference Materials for Shareholders, but for the purposeof explaining the Plan lucidly. For more and accurate details, please refer to pages 4 of this convocation
notification document and the press release “Introduction of the Measures to Prevent Large-scale
Acquisition of Our Company Shares (Takeover Defense Measures)” as of May 21, 2008.
Q1.

What is the purpose of JAPEX’s introduction of the takeover defense measure?

A. The Plan, for which we kindly ask your approval in Item 6, sets forth the procedures to follow in theoccurrence of a large-scale acquisition of JAPEX shares. It ensures the information and timenecessary for our shareholders to decide whether to accept the acquisition or not and for the Board of
Directors to propose an alternative plan, as well as to secure the opportunities for consultation,negotiation, or any other communication with the Acquirer.
Through this, we further aim to protect our (1) advanced oil and gas exploration technology, (2)developmental technology and operational know-how for oil and gas fields both in Japan and abroad,and (3) establishment of national pipeline networks for natural gas transportation and the trust
relationship with stakeholders including customers, shareholders, and communities based on theaccumulation of a stable, long-term supply achievements that uses the above resources. The Plan also
serves the purpose of preventing harm to our unified business model in which JAPEX conduct
exploration, development and distribution, in continuity, upon our ownership of oil and gas interests,
and thus ensures and improves our corporate value and consequently the common interest of ourshareholders.
Q2.

Describe the overview of the Plan.

A. This Plan is an in-advance warning type rights plan that involves the allotment of share options
without contribution at the time of emergency. Specifically, the plan involves the following matters:(1) Acquirers who wish to purchase 20% or more of the shares issued by JAPEX shall submit the
document including information required to review the contents of acquisition prior to theacquisition and a covenant that pledges compliance with the procedures stipulated in the Plan.
(2) The Independent Committee may request the submission of opinions and its supporting
materials, and an alternative plan (if such exists) concerning the above contents of acquisition, tothe Board of Directors.
(3) The Independent Committee shall, after receiving the information from the Acquirer and theBoard of Directors, upon obtaining advice from outside experts, review the contents ofacquisition submitted by the Acquirer and the alternative plan from the Board of Directors,
negotiate with the Acquirer, and disclose information to our shareholders.
(4) In case the Acquirer does not comply with the Plan or when it is clearly recognizable that theAcquirer will infringe the common interest of our shareholders, and deemed appropriate tocounter this, JAPEX will pass a resolution on the implementation of the allotment of shareoptions without contribution by judgment of the Independent Committee.
(5) The share options allotted in relation to the exercise of the Plan includes an exercising condition
which restricts the exercise of share option rights to Acquirers and an acquisition condition that- 20 -

JAPEX can acquire share options in exchange for JAPEX shares from holders other than the
Acquirer. If JAPEX shares are issued to our shareholders other than the Acquirer according to this,the ratio of the voting rights of JAPEX held by the Acquirer may be diluted to a maximum of
50%.
Q3.

In what specific ways is the JAPEX’s takeover defense measure highly reasonable?

A.

The characteristics representing the Plan’s reasonableness are listed below:
Item

Intention of theshareholders

Independent
Committee

Requirements forcommencing theprocedure
Requirements forexercise
Effective period(Sunset provision)

Abolition

Purpose /Requirements forexercise / Information
disclosure(including procedure)
Sending ofConvocation Notices

JAPEX’s Takeover Defense Measure
・ The introduction of the Plan is subject to the approval of ourshareholders at the 38th ordinary general meeting of shareholders.
・The implementation of the Plan is also subject to the approval of ourshareholders at a general meeting of shareholders, in the caseprescribed in the Plan.
・The plan may be abolished on the spot upon the resolution at a general
meeting of shareholders or the resolution of the Board of Directors,
even prior to its expiration --- the continuity or discontinuity of thePlan can depend on the shareholders.
・An Independent Committee, with high independency, that consists ofoutside directors, etc. is established.
・The initial members of the Independent Committee are 1 outside
director, 1 outside auditor, and 1 outside expert, each with highindependency.
・The Plan must undergo the advisory of the Independent Committee whocome to their decision upon considering the specific designatedrequirements before the exercise of the Plan.
・The Independent Committee may receive advice from a third-party
expert at the expense of the company.
Holding 20% or more of the voting rights or tender offers that intend theacquisition of 20% or more of the voting rights
Reasonable and objective requirements
3 years
May be abolished at any time by a resolution at a general meeting ofshareholders or a resolution of the Board of Directors(not a dead-hand measure of which implementation cannot be deterred
even with the replacement of over half of the constituting members of theBoard of Directors and also not a slow-hand type that takes time to deter
the exercise)
Sufficient information disclosure through press releases, agendas andreference documents for the general meetings of shareholders, and at thegeneral meetings of shareholders
Sent out on June 3 (Tuesday), 3 weeks before the 38th ordinary general
meeting of shareholders

Q4.

What effects are expected for shareholders from the introduction of the Plan?

A.

The allotment of share options without contribution will not be performed at the point of
introduction of the Plan, and therefore, there will be no direct and specific impact on our- 21 -

shareholders.
In case an Acquirer emerges and the Plan is thus exercised, the allotment of share options
without contribution will be exercised to the shareholders other than the Acquirer. Shareholders who
received the allotment of the share options without contribution will, after the commencing date of
the period of exercise, be issued, in principle, 1 JAPEX share per share option through paying
money equivalent to the exercising amount specified in the resolution concerning the allotment ofshare options without contribution within the value range of one yen as lower limit and one half of themarket value of one JAPEX share as higher limit.
However, in case JAPEX is issuing JAPEX shares in exchange of acquiring share options, theshareholders other than the Acquirer will be issued the corresponding JAPEX shares without
performance of the exercising procedures on the part of the shareholders. In case JAPEX performs
such an acquisition procedure, the shareholders other than the Acquirer will receive JAPEX shares
without the exercise of share options and the monetary payment equivalent to the exercising value.
As a result, in principle, the dilution of owned JAPEX shares shall not occur to the shareholders
other than the Acquirer.
Q5.

In case the allotment of share options without contribution is implemented, what procedures are
required on the part of the shareholders?

A. (1) Transfer of shareholder’s names in the registry
In case the Board of Directors pass the resolution on implementation of the allotment of shareoptions without contribution, JAPEX will release a public notice concerning the date of allotment
for the allotment of share options without contribution. The allotment of share options without
contribution will be exercised to the shareholders whose names are listed or recorded in the latest
shareholder registry or substantial shareholder registry as of the date of allotment. Therefore, we
kindly ask our shareholders to proceed to the procedure for transfer of shareholder’s name at theirearliest before the date of allotment. However, transfer of shares is not required of depositary sharecertificates at the Japan Securities Depository Center. Furthermore, the shareholders whose names arelisted or recorded in the latest shareholder registry or substantial shareholder registry as of thedate of allotment will consequently become holders of the share options on the effective date of theallotment of share options without contribution, with no other procedures.
(2) Exercise of share options
In the case where share options allotted through the allotment of share options without
contribution are to be exercised, shareholders, in principle, are asked to submit the request for the
exercise of share options (form designated by JAPEX including a provision with a covenant
pledging that the relevant shareholders are not Acquirers) of the share options and otherdocuments necessary for the exercise of share option rights, during the period of exercise of shareoption rights. In principle, we ask our shareholders to pay the money equivalent to the exercising
amount specified in the resolution concerning the allotment of share options without contribution
within the value range of one yen as lower limit and one half of the market value of one JAPEX shareas higher limit.
(3) Procedures for the acquisition of the share options by JAPEX- 22 -

In case the Board of Directors has decided to issue JAPEX shares in exchange of acquiring
share options, JAPEX will, according to statutory procedures, acquire the share options on thedate otherwise determined by the Board of Directors. In this case, shareholders are exempt fromperforming the exercising procedures, but may be asked to submit a document in a designatedform, including a provision with a covenant pledging that the relevant shareholder is not an
Acquirer.
Q6.

Among the condition for exercise of the share option rights allocated by the allotment of shareoptions without contribution, it is prescribed that, under the applicable foreign law, non-residents(residents in foreign countries), who require prescribed procedures for the exercise of the share options,
may not, in principle, exercise the share options. Do non-residents suffer losses from the Plan?

A.

First of all, if the applicable foreign law of the country in which the non-resident shareholder resides
does not require prescribed procedures including registration of securities upon the exercise of shareoptions, such non-residents can exercise the share options.
Secondly, even if the above prescribed procedures are necessary in the country that the
non-resident shareholder resides when share options are exercised, in cases where such shareholder
can be exempted from such procedures, the shareholder, in principle, can exercise the share option
rights under the condition that requirements for such exemption are satisfied.
Furthermore, in case JAPEX acquires share options in consideration of JAPEX shares, the shareoptions held by non-residents would also be the objects of the acquisition, according to the applicablelaws. When such condition arises, JAPEX shares shall also be issued to the non-residents.
END of Document- 23 -

Consolidated Balance Sheets(As of March 31, 2008)(Unit: millions of yen)Accounting titles(Assets)
Current assets
Cash and deposits in banks
Trade notes and accounts receivable
Marketable securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Fixed assets
Property, plant and equipment
Buildings and structures
Wells
Machinery, equipment and vehicles
Land
Construction in progress
Other
Intangible fixed assets
Goodwill
Other
Investments and other assets
Investments in securities
Long-term loans receivable
Long-term accounts receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Allowance for losses on overseas
investments
Total assets

AmountAccounting titles(Liabilities)
89,008 Current liabilities
27,794 Trade notes and accounts payable
25,865 Accrued income taxes
17,724 Accrued bonuses to officers
10,492 Accrual for losses resulting from disasters
2,295 Other
4,846(10) Long-term liabilities
Long-term debt
531,937 Deferred tax liabilities
Accrued retirement benefits for employees
141,162 Accrued retirement benefits for officers
54,722 Accrued estimated cost of abandonment
18,751 Accrual for losses on projects
35,046 Other
15,305 Total liabilities
12,893
4,443(Net assets)
Shareholders’ equity
6,179 Common stock
2,092 Retained earnings
4,086 Treasury stock

384,595 Valuation, translation adjustments andothers376,137 Unrealized holding gain on securities
7,489 Unrealized gain on hedging instruments
2,065 Translation adjustments
749
5,872 Minority interests in consolidated
subsidiaries(97)(7,621) Total net assets

620,946 Total liabilities and net assets(Amounts truncated to millions of yen)

- 24 -

Amount
38,857
13,469
1,414
102
487
23,382
133,862
21,922
101,477
5,272
511
4,126
310
241
172,720

259,506
14,288245,225(7)
180,346
179,629
(0)
716
8,373

448,226

620,946

Consolidated Statements of Income
From April 1, 2007
To March 31, 2008
Accounting titles

Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Gain on sales of securities, net
Equity in earnings (losses) of non-consolidated
subsidiaries and affiliates accounted for underequity method, net
Reversal of allowance for losses on overseas
investments
Reversal of accrual for losses on projects
Other
Non-operating expenses
Interest expense
Loss on sales of securities, net
Loss on devaluation of securities
Provision for accrued estimated cost of abandonment
Foreign exchange loss
Other
Ordinary profit
Extraordinary gain
Reversal of allowance for doubtful accounts
Gain on sales of fixed assets
Extraordinary loss
Loss on disposal of fixed assets
Restoration expense for earthquake disasters
Other
Income before income taxes
Current
Deferred
Minority interests
Net income(Amount truncated to millions of yen)

- 25 -(Unit: millions of yen)Amount207,638
143,682
63,955
13,55930,77019,625
1,606
5,184
85
2,193

1,110
291
1,580
313
172
1,578
748
1,242
375

1
1
218
709
18
6,165
(738)

12,051

4,430
27,2472945
26,305
5,426
780
20,097

Consolidated Statement of Changes in Net Assets
From April 1, 2007
To March 31, 2008
(Unit: millions of yen)
Valuation, translation
adjustments and others

Shareholder’s equity
Common stock

Balance as of March
31, 2007Net changes duringconsolidated fiscal
year
Cash dividends
paid
Net income
Purchase oftreasury stock
Net changes in
items other thanthose inshareholders’equityTotal changes during
the period
Balance as of March
31, 2008

14,288Retainedearnings

227,413

Total
Treasury stock shareholder’sequity(5)

241,696

Unrealized
Unrealized gain
holding gain on from hedging
instruments
securities

168,234

55

Total valuation,translation
adjustments
and others

Translation
adjustments

707

168,997

Minority
interests

Total net assets

8,234

418,929(2,286)(2,286)(2,286)20,097

20,097

20,097

(1)

(1)

(1)

11,394(56)

911,348138

11,487－

17,811(1)

17,810

11,394(56)

911,348138

29,297

14,288245,225(7)

259,506

179,629(0)716

180,3468,373

448,226(Amount truncated to millions of yen)

- 26 -

Balance Sheets(As of March 31, 2008)
Accounting titles(Assets)
Current assets
Cash and deposits in banks
Accounts receivable
Marketable securities
Commodities
Products
Raw materials
Inventory
Advances account
Advance expense
Deferred tax assets
Accrued revenue
Short-term loans to affiliated companies
Accrued receivable
Advance money
Other
Fixed assets
Property, plant and equipment
Buildings
Structures
Wells
Machinery and equipment
Vessels
Vehicle and delivery equipment
Tools, instruments, and equipments
Land
Construction in progress Drilling inprogress
Intangible fixed assets
Lease tenant right
Software
Other
Investment and other assets
Investments in securities
Affiliated company shares
Long-term loans receivable
Long-term loans to affiliated companies
Long-term advance expense
Long-term accrued receivable fromaffiliated companies
Other
Allowance for doubtful accounts
Allowance for losses on overseas
Investments
Total assets(Amounts truncated to millions of yen)

(Unit: millions of yen)AmountAccounting titles
Amount(Liabilities)
50,194 Current liabilities
27,3283,681 Accounts payable
12,002
19,906 Long-term debt to be returned within a year
2,278
11,015 Accrued liabilities
4,653
7 Accrued expense
7,224
3,809 Accrued income tax
453
2,437 Deposits payable
141
2,457 Accrued bonuses to officers
87
0 Accrual for losses resulting from disasters
487
423
2,117 Long-term liabilities
131,326
81 Long-term debt
21,922885 Deferred tax liabilities
101,370876 Accrued retirement benefits for employees
4,628
1,721 Accrued retirement benefits for officers
460
772 Accrued estimated cost of abandonment
2,917
Other
27
517,275
118,783 Total Liabilities
158,655
8,207
39,892
15,361(Net assets)
26,796 Shareholders’ equity
229,023
2 Common stock
14,2888 Retained earnings
214,742
2,412
Earned surplus reserve
3,572
12,761Other retained earnings
211,170
11,807
Reserve for the allowance for losses on
399
1,533
overseas investments
1,282
Reserve for exploration
17,800178
Reserve for extraordinary amortization
96
880
Reserve for advanced depreciation of295
223
fixed assets
397,209
Reserve for exploration investment
47,246330,139
Contingent reserves
131,600
76,017Retained earnings carryforward
13,732926 Treasury stock(7)
11,469 Valuation, translation adjustments and
179,791
others
1,566 Unrealized holding gain on securities
179,791
1,701
2,664 Total net asset(64)(27,212)408,814567,469 Total liabilities and net assets

567,469- 27 -

Statements of Income
From April 1, 2007
To March 31, 2008
(Unit: millions of yen)Accounting titles

AmountNet sales

171,563

Cost of sales

124,244

Gross profit

47,319

Exploration expenses

6,135

Selling, general and administrative expenses

22,623Operating income

18,560Non-operating income
Interest income

645Interest on securities

342

Dividend income

5,761

Other

974

7,724

Non-operating expenses
Interest expense

310

Loss on devaluation of securities
Provision for allowance for losses on overseas
investments

1,417
4,500

Provision for accrued estimated cost of abandonment
Foreign exchange loss

532
1,437

Other

361

Ordinary profit

8,559
17,726Extraordinary gain
Gain on residual property

194

194

Extraordinary loss
Loss on disposal of fixed assets

125

Restoration expenses for earthquake disasters

717

Income before income tax

843
17,077

Current

3,517

Deferred(719)

Net income

2,798
14,279(Amounts truncated to millions of yen)

- 28 -

Statement of Changes in Net Assets
From April 1, 2007
To March 31, 2008
(Unit: millions of yen)

Total shareholder’s equity(5,200)－－(3,500)

3,500

－

－

24

－

－

11

－

－

11,000 (11,000)(2,286)
14,279－(2,286)
14,279(1)－(2,286)
14,279
(1)

(1)
(7)

11,991
229,023306 47,246 120,600

Treasury stock

Total retained earnings

5,200

120

Contingent reserves

Retained earnings
carryforward

Reserve for exploration
investment

202,749

399 16,100

Reserve for advanced
depreciation of fixed
assets

14,403

Reserve for extraordinary
amortization

3,572

Reserve for exploration

14,288Reserve for loss onoverseas investments

Earned surplus Reserve

Balance as of March 31, 2007

Common Stock

Shareholder’s equity
Retained earnings
Other retained earnings(5)

217,032

Net changes during fiscal year
Funding on reserve for exploration
Appropriation of reserve for
exploration
Appropriation of reserve forextraordinary amortization
Appropriation of reserve foradvanced depreciation of fixed
assetsReserve for contingent reserves

(24)
(11)

Cash dividends paid
Net income
Purchase of treasury stock
Net changes in items other than thosein shareholders’ equity
Total changes during the fiscal year
Balance as of March 31, 2008－
14,288－
3,572－ 1,700
399 17,800

(24)
96

(11)
－ 11,000
295 47,246 131,600

Valuation, translation adjustments and others
Unrealized
holding gain on
securities
Balance as of March 31, 2007

167,913

Unrealized gainfrom hedging
instruments

Total ofvaluation,translation
adjustments andothers44

167,957

Total net
assets384,989

Net change during fiscal year－

Funding on reserve for exploration
Appropriation of reserve for
exploration
Appropriation of reserve forextraordinary amortization
Appropriation of reserve foradvanced depreciation of fixed
assetsReserve for contingent reserves－－－－(2,286)
14,279(1)

Cash dividends paid
Net income
Purchase of treasury stock
Net changes in items other than thosein shareholders’ equity
Total changes during the fiscal year
Balance as of March 31, 2008

11,877(44)

11,833

11,833

11,877
179,791(44)－

11,833
179,791

23,825
408,814(Amounts truncated to millions of yen)

- 29 -(671)
13,732

11,993214,742