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

Presentation Meeting ofConsolidated Financial Results
for the Six Months Ended September 30, 2016
November 9 , 2016

Japan Petroleum Exploration Co .,Ltd.

Cautionary Statement
Any information contained herein with respect to JAPEX’s plans, forecasts, strategies
and other statements that are not historical facts are forward-looking statements about
the future performance of JAPEX. Readers should be aware that the actual results andevents may be different from these projections because of various factors that could
occur in the future.
The provision of this document should not be construed as a solicitation for investment.
Copyright : All information contained herein is protected by copyright, and may not be
copied or reproduced without prior consent of JAPEX.
Note: Abbreviations used herein are as follows:
1H = First half (1Q-2Q)
2H = Second half (3Q-4Q)(a) = Actual results(f) = Forecasts
FY = Fiscal Year (FY3/17, for instance, means 12 months ending March 31, 2017)
Any inquiries about the information contained herein or other Investor Relations questions arerequested to be directed to:Investor Relations Group, Media & Investor Relations Dept.
Japan Petroleum Exploration Co., Ltd.
Tokyo, JAPANTEL: +81-3-6268-7111

2

Contents

Ⅰ. Business Overview
President Hideichi Okada

Ⅱ. Consolidated Financial Results for the Six
Months Ended September 30, 2016
Managing Executive Officer Michiro Yamashita

Ⅲ. Revised Full Year Forecasts for FY3/17
Managing Executive Officer Michiro Yamashita

3

Ⅰ. Business Overview
President
Hideichi Okada

4

Long-Term Business Vision and Medium-Term Business Plan
“Transformation to an Integrated Energy Company with a Focus on Oil and Gas E&P”
 If we liken our business into a tree, E&P business will be “root” and “trunk”, and we will groweach business around E&P business as “the well-proportioned wood”
Power generation
business

1.2 million kW＋αPower generation business
FID

Domestic gas supply
Completion of Soma LNG
terminal construction

Domestic gas

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

E&P business

Improverevenue andprofitshareholder
returnE&P business

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

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

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

Environment andinnovative technology
business

RRR＞1

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

CSR Management

Re-Investment Cycle

FY3/16 – FY3/20
5

Enhanceshareholder
returnBusiness prospect
Geothermal generation,
MH and CCS

E&P business
CSR Management

FY3/26

2013-09
2013-10
2013-112013-12
2014-01
2014-022014-032014-04
2014-05
2014-06
2014-072014-08
2014-09
2014-10
2014-11
2014-12
2015-01
2015-022015-032015-04
2015-05
2015-06
2015-072015-08
2015-09
2015-10
2015-11
2015-12
2016-01
2016-02
2016-03
2016-04
2016-05
2016-06
2016-072016-08
2016-09［Crude Oil Prices US$/bbl]
$120
¥160

$110
¥150

$100

$90

Crude Oil prices
US$/bbl (Left axis)
Exchange Rate
JP¥/US$ (Right axis)

6

¥140

¥130

$80
¥120

$70
¥110

$60
¥100

$50
¥90

$40
¥80

$30
¥70

Japan Crude Cocktail (JCC) Price in the first 10 days of October 2016 on a prompt
report basis: US$ 45.38/bbl JP¥ 101.53/US$［Foreign Exchange Rate JP¥/US$］

Trends in Crude Oil Prices and Foreign Exchange Rate

Revised Forecasts for FY3/17 (Highlight)
FY3/16
Billion ¥Full (a)FY3/17
Previous
forecasts
1H (f)
Aug.5, 2016 ①

1H (a) ②

Difference

Previous
Revisedforecasts
forecasts
Full (f)Full (f)Aug.5, 2016 ③ Nov.8, 2016 ④

1H
（②-①）

Full
（④-③）

240.3

90.1

91.4

198.0

189.5

+1.3

-8.5

Operating income(loss)

8.3

-3.3

-3.2

-0.5

-1.2

+0.1

-0.7

Ordinary income(loss)

4.6

-0.4

-2.2

0.7

-3.7

-1.7

-4.4

Profit (loss)
attributable to ownersof parent

2.0

0.3

-1.2

1.8

-0.3

-1.6

-2.2

US$/bbl

51.48

43.81

41.64

46.87

43.34

-2.17

-3.53

Bitumen price US$/bbl

21.05

9.90

9.94

10.31

10.28

+0.04

-0.03

Exchange rate JP¥/US$

121.06107.34107.67106.10103.63

+0.33

-2.47

Net sales

JCC price7

Current Status of Ongoing Projects (Highlight)

E&P business

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

Canada: Shale Gas and LNG Project

Soma LNG Terminal

Upstream: Shale gas production under controlled investment
Midstream: Environmental Assessment approved by CEAA
in September, 2016, and analyzing 190 attached conditions



Under stable construction toward the commercial
commencement in March 2018
Launched development of the operation organization for thecommencement

Soma Natural Gas-fired Power Generation Project
Canada: Oil Sands Project

Temporary suspension of Bitumen production in 3.75 section
area
Plan to commence production of expansion area in mid 2017,
under consideration of improved business plan

Decision on commercialization of power generation projectEnvironment and Innovative Technology Business<Highest Priority Challenges>
Accelerating large projects such as CCS, Methane Hydrate

CCS

Iraq : Garraf Project

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

Methane HydrateIndonesia: Kangean ProjectCommencement of CO2 injections operations in large-scale
CCS demonstration project on April 2016.

Preparation for the second offshore production test in 2017

Geothermal Energy

Preparing for the commencement of TSB Phase-2 gas
production in 2019 2Q
Exploration phase drilling in South Saubi structure

8Drilling the 3rd exploratory well in Musa-dake (Mt.) for
geothermal research

E&P BusinessCurrent status of Canada Shale Gas and LNG project【Upstream】【Midstream】
Measures in response to low crude oil prices Make a comprehensive judgment of FID
Low gas price (Premise price 2016) environment after scrutiny of additional conditions of theEnvironmental Assessment by CEAA
CA$1.74/Mcf (After deduction of royalty;
Forecasts Nov. 8, 2016 ) Suppression of investmente.g. 2015 actual drilling number: 159→2016 planning drilling number: 36

 Increased production efficiency
Improvement of production capacity per minethrough the improvement of the drilling
locations and well design

Examples of the 190 conditions attachedto the approval
1. Placing a maximum capacity on
greenhouse gas emissions
2. Set a limit on the construction period
for part of the underwater work

Suppress the investment (Drilling work)in 2016

Rendering of the LNG plant

9

E&P Business Hangingstone Oil Sands Project- Improved Business Plan 【Current Status and Forecasts】
 Progress (as of Sep.): 96%
 Impact of temporary
suspension due to wildfire in
Fort McMurray area anddelay in CPF constructionworks Production Start-up: Mid 2017
 Cost forecasts: Approx. CA$1.5B(CA$250MM increase from LE)

 Even under the current oil
price, positive operating net
cash flow
2016 2H

US$45/bbl (f)* Production operations in Demo will be
determined taking into accountexpected oil price and OPEX.

【Consider and Implement Improved Business Plan】
To maximize project value, steadily implement Step
1 and pursue possibility to realize Step 2(Step1: Improvement by cost reduction)
Cost reduction within the current concept① Reduction of future CAPEX (wells and FF) by
optimization of engineering and work sequence② Reduction of G&A and OPEX by optimization oforganization, personnel costs, etc.
③ Pursue possibility to reduce transportation cost by
sharing facilities with third party(Step2： Adoption of new technology)
Pursue possibility to improve efficiency of
production by applying SA-SAGD method(co-inject condensate)① Reduction of OPEX by saving fuel gas consumption② Acceleration of recover of investment withaccelerated production

ハンギングストーン拡張開発中央処理施設建設現場

10

Domestic natural gas supply business

Commercialization of Natural Gas-Fired Power Generation Project

The Natural Gas-fired Power Generation Projectat Soma Port in Fukushima Stable supply of inexpensive and low-environmental load electricity to the wide area inthe electricity liberalization
Objective
 Reconstruction and contribution to the economic and industrial revitalization of thecoastal area of Fukushima
Nov. 2013
Started feasibility study of power generation project by JAPEX
Apr. 2015
Founded Fukushima Gas Power Co., Ltd. (FGP) by JAPEX and Mitsui & Co., Ltd.
Taking over the investigation and procedures works of this project from JAPEX

Implementation of Environmental Assessment processes required for the power plant construction
Evaluation of the economics for the decision of commercialization

Oct.11, 2016 Decision on commercialization of power generation project① Decision on Commercialization of the Project
 Commencement of construction after completion of Environmental Assessment processes (expected
in 2017 Summer)
 Start to investments and preparations for the commencement of construction in the site
② New Shareholders (Business Partners) Participation in FGP
 In addition to JAPEX and Mitsui & Co., Ltd., newly participations of Osaka Gas Co., Ltd., Mitsubishi
Gas Chemical Co., Inc., and Hokkaido Electric Power Co., Inc.
③ Adopt “Tolling System”
 Possible its own LNG procurement and power supply and sales business for each business partners
11Dividend Payout of FY17/3
JAPEX’s Basic Policy
 Maintain Long-term and Stable Dividends for shareholders
 Set the Dividend based on Medium to Long Term Business Forecasts and Retained Earnings

Interim Dividend Payout and Year-end Dividend Forecast Revision of FY3/17
 Regrettably Revised the Interim Dividend due to Significant Downturn of our Financial Results andForecasts as below
 Also Changed the Year-end Dividend Forecast into “Undetermined”
 Plans to announce right after the decision considering our financial forecasts
Interim Dividend Payout from Earnings of FY3/17(Announced on November 8, 2016)
InterimYear-end

Total

Latest dividend forecast

25.00 yen

25.00 yen

50.00 yen

Revised dividend forecast

5.00 yen

Undetermined

Undetermined

Previous dividend result (FY16/3)

25.00 yen

25.00 yen

50.00 yen Consider and Execute the Measures of Financial Improvement due to seriously accepted the result of
lower revisions of financial forecast and cutting the interim dividend e.g. Company-wide Level Cost Reductions Including Compensation Reduction of Directors andOfficers, Sales of our Portfolio Assets, etc.
 Struggle for the transform of corporate structure to maintain the corporate soundness even in low oil
price environment, and pursue to enhance our corporate value
12＜Appendix＞ E&P Business (1)Initiatives in Japan and Overseas
Oil Sands project

U.K./Norway(Temporary suspension of
production / Development)

Sakhalin

Shale Gas/LNG project

Sakhalin 1 project

U.K. North Sea Block(Production of natural gas /planning of LNG plant)(Production & Development)(Exploration)

CanadaDomestic oil and gas fields(Production & Development) (Production)
Japex (U.S.) Corp.
Iraq Garraf oil field

Middle East

(Production)

Southeast Asia
Indonesia Kangean Block(Production & Development)

focus areas
Blocks owned by our consolidated
subsidiaries or equity-method affiliates
13＜Appendix＞ E&P Business (2)Domestic Initiatives
Domestic exploration•

Domestic exploration (Geophysics,
Exploration well) is not scheduled
in FY3/17•

Pursuing additional domestic E&P
potential by utilizing government
basic surveys•

Based on the results so far,considering efficient exploration
plan

Operates 10 domestic oil and gas fields

Yurihara
oil and gas field

Yufutsu
oil and gas field

Katakai gas field

Compensation of domestic reserves
and pursue the maintenance of
production volume

Iwahune-oki
oil and gas fieldYoshii gas field

14

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

LNG project(Midstream)

Block /
Proposed site

North Montney Area,
British Columbia, Canada

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

Interest

10% Interest

10% Equity

Operator

PETRONAS(Including subsidiaries)

PETRONAS(Including subsidiaries)

・Production and sales of
shale gas
Current status
・Reducing the development
investment

Prince Rupert(Proposed LNG
plant site)

North Montney（Block)Pipeline
Analyzing 190 attachedconditions.

Vancouver Calgary
Export LNG to Japan■Project Schedule
April 2013

Conclusion of contract, Production and sales of Natural Gas

June 2015

Conditional Final Investment Decision

July 2015

Approval of the Project Development Agreement by theLegislative Assembly of B.C.

Sep. 27, 2016

Environmental-assessment was approved by CEAA.
 Consultation for FID between partners after analyzing
190 conditions.

2022 or later

CalgaryFirst LNG production (12MMtonnes/y)15

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

Canada Oil Sands Co., Ltd. (CANOS)

Company

Operator : Japan Canada Oil Sands Ltd. (JACOS)

Hangingstone 3.75 section

100％ Interests

Approximately 5,000 bbl/d(Suspending the production operation)

Temporary suspensionof the production(Cumulative production：
35.07M bbl as of end of
March 2016)

Expansion project of undeveloped part ofHangingstone area
Block

75％ Interests

In development

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

12％ Interests

In appraisal

Other bitumen leases(include Corner, Chard & Thornbury)

Considering future
activities

Calgary
FORT McMURRAY Area
Hangingstone
3.75 Section“Demo area”

Hangingstone
expansiondeveloping area

Corner JV lease■Schedule of Hangingstone Expansion
Feb. 2013

Started early civil work for construction facilities

May-Jun. 2014

Construction temporary pause by Alberta wildfires

Dec. 2016

Completion of construction

Mid 2017

Commencement of production

Construction site of central facility for
Hangingstone Expansion

16

＜Appendix＞ E&P Business (5)Iraq : Garraf Oil Field
Project
company
Interest

Japex Garraf Ltd.

30％ (cost share 40%)
Operator ： PETRONAS

Field

2013

GarrafBaghdadGarraf oil field

In Production

Samawah

Expected cumulative production :2030

Around 1.1 billion bbl

Nasiriyah

Basrah■ Time Schedule
First oil production on August 31
2013

Average daily production :Approximately 64,000 bbl/d2014 - 2016

Average daily production
2014 : Approximately 84,000 bbl/d2015 - : Approximately 100,000 bbl/d2017 onwards

Gradual increase from 100,000 bbl/d to230,000 bbl/d subject to technical andcommercial viability

17

Garraf crude
oil hasoil
beensmoothly fromshippedfrom oil
BasrahSteadyproduction
Garraffield

＜Appendix＞

E&P Business (6)Indonesia: Kangean BlockWest Kangean gas field(Exploration)

Pagerungan Utara oil field（Production suspended）

Jakarta
Pagerungan gas field (Production)
West Java Pipeline

Java Island
Bali Island
to Surabaya

Kangean Energy

ProjectIndonesia Ltd. (KEI)
Company

Sepanｊang Island oil field(Production suspended)

TSB gas field（Production-partly）
Sirasun gas field

Terang gas field

Batur gas field+ 2 others, Equity-method affiliate

Interest

25％ (Operator : KEI)

■ production volume : approximately 50,000boe/d□ the TSB gas field(Phase1: Terang ) : Production started in end-May 2012.
Maximum production 0.3billion cf/d
(Approximately 50,000boed)(Phase2: Sirasun, Batur ) : Targeting the start of production in
2Q 2019.
□South Saubi Structure : Drilling Campaign (Aug.-Oct. 2016)18

FPU (floating Production Unit) in the Terang gas field＜Appendix＞ E&P Business (7)Sakhalin 1 Project
Project
Company

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

Interest

SODECO

Sakhalin 1 Consortium
Exxon Neftegas Ltd.
30%
Others40%

SODECO
30%

Minister of
Economy,Trade andIndustry

Arkutun-Dagi

JAPEX
15.29%

50.00%

Others
34.71%

ChayvoIn Production at each fields

Block

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

Odoptu,* The Chayvo field achieved a new world-record ofextended reach drilling.

ArkutunDagi

Total production volume of Crude Oil：Approximately 180,000 bbl/d* Average production volume per day on 2016,
based on JAPEX’s estimates.

19

The Arkutun-Dagi offshore field＜Appendix＞ Domestic Natural Gas Supply Business (1)Construction of Soma LNG Terminal■Soma LNG Terminal
Site

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

Capacity

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

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 (Planned)*In addition to the above, it plans to construct a new LNG vaporization equipment
and LNG storage tank (230,000kl) in accordance with the implementation of thepower generation project.

■Soma-Iwanuma Gas Pipeline
Starting / end
point

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

Caliber

20B

Pressure

7Mpa

LengthAround 39km

Commencementof operation

March 2018 (Planned)

Rendering of the Soma LNG Terminal and “Soma Port
Natural Gas-fired Electric Power Generation Plant(tentative name)”

20

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

Fukushima Gas Power Co., Ltd.*

MethodGas Turbine and Steam Power (Combined Cycle)

Capacity

1.18 million kW (2 units of 0.59 million kW)

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

Thermal efficiency

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

Gas turbine

1,500°C Class

Steam turbine

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

Heat recovery boiler

Rendering of the Soma LNG Terminal
and the Electric Power Generation Plant

Targeting commercial operations toTokyo metropolitan area in 2020

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

■Schedule
Apr. 23, 2015

Establishment of Fukushima Gas Power Co., Ltd.

Oct. 11, 2016

Decision on commencement of construction2017 Summer

Commencement of construction after completion of Environmental
Assessment process2020 Spring

Commencement of commercial operations*Investment ratio (As of Oct.11,2016) : JAPEX 33%, Mitsui & Co., Ltd. 29%, Osaka Gas Co., Ltd. 20%,
Mitsubishi Gas Chemical Co., Inc. 9%, Hokkaido Electric Power Co., Inc. 9%

21

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

＜Appendix＞ Environment and innovative technology
Geothermal, MH, CCS, Solar Power
Geothermal Power

CCS

Mt. Musa area
（Shibetsu Town）

Tomakomai City

●
●

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

Photo provided by Japan CCS Co., Ltd

Facilities of CCS demonstration
project in Tomakomai city

Solar Power

Provisional jet testin Mt. Musa area

Methane Hydrate● Bandai area

The mega-solar power plant locatedwithin Hokkaido District Office site

●Offshore Atsumi and
Shima peninsulas

22

Photo provided by JOGMEC

The world’s first offshore methane hydrate
gas production tests

Ⅱ. Consolidated Financial Results
for the Six Months Ended September 30, 2016

Managing Executive Officer
Michiro Yamashita

23

1H Result

Actual Financial Results for 1H FY3/17 (Summary)Billion ¥Net Sales
Operatingincome (loss)
Ordinary income(loss)
Profit (loss)
attributable toowners of parent

JCC price
US$/bbl
Bitumen price
US$/bblExchange rate
JP¥/US$

FY3/16

1H (a)

124.1
5.4
8.8
7.9

FY3/17
1H (f)
Aug. 5 , 2016

90.1
-3.3
-0.4
0.3

FY3/17
1H (a)

91.4
-3.2
-2.2
-1.2

Difference%

Billion ￥

140.0

+1.5%

+ %
+ %
+ %

Net Sales (left axis)

Billion ￥

124.1

11.0

120.0
100.0
80.0

9.0

8.8
7.9

91.4

90.1

5.0

5.4

3.0

60.0

59.21

43.81

7.0

41.64

0.3

1.0

40.0

26.16
121.449.90
107.34

9.94

-0.4
20.0

107.67-3.3

0.0
FY3/16 1H(a)Main points of difference with previous forecasts (Aug.5, 2016) and actual results□Net Sales+ ¥1.3 billion
Re-schedule of crude oil sales of Garraf Oil Field, Iraq
□Operating income+ ¥0.1 billion□Ordinary income- ¥1.7 billion
Fluctuations in foreign currency exchange rate (-2.2billion), Equity in earnings (+0.2billion)□Profit attributable to owners of parent - ¥1.6 billion

24

FY3/17 1H(f)

-1.0

-1.2
-3.0
-2.2
-3.2
-5.0

FY3/17 1H(a)right axis
Operating income
Ordinary income
Profit attributable owners of parent

1H Result

Actual Sales of Natural Gas in 1H FY3/17 (vs 1H FY3/16)
FY3/16
1H(a)Sales volume : Million M3
Net sales : Million ￥Natural gas

FY3/17
1H (a)

Difference

Sales volume

820

845

+24

Net sales

33,031

23,184-9,846

Breakdown
Domestic gas

Sales volume

579

531

-47

(Domestically produced gas)

Sales volume

(361)

(324)

(-36)

Overseas gas

Sales volume

241

313

+71

Million M3

1,000
800
600
400
200
-

Sales volume of overseas gas

241

313
Sales volume of domestic gas

579

531
Sales volume of “Overseas gas” stated herein are amount of Japex (U.S.)
Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries.

FY3/16 1H

FY3/17 1H

25

1H Result

Actual Sales of Crude Oil in 1H FY3/17 (vs 1H FY3/16)
Sales volume : Thousand KL
Net sales : Million ¥FY3/16

FY3/17

1H (a)

1H (a)

Difference

Sales volume

1,480

1,715

+235

Net sales

57,14843,792-13,355

Sales volume

180

149

-30

Net sales

8,427

4,645

-3,781

Sales volume

669

986

+317

Net sales

24,41623,112-1,303

Sales volume

143

91

-51

Net sales

2,927

589

-2,338JCC price

US$/bbl

59.21

41.64

-17.57

Bitumen price

US$/bbl

26.16

9.94

-16.22

Exchange rateJP¥ / US$

121.44107.67-13.77

Crude oil

Decline in sales prices

Breakdown
Domestic crude oil *1

Overseas crude oil *2

Bitumen *3

Assumptions

26*1

Sales volume and net sales of“Domestic crude oil” do notinclude purchased crude oil.

*2

Sales volume and net sales of“Overseas crude oil” areamounts of 3 overseas
subsidiaries (Japex (U.S.)
Corp., JAPEX Montney Ltd.
and Japex Garraf Ltd.).

*3

Royalty is excluded in the net
sales and price of Bitumen.

1H Result

Actual Results for 1H FY3/17 (year-on-year)
Million ¥FY3/16

FY3/17(a)(a)

Difference

Causes of increase(+) or decrease(-)
Gross profit
Domestic crude oil and natural gas - ¥7.6 billion
Overseas consolidated subsidiaries - ¥5.3 billion
Reduction of consignment revenue - ¥1.6 billion

Net sales

124,157

91,494-32,663

Gross profit

26,408

11,675-14,733

Exploration expenses

4,769

645

-4,124

SG&A expenses

16,231

14,243-1,987

Operating income (loss)

5,407-3,213-8,621

SG&A expenses
Decrease of transportation cost andG&A expenses of JACOS- ¥0.4 billion

Non-operating income(loss)

3,434

975-2,459

Cost reduction- ¥1.5 billion

Ordinary income (loss)

8,842-2,238-11,081

Extraordinary income(loss)

-72

-270

-198

Non-operating income (loss)
Equity in earnings- ¥2.2 billion

Income taxes

3,660

414

-3,245

Profit (loss) attributable
to non-controllinginterests-2,853-1,657+1,196

Profit (loss) attributableto owners of parent

7,963-1,267-9,23027

Exploration expenses
Overseas exploration
Domestic exploration- ¥3.4 billion- ¥0.6 billion

Ⅲ. Revised Full Year Forecasts
for FY3/17
Managing Executive Officer
Michiro Yamashita

28

Revised Full Year Forecasts

Assumptions of Revised Forecasts for FY3/17
2016
2017
Full year
Jan.-Mar. Apr.-Jun. Jul.-Sep. Oct.-Dec. Jan.-Mar.

[Assumptions]

JCC price

US$/bblExchange rate JP\/US$
JACOS
Bitumen
JML
Gas
1.
2.

37.17
50.00
50.00
50.00
46.87
37.17 45.92 45.00 45.00 43.34
110.71 105.00 105.00 105.00 106.10
110.71 105.32 100.00 100.00 103.63

Previous forecasts
Revised forecasts
Previous forecasts
Revised forecasts

US$/bblPrevious forecasts

CA$/mcf

Previous forecasts

Revised forecasts
Revised forecasts

7.12
7.12
1.58
1.58

16.80 16.95 1.34
1.94
1.94
1.36
2.14
1.94

10.31
10.28
1.68
1.74

“JACOS Bitumen” stated herein Bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction of Royalty).
On the premise of a temporarily suspend a production operation in Demo area from May 2016, the second half of sales
does not expect.
“JML Gas” stated herein gas sales price of JAPEX Montney Ltd. (Deduction of Royalty)

29

Revised Full Year Forecasts

Revised Full Year Forecasts for FY3/17 (Summary)Previous
forecasts
Full(f)Aug.5,2016

Billion ¥1,980

Net Sales

Revisedforecasts
Full(f)Nov.8,2016

1,895

Difference
VS Previous
Forecasts(%)

Difference

-85

-4.3%

Operating income(loss)

-5

-12

-7

-%

Ordinary income (loss)

7

-37

-44

-%

Profit (loss)
attributable to ownersof parent

18

-3

-22

-%

Billion￥

220.0
200.0

Billion￥Net Sales (left axis)

198.0

5.0

189.5

180.0

3.0

1.8

160.0

2.0

0.7

140.0

1.0

120.0
JCC price

US$/bbl

46.87

43.34

-3.53

Bitumen price

US$/bbl

10.31

10.28

-0.03

Exchange rate

JP¥/US$106.10103.63

-2.47

100.0
80.0

0.0

-0.3

-0.5
-1.2

□Net Sales- ¥8.5 billion Decline in sales prices□Operating income - ¥0.7 billion Decrease in gross profit (- ¥0.4 billion)□Ordinary income - ¥4.4 billion Fluctuations in foreign currency exchange
rate (-3.6 billion)□Profit attributable to owners of parent - ¥2.2 billion
Reduction of corporate tax (+0.9 billion)

30

20.0

-1.0
-2.0

60.0

-3.0

40.0
Main points of difference with previous forecasts (Aug.5, 2016) and revised
forecast (November 8, 2016) *Causes of increase (+) or decrease (-)

4.0

-3.7
Previous forecasts Revised forecasts(f)Aug.5,2016(f)Nov.8,2016
right axis
Operating income
Ordinary income
Profit attributable to owners of parent

-4.0
-5.0

Revised Forecasts Natural Gas Sales in FY3/17(vs Previous Forecasts)
Previous forecasts
Full(f)
Aug 5, 2016

Sales volume : Million M3
Net sales : Million ￥Natural gas

Revised Full Year Forecasts

Revised forecasts
Full(f)Nov.8, 2016

Difference

Sales volume

1,816

1,828

+13

Net sales

55,04753,847-1,200

Breakdown
Domestic gas

Sales volume

1,252

1,245

-7

(Domestically produced gas)

Sales volume

(732)

(733)

(+1)

Overseas gas

Sales volume

563

583

+20

Million M3

2,000
Sales volume of overseas gas

1,600

563

583

1,252

1,245

Sales volume of domestic gas

1,200
800
400
-

Previous forecasts

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

Revised forecasts

31

Revised Forecasts Crude Oil Sales in FY3/17(vs Previous Forecasts)
Sales volume : Thousand KL
Net sales : Million ￥Previous
forecasts
Full(f)Aug.5, 2016

Revisedforecasts
Full(f)Nov.8, 2016

Revised Full Year Forecasts

Difference

Sales volume

2,725

2,852

+127

Net sales

79,50675,000-4,506

Sales volume

299

302

+3

Net sales

10,133

9,309

-824

Sales volume

1,486

1,496

+11

Net sales

40,18335,543-4,640

Sales volume

92

92

+0

Net sales

624

592

-31

JCC price

US$/bbl

46.87

43.34

-3.53

Bitumen price

US$/bbl

10.31

10.28

-0.03

Exchange rate

JP¥/US$106.10103.63-2.47

Crude Oil

Decline in sales prices

Breakdown
Domestic crude oil*1Overseas crude oil*2

Bitumen *3
Assumptions

32*1

Sales volume and net sales of“Domestic crude oil” do notinclude purchased crude oil.

*2

Sales volume and net sales of“Overseas crude oil” areamounts of 3 overseas
subsidiaries (Japex (U.S.)
Corp., JAPEX Montney Ltd.
and Japex Garraf Ltd.).

*3

Royalty is excluded in the net
sales and price of Bitumen.

Revised Full Year Forecasts

Revised Forecasts for FY3/17 (vs Previous Forecasts)
Previous forecasts
Full(f)Aug. 5, 2016

Revised forecasts
Full(f)Nov.8, 2016

Net sales

198,057

189,528-8,529Gross profit

29,607

29,154-454

Exploration expenses

1,839

1,845

+6

SG&A expenses

28,31828,594+276

Operating income (loss)-549-1,285-736

Non-operating income

1,274-2,439-3,714

Ordinary income (loss)

725-3,725-4,450Million ￥Difference

Extraordinary income

-313

97

+410

Income taxes

1,569

584

-985

Profit (loss) attributable tonon-controlling interests-3,031-3,871-840

Profit (loss) attributable toowners of parent

1,874

-341

-2,21533

Causes of increase(+) or decrease(▲)
Gross profit
Domestic crude oil and natural gas- ¥1.2billion
Overseas consolidated subsidiaries+ ¥0.3billion
Other+ ¥0.5billion

Non-operating income (loss)
Foreign currency translation
adjustments on debt, foreignexchange gains and losses(Previous) Gains ¥1.6billion→(Current) Losses ¥ 1.9billion- ¥3.6billion
Equity in earnings+¥0.1billion

Revised Full Year Forecasts

Revised Forecasts Natural Gas Sales in FY3/17 (vs FY3/16)
Sales volume : Million M3
Net sales : Million ￥Natural gas

FY3/16

FY3/17Full (a)Revised forecasts
Full(f) Nov.8,2016

Difference

Sales volume

1,780

1,828

+47

Net sales

68,46953,847-14,622

Breakdown
Domestic gas

Sales volume

1,275

1,245

-31

(Domestically produced gas)

Sales volume

(769)

(733)

(-35)

Overseas gas

Sales volume

504

583

+78

Million M3

2,000
1,600

Sales volume of overseas gas

504

583

1,275

1,245

Sales volume of domestic gas

1,200
800
400
-

FY3/16 Full(a)Sales volume of “Overseas gas” stated herein are amount of Japex (U.S.)
Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries.

FY3/17 Full(f)34Revised Full Year Forecasts

Revised Forecasts Crude Oil Sales in FY3/17 (vs FY3/16)
FY3/16
Sales volume : Thousand KL
Net sales : Million ¥Full (a)FY3/17
Revisedforecasts
Full(e)Difference

Nov.8,2016

Sales volume

3,233

2,852

-381

Net sales

102,91875,000-27,917

Domestic
crude oil *1

Sales volume

340

302

-38

Net sales

13,815

9,309-4,506

Overseas
crude oil *2

Sales volume

1,616

1,496

-119

Net sales

48,38435,543-12,841

Sales volume

306

92

-214

Net sales

4,894

592

-4,302

JCC price

US$/bbl

51.48

43.34

-8.14

Bitumen

US$/bbl

21.05

10.28

-10.77

Exchange rate

JP¥/US$

121.06103.63-17.43

Crude oil

Decline in sales prices

Breakdown

Bitumen *3
Assumptions

35*1

Sales volume and net sales of“Domestic crude oil” do notinclude purchased crude oil.

*2

Sales volume and net sales of“Overseas crude oil” areamounts of 3 overseas
subsidiaries (Japex (U.S.)
Corp., JAPEX Montney Ltd.
and Japex Garraf Ltd.).

*3

Royalty is excluded in the net
sales and price of Bitumen.

Revised Full Year Forecasts

Revised Forecasts for FY3/17 (vs FY3/16)
Million ￥FY3/16
Full (a)Causes of increase(+) or decrease(-)

FY3/17
Revised forecasts
Full(f)Nov.8, 2016

Difference

Gross profit
Domestic crude oil and natural gas- ¥8.7billion
Overseas consolidated subsidiaries- ¥7.5billion
Reduction of consignment revenue- ¥2.6billion

Net sales

240,302

189,528-50,774

Gross profit

47,27929,154-18,126

Exploration expenses

6,516

1,845

-4,670

SG&A expenses

32,42628,594-3,833Operating income (loss)

8,336-1,285-9,622Non-operating income(loss)-3,684-2,439+1,245

SG&A expenses
Decrease of transportation cost andG&A expenses of JACOS - ¥1.4 billion

Ordinary income (loss)

4,652-3,725-8,376Other
e.g. Cost reduction

Extraordinary income-3,14397+3,239

Income taxes

6,388

584

-5,804

Profit (loss) attributable
to non-controllinginterests-6,970

Profit (loss) attributableto owners of parent

2,090-3,871-341

36+3,099-2,431

Exploration expenses
Overseas exploration - ¥3.5billion
Domestic exploration - ¥1.1billion- ¥2.4 billion

Non-operating income (losses)
Equity in earnings- ¥4.3billion
Foreign currency translation
adjustments on debt, other foreignexchange gains and losses(Previous) Losses ¥8.8illion→(Current) Losses ¥1.9billion+ ¥6.8billion

Revised Full Year Forecasts

Assumptions and Impact on Profits [2H]
FY3/16
1Q-4Q(a)FY3/17
1Q(a)

2Q(a)

3Q(f)

4Q(f)

1Q-4Q(f)

JCC price

US$/bbl

51.48

37.17

45.92

45.00

45.00

43.34

Exchange rate

JP¥/US$

121.06110.71105.32100.00100.00103.63

Canadian gas

CA$/mcf

2.11

1.58

1.36

2.14

1.94

1.74

Assumptions

JCC price(3Q-4Q)

Exchange rate
(3Q-4Q)

US$ 45.00/bbl

100.00 JP¥/US$

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

Canadian gas(4Q)
CA$ 1.94/mcf
JP¥ 80/CA$

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

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

Operating incomeJP¥ 120millionJP¥ 70millionJP¥ 520million

Profit attributableto owners of parentJP¥ 90millionJP¥ 30millionJP¥ 240million

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

37Abbreviation
 BOE(D)Barrels of Oil Equivalent (per Day)

 CCS

Carbon dioxide Capture and Storage 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

 JOGMEC

Japan Oil, Gas and Minerals National Corporation

 LNG

Liquefied Natural Gas

 MH

Methane Hydrate

 P/L

Pipeline

 PNWL

Pacific North West LNG

 ROE

Return on Equity

 RRR

Reserves Replacement Ratio SODECO

Sakhalin Oil & Gas Development Co., Ltd.

 TSB

Terang, Sirasun, Batur

 WTI

West Texas Intermediate38