Note : This document has been translated from the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original shallprevail.

Annual Securities Report(Report pursuant to Article 24, Paragraph 1 of the
Financial Instruments and Exchange Act)
Fiscal year
From: April 1, 2023
(The 54th term)
To: March 31, 2024

Japan Petroleum Exploration Co., Ltd.
1-7-12 Marunouchi, Chiyoda-ku, Tokyo(E00041)This document has been produced to be printed on a paper document that contains the contents of the Annual
Securities Report filed to the Financial Services Agency via the Electronic Disclosure for Investors’ NETwork(EDINET) system.

Table of Contents
Page
Cover
Section 1 Company Information ……………………………………………………………………………………………
Item 1. Overview of Company……………………………………………………………………………………………
1. Key Financial Data ……………………………………………………………………………………………
2. History …………………………………………………………………………………………………………
3. Description of Business…………………………………………………………………………………………
4. Subsidiaries and Associates……………..………………………………………………………………………
5. Employees………………………………………………………………………………………………………
Item 2.
Overview of Business……………………………………………………………………………………………
1. Management Policy, Business Environment, and Issues to be Addressed………………………………………
2. Views and Initiatives on Sustainability.…………………………………………………………………………
3. Business and Other Risks ………………………………………………………………………………………
4. Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows …………
5. Material Contracts………………………………………………………………………………………………

1
1
1
3
5
8
12
14
14
18
29
35
49

6. Research and Development Activities …………………………………………………………………………

50

Item 3.

Information about Facilities …………………………………………………………………………………… 51
1. Overview of Capital Expenditures …………………………………………………………………………… 51
2. Major Facilities (Facilities by Office) ………………………………………………………………………… 52
3. Planned Addition, Retirement, and Other Changes of Facilities ……………………………………………… 54
Item 4.
Information about Reporting Company………………………………………………………………………… 55
1.
Company’s Shares, etc. ……………………………………………………………………………………… 55(1) Total number of shares ……………………………………………………………………………………… 55(2) Share acquisition rights……………………………………………………………………………………… 55(3) Exercises of moving strike convertible bonds, etc. ………………………………………………………… 55(4)
Changes in number of issued shares, share capital and legal capital surplus ……………………………… 55(5)
Shareholding by shareholder category……………………………………………………………………… 55(6)
Major shareholders ………………………………………………………………………………………… 57(7)
Voting rights………………………………………………………………………………………………… 58(8)
Share ownership plan for Directors and other Officers and employees …………………………………… 59
2. Acquisition and Disposal of Treasury Shares………………………………………………………………… 61
3. Dividend Policy ……………………………………………………………………………………………… 63
4. Corporate Governance ……………………………………………………………………………………… 64
Item 5.
Financial Information…………………………………………………………………………………………… 95
1. Consolidated Financial Statements, etc. ……………………………………………………………………… 96(1) Consolidated financial statements…………………………………………………………………………… 96(2) Other ………………………………………………………………………………………………………… 149
2. Non-consolidated Financial Statements, etc. ………………………………………………………………… 150(1) Non-consolidated financial statements……………………………………………………………………… 150(2) Components of major assets and liabilities ………………………………………………………………… 167(3) Other………………………………………………………………………………………………………… 167
Item 6.
Outline of Share-related Administration of Reporting Company ……………………………………………… 168
Item 7.
Reference Information of Reporting Company………………………………………………………………… 169
1. Information about Parent of Reporting Company …………………………………………………………… 169
2. Other Reference Information ………………………………………………………………………………… 169
Section 2 Information about Reporting Company’s Guarantor, etc. ……………………………………………………… 170
Independent Auditor’s Report171CoverDocument title

Annual Securities Report

Clause of stipulation

Article 24, paragraph 1 of the Financial Instruments and Exchange Act

Place of filing

Director-General of the Kanto Local Finance Bureau

Filing dateJune 26, 2024

Fiscal year

The 54th term (April 1, 2023 to March 31, 2024)

Company name

Japan Petroleum Exploration Co., Ltd.

Company name in English

Japan Petroleum Exploration Co., Ltd.

Title and name of representative

YAMASHITA Michiro, Representative Director and President

Address of registered headquarters

1-7-12 Marunouchi, Chiyoda-ku, Tokyo

Telephone number+81-3-6268-7001

Name of contact person

OKAMOTO Mitsumasa, Manager of Document Administration Group,
Administration & Legal Dept.

Nearest place of contact

1-7-12 Marunouchi, Chiyoda-ku, Tokyo

Telephone number+81-3-6268-7001

Name of contact person

OKAMOTO Mitsumasa, Manager of Document Administration Group,
Administration & Legal Dept.

Place for public inspection

Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

Section 1 Company Information
Item 1. Overview of Company
1. Key Financial Data
(1) Consolidated financial data
Fiscal year

50th

Fiscal year ended

51st

52nd

53rd

54th

March 31, 2020 March 31, 2021 March 31, 2022 March 31, 2023 March 31, 2024

Net sales(Millions of yen)

318,822240,078

249,140

336,492

325,863

Ordinary profit(Millions of yen)

32,635

10,001

43,674

83,13068,808

Profit (loss) attributable to(Millions of yen)owners of parent

26,815(2,725)(30,988)

67,39453,661

Comprehensive income(Millions of yen)

(6,254)(1,574)(18,992)

68,436108,087

Net assets(Millions of yen)

440,157

434,492

402,770

457,169

537,574

Total assets(Millions of yen)

627,132

624,786

471,941

568,180

660,928

Net assets per share(Yen)

7,046.18

7,011.36

6,679.85

7,849.18

9,532.46

Basic earnings (loss) per
share

(Yen)

469.18(47.73)(545.64)

1,236.65

994.43

Diluted earnings per share

(Yen)

–

–

–

–

–

Equity ratio

(%)

64.2

64.0

78.7

74.9

76.2

Return on equity

(%)

6.5

–

–

16.9

11.5

Price-earnings ratio(Times)

3.79

–

–

3.61

6.90

Net cash provided by (used(Millions of yen)in) operating activities

69,89543,263(1,052)

104,581

90,564

Net cash provided by (used(Millions of yen)in) investing activities(18,701)(6,453)52,067(52,723)(99,659)

Net cash provided by (used(Millions of yen)in) financing activities(13,743)(15,626)(70,939)(14,506)(28,596)

138,259

157,963

144,513

186,166

152,598

1,739

1,780

1,634

1,617

1,641

[473]

[464]

[443]

[482]

[494]

Cash and cash equivalents
at end of period(Millions of yen)

Number of employees[Separately, average
number of temporary(Persons)

employees]
Notes: 1. The amounts of diluted earnings per share are not stated since there were no dilutive shares and basic losses per share
were recorded for the 51st and 52nd terms.
2. For the51st and 52nd terms, the figures of return on equity and price-earnings ratio are not stated since losses
attributable to owners of parent were recorded.
3. The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised
ASBJ regulations have been applied from the beginning of the fiscal year ended March 31, 2022, and therefore, key
financial data for the fiscal year ended March 31, 2022 and thereafter are computed with such accounting standard andrelevant regulations applied.

-1-(2) Financial data of reporting company
Fiscal year

50th

Fiscal year ended

51st

52nd

53rd

54th

March 31, 2020 March 31, 2021 March 31, 2022 March 31, 2023 March 31, 2024

Net sales(Millions of yen)

217,079

169,195

133,642

233,160

190,114

Ordinary profit(Millions of yen)

29,71824,54939,01867,16954,808

Profit (Loss)(Millions of yen)

25,413(26,664)(20,003)58,76946,872

Share capital(Millions of yen)

14,28814,28814,28814,28814,288

Number of issued shares (Thousand shares)

57,154

57,154

57,15454,30054,300Net assets(Millions of yen)

380,442362,065

337,872

381,522449,211

Total assets(Millions of yen)442,637

467,262423,049

492,716

552,910(Yen)

6,656.63

6,343.70

6,072.94

7,035.75

8,497.85

50.0

50.0

50.0

370.0

300.0

[25.0][25.0][25.0][150.0][125.0]Net assets per share
Dividends per share[Interim dividend pershare of the above](Yen)

Basic earnings (loss) per
share

(Yen)

444.66(466.92)(352.20)

1,078.40

868.63

Diluted earnings per
share

(Yen)

–

–

–

–

–

Equity ratio

(%)

85.9

77.5

79.9

77.4

81.2

Return on equity

(%)

6.6

–

–

16.3

11.3

Price-earnings ratio(Times)

4.00

–

–

4.14

7.90

Dividend payout ratio

(%)

11.2

–

–

34.3

34.5

919

937

965

954

979

[193]

[203]

[205]

[220]

[217]

Number of employees[Separately, average
number of temporary
employees](Persons)

Total shareholder return

(%)

76.9

90.4

113.7

206.9

322.2

(%)

[51.2][65.8][124.1][133.9][278.8]Highest stock price

(Yen)

3,280

2,500

3,045

5,230

6,960

Lowest stock price

(Yen)

1,541

1,624

1,714

2,443

4,105

[Comparative index:
TOPIX (mining
industry) Total Return
Index by industry]

Notes: 1. The amounts of diluted earnings per share are not stated since there were no dilutive shares and basic losses per share
were recorded for the 51st and 52nd terms.
2. For the 51st and 52nd terms of reporting company, the figures of return on equity, price-earnings ratio, and dividend
payout ratio are not stated since losses were recorded.
3. The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised
ASBJ regulations have been applied from the beginning of the fiscal year ended March 31, 2022, and therefore, key
financial data for the fiscal year ended March 31, 2022 and thereafter are computed with such accounting standard andrelevant regulations applied.
4. The highest and lowest stock prices are quoted prices on the First Section of the Tokyo Stock Exchange on and before
April 3, 2022 and on the Prime Market of the Tokyo Stock Exchange on and after April 4, 2022.

-2-

2. History
In December 1955, Japan Petroleum Exploration Co., Ltd. was founded as a special company under the Law of Japan Petroleum
Exploration Co., Ltd. In October, 1967, when Japan Petroleum Development Corporation (JPDC) was founded, this special
company was dissolved with all of its goodwill invested into JPDC. The business activities of this special company were
continued as a division of JPDC. This form of business operation was implemented as a three-year time-limited measure as set
forth in the Supplementary Provisions of the Japan Petroleum Development Corporation Law. Accordingly, in April 1970, theabove division separated from JPDC to be reorganized as Japan Petroleum Exploration Co., Ltd. (hereinafter “JAPEX” or the“Company”), which is a private company under the Commercial Law.
Thus, although JAPEX was established in April 1970, the start of its business dates back to December 1955, when the above
special company was founded. For this reason, the following history starts from December 1955.
Dec. 1955
Founded as a special company under the name of Japan Petroleum Exploration Co., Ltd, thepredecessor of JAPEX (hereinafter referred to as the “Predecessor Company”), with the government’s
contribution exceeding 50% (56% at the foundation)
Mar. 1958
Discovered the Mitsuke oil field in Niigata
Jul. 1958

Discovered the Sarukawa oil field in Akita

Jun. 1959

Discovered the Higashi-Niigata gas field in Niigata

Dec. 1960

Discovered the Katakai gas field in Niigata

Jun. 1962

Established JAPEX SKS Corporation (currently a consolidated subsidiary of JAPEX)

Feb. 1966

Established North Sumatra Offshore Petroleum Exploration Co., Ltd. (currently INPEXCORPORATION)
Dissolved and integrated into Japan Petroleum Development Corporation (JPDC) as its division upon
foundation of JPDC
Discovered the Yoshii gas field in Niigata

Oct. 1967
Apr. 1968
Apr. 1970

Separated from JPDC and reorganized as a private company, Japan Petroleum Exploration Co., Ltd.
(with JPDC succeeding the government’s equity stake in the Predecessor Company)

May 1971

Established Japex Offshore Ltd. (currently a consolidated subsidiary of JAPEX) (Note 1)

Oct. 1971

Established SK ENGINEERING CO., LTD. (currently a consolidated subsidiary of JAPEX)

Jun. 1976

Discovered the Yurihara oil and gas field in Akita

Apr. 1983

Established JGI, Inc. (currently a consolidated subsidiary of JAPEX) (Note 2)

Mar. 1989

Discovered the Yufutsu oil and gas field in Hokkaido

Mar. 1996
Oct. 2003

Completed construction of the Niigata-Sendai gas pipeline with a total length of 251 km capable ofsupplying natural gas to an extensive area
Established Shirone Gas Co., Ltd. (currently a consolidated subsidiary of JAPEX) (Note 3)

Dec. 2003

Listed on the First Section of the Tokyo Stock Exchange

May 2007

Acquired equity stake in Energi Mega Pratama Inc. (a corporation of the British Virgin Islands that
operates in the Kangean Block in Indonesia, currently an equity-method associate of JAPEX)

Nov. 2009

Acquired equity stake in Japex Energy Co., Ltd. (currently a consolidated subsidiary of JAPEX)

Mar. 2010

Established Japex Garraf Ltd. (currently a consolidated subsidiary of JAPEX) (Note 4)

Mar. 2014
Apr. 2015

Established JAPEX UK E&P Ltd. (a corporation of the United Kingdom for exploration activities in a
block located offshore of Aberdeen in the UK North Sea, currently a consolidated subsidiary of JAPEX)
Established Fukushima Gas Power Co., Ltd. (currently an equity-method associate of JAPEX)

Mar. 2018

Commenced operation of the Soma LNG Terminal in Fukushima

Apr. 2020

Commenced sale of electricity generated by Fukushima Gas Power Co., Ltd. (Note 5)

Apr. 2022

Transferred from the First Section to the Prime Market of the Tokyo Stock Exchange (TSE) in responseto the restructure of TSE’s market segments
May 2023
Acquired equity stake in Longboat Energy Norge AS (a corporation of Norway that promotes explorationand development in offshore blocks of Norway, currently Longboat JAPEX Norge AS, which is anequity-method associate of JAPEX)
Notes: 1. Japex Offshore Ltd. discovered the Aga-oki oil and gas field and the Iwafune-oki oil and gas field both in Niigata
in March 1972 and in June 1983, respectively.
2. JAPEX entrusts a major portion of its geophysical exploration work to JGI, Inc.
3. Shirone Gas Co., Ltd. commenced general gas utility services in April 2004.
4. Japex Garraf Ltd. commenced production at the Garraf oil field in August 2013.
5. Fukushima Gas Power Co., Ltd. started the commercial operation of Unit No. 1 and Unit No.2 of the Fukushima

-3-

6.

Natural Gas Power Plant in April and in August, respectively, in 2020.
JAPEX UK E&P Ltd. commenced production at Seagull Block in November 2023.

-4-

3. Description of Business
As of March 31, 2024, the JAPEX Group comprises JAPEX, 22 subsidiaries and 20 associates. Our main business categories are
the “E&P Business,” the “Infrastructure/Utility Business,” and “Other businesses.” In addition to its business activities in Japan,
the JAPEX Group is conducting business overseas through its project companies established considering their business locations.
The JAPEX Group consists of segments by business location. The description of business in each business segment and thepositioning of JAPEX, the subsidiaries, and the associates are as follows:Business Segment
Japan

North America

EuropeMiddle East

Description of Business(1) E&P Business
JAPEX and its consolidated subsidiary Japex Offshore Ltd. produce crude oil and natural gas in Japan. In
addition, the consolidated subsidiary North Japan Oil Co., Ltd. purchases and sells JAPEX’s crude oil.
(2) Infrastructure/Utility BusinessIn addition to the domestic natural gas produced by the JAPEX Group, JAPEX regasifies LNG fromimported LNG at the Soma LNG Terminal and Nihonkai LNG Co., Ltd.’s Niigata LNG Terminal. This gas
is sold to customers in regions along JAPEX’s own gas pipeline network spanning over 800 km in length.
The consolidated subsidiary Shirone Gas Co., Ltd. and the associate TOHOKU NATURAL GAS Co., Inc.
sell gas received from JAPEX’s wholesale supply. The consolidated subsidiary Akita Natural Gas PipelineCo., Ltd. transports the natural gas that JAPEX sells in Akita Prefecture. In Hokkaido, JAPEX receives
LNG from coastal vessels and tank trucks at the Yufutsu LNG Receiving Terminal and sells the regasified
LNG and domestic natural gas to customers in the prefecture.
In addition, JAPEX and some of its consolidated subsidiaries and associates supply LNG via an LNG
satellite system using tank trucks and tank containers to meet demand for natural gas in the areas outside ofits pipeline network.
Also, JAPEX provides gas transportation services using its pipeline network to gas transportation service
clients.
JAPEX’s associate Fukushima Gas Power Co., Ltd. (FGP) conducts power generation business at the
Fukushima Natural Gas Power Plant, which is adjacent to the Soma LNG Terminal. JAPEX contracts with
FGP to convert LNG to electricity and sells electricity mainly to other retail electric providers. In addition,
JAPEX is contracted by FGP for regasification of the LNG used as fuel for the power plant.
To stably procure the necessary LNG for the Gas Business and Electric Power Business, JAPEX works hardto diversify its suppliers and contract terms.
In addition, JAPEX has been making efforts to develop renewable energy sources.
JAPEX’s associates, Abashiri Biomass Power 2 LLC. and Abashiri Biomass Power 3 LLC. operates
biomass power generation using domestic wood chips made from woods in Hokkaido as fuel.
(3) Other businesses
The consolidated subsidiary SK ENGINEERING CO., LTD. is contracted by JAPEX and other companies
for well drilling and maintenance operations.
The consolidated subsidiary Geophysical Surveying Co., Ltd. is contracted by JAPEX and other companies
to conduct geophysical logging and mud logging related to well drilling and workover operations. Mudlogging refers to recording the results of surveys and analyses of mud that is circulated in wells during
drilling and cuttings that is brought to the surface by the mud.
The consolidated subsidiary JGI, Inc. is contracted by JAPEX and other companies to conduct geophysicalexploration.
The consolidated subsidiary Japex Energy Co., Ltd.’s main business is the sale of oil products. Thissubsidiary sells LPG and others to JAPEX and other oil products to JAPEX SKS Corporation and othercompanies.
E&P Business
When conducting exploration and development of crude oil and natural gas fields overseas, in most cases,
JAPEX establishes a company for each project to ensure efficient operations, and promotes project as joint
ventures with other companies in an effort to diversify risks.
In North America, the consolidated subsidiary Japex (U.S.) Corp. participates in projects at the production
stage.
E&P Business
The consolidated subsidiary JAPEX UK E&P Ltd. participates in a project at the production stage in the UK
North Sea. The associate Longboat JAPEX Norge AS participates in projects at the exploration,
development and production stage in the offshore blocks of Norway.
E&P Business
The consolidated subsidiary Japex Garraf Ltd. participates in a project at the production stage in the Garraf
oil field in the Republic of Iraq.

-5-

Other

E&P Business
JAPEX also has business segments in Southeast Asia (the associate Energi Mega Pratama Inc. participatesin a project at the production stage) and Russia (the associate Sakhalin Oil and Gas Development Co., Ltd.
participates in the project).

-6-

The following chart summarizes the structure of the Group’s businesses. In this chart, business segments are in parentheses while
description of business are in square brackets.
[E&P Business]

Sale of crude oil(Middle East)(North America)

Japex Garraf Ltd.

Japex (U.S.) Corp.

(Southeast Asia)(Europe)

Exploration, development andproduction-stage company(Japan)Sale of crude oil
Sale of crude oil

North Japan Oil Co., Ltd.

Longboat JAPEX Norge AS

Japex Offshore Ltd.

Some othercompanies[Infrastructure/Utility Business](Japan)Sale of natural gas
Sale of natural gas

Shirone Gas Co., Ltd.

Sale of natural gas
Transportation of natural gas

JAPEX

Contracting-out of power generation

Clients

Fukushima Gas Power Co.,
Ltd.

Contracting-out of regasification

Abashiri Biomass Power 2 LLC.

Abashiri Biomass Power 3 LLC.

Some othercompanies[Other Business](Japan)Sale of LPG, etc.
Sale of LPG, etc; andmanagement of real estate

JAPEX SKS Corporation

Japex Energy Co., Ltd.

Sale of oil products, etc.

Well drilling and workover
Geophysical logging and mud logging
Geophysical exploration, etc.

JGI, Inc.

Some othercompanies

LegendConsolidated subsidiary
Associate-7-

4. Subsidiaries and Associates

Company name

Address

Share capitalor capital
contribution

Main businesses(Millions of yen)

JAPEX’s stakeand percentage ofvoting rights held
Stake
(%)

Percentage
of votingrights held(%)

Description of relationship(Consolidated
subsidiaries)

Akita Natural Gas
Pipeline Co., Ltd.

SK ENGINEERING
CO., LTD.

JAPEX SKS
Corporation

North Japan Oil Co.,Ltd.

Akita City,
Akita

Chiyoda-ku,
Tokyo

Minato-ku,
Tokyo

Sakata City,
Yamagata

Shirone Gas Co., Ltd. Tsubame City,(Note 1)
Niigata

Japex Pipeline Ltd.

JGI, Inc. (Note 1)

GeophysicalSurveying Co., Ltd.

Nagaoka City,
NiigataBunkyo-ku,
TokyoChiyoda-ku,
Tokyo

250

300

Transportation ofnatural gas by pipeline
in Akita Prefecture

Provision of contracted
well drilling andengineering services

90

Manufacture and sale ofoil products; real estate
management; andinsurance agency

80

Sale of crude oil,recycling of waste oil,
contracted
transportation of crude
oil

3,000

Production, supply andsale of gas in Tsubame
City and Niigata City,
Niigata Prefecture

80

Pipeline maintenanceand management

2,100

Conduct of contracted
geophysical exploration
work and developmentof geophysicalexploration technology

446

Conduct of contracted
geophysical logging andmud-logging work-8-

100.00100.00100.00100.00100.00100.00100.00100.00–Transporting JAPEX’s
natural gas.
Interlocking officers: Yes–

Conducting a contractedout part of JAPEX’s welldrilling work.
Receiving a loan fromJAPEX for part of its
business funds.
Interlocking officers: Yes–

Purchasing crude oil andnatural gas from JAPEX.
Also selling products suchas LPG to JAPEX; andmanaging real estate of
JAPEX.
Interlocking officers: Yes–

Purchasing crude oil fromJAPEX. Also conducting
contracted transportationof JAPEX’s crude oil.
Interlocking officers: Yes–

Purchasing JAPEX’s
natural gas to supply it ascity gas.
Interlocking officers: Yes–

Conducting maintenanceand management work for
JAPEX’s main gas
pipelines.
Interlocking officers: Yes–

Conducting geophysicalexploration work
contracted out by JAPEX.
Interlocking officers: Yes–

Conducting contracted
geophysical logging andmud-logging work for
JAPEX’s well drilling
work.
Interlocking officers: YesCompany name

Address

Share capitalor capital
contribution

Main businesses(Millions of yen)

Japex (U.S.) Corp.
(Note 1)

Texas, UnitedStatesLondon,JAPEX UK E&P Ltd.
United(Note 1)
Kingdom

North Japan Security Niigata City,
Service Co., Ltd.
Niigata

Japex Offshore Ltd.
(Note 1)GEOSYS, Inc. (Note 3)

Japex Energy Co.,
Ltd. (Note 5)

Japex Garraf Ltd.
(Note 1 and 6)

JAPEX Insurance
Ltd. (Note 1)

Chiyoda-ku,
TokyoBunkyo-ku,
Tokyo

Taito-ku,Tokyo

Chiyoda-ku,
Tokyo

Hamilton,
Bermuda

191,000(thousandUS dollars)

161,662(thousandBritishpounds)

30

5,963

49

JAPEX’s stakeand percentage ofvoting rights held
Stake
(%)

Percentage
of votingrights held(%)

Description of relationship

Exploration,
development andproduction of petroleum
resources in the UnitedStates100.00–Receiving loans fromJAPEX for part of its
business funds.
Interlocking officers: Yes

Exploration,
development andproduction of petroleum
resources in the UK
North Sea

100.00–Interlocking officers: Yes

89.42

–

Providing security
services to JAPEX Group
companies including
JAPEX and Japex
Offshore Ltd.
Interlocking officers: Yes

70.61

–

Selling crude oil andnatural gas to JAPEX.
Interlocking officers: Yes–

Providing businesssupport to the subsidiary
JGI, Inc.
Interlocking officers: Yes

Industrial safety
services, security
services
Exploration,
development andproduction of petroleum
resources on thecontinental shelf of the
Sea of Japan
Conduct of contracted
geophysical exploration
work; and sale ofgeophysical explorationequipment

57.82(57.82)90

Purchase and sale of
LNG, oil products, etc.

90.00

–

Selling products such as
LPG to JAPAX Group
companies including
JAPEX and JAPEX SKS
Corporation.
Interlocking officers: Yes

20,930Exploration,
development andproduction of petroleum
resources in the Garraf
oil field, Iraq

55.00

–

Selling crude oil to
JAPEX.
Interlocking officers: Yes

3,500

Underwriting
reinsurance of non-life
insurance of JAPEX
group

–

Underwriting a part of theinsurance for JAPEXGroup companies
including JAPEX andJapex Offshore Ltd.
Interlocking officers: Yes-9-100.00Company name

Address

Share capitalor capital
contribution

Main businesses

JAPEX’s stakeand percentage ofvoting rights held
Stake

(Millions of yen)(%)

Percentage
of votingrights held(%)

Description of relationship(Equity-method
associate)
TOHOKU
Sendai City,
NATURAL GAS Co.,
MiyagiInc.

Chiyoda-ku,
TELNITE CO., LTD.
Tokyo

Fukushima Gas
Power Co., Ltd.

Chiyoda-ku,
Tokyo

300

98

537

Purchase and sale ofnatural gas in the
Tohoku region

Manufacture and sale ofdrilling fluid chemicals;
and provision of mud
services

Operation and contract
work of power
generation businessusing a natural gas
power plant

45.00

47.00

33.30

–

Purchasing natural gas
from JAPEX.
Interlocking officers: Yes–

Selling drilling fluid
chemicals to JAPEX.
Also providing contracted
mud services for
JAPEX’s well drilling
work.
Interlocking officers: Yes–

Conducting contracted
operation of power
generation for JAPEX,
namely converting LNG
to electricity. Also
contracting-out
regasification of LNG to
JAPEX.
Having its debt obligation
collateralized by JAPEX’s
assets.
Interlocking officers: Yes

Sakhalin Oil and Gas
Minato-ku,
Development Co.,
Tokyo
Ltd. (Note 4)

Energi Mega Pratama British Virgin
Inc.
Islands

Kangean Energy
Indonesia Ltd.
(Notes 2 and 4)

EMP Exploration(Kangean) Ltd.
(Notes 2 and 4)

22,592

1,000(thousandUS dollars)

Delaware,
United Sates

10 (thousand
US dollars)

London,UnitedKingdom

100 (British
pounds)Exploration,
development andproduction of petroleum
resources on Sakhalin
Island and its land shelfin the RussianFederation
Exploration,
development andproduction of petroleum
resources in the easternJava Sea, Republic ofIndonesia
Exploration,
development andproduction of petroleum
resources in the easternJava Sea, Republic ofIndonesia
Exploration,
development andproduction of petroleum
resources in the easternJava Sea, Republic ofIndonesia- 10 -

15.29–

Interlocking officers: Yes

25.00

–

Interlocking officers: Yes–[100.00]–

Interlocking officers: Yes–[100.00]–

Interlocking officers: YesCompany name

Address

Share capitalor capital
contribution

Main businesses(Millions of yen)

Abashiri Biomass
Power 2 LLC.

Abashiri Biomass
Power 3 LLC.

Longboat JAPEX
Norge AS

1,297

Abashiri,
Hokkaido

1,238

Operation of biomass
power generation using
domestic wood chips

Stavanger,
Norway6,786(thousand
Norwegiankrone)

Blue Spruce
Wyoming,
Operating LLC (Notes 3) United Sates

Notes: 1.
2.
3.
4.
5.

11,630(thousand US
dollars)

Exploration,
development andproduction of petroleum
resources in the
territorial waters of
NorwayConsideration of
separation and captureof CO₂ and sale ofnatural gas and heliumin Wyoming, United
Sates

Percentage
of votingrights held(%)

Description of relationship–

Receiving debt
guarantees from JAPEX
for some of its
borrowings.
Interlocking officers: Yes–

Receiving debt
guarantees from JAPEX
for some of its
borrowings.
Interlocking officers: Yes

49.90

–

Receiving a loan fromJAPEX for part of its
business funds.
Interlocking officers: Yes

40.00(40.00)–Interlocking officers: Yes

33.80

33.80

The company is a specified subsidiary.
The figure inside the square brackets under “Percentage of voting rights held” represents the percentage held by parties
who are closely related to or aligned with JAPEX and is excluded from the above percentage.
The figure inside the parentheses under “Percentage of voting rights held” represents the percentage of indirectly held
voting rights and is included in the above percentage.
The company is considered to be an associate because JAPEX has a substantial influence thereon despite having a stake
therein that is less than 20%.
The amount of sales of Japex Energy Co., Ltd. (excluding intercompany sales) exceeded 10% of the amount ofconsolidated net sales of JAPEX.
Information on profit or loss, etc. (Millions of yen):

6.

Stake
(%)

Operation of biomass
power generation using
domestic wood chips

Abashiri,
Hokkaido

JAPEX’s stakeand percentage ofvoting rights held

(1) Net sales
49,850(2) Ordinary profit
457(3) Profit
297(4) Net assets
1,789(5) Total assets
8,061
The amount of sales of Japex Garraf Ltd. (excluding intercompany sales) exceeded 10% of the amount of consolidated
net sales of JAPEX.
Information on profit or loss, etc. (Millions of yen): (1) Net sales
36,182(2) Ordinary profit
11,371(3) Profit
6,716(4) Net assets
61,809(5) Total assets
68,953- 11 -

5. Employees(1) Information about consolidated companies
As of March 31, 2024
Segment

Number of employees (Persons)Japan
North America
EuropeMiddle East
Total for reportable segments
Other
Corporate (company-wide)
Total
Notes: 1.
2.
3.

1,210
7
2

[398]
[1]
[1]

1

[–]

1,220

[400]

–
421

[–]
[94]

1,641

[494]

The number of employees represents the number of regular employees, which excludes the number of temporary
employees provided inside the square brackets.
“Other” represents business segments other than the reportable segments and includes locations such as Southeast Asia.
The number of employees provided under “Corporate (company-wide)” represents the number of employees belonging
to administration divisions that cannot be classified to any specific segment.

(2) Information about Reporting Company
As of March 31, 2024
Number of employees (Persons)Average age (Years old)979 [217]

40.37

Average length of service(Years)15.00

Segment

Average annual salary (Yen)
9,588,443

Number of employees (Persons)Japan

558 [123]

North America–[–]

Europe

–

[–]

–

[–]

Middle East
Total for reportable segments

558 [123]

Other
Corporate (company-wide)
Total
Notes: 1.
2.
3.
4.
5.

–

[–]

421

[94]

979 [217]

The number of employees represents the number of regular employees, which excludes the number of temporary
employees provided inside the square brackets.
Persons seconded to JAPEX from outside JAPEX are excluded from the calculations of average age, average length ofservice, and average annual salary.
Average annual salary includes bonuses and extra wages.
“Other” represents business segments other than the reportable segments and includes locations such as Southeast Asia.
The number of employees provided under “Corporate (company-wide)” represents the number of employees belonging
to administration divisions that cannot be classified to any specific segment.

- 12 -

(3) Labor union
Employees of JAPEX have a union called JEC RENGO Sekiyu Kaihatsu Rodokumiai (JAPEX Labor Union), and the numberof union members is 728 (including those seconded to outside JAPEX from JAPEX) as of March 31, 2024.
Labor-management relations have remained favorable, and there are no special matters to be noted as to the relationship withthe labor union.
(4) Percentage of female managers, percentage of male employees taking childcare leave, and wage variance between male andfemale workers
Consolidated subsidiary
Reporting company

Japex Pipeline Ltd.
(Note 3)

JAPEX SKS
Corporation (Note 3)

North Japan
Security Service
Co., Ltd. (Note 4)

Percentage of female
managers (Note 1)

5.9%

Percentage of male
employees taking childcare
leave (Note 2)

60.0%

–

–

100.0%All workers: 70.9%
Of which regular
employees: 72.3%
Of which non-regular
employees: 56.3%

–

–

–

Wage variance between
male and female workers(Note 1)

Notes: 1.
2.

3.

4.

–%

–%

–

The percentage was calculated pursuant to the provisions of the Act on the Promotion of Women’s Active Engagementin Professional Life (Act No. 64 of 2015).
The percentage was calculated pursuant to the provisions of Article 71-4, item (i) of the Ordinance for Enforcement of
the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or
Other Family Members (Ordinance of the Ministry of Labor No. 25 of 1991) as prescribed by the Act on Childcare
Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members(Act No. 76 of 1991).
Japex Pipeline Ltd. and JAPEX SKS Corporation, which are consolidated subsidiaries that are required to publicize
certain matters based on their choices, publicized the percentage of female managers pursuant to the provisions of the
Act on the Promotion of Women’s Active Engagement in Professional Life (Act No. 64 of 2015).
North Japan Security Service Co., Ltd., which is a consolidated subsidiary that is required to publicize certain mattersbased on its choice, publicized the percentage of male employees taking childcare leave pursuant to the provisions of
the Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or
Other Family Members (Act No. 76 of 1991).

- 13 -

Item 2. Overview of Business
1. Management Policy, Business Environment, and Issues to be Addressed
Please note that any forward-looking statements in the following discussion are based on the judgement of the JAPEX Group’s
management as of the end of the fiscal year under review.
(1) Basic management policies of JAPEXAs a company focusing mainly on the exploration, development, production, and distribution of oil and natural gas, with themission of contributing to stable supply of energy in Japan through securing reserves and expanding production, the JAPEXGroup has established its business foundation by continuously discovering new oil and gas reserves, since its foundation in1955.
As the JAPEX Group’s supply volume increases, its social responsibility for stable supply of energy is growing. Meanwhile, it
has become crucial for the Group to build a new business model based on, among other things, irreversible changes in theenergy supply and demand structure driven by the progress in global decarbonization. Therefore, JAPEX aims to develop as acompany with market competitiveness whilst adapting to changes in its business environment. Our corporate vision is asfollows:
Contribute to society through stable supply of energy and address social issues towards Sustainable Development Goals- Explore, develop, produce and distribute crude oil and natural gas at home and abroad.
- Further strengthen the natural gas supply chain, built on our domestic infrastructures, by combining the electric power
supply business.
- Contribute to resolving energy and climate change related challenges towards a sustainable society through developing andcommercializing new technologies, drawing on our expertise.
- Achieve sustainable growth and maximize corporate value, while placing top priority on maintaining trust with all
stakeholders.
(2) Medium- to long-term management strategies and issues to be addressed
In light of irreversible changes in energy supply and demand structure driven by the progress in global decarbonization, in May
2021, JAPEX formulated and announced “JAPEX2050,” which outlines our responsibility and focus area to realize the carbonneutral society.
In addition, in March 2022, we formulated and announced the “JAPEX Management Plan 2022–2030,” which sets forth abasic policy of improving profitability and building a business foundation for 2030 and beyond.
Outlines of “JAPEX2050” and “JAPEX Management Plan 2022–2030” are as follows:[JAPEX2050]
1) GHG emission reduction target(a) Achieve net-zero emissions (Scope1 + Scope2) from JAPEX operations in 2050
As a first step, reduce the CO2 emission intensity of JAPEX operations by 40% in FY2030 compared to FY2019.
Note: Scope1: Direct emission of greenhouse effect gas generated from emission sources owned or managed bycompanies or households
Scope2: Indirect emission of greenhouse effect gas accompanying use of electricity, steam and heat(b) Strengthen line of business that contribute to the reduction of our supply chain emissions (Scope3)
Contribute to establish new technologies and energy supply with lower environmental impact, for reducing net CO2
emissions in our supply chain.
Note: Scope3: Indirect emission in supply chain except cases of Scope2- 14 -

2) Focused efforts to realize a carbon-neutral society(a) Turn Carbon Neutral into a profitable business based on CO2 injection and storage technology
Aim to achieve the early implementation and commercialization of CCS (Carbon dioxide Capture and Storage)/CCUS(Carbon dioxide Capture, Utilization, and Storage) as a pioneer in Japan.
- Make the most of JAPEX strengths accumulated through oil and natural gas E&P in exploring and selecting candidate
sites (deep saline aquifers), drilling injection wells, and monitoring stored CO2.
Note: Deep saline aquifer: Sandstone layer in deep underground that includes ancient sea water (salt water) which is
not suitable for drinking. Its geographical distributions are broader compared to oil and natural gas reservoirs, andCO2 storage capacity is anticipated.
- Make contributions to CO2 transportation by leveraging our experience and expertise in natural gas and LNG(liquefied natural gas) supply.
Strive to collaborate and enter into carbon-neutral businesses areas, where synergies with CCS/CCUS can be expected.
- Focus on BECCS (Bio-energy with Carbon Capture and Storage) and natural gas-fired power plants with CCS as
assumed areas of collaboration.
- Consider entering into business areas of carbon-recycling, including blue hydrogen and methanation.
(b) Expand participation in renewable energy projects
Aim to increase renewable energy projects in which JAPEX participates while utilizing knowledge and experience inconventional businesses.
- Increase the business opportunities and examine commercialization, mainly in biomass power generation leveraging
experiences in natural gas power generation business and offshore wind power generation which have an affinity withknowledge and experience of E&P.
(c) Stable supply of oil and natural gas
Recognizing that oil and natural gas will remain as one of the major energy sources worldwide, continue to meet thedemand for them.
As a comprehensive energy company, aim to achieve a carbon-neutral society through the use of CCS/CCUS and otherdecarbonization technologies, rather than through a complete shift away from oil and natural gas.
- Participate in natural gas development projects and consider employing CCS/CCUS in them.
- Horizontally deploy various supply methods for natural gas and LNG to meet demand for fuel switching from coaland heavy oil.
[JAPEX Management Plan 2022–2030]
1) Basic policy
Improve profitability and build business foundation for 2030 and beyond- Aim to achieve a reasonable profit level considering capital costs and enhance shareholder returns by focusing onpriority items in the business fields of E&P, Infrastructure/Utility, and Carbon Neutral.

- 15 -

2) Management goals(a) Quantitative targets- Business profit: ¥50 billion scale as of FY2030 (Interim target: ¥30 billion scale as of FY2026)- ROE: 8% as of FY2030 (Interim target: 5% as of FY2026)- Profit composition target on E&P-to-non E&Ps: 5-to-5 as of FY2030 (Interim target: 6-to-4 as of FY2026)
Note: Business profit: The figure is calculated by subtracting head office administrative expenses and other expenses
of approximately ¥6 billion from the sum of operating profit and share of profit of entities accounted for using
equity method (including profits to be distributed under limited partnership and silent partnership agreements)
in each business field. The forecast crude oil price used in this calculation is JCC US$50 per barrel.
(b) Carbon neutral related target- Launch CCS/CCUS hub & cluster model business utilizing our existing domestic oil and gas fields and others by
FY2030- Reduce GHG emission intensity of JAPEX operations by 40% in FY2030 compared to FY2019
3) Fund allocation- Out of a total of ¥500 billion in cash inflows, allocate ¥450 billion in growth investments and ¥50 billion in shareholder
returns4) Profit targets and priority items of each business field(a) E&P field
Contribute to early expansion of profit scale and respond to low-carbonization- Business profit target: ¥27 billion as of FY2030 (Interim target: ¥23 billion as of FY2026)- Priority items
Domestic: Conduct stable production of oil and natural gas in existing oil and gas fields, pursue additional
development at existing oil and gas fields and their surrounding areas, and reduce GHG emissions at
oil and gas production locations
Overseas: Steadily promote existing projects and acquire new interests(b) Infrastructure/Utility field
Transform business structure to withstand market changes such as oil price volatility- Business profit target: ¥27 billion as of FY2030 (Interim target: ¥12 billion as of FY2026)- Priority items
Domestic: Maintain and expand gas supply volumes, continue stable operations of FGP power plant, make steadyprogress in on-going development projects of renewable energy, and participate in additional projects
Overseas: Participate in an LNG supply infrastructure development project and consider possible participation in
renewable energy projects
Note: FGP: Abbreviation of Fukushima Gas Power Co., Ltd. managing Fukushima Natural Gas Power Plant (ourinvestment ratio of 33%)(c) Carbon Neutral field
Contribute to smooth transition for a carbon-neutral society in 2050
- Business profit target: ¥2 billion as of FY2030 (Interim target: ¥1 billion as of FY2026)- Priority items
Domestic: Launch CCS/CCUS hub and cluster model business utilizing existing oil and gas fields and others
Overseas: Participate in CCS projects in systematically advanced areas and participate in feasibility studies on
CCS/CCUS in emerging countries- 16 -

5) Return to shareholders
Our basic shareholder return policy is to pay dividends in line with our financial results each fiscal year, with a target
consolidated dividend payout ratio of 30% starting from interim and year-end dividends of the fiscal year ending March 31,
2023. At the same time, we will do our utmost to maintain an annual dividend of ¥50 per share, even if we suffer from a
temporary setback in our business performance due to changes in the business environment and other factors. (However,for a fiscal year in which a drastic change in profit attributable to owners of parent is recorded due to extraordinary income
or losses and other special factors, the amount of dividends will be determined in consideration of such impact.)
Based on the above, to accelerate initiatives for sustainable growth and medium- to long-term enhancement of corporate
value, we have summarized the following points:• Analyzed that the main reason of less than 1x P/B ratio is due to below-average PER, while ROE has been above the TSE
Prime average• Recognized that the low PER is partly due to the lack of understanding and confidence in our efforts to enhance corporate
value, in addition to structural factors such as the sustainability of the oil and natural gas business toward decarbonizedsociety and the volatility of oil and natural gas prices• Future policies to enhance corporate value have been summarized as “Investments focused on capital efficiency,”“Enhancement of shareholder returns,” and “Continuous dialogue with stakeholders”
By steadily implementing “JAPEX2050” and “JAPEX Management Plan 2022–2030,” we will continue to contribute to therealization of a carbon-neutral society in 2050 and further increase our growth and corporate value as a comprehensive energy
company.

- 17 -

2. Views and Initiatives on Sustainability
Please note that any forward-looking statements in the following discussion are based on JAPEX’s judgement as of the filing dateof this Annual Securities Report.
(1) Sustainability in general<Basic views and initiatives>
JAPEX believes that our mission is to provide a stable supply of energy and that our business activities themselves are a form ofCSR. Under this recognition, we have been promoting sustainability activities based on a policy on sustainability activities,
which is to actively work on solving social issues toward the realization of a sustainable society, and the five core CSR themes“SHINE” to realize value creation in the medium- to long-term. Every year, we establish CSR action plans in line with the core
themes and individual challenges. The Sustainability Committee over which the President presides implements a PDCA cycle
by reviewing the achievement progress and setting goals for the following fiscal year.
In 2023, we have defined the "Materiality" as what connects core CSR themes “SHINE” and our management plan.
“Materiality” has identified the four issues from the core CSR themes “SHINE” as what to work on now for our sustainablegrowth.
The correlation between the five core CSR themes “SHINE” and the four issues of Materiality is as follows:
Core CSR themes

Individual challenges

Materiality

ESG[S] Stable and sustainable(1) Stable energy supply• Stable energy supply

E, S

energy supply(2) Development of new• Establishment of CN

technologies

business(3) Climate change response• Digital transformation

Corresponding elements of SDGs(DX)
[H] HSE as our culture(4) Occupational health andE, S

safety(5) Pollution prevention andresource recycling(6) Preserving biodiversity
and ecosystems[I] Integrity and governance(7) GovernanceG(8) Crisis management(9) Compliance[N] Being a good Neighbor(10) Growing together withS

stakeholders[E] The Employer of choice(11) Promotion of HR• Promotion of HR

development and diversity

development and diversity(12) Creating a fair and good

• Digital transformation

working environment

(DX)

S

• “Stable energy supply” corresponds to matters related to development of crude oil and natural gas that are covered by theindividual challenge (1).
• “Establishment of CN business” corresponds to matters related to CCS/CCUS that are covered by the individual challenges (2)and (3).
• “Promotion of HR development and diversity” corresponds to development of human resources, diversity and matters related
thereto that are covered by the individual challenges (11) and (12).

- 18 -

• “Digital transformation (DX)” corresponds to all individual challenges of SHINE, but to the individual challenges of (1) and (12)with respect to specific stated goals.
Details of issues of Materiality are as follows. We will publicize the progress of Materiality on our website and integrated reports,
as necessary.
<Issues for contributing to society through our business>
Stable energy supply• We consider that oil and natural gas will continue to be indispensable energy sources for society even in a carbon neutrality
by 2050.
• Based on this consideration, we will continue to work for stable energy supply through the oil and natural gas development.
Establishment of CN business• In order to realize a stable energy supply even in the future, we will contribute to the carbon-neutral society by establishing
CCS and others as our business.
<Strengthening of Management Foundation>
Promotion of HR development and diversity• We consider that human resources (HR) are an origin of the value creation and an essential for the realization of ourmanagement plan.
• Based on this consideration, we will enhance the ability of each employee for value creation through HR development andstrengthen the company-wide capabilities through diversity promotion.
Digital transformation (DX)• We will realize the working environment for add-valued businesses through the strategic utilization of data and digitaltechnologies and make continuous challenges for further increasing our corporate value.
<Governance>
We have implemented a system for appropriate decision-making under the supervision of the Board of Directors. The
Sustainability Committee has been established to deliberate on medium- to long-term management issues related to achieving
sustainable growth and accompanying sustainability-related matters. Matters deliberated by the Sustainability Committee areproperly reported to the Board of Directors, and key decisions are made by the Board of Directors.
The Sustainability Committee is chaired by the President, and its members are officers from each department. Full-time Audit &Supervisory Board Members attend the Sustainability Committee meetings as observers.
Number ofmeetings
Committee
Chair
Main items deliberated(FY2023)

Sustainability Committee

President

16 meetings• Formulation and review of the management plan
• Basic policy about sustainability including the Code of Ethics
and Conduct• Key matter related to environment, social and governance(ESG)• Establishment and review of the core CSR themes and CSR
action plans• Disclosure of sustainability information to external parties
including integrated reports

Note: For the status of activities of the Board of Directors, including sustainability, please refer to “Item 4. Information about
Reporting Company, 4. Corporate Governance, (1) Overview of corporate governance.”
When we decide investments, the Investment Evaluation Committee assesses risks from diversified viewpoints including ESG
and geopolitics, and based on the assessments, the Executive Committee and the Board of Directors make reasonablejudgements, considering risks and opportunities. In addition, the status of ESG-related activities is reported to the Board of
Directors annually.

- 19 -

We specify ESG and sustainability skills in the skills matrix, which lists the knowledge, experience, and skills of each of our
Directors and Audit & Supervisory Board Members.
<Risk management>
JAPEX has established the Risk Management Committee to manage key company-wide risks including those related tosustainability (Integrated Risk Management).
Number ofmeetings
Committee
Chair(FY2023)
Risk Management
Committee

President

1 meeting /3 months

Main items deliberated• Matters related to company-wide risks (identification andassessment)• Managing progress and addressing issues of major projects
during the implementation and operation stage• Inspecting cases of compliance violations

In the Integrated Risk Management, we formulated a risk matrix to identify and assess company-wide risks. Each businessdivision identifies risks based on factors such as the content and regions of the business and related regulations, then conducts
quantitative assessment of each risk from the perspectives of probability and impact. The assessment of the risks is reported to
the Board of Directors annually after being deliberated by the Risk Management Committee. Those positioned as major risks aredisclosed in “3. Business and Other Risks” below.
Among the risks identified by the Risk Management Committee, management issues recognized as needing long-term attention
are discussed by the Sustainability Committee, which deals with JAPEX2050, JAPEX Management Plan 2022-2030, and ESG,to decide the direction of future actions. Furthermore, the Sustainability Committee assesses and manages JAPEX’s businessportfolio including sustainability-related opportunities in the process of the formulation and progress management ofmanagement plans.
For the management of risks and opportunities related to climate change, please refer to “(2) Climate change, <Risk
management>” below.
(2) Climate change
JAPEX positions climate change response as one of its top management priorities. Aiming to contribute to global initiatives on
climate change and the government’s goal of achieving carbon neutrality by 2050, the entire JAPEX Group, including
subsidiaries and associates, is working to transform its business portfolio by reducing GHG emissions and developing CCS andother new technologies.
<Governance>
We have implemented a system for appropriate decision-making under the supervision of the Board of Directors.
Key matters for business execution, including risks and opportunities of climate change, are deliberated at the Executive
Committee and various other committees before being resolved by or reported to the Board of Directors. Key matters for
execution, including climate change response and other medium- to long-term policies and plans, are subject to resolution by the
Board of Directors. The “JAPEX2050: Toward a Carbon-Neutral Society” (JAPEX2050) and “JAPEX Management Plan
2022–2030” were all decisions made by the Board of Directors. In addition, the progress toward GHG emission reduction
targets, ESG external evaluation results, ESG activity status, and other such information are reported annually to the Board of
Directors.
Climate change response is also addressed by the Sustainability Committee, Risk Management Committee, and Investment
Evaluation Committee in addition to the Executive Committee. We have created a PDCA cycle for climate change response
through deliberations at and reports to various committees as well as data collaboration and integrated management among
business divisions and various committees.
Since 2022, we have linked executive compensation to the achievement of company-wide climate initiative targets to strengthen
climate action governance.
<Strategy>
Because of the business characteristics of handling fossil resources, JAPEX has positioned climate change response as one of its- 20 -

management priorities. We conduct scenario analyses to evaluate the medium- to long term impact that climate change will haveon JAPEX’s business. In formulating “JAPEX Management Plan 2022–2030” in March 2022, as a medium- to long-term
financial impact analysis, we conducted scenario analyses using carbon and oil prices published in the four scenarios (NZE*1,
SDS*2, APS*3, and STEPS*4) presented in the World Energy Outlook of the International Energy Agency as parameters andused the analysis results for the consideration of the new management plan by the Sustainability Committee.
We have evaluated the percentage of investment allocated to risk assets and opportunities on an ongoing basis from theperspective of climate change and aim to formulate a sustainable business portfolio even under the NZE scenario with the moststringent conditions.
*1 Net Zero Emissions by 2050 Scenario*2 Sustainable Development Scenario*3 Announced Pledges Scenario*4 Stated Policies Scenario<Risk management>
JAPEX manages climate change risks within its integrated risk management, which is a process for identifying and assessing
company-wide risks, as described in “(1) Sustainability in general, <Risk management>” above. In addition, the Sustainability
Committee manages JAPEX’s business portfolio including opportunities in climate change during the formulation and progress
management of management plans.
The risks and opportunities related to climate change are summarized through the aforementioned process as follows:- 21 -

Risks related to climate change
Risk classification

Transition
risks

Term

Long
term

Decreased demandfor oil and naturalgas, and decreased
revenue due tofactors such as
price decline

High

Mediumterm

Difficult funding
for the E&P
Business due toglobal climateagreements

High

Mediumterm

Impact of extreme
weather conditions
on our land and sea
facilities, among
other impacts

Low

As a result of assessing weather disasterrisks using a hazard map and other tools,
the estimated impact is limited.

Mediumterm

Impact of sea level
rise on our land andsea facilities, andthe impact of driedup water resources,
among otherimpacts

Low

As a result of assessing the risks of sea
level rise using scientific data and others,
the estimated impact is limited.

term

Acute

Physical risks
Chronic

Measures

High

Long

regulation

Reputation

Impactlevel

Increasedadditional costs due
to environmental
laws andregulations,
including carbon
taxes

Policy andMarket andtechnology

Impact• Reduce GHG emissions based on the net
zero target by 2050.
• Assess transition risks at the investment
stage using methods such as internalcarbon pricing.
• Transition to a sustainable businessportfolio based on the results of scenario
analyses.

Note: “Medium term” indicates five years or shorter, and “long term” indicates longer than five years.

- 22 -

Opportunities related to climate change
Opportunity classification

Resource
efficiency

Adopt more efficient
production anddistribution processes.

TermLong term

Item in JAPEXManagement Plan 2022–
2030

Impactlevel

Medium

Use CCS/CCUS alongwith otherdecarbonization
technologies at our
production sites.

Specific progress• Consider an overseas CCS project(Equity Participation in Blue Spruce
Operating LLC having assets in
Wyoming, United States).
• Study the feasibility of an overseas
CCS/CCUS project (CO2-EOR(Enhanced Oil Recovery) at
Indonesia’s Sukowati oil field with
Pertamina and LEMIGAS).
• Continue the feasibility study of
CCS project in the Tomakomai andHigashi-Niigata areas, where
JAPEX, in collaboration with othercompanies, submitted proposals forLong term

Product
andserviceHigh

MediumParticipate in projects of
LNG supply
infrastructuredevelopment.

• Join the northern Vietnam LNG
terminal project.
• Study the feasibility of an energy
service business utilizing LNG for anindustrial park in northern Vietnam.

Low

Expand energy supply
with low environmental
impact and service areas
through businesses suchas commissioned projects
that utilize existing
infrastructure.

• Expand sales of carbon-neutral
LNG in Japan.

Develop and expand
products and services
with lower emissions.
Mediumterm

Mediumterm

public solicitations regarding the“Business Feasibility Study on
Japanese Advanced CCS Project.”• Study the feasibility of an overseas
CCS/CCUS project (CCS in
Malaysia with PETRONAS andother companies).
• Consider underground storage ofassociated CO2 at domestic fields.

Implement andcommercialize
CCS/CCUS promptly.

Note: “Medium term” indicates five years or shorter, and “long term” indicates longer than five years.

- 23 -

<Metrics and targets>
We established a net zero target by 2050 and a FY2030 target as a milestone for GHG emissions (Scope 1+2) in our own
operations as described below. The following targets are set based on the opportunities related to climate change, including theimplementation and commercialization of CCS.
• 2050: Achieve net zero
• FY2030: Reduce GHG emissions (Scope 1+2) of emissions intensity (GHG emissions intensity*) in our operations by 40%
compared to FY2019* CO2 emissions (ton-CO2) per 1 terajoule (TJ) of energy supplied by JAPEXIn addition, regarding emissions in our own supply chain (Scope 3), we established qualitative targets where we aim tostrengthen business fields that contribute to emission reductions.
As presented in the following table, GHG emissions intensity in FY2023 for Scope 1+2 was reduced by 14% from FY2019, also
being reduced compared to the previous fiscal year. The main reasons were that the energy amount provided did not changemuch year on year (maintained intensity denominator) and that GHG emissions decreased (decreased intensity numerator) due tothe implementation of energy-saving measures at our production sites and the introduction of renewable energy sources(including the purchase of non-fossil certificates).
Changes in Scope 1+2 Emission Intensity
TargetGHG emission intensity(ton-CO2/TJ)
Reduction rate from base year (%)

FY2019FY2020

FY2021

FY2022

FY2023

3.97

3.44

3.20

3.56

3.40

-

-13%

-19%

-11%

-14%

* GHG emissions (Scope 1+2) have been certified by a third party to improve reliability since FY2020. The figures of GHG
emission intensity and reduction rate from base year for FY2023 are, however, provisional because they are under verification by
the third party on the date of filing of this Annual Securities Report.
(3) Human capital<Governance>
The Sustainability Committee deliberates on initiatives related to human capital as important management matters and reports to
the Board of Directors accordingly. In FY2023, in addition to the discussions about each policy stated in the “<Strategy>” section
below, the Sustainability Committee and the Board of Directors primarily discussed the revision of our competency based
personnel system, which tends to favor seniority and shift into a role based system.
<Strategy>
Under the “JAPEX Management Plan 2022–2030,” JAPEX has established the following fundamental concepts to support its
human resources strategy for growing into a comprehensive energy company. We have established the “Human Resources
Development Policy” and the “Internal Environment Development Policy” to provide an environment for the company’s andemployees’ conduct and human resources development, as well as “JAPEX Diversity, Equity & Inclusion (DE&I) Policy” to ensure
diversity in human resources. We also have established the “JAPEX Health Management Declaration ” to promote healthmanagement under a system managed by the President.
[Human Resources Development Policy]
With a view to achieve sustainable growth to a comprehensive energy company, JAPEX and employees shall engage in thefollowing activities:
1. Employees demonstrate their abilities as independent professionals who respond flexibly to changes and achieve theirpersonal growth through contributing to JAPEX’s business.
2. JAPEX provides employees with growth opportunities to develop human resources who can try to resolve technical andsocial challenges on energy issues and climate change.
[Internal Environment Development Policy]
JAPEX shall engage in the following activities to provide an environment to develop human resources:- 24 -

1. Provide employees with job opportunities to try to achieve new higher goals for sustainable growth.
2. Support employees’ career growth so that they can improve their knowledge and experience to demonstrate their abilities tothe fullest extent.
3. Create an environment in which all employees can actively engage in their work by making the best use of theirpersonalities and feel that their work is satisfying and meaningful.
4. Foster a corporate culture in which all employees learn and grow on their own initiative.
[JAPEX Diversity, Equity & Inclusion (DE&I) Policy]
In order to respond to changes in the business environment and achieve further growth as a comprehensive energy company,
we regard the promotion of diversity, equity and inclusion (DE&I) as an important management issue, and aim to strengthen
our corporate competitiveness and achieve sustainable development. To this end, we enable our diverse employees to create
new value by encouraging each and every one to play their active role and grow their careers through fully demonstrating theirinherent capabilities.
By respecting diversity in terms of gender, nationality, age, disability, career, personality, and values, and by correcting social
imbalances caused by these characteristics and differences, we will realize an organizational culture in which all employees
can be productive and active.
(1) Foster an organizational culture that makes the most of diversity
We seek to improve productivity and create innovation by fostering an organizational culture that makes the most of theirindividual characteristics and qualities of all employees, with positively accepting diversity and respecting differences.
(2) Promote the activities of diverse human resources
By securing outstanding talents regardless of gender, nationality, age, etc., and by providing timely and appropriate
placement and training as well as providing support for career and skill development tailored to each employee, we put inplace a system that allows all human resources to demonstrate their capabilities and play their active role as self-directed
professionals, thereby increasing individual engagement.
(3) Create an environment that respects diversity
We promote the development of a work environment that allows employees to exert themselves to the fullest in all
situations, taking into consideration the circumstances and characteristics of each individual, including childcare, nursing
care, disabilities, and LGBTQ+.
[JAPEX Health Management Declaration]
The JAPEX group has the mission for stable energy supply and making social contributions by our business. Aiming to realize
our sustainable growth and value maximization based on the mission, Health, Safety, and Environment (HSE) is the top
priority in our business actions.
With understanding that each employee’s health is essential for sustainable growth and value maximization, JAPEX declares topromote health management.
• Always be conscious of occupational safety and health and strive to ensure it and prevent industrial accidents.
• Create a comfortable work environment for better health both physically and mentally, including promoting work-lifebalance.
• Respect the diversity in values, individuality, and privacy and prevent discrimination and harassment.
• Promote physical and mental health in cooperation with the health insurance association and the labor union so that
employees and their families can live healthily for longer years.
Based on these approaches, we have implemented various measures as follows:• Human Resources Development
JAPEX has launched the reskilling program for human resources development to promote DX and shift to new business fields toachieve “JAPEX Management Plan 2022-2030.” Since FY2022, we have created an organizational culture of autonomous learning- 25 -

by providing programs about DX to all employees including Directors and other officers and also supporting them to obtain related
qualifications. In FY2023, we introduced an education program to develop human resources with advanced knowledge of digitaltechnology. As a result, approximately 100 employees, equivalent to about 10% of our workforce, have participated in the program.
We also launched programs aiming to improve expertise including financial skills to develop human resources who promote new
business. In addition, in 2022 we established our internal university (JAPEX University) that plans the support for employees’
personal growth and career development through their independent and self-motivated learning. It systematically develops
educational contents, mainly lecture videos provided by internal lecturers. As of the end of FY2023, the university offers around100 courses. In addition, we have expanded business skill seminars. In FY2023, we newly provided training sessions on (1) logicalthinking, (2) introductory problem solving, (3) contract and legal affairs, and (4) business communication. Henceforth, we areadvancing the further expansion and systemization of our education programs to strategically develop human resources that
contribute to innovation and challenges.
• Employees’ Career Development
To support employees in independent planning and prospering their career, we have internally disclosed the Guidelines forOperations specifying operations and requirements of each division at JAPEX, as well as working to enhance an internal personnel
recruitment system. In addition, we have a system to provide private consultation in place by setting up a consultation desk, as wellas providing career training by the age group. Furthermore, we have internally disclosed the career of officers and managers, etc.
and developed a system where any employee can directly consult with them if they wish.
• Diversity Promotion
To adopt flexible perspectives and views that would lead to the achievement of “JAPEX Management Plan 2022-2030,” we haveactively employed mid-career employees with diverse experiences and worked to promote them to managerial positions in order toappoint them to key positions. For the promotion of women’s activities, we have set percentile targets to hire female new-graduatesand promote female employees to managerial positions, to address the important issue of the shortage of female management
positions relative to the total number of employees. In addition, to create a working environment where diverse human resources
can play an active role, we are committed to promote a variety of ways of working that are tailored to the individual circumstancesof each employee. We have introduced a telecommuting system and a full flextime system, as well as a principle that transfers
involving relocation must be consented by the employee. We are also making efforts to encourage male employees to take childcare
leave, aiming at creating an organizational culture where the taking of childcare leave is actively encouraged. On top of theforegoing initiatives, we launched unconscious bias training for managers several years ago to remove a bottleneck in the
promotion of diversity and provided the training more widely to all employees, including nonmanagerial employees. In addition,
we provided training sessions about LGBTQ+ to all employees in FY2023.
• Maintenance and Improvement of Employees’ Health
JAPEX has established the JAPEX Health Management Declaration and to promote it under the responsibility of the President
based on the idea that consideration for the health of employees contributes to the growth and sustainable developments of thecompany. Based on the results of health checkups and health surveys, we have focused on the three major health issues that weregard as important—“improvement of lifestyle,” “smoking cessation,” and “women’s health issues.” We are enhancing our efforts
for the maintenance and improvement of employees’ health by measures such as adopting a system for employees to manage theresults of their health checkups and health related data at any time and e-Learning for health issues, introducing a full-day smoking
ban at certain offices including the head office, providing corporate support for purchasing quit-smoking products, and providing
all employees with seminars related to female-specific cancers.
As these measures were recognized, JAPEX was selected for the first time as one of the “Health & Productivity Stock Selection
2024.” In addition, it was recognized as one of the “White 500 Companies in Health & Productivity Management Outstanding
Organization” for the fourth time since 2019.
• Employees Engagement
We recognize the need to strengthen trust and connection (engagement) between employees and JAPEX to realize our management
plan while adapting to environmental changes surrounding individuals. Therefore, we conducted an engagement survey. Based on
the result of the engagement survey, each of our divisions and offices formulated action plans for improvement, advancing theirinitiatives. Henceforth, we will conduct such surveys regularly, aiming to further improve company-wide engagement.

- 26 -

For human capital initiatives, each company within the JAPEX Group implements specific measures individually, so describing theinitiatives of the entire JAPEX Group as a whole is not feasible. Please note that the description is basically about the reporting
company’s initiatives and policies.
<Risk management>
JAPEX manages risks related to human capital within its integrated risk management, which is a process for identifying andassessing company-wide risks. For details, please refer to “(1) Sustainability in general, <Risk management>” above.
<Metrics and targets>[Targets and results of DE&I Policy](i) Target and results of the promotion of female employees to management positions
Target25 or more persons by FY2025

FY2021

FY2022

FY202319

18

18

FY2021

FY2022

FY2023

33.3%

33.3%

35.0%

(ii) Target and results of percentage of female new-graduates hired
Target30% or more every year by FY2025(iii) Target and results of percentage of mid-career hires in management positions
TargetFY2021

FY2022

FY2023

Maintain 20% or more until the end of
FY2025

24.5%

25.9%

29.0%

FY2021

FY2022

FY2023

56.4%

52.1%

62.7%

(iv) Target and results of percentage of mid-career hires to total hires
Target
50% or more every year by FY2025(v) Target and results of percentage of male employees taking childcare leave
Target
80% or more by the end of FY2025

FY2021

FY2022

FY2023

75.6%

58.9%

60.0%

Note: For human capital initiatives, each company within the JAPEX Group implements specific measures individually, so
describing the initiatives of the entire JAPEX Group as a whole is not feasible. Please note that the targets and the results described
are those of the reporting company (including those seconded to outside of JAPEX from JAPEX).
(4) Respect for Human Rights<Human Rights Policy>
In addressing social issues towards the Sustainable Development Goals, the JAPEX Group has established its “Human Rights
Policy,” which defines its basic stance of promoting respect for human rights of stakeholders involved in our business activities
throughout its value chain under the “JAPEX Group Code of Ethics and Conduct.” The purposes of the policy are to clearly show
JAPEX Group’s intention to respect human rights, and to promote understanding of our human rights initiatives among JAPEXGroup’s officers and employees, as well as its stakeholders by specifying human rights issues related to our business activities.
JAPEX Group’s Human Rights Policy
https://www.japex.co.jp/en/sustainability/social/humanrights/<Human Rights Due Diligence>
Based on the United Nations Guiding Principles on Business and Human Rights, we work to identify, prevent, and mitigate adverse
human rights impacts that are linked to our business activities by establishing a Human Rights Due Diligence process. We strive to
avoid causing or contributing to adverse human rights impacts through our value chain.
In FY2023, we investigated and evaluated human rights risks and the status of measures against them at domestic subsidiaries andassociates (17 locations). Through this investigation, several issues were identified. Specifically, it revealed that measures wereinsufficient in the areas of Human Rights Due Diligence systems, prohibition of discrimination, freedom of association and the- 27 -

right to collective bargaining. To address these issues, JAPEX has reported solutions to each of the companies needing them, andsuggested preventive and mitigation measures. Furthermore, we have had executive study meetings about human rights for officersof our subsidiaries and associates.
<Whistle-blowing system>
The JAPEX Group has an internal reporting and consulting system for compliance matters such as respect for human rights, fairprocurement and transactions, and the maintenance of sound and transparent relations with politics and administration. We seek toprotect those who report or consult through measures including establishment of an external point of contact, where they can reportor consult with our corporate attorney. We also ensure confidentiality by allowing anonymous reporting or consulting, and prohibit
retaliation.
(5) Procurement policy
In working on solving social issues toward the realization of a sustainable society, We have established CSR Procurement Policy,
which defines its efforts on CSR elements in JAPEX Group’s procurement activities. In addition, by illustrating specific actions in
CSR Procurement Policy to promote CSR procurement activities in concert with JAPEX Group’s suppliers, we ask them tounderstand and to cooperate in the Policy to build a better partnership.
CSR Procurement Policy and Guidelines
https://www.japex.co.jp/en/sustainability/social/procurement/- 28 -

3. Business and Other Risks
The following risk information includes major items that may have an impact on the JAPEX Group’s operating results and financial
position. Recognizing the possibility of the occurrence of these risks, we strive to avoid their occurrence and to take appropriate
measures in the event of their occurrence.
JAPEX manages risks through the Risk Management Committee and other various internal committees. For further information,please refer to “2. Views and Initiatives on Sustainability, (1) Sustainability in general, <Risk management>” above, and “Item 4.
Information about Reporting Company, 4. Corporate Governance, (1) Overview of corporate governance, 3) Other mattersregarding corporate governance (Status of development of risk management system)” below.
The following risks are identified and analyzed from the perspectives of impact and probability, and managed accordingly. All thoserisks are determined by JAPEX as major risks after discussions at the Risk Management Committee and the Board of Directors
meetings. The operating results and financial position of the JAPEX Group may be affected by risks that are not listed below. Thissection contains forward-looking statements based on the judgment of JAPEX’s management as of the filing date.
(1) Risks related to commodity prices and exchange rates
1) Fluctuation risks in crude oil and natural gas prices
The JAPEX Group is engaged in the E&P Business in Japan and overseas and the Infrastructure/Utility Business in Japan.
The net sales and operating profit of these businesses are significantly affected by fluctuations in crude oil and natural gas
prices. For example, we take some measures to mitigate the fluctuation risks of crude oil and natural gas prices, includingcommodity swap transactions, but these measures do not completely eliminate the risks.
For example, our operating profit for the fiscal year ending March 31, 2025 is estimated to increase or decrease by ¥620
million when the oil price increases or decreases by US$1 per barrel. This increase or decrease includes the impact of changes
in the procurement cost of LNG, which is linked to the price of crude oil, and resulting changes in sales prices of domestic
natural gas and electricity. However, actual operating profit will be affected by a variety of factors other than those mentioned
above.
If the carrying amount of business assets at that point in time is not expected to be recovered from future profits due to a
reduction in the estimated medium- to long-term sales prices of crude oil, natural gas, etc., an impairment loss will berecorded for the assets, which may have a negative impact on the operating results and financial position of the JAPEXGroup.
2) Exchange rate fluctuation risks
Fluctuations in the exchange rate between the US dollar and Japanese yen have an impact on net sales and operating profit,
etc., because the JAPEX Group sells crude oil and natural gas produced in Japan in yen-denominated terms that refer to thecustoms clearance price (CIF price) of crude oil and LNG. Such fluctuations will also affect the domestic sales prices ofnatural gas made from imported LNG and electricity fueled by imported LNG and will affect the purchase prices as well. We
take some measures to mitigate the exchange rate fluctuation risks, including foreign exchange forward contracts, but thesemeasures do not completely eliminate the risks.
Our operating profit for the fiscal year ending March 31, 2025 is estimated to increase or decrease by ¥580 million when theexchange rate increases or decreases by ¥1/US dollar.
(2) Risks related to business[E&P Business]
1) Risks related to E&P business investment (exploration and development investment)
The general characteristics of our E&P businesses include the following investment-related risks.
(a) Risks related to exploration investment
In exploration activities, we first identify the geological structure of the target area by analyzing the geological conditions,strata, and geophysical exploration. If the area is evaluated as positive, we conduct exploratory drilling to confirm the extent
of the oil and gas reservoirs and the amount of resources. However, geological uncertainty cannot be eliminated even with therecent development of exploration technology. It is not always possible to discover crude oil and natural gas on the expectedscale. Therefore, due to the failure of exploration activities, we may not be able to recover the expenditures previously
invested, and we may incur investment losses.
(b) Risks related to development investment- 29 -

When moving onto the development of oil and gas fields, we strive to make rational final investment decisions based on avariety of information and assumptions obtained at that time, such as the estimated amount of resources obtained throughexploration activities, the construction and operating costs of wells, production and transportation facilities, and the estimatedsales prices of products. However, we may not be able to make a final investment decision due to a variety of factors,
including changes in equipment specifications as a result of subsequent detailed technical studies, price hikes in materials andservices required for development, delays in government approval procedures and drilling work, new geological problems in
the production stage, and declines in crude oil and natural gas prices. In addition, due to the same factors above, theprofitability of the business may become lower than expected at the time of the final investment decision. As a result,investment losses may be incurred due to the inability to recover expenditures previously invested.
(c) Risks related to future well abandonment
The JAPEX Group’s current production wells and fields need to be abandoned after the end of production. The Group records
the present value of the costs in relation to abandonments of wells and fields based on current estimates as asset retirement
obligations. In the future, if the estimated amount is expected to be insufficient due to changes in the abandonment plan,tightening of regulations, or soaring prices of materials and equipment, it may be necessary to increase the amount of asset
retirement obligations, which may have an adverse impact on the operating results and financial position of the JAPEXGroup. For details of asset retirement obligations, please refer to “Item 5. Financial Information, 1. Consolidated Financial
Statements, etc., (1) Consolidated financial statements, Notes to consolidated financial statements (Asset retirement
obligations).”(d) Risks due to long investment payback period
The E&P businesses require a long period of time and substantial investment in exploration phase, from the initial basic
survey to the discovery of resources through drilling, and in the development phase, which involves drilling of development
wells and construction of production and transportation facilities after the discovery of resources. Therefore, it usually takes along lead time from the start of a business to the recovery of investment and the contribution to profits. During this period,changes in the business environment may result in an increase in investment (including those resulting from delays indevelopment schedules), a decrease in demand, a decline in sales prices, an increase in operating costs, and fluctuations inforeign exchange rates, which may lower the profitability of the business. Such changes also may prevent the recovery of
expenditures previously incurred and result in investment losses.
(e) Risks related to reserves and production volume
In order to maintain and develop the E&P businesses, it is necessary to compensate for and expand reserves and production,
which will decrease in line with production activities, in the medium- to long- term through continuous acquisition of mineralrights, exploration and development efforts. However, due to the existence of the risks listed in “(a) Risks related to
exploration investment” through “(d) Risks due to long investment payback period” above, as well as the risks related tooverseas E&P businesses and risks related to climate change as described below, if such operations are not successful, theamount of reserves and production may decrease in the future, which may adversely affect the JAPEX Group’s operating
results.
Reserves are evaluated based on the quantity of oil and gas in surface form that is estimated to be economically andoperationally extractable from known oil and gas reservoirs at the time of evaluation based on geological and engineering
data. The quantity may be revised upward or downward according to review based on new data to be obtained in the future,changes in economic conditions, and changes in internationally recognized reserve definitions. For details, please refer to “4.
Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows, (1) Overview of operating
results, (d) Reserves of the JAPEX Group.”2) Risks specific to overseas E&P business investment
In addition to the “1) Risks related to E&P business investment (exploration and development investment)” above, theoverseas E&P businesses have the country risk as a general trend. Some of our overseas E&P businesses are conducted inregions with relatively high country risk. Political, economic, and social turmoil (including significant deterioration in public
safety), changes in legislation, taxation systems, or policies in these countries may adversely affect the smooth execution of
the Group’s overseas business. Regarding major overseas projects, the Risk Management Committee assesses and manages
these risks concerned in each country where the project operates.

- 30 -

3) Risks related to major individual projects in overseas E&P businessesa) Iraq Garraf oil field development project
JAPEX has been participating in the development and production project in Garraf oil field located in the southern part of the
Republic of Iraq through its investment in a consolidated subsidiary Japex Garraf Ltd. (investment ratio at the end of the
fiscal year ended March 31, 2024: 55.00%), which holds 30% working interest in the project and provides 40% of funding.
JAPEX has been promoting development businesses jointly with the operator, PETRONAS Carigali Iraq Holding B.V. (thesubsidiary of PETRONAS).
The production started in August 2013, and the project is currently conducting additional development work under the final
development plan to increase crude oil production, while allocating the proceeds from the sale of collected crude oil to capital
investment.
The production volume, sales volume, and net sales and operating profit of the project may decrease due to the deteriorationof the political, social, and security situation in the country and the agreement of the OPEC to reduce production. In addition,in the event of an increase in costs, delays in development schedules, or a decrease in production, there may be a shortage ofcrude oil sales revenue to fund capital expenditures, resulting in an increase in JAPEX’s financial burden.
(b) Russia Sakhalin-1 Project
JAPEX has been participating in the development of crude oil and natural gas off the coast of Sakhalin Island, Russia (Russia
Sakhalin-1 Project) through its investment in Sakhalin Oil and Gas Development Co., Ltd. (investment ratio at the end of the
fiscal year ended March 31, 2024: 15.29%).
As for the production and sales of crude oil and gas in the Russia Sakhalin-1 Project, its operating profit is significantly
affected by fluctuations in crude oil and natural gas prices, as described in “(1) Risks related to commodity prices andexchange rates, 1) Fluctuation risks in crude oil and natural gas prices” above. Sakhalin Oil and Gas Development Co., Ltd. is
an important associate of JAPEX. If profit of Sakhalin Oil and Gas Development Co., Ltd. significantly decreases due to suchfactors, the JAPEX Group’s operating results may be adversely affected.
Under the strained situation in Ukraine, a new company was formed by the government of the Russian Federation andsucceeded to all rights and obligations under the production sharing agreement. Sakhalin Oil and Gas Development Co., Ltd.
has been approved by the government of the Russian Federation to subscribe for a proprietary equity in the new company inproportion to its participating interest. The operating results of the JAPEX Group may be adversely affected if our businessactivities will be restrained for a long period due to the impact of the economic sanction against Russia.
[Infrastructure/Utility Business]
1) Risks related to natural gas sales
From the perspective of mitigating the impact of various risks in our E&P businesses, JAPEX is working to expand thevolume of natural gas we handle as part of our infrastructure and utilities business. We are actively engaged in thedevelopment of demand by utilizing existing natural gas pipelines and supplying LNG from satellite terminals using tankers
and other vehicles for areas outside the pipelines reach. However, the Group’s operating results may be adversely affected byfactors such as a decline in the current handling volume of natural gas (including the volume of transportation service forthird parties), a failure to develop new demand, or a decline in unit sales prices. These factors may be caused by a decrease inpopulation due to the declining birthrate and aging population, a decline in the utilization rate of customers’ facilities, andintensifying competition with peer companies.
We are striving to procure LNG that will be required based on future sales volume projections by combining long-term
contracts with spot contracts to ensure both stability in procurement and flexibility in response to demand fluctuations.
However, in the event of an unexpected decrease in demand, we may not be able to cope with the situation by simply
adjusting the amount of LNG procured through spot contracts, and may incur a payment under the take or pay clause in along-term contract for untaken LNG volumes or resell the LNG at a lower price.
Although we have taken measures such as appropriately transferring fluctuations in LNG procurement prices to sales prices,
we may not be able to transfer such fluctuations to sales prices sufficiently if the LNG procurement prices rise in a shortperiod of time. In such a case, there is a possibility that the JAPEX Group’s operating results and financial position may be
adversely affected.
2) Risks related to natural gas thermal power generation business- 31 -

JAPEX has invested in Fukushima Gas Power Co., Ltd., the main promoter of the natural gas-fired power generation
business at Soma Port in Fukushima prefecture (investment ratio at the end of the fiscal year ended March 31, 2024:
33.30%), where we are engaged in the power generation business using the power generation capacity equivalent to theinvestment ratio.
We have concluded long-term sales contracts with several customers, mainly retailers, for a significant portion of theelectricity we take. However, the JAPEX Group’s operating results may be adversely affected in the event that a decrease inelectricity sales volume or sales unit price occurs in the future due to procurement of alternative power sources required for
dealing with power plant equipment trouble or intensified competition among power sources.
[Overall business]
1) Risks related to accidents and disasters
The JAPEX Group strives to maintain the integrity of its facilities (such as natural gas pipelines) and develop emergency
response measures including security systems and Business Continuity Plans (BCPs) for operations such as well drilling,
production and transportation of crude oil and natural gas, and storage, regasification, and transportation of LNG. However,
we cannot completely prevent the risk of human and property damage or the inability to operate oil and gas fields due tooperational accidents and disasters (including abnormal weather, earthquakes, and other natural disasters), the spread of
epidemics (pandemics), crime and terrorism (including cybersecurity-related ones). In such an event, not all of the damage iscovered by insurance, though we take some measures including non-life insurance contracts. In addition to direct damage, it
could result in secondary damage such as loss of income due to interruption of sales, compensation for damage to customers
to whom we are obligated to supply, compensation for damage due to environmental pollution such as soil, air, water, andocean, administrative punishment, and loss of public trust.
2) Risks related to infectious diseases such as COVID-19
While we regard that COVID-19 now has a lesser impact on economic activities in and outside Japan, the spread of any
infectious disease like COVID-19 or a new infectious disease that requires measures to be taken, such as urban blockades,declaration of a state of emergency, and priority measures to prevent the spread thereof, may reduce demand for oil, naturalgas, and electricity and, furthermore, may cause a decline in the prices of crude oil, natural gas, and electricity.
3) Risks related to climate change
Following the adoption of the Paris Agreement, efforts have been made worldwide to reduce greenhouse gases, which areconsidered to be the cause of climate change and global warming, and the movement toward the realization of a low-carbon
society is accelerating.
Recognizing the importance of responding to climate change, JAPEX has been implementing necessary measures in suchareas as governance, business strategies, risk management, and emissions management based on the TCFD recommendations.
Of the risks related to climate change, risks associated with the transition to a low-carbon or decarbonized society (policy andregulatory risks, technology risks, market risks, etc.) and physical risks due to natural disasters (acute risks caused by sudden
meteorological events including typhoons and chronic risks associated with long-term climate change including sea level rise)
may become apparent in the medium- to long- term. As a result, if climate change policies are strengthened in various
countries and environmental laws and regulations, including carbon taxes, are revised or newly introduced, there is apossibility that the JAPEX’s business value may be damaged due to a decrease in domestic and overseas demand for oil andnatural gas, a prolonged slump in sales prices, and additional costs. In addition, due to factors such as rules by international
agencies and agreements between countries, it may be difficult to secure funding for investments in the E&P Business fromfinancial institutions and the like, as well as to conclude non-life insurance contracts.
4) Risks related to acquisition of new projects and establishment of new businesses
As described in “Item 2. Overview of Business, 1. Management Policy, Business Environment, and Issues to be Addressed,”in May 2021, JAPEX announced the “JAPEX2050.” It outlines our responsibilities and issues to be addressed to realize acarbon-neutral society, as well as our future actions and direction for our business development. Also, in March 2022, JAPEX
announced the “JAPEX Management Plan 2022–2030” as the medium- to long- term management plan with the aim oftransforming into the business structure set forth in “JAPEX2050.” The “JAPEX2050” and “JAPEX Management Plan 2022–
2030” state that we will work on the E&P field; Infrastructure/Utility field with a focus on the supply of renewable energy;
and other areas related to CCS (capture and storage of CO2) and CCUS (capture, utilization, and storage of CO2) as our- 32 -

business foundation. Under these plans, we aim to acquire new projects and establish new businesses. However, if these
efforts do not lead to the acquisition of new projects or the establishment of new businesses, it may adversely affect the
JAPEX Group’s operating results.
5) Partner risk
When a large amount of investment is required to carry out the business, or when there are high risks in terms of technology,
etc., we engage in joint business with other companies as partners, rather than with ourselves, in order to diversify funds andrisks.
In making decisions regarding joint ventures, each partner is generally granted voting rights according to the amount ofinterests held, and we have no controlling authority in joint ventures in which we hold only a minor share. As a result, ourintentions are not necessarily reflected in business decisions, etc., and if such decisions are made in a manner that is not inline with our interests, we may not be able to obtain expected profits. In addition, if some partners withdraw from projects,
smooth operation of the projects may be interfered with.
In addition, if our joint venture partner runs short of funds, JAPEX may temporarily provide funds based on contracts and thelike. In such a case, JAPEX’s financial burden will increase, and JAPEX’s losses may expand depending on the progress ofthe business.
(3) Specific laws and regulations
1) Laws and regulations related to gas and electric utilities
As part of retail liberalization aimed at introducing the principle of competition in the Japanese gas and power industries, thebusiness acts have been revised repeatedly and new revisions of systems may be made in future. If such revision of legal
systems is made, it may bring an opportunity for the JAPEX Group to expand its business due to factors such as market
revitalization, but at the same time have an adverse effect on our operating results due to additional obligations to be borne oran intensified competition.
2) Other laws and regulations specific to the JAPEX Group’s business
Due to the nature of the Group’s business, the Group’s operations may impose various environmental burdens. The JAPEXGroup therefore has taken all necessary procedures, including the acquisition of licenses and approvals from regulatory
authorities, submission of notifications, and provision of product information to customers, in accordance with the Mine
Safety Act, High Pressure Gas Safety Act, and other relevant laws and regulations, in a legal and appropriate manner, and noserious problems have occurred to date. However, if the current laws and regulations are strengthened in line with increasing
global environmental awareness, an increase in costs related to additional facilities and operational measures could have anegative impact on the JAPEX Group’s business performance.
(4) Risks associated with the variation in INPEX CORPORATION’s stock price and business performance
As of March 31, 2024, JAPEX held 4.24% of the shares of INPEX CORPORATION. As of the end of the fiscal year underreview, the balance of investment securities of the JAPEX Group was ¥180,415 million, of which ¥125,091 million was forthe shares of INPEX CORPORATION. If the stock price and business performance of the company fluctuates, it may affectthe financial position of the JAPEX Group.
(5) JAPEX’s shares held by the government
In December 2003, JAPEX listed its shares on the First Section of the Tokyo Stock Exchange through a secondary offering ofsome of the shares held by the then Japan National Oil Corporation (JNOC). As a result, the percentage of shares held by the
JNOC declined from 65.74% to 49.94%.
With the abolition of JNOC, the remaining shares of JAPEX held by JNOC were transferred to the government (Minister of
Economy, Trade and Industry) on April 1, 2005 and then an equivalent of 15.94% of the shares were sold with a transfer dateof June 15, 2007. As a result, the percentage of shares held by the Minister was reduced to 34.00%. Thereafter, JAPEX
acquired treasury shares from November 2021 to August 2022 and canceled its treasury shares in September 2022, which
resulted in the percentage of shares held by the Minister being increased to 35.79%. In addition, based on the resolution at theBoard of Directors meeting held on November 10, 2023, JAPEX is purchasing treasury shares with a purchase period from
November 13, 2023 to August 30, 2024, and plans to cancel all of them on September 30, 2024. Due to this cancellation, thepercentage of shares held by the Minister is expected to increase from 35.79%.

- 33 -

The shares held by the Minister may be sold in the future, and timing, method, and quantity of such sale may have an impact
on the JAPEX’s stock price.
(6) Compliance
The JAPEX Group must fulfill the following social responsibilities in conducting business in Japan and overseas.
(a) Compliance with laws and regulations
Comply with laws and regulations including the Companies Act, the Tax Act, the Financial Instruments and Exchange Act,
the Anti-Monopoly Act, the Labor Standards Act, environment-related laws, information security-related laws, anti-bribery
laws, the Mining Act, the Gas Business Act, and other business laws.
(b) Implementation of information security measures
Appropriately manage confidential information, including collected personal information, so as not to be leaked or used forother purposes in the course of business.
(c) Blocking unfair trade
Do not engage in unfair transactions such as bribery or giving benefits to anti-social forces.
(d) Respect for human rights
Do not engage in or participate in human rights violations throughout the supply chain, including discrimination, harassment,
forced or child labor, and unfair interference with the rights of indigenous peoples.
In order to fulfill these social responsibilities, the JAPEX Group strives to raise awareness of compliance and human rights
among its officers and employees through in-house training and other means. In addition to establishing internal rules andcommittees (please refer to “Item 4. Information about Reporting Company, 4. Corporate Governance, (1) Overview ofcorporate governance” below), we have established internal control systems for internal audits and financial reporting.
However, if JAPEX Group’s officers and employees conduct any illegal or improper activities, it may cause tangible damage,such as suspension of oil and gas production operations and incurrence of legal expenses, as well as intangible damage, suchas loss of public trust, which may have a negative impact on the JAPEX Group’s operating results.

- 34 -

4. Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows(1) Overview of operating results
The overviews of the financial position, operating results and cash flows (hereinafter referred to as “operating results”) of
JAPEX Group (JAPEX, consolidated subsidiaries and equity-method associates of JAPEX) for the fiscal year ended March 31,
2024 are as follows.
(a) Overviews of financial position and operating results
In the fiscal year ended March 31, 2024, the Japanese economy was on a gradual recovery path, mainly due to a pickup in
personal consumption and improved employment conditions. However, there were concerns that a downturn in overseas
economies, such as due to the effects of global monetary tightening and concerns about the future of the Chinese economy,
may put downward pressure on the Japanese economy.
The Japan Crude Cocktail (JCC) price fell from the mid-$80s per barrel at the beginning of the fiscal year to the lower $80s per
barrel in July mainly due to concerns over the slowdown in the US and Chinese economies. Thereafter, the price rose to thelower $90s per barrel in November due to reduced production by Saudi Arabia and Russia, turmoil in the Middle East andother factors, but turned downward mainly due to the decision by OPEC+ not to strengthen the production cuts, with the JCC
price finishing the fiscal year in the mid-$80 level.
In the foreign exchange market, the yen started the fiscal year in the mid-¥130/US$ level, but the yen sharply depreciated fromthe first half to the second half of the fiscal year. Although the yen temporarily appreciated from December onwards, it
weakened again toward the end of the fiscal year and was in the upper ¥140/US$ level at the end of the fiscal year.
As for the domestic natural gas market, the JAPEX Group faced a severe domestic market environment due to a decline indemand driven by soaring gas prices, etc. resulting from the tense international situation following Russia’s invasion of
Ukraine in February 2022 and the significant depreciation of the yen, as well as the typical competition in the entire energy
industry. Furthermore, in the domestic electricity market, spot market prices on the Japan Electric Power Exchange (JEPX)
remained at low levels during the fiscal year under review due to factors such as the decline in LNG prices.
In recent years, the business environment surrounding the JAPEX Group has changed significantly, including the accelerationof the global move toward decarbonization. To respond promptly and flexibly to these changes in the business environment, in
May 2021, we formulated and announced “JAPEX2050: Toward a Carbon-Neutral Society” which outlines the responsibilities
and challenges we must take in order to achieve global net-zero CO2 emissions by 2050, and the direction for JAPEX’s future
actions and business development, and then in March 2022, we formulated and announced the “JAPEX Management Plan
2022-2030,” which is based on the basic policy of improving profitability and building a business foundation for 2030 andbeyond. We are diligently promoting our businesses based on these plans.
During the fiscal year, net sales was ¥325,863 million, a decrease of ¥10,628 million (-3.2%) year on year. Gross profit was¥87,296 million, a decrease of ¥8,814 million (-9.2%) year on year. Main factors behind the year-on-year decrease for net sales
and decrease for gross profit include a decrease in the selling prices of crude oil, natural gas, LNG and electricity due to thecalming of the market prices of crude oil and others compared to the previous fiscal year.
Exploration expenses was ¥3,536 million, an increase of ¥651 million (+22.6%) year on year. Selling, general andadministrative expenses was ¥28,512 million, a decrease of ¥2,627 million (-8.4%) year on year. As a result, operating profit
was ¥55,247 million, a decrease of ¥6,838 million (-11.0%) year on year.
Ordinary profit was ¥68,808 million, a decrease of ¥14,321 million (-17.2%) year on year, due mainly to decreases in share of
profit of entities accounted for using equity method.
Profit before income taxes decreased by ¥14,299 million year on year to ¥68,784 million. Profit attributable to owners ofparent decreased by ¥13,732 million year on year to ¥53,661 million.
Below is a breakdown of net sales.
(i) E&P BusinessNet sales from the E&P Business came to ¥88,810 million, an increase of ¥32,747 million (+58.4%) year on year, mainly due
to the growth of sales volume for crude oil in North America, Europe and the Middle East.
(ii) Infrastructure/Utility BusinessNet sales from the Infrastructure/Utility Business came to ¥172,147 million, a decrease of ¥41,510 million (-19.4%) year on
year. This was mainly the result of a decrease in the selling prices following the calming in the market prices for crude oil andothers, and decreased sales volumes for natural gas and LNG.
(iii) Other Businesses
Net sales from other businesses, such as the contract services (drilling and geological surveys, etc.), sale of oil products,- 35 -

including liquefied petroleum gas (LPG), fuel oil, etc., and other subcontracted businesses, came to ¥64,905 million, a decreaseof ¥1,865 million (-2.8%) year on year.
Below is a summary of performance by segment (before elimination of intersegment transactions).
Japan
Net sales in the Japan segment are mainly composed of crude oil, natural gas (including LNG), electricity, contract services, oil
products and the like. In the fiscal year under review, net sales came to ¥256,470 million, a decrease of ¥46,577 million (15.4%) year on year, mainly due to a decrease in the selling prices following the calming in the market prices for crude oil andothers, and decreased sales volumes for natural gas and LNG. Segment profit decreased by ¥17,724 million (-25.7%) year on
year to ¥51,130 million, mainly due to deteriorations in balance of sales revenue resulting from lower sales prices.
North America
Net sales in the North America segment are mainly composed of crude oil and natural gas. In the fiscal year under review, net
sales came to ¥30,607 million, an increase of ¥21,445 million (+234.1%) year on year, mainly due to the growth of sales
volume for crude oil. Segment profit, like net sales, increased by ¥7,207 million (+171.2%) year on year to ¥11,417 million,
mainly due to the growth of sales volume for crude oil.
EuropeNet sales in the Europe segment are mainly composed of crude oil and natural gas. In the fiscal year under review, net sales
came to ¥2,609 million, due to the start of production of crude oil and natural gas in the UK North Sea block located offshore
Aberdeen. With respect to segment profit (loss), there was segment profit of ¥426 million (compared to segment loss of ¥170
million in the previous fiscal year).
Middle East
Net sales from the Middle East segment are composed of crude oil. In the fiscal year under review, net sales came to ¥36,182
million, an increase of ¥11,899 million (+49.0%) year on year, mainly due to the growth of sales volume for crude oil. With
respect to segment profit (loss), there was segment profit of ¥4,750 million (compared to segment loss of ¥112 million in theprevious fiscal year).
Total assets at the end of this fiscal year increased by ¥92,748 million from the previous fiscal year-end to ¥660,928 million.
Current assets decreased by ¥32,022 million from the previous fiscal year-end. This was due to decreases in cash and deposits,
and notes and accounts receivable - trade. Non-current assets increased by ¥124,771 million from the previous fiscal year-end.
This was mainly due to an increase in property, plant and equipment owing to the recording of wells, and an increase ininvestment securities owing to a rise in their market values.
Liabilities increased by ¥12,343 million from the previous fiscal year-end to ¥123,354 million.
Current liabilities decreased by ¥15,155 million from the previous fiscal year-end. This was due mainly to decreases in notes
and accounts payable - trade, and income taxes payable. Non-current liabilities increased by ¥27,498 million from the previous
fiscal year-end. This was mainly due to an increase in deferred tax liabilities resulting from the rise in market values ofinvestment securities and other factors.
Net assets increased by ¥80,405 million from the previous fiscal year-end to ¥537,574 million.
The main factors were increases in retained earnings and in valuation difference on available-for-sale securities.
(b) Overview of cash flows for the fiscal year under review
As of March 31, 2024, cash and cash equivalents (hereinafter “net cash”) decreased by ¥33,567 million compared to the end of
the previous fiscal year to ¥152,598 million. Below is a summary of cash flows for each activity.
(Cash flows from operating activities)
Net cash provided by operating activities amounted to ¥90,564 million. This was mainly due to profit before income taxes of¥68,784 million and recovery of recoverable accounts of ¥27,775 million.
(Cash flows from investing activities)
Net cash used in investing activities amounted to ¥99,659 million. Net cash was mainly used in purchase of property, plant and- 36 -

equipment of ¥65,924 million and payments of recoverable accounts of ¥25,379 million, while net cash was provided byinterest and dividends received of ¥10,712 million.
(Cash flows from financing activities)
Net cash used in financing activities was ¥28,596 million. Net cash was mainly used in dividends paid of ¥18,726 million andpurchase of treasury shares of ¥7,973 million.

- 37 -

(c) Status of production, orders received and sales(i) Status of production
Below is a status of production performance by segment for the fiscal year under review.
- JapanFiscal year ended
March 31, 2024

E&P Business
Infrastructure/Utility
Business

YoY (%)

Crude oil (kl)232,008(0.4)

Natural gas (thousand m3)

484,224(5.0)

Electricity (thousand kWh)

3,085,392

22.9- North America
Fiscal year ended
March 31, 2024

E&P Business
Infrastructure/Utility
Business

YoY (%)

Crude oil (kl)482,227

298.7

Natural gas (thousand m3)

64,837

358.7

Electricity (thousand kWh)––

- Europe
Fiscal year ended
March 31, 2024

E&P Business
Infrastructure/Utility
Business

YoY (%)

Crude oil (kl)

20,210–Natural gas (thousand m3)

5,695

–

Electricity (thousand kWh)––

- Middle East
Fiscal year ended
March 31, 2023

E&P Business
Infrastructure/Utility
Business

Crude oil (kl)YoY (%)

409,476

3.0

Natural gas (thousand m3)––

Electricity (thousand kWh)––(ii) Status of orders received
JAPEX and its consolidated subsidiaries do not conduct production by order.

- 38 -

(iii) Status of sales
Below is a status of sales performance by segment for the fiscal year under review.
- JapanFiscal year ended
March 31, 2024

Crude oil (kl)E&P Business

Sales volume

Amount(Millions of yen)

Sales volume

246,219

19,410(5.0)(14.2)––––Natural gas (overseas)(thousand m3)
Subtotal

Infrastructure/Utility
Business

19,410

Amount(14.2)Natural gas (domestic)(thousand m3)

955,826

81,487(3.4)(16.3)

LNG (t)275,149

30,190(19.2)(41.5)

3,548,750

53,272

18.1

(9.3)

Electricity (thousand kWh)
OthersOther businesses

YoY (%)

7,197

20.2

Subtotal

172,147(19.4)

Contract services

6,395(17.5)

Oil products/merchandise

55,423(2.0)

Others

3,087

26.1

Subtotal

64,905

(2.8)

Total

256,463(15.4)- 39 -

- North America
Fiscal year ended
March 31, 2024

E&P Business

Sales volume

Amount(Millions of yen)

Sales volume

Crude oil (kl)498,536

29,932

287.0

240.1

Natural gas (overseas)(thousand m3)

60,449

675

425.9

87.4

Subtotal

Infrastructure/Utility
BusinessAmount30,607234.1

Natural gas (domestic)(thousand m3)

–

–

–

–

LNG (t)

–

–

–

–

Electricity (thousand kWh)

–

–

–

–

OthersOther businesses

YoY (%)––

Subtotal––

Contract services––

Oil products/merchandise––

Others––Subtotal

–

–

Total

30,607234.1- 40 -

- Europe
Fiscal year ended
March 31, 2024

E&P Business

Sales volume

Amount(Millions of yen)

Crude oil (kl)

33,720

2,282

–

–

Natural gas (overseas)(thousand m3)

5,501

327

–

–

Subtotal

Infrastructure/Utility
Business

Sales volume

Amount2,609–

Natural gas (domestic)(thousand m3)

–

–

–

–

LNG (t)

–

–

–

–

Electricity (thousand kWh)

–

–

–

–

OthersOther businesses

YoY (%)––

Subtotal––

Contract services––

Oil products/merchandise––

Others––Subtotal

–

–

Total

2,609

–

- 41 -

- Middle East
Fiscal year ended
March 31, 2024

Crude oil (kl)E&P Business

Sales volume

Amount(Millions of yen)

Sales volume462,265

36,182

50.3

49.0

–

–

–

–

Natural gas (overseas)(thousand m3)
Subtotal

Infrastructure/Utility
Business

YoY (%)

36,18249.0

Natural gas (domestic)(thousand m3)

–

–

–

–

LNG (t)

–

–

–

–

Electricity (thousand kWh)

–

–

–

–

OthersOther businesses

Amount––Subtotal––

Contract services––

Oil products/merchandise––

Others––Subtotal

–

–

Total

36,18249.0

Notes: 1. Intersegment transactions are offset and eliminated.
2. “Crude oil” includes crude oil that the JAPEX Group produced from fields and crude oil purchased from other companies.
3. “Natural gas (domestic)” of the Infrastructure/Utility Business refers to gas supplied in Japan via pipeline and comprises
the total of natural gas produced in Japan and regasified LNG. Natural gas (domestic) is classified under the
Infrastructure/Utility Business, since both natural gas produced in Japan and regasified LNG are sold together by
JAPEX’s supply network, which consists of the natural gas fields in Japan and the LNG terminals that vaporize gas linked
by a pipeline network.
4. “Others” of the Infrastructure/Utility Business includes contracted transportation of natural gas and contracted
regasification of LNG used for power plant fuel, etc.
5. Under the Other businesses, “Oil products/merchandise” includes liquefied petroleum gas (LPG), heavy oil, gas oil andkerosene, and “Others” includes other subcontracted tasks.
6. The sales results by major purchaser and their ratio to the total sales are as follows. The ratio for the fiscal year underreview is omitted because there were no customers whose sales accounted for 10% of the total sales.

Purchaser

Fiscal year ended
March 31, 2023
Amount(Millions of yen)

TOHOKU NATURAL GAS
Co., Inc.

38,133- 42 -

Fiscal year ended
March 31, 2024
Amount(Millions of yen)

Ratio (%)
11.3–

Ratio (%)–

(d) Reserves of the JAPEX GroupThe below table shows proved reserves held by the reporting company and its consolidated subsidiaries as of March 31, 2024
as well as proved reserves held by equity-method associates equivalent to the reporting company’s stake in such associates asof that date.
JAPEX and consolidated subsidiaries
Proved reserves

As of March 31, 2023
Increase due toexpansion or discovery

Domestic

Overseas

Equity-method associates
of JAPEX

Subtotal

Total

Crude oil

Gas

Crude oil

Gas

Crude oil

Gas

Crude oil

Gas

Crude oil

Gas

(Thousand kL)(Million m3)(Thousand kL)(Million m3)(Thousand kL)(Million m3)(Thousand kL)(Million m3)(Thousand kL)(Million m3)

1,606

6,944

12,538662

14,144

7,606

0

357

14,144

7,964

40

463

–

–

40

463

–

–

40

463

42

871

(1,665)32(1,624)

902

0

93

(1,624)

996

–

–

2,354

303

2,354

303

7

38

2,360

342

(227)

(511)

(938)

(68)

(1,166)

(579)

(0)

(170)

(1,166)

(748)

1,461

7,767

12,288930

13,748

8,696

7

319

13,755

9,016

Change due to revisionof evaluation from theprevious fiscal year
Change due toacquisition and/or
divestiture
Decrease due to
production
As of March 31, 2024

Notes: 1.

Proved reserves held by the following consolidated subsidiaries include reserves attributable to non-controlling interests.
(Figures in parentheses are non-controlling interests’ percentage.)
Domestic: Japex Offshore Ltd. (29.39%)
Overseas: Japex Garraf Ltd. (45.00%)
2. Reserves of consolidated subsidiaries and equity-method associates whose balance sheet dates differ from theconsolidated balance sheet date are accounted for on the basis of the entity’s respective fiscal year-end.

Proved reserves detailed in the above table represent the quantity of oil and gas in surface form that is estimated to beeconomically and operationally extractable from known oil and gas reservoirs at the time of evaluation based on geological andengineering data. The figures do not include the past production volumes or resource volumes related to undiscovered deposits.
As for the definitions of reserves, the Petroleum Resources Management System (PRMS), which was established in 2007 byfour organizations, namely the Society of Petroleum Engineers (SPE), the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), and the Society of Petroleum Evaluation Engineers (SPEE), has been widely
accepted as an international standard.
The figures presented in the tables above are based on JAPEX’s own evaluations in accordance with the PRMS’ definition of“proved reserves,” which was revised in 2018. The figures do not include reserves corresponding to “probable reserves” or“possible reserves,” i.e., reserves that have higher uncertainty regarding future extractability than proved reserves under the
PRMS. Further, under the same definitions, projects for which commercial development plans have not been finalized (even if
the existence of resource deposits has been confirmed) are separately classified from reserves as “contingent resources.”
Accordingly, the figures presented on this table do not include the JAPEX Group’s contingent resources in areas lacking
finalized development plans.
We acknowledge that the definition of proved reserves used by the U.S. Securities and Exchange Commission (SEC) is also
widely accepted, especially among investors in the United States. The definition of proved reserves by the SEC isfundamentally similar to that under the PRMS.
JAPEX discloses the figures based on its own judgment in accordance with the PRMS’ definition of proved reserves.
Regarding the reserves held by overseas project companies, we disclose the figures based on the economic shares specified in
the contracts among each project company and authorities such as the local government.
In addition, Ryder Scott Company, L.P. has been contracted by JAPEX to conduct a third-party assessment and appraisal of thevalidity of JAPEX’s evaluation and judgement for the quantity equivalent to around 82% of the proved reserves of JAPEX andits consolidated subsidiaries in Japan as of March 31, 2024 (the quantity is hereinafter referred to as “[1]”) as disclosed on theabove table. Regarding the overseas reserves, reserves held by Japex (U.S.) Corp., JAPEX UK E&P Ltd., Kangean Energy- 43 -

Indonesia Ltd., and Blue Spruce Operating LLC. are assessed by third parties. The sum total of domestic and overseas quantity
is equivalent to around 60% of the total proved reserves as of March 31, 2024 (the quantity is hereinafter referred to as “[2]”)as disclosed on the above table. The figures of proved reserves obtained by JAPEX’s own evaluation and those obtained by thethird-party assessments have generally been approximate, but some figures from third-party assessments as of March 31, 2024
were lower than those from JAPEX’s own evaluation to a certain extent. The discrepancy is due to differences in assessment
methods, so we believe that the former figures are appropriate.
Reserves are ultimately a projection of future production capacity shrouded in uncertainty. Nevertheless, JAPEX strives toensure accurate evaluations based on currently available scientific evidence, including geological and engineering data. Despite
these efforts, the quantity may be revised upward or downward according to review based on new data to be obtained in the
future, changes in economic conditions, and changes in the internationally accepted definitions for reserves.
[1] We calculate 1 kiloliter of crude oil as 1,033.1 cubic meters of natural gas (1BOE = 5.8Mscf).
[2] Same as [1].

- 44 -

(2) Management’s discussion and analysis of operating results and other relevant items
Views and issues analyzed/discussed with regard to the status of operating results and other relevant items from the
management’s perspective, are as follows. Please note that any forward-looking statements in the following discussion are basedon the judgement of the JAPEX Group’s management as of the end of the fiscal year under review.
(a) Views and issues analyzed/discussed with regard to the financial position and the status of operating results and otherrelevant items
Profit attributable to owners of parent of the JAPEX Group for the fiscal year under review decreased by ¥13.7 billion year on
year to ¥53.6 billion, as shown in Chart 1 “Main factors for changes in profit for the fiscal year under review (YoY).” Main
factors for changes are analyzed per each line item profit as follows.
Chart 1: Main factors for changes in profit for the fiscal year under review (YoY)(Operating profit: ¥(6.8) billion)
The main reason for the ¥6.8 billion decrease in operating profit is that the reduced profit in the domestic E&P Businessand the Infrastructure/Utility Business, due to factors such as a decrease in sales prices of crude oil, natural gas, andelectricity, surpassed the ¥13.6 billion increase in profit in the overseas E&P Business, due to factors such as anincrease in crude oil sales volume in North America.
(i) Overseas E&P Business
The overseas E&P Business mainly covers Japex (U.S.) Corp. in the North America segment, JAPEX UK E&P Ltd.
in the Europe segment, and Japex Garraf Ltd. in the Middle East segment.
A year-on-year increase of ¥13.6 billion in operating profit of the overseas E&P Business was mainly due to anincrease of ¥7.2 billion in operating profit from factors such as an increase in oil production resulting from tight oil
development projects in which Japex (U.S.) Corp. has participated, and an increase of ¥4.8 billion in Japex Garraf
Ltd.’s operating profit due to factors such as the absence of one-off costs accounted for in the previous fiscal year.
(ii) Domestic E&P Business
The domestic E&P Business mainly covers production and sales activities for crude oil and natural gas conducted by
JAPEX and its consolidated subsidiary, Japex Offshore Ltd. Such activities are included in the Japan segment. Whilethe classification of crude oil (domestic) represents the sales for customers outside of the Group, natural gas(domestic) represents the deemed sales from transactions with the Infrastructure/Utility Business set for internalmanagement purposes.

- 45 -

The domestic E&P Business recorded an operating profit decrease of ¥14.2 billion mainly due to lower sales
volumes and prices of crude oil and natural gas*. As shown in Chart 2 “Results of crude oil price and exchange rate
(YoY),” JCC price fell from US$102.26 per barrel of the previous fiscal year to US$86.28 per barrel of the fiscal
year under review, a year-on-year decrease of US$15.98 per barrel [(15.6)%], causing a decrease in operating profit.
* Sales prices of natural gas (domestic) represents transaction prices of natural gas supplied from the domestic E&P
Business to the Infrastructure/Utility Business set for internal management purposes.
Chart 2: Results of crude oil price and exchange rate (YoY)
Upper: from January 2022 to March 2023
Lower: from January 2023 to March 2024

WTI

USD/bblCrude oil CIF (JCC)

USD/bblExchange rate

JPY/USD

FY3/23 (a)FY3/24 (a)FY3/23 (a)FY3/24 (a)FY3/23 (a)FY3/24 (a)Jan.-Mar.

Apr.-Jun.

Jul.-Sep.

Oct.-Dec.

Jan.-Mar.

94.41
76.11
-

108.6573.78
101.5585.17
122.50134.3691.76
82.49
115.3181.77
133.58141.0682.85
78.36
105.9390.79
143.32148.5389.98
86.32
133.39146.51

Full year

94.42
77.69
102.2686.28
132.86143.28(iii) Infrastructure/Utility Business
The Infrastructure/Utility Business mainly covers the sale of natural gas (domestic natural gas and regasified LNG)
to customers in regions along JAPEX’s own gas pipeline network and the sale of LNG via a satellite supply systemusing tank trucks to meet demand for natural gas in the areas outside of its pipeline network, as well as the sale ofelectricity.
The Infrastructure/Utility Business recorded a year-on-year operating profit decrease of ¥3.7 billion. This was mainly
because JAPEX’s sales prices of natural gas and electricity decreased due to settled crude oil prices and LNG spot
prices, and lower average import price of LNG in Japan, which reduced the margin after deducting the costs of LNG
procured as raw material for regasified LNG and fuel for power plants.
Ordinary profit for the fiscal year under review was ¥68.8 billion, a decrease of ¥14.3 billion [(17.2)%] year on year. The
decrease of ¥14.3 billion was due mainly to a decrease in operating profit as mentioned above and a net decrease in nonoperating income and expenses of ¥7.4 billion, as shown in Chart 1 “Main factors for changes in profit for the fiscal year underreview (YoY).”(Non-operating income and expenses: ¥(7.4) billion)
A year-on-year increase of ¥2.3 billion in foreign exchange gains was due mainly to an increase in foreign exchange
gains regarding foreign currency denominated receivables and foreign currency deposit of JAPEX and Japex Garraf
Ltd. compared to the previous fiscal year.
A year-on-year decrease of ¥6.8 billion in share of profit of entities accounted for using equity method was due mainly
to a decrease in profit at Sakhalin Oil and Gas Development Co., Ltd. and Diamond Gas Netherlands B.V.
A net year-on-year decrease of ¥2.8 billion in other non-operating income and expenses was due mainly to the absenceof gain on derivatives of ¥6.0 billion generated from a book-out transaction of LNG (a transaction to sell back LNG at
an agreed market price without making physical exchange) accounted for in the previous fiscal year, despite an increase
in interest income and dividend income.
Profit before income taxes for the fiscal year under review decreased by ¥14.2 billion year on year to ¥68.7 billion. As shownin Chart 1 “Main factors for changes in profit for the fiscal year under review (YoY),” the ¥14.2 billion decrease was due to thedecrease in ordinary profit as mentioned above.
Profit attributable to owners of parent for the fiscal year under review amounted to ¥53.6 billion, a year-on-year decrease of¥13.7 billion. As shown in Chart 1 “Main factors for changes in profit for the fiscal year under review (YoY),” the main factors
behind the decrease of ¥13.7 billion were the above-mentioned decrease in profit before income taxes, an increase of ¥3.0
billion in profit due to a decrease in income taxes, and a decrease in profit of ¥2.4 billion due to an increase in profit (loss)
attributable to non-controlling interests.

- 46 -

The amount of total income taxes, obtained by “income taxes – current” plus “income taxes – deferred,” was ¥12.0 billion (adecrease of ¥3.0 billion year on year). The decrease in total income taxes was due mainly to decreased income taxes resulting
from the above-mentioned decrease in profit before income taxes. The amount of profit (loss) attributable to non-controllinginterests was ¥3.0 billion for the fiscal year under review (an increase of ¥2.4 billion year on year). This was due mainly to anincrease in profit of Japex Garraf Ltd. for the fiscal year under review.
(b) Analysis and discussion of cash flow and capital resources and liquidity of funds(Basic policy)
In line with our financial discipline outlining a “debt-to-EBITDA ratio < 2,” we will secure funds necessary for business
continuity and new investment, keeping our financial soundness. Chart 3 “Changes in a debt-to-EBITDA ratio” shows thechange of the ratio from the previous fiscal year to the fiscal year under review. We have achieved a “debt-to-EBITDA ratio< 2” continuously from the previous fiscal year.
Chart 3: Changes in a debt-to-EBITDA ratio(Billions of yen)

FY3/24

FY3/23
10.4

9.0

EBITDA

85.3

93.6

Debt-to-EBITDA ratio

0.1

0.1

Interest-bearing debt

*1

*2

Notes: *1 Interest-bearing debt includes lease obligations, retirement benefit liabilities and contingent liabilities.
*2 EBITDA is the total of operating profit, depreciation, interest and dividends received based on investment cash flow statement.

(Funding methodology)
The JAPEX Group efficiently uses internal funds and loans from banks to secure necessary funds to meet the funddemand.
While the Group’s working capital, etc. is primarily procured using internal funds, the Group seeks to improve funding
efficiency and secure liquidity of funding through CMS (cash management systems) and cash pooling agreements withfinancial institutions. We present the borrowings by the agreement offset by deposits in our reporting. The offset amountas of March 31, 2024 was ¥33.1 billion.
Foreign currencies for transactions such as purchase of LNG are exposed to foreign currency fluctuation risk. The Group
mitigates such risk by utilizing foreign exchange forward contracts.
We have entered into loan commitment agreements with multiple banks to facilitate efficient procurement of working
capital. The Group can borrow money in yen or US dollar under these agreements.

- 47 -

(Funding use and allocation)(i) Consolidated financial position and funds allocation policy
The JAPEX Group has planned to allocate ¥450.0 billion to growth investments in fields such as E&P,
Infrastructure/Utility, Carbon Neutral fields and ¥50.0 billion to shareholder returns for 9 years from FY2022 to FY2030,
as shown in Chart 4 “JAPEX Management Plan 2022-2030, allocation policy.” Also, we have determined to adopt a
consolidated dividend payout ratio for the basic policy for shareholder returns and to pay dividends in line with financial
results with a target payout ratio of 30%.
The Group has planned to raise funds for the above-mentioned funds allocation of ¥500.0 billion through cash flows fromoperating activities of ¥380.0 billion and cash on hand and bank loans of ¥120.0 billion.
Chart 4: JAPEX Management Plan 2022-2030, allocation policy(ii) Approach for funds on hand
While the E&P Business, in particular, requires a large amount of investment funds, it usually takes a long time from thestart of the business to recover the investment. During this time, the business is exposed to the risk of changes in businessenvironment. In light of such business characteristics, we have managed funds properly thorough methods such as
preparing monthly financial plans, in order to secure liquidity on hand necessary for the smooth business operation.
(c) Significant accounting estimates and assumptions
The Group’s consolidated financial statements are prepared based on accounting principles generally accepted in Japan. The
management of the Group prepares these consolidated financial statements based on their estimates, which affect assets andliabilities on the balance sheet date, and the amounts and disclosure of revenues and expenses during the reporting period
within the range of certain accounting principles. Although the appropriateness of these estimates is continuously assessed
based on past results and circumstances and reviewed, when necessary, they may differ from actual results due to uncertainties
inherent to estimates.
The Group’s highly uncertain accounting estimates for the fiscal year under review include that for the recoverability ofdeferred tax assets. The recoverability of deferred tax assets is largely dependent on estimates of future earned revenue andgenerated cash flow from the Group’s main operation activities. Especially this item receives a direct influence from market
conditions such as crude oil prices and foreign exchange, and estimates of reserves.
The above-mentioned significant accounting estimates and assumptions used for the preparation of the consolidated financial
statements, among other matters, are as stated in “Item 5. Financial Information, 1 Consolidated Financial Statements, etc., (1)Consolidated financial statements, Notes to consolidated financial statements, (Significant accounting estimates).”- 48 -

5. Material Contracts
E&P BusinessContracting party

Outline of contracts

Japan Petroleum Exploration Co.,
Ltd.

Contract date(Reporting company)

Contract period

February 9, 1983 to the end of joint development

Contract details

An agreement on a joint business regarding exploration, development
and production of oil and natural gas in Iwafune-oki area in of Niigata
Prefecture
Ratio of working interests of each company is as follows:
Japan Petroleum Exploration Co., Ltd.
46.667%
Japex Offshore Ltd.
33.333%
MITSUBISHI GAS CHEMICAL COMPANY, INC.
20.000%Japex Garraf Ltd.
(Consolidated subsidiaries)

Contract date

January 18, 2010
As of March 31, 2010, contractual rights and obligations weretransferred from the reporting company.

Iraq Dhi Qar Oil Company
PETRONAS(Malaysia’s state-owned oilcompany)
North Oil Company (Iraq)

Contract period

20 years from February 2010

Contract details

Service agreement for development and production in Garraf oil field in
the Republic of Iraq (*)

Japex Offshore Ltd.
(Consolidated subsidiary)
MITSUBISHI GAS CHEMICALCOMPANY, INC.

February 23, 1983(*) Service agreement for development and production: Under thiscontract format, an oil development company invest required funds
and technology to conduct development. Also, the oil development
company may recover invested funds from a certain ratio of produced
crude oil and natural gas and receive rewards in accordance with theamount of rewards per predetermined production.
Ratio of capital participation of each contractor is as follows:
PETRONAS
45%
Japex Garraf Ltd.
30%
North Oil Company (Iraq)
25%- 49 -

6. Research and Development Activities
The JAPEX Group has been considering entry into the fields of next-generation technologies and new businesses. In addition toissues directly linked to businesses, we choose specific themes in technical domains such as exploration (geology), geophysicalexploration and production as well as in environmental business fields where such aforementioned technologies are applicable.
Subsequently we conduct research and development and studies on such themes.
Research tasks and R&D expenses per segment for the fiscal year under review are as follows:Japan
Researcher(Research system)

R&D expenses(Millions ofyen)

Research issues

PurposeResearch on offshore highresolution exploration method

To develop various high-resolution offshore exploration
methods, while putting into practice and upgrading
technologies used for such methods

JGI, Inc.

28

Research for permanentmonitoring technology

To research on a most cost-effective monitoring method
to meet demand of monitoring for CCS, carbonrecycling and so forth

JGI, Inc.

20

Development of fullwaveform inversion
technology

To improve technologies by collecting information onstate-of-the-art technologies, utilizing provided codes,
and accumulating know-how of a data analysis method

JGI, Inc.

17

Research for establishment ofan optimal analysis method

To examine an appropriate method of utilization ofanalytical software and further improve the quality ofprocessing results and the efficiency of work

JGI, Inc.

16

Research on analysis systems
utilizing digital technologies

To improve efficiency of data processing and various
analytical tasks through automation and mechanization
proactively, utilizing the digital technologies such as
AI-IoT.

JGI, Inc.

16

Establishment of anelectromagnetic exploration
method for deep sea resource
exploration

To develop a package of an electromagnetic offshore
exploration at a reasonable price to understand, withhigh accuracy, subsurface characteristics of submarinehydrothermal deposits and hydrocarbon reservoirs
through integrated analysis of the package with thereflection method data

JGI, Inc.

14

Consideration on applicabilityof new technologies toseismic surveys

To improve and streamline our seismic surveys from
economic, efficient and technological perspectives tomeet customers’ various needs

JGI, Inc.

12

Establishment of geologicalmodeling and simulation
technology applicable tohydrogeology analysis

To establish a workflow from geological modeling for
fluid flow analysis to fluid flow simulation to expand
and advance our business scope

JGI, Inc.

10

Japan Petroleum
Exploration Co., Ltd.
JGI, Inc.

48

Others

–

Total

181

- 50 -

Item 3. Information about Facilities
1. Overview of Capital Expenditures
During the fiscal year under review, JAPEX made capital investment (after elimination of intersegment transactions) of ¥77,055
million, which corresponds to the total amount of property, plant and equipment and intangible assets acquired.
In the Japan segment, capital investment of ¥6,712 million was made mainly for the drilling of production wells and theconstruction of production facilities.
In the North America segment, capital investment of ¥65,690 million was made, which mainly consists of the development
expenditure for tight oil joint development projects in the states of Texas, Oklahoma, and Wyoming.
In the Europe segment, capital investment of ¥4,652 million was made, which mainly consists of the development expenditure fora block (commonly known as Seagull Block) located offshore in the UK North Sea.
No capital investment was made in the Middle East and Other segments.
The other capital expenditure for the fiscal year under review includes the expenditure of ¥25,379 million for the development
and other projects at the Garraf oil field in Iraq in the Middle East segment, which was recorded as payments of recoverable
accounts.

- 51 -

2. Major Facilities (Facilities by Office)
Major facilities of the JAPEX Group by segment are as follows:(1) Japan(a) Reporting company
Office(Location)

Description offacilities

Carrying amount (Millions of yen)
Buildings
andstructures

Machinery,equipment
and vehicles

0

0

635

535

20,311

1,886

8,586

11,583

976

103

Land
(Area: m2)

Wells

Other

Number of
employees(Persons)

Total

Production
Hokkaido District Office(Tomakomai City,

facilities
Gas supply

Hokkaido)

facilities

0

0

0

0

209

58

1,701

4,206

887

30,991-785

25,750

-

579

2,369

(720,644)

87[22]

Offices
Akita District Office(Akita City, Akita)

Production
facilities

261(178,458)

Offices71[25]

Production
Nagaoka District Officefacilities(Note 2)

Gas supply(Nagaoka City, Niigata)facilities
Offices

Soma District Office

Manufacturing(Soma County,

facilities

Fukushima)

OfficesHead Office(Chiyoda-ku, Tokyo andMihama-ku, Chiba City,
Chiba)

Notes: 1.
2.

3,698(625,788)

4,794(306,811)

198
[52]

84
[7]

Research
facilities
Welfare709(30,061)

facilities

539
[111]

Other

The carrying amounts shown in the table are those after the write-off of the impairment losses.
JAPEX is renting a part of the gas pipeline used in the district for which Nagaoka District Office operates, and thispart is not included in the table.

(b) Domestic subsidiaries
Company name

Office(Location)

Description offacilities

Carrying amount (Millions of yen)
Buildings Machinery,andequipment
structures and vehicles

Land(Area: m2)

Wells

Other

Total

Number of
employees(Persons)

Head OfficeNiigata District Office

Production

Japex Offshore Ltd. (Chiyoda-ku, Tokyo

facilities

and Kita-ku, Niigata

Offices

0

0

81

2,151

218

46

15

0

75

383

542

0

5

547

-

77

2,826

317
(4,847)

-

311

894

-

-

152

167

-

14

703

(177,329)

32[26]

City, Niigata)
Shirone Gas Co.,Ltd.

Head OfficeGas supply(Tsubame City,

facilities,

Niigata)etc.

Ranzan Research

JGI, Inc.

Center(Ranzanmachi, Hiki
County, Saitama)

Geophysicalexplorationequipment

Head OfficeComputing(Bunkyo-ku, Tokyo)

equipment

515(14,124)

41
[10]

11
[7]
54
[37]

Head office and
JAPEX SKS
Corporation

branches(Minato-ku, Tokyo,
Tomakomai City,
Hokkaido, andProduction
facilities,
etc.

229
(2,475)

Mitsuke City, Niigata)

Note:
.

The carrying amounts shown in the table are those after the write-off of the impairment losses.

- 52 -

79[75]

(2) North America
Overseas subsidiaries
Office(Location)

Company name

Japex (U.S.) Corp.

Description offacilities

Head Office

Production(Houston, Texas,
United States)

facilities,
etc.

Carrying amount (Millions of yen)
Buildings Machinery,andequipment
structures and vehicles
6,339

-

Land
(Area: m2)

Wells

Other

Total

-

58,55861

64,959Number of
employees(Persons)
7[1](3) Europe
Overseas subsidiaries
Company name

JAPEX UK E&P
Ltd.

Notes: 1.
2.

Office(Location)

Description offacilities

Head Office

Production(London, Unitedfacilities,

Kingdom)

etc.

Carrying amount (Millions of yen)
Buildings Machinery,andequipment
structures and vehicles
5,921

6,801

Land
(Area: m2)

Wells

Other

Total

-

7,851

5,986

26,561

Number of
employees(Persons)
2[1]

The above figures represent carrying amounts after deducting the depreciation expenses at the end of the fiscal year
under review.
The figures in the square brackets represent the numbers of temporary employees, which is not included in thenumber above.

- 53 -

3. Planned Addition, Retirement, and Other Changes of Facilities
The following describes the status and plans of addition, expansion, acquisition and renovation of major facilities as of March 31,
2024.
(1) Japan
Estimated amount ofexpenditures
Company name
Office nameLocation

Description of facilities(Millions of yen)

Funding

Commenced

Increase in capacity after

AmountmethodTo be completedcompletion

Total
amountNagaoka District
Office, Japan Petroleum
Exploration Co., Ltd.
Nagaoka District
Office, Japan Petroleum
Exploration Co., Ltd.

Niigata City,

Heat capacity

Niigata

control facilities

Ojiya City,
Niigata

3,100

alreadypaid
2,992

One production well(with total depth of

3,600

2,030

about 4,830 m)

Selffinancing
Selffinancing

October 2019
June 2024(Note 2)

(Note 1)
August 2023
June 2024–(Note 3)

Head officeand branches

Self-(Chiyoda-ku,

financingTokyo,SK ENGINEERING
CO., LTD

Tomakomai
City,
Hokkaido,

A 1500-meter
drilling rig

and
1,900

1,362

borrowings
from theAkita City,May 2023
September 2024–

parentAkita, andcompany

Nagaoka
City, Niigata)

Notes: 1.

2.
3.

The heat capacity control facilities at the Nagaoka District Office, Japan Petroleum Exploration Co., Ltd., whichhave been specified in Annual Securities Reports since the fiscal year ended March 31, 2021, were completed in June
2024, as the remaining parts of the constructed facilities were received and inspected.
No capacity increase is expected because these facilities are not intended to increase the gas transportation amount.
One production well of Nagaoka District Office, Japan Petroleum Exploration Co., Ltd., which has been specified in
the Annual Securities Reports since the fiscal year ended March 31, 2023, is planned to be completed in June 2024,
due to a delayed work schedule.

(2) North America
Estimated amount ofexpenditures
Company name
Office name

Japex (U.S.) Corp.

Note:

Location

Description of facilities(Millions of dollars)

Funding

Commenced

Increase in capacity after

AmountmethodTo be completedcompletion

Total
amountTexas, UnitedStatesalreadypaid

Wells andproduction facilities,

23

etc.

–

Self-

January 2024

financing

December 2024

About 1,300 barrels perday(Note)

Japex (U.S.) Corp. holds a 5% interest in the tight oil development project in Eagle Ford, Texas, United States. In thetable, the production capacity for which the company holds interests is shown.

- 54 -

Item 4. Information about Reporting Company
1. Company’s Shares, etc.

(1) Total number of shares
1) Total number of shares
Class

Total number of shares authorized to be issued (Shares)

Common stock

120,000,000
Total

120,000,000

Note: At the meeting of the Board of Directors held on May 14, 2024, JAPEX passed a resolution to conduct a 5-for-1 stock split ofshares of common stock, with an effective date of October 1, 2024. With this stock split, the total number of authorized shares of
JAPEX will increase from 120,000,000 shares to 600,000,000 shares on the same day.
2) Issued shares
Name of financial instruments
Number of shares issued as of
Number of sharesexchange on which securities
end of period
issued as of filing date
are listed or authorizedClass
Description(Shares)(Shares)financial instruments business(March 31, 2024)(June 26, 2024)
association to which securities
are registered
The number ofTokyo Stock Exchangeshares constituting
Common stock
54,300,076
54,300,076
Prime Market
one unit is
100 shares
Total

54,300,076

54,300,076–(2) Share acquisition rights
1) Stock option plans
Not applicable.
2) Shareholder right plans
Not applicable.
3) Share acquisition rights for other uses
Not applicable.
(3) Exercises of moving strike convertible bonds, etc.
Not applicable.
(4) Changes in number of issued shares, share capital and legal capital surplus
Balance ofIncrease
Balance of
Changes in the
total number(decrease) in total
share capital
total number ofof issued
number of issued
Date(Thousands ofissued sharessharesshares(Shares)

September 30,
2022(Note)(Shares)(2,854,700)

yen)(Thousands of yen)

54,300,076––

Increase(decrease) in legal
capital surplus

Balance oflegal capitalsurplus(Thousands of yen)(Thousands of
yen)

–

–

14,288,694

Note: The decrease in number of shares is a result of cancellation of treasury shares.
(5) Shareholding by shareholder category
As of March 31, 2024
Status of shares (one unit of shares: 100 shares)
Category

National andlocal
governments

Financial
institutions

FinancialserviceprovidersOther
corporations

12

35

29

202,077

100,116

37.26

18.46

Foreign investors, etc.

Individuals andothers

Total

Number ofshares ofless than one
unit(Shares)Nonindividuals

Individuals

295

254

28

17,10417,757–

7,622

42,302

128,923

82

61,184542,306

69,476

1.41

7.80

23.77

0.02

11.28

100.00–

Number ofshareholders(Persons)
Share ownership(Units)Percentage ofshareholdings (%)

Note: Of 1,375,686 treasury shares, 13,756 units are included in the “Individuals and others” column while 86 shares are included in- 55 -

the “Number of shares of less than one unit” column. 626 units of JAPEX shares held by the Custody Bank of Japan, Ltd. (Trust
Account) as trust assets of the Board Benefit Trust are not included in treasury shares, but included in “Financial institutions.”- 56 -

(6) Major shareholders
As of March 31, 2024
Name

Address

Number of shares
held(Shares)

Shareholding ratio(excluding treasury
shares) (%)

Minister of Economy, Trade and Industry

1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo

19,432,724

36.72

The Master Trust Bank of Japan, Ltd.
(Trust account)

Akasaka Intercity AIR, 1-8-1 Akasaka,
Minato-ku, Tokyo

7,160,400

13.53

CEP LUX - ORBIS SICAV(Standing proxy: Tokyo Branch, Citibank
N.A.)

31 Z. A. BOURMICHT, L-8070
BERTRANGE, LUXEMBOURG(6-27-30, Shinjuku, Shinjuku-ku, Tokyo)

1,736,271

3.28

INPEX CORPORATION

5-3-1, Akasaka, Minato-ku, Tokyo

1,426,106

2.69

Custody Bank of Japan, Ltd. (Trust
Account)

1-8-12, Harumi, Chuo-ku, Tokyo

1,239,200

2.34

STATE STREET BANK AND TRUSTCOMPANY 505001(Standing proxy: Settlement & Clearing
Services Dept., Mizuho Bank, Ltd.)JFE Engineering Corporation

P.O. BOX 351 BOSTONMASSACHUSETTS 02101 U.S.A.
(Shinagawa Intercity Tower A, 2-15-1,
Konan, Minato-ku, Tokyo)
2-2-3 Uchisaiwaicho, Chiyoda-ku, Tokyo

981,869

1.86

924,012

1.75

STATE STREET BANK AND TRUSTCOMPANY 505223(Standing proxy: Settlement & Clearing
Services Dept., Mizuho Bank, Ltd.)THE BANK OF NEW YORK MELLON
140044(Standing proxy: Settlement & Clearing
Services Dept., Mizuho Bank, Ltd.)Marubeni-Itochu Steel Inc.

P.O. BOX 351 BOSTONMASSACHUSETTS 02101 U.S.A.
(Shinagawa Intercity Tower A, 2-15-1,
Konan, Minato-ku, Tokyo)
240 GREENWICH STREET, NEW YORK,NY 10286, U.S.A.
(Shinagawa Intercity Tower A, 2-15-1,
Konan, Minato-ku, Tokyo)
1-4-1, Nihonbashi, Chuo-ku, Tokyo

595,3501.12

528,451

1.00

473,444

0.89

Total

–

34,497,827

65.18

Notes: 1.

JAPEX holds 1,375,686 treasury shares, but is excluded from “Major shareholders.” These treasury shares do not include62,600 shares of the Company held by the Custody Bank of Japan, Ltd. (Trust Account) as trust assets of the Board
Benefit Trust.
2. Change reports pertaining to large shareholding reports by Orbis Investment Management Limited dated October 6, 2023,
are available for public inspection to the effect that the company held shares in JAPEX as follows as of September 29,
2023. However, the information in the reports is not stated in the preceding table since JAPEX has not confirmed theactual status of shareholding as of March 31, 2024.
A summary of the reports is as follows:
Name

Address

Number of sharecertificates held
(Shares)

Orbis Investment Management
LimitedOrbis House, 25 Front Street, Hamilton, HM 11,
Bermuda- 57 -

3,365,804

Shareholding
ratio (%)
6.20

(7) Voting rights
1) Issued shares
As of March 31, 2024
Category

Number of shares (Shares)

Number of voting rights

Description

Shares without voting rights

–

–

–

Shares with restricted voting rights(treasury shares, etc.)

–

–

–

Shares with restricted voting rights(other)–––Shares with full voting rights(treasury shares, etc.)

Common stock

1,375,600––

Shares with full voting rights(other)Common stock

52,855,000

528,550–

Shares of less than one unit

Common stock

Number of issued shares

69,476––54,300,076

–

–

–

528,550–

Total number of voting rights
Notes: 1.

The number of “Shares with full voting rights (other)” of common stock includes 62,600 shares of JAPEX (626 voting
rights) held by the Custody Bank of Japan, Ltd. (Trust Account) as trust assets of the Board Benefit Trust.
2. The number of “Shares of less than one unit” of common stock includes 86 treasury shares held by JAPEX.
2) Treasury shares
As of March 31, 2024

Name ofshareholder
Japan Petroleum
Exploration Co.,
Ltd.
Total
Note:

Address ofshareholder

Number of shares
held in own name(Shares)Number of shares
held in others’
names (Shares)

Total number ofshares held
(Shares)

Shareholding ratio(%)

1-7-12 Marunouchi,
Chiyoda-ku, Tokyo

1,375,600–

1,375,600

2.53–

1,375,600–

1,375,600

2.53

62,600 shares of JAPEX held by the Custody Bank of Japan, Ltd. (Trust Account) as trust assets of the Board Benefit Trust
are not included in treasury shares.

- 58 -

(8) Share ownership plan for Directors and other Officers and employees
1) Overview of the share ownership plan for Directors and other Officers
In accordance with the resolution of the 50th Ordinary General Meeting of Shareholders held on June 26, 2020, JAPEX has
introduced a “Board Benefit Trust (BBT)” (hereinafter the “Plan”), a performance-based stock compensation plan for
Directors (excluding Outside Directors) and Executive Officers who do not concurrently serve as Directors (hereinafter“Directors, etc.”).
We partially revised the Plan at the 54th Ordinary General Meeting of Shareholders held on June 26, 2024. The revisionaims to increase the ratio of performance-based compensation to total compensation to ensure the Plan functions as a proper
incentive to enhance JAPEX’s medium- to long-term corporate value and further share value with shareholders.
<Structure of the Plan>(1) Establishment of
the Rules on
Provision of Shares[Trustor]
JAPEX(3) Acquisitionof shares(5) Non-exercise of
voting rights[Trustee]Mizuho Trust & Banking Co., Ltd.
(Re-trusted to Custody Bank of Japan, Ltd.)JAPEX’s shares

Trust administrator

Instructions on
non-exercise of voting rights(6) Provision of
JAPEX’s Shares, etc.

[Beneficiary]
Directors, etc. who haveretired and satisfy thebeneficiary requirements(1) JAPEX obtained approval for officer compensation regarding the Plan at the General Meeting of Shareholders andestablished the Rules on Provision of Shares to Officers within the approved framework.
(2) JAPEX will entrust money within the scope of the resolution approved at the General Meeting of Shareholders mentionedin (1).
(3) The Trust will acquire JAPEX’s shares through the stock market on which JAPEX’s shares are listed, or by way of
subscribing to a disposition of JAPEX’s treasury shares, using the money entrusted as in (2) above as the funds.
(4) JAPEX will grant points to Directors, etc. in accordance with the Rules on Provision of Shares to Officers.
(5) The Trust will not exercise voting rights of JAPEX’s shares held in the Trust in accordance with the instructions of thetrust administrator, who is independent from JAPEX.
(6) The Trust will provide those individuals who retire from office as Directors, etc. and fulfill the beneficiary eligibility
requirements stipulated in the Rules on Provision of Shares to Officers (hereinafter referred to as the “Beneficiaries”) withJAPEX’s shares, according to the number of points granted to the relevant Beneficiary. However, if a Director, etc. fulfills
the requirements stipulated in the Rules on Provision of Shares to Officers, JAPEX will provide the Director, etc. withmoney equivalent to the fair value of JAPEX’s common stock.
(Note) Pursuant to the Rules on Provision of Shares to Officers, JAPEX may confiscate part or all of the points granted toany Director, etc. as resolved at a meeting of the Board of Directors if such Director, etc. is dismissed or causes significant
damage to JAPEX’s or the Group’s business due to his/her execution of duties (so-called malus clause).
2) Total number/amount of shares to be delivered to Directors and other Officers
JAPEX introduced the Plan for the three fiscal years, from the fiscal year ended on March 31, 2021 to the fiscal year ended
on March 31, 2023 (hereinafter, the three fiscal years are referred to as the “Initial Period,” and the Initial Period and the periodof each five fiscal years that starts after the Initial Period terminated are referred to as the “Applied Period”) and each Applied
Period after the Initial Period. JAPEX has contributed funds of ¥141 million (including ¥63 million for Directors) as funds toacquire JAPEX’s shares to be provided to our Directors, etc., and set up the Trust, whose Beneficiaries are the Directors, etc.

- 59 -

Acquisition of beneficiary rights(2) Entrustment of money

Directors, etc.

(4) Granting of points

who fulfill the beneficiary eligibility requirements. The Trust has acquired 77,600 shares of JAPEX’s shares using the funds
entrusted by JAPEX. Furthermore, after the expiration of the Initial Period, in principle, JAPEX shall reasonably estimate thenecessary number of shares to provide to the Directors, etc. based on the Plan, and make additional contributions deemednecessary to acquire such shares in advance to the Trust for each Applied Periods until the termination of the Plan.
3) Beneficiaries of the Plan
Beneficiaries are the retired Directors, etc., who satisfy the conditions in the Rules on Provision of Shares to Officers.

- 60 -

2. Acquisition and Disposal of Treasury SharesClass of Shares, etc.: Acquisition of common stock under Article 155, item 3 of the Companies Act and acquisition of common
stock under Article 155, item 7 of the Companies Act(1) Acquisition by resolution of General Meeting of Shareholders
Not applicable.
(2) Acquisition by resolution of Board of Directors
Acquisition in accordance with the provisions of Article 156 of the Companies Act, as applied pursuant to Article 165,
paragraph 3 of the same act
Number of shares(Shares)Category
Status of resolution at the Board of Directors’ meeting (held on
November 10, 2023)

Total amount (Yen)

3,000,000

20,000,000,000

Treasury shares acquired before the fiscal year under review––

Treasury shares acquired during the fiscal year under review

1,373,000

7,972,976,000

Total number and value of remaining shares resolved

1,627,000

12,027,024,000

Unexercised percentage as of the end of the fiscal year under review (%)

54.2

60.1

Treasury shares acquired during the period from April 1, 2024 until thefiling date of this Annual Securities Report

655,000

4,434,739,000

32.4

38.0

(Purchase period: November 13, 2023 through August 30, 2024)

Unexercised percentage as of the filing date (%)

Note:
The number of treasury shares acquired during the period from April 1, 2024 until the filing date of this Annual
Securities Report does not include shares acquired through market purchase of treasury shares during the period from June 1,
2024 to the filing date of this Annual Securities Report.
(3) Acquisition not based on resolution of General Meeting of Shareholders or Board of Directors’ meeting
Number of shares(Shares)Category

Total amount (Yen)Treasury shares acquired during the fiscal year under review

56

327,920

Treasury shares acquired during the period from April 1, 2024 until thefiling date of this Annual Securities Report

–

–

Note:
The number of treasury shares acquired during the period from April 1, 2024 until the filing date of this Annual
Securities Report does not include shares of less than one unit acquired during the period from June 1, 2024 to the filing dateof this Annual Securities Report.
(4) Disposal of acquired treasury shares and number of treasury shares held
From April 1, 2024 until thefiling date of this Annual
Fiscal year under review
Securities Report
Category
Number of Total amount
Number of
Total amount ofsharesof disposal
sharesdisposal(Shares)(Yen)(Shares)(Yen)
Acquired treasury shares for which subscribers were solicited

–

–

–

–

Acquired treasury shares that were disposed of

–

–

–

–

–

–

–

–

–

–

–

–

1,375,686–

2,030,686–

Acquired treasury shares that were transferred for merger,
share exchange, share issuance and company split
Other (－)
Treasury shares held

Notes: 1. The number of shares held during the period from April 1, 2024 to the filing date of this Annual Securities Report does notinclude shares acquired through market purchase or shares of less than one unit during the period from June 1, 2024 to the- 61 -

filing date of this Annual Securities Report.
2. The treasury shares held during the fiscal year under review and those held from April 1, 2024 until the filing date of thisAnnual Securities Report do not include 62,600 shares of JAPEX held by the Custody Bank of Japan, Ltd. (Trust Account)as trust assets of the Board Benefit Trust.

- 62 -

3. Dividend Policy
We aim to sustainably increase corporate value through proactive investment using retained earnings and expansion of ourbusiness base, thereby sharing the fruits of our efforts with our shareholders. JAPEX’s basic policy for profit distribution is to pay
dividends in line with business results for each fiscal year with a target consolidated dividend payout ratio of 30%, while striving
to maintain an annual dividend of ¥50 per share even in the event of a temporary downturn in business performance due to factors
such as changes in the business environment. (However, in the year when profit attributable to owners of parent fluctuatessignificantly due to extraordinary income or loss or other exceptional factors, the amount of dividend will be determined inconsideration of such fluctuations.)
Based on this policy, we decided to pay a dividend of ¥300 (an interim dividend of ¥125 and year-end dividend of ¥175) per
share for the fiscal year under review.
Pursuant to Article 454, paragraph 5 of the Companies Act, our Articles of Incorporation stipulate that JAPEX may, by aresolution of the Board of Directors, pay an interim dividend on September 30 of each year as the record date. JAPEX pays
dividends twice a year as dividends of surplus: an interim dividend and a year-end dividend. The amount of interim dividend isresolved at the meeting of the Board of Directors, year-end dividend at a General Meeting of Shareholders.
Dividends of surplus for the fiscal year are as follows:
Total amount of dividends
Dividend per share
Date of resolution(Millions of yen)
(Yen)
Resolution at the Board of Directors’
meeting held on November 10, 2023

6,787

125

Resolutions at the Ordinary General Meetingof Shareholders held on June 26, 2024

9,261

175

- 63 -

4. Corporate Governance(1) Overview of corporate governance1) Basic views on corporate governanceContributing to society through stable energy supply and addressing social issues toward realizing the sustainable
development goals is the corporate vision of JAPEX. In order to achieve the corporate vision and to maximize our corporate
value in a medium- and long-term perspective, the efficient and transparent corporate management and the building of mutual
trust relationships with our stakeholders including shareholders through ensuring our accountability are required, andcorporate governance is one of our important topics as the foundation.
2) Outline of corporate governance structure and reasons for adopting such structure(Outline of corporate governance)
At JAPEX, Directors and Executive Officers, who are appointed and assigned duties by the Representative Directors and theBoard of Directors, serve as operating officers. The Board of Directors and Audit & Supervisory Board Members, along with
the Audit & Supervisory Board that is comprised of all Audit & Supervisory Board Members, are responsible for supervising
the execution of their duties. (Company with an Audit & Supervisory Board)
The Board of Directors is held regularly once a month. Decisions on important business execution are left to the Board. It
also serves supervisory functions as it receives business execution reports from Directors or Executive Officers.
In addition, in order to strengthen the supervisory functions of the Board of Directors, JAPEX appointed five insightful andindependent Outside Directors. We actively listen to their opinions and advice on meeting agenda and deliberations, which
are highly independent from management and are essential to invigorate discussions at the Board of Directors’ meeting.
From the standpoint of accelerating the speed of decision-making, we hold the Executive Committee composed of Directors
and other officers of JAPEX to make decisions on the matters not involved by the decision-making standard of the Board of
Directors and to make a discussion to assist the decision-making in the Board of Directors. The Executive Committee is held
twice a month in principle, with extraordinary meetings held as needed.
The Nomination and Compensation Committee has been established under the Board of Directors, with a view toward
strengthening the supervisory function of the Board of Directors, by further ensuring transparency and objectivity of theprocedures for making decisions concerning nomination and compensation of Directors.
The status of activities of the Board of Directors and the Nomination and Compensation Committee for the fiscal year ended
March 31, 2024 is as follows:- 64 -

Organs

Board of Directors

Number of Meetings and Detailed
Descriptions of Discussions• 14 meetings were held for the fiscal year
under review.
• Pursuant to the provisions of theCompanies Act, the following matters werediscussed: matters regarding the general
meeting of shareholders, matters regarding
the settlement of accounts, mattersregarding officers, matters regarding
participation in specific projects and loans
to relevant subsidiaries, and so forth.
• The Board of Directors received generalreports on sustainability topics, including
the management plan, HSE (health, safety,
and environment), personnel strategies, andhealth management, as well as reports on
the above topics as specific items fordiscussion, and then discussed matters suchas the status of efforts.
• The Board of Directors received regular
reports of production and sale of gas andother energies in Japan and progress inprojects, and then discussed matters such as
the status of efforts.
• In addition to the foregoing, the Board of
Directors received reports of specific items

Attendance by Directors and Members• Persons attended 14 out of 14 meetings:
WATANABE Osamu, FUJITA Masahiro,
ISHII Yoshitaka, YAMASHITA Michiro,
NAKAJIMA Toshiaki, ITO Tetsuo (Note 1),
KAWASAKI Hideichi (Note 1), KITAI
Kumiko (Note 1)• Persons attended 13 out of 14 meetings:
YAMASHITA Yukari (Note 1)• Persons attended 12 out of 14 meetings:
SUGIYAMA Yoshikuni (Note 1)• Persons attended 10 out of 10 meetings:
TEZUKA Kazuhiko• Persons attended 4 out of 4 meetings:
HIRATA Toshiyuki (Note 2)

for discussion, including DX (digitaltransformation) and the internal reporting
system, and then discussed matters such as
the status of efforts.
• Four meetings were held for the fiscal
year under review.
• The chair and all members (*) attended• The committee discussed matters
all meetings of the committee.
regarding officers (election of Directors*Chair: FUJITA Masahiro, Representative
Nomination andand Audit & Supervisory Board Members
Director and President
Compensation Committee
to be proposed to the general meeting ofMembers: WATANABE Osamu, ITO
shareholders and election of Executive
Tetsuo (Note 1), YAMASHITA Yukari (Note 1),
Officers, compensation and bonuses for
KAWASAKI Hideichi (Note 1)
Directors, the skill matrix, officers’ shareownership plan, and so forth).
Notes: 1.
ITO Tetsuo, YAMASHITA Yukari, KAWASAKI Hideichi, KITAI Kumiko, and SUGIYAMA Yoshikuni are theOutside Directors as defined under Article 2, item 15 of the Companies Act.
2.

Director HIRATA Toshiyuki retired on June 27, 2023.

In addition to the above structure, risk is managed by Risk Management Committee and other internal committees of JAPEX.
For details, please refer to 3) Other matters regarding corporate governance (Status of development of risk management
system).

- 65 -

<Corporate Governance Structure>
Shareholders Meeting
Appointment/Dismissal

Appointment/Dismissal

Appointment/Dismissal[Management/Supervise]
Nomination andCompensation
Committee

Directors/
Board of Directors

Supervise

Audit & Supervisory
Board Members/Audit& Supervisory Board

Audit

Audit Report

Selection/Removal[Business Execution]

Sustainability Committee

Cooperation

Cooperation

Accounting Auditor

Cooperation

Audit

ReportReport/Preconsultation

Risk Management
Committee

Executive Committee
Representative Director
and President(Chief Executive Officer)

ReportAuditing Dept.
Approval ofplans

HSSE Committee

Information Security
Committee

Internal Audit
Internal Control Evaluation

Each Division
Management

Investment Evaluation
Committee

Group Companies(Reasons for adopting the current corporate governance structure)
As stated above, JAPEX has put in place a structure where Outside Directors comment on and supervise the corporate
management by operating officers from an independent standpoint and audits on Directors’ performance of duties are
conducted by Audit & Supervisory Board Members, along with the Audit & Supervisory Board. Such structure has beenworking well and fully ensures objective and appropriate decision-making. Therefore, we believe that JAPEX is capable ofstrengthening its corporate governance by adopting a corporate structure of a company with an audit & supervisory board.
3) Other matters regarding corporate governance(Matters concerning the development of internal control system)
At JAPEX, the Risk Management Committee and the Auditing Dept. take initiative to continue efforts to monitor and develop
a system to ensure appropriate business operations. JAPEX develops such a system required by the Companies Act and theRegulations for Enforcement of the Companies Act in accordance with the following policies.
(i)

Systems to ensure that the execution of duties by JAPEX’s Directors and employees complies with laws and regulations
and the Articles of Incorporation
To ensure that the execution of duties by Directors and employees of JAPEX conforms to laws and regulations and the
Articles of Incorporation, JAPEX establishes the JAPEX Group Code of Ethics and Conduct and develops a system toensure compliance and thoroughness with the code.
Likewise, JAPEX makes its Directors and employees to follow laws and regulations and the Articles of Incorporationin the performance of their duties by establishing the Risk Management Committee chaired by the President, which
deliberates important compliance-related matters and manages the status of implementation, as well as by ensuring
thorough awareness of compliance through internal training. At the same time, JAPEX organizes an internal reporting
system with internal and external contact points for reporting and consultation that are independent from the company
organization.

- 66 -

In addition, each department manages the execution of its duties following own business regulations and manuals, andthe internal audit department, which is controlled directly by the President, audits the systems and execution status ofvarious management activities and reports the results to the President, the Board of Directors and the Audit &Supervisory Board.
Further, to secure the reliability of financial reporting, JAPEX organizes and properly operates an internal control
system for financial reporting, and the internal audit department independently evaluates the effectiveness of the system
and reports the results to the President, the Board of Directors and the Audit & Supervisory Board.
(ii)

Systems concerning the retention and management of information on the execution of duties by Directors
JAPEX retains the minutes of Board of Directors meetings, approval for management, various contracts, and othermajor documents that indicate the execution status of operations. The details of the system are stipulated by the
document handling regulations.

(iii) Regulations and other systems relating to manage risks of loss
JAPEX reviews the credit management regulations, market risk management and derivative trading regulations, andother emergency response procedures, and where necessary, prepares manuals and other documents from the perspectiveof risk management.
At the same time, the Risk Management Committee evaluates and manages cross-company risks.
(iv) Systems to ensure that Directors execute their duties efficiently
The Board of Directors meets monthly in principle, to conduct swift decision-making on agenda items on which the
Executive Committee has deliberated in advance. The Board of Directors also ensures efficient execution by delegating
authority in accordance with the decisions and authorization regulations.
(v)

Systems to ensure appropriate business activities in the business group comprised of JAPEX and its subsidiaries
Through the JAPEX Group Code of Ethics and Conduct and the Management Plan, JAPEX sets forth the common
direction and goals to be pursued by the Group as its management policy, and the entire Group works together to achievethem.
Likewise, JAPEX Group makes efficient decisions and executes duties appropriately in a timely manner. JAPEX
appropriately operates group management agreements, etc., so that it can consult with and can receive reports onimportant matters from its subsidiaries in advance. In addition, in accordance with the Subsidiary and AssociateManagement Regulations, JAPEX’s departments in charge of managing subsidiaries and associates and corporate
divisions, etc., support the subsidiaries in development and operation of the internal control systems as well as risk
management to ensure appropriate operations of the entire Group.
Our subsidiaries establish and operate a system similar to our system that is stipulated in the preceding four items,
depending on the type of business, size and other attributes. Our subsidiaries’ directors report to JAPEX on the statusof execution of their duties regularly or as needed.
Furthermore, JAPEX's internal reporting system applies to subsidiaries, and our internal audit department audits
subsidiaries as necessary.

(vi) Matters relating to employees who assist in the duties of Audit & Supervisory Board
At the request of its Audit & Supervisory Board, JAPEX appoints one or more employees as Audit & Supervisory Board
office members.
(vii) Matters relating to the independence of the employees set forth in the preceding item from Directors
Personnel-related decisions on the relevant employees, including appointment and transfer, are subject to the prioragreement of the Audit & Supervisory Board.
(viii) Matters relating to ensure the effectiveness of instructions given by Audit & Supervisory Board Members to the relevant
employees
The employees appointed by the Audit & Supervisory Board office perform their duties in accordance with the
instructions of the Audit & Supervisory Board, and operating departments cooperate with such employees in theperformance of their duties.
(ix) Systems for our Directors and employees and subsidiaries’ Directors to report to the Audit & Supervisory Board(a) Our Directors make monthly business reports at Board of Directors meetings and circulate requests for management- 67 -

approval to Audit & Supervisory Board Members (Note). In addition, Director or employee immediately reports toa Member of the Audit & Supervisory Board if he/she discovers any facts that may cause significant damage to
JAPEX.
(b) Our subsidiaries’ director, audit & supervisory board member, or employee report to a Member of the Audit &Supervisory Board when he/she discovers any fact that may cause significant damage to JAPEX. The same also
applies to matters deemed necessary in connection with the performance of duties.
Note: Specifically, the full-time Audit & Supervisory Board Members receive requests for management approval inaccordance with the segregation of duties among Audit & Supervisory Board Members.
(x)

Systems to ensure that persons who made a report as set forth in the preceding item are not treated disadvantageously
due to such reporting
Applicable to JAPEX and its subsidiaries, the handling procedures for such reporting stipulates that no person who
made a report as set forth in the preceding item is subjected to any disadvantageous treatment for such reporting.

(xi) Matters relating to policies concerning the procedure for advance payment or reimbursement of expenses that arise in
the execution of duties by Audit & Supervisory Board Members, or other expenses or obligations that arise in suchexecution of duties
Audit & Supervisory Board Members may request prepayment, reimbursement, or other payment in case of necessary
to execute their duties by the writing with the reason, amount, and others. Based on the writing, JAPEX makes advancepayments or reimbursements.
(xii) Other systems to ensure effective audits of Audit & Supervisory Board Members
JAPEX ensures that the Audit & Supervisory Board Members have opportunities to exchange opinions with the
Representative Directors and the Accounting Auditor to enhance cooperation and information sharing.
Likewise, the Audit & Supervisory Board Members cooperate with the internal audit department through periodic
exchanges of opinions to improve the effectiveness of the audits.
(Status of development of risk management system)
In order to adequately operate the internal control system, we have set up various internal committees and developed a system
for risk management. For information on risk management by the Risk Management Committee and the Sustainability
Committee, please refer to “Item 2. Overview of Business, 2. Views and Initiatives on Sustainability, (1) Sustainability ingeneral, <Risk management>” above. JAPEX has also established specialized committees the Information Security Committee
and the Health, Safety, Security and Environment (HSSE) Committee to deliberate important issues concerning information
security and occupational health-and-safety, respectively.
Deliberation results and verification results obtained by these internal committees are reported to the Executive Committee
and the Board of Directors as needed before they discuss related matters.
(System to ensure appropriate business activities in subsidiaries)
The Auditing Dept. conducts internal audits on our subsidiaries based on annual audit plan to ensure appropriateness of theirbusiness activities. Audit results are reported to the President, then to Audit & Supervisory Board Members, and corrective
actions are taken as needed.
The Auditing Dept. evaluates on the development and operating status of subsidiaries’ overall internal control for financial
reporting, and the evaluation results are utilized in internal control audits conducted by the Accounting Auditor, and arereported to Audit & Supervisory Board Members and the Board of Directors of JAPEX.
In accordance with subsidiary and associate management regulation, JAPEX concludes a group management agreement with
relevant companies to monitor their corporate management. JAPEX also conducts audits on our major subsidiaries by fulltime Audit & Supervisory Board Members and the Auditing Dept.
(Outline of the limited liability agreement)
JAPEX amended the Articles of Incorporation at the General Meeting of Shareholders as of June 2015, enacted the new article
related to the limited liability agreement with Outside Directors and Outside Audit & Supervisory Board Members, and each
Outside Directors and Outside Audit & Supervisory Board Members executed the agreement based on the above article. The- 68 -

outline of the limited liability agreement is as follows:(i) The limited liability agreement with Outside Directors
In the case where Outside Director(s) is(are) liable for damages which have arisen to JAPEX under paragraph 1, Article
423 of the Companies Act, given his/her performance of duties are made faithfully and without any gross negligence,he/she should be liable for damages to JAPEX within the limit of minimum amount as stipulated in each item of paragraph
1, Article 425 of the Companies Act and should be exempted from any liabilities beyond the minimum amount by JAPEX.
(ii) The limited liability agreement with Outside Audit & Supervisory Board Members
In the case where Outside Audit & Supervisory Board Member(s) is(are) liable for damages which have arisen to JAPEX
under paragraph 1, Article 423 of the Companies Act, given his/her performance of duties are made faithfully and without
any gross negligence, he/she should be liable for damages to JAPEX within the limit of minimum amount as stipulated ineach item of paragraph 1, Article 425 of the Companies Act and should be exempted from any liabilities beyond theminimum amount by JAPEX.
(Outline of Directors’ and Officers’ liability insurance contract)
JAPEX has concluded a Directors’ and Officers’ liability insurance contract as stipulated in Article 430-3, paragraph 1 of theCompanies Act with an insurance company. The insureds bear no responsibility for payment of the insurance premiums.
i) Scope of the persons insured• JAPEX’s Directors, Audit & Supervisory Board Members, Executive Officers, Counselors, Fellows, and management
employees, including those who have already retired or resigned• Officers and management employees of JAPEX’s subsidiaries, etc., including those who have already retired or resigned
Notes: 1. Persons with high expertise in JAPEX’s specific professional fields have been appointed as Fellows to support
corporate management (JAPEX has two Fellows as of March 31, 2024).
2. Management employees of JAPEX’s associates in overseas are not covered by the insurance contract.
ii) Outline of the insurance contract
This insurance contract covers compensation for damages borne by the insured persons (third-party damage suit andshareholder derivative suit) in the event of claims made against them for actions taken (or inaction) in their roles as an
officer of JAPEX and JAPEX’s subsidiaries, etc. during the coverage period.
In overseas, this insurance contract covers compensation for the first claimed damages borne by the insured persons of
JAPEX and JAPEX’s subsidiaries and associations covered by the insurance contract during the coverage period due totheir unjust behavior.
Provided, however, that there are certain exemptions. For example, the damage caused as a result of any conduct inviolation of laws and regulations or the damage covered by other forms of insurance shall not be covered.
4) Quorum of Directors
The Articles of Incorporation of JAPEX stipulate that the number of Directors is to be 18 or less.
5) Requirement for the adoption of resolutions for electing Directors
Our Articles of Incorporation stipulate that the Directors of JAPEX shall be elected by a majority vote of all eligible
shareholders present at a General Meeting of Shareholders which shall have attendance of shareholders holding, in aggregate,
not less than one third (1/3) of the total voting rights of all eligible shareholders.
The Articles of Incorporation also stipulate that cumulative voting shall not be used for the resolution for electing Directors.
6) Decision-making body of interim dividends
Pursuant to Article 454, paragraph 5 of the Companies Act, our Articles of Incorporation stipulate that JAPEX may, by aresolution of the Board of Directors, pay an interim dividend on September 30 of each year as the record date. This is intended
to return profits to shareholders in a flexible manner.
7) Decision-making body for the purchase of treasury shares
Pursuant to Article 165, paragraph 2 of the Companies Act, our Articles of Incorporation stipulate that, upon resolution of theBoard of Directors, JAPEX may acquire its treasury shares by trading in the market etc. as stipulated in paragraph 1 of the- 69 -

same article. This is to facilitate the purchase of treasury shares with flexibility.
8) Requirement for the adoption of special resolution of General Meeting of Shareholders
Our Articles of Incorporation stipulate that resolutions under Article 309, paragraph 2 of the Companies Act shall only be
adopted by two thirds (2/3) or more of the votes of the shareholders at a General Meeting of Shareholders which shall haveattendance of shareholders holding, in aggregate, not less than one third (1/3) of the total eligible voting rights. This is intended
to facilitate smooth operations of the General Meeting of Shareholders.
Overview of the measures to prevent large-scale acquisition of our company’s shares (Takeover Defense Measures)(1) Basic policy regarding the person controlling decisions relative to 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 is eligible to protect and enhance corporate value and ultimately
the shareholders’ common interests in a continuing, sustainable manner.
JAPEX believes the decision on an acquisition proposal which is associated with the transfer of corporate control should ultimately
be made based on the general decision of our shareholders. Furthermore, JAPEX does not disapprove of large-scale shareacquisition that contributes to our corporate value and ultimately the shareholders’ common interests.
Nevertheless, among large-scale share acquisitions, there are many that do not contribute to the corporate value and theshareholders’ common interests, in light of their purpose, including such that cause a clear infringement on the corporate value andthe shareholders’ common interests, such that has the risk of a de facto coercion against the shareholders to sell their shares, suchthat does not provide sufficient time and/or information for the Board of Directors and the shareholders 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 consultationand negotiation with the acquirer 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, described in (2)1 below, not to mention thecontent of JAPEX’s finances and business, and unless he or she protects and enhances them over medium to long term, our corporate
value and ultimately the shareholders’ common interests will be damaged.
JAPEX considers such a large-scale acquirer that does not contribute to our corporate value and the shareholders’ common interests
inappropriate as the controlling person to determine the policies of our finances and business, and thus consider necessary to protect
our corporate value and ultimately the shareholders’ common interests by taking essential and substantial measures against suchattempts.
(2) Special undertakings that contribute to the source of our corporate value and to the realization of the basic policy
1. Source of our corporate value
JAPEX has developed its business focusing on the improvement of the self-sufficiency of oil and natural gas since its foundationin 1955. Starting out with zero reserves, JAPEX has established its current business base in the compounding discoveries of newoil and gas fields one after another, and is operating the businesses of exploration, development and production, and distribution ofoil and natural gas resources as its core business.
The source of our corporate value lies in our business model where we conduct exploration, development, and distributing in
integrated manner, upon our ownership of oil and natural gas interests, while providing, in Japan, a stable supply of gas using
infrastructure such as pipelines and LNG terminals and supplying electricity from natural gas-fired power generation and renewableenergy sources. As such, JAPEX conducts a business with a highly public nature, as well as taking on a crucially important
responsibility in terms of maintaining and ensuring stable supply and safe operation as an enterprise involved in the supply ofenergy, which is compared to the bloodstream of industrial activity and civic life. Moreover, to contribute to the realization of acarbon-neutral society, JAPEX is working toward the early commercialization of CCS (Carbon dioxide capture and storage) and
CCUS (Carbon dioxide capture, utilization, and storage), mainly utilizing E&P technologies.
This business model is backed with JAPEX’s 1) advanced exploration technology for oil and natural gas, 2) comprehensive
technological capabilities such as oil/gas field development technology and operation know how both in and out of Japan, 3)- 70 -

construction of a strong infrastructure such as natural gas transport pipelines and LNG terminals in Japan, and 4) trust relationships
with our stakeholders including customer, stockholder and community, based on the buildup of a stable, long-term supply record
due to the aforementioned network.
It is not uncommon for it to take more than 10 years to reach the production stage from exploration of a new oil or gas field in the
E&P business. In addition, in order to contribute to the realization of a carbon-neutral society, it is required to develop businesswith a long-term perspective and contribute to society through consideration for the protection of the global environment. Also, inthe view of today’s international energy situation, in which the global competition with regard to the securement of energy resources
is intensifying, efforts for improvement of corporate technology and know-how, securing human resources, and the further
enrichment of trust relationships with each stakeholder are essential for the continuing growth of the business and enhancement ofour corporate value. This, we believe, is still what brings the future maintenance and improvement of our corporate value and thusof the common interest of our stockholders.
2. Undertakings for the improvement of corporate value
In view of the irreversible changes in energy demand structure due to global progress toward decarbonization, in May 2021 weformulated and announced “JAPEX2050,” which outlines our responsibilities toward the realization of a carbon-neutral society
and our direction for future business development.
In addition, in March 2022, we formulated and announced the “JAPEX Management Plan 2022–2030,” which sets forth a basic
policy of improving profitability and building a business foundation for 2030 and beyond.
A summary of “JAPEX2050” and “JAPEX Management Plan 2022-2030” is as described in “Item 2. Overview of Business, 1.
Management Policy, Business Environment, and Issues to be Addressed, (2) Medium- to long-term management strategies andissues to be addressed.”
By steadily implementing “JAPEX2050” and “JAPEX Management Plan 2022–2030,” we will continue to contribute to therealization of a carbon-neutral society in 2050 and further increase our growth and corporate value as a comprehensive energy
company.
3. Fortification of Corporate Governance
JAPEX plans to implement the above measures and intends to acquire and improve our corporate value and consequently thecommon interest of our shareholders. Furthermore, we believe that our path to sustainable growth over the long term lies in efficientand transparent management and building relationships of trust by fulfilling our accountability to shareholders and otherstakeholders. To this end, we are striving to enhance corporate governance.
First of all, Directors or Executive Officers, who are appointed and assigned duties by the Representative Directors and Board of
Directors, serve as JAPEX’s operating officers. The Board of Directors and Audit & Supervisory Board Members (along with the
Audit & Supervisory Board that is comprised of all Audit & Supervisory Board Members) assume the role of supervising theexecution of their duties.
In addition, in order to strengthen the supervisory function of the Board of Directors, JAPEX has appointed five Outside Directors
who are highly independent and have deep insight. The Outside Directors contribute to vigorous discussion at meetings of theBoard of Directors by actively providing comments on proposals and deliberations. In addition, with a view to providing sufficient
information to Outside Directors, thereby helping them perform their role appropriately, JAPEX has arrangements in place
including liaison meetings for Outside Directors and Outside Audit & Supervisory Board Members for providing preliminary
briefing to Outside Directors and Outside Audit & Supervisory Board Members on proposals for the Board of Directors, as well as
for exchanging information and opinions among them.
All Audit & Supervisory Board Members attend the Board of Directors’ Meeting and the full-time Audit & Supervisory Board
Members also attend the other important meetings as well as exchange opinions with Directors who execute business operations or
Executive Officers as appropriate, thus serving in the supervisory function. Furthermore, as an internal audit, the Auditing Dept.
evaluates the systems and execution of various management activities of JAPEX from the viewpoint of legality and rationality, andprovides suggestions and advice for improvement and rationalization to the subject departments as necessary.
Furthermore, the Nomination and Compensation Committee has been established under the Board of Directors, with a view toward
strengthening the supervisory function of the Board of Directors, by further ensuring the transparency and objectivity of the- 71 -

procedures for making decisions concerning the nomination and compensation of Directors.
On the other hand, concerning the internal control, the Risk Management Committee, as the main actor, is continuing its inspection
and development of the framework to ensure due business operation.
Furthermore, in addition to such corporate governance in management mechanism, we anticipate to attain the optimal businessexecution appropriately, through improved transparency of management brought by IR activities such as results briefings andenrichment of the website.
(3) Undertakings based on the basic policy to prevent the controlling of decision of policies of our finances and business byinappropriate persons (the “Plan”)
1. Purpose of the Plan
The Plan has been adopted according to the Basic Policy described above (1) for the purpose of ensuring and improving ourcorporate value and the common interests of our shareholders.
The Board of Directors, as set forth in the Basic Policy, considers a person who performs the large-scale acquisition of JAPEX
share certificates, etc., without contributing to our corporate value and/or the common interests of our shareholders inappropriate
for making financial and business policy decisions regarding JAPEX. The Plan aims to prevent the control of our financial andbusiness policies by such inappropriate persons and deter large-scale acquisition that is detrimental to our corporate value and/or
the common interests of our shareholders. At the same time, the Plan shall allow JAPEX’s Board of Directors to ensure the necessary
information and time required to propose an alternative plan to our shareholders or for our shareholders to sufficiently judge whether
such a large-scale acquisition of JAPEX share certificates, etc., is acceptable and/or allow negotiation and other measures to betaken on behalf of our shareholders.
2. Overview of the Plan
The Plan determines the necessary procedure for achieving the aforementioned purpose, such as demanding the prior provision of
information from the acquirer, upon the emergence of a person who intends to acquire 20% or more of JAPEX share certificates,etc.
In case the decision of not implementing the Plan has been made by the Board of Directors based on the procedures of the Plan,
the acquirer shall be authorized to make a large-scale acquisition of JAPEX share certificates, etc., only after such a board decision.
In case the acquirer does not comply with the procedure set forth in the Plan or the intended large-scale acquisition of JAPEX sharecertificates, etc., has a risk of impairing our corporate value and/or the common interest of our shareholders and if the predetermined
requirements for the implementation of the Plan are satisfied, JAPEX shall allot share options without contribution regarding thosewith exercise conditions in which the exercise of rights by the acquirer is, in principle, impermissible or with acquisition clauses
where JAPEX may, in principle, acquire share options from persons other than the acquirer in exchange for JAPEX shares and shall
implement any other reasonable measures that could be taken under the laws and regulations and JAPEX’s Articles of Incorporation.
In the event that the allotment of share options without contribution is executed according to the Plan, and associated by its
execution or acquisition by JAPEX, when JAPEX shares are issued to all shareholders except for the acquirer, the percentage ofvoting rights the acquirer holds may be diluted up to a maximum of approximately 50%.
With regard to the decision whether to implement or not implement the allotment of share options without contribution, or toacquire, according to the Plan, in order to eliminate the arbitrary decision of the Board of Directors, it shall undergo the objective
decision of the Independent Committee constituted only of Outside Director etc., who are independent from JAPEX’s Board of
Directors pursuant to the Independent Committee Provision.
Following persons are members of the Independent Committee.
ITO Tetsuo, Outside Director, JAPEXYAMASHITA Yukari, Outside Director, JAPEXKAWAKITA Chikara, Outside Audit & Supervisory Board Member, JAPEX
Moreover, in the event that the allotment of share options without contribution is implemented according to the Plan, the Board of
Directors shall, in principle, convoke a general meeting of the shareholders to confirm the decision of the shareholders concerning
said implementation of the allotment of share options without contribution.

- 72 -

We aim to ensure transparency of the process of these procedures through the timely disclosure of appropriate information to ourshareholders.
The effective period of the Plan shall be until the close of the Ordinary General Meeting of the Shareholders regarding the latest
fiscal year ending within three years after the close of the Ordinary General Meeting of the Shareholders, which is the same as thedelegation period of the authority to decide the matters concerning the allotment of the Share Options without contribution in thePlan to be in accordance with the resolution of the 53rd Ordinary General Meeting of the Shareholders held on June 27, 2023.
However, even before the expiration of the effective period, if a resolution to abolish the Plan is made by the Board of Directors,
the Plan shall be abolished at that point in time.
Details of the Plan is available on our website. Please refer to our news release “Renewal of the Measures to Prevent Large-scale
Acquisition of Our Company Shares (Takeover Defense Measures)” issued on May 12, 2023.
(https://www.japex.co.jp/en/news/uploads/pdf/JAPEX20230512_TDM_Update_e.pdf)(4) Decision and its reason of the Board of Directors concerning the Plan
1. The Plan must be in accordance with the Basic Policy
The Plan is a framework in accord with the Basic Policy that ensures our corporate value and consequently the common interest of
our shareholders, by enabling the decision-making of shareholders concerning the acceptance of the Acquisition, or ensuring theinformation and time necessary for the proposal of an alternative plan by the Board of Directors, and/or enabling negotiation orother communication with the Acquirer on behalf of the shareholders, in the event of Acquisition of JAPEX share certificates, etc.
2. The Plan must not be such that is detrimental to the common interest of our shareholders and does not serve the purpose of retaining
the position of our corporate officers.
JAPEX considers the Plan to be not detrimental to the common interest of our shareholders and that it does not serve the purposeof retaining the position of our corporate officers for the following reasons:1) That the Plan satisfies the guiding requirements of the takeover defense measure:
The Plan satisfies the three principles (1) the principle of protecting and enhancing corporate value and shareholders’ common
interests; (2) the principle of prior disclosure and shareholders’ will; and (3) the principle of ensuring the necessity andreasonableness of defensive measures, set forth in the Guidelines Regarding Takeover Defense for the Purposes of Protection
and Enhancement of Corporate Value and the Shareholders’ Common Interests announced by the Ministry of Economy, Tradeand Industry and the Ministry of Justice on May 27, 2005.
2) That the Plan respects the decision of the shareholders:
The introduction of the Plan was tabled and discussed at the 38th Ordinary General Meeting of Shareholders held on June 25,2008 to confirm the intention of shareholders and was approved at the meeting. So were the updates of the Plan at the following
Ordinary General Meetings of Shareholders: the 41st meeting held on June 24, 2011; the 44th meeting held on June 25, 2014;
the 47th meeting held on June 28, 2017; the 50th meeting held on June 26, 2020; and the 53rd meeting held on June 27, 2023.
And the Board of Directors made it clear that JAPEX holds a General Meeting of Shareholders to hear shareholders’ decision
regarding the implementation of the Plan for certain cases depicted in the Plan.
In addition, the Plan contains a sunset provision that stipulates an effective period of approximately three years. Alongside,even before the expiration of the effective period, if a resolution abolishing the Plan is made by the Board of Directors, thePlan shall be abolished at that point of time. In that context, the intention of our shareholders will be reflected on the prevalenceof the Plan.
3) Respect for the decision of the Outsider Directors and Outside Audit & Supervisory Board Members and information
disclosure
The practical decisions on the operations of the Plan are executed by the Independent Committee which only consists of
Outside Directors and Outside Audit & Supervisory Board Members who are independent.
Furthermore, the overview of the decision is to be disclosed to our shareholders, ensuring the framework for a transparent
operation of the Plan to serve the corporate value and the common interest of our shareholders.
4) Establishment of reasonable objective requirements- 73 -

The Plan shall not be implemented if it does not meet the reasonable objective requirements, ensuring the framework to preventthe arbitrary implementation by the Board of Directors.
5) Hearing of opinions from third party experts
When an acquirer emerges, the Independent Committee may receive advice from financial advisors, certified public
accountants, lawyers, certified tax accountants, consultants, and other experts at the expense of JAPEX. This creates amechanism for securing fairness and objectivity of the decisions given by the Independent Committee to a stronger degree.
6) That the takeover defense measure is not a dead-hand or slow-hand type measure
A large-scale purchaser of JAPEX share certificates, etc. can appoint Directors of their own designation in a general meetingof the shareholders and abolish this Plan through the Board of Directors constituted of such Directors.
Therefore, the Plan is not a dead-hand type takeover defense measure (a takeover defense measure of which implementation
cannot be deterred even with the replacement of over half of the constituting members of the Board of Directors). Furthermore,
the assumption of Directors at JAPEX does not employ the staggered system, which does not make the Plan a slow-hand typetakeover defense measure (a takeover measure of which implementation takes time to deter due to the impossibility of an alltogether replacement of the constituting members of the Board of Directors).

- 74 -

(2) Directors and Senior Management
1) List of Directors and Senior Management
Male: 13, Female: 2 (percentage of females among Directors and Audit & Supervisory Board Members: 13.3%)
Position

Name

Date of birthBusiness experience

NumberTerm of of shares
officeheld(Shares)

Apr. 1977 Joined the Ministry of International Trade and Industry
Jul. 2008 Director-General, Trade and Economic Corporation Bureau, theMinistry of Economy, Trade and Industry
Nov. 2010 Executive Officer, Sumitomo Corporation
Jun. 2018 Representative Director, Executive Vice President, Sumitomo
Representative Director

FUJITA

Chairman

Masahiro

Nov. 12, 1954

Corporation
Apr. 2019 Representative Director, Assistant to President and CEO,
Sumitomo Corporation

Note 3

13,205Note 37,806

Note 3

6,943

Jun. 2019 Representative Director, Executive Vice President, JAPEXOct. 2019 Representative Director, President & CEO, JAPEXOct. 2019 Chairman, JAPEX Montney Ltd.
Oct. 2019 Representative Director, President, JAPEX Offshore Ltd.
Nov. 2019 Representative Director, President, JAPEX Garraf Ltd.
Apr. 2024 Representative Director, Chairman, JAPEX (to present)
Apr. 1982 Joined JAPEX
Jun. 2005 General Manager of Corporate Planning Dept.
Apr. 2010 Vice President of Environment and Innovative Technology Projects
Division
Jun. 2011 Vice President of Environment and Innovative Technology Projects
Representative Director
President
Chief Executive Officer

Division
YAMASHITA
MichiroOct. 27, 1959

Jun. 2013 Executive Officer
Jun. 2016 Managing Executive Officer
Jun. 2018 Director, Managing Executive Officer
Apr. 2022 Director, Senior Managing Executive Officer
Mar. 2024 Representative Director, President, JAPEX Garraf Ltd. (to present)
Apr. 2024 Representative Director, President & CEO, JAPEX (to present)
Apr. 2024 Representative Director, President, JAPEX Offshore Ltd. (topresent)
Apr. 1981 Joined JAPEX
Apr. 2010 General Manager of Technical Dept., Nagaoka Division OfficeJun. 2014 Executive Officer, General Manager of Nagaoka Division Office,Domestic Project Division
Apr. 2017 Executive Officer, General Manager of Nagaoka District OfficeJun. 2017 Managing Executive Officer, General Manager of Nagaoka District
OfficeRepresentative Director

Nov. 2017 Managing Executive Officer, Vice President of Inter-regional Gas

Executive Vice President

Supply Division and Vice President of Soma Project Division

Advisor to President,
President of PowerBusiness Division
In charge of Secretary
OfficeJun. 2018 Representative Director and President, Fukushima Gas Power Co.,ISHII Yoshitaka Apr. 3, 1957

Ltd. (to present)
Jun. 2018 Director, Managing Executive Officer, President of Inter-regional
Gas Supply Division and President of Soma Project & PowerBusiness Division
Oct. 2018 Director, Managing Executive Officer, President of Inter-regional
Gas Supply Division and President of Soma Project & PowerBusiness DivisionJun. 2020 Director, Senior Managing Executive Officer, President of PowerBusiness DivisionJun. 2021 Representative Director, Executive Vice President, President ofPower Business Division (to present)- 75 -

Position

Name

Date of birth

Director

In charge of Corporate
Communication Office

NumberTerm of of shares
officeheld(Shares)

Apr. 1986 Joined JAPEXManaging Executive
OfficerBusiness experience

Jun. 2010 General Manager of Corporate Planning Dept.
NAKAJIMA
Toshiaki

May 1, 1962

and Corporate Strategy

Jun. 2011 General Manager of Corporate Strategy Dept.
Jun. 2019 Executive Officer
Jun. 2021 Managing Executive Officer

Note 3

4,451

Note 3

3,422

Note 3535

Note 3－Note 3－Note 3

1,000

Jun. 2022 Director, Managing Executive Officer (to present)

Dept.

Dec. 1983 Joined JAPEX
Jun. 2005 General Manager of Development & Engineering Laboratory,
Research Center
Director
Managing Executive
OfficerPresident of TechnicalJun. 2011 General Manager of Development & Engineering Laboratory,TEZUKA
KazuhikoResearch Center, Technical DivisionNov. 6, 1960

Apr. 2014 General Manager of Advanced Technology Laboratory, ResearchCenter, Technical Division

Division

Jun. 2014 General Manager of Research Center, Technical DivisionJun. 2020 Executive Officer, President of Technical Division
Apr. 2022 Managing Executive Officer, President of Technical DivisionJun. 2023 Director, Managing Executive Officer (to present)
Apr. 1988 Joined JAPEX

Director

Jun. 2012 General Manager of Administration Dept., Hokkaido District

Managing Executive

Office, Domestic Project Division

OfficerJun. 2013 General Manager of Administration Dept.

In charge of
Administration & Legal

FUNATSU
Jiro

Aug. 4, 1964

Jun. 2018 General Manager of Administration & Legal Dept.
Jul. 2020 General Manager of Human Resources Dept.

Dept. and Human

Apr. 2023 Executive Officer

Resources Dept.

Apr. 2024 Managing Executive Officer
Jun. 2024 Director, Managing Executive Officer (to present)
Apr. 1975 Appointed as a prosecutor
Jun. 2001 Head of Special Investigation Force, Tokyo District Public
Prosecutors OfficeDirector

ITO Tetsuo

Mar. 15, 1948

Jan. 2009 Deputy Prosecutor-General, Supreme Public Prosecutors Office
Apr. 2011 Attorney, registered at Daiichi Tokyo Bar Association (to present)
Apr. 2011 Of Counsel at Nishimura & Asahi
Jun. 2016 Director, JAPEX (to present)
Jul. 2023 Attorney, Sawayaka Law Office (to present)
Oct. 1985 Joined The Institute of Energy Economics, Japan
Jun. 2011 Board Member, Unit Manager of Global Environment &Sustainable Development Unit, The Institute of Energy Economics,

Director

YAMASHITA
YukariJapan
Oct. 23, 1959

Jul. 2011 Board Member, Director in charge of the Energy Data andModelling Center, The Institute of Energy Economics, Japan
Jun. 2019 Director, JAPEX (to present)
Jun. 2020 Managing Director in charge of the Energy Data and Modelling
Center, The Institute of Energy Economics, Japan (to present)
Apr. 1970 Joined Oki Electric Industry Co., Ltd.
Apr. 2001 Executive Officer, Oki Electric Industry Co., Ltd.
Apr. 2004 Senior Vice President, Oki Electric Industry Co., Ltd.
Jun. 2005 Managing Director, Oki Electric Industry Co., Ltd.

Director

KAWASAKI
HideichiApr. 2009 Vice President, Representative Director, Oki Electric Industry Co.,
Jan. 10, 1947

Ltd.
Jun. 2009 President, Representative Director, Oki Electric Industry Co., Ltd.
Apr. 2016 Chairman of the Board, Representative Director, Oki ElectricIndustry Co., Ltd.
Jun. 2018 Chairman of the Board, Oki Electric Industry Co., Ltd.
Jun. 2020 Director, JAPEX (to present)- 76 -

Position

Name

Date of birthBusiness experience

NumberTerm of of shares
officeheld(Shares)

Apr. 1976 Joined Ministry of Labor
Jul. 1999 Deputy Governor, Shizuoka Prefecture
Aug. 2005Director General, Employment Environment and Equal
Employment, Children and Families Bureau, Ministry of Health,
Labor and Welfare
Director

KITAI Kumiko Oct. 29, 1952

Sep. 2006 Director-General of Secretariat, Central Labour Relations

Note 3－Note 3－Note 43,100

Note 32,700

Note 5－

Commission
Aug. 2007Executive Director, Japan Industrial Safety and Health Association
Apr. 2012 Attorney registered at Daini Tokyo Bar Association (to present)
Jul. 2014 Attorney, Kachidoki Law Office (to present)
Jun. 2022 Director, JAPEX (to present)
Apr. 1978 Joined The Yomiuri Shimbun
Jun. 2010 Director, Tokyo Head Office, The Yomiuri Shimbun
Jun. 2011 Director, Yomiuri Shimbun Holdings (to present)
Jun. 2011 Managing Director, Tokyo Head Office, The Yomiuri Shimbun
Jun. 2012 Senior Managing Director, The Yomiuri Shimbun Tokyo Head
OfficeDirector

SUGIYAMA
Yoshikuni

Oct. 11, 1954

Jun. 2014 Representative Director, President, The Yomiuri Shimbun Seibu
Head OfficeJun. 2015 Representative Director, President, The Yomiuri Shimbun Osaka
Head OfficeJun. 2019 Board Director, Nippon Television Holdings, Inc.
Jun. 2020 Representative Director, President, Nippon Television Holdings,
Inc.
Jun. 2022 Director, JAPEX (to present)
Jun. 2022 Representative Director, Chairman, Nippon Television Holdings,
Inc. (to present)
Apr. 1983 Joined JAPEX
Jan. 2007 General Manager of Accounting & Procurement Dept., Sapporo
Division Office (later Hokkaido Division Office)

Audit & Supervisory
Board Member(full-time)

MOTOYAMA
Apr. 23, 1960
Yoshihiko

Jul. 2013 General Manager of Procurement Dept.
Jun. 2019 Executive Officer
Jun. 2021 Advisor to President
Jun. 2021 Corporate Auditor, JAPEX Offshore Ltd.
Jun. 2022 Audit & Supervisory Board Member (full-time), JAPEX (topresent)
Apr. 1984 Joined JAPEX
Feb. 2016 General Manager of Technical Planning & Coordination Dept.,

Audit & Supervisory
Board Member(full-time)

Technical Division
TAKAHATA
ShinichiJun. 24, 1961

Jun. 2019 Executive Officer, Vice President of Technical DivisionJun. 2020 Executive Officer, General Manager of Nagaoka District Office
Apr. 2023 Advisor to President, Assistant of the executive in charge ofCorporate Strategy Dept.
Jun. 2024 Audit & Supervisory Board Member (full-time) (to present)
Apr. 1977 Joined the Ministry of FinanceJul. 2010 Commissioner, National Tax Agency
Oct. 2012 Professor, Graduate School of Law, Hitotsubashi University

Audit & Supervisory

KAWAKITA

Board Member

ChikaraJun. 2013 Outside Director, ITOCHU Corporation
Oct. 15, 1954

Oct. 2014 Deputy Chairperson, General Insurance Rating Organization ofJapan
Jun. 2019 Outside Audit & Supervisory Committee member, KONAMIGROUP CORPORATION
Jun. 2022 Outside Audit & Supervisory Board Member, JAPEX (to present)- 77 -

Position

Name

Date of birthBusiness experience

NumberTerm of of shares
officeheld(Shares)Nov. 1974 Joined Tetsuzo Ota Audit Office (later Ernst & Young ShinNihon
LLC)
Sep. 1978 Registered as certified public accountant (to present)
May 1998 Representative Partner, Ota Showa Audit Corporation (later Ernst& Young ShinNihon LLC)
Jun. 2006 Managing Executive Partner, Ernst & Young ShinNihon Audit
Audit & Supervisory

KATO

Board Member

YoshitakaCorporation (later Ernst & Young ShinNihon LLC)
Sep. 17, 1951

Aug. 2008Chairman and CEO, ShinNihon LLC (later Ernst & Young
ShinNihon LLC)

Note 6－

Jun. 2015 Outside Corporate Auditor, Sumitomo Chemical Company,
Limited (to present)
Jun. 2015 Outside Corporate Auditor, Mitsui Fudosan Co., Ltd.
Jun. 2016 Outside Audit & Supervisory Board Member, SUMITOMOCORPORATION
Jun. 2024 Outside Audit & Supervisory Board Member, JAPEX (to present)
Total

43,162

Notes: 1. Directors ITO Tetsuo, YAMASHITA Yukari, KAWASAKI Hideichi, KITAI Kumiko and SUGIYAMA Yoshikuni are theOutside Directors as defined under Article 2, item 15 of the Companies Act.
2. Audit & Supervisory Board Members KAWAKITA Chikara and KATO Yoshitaka are the Outside Audit & Supervisory
Board Members as defined under Article 2, item 16 of the Companies Act.
3. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within one year after the election on June 26, 2024.
4. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within three years after the election on June 28, 2022.
5. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within four years after the election on June 28, 2022.
6. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within four years after the election on June 26, 2024.
7. The number of JAPEX’s shares held by each officer includes the number of shares to be delivered after his/her retirement
under the share-based compensation plan.
8. Director YAMASHITA Yukari is registered as NIWA Yukari in family register. YAMASHITA has been used in career.
9. ANRAKU Toshiyuki and TAKANO Osamu were appointed by JAPEX as Fellow as of April 1, 2022 and April 1, 2023,
respectively. Fellows support the management with high degree of expertise in specialized fields.
10. JAPEX has introduced an Executive Officer System.
Executive Officers who are not concurrently serving as Directors are as follows:
Senior Managing
Executive Officer

President of Marketing & Sales Division, incharge of Procurement Dept.

SUGA Tsuyoshi

Managing Executive
OfficerPresident of Overseas Business Division I

ABE Satoshi

Managing Executive
OfficerPresident of Japan Carbon Neutral Division

IKENO Tomonori

Managing Executive
Officer

Vice President of Power Business Division

KASA HirofumiManaging Executive
OfficerPresident of Overseas Business Division II

YAMADA Tomomi

Managing Executive
Officer

Vice President of Marketing & Sales
Division, General Manager of Hokkaido
Marketing & Sales Office of Marketing &NAGAHAMA Yasushi

Sales Division- 78 -

Executive Officer

General Manager of Nagaoka District
OfficeNAKANO Masanori

Executive Officer

In charge of LNG Marketing &Procurement Office

OHAMA Tadashi

Executive Officer

Vice President of Power Business Division

YASUI Akira

Executive Officer

President of Domestic E&P Project
Division, in charge of HSE Dept.

TAKAHASHI Toshihiro

Executive Officer

President of Gas Supply & Facility
Engineering Division

SUDA Akira

Executive Officer

In charge of Finance & Accounting Dept.
and Deal Execution / PMI Support Dept.

NISHIMURA Yutaka

Executive Officer

Vice President of Overseas Business

HIRATA Kazunari

Division I, General Manager of Business
Development Dept. I of Overseas Business
Division I
11. The skill matrix of Directors and Audit & Supervisory Board Members is as follows:

Name

FUJITA
Masahiro

Position

Financial

Legal

Corporateaffairs,

affairs

manage-accounting,and riskment

and tax

manage-affairsment

Knowledge
ESG andsustainability

about

GlobalTechnology

energybusinessand DX

industry

Representative
Director and

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

Chairman
Representative

YAMASHITA
MichiroDirector
President○○

Chief Executive
Officer

ISHII

Representative

Yoshitaka

Director

NAKAJIMA
ToshiakiTEZUKA
Kazuhiko
FUNATSU
Jiro
ITO
TetsuoYAMASHITA
YukariKAWASAKI
Hideichi
KITAI
Kumiko○Director
Director○○○

Director○○

Outside Director○○

Outside Director
Outside Director
Outside Director

○
○

○
○

- 79 -

○

○

○

○

○

○

○

SUGIYAMA
Yoshikuni

Outside Director

○

○

○

○

Audit &MOTOYAMA

Supervisory

Yoshihiko

Board Member

○

○

○

(full-time)
Audit &
TAKAHATASupervisory

ShinichiBoard Member○(full-time)
KAWAKITA
Chikara
KATO
YoshitakaOutside Audit &Supervisory

○

○

○

○

○

○

Board Member
Outside Audit &Supervisory
Board Member- 80 -○○

2) Outside Officers(The number of Officers)
The number of JAPEX’s Outside Directors is five and the number of its Outside Audit & Supervisory Board Members is two.
(Personal, capital, material business relationships or any other conflicts of interest with JAPEX)JAPEX has entered into business transactions with Nishimura & Asahi, where Outside Director ITO Tetsuo served Of
Counsel. However, considering the scale and the nature of the transactions, the decision-making of JAPEX will not besignificantly affected. In addition, no relationships exist that may raise conflict of interest with our other general shareholders.
JAPEX has entered into business transactions with The Institute of Energy Economics, Japan, where Outside Director
YAMASHITA Yukari serves as a Managing Director. However, considering the scale and the nature of the transactions, thedecision-making of JAPEX will not be significantly affected. In addition, no relationships exist that may raise conflict ofinterest with our other general shareholders.
Outside Audit & Supervisory Board Member KATO Yoshitaka served as Chairman and CEO at an audit firm serving as the
Accounting Auditor (currently Ernst & Young ShinNihon LLC), but he has never been directly involved in accounting auditsof JAPEX and about 10 years have passed since he retired from the audit firm in June 2014. In addition, the amount of fees
paid by the JAPEX Group to the audit firm for FY2023 totaled ¥127 million, which is less than 1% of the firm’s net sales.
Therefore, the audit firm does not economically depend on the JAPEX Group. Considering the scale and the nature of therelationships with KATO and the audit firm, the decision-making of JAPEX will not be significantly affected. In addition, no
relationships exist that may raise conflict of interest with our other general shareholders.
All the Outside Directors and Outside Audit & Supervisory Board Members, including the ones above, do not have conflictsof interest with JAPEX.
(Functions and roles to be played in corporate governance and criteria or policies concerning independence)
We believe that, by appointing Outside Directors, the supervisory functions of the Board of Directors will be strengthened.
We also believe that, by letting the Outside Directors and Outside Audit & Supervisory Board Members actively commenton and give advice on the meeting agenda, deliberations and other matters from an independent standpoint from management,
we can invigorate discussion at the meeting of the Board of Directors.
JAPEX nominates Outside Directors and Outside Audit & Supervisory Board Members who have experience as a corporate
manager at a private firm, and persons with legal expertise, among others, because such persons can provide supervision andwide-ranging proposals to our management based on their abundant experience and deep insight. In addition to meeting theindependence criteria stipulated by the Tokyo Stock Exchange, JAPEX regards that a person is independent if the person does
not meet any of the following conditions:i)

An executive of a company that provides products or services to JAPEX and for which the amount paid by JAPEX
exceeds 2% of the consolidated net sales of the company in any of the last three fiscal yearsii)

An executive of a company in which JAPEX’s borrowings account for more than 2% of the consolidated total assets of
JAPEX in any of the last three fiscal yearsiii) An executive of a company to which JAPEX provides products or services and whose payments to JAPEX exceed 2%of the consolidated net sales of JAPEX in any of the last three fiscal yearsiv) A person who has received compensation exceeding ¥10 million per year from JAPEX as a consultant, accounting
expert, or legal expert in any of the last three years in addition to officer compensation (in the case of an organizationsuch as a corporation or association, a person who belongs to such organization)v)

A relative within the second degree of kinship of a person who falls under any of (1) through (4) below:(1) A person listed in i) to iv) above(2) An executive of a subsidiary of JAPEX(3) A director who is not an executive of a subsidiary of JAPEX (limited to cases where an Outside Audit & Supervisory
Board Member is designated as an independent officer)(4) A person who fell into (2) or (3) above, or was an executive of JAPEX (including a director who is not an executive
if an Outside Audit & Supervisory Board Member is designated as an independent officer) in the past three years- 81 -

(Our stance on the appointment)
We believe the current appointment of Outside Directors and Outside Audit & Supervisory Board Members is reasonablefrom a standpoint of governance such as the number and structure of Directors and Audit & Supervisory Board Members.

Outside Director

Name

Reasons for Appointment

ITO Tetsuo

He has extensive knowledge and experience as a legal specialist. We expect him
to identify JAPEX’s business challenges with accuracy, and pose questions that
contribute to reasonable and appropriate decision-making. Therefore, we haveappointed him an Outside Director.
She has extensive knowledge through her experience as a researcher at theinstitute which conducts survey and research on energy economics as well as
energy and environmental policies. We expect to receive valuable proposals thatwould bring JAPEX to grow steadily for a long time as a comprehensive energy
company. We believe she would fit perfectly for the task. Therefore, we haveappointed her an Outside Director.
He has extensive knowledge on corporate management in general that come fromabundant managerial experience in global firms in telecommunications and otherareas. Based on the experience, we expect useful proposals from him which
would help JAPEX deal with range of challenges. Therefore, we have appointed
him an Outside Director.
She has deep insight that comes from abundant experience of working atgovernment offices in the field of labor administration and extensive knowledge
on labor and other laws. We expect her to provide supervision over and proposals
to our corporate management from a legal expert perspective. Therefore, we haveappointed her an Outside Director.
He has deep insight and abundant corporate management experience he has
acquired through his career at a newspaper company and others. We expect him toprovide supervision over our corporate management from an objective and neutral
standpoint as well as wide-ranging proposals that would bring JAPEX to growsustainably and enhance its corporate value in the medium to long run. Therefore,
we have appointed him an Outside Director.
Based on his abundant experience and deep insight in policy execution at the
Ministry of Finance and as a professor at a graduate school, we consider him
capable of conducting audits appropriately from an objective standpoint
independent from our management team engaged in JAPEX’s business execution.
Therefore, we have appointed him an Outside Audit & Supervisory Board
Member.
Based on his specialist knowledge and extensive experience in finance,accounting, taxation, and risk management through his organizational
management as Chairman and CEO of an audit firm and his many years of work
as a certified public accountant, we consider him capable of conducting audits
appropriately from an objective standpoint independent from our management
team engaged in JAPEX’s business execution. Therefore, we have appointed him
an Outside Audit & Supervisory Board Member.

YAMASHITA
YukariKAWASAKI
Hideichi

KITAI Kumiko

SUGIYAMA
Yoshikuni

Outside Audit &Supervisory Board
MemberKAWAKITA
Chikara

KATO
Yoshitaka3) Mutual cooperation between Outside Directors or Outside Audit & Supervisory Board Members in supervision or audits andinternal audits, audits by Audit & Supervisory Board Members and accounting audits, and relationship with the internal control
division
Together with Audit & Supervisory Board Members, Outside Directors are pre-informed of audit plans and receive briefings
on auditing results upon receiving auditor’s reports from the Accounting Auditor. In addition, the Outside Officer Liaison
Meeting has been set up as a place for outside officers to be pre-informed of the meeting agenda at the Board of Directors’
meetings and to provide and exchange information.
Outside Audit & Supervisory Board Members are pre-informed of audit plans and receive briefings on auditing results uponreceiving auditor’s reports from the Accounting Auditor as members of the Audit & Supervisory Board. Reports on internal
audits conducted by the Auditing Dept. and the internal control report prepared by the department are submitted to the Audit& Supervisory Board and explained by the department.

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(3) Audits
1) Audits by Audit & Supervisory Board Members(Structure and members)
The number of Audit & Supervisory Board Members is four, two of which are outside Audit & Supervisory Board Members.
Each member exercises auditing authority independently based on the auditing policy and each responsibility between themembers which are predetermined by Audit & Supervisory Board.
Audit & Supervisory Board Members KAWAKITA Chikara and KATO Yoshitaka both have considerable knowledge on
finance and accounting. While KAWAKITA acquired such knowledge from his experience in policy execution at the Ministryof Finance, KATO acquired it from his long-term work experience as a certified public accountant.
(Activities)
All Audit & Supervisory Board Members attend the Board of Directors and the Outside Officer Liaison Meeting, and fulltime Audit & Supervisory Board Members attend the Executive Committee and other important management meetings to
perform the function of management supervision by exchanging opinions as necessary with Directors and Executive Officers
responsible for business execution.
The Audit & Supervisory Board is held once a month, in principle. During the fiscal year under review, 12 meetings of the
Audit & Supervisory Board were held. The attendance rate of each Audit & Supervisory Board Member is as follows:
Attendance rate for the Audit & Supervisory Board
Title
Name
during the fiscal year under review
NAKAMURA
Audit & Supervisory Board

Mitsuyoshi

Member (full-time)

MOTOYAMA

100% (12/12)
100% (12/12)

Yoshihiko
Outside Audit & Supervisory

KAWAKITA Chikara

100% (12/12)

Board Member

MOTOYAMA Hiroshi

100% (12/12)

The Audit & Supervisory Board resolved, reported, deliberated on and discussed the following matters throughout the fiscal
year under review.
Twelve matters were resolved, which included audit plans of Audit & Supervisory Board Members (audit policies, thecontents and methods of interim and year-end audits, and so forth), agreement on the selection of the Accounting Auditor andthe determination of audit fees, and preparation of an audit report of Audit & Supervisory Board and notification of thecontents thereof.
Forty-two matters were reported, which included key audit matters reviewed, audit results, assessment results of the
Accounting Auditor, and the quarterly review results and annual accounting audit results by the Accounting Auditor.
Two matters were deliberated on and discussed, which included business reports and compensation for Audit & Supervisory
Board Members.
2) Internal audits
Internal audits of JAPEX are conducted by the Auditing Dept. under the direct management of the President. The Auditing
Dept. has been assigned four staff members to conduct internal audits, and they assess the systems and status of
implementation of various management activities in light of the lawfulness and reasonableness and provide guidance andadvice to improve or rationalize audited matters, as necessary.
Internal audits are conducted following the annual plan in order, and the Auditing Dept. reports the results of each audit to
President and shares them with officers in charge of the audited matters and full-time Audit & Supervisory Board Members.
The Auditing Dept. also evaluates the internal control for financial reporting pursuant to the Financial Instruments andExchange Act by having five staff members engage in that evaluation. The evaluation results are utilized in internal control
audits conducted by the Accounting Auditor, and are reported to the Audit & Supervisory Board and the Board of Directors.

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3) Accounting audits(Matters concerning audit firm)
Ernst & Young ShinNihon LLC. was the audit firm that conducted audits on financial statements and internal control for the
fiscal year under review, and the continuous audit period is 49 years. Certified public accountants who executed the audit
duties are as follows:
Name: YUKAWA Yoshio, YAMAZAKI Kazuhiko, MORONUKI Kentaro
Composition of assistants to the audit engagement: 7 certified public accountants and 25 other individuals(Policy and reasons for appointing audit firm)
JAPEX’s Audit & Supervisory Board has formulated “Standards for Appointment of Accounting Auditor.” Specifically, theBoard makes a decision on such appointment based on the comprehensive consideration after conducting an interview withthe audit firm to examine and confirm 1) outline of the audit firm; 2) system for conducting audits, etc.; and 3) estimatedaudit fee, and exchanging opinions and coordinating with execution division.
Based on the above standard, JAPEX has reappointed Ernst & Young ShinNihon LLC.
When the Accounting Auditor has breached or contravened laws or regulations such as the Companies Act, has neglected
their duties, or has engaged in conduct unbecoming as an Accounting Auditor, or when considered necessary by the Audit &Supervisory Board, the Board decides the content of proposal on dismissal or non-reappointment of the Accounting Auditor.
Based on such decision, the Board of Directors submits the proposal to a General Meeting of Shareholders.
If the Accounting Auditor falls under any of the items of Article 340, paragraph 1 of the Companies Act, the Audit &Supervisory Board dismisses the Accounting Auditor with consent of all Audit & Supervisory Board Members. In such acase, an Audit & Supervisory Board Member designated by the Audit & Supervisory Board shall report the dismissal of the
Accounting Auditor and the reason for it at the first General Meeting of Shareholders convened after the dismissal.
(Evaluation of audit firm by Audit & Supervisory Board and its members)
The Audit & Supervisory Board has formulated the “Standards for Evaluation of Accounting Auditor” consisting of sevenevaluation items: 1) quality control of the audit firm; 2) auditing team; 3) audit fee, etc.; 4) communication with Audit &Supervisory Board Members; 5) Relationship with management, etc.; 6) group audit; and 7) fraud risk. The evaluation was
conducted on auditing certified public accountants, etc. for each of the items above and concluded that the audit firm satisfied
all the standards.

- 84 -

4) Details of audit fees, etc.
(a) Audit fees paid to auditing certified public accountants, etc.
Previous fiscal year
Category

Fees for audit

Fiscal year under review

Fees for non-audit

Fees for audit

certification services

services

certification services

services(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

Reporting company
Consolidated
subsidiaries
Total

Fees for non-audit

71

19

81

21

21

0

24

0

93

20

105

22

(Previous fiscal year)
Non-audit services provided to JAPEX include a study on revision of laws concerning Health, Safety and Environment (HSE),
support for establishment of a human rights policy, and preparation of documents for audits of projects in Indonesia.
Non-audit services provided to consolidated subsidiaries include services for income and expenditure statements for gas
transportation service.
(Fiscal year under review)Non-audit services provided to JAPEX include a study on revision of laws concerning Health, Safety and Environment (HSE),
support for response to human rights issues, and third-party assurance services for non-financial information (ESG data).
Non-audit services provided to consolidated subsidiaries include services for income and expenditure statements for gas
transportation service.
(b) Audit fees paid to the same network (Ernst & Young LLC.) to which auditing certified public accountants., etc. belong(excluding fees specified in (a) above)
Previous fiscal year
Category

Fiscal year under review

Fees for audit

Fees for non-audit

Fees for audit

Fees for non-audit

certification services

services

certification services

services(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

Reporting company
Consolidated
subsidiaries
Total

9

4

13

0

46

28

53

30

55

33

66

30

(Previous fiscal year)
Non-audit services provided to JAPEX include advice concerning tax matters regarding overseas business trips by JAPEX’s
employees and tax return agency service, advice concerning visa acquisition for overseas business trips by JAPEX’s
employees, and tax return service for JAPEX’s overseas representative offices.
Non-audit services provided to consolidated subsidiaries include tax-related advice and instruction to Japex (U.S.) Corp.,
Japex Garraf Ltd. and JAPEX UK E&P Ltd.
(Fiscal year under review)Non-audit services provided to JAPEX include advice concerning tax matters regarding overseas business trips by JAPEX’s
employees.
Non-audit services provided to consolidated subsidiaries include tax-related advice and instruction to Japex (U.S.) Corp.,
Japex Garraf Ltd. and JAPEX UK E&P Ltd.

- 85 -

(c) Details of fees for other significant audit certification services(Previous fiscal year)
Not applicable.
(Fiscal year under review)Not applicable.
(d) Policy for determining audit fees
Audit fees paid by JAPEX to auditing certified public accountant, etc. are determined based on a number of days required forthe audit and other factors.
(e) Reasons for the Audit & Supervisory Board’s consent to fees for the Accounting Auditor
The Audit & Supervisory Board, after receiving the necessary documents and reports from relevant departments of JAPEX
and the Accounting Auditor, assessed and deliberated whether the audit plans of the Accounting Auditor, the status of theperformance of duties by the Accounting Auditor, a calculation basis for the estimation of audit fees were appropriate.
Consequently, the Audit & Supervisory Board concluded that the amount was appropriate and consented to the amount offees to be paid to the Accounting Auditor in accordance with Article 399, paragraph 1 of the Companies Act.

- 86 -

(4) Compensation for Directors and other Officers
1) Policy for determining the compensation amount for Directors and other officers or the calculation method thereof(a) Compensation for Directors
Compensation for Directors is determined based on the policy for determining the compensation of directors set by the Boardof Directors after deliberation by the Nomination and Compensation Committee. In determining the details of compensationfor each Director for the fiscal year under review, the Nomination and Compensation Committee deliberated on the draft
based on the determination policy. The Board of Directors therefore judged that the details were in line with the determination
policy, with the respect for the Committee’s deliberation results. The policy for determining the compensation of directors isoutlined below.

Basic policy

・Regarding the compensation of directors, the compensation structure can function as anincentive to sustainably enhance corporate value. When deciding the compensation ofindividual directors, our basic policy is to set an appropriate level in consideration of theroles aligned with their position.
・Specifically, the compensation of directors (excluding outside directors) comprises basecompensation and performance-linked compensation (bonuses and share-based
compensation). Compensation for outside directors is only base compensation, considering
their duty of supervising management.

Policy for determiningbase compensation(monetarycompensation)・Base compensation of JAPEX’s directors is fixed monthly monetary compensation and isdecided in comprehensive consideration of their position, balance with market standard
and employees’ salaries, number of years of service, and more.

Policy for determining
performance-linked, or
non-monetarycompensation

・Of performance-linked compensation, bonuses are paid at certain times every year basedon consolidated net income as an indicator measuring their contribution to results for thecorresponding fiscal year. Specifics are decided in comprehensive consideration of theirposition, dividends, the level of employee bonuses, their contribution of directors tocorporate management in each fiscal year, past results, payment record, and more.
Individual Director’s contribution to JAPEX’s management is measured based on theachievement of previously set annual goals and business plans (including GHG reduction
target), human resource management, leadership, and execution ability, in addition to theaforementioned contribution to business performance.
・Of performance-linked compensation, share-based compensation is based on the Rules on
Provision of Shares to Officers approved by the Board of Directors within the limit
approved at the General Meeting of Shareholders. JAPEX shares equivalent to the numberof points provided in line with their positions and performance (using a total return ratio asa general rule as an indicator of performance evaluation based on JAPEX’s recognition that
returning profits to shareholders is an important management issue) and a monetaryamount equivalent to the market price of said shares is provided as a general rule todirectors upon retirement.
Note: As the policy for provision of share-based compensation, the indicator of performance
evaluation has been changed from annual dividend amount (for share-based
compensation for and before FY2022) to total return ratio (for share-based
compensation from FY2023 onwards).

Policy concerning theratio of compensation

・We aim for the ratio of performance-linked compensation (bonuses and share-based
compensation) to total compensation to be around 30% at standard amounts. To ensure thecompensation system can better function as an incentive to sustainably enhance corporate
value, we will consider revising the ratio as appropriate.

- 87 -

Matters on
determination ofcompensation

・Regarding individual compensation, the representative director and president is entrustedwith the specific details based on a resolution by the Board of Directors. That authority
enables the allocation of bonuses based on each director’s base compensation and the
directors’ contribution to corporate management. It also enables the setting of the specifictiming of the payment.
・Calculation methods for base compensation and bonuses are deliberated in advance at theNomination and Compensation Committee. The representative director and president must
decide the method with respect to the results of the deliberations.
・The provision of points in share-based compensation is reported in advance of theNomination and Compensation Committee.

(b) Compensation of Audit & Supervisory Board Member
Compensation for Audit & Supervisory Board Members is determined after consulting with Audit & Supervisory Board
Members, and within the limit approved at a General Meeting of Shareholders.
(c) Details of non-monetary performance-linked compensation
In accordance with the resolution of the Ordinary General Meeting of Shareholders, JAPEX has introduced a share-based
compensation plan (Board Benefit Trust) for Directors (excluding Outside Directors) and Executive Officers who do notconcurrently serve as Directors, as mentioned in (h) below.
(d) Policy on determining payment ratios of performance-linked and non-performance-linked compensation
The policy is the same as (a) above.
(e) Indicators used for performance-linked compensation, reasons why we use them and how we decide on the amount of theperformance-linked compensation
Performance-linked compensation is composed of bonus and share-based compensation. For bonuses, consolidated profit isused as an indicator to measure contribution to business performance for the corresponding fiscal year. For share-based
compensation, a total shareholder return ratio is used as an indicator of performance evaluation as JAPEX recognizes that
returning profits to shareholders is an important management issue. By setting these indicators, we aim to raise awarenessamong Directors, etc. of improving business performance for the corresponding fiscal year, as well as to motivate them tocontribute to the improvement of the business performance and corporate value of JAPEX over the medium and long term
and the improvement of profit distribution to shareholders. The amount of performance-linked compensation is decided inaccordance with the policy for determining compensation for Directors described in (a) above.
(f) Target and actual figures of indicators used for performance-linked compensation
Of performance-linked compensation, the specific target for the indicator used for bonuses (consolidated profit) has not beenset, as our business performance is often affected by external factors such as fluctuations of crude oil and natural gas prices aswell as foreign exchange rates, and therefore it is difficult to set right figure that works as an incentive. For the fiscal year
under review, JAPEX posted consolidated profit of ¥53,661 million. The target for the indicator for the fiscal year under review
used for share-based compensation was total return ratio. The target for the fiscal year under review was 30% as stated in (h)below, and the actual total return ratio for the fiscal year under review was 44.77%.
(g) Policy on determination of compensation amount by position or the calculation method thereof
As described in the policy for determining compensation for Directors in (a) above, our basic policy for deciding thecompensation amount for Directors is to set it at an appropriate level in consideration of their roles and others according totheir position.
(h) Summary of resolutions related to compensation at General Meetings of Shareholdersi) The following was resolved on monetary compensation for Directors at the General Meeting of Shareholders. The numberof eligible Directors as of the filing date is 11, including five Outside Directors.

- 88 -

Date of the General
Meeting of
Shareholders’ resolution

June 26, 2024, at the 54th Ordinary General Meeting of Shareholders

Resolution summary

Up to ¥50 million per month (of which up to ¥6 million per month is for Outside Directors)
Note: The amount does not include the portion of employees’ salaries for Directors who
concurrently serve as employees.

ii) The following was resolved on share-based compensation for Directors at the General Meeting of Shareholders: The
number of eligible Directors (excluding Outside Directors) as of the filing date is eight.
[Introduction of a share-based compensation plan (Board Benefit Trust)]
Date of the General
Meeting of
Shareholders’ resolution

June 26, 2020, at the 50th Ordinary General Meeting of Shareholders

Resolution summary・ JAPEX will introduce a share-based compensation plan (Board Benefit Trust) for
Directors, etc. and provide the share-based compensation to JAPEX’s Directors separatelyfrom their monetary compensation.
・ The outline of the Board Benefit Trust (BBT) is as sated below and the details are left to
the Board of Directors’ decision.

(Board Benefit Trust)

Outline of the Plan

The Plan is a performance-linked share-based compensation plan under which JAPEX’s
shares are acquired through a trust (the “Trust”), using money contributed by JAPEX as
financial funds, and Directors, etc. are provided with JAPEX’s shares and an amount ofmoney equivalent to the market value of JAPEX’s shares (“JAPEX’s Shares, etc.”) throughthe Trust, in accordance with the Rules on Provision of Shares to Officers.

Persons eligible for thePlan

Directors (excluding Outside Directors) and Executive Officers who do not concurrently
serve as Directors

Timing of provision

Upon retirement from office

Number of shares to beprovided

Accumulated points calculated in accordance with the “Point calculation method” below.
Number of shares to be provided shall be decided upon retirement. (1 point = 1 share)

Applicable period for
granting points andtiming thereof

The applicable period shall be one year following the (re)appointment of an officer (from thedate of the Ordinary General Meeting of Shareholders to the prior day of the next year’s
Ordinary General Meeting of Shareholders), and points shall be granted at the date of theOrdinary General Meeting of Shareholders.

Conditions for granting
pointsEach of Directors, etc. shall be in office as of the last day (March 31) of the fiscal year
preceding the Ordinary General Meeting of Shareholders each year.

Point calculation
methodThe number of points shall be calculated in accordance with the Rules on Provision of Shares
to Officers based on position, JAPEX’s business performance, etc.
(*) For the initial three fiscal years, JAPEX shall use the annual dividend amount as anindicator to evaluate performance (target amount: ¥50), with a range of fluctuation from 0%
to 120%, assuming that the payout ratio at the target value is 100%.
The total number of points granted to Directors, etc. per fiscal year shall be limited to 31,400
points (including 14,000 points for Directors).

Applicable period

The initial period shall be three fiscal years up to FY2022, and the subsequent applicable
period is expected to be every five fiscal years.

Trust amount (amountof compensation, etc.)

JAPEX shall contribute money as defined below to the Trust, as the financial funds for the
Trust to acquire JAPEX’s shares.
1) Initial three fiscal years: up to ¥141 million (including ¥63 million for Directors)
2) Every five fiscal years afterwards: up to ¥235 million (including ¥105 million for
Directors)

Acquisition method of
JAPEX’s shares

In principle, JAPEX’s shares shall be acquired from stock exchange markets (or may bethrough the disposal of JAPEX’s treasury shares).

- 89 -

Note:The Board of Directors resolved with respect to the “point calculation method” specified above at its meeting
held on March 31, 2023 that a total shareholder return ratio (target value: 30%) would be used as a general rule
as an indicator of performance evaluation for the policy for provision of share-based compensation fromFY2023 onwards, with a range of fluctuation from 0% to 120%, assuming that the payment ratio at the target
value is 100%. Total return ratio will be used as an indicator of performance evaluation for the acquired points tobe allocated from FY2024 onwards.

[Partial revision of the share-based compensation plan (Board Benefit Trust)]
After the introduction, the share-based compensation plan (Board Benefit Trust) was partially revised in order to increase
the ratio of the performance-linked compensation to total compensation, to function as an appropriate incentive for
improving JAPEX’s corporate value over the medium and long term, and to further promote value sharing withshareholders.
Date of the General
Meeting of
Shareholders’ resolution

June 26, 2024, at the 54th Ordinary General Meeting of Shareholders

Resolution summary

・ The total number of points granted to Directors, etc. per fiscal year shall be limited to45,400 points (including 18,300 points for Directors).
・ As for the trust amount, JAPEX will, in principle, reasonably estimate the number ofshares necessary to provide JAPEX’s Shares, etc. to Directors, etc. under the Plan, andmake additional contributions to the Trust of the funds deemed necessary for the Trust toacquire the shares in advance for each Applicable Period.
・ The amount of compensation, etc. to be received by a Director shall be based on the total
number of points to be granted to the Director at the time the points are granted, multipliedby the carrying amount per share of JAPEX’s shares held by the Trust (however, in theevent of a stock split, allotment of shares without contribution, or consolidation of shares,
etc. of JAPEX’s shares, reasonable adjustments will be made in accordance with such ratio,etc.).

iii) The following was resolved on compensation for Audit & Supervisory Board Members at the General Meeting of
Shareholders. The number of eligible Audit & Supervisory Board Members as of the filing date is four.
Date of the General
Meeting of
Shareholders’ resolution

June 24, 2015, at the 45th Ordinary General Meeting of Shareholders

Resolution summary

Up to ¥8 million per month(i) Name of the person responsible for deciding on compensation amount, calculation method thereof, and details and scopeof his/her discretion
Under (a) above, regarding individual compensation of Directors for the fiscal year under review, the Board of Directors
delegated the Representative Director and President YAMASHITA Michiro to decide the amount of base compensation,
allocation of bonuses based on contribution to corporate management, and the specific timing of the payment for each Director.
The reason for the delegation is because the Representative Director and President is in the best position to evaluate each
Director, while taking into account the comprehensive business performance of JAPEX and other factors. Before finallydeciding on the delegated matters, their adequacy, etc. were verified by the Nomination and Compensation Committee.
(j) Activities of the Board of Directors and the Committee in deciding on compensation amount, etc.
Compensation for Directors and other officers for the fiscal year under review is decided after going through deliberation at
the Nomination and Compensation Committee, which is then followed by deliberation and resolution by the Board of
Directors. The following are activities for the fiscal year under review:- 90 -

(Board of Directors)
Date of meeting

Description

June 27, 2023

・ Resolution on determination of the compensation amount for Directors, allocation of
bonuses for Directors, and the payment of retirement benefits to Executive Officers whowill assume office of Directors(Nomination and Compensation Committee)
Date of meeting

Description

May 11, 2023

・ Deliberation on determination of the compensation amount of Directors and the paymentof bonuses for Directors

March 25, 2024

・ Deliberation on the revision of the amount of compensation for Directors

2) Total amount of compensation by position, type of compensation and number of recipients
Position
Directors(excluding Outside Directors)

Total amount ofconsolidated
compensation(Millions of yen)

Total amount of each type of compensation(Millions of yen)
Share-based
Base compensation
Bonus
compensation

Number ofrecipients(Persons)

318

244

61

12

7

49

49

–

–

2

77

77

–

–

7

Audit & Supervisory Board
Members(excluding Outside Audit &Supervisory Board Members)

Outside Officers

Note: 1. The above number of recipients includes one Director who retired upon the conclusion of the 53rd Ordinary General
Meeting of Shareholders held on June 27, 2023.
2. The above amount comprises the amount paid or allocated for base compensation, provision for bonuses andprovision equivalent to money provided based on the acquired points under share-based compensation that were
provided during the fiscal year.

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(5) Shareholdings
1) Standards for and view on the classification of investment shares
JAPEX classifies shares of companies we have determined to be necessary to promote smooth business execution and tomaintain good business relationships for the purpose of achieving sustainable growth and enhancing medium- to long-term
corporate value as “investment shares held for purposes other than pure investment (strategic shareholdings)” separately frominvestment shares held for pure investment purposes.
2) Investment shares held for purposes other than pure investmenti) Shareholding policy, method of verification of the rationale for shareholdings, and details of verification by the Board of
Directors, etc. of the appropriateness of shareholdings of individual issues
To verify the reasonableness of these shareholdings, the Board of Directors performs a qualitative evaluation related to theappropriateness of the purpose of holding for each issue and a quantitative evaluation on whether the benefits and risks
from each holding are commensurate with JAPEX’s cost of capital every year. If we determine that it has become lessreasonable to hold certain issues based on these evaluations, we reduce the number of those shareholdings.
ii) Number of issues and carrying amount
Number ofissuesTotal balance sheet amount(Millions of yen)

Unlisted shares

21

2,209

Shares other than unlisted
shares4

129,734(Issues whose number of shares increased during the fiscal year under review)
Total acquisition price related
Number of
to increase in number of sharesissues(Millions of yen)
Unlisted shares

1500

Shares other than unlisted
shares––(Issues whose number of shares decreased during the fiscal year under review)
Total sales price related to
Number of
decrease in number of sharesissues(Millions of yen)
Unlisted shares––

Shares other than unlisted
shares––- 92 -

Reasons for the increase
Acquisition of new shares for expanding businessdomain–iii) Numbers of specified investment shares and deemed holding investment shares by issue, and their balance sheet amountSpecified investment shares

Issue

Fiscal year underreview
Number of shares(Shares)
Total balance sheet
amount(Millions of yen)Previous fiscal year
Number of shares(Shares)
Total balance sheet
amount(Millions of yen)

Purpose of holding, outlines of business collaboration,
quantitative effect of holding,and reason for increase in number of shares

Holding of
JAPEX’ssharesSince JAPEX took initiative in establishing North
Sumatra Offshore Petroleum Exploration Co., Ltd.,the precursor to INPEX CORPORATION (hereinafter
53,446,600

53,446,600“INPEX”) in 1966, JAPEX has held a certain numberof its shares since then, although its management was
separated from ours later. INPEX places its upstream
oil and gas business as its core business, and jointly
promotes part of overseas projects with JAPEX.
JAPEX therefore holds INPEX’s shares to facilitate
the business relationship. Because the quantitative
effect of the shareholding involves trade secrets, etc.,

INPEX
CORPORATION

125,091

660,000

74,664660,000

Nitto Boseki Co.,
Ltd.
3,940

1,329

Yes

it is difficult to disclose such information. However,
JAPEX has conducted a qualitative assessment on theappropriateness of the purposes of holding as well as aquantitative assessment on benefits and risks
associated with the holding, and concluded that theshareholding was reasonable.
The company is an important customer along the
JAPEX’s natural gas pipeline, and JAPEX holds its
shares to maintain favorable trading relationship.
Because the quantitative effect of the shareholding
involves trade secrets, etc., it is difficult to disclosesuch information. However, JAPEX has conducted aqualitative assessment on the appropriateness of the
purposes of holding as well as a quantitative
assessment on benefits and risks associated with theholding, and concluded that the shareholding was
reasonable.

No

The company and JAPEX jointly conduct business at
the Group’s major oil and gas fields, including
163,770

163,770

MITSUBISHIGAS CHEMICALCOMPANY, INC.
424

321

Iwafune-oki oil and gas field and Higashi-Niigata gas
field. JAPEX holds its shares to facilitate business
relationship as well as to maintain favorable trading
relationship. Because the quantitative effect of theshareholding involves trade secrets, etc., it is difficult
to disclose such information. However, JAPEX has
conducted a qualitative assessment on theappropriateness of the purposes of holding as well as aquantitative assessment on benefits and risks
associated with the holding, and concluded that theshareholding was reasonable.

- 93 -

Yes

110,000

110,000

Hokkaido Gas Co.,
Ltd.

278

213

The company is an important customer for our sale ofnatural gas in Hokkaido, and JAPEX holds its share to
maintain favorable trading relationship. Because thequantitative effect of the shareholding involves trade
secrets, etc., it is difficult to disclose such information.
However, JAPEX has conducted a qualitative
assessment on the appropriateness of the purposes ofholding as well as a quantitative assessment on
benefits and risks associated with the holding, andconcluded that the shareholding was reasonable.

Yes

Note: The Board of Directors verified the reasonableness of these shareholdings at its meeting held in December 2023.
JAPEX does not have deemed holdings of investment shares.
3) Investment shares held for pure investment purposes
Fiscal year under review
Category

Previous fiscal year

Total balance sheet
amount(Millions of yen)

Number of issues

Total balance sheet
amount(Millions of yen)

Number of issues

Unlisted shares

–

–

–

–

Shares other than unlisted
shares

3

152

3

84

Fiscal year under review
Total of dividends
received (Millions ofyen)

Total of gain (loss) on
sale (Millions of yen)

Total of valuation gain
(loss) (Millions of yen)

Unlisted shares

–

–

–

Shares other than unlisted
shares0–66

Category- 94 -

Item 5. Financial Information
1. Basis for Preparation of Consolidated Financial Statements and Non-consolidated Financial Statements(1) The consolidated financial statements of JAPEX are prepared in accordance with the Ordinance on Terminology, Forms, andPreparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976).
(2) The non-consolidated financial statements of JAPEX are prepared in accordance with the Ordinance on the Terminology,
Forms, and Preparation Methods of Financial Statements (Ordinance of the Ministry of Finance No. 59 of 1963; hereinafterreferred to as the “Ordinance on Financial Statements, etc.”).
JAPEX falls under the company allowed to file specified financial statements and prepares its non-consolidated financial
statements pursuant to the provisions of Article 127 of the Ordinance on Financial Statements, etc.

2. Audit Certificate
Pursuant to the provisions set forth in Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, JAPEX’s
consolidated and non-consolidated financial statements for the fiscal year from April 1, 2023 to March 31, 2024 have been auditedby Ernst & Young ShinNihon LLC.

3. Special Measures to Ensure the Appropriateness of Consolidated Financial Statements, etc.
JAPEX has taken special measures to ensure the appropriateness of the consolidated financial statements, etc. Specifically, JAPEX
has joined the Financial Accounting Standards Foundation and has participated in seminars held by the foundation in order tounderstand accounting standards properly and establish a system that allows JAPEX to adapt to changes in accounting standards
appropriately.

- 95 -

1 Consolidated Financial Statements, etc.
(1) Consolidated financial statements
1) Consolidated Balance Sheet(Millions of yen)
As of March 31, 2023
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Contract assets
Securities
Merchandise and finished goods
Work-in-process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Wells
Accumulated depreciation
Wells, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Allowance for overseas investment loss
Total investments and other assets
Total non-current assets
Total assets

191,956

169,997*1, *247,993*1, *240,790*3181,787*3194,088*4, *5115,940*4, *5180,415

480
3,000
2,216
11
21,613
14,574(54)281,791(145,756)
36,03094,048(77,417)
16,630*3147,047(126,573)
20,473
11,53228,284*323,644(18,184)5,460
118,411
5,569

1,307
3,813
1,703
40,031(47)(341)
162,407286,388568,180- 96 -

As of March 31, 2024

820
3,000
2,602
40
19,885
12,684(53)
249,768(150,437)
43,650163,906(93,079)
70,826*3156,073(131,848)
24,225
11,53016,003*328,925(18,860)
10,064
176,300
5,265

1,247
5,738
3,363
39,040(47)(163)
229,593411,160
660,928

(Millions of yen)
As of March 31, 2023
Liabilities
Current liabilities
Notes and accounts payable - trade
Current portion of long-term borrowings
Income taxes payable
Contract liabilities
Provision for loss on disaster
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets- 97 -

As of March 31, 2024

26,489
260
9,333
155
2,119
25,89264,250

9,520
250
5,309
115
169
33,73049,095250
20,461
3,428
20,043
2,577
46,759111,010–
41,7393,414
24,687
4,417
74,258123,354

14,288362,989(136)
377,141

14,288397,846(8,094)
404,040

46,324

84,686

(699)
2,275
590
48,491
31,536457,169
568,180

8,704
4,881
1,589
99,862
33,671
537,574
660,928

2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income(Millions of yen)
Fiscal year ended
March 31, 2023
Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodForeign exchange gains
Gain on derivatives
Other
Total non-operating income
Non-operating expenses
Interest expenses
Administrative expenses of inactive oil and gas field
Commitment fees
Provision for loss on disaster
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Fiscal year ended
March 31, 2024

*1336,492*2, *3238,567

96,111
2,885*4, *531,139
62,08587,296
3,536*4, *528,512
55,247

1,173
3,520

2,265
4,090

7,109

214

5,332
6,082
373
23,592

7,634
–
1,495
15,700

5
47
312
1,509
673
2,547
83,130

626
821
320
49
320
2,139
68,808

*60

*61

0

1

*78

- 98 -*1325,863*2, *3240,380

*70

*838

*825

46
83,084
11,223
3,878
15,102
67,981587
67,39425
68,784
10,895
1,172
12,06756,716
3,055
53,661

Consolidated Statement of Comprehensive Income(Millions of yen)
Fiscal year ended
March 31, 2023
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests- 99 -

Fiscal year ended
March 31, 2024

67,981

56,716(2,019)
715
1,993
(873)

38,357
9,237
2,636
998

639

141

*454

*51,370

68,436108,087

67,848105,032

587

3,054

3) Consolidated Statement of Changes in Equity
Fiscal year ended March 31, 2023 (April 1, 2022 – March 31, 2023)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

14,288Retained earnings

2,607

Total shareholders’equityTreasury shares

310,592(3,886)323,602

Changes during period
Dividends of surplus(9,537)(9,537)

Profit attributable to owners ofparent67,394

67,394(63)(63)

Change in scope of equity
methodPurchase of treasury shares(4,263)(4,263)

Disposal of treasury shares

8

8

8,004

–

Cancellation of treasury shares(8,004)

Transfer from retained earnings
to capital surplus

5,396(5,396)–(2,607)52,396

3,749

53,53914,288–362,989(136)

377,141–

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

Accumulated other comprehensive income
Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities
Balance at beginning of period

48,346(1,862)Foreigncurrencytranslation
adjustment

Remeasurements ofdefined benefit
plans

89

1,464

Total
Non-controlling
Total net assets
accumulated
interests
othercomprehensive income
48,036

31,131

402,770

Changes during period
Dividends of surplus(9,537)

Profit attributable to owners ofparent67,394

Change in scope of equity
method(63)

Purchase of treasury shares(4,263)

Disposal of treasury shares

8

Cancellation of treasury shares–

Transfer from retained earnings
to capital surplus–

Net changes in items other thanshareholders’ equity(2,021)

1,163

2,185

(873)

454

405

859

Total changes during period(2,021)

1,163

2,185

(873)

454

405

54,399Balance at end of period

46,324

(699)

2,275

590

48,491

31,536457,169- 100 -

Fiscal year ended March 31, 2024 (April 1, 2023 – March 31, 2024)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

14,288Retained earnings–

Total shareholders’equityTreasury shares

362,989(136)

377,141

Changes during period
Dividends of surplus(18,732)(18,732)

Profit attributable to owners ofparent53,66153,661(71)(71)

Change in scope of equity
methodPurchase of treasury shares(7,973)(7,973)

Disposal of treasury shares

15

15

Cancellation of treasury shares–

Transfer from retained earnings
to capital surplus–

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period––

34,857(7,957)

26,89914,288–397,846(8,094)

404,040

Accumulated other comprehensive income
Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities
Balance at beginning of period

46,324(699)

Foreigncurrencytranslation
adjustment

Remeasurements ofdefined benefit
plans

2,275

590

Total
Non-controlling
Total net assets
accumulated
interests
othercomprehensive income
48,491

31,536457,169

Changes during period
Dividends of surplus(18,732)

Profit attributable to owners ofparent53,661

Change in scope of equity
method(71)

Purchase of treasury shares(7,973)

Disposal of treasury shares

15

Cancellation of treasury shares–

Transfer from retained earnings
to capital surplus–

Net changes in items other thanshareholders’ equity

38,361

9,404

2,606

998

51,371

2,135

53,506

Total changes during period

38,361

9,404

2,606

998

51,3712,135

80,405

Balance at end of period

84,686

8,704

4,881

1,589

99,862

33,671

537,574- 101 -

4) Consolidated Statement of Cash Flows(Millions of yen)
Fiscal year ended
March 31, 2023
Cash flows from operating activities
Profit before income taxes
Depreciation
Loss on retirement of property, plant and equipment
Loss (gain) on valuation of short-term and long-term
investment securities
Increase (decrease) in allowance for doubtful accounts
Decrease (increase) in retirement benefit asset
Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for loss on disaster
Increase (decrease) in allowance for overseas
investment loss
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using
equity method
Recovery of recoverable accounts
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in accounts receivable - other
Increase (decrease) in accrued consumption taxes
Other, net
Subtotal
Income taxes refund (paid)
Net cash provided by (used in) operating activities- 102 -

Fiscal year ended
March 31, 2024

83,084
14,25737

68,784
27,646
23

10

–

4
616
51
347

(0)
(1,659)(13)(1,967)44(178)(4,693)
5(5,646)(6,355)626(8,558)(7,109)(214)

18,295(893)(9,139)21,537(10,541)
3,768
721
104,759(177)
104,581

27,775
7,038
1,391(17,495)
9,191(4,175)
2,863
104,722(14,157)
90,564

(Millions of yen)
Fiscal year ended
March 31, 2023
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Proceeds from sale and redemption of securities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Payments for asset retirement obligations
Purchase of investment securities
Proceeds from sale and redemption of investment
securities
Payments of recoverable accounts
Loan advances
Proceeds from collection of loans receivable
Interest and dividends received
Proceeds from dividends of residual property
Proceeds from capital reduction of investments
Proceeds from distributions from investment
partnerships
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Repayments of long-term borrowings
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Interest paid
Repayments of lease liabilities
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 103 -

Fiscal year ended
March 31, 2024

(36,106)
34,45330(35,973)
2
(191)
(8)
(2,625)(56,233)
45,757–(65,924)
3
(317)
(19)
(7,685)674

318(27,729)(1,694)
7,135
8,974
271
19

(25,379)(2,225)16
10,712
378
653

145

749

(101)
(52,723)(465)(99,659)(260)(4,263)(9,531)
(181)
(5)
(264)
(14,506)(260)(7,973)(18,726)
(919)
(461)
(256)
(28,596)

4,301

4,123

41,653
144,513*186,166(33,567)
186,166*152,598

Notes to consolidated financial statements(Notes to significant accounting policies for preparation of consolidated financial statements)
1. Disclosure of scope of consolidation(1) Number of consolidated subsidiaries: 16
Names of major consolidated subsidiaries
JGI, Inc., Japex (U.S.) Corp., Japex Offshore Ltd., Shirone Gas Co., Ltd., Japex Energy Co., Ltd., and Japex
Garraf Ltd.
(2) Names of major unconsolidated subsidiaries, etc.
Major unconsolidated subsidiaries
Seiki Plant Services, Co., Ltd. and Japex Canada Limited(Reason for exclusion from the scope of consolidation)
These unconsolidated subsidiaries have been excluded from the scope of consolidation because they are small inscale, and have no material impact on consolidated financial statements in terms of the total amount of items
including total assets, net sales, profit or loss (amount proportionate to JAPEX’s equity interests), and retained
earnings (amount proportionate to JAPEX’s equity interests).
2. Disclosure about application of equity method(1) Number of unconsolidated subsidiaries accounted for using equity method: 0(2) Number of associates accounted for using equity method: 11
Names of major associates accounted for using equity method
Energi Mega Pratama Inc., Sakhalin Oil and Gas Development Co., Ltd., Fukushima Gas Power Co., Ltd., andLongboat JAPEX Norge AS
Abashiri Biomass Power 3 LLC., an associate of JAPEX, is included in the scope of entities accounted for using theequity method due to its increased materiality. Meanwhile, Longboat JAPEX Norge AS and Blue Spruce Operating
LLC, associates of JAPEX, are included in such scope as JAPEX acquired their shares and equity interest.
Diamond Gas Netherlands B.V. and another associate are excluded from the scope of entities accounted for using
the equity method due to their liquidation.
(3) Certain unconsolidated subsidiaries (Seiki Plant Services Co., Ltd., Japex Canada Limited, etc.) and associates(DAIWA Exploration & Consulting Co., Ltd., Joban Kyodo Gas Co., Ltd., etc.) are excluded from the scope ofentities accounted for using the equity method because such exclusion has no material impact on JAPEX’s
consolidated financial statements in terms of profit or loss (amount proportionate to JAPEX’s equity interests),
retained earnings (amount proportionate to JAPEX’s equity interests), etc., and they are immaterial as a whole.
(4) Entities accounted for using the equity method whose closing dates are different from the consolidated closing dateare accounted for on the basis of the entities’ respective closing date.
(5) Any difference between the cost and the underlying net equity at fair value of investments in entities accounted forusing the equity method is amortized by the straight-line method over a period not exceeding 20 years, except forminor accounts that are amortized at one time as incurred.
3. Disclosure about fiscal years, etc. of consolidated subsidiaries
The balance sheet date of Japex (U.S.) Corp., Japex Garraf Ltd., and two other consolidated subsidiaries is December
31.
For Japex Garraf Ltd., the financial statements based on a provisional settlement of accounts as of the consolidatedbalance sheet date are used.
The financial statements of Japex (U.S.) Corp. and two other consolidated subsidiaries as of their balance sheet date
are used in preparing the consolidated financial statements. The necessary adjustments have been made to theconsolidated financial statements for any significant transactions that occurred between January 1 and the consolidatedbalance sheet date March 31.

- 104 -

4. Disclosure of accounting policies(1) Accounting policy for measuring significant assets
1) Securities
Held-to-maturity debt securities
Stated at amortized cost.
Available-for-sale securities
Available-for-sale securities other than shares, etc. without market priceStated at fair value based primarily on the market price at the fiscal year-end. Unrealized gains and losses
are recognized directly in net assets and the cost of securities sold is determined using the moving-averagemethod.
Shares, etc. without market priceStated at cost using the moving-average method.
Investments in limited partnerships and silent partnerships are recorded by adjusting the amount of equity
interest in the net assets of the partnerships to “investment securities.”2) Derivatives
Stated at fair value.
3) Inventories
Stated at cost (a method in which carrying amount is written down based on any decline in profitability).
Merchandise and finished goods
Stated mainly by the first-in, first-out method.
Raw materials and supplies
Stated mainly by the moving-average method.
(2) Accounting policy for depreciation/amortization of significant assets
1) Property, plant and equipment (excluding leased assets)
Buildings (excluding attached facilities) acquired on or after April 1, 1998, facilities attached to buildings andstructures of certain domestic consolidated subsidiaries acquired on or after April 1, 2016, Sendai gas pipelines,
Shiroishi-Koriyama gas pipelines, Soma-Iwanuma gas pipelines, assets of the Hokkaido District Office and Soma
District Office of JAPEX, and property, plant and equipment items held by three domestic consolidated
subsidiaries are depreciated by the straight-line method.
Property, plant and equipment items held by two foreign consolidated subsidiaries are depreciated by the unit ofproduction method.
Other property, plant and equipment items are depreciated by the declining-balance method.
The principal useful lives are as follows:
Buildings and structures: 2 to 60 years
Wells: 3 years
Machinery, equipment and vehicles: 2 to 22 years
2) Intangible assets (excluding leased assets)
Amortized by the straight-line method.
Capitalized computer software costs are amortized by the straight-line method over a period of 5 years, which isthe period available for internal use.
Intangible assets of one foreign consolidated subsidiary are mainly amortized by the unit of production method.
3) Leased assets
Finance leases which do not transfer ownership of the leased assets to the lessee
Leased assets are depreciated by the straight-line method over the lease terms with no residual value.

- 105 -

(3) Accounting policies for significant provisions
1) Allowance for doubtful accounts
To provide for potential credit losses on receivables, the allowance for doubtful accounts is recorded at the amountdetermined based on the historical experience of bad debt with respect to ordinary receivables, plus an estimateof uncollectible amounts determined by reference to specific doubtful receivables from customers which areexperiencing financial difficulties.
2) Allowance for overseas investment loss
The allowance for overseas investment loss is recorded at the amount determined based on the investees’ financial
position and other relevant factors for possible losses arising from investments in the exploration and developmentof overseas natural resources.
3) Provision for loss on disaster
The provision for loss on disaster is recorded at the estimated amount of payment for restoration expenses
accompanying disasters.
(4) Accounting treatment of retirement benefits
1) Method of attributing expected benefit to periods
The retirement benefit obligations for employees are attributed to each period by the benefit formula method overthe estimated service years of eligible employees.
2) Accounting treatment of actuarial gains and losses and prior service costs
Prior service costs are amortized as incurred by the straight-line method over a certain period (10 years), whichis shorter than the average remaining service years of the employees.
Actuarial gains and losses are amortized in the following year in which the gains or losses are recognized by thestraight-line method over a certain period (10 years), which is shorter than the average remaining service years of
the employees.
3) Application of simplified method for smaller enterprises
Certain consolidated subsidiaries apply the simplified method for calculating retirement benefit expenses andliabilities based on the assumption that the benefits payable, which are calculated as if all eligible employees
voluntarily terminated their employment at fiscal year-end, approximates the retirement benefit obligation at
year’s end.
(5) Accounting policies for significant revenues and expenses
JAPEX and its consolidated subsidiaries conduct the “E&P Business,” the “Infrastructure/Utility Business,” and“Other businesses” in the four reportable segments provided in the segment information: “Japan,” “North America,”“Europe” and “Middle East.”
With regard to revenues from contracts with clients of JAPEX and its consolidated subsidiaries, the main
performance obligations in key businesses and the timing at which these obligations are typically satisfied (i.e.,
when revenues are typically recognized) are as follows.
1) E&P BusinessIn the E&P Business, exploration, development, production, production services, and sales of crude oil and natural
gas are conducted at business locations in Japan and overseas. It is determined that in these sales, legal ownershipand physical possession of assets, as well as significant risks and economic rewards associated with ownership ofassets, are transferred, and the right to receive consideration for delivered products is obtained, at the time theproducts are delivered to clients. Thus, revenue is recognized at that time. As for production services, when control
over goods or services is transferred to clients over a certain period of time, revenue is recognized according toprogress in the satisfaction of performance obligations. Progress is measured using the output approach based on
production volume.
2) Infrastructure/Utility BusinessIn the Infrastructure/Utility Business, sales of gases (natural gas and LNG) and electricity are conducted at businesslocations in Japan. It is determined that in these sales, legal ownership and physical possession of assets, as well as
significant risks and economic rewards associated with ownership of assets, are transferred, and the right to receive
consideration for delivered products is obtained, at the time the products are delivered to clients. Thus, revenue isrecognized at that time.

- 106 -

3) Other businesses
In the Other businesses, contract services (drilling and geological surveys, etc.) and sales of oil products, etc. areconducted at business locations in Japan. As for contract services, when control over goods or services is transferred
to clients over a certain period of time, revenue is recognized according to progress in the satisfaction of performanceobligations. For measurement of progress, the input approach based on incurred costs is used. It is determined thatin sales of oil products, etc., legal ownership and physical possession of assets, as well as significant risks andeconomic rewards associated with ownership of assets, are transferred, and the right to receive consideration fordelivered products is obtained, at the time the products are delivered to clients. Thus, revenue is recognized at thattime.
For all businesses, in assessing performance obligations, it is examined whether the JAPEX Group acts as a principal
or an agent. If the nature of its promise is a performance obligation to provide the specified goods or services itself,
as a principal it presents revenue at the gross amount of consideration in its consolidated statement of income. If thenature is a performance obligation to make arrangements so that these goods or services are provided by otherparties, as an agent it presents revenue at the amount of commissions or fees, or the net amount of consideration, in
its consolidated statement of income.
Revenue is recognized based on the transaction price under contracts with clients. If a contract contains multiple
performance obligations, the transaction price is allocated to each performance obligation at a ratio of standalone
selling price. Since consideration for transactions is usually paid within one year after the satisfaction of performanceobligations, such consideration does not include any significant financing component.
(6) Accounting policy for translating significant foreign currency assets and liabilities into yen
Monetary receivables and payables denominated in foreign currencies are translated into yen at the spot exchange
rate on the consolidated balance sheet date, and the resulting translation adjustments are presented as foreignexchange gains or losses. Meanwhile, assets, liabilities, revenues and expenses of foreign consolidated subsidiaries,
etc. are translated into yen at the spot exchange rate on their respective balance sheet dates, and the resulting
translation adjustments are included in foreign currency translation adjustment under net assets.
(7) Significant hedge accounting
1) Hedge accounting method
Deferral hedge accounting is adopted for hedge transactions. Foreign exchange forward contracts are accounted forusing the allocation method if they meet certain criteria.
2) Hedging instruments and hedged items
Hedging instruments: Foreign exchange forward contracts, crude oil swaps, and LNG swaps
Hedged items: Accounts payable – trade, accounts payable – other, proceeds from sale of crude oil, and proceedsfrom sale of LNG
3) Hedging policy
To avoid future foreign currency fluctuation risk associated with foreign currency transactions, as well as oil and
LNG price fluctuation risk, the Group enters into hedge transactions only in connection with the relevant assets,
liabilities, and forecast transactions.
4) Method of assessing the effectiveness of hedges
The Group assesses whether the critical terms of the hedging instruments and hedged items are closely aligned, andthe hedge transactions are effective in offsetting the price fluctuation, etc. at the inception of the hedge and on an
ongoing basis.
Forward exchange contracts accounted for using the allocation method are not subject to the assessment of hedge
effectiveness.
(8) Scope of cash and cash equivalents in the consolidated statement of cash flows
Cash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, readily available
deposits and highly liquid short-term investments with maturities of three months or less from the acquisition date

- 107 -

that are exposed to an insignificant risk of changes in value.
(9) Other significant matters for preparation of consolidated financial statements
Accounting treatment of recoverable accounts
Investments made under a development and production service contract are included in recoverable accounts. These
investments are recovered by receiving a portion of the crude oil production based on the contract, which eventuallyis sold to the customers.
In addition, an amount corresponding to the recovered investments at the time of sale is recorded as cost of sales.
(Significant accounting estimates)
Recoverability of deferred tax assets(1) Amounts recorded in the consolidated financial statements for the fiscal years ended March 31, 2024
(Millions of yen)
As of March 31, 2023
Deferred tax assets

As of March 31, 2024
22,16228,097

Note: The amount is before offset with deferred tax liabilities.
(2) Information about significant accounting estimates on identified items
1) Calculation method
JAPEX reviews the recoverability of deferred tax assets in accordance with the “Implementation Guidance on
Recoverability of Deferred Tax Assets.”
As of March 31, 2024, deductible temporary differences which are deemed recoverable and net tax loss carriedforward are recognized as deferred tax assets as a result of the scheduling of temporary differences based on theestimated amount of taxable income before adding or subtracting temporary differences for the following fiscal
year.
In addition, consolidated subsidiaries recognize deferred tax assets in accordance with respective accounting
standards they apply.
2) Major assumptions used for significant accounting estimates
The recoverability of deferred tax assets is largely dependent on estimates of future taxable income. JAPEX and its
consolidated subsidiaries estimate the timing and amount of future taxable income in accordance with the tax lawsof the respective countries. The assumptions underlying these estimates, such as the sales price of each product,sales volume and foreign exchange rates, are incorporated into the business plans approved by management.
While the factors affecting the above assumptions include Russia-Ukraine and Middle East conflicts, we believethat various structural changes brought about by the progress on global decarbonization could be a risk factor for
future demand for fossil fuels. In light of the changes in the business environment surrounding our company andthe trend of rising global carbon prices, our projection for the medium- to long-term oil price is set at US$50 per
barrel.
Taking into consideration the impact of such business conditions on the future business environment, JAPEX has
calculated the amount of deferred tax assets to the extent that it is probable that taxable income will be available
against which the deductible temporary differences and net tax loss carried forward can be utilized.
3) Effects on the consolidated financial statements for the year ending March 31, 2025
Any changes in the above assumptions may affect taxable income and increase or decrease the amount of deferred
tax assets recorded by JAPEX and its consolidated subsidiaries.
The amount of deferred tax assets may also increase or decrease as a result of reexamining the reasonably estimablefuture period due to changes in the above assumptions in order to examine the recoverability using taxable income
based on future profitability and tax planning estimates for deductible temporary differences and net tax loss carriedforward for consolidated subsidiaries.

- 108 -

(Changes in presentation)
Consolidated statement of income“Administrative expenses of inactive oil and gas field,” which was included in “Other” under “Non-operating expenses” inthe previous fiscal year, is separately presented in the fiscal year under review because of the increased quantitative
significance. To reflect this change in presentation, the consolidated financial statements for the previous fiscal year havebeen reclassified.
Accordingly, “Other” totaling ¥720 million presented under “Non-operating expenses” in the consolidated statements ofincome for the previous fiscal year has been reclassified as “Administrative expenses of inactive oil and gas field” of ¥47
million and “Other” of ¥673 million.
Consolidated statement of cash flows“Increase (decrease) in provision for loss on disaster,” which was included in “Other, net” under “Cash flows from operating
activities” in the previous fiscal year, is separately presented in the fiscal year under review because of the increased
quantitative significance. To reflect this change in presentation, the consolidated financial statements for the previous fiscal
year have been reclassified.
Accordingly, “Other, net” totaling ¥1,068 million presented under “Cash flows from operating activities” in the consolidated
statement of cash flows for the previous fiscal year has been reclassified as “Increase (decrease) in provision for loss on
disaster” of ¥347 million and “Other, net” of ¥721 million.
“Proceeds from distributions from investment partnerships,” which was included in “Other, net” under “Cash flows frominvesting activities” in the previous fiscal year, is separately presented in the fiscal year under review because of theincreased quantitative significance. To reflect this change in presentation, the consolidated financial statements for theprevious fiscal year have been reclassified
Accordingly, “Other, net” totaling ¥43 million presented under “Cash flows from investing activities” in the consolidated
statement of cash flows for the previous fiscal year has been reclassified as “Proceeds from distributions from investment
partnerships” of ¥145 million and “Other, net” of ¥(101) million.
(Additional information)
Share-based compensation plan
JAPEX, based on the resolution of the 50th Ordinary General Meeting of Shareholders held on June 26, 2020, has
introduced a “Board Benefit Trust (BBT)” (hereinafter referred to as the “Plan”), a performance-linked share-based
compensation plan for JAPEX’s Directors (excluding Outside Directors) and Executive Officers who do not concurrently
serve as Directors (hereinafter collectively referred to as “Directors, etc.”). The Plan aims to better clarify the linkage
between compensation for Directors, etc. and the business performance and share value of JAPEX in order to further
motivate Directors, etc. to contribute to the improvement of the business performance and corporate value of JAPEX
over the medium and long term.
(1) Overview of the transaction
Under the Plan, Directors, etc. are provided with JAPEX’s shares and an amount of money equivalent to the market
value of JAPEX’s shares (hereinafter referred to as the “Company’s Shares, etc.”) through the trust established basedon the Plan, in accordance with the Rules on Provision of Shares to Officers established by JAPEX.
The Directors, etc. shall receive JAPEX’s Shares, etc., upon their retirement from office, in principle.
(2) JAPEX’s shares remaining in the trust
JAPEX’s shares remaining in the trust are recorded as treasury shares under net assets at the carrying amount in thetrust (except for incidental costs). The carrying amounts and the numbers of shares of the treasury shares as of March
31, 2023 and 2024 were ¥128 million and 71,000 shares, and ¥113 million and 62,000 shares, respectively.

- 109 -

(Consolidated balance sheet)*1 Notes and accounts receivable - trade includes accounts receivable from construction contracts.
*2 Notes and accounts receivable - trade includes following receivables arising from contracts with clients.
(Millions of yen)
As of March 31, 2023
Notes receivable - trade
Accounts receivable - trade

As of March 31, 2024

142
47,466

198
39,901

The above accounts receivable - trade includes accounts receivable from construction contracts.
*3. The amount deducted from the acquisition costs of property, plant and equipment due to government subsidies received,
etc. is as follows:(Millions of yen)
As of March 31, 2023
Buildings and structures
Machinery, equipment and vehicles
Other

As of March 31, 2024
42

42

4,865
198

4,872
198

*4 Investments in unconsolidated subsidiaries and associates are as follows:(Millions of yen)
As of March 31, 2023
Investment securities (equity securities)(of the above, investment in jointly controlled
entities)
Investment securities (investments in capital)
Investment securities (corporate bonds)

As of March 31, 2024

20,161

18,373(–)(2,503)

2,795
4,459

5,576
4,204

*5 The following assets were pledged as collateral for borrowings of subsidiaries and associates.
(Millions of yen)
As of March 31, 2023
Investment securities

4,733

As of March 31, 2024
4,475

In addition to the assets pledged as collateral above, investment securities valued at ¥1,541 million and ¥1,604 million,
which have been reduced due to application of the equity method on the consolidated balance sheet, were pledged ascollateral as of March 31, 2024 and 2023, respectively.

- 110 -

6. Liabilities for guarantees
JAPEX provides guarantees for borrowings and other obligations from financial institutions to the following
subsidiaries and associates.
(Millions of yen)
As of March 31, 2023

As of March 31, 2024

Abashiri Biomass Power 2 LLC.

2,218

Abashiri Biomass Power 3 LLC.

2,107

Ozu Biomass Power Co., Ltd.
Kumamoto Mirai LNG Co., Ltd.
Employees (borrowings for housing funds)
Total

412
25
16
4,781

Abashiri Biomass Power 3 LLC.

1,964

Abashiri Biomass Power 2 LLC.

1,845

Kumamoto Mirai LNG Co., Ltd.
Employees (borrowings for housing funds)
Total

19
11
3,840

7. JAPEX and certain consolidated subsidiaries (JAPEX SKS Corporation, SK ENGINEERING CO., LTD., JGI, Inc., Japex(U.S.) Corp., and Japex Energy Co., Ltd.) have entered into overdraft agreements and loan commitment agreements withfive banks (five banks in the previous fiscal year) to facilitate efficient procurement of working capital. The unusedbalances of these agreements as of March 31, 2023 and 2024 are as follows:(Millions of yen)
As of March 31, 2023

As of March 31, 2024

Total overdraft limit and commitment line
Executed borrowings

91,093–93,820–

Unused balance

91,09393,820- 111 -

(Consolidated statement of income)*1 Revenue from contracts with clients
Revenue from contracts with clients is not disclosed separately from other sources of revenue in net sales. Revenue fromcontracts with clients in net sales is as presented in “Notes to consolidated financial statements (Revenue recognition) 1.
Information on disaggregation of revenue from contracts with clients.”*2 Inventories at the end of the period are stated after write-downs due to decline in profitability, and cost of sales includes
the following valuation loss of inventories.
(Millions of yen)
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2024
13

859

*3 Provision for loss on construction contracts included in cost of sales(Millions of yen)
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2024
38

44

*4 Below is a breakdown of major expense items and amount of selling, general and administrative expenses:(Millions of yen)
Fiscal year ended March 31, 2023 Fiscal year ended March 31, 2024
Personnel expenses(of the above, retirement benefit expenses)
Taxes and dues
Subcontracting construction expenses
Depreciation

10,969
507
3,750
2,775
3,979

11,540
517
1,418
3,173
3,187

(Changes in presentation)“Subcontracting construction expenses,” which were not presented as a major expense item in the previous fiscal year,
are presented in the fiscal year under review because of the increased quantitative significance. To reflect this change inpresentation, the figure for the previous fiscal year is also presented.
*5 Total amount of research and development expenses included in general and administrative expenses(Millions of yen)
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2024
291

181

*6 The main components of gain on sale of non-current assets are as follows:(Millions of yen)
Fiscal year ended March 31, 2023 Fiscal year ended March 31, 2024
Machinery, equipment and vehicles
Land

0
0

1
0

Total

0

1

- 112 -

*7 The main components of loss on sale of non-current assets are as follows:(Millions of yen)
Fiscal year ended March 31, 2023 Fiscal year ended March 31, 2024
Buildings and structures
Other

5
2

–
0

Total

8

0

*8 The main components of loss on retirement of non-current assets are as follows:(Millions of yen)
Fiscal year ended March 31, 2023 Fiscal year ended March 31, 2024
Machinery, equipment and vehicles
Other

30
7

8
16

Total

38

25

- 113 -

(Consolidated statement of comprehensive income)* Reclassification adjustments and tax effects relating to other comprehensive income(Millions of yen)
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2024

(2,804)–53,270–Pre-tax amountTax effect(2,804)785

53,270(14,913)

Valuation difference on available-for-salesecurities(2,019)38,357

1,397(36)

12,242
175

1,361
(646)

12,417(3,179)Deferred gains or losses on hedges

715

9,237

Foreign currency translation adjustment
Gains (losses) arising during the year
Reclassification adjustments

1,993
–

2,636
–

Foreign currency translation adjustment

1,993

2,636

Remeasurements of defined benefit plans, netof taxGains (losses) arising during the year
Reclassification adjustments

(722)
(327)

1,726
(327)

(1,049)
176

1,399
(400)

(873)

998

511
126
2

(98)
237
2

Share of other comprehensive income ofentities accounted for using equity
method639

141

Total other comprehensive income

454

51,370

Valuation difference on available-for-salesecurities
Gains (losses) arising during the year
Reclassification adjustments

Deferred gains or losses on hedges
Gains (losses) arising during the year
Reclassification adjustments
Pre-tax amountTax effectPre-tax amountTax effectRemeasurements of defined benefit plans,
net of tax
Share of other comprehensive income ofentities accounted for using equity method
Gains (losses) arising during the year
Reclassification adjustments
Adjustment for asset acquisition cost

- 114 -

(Consolidated statement of changes in equity)
Fiscal year ended March 31, 2023 (April 1, 2022 – March 31, 2023)
1. Class and total number of issued shares and class and number of treasury shares
Number of shares atthe beginning of the
Increase (Shares)
Decrease (Shares)
fiscal year (Shares)

Number of shares atthe end of the fiscal
year (Shares)

Issued shares
Common stockTotal

57,154,776–

2,854,700

54,300,076

57,154,776–

2,854,700

54,300,076

1,518,982

1,414,348

2,859,600

73,7301,518,982

1,414,348

2,859,600

73,730Treasury shares
Common stock
Total

Notes: 1. The decrease of 2,854,700 shares in total issued shares of common stock comprises a decrease due to the cancellation oftreasury shares by resolution of the Board of Directors.
2. The increase of 1,414,348 shares in treasury shares of common stock comprises an increase of 1,414,100 shares due tothe acquisition of treasury shares by resolution of the Board of Directors and an increase of 248 shares due to thepurchase of shares less than one unit.
3. The decrease of 2,859,600 shares in treasury shares of common stock comprises decreases due to 2,854,700 shares incancellation of treasury shares by resolution of the Board of Directors and 4,900 shares in the provision of sharesthrough the Board Benefit Trust (BBT).
4. The number of treasury shares of common stock includes shares held by the Board Benefit Trust (BBT) (76,000 shares atthe beginning of the fiscal year ended March 31, 2023 and 71,100 shares at the end of the fiscal year ended March 31,2023).
2. Dividends(1) Cash dividends paid
Resolution
Ordinary General
Meeting of
Shareholders held on
June 28, 2022

Class of shares

Total dividends

Dividends per share(Millions of yen)

(Yen)

Record date

Effective dateCommon
stock

1,392

25

March 31, 2022

June 29, 2022

Meeting of the Board
Commonof Directors held on
stock
November 10, 2022

8,144

150

September 30, 2022

December 12, 2022

Notes: 1: The total amount of the dividend at the Ordinary General Meeting of Shareholders held on June 28, 2022 includes a
dividend of ¥1 million for shares held by the Board Benefit Trust (BBT).
2. The total amount of the dividend at the meeting of the Board of Directors held on November 10, 2022 includes a
dividend of ¥10 million for shares held by the Board Benefit Trust (BBT).
(2) Dividends payments whose record date is in the fiscal year under review but whose effective date is in the following
fiscal year
Resolution
Ordinary General
Meeting of
Shareholders held on
June 27, 2023
Note:

Total dividends
Class of shares (Millions of yen)
Commonstock

11,945

Source ofdividends
Retainedearnings

Dividends per
share

Record date

Effective date

March 31, 2023

June 28, 2023

(Yen)

220

The total amount of the dividend at the Ordinary General Meeting of Shareholders held on June 27, 2023 includes a
dividend of ¥15 million for shares held by the Board Benefit Trust (BBT).

- 115 -

Fiscal year ended March 31, 2024 (April 1, 2023 – March 31, 2024)
1. Class and total number of issued shares and class and number of treasury shares
Number of shares atthe beginning of the
Increase (Shares)
Decrease (Shares)
fiscal year (Shares)

Number of shares atthe end of the fiscal
year (Shares)

Issued shares
Common stockTotal

54,300,076––

54,300,076

54,300,076––

54,300,076

73,7301,373,056

8,500

1,438,286

73,7301,373,056

8,500

1,438,286

Treasury shares
Common stock
Total

Notes: 1. The increase of 1,373,056 shares in treasury shares of common stock comprises an increase of 1,373,000 shares due tothe acquisition of treasury shares by resolution of the Board of Directors and an increase of 56 shares due to the purchaseof shares less than one unit.
2. The decrease of 8,500 shares in treasury shares of common stock comprises a decrease in shares due to the provision ofshares through the Board Benefit Trust (BBT).
3. The number of treasury shares of common stock includes shares held by the Board Benefit Trust (BBT) (71,100 shares atthe beginning of the fiscal year ended March 31, 2024 and 62,600 shares at the end of the fiscal year ended March 31,2024).
4. The Board of Directors resolved at its meeting held on November 10, 2023 to cancel treasury shares in accordance withthe provisions of Article 178 of the Companies Act. However, the cancellation procedures were not completed for thefollowing treasury shares by the end of the fiscal year ended March 31, 2024.
Carrying amount:¥7,972 million
Class of shares:
Common stock
Number of shares:
1,373,000 shares
2. Dividends(1) Cash dividends paid
Resolution
Ordinary General
Meeting of
Shareholders held on
June 27, 2023

Class of shares

Total dividends

Dividends per share(Millions of yen)

(Yen)

Record date

Effective dateCommonstock

11,945220

March 31, 2023

June 28, 2023

Meeting of the Board
Commonof Directors held on
stock
November 10, 2023

6,787

125

September 30, 2023

December 12, 2023

Notes: 1. The total amount of the dividend at the Ordinary General Meeting of Shareholders held on June 27, 2023 includes a
dividend of ¥15 million for shares held by the Board Benefit Trust (BBT).
2. The total amount of the dividend at the meeting of the Board of Directors held on November 10, 2023 includes a
dividend of ¥7 million for shares held by the Board Benefit Trust (BBT).
(2) Dividends payments whose record date is in the fiscal year under review but whose effective date is in the following fiscal year
Resolution

Class of shares

Total dividends(Millions of yen)

Source ofdividends

Dividends per
share

Record date

Effective date

March 31, 2024

June 27, 2024

(Yen)

Ordinary General
Meeting of
Shareholders held on
June 26, 2024
Note:

Common
stock

9,261

Retainedearnings

175

The total amount of the dividend to be resolved at the Ordinary General Meeting of Shareholders on June 26, 2024
includes a dividend of ¥10 million for shares held by the Board Benefit Trust (BBT).

- 116 -

(Consolidated statement of cash flows)* Reconciliation of cash and cash equivalents at end of period and the amount recorded in the consolidated balance sheet(Millions of yen)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

Cash and deposits

191,956

169,997

Time deposits with maturity over three months(8,789)(20,398)

3,000

3,000

186,166

152,598

Short-term investments, etc. having maturities
within three months from the acquisition date
(Securities) Money management fund andothersCash and cash equivalents(Leases)
Operating lease transactions(As lessee)
Future lease payments(Millions of yen)
As of March 31, 2023

As of March 31, 2024

Due within one year

880

887

Due after one year

2

6

883

893

Total

- 117 -

(Financial instruments)
1. Information about financial instruments(1) Policy for measures relating to financial instruments
The Group’s policy is to manage operating funds while ensuring funding liquidity and controlling risks. The Group
raises necessary funds mainly through funds on hand and bank loans. The Group does not enter into derivativetransactions for trading or speculative purposes but uses them to hedge the undermentioned risks.
(2) Description of financial instruments and related risk and risk management
Operating receivables such as notes and accounts receivable - trade are exposed to customers’ credit risk. The Group
works to prevent bad debts by monitoring credit conditions, etc. of customers on a timely basis in accordance withinternal credit management rules.
Securities and investment securities mainly consist of equity securities of partner companies, and for those exposed tomarket fluctuation risk, fair value evaluation is reported to the directors on a regular basis in accordance with theinternal regulations. Investment securities mainly consist of equity securities of INPEX CORPORATION recorded at¥125,091 million and ¥74,664 million as of March 31, 2024 and 2023, representing 69.3% and 64.4% of total
investment securities, respectively.
Loans receivable are mainly loans to our subsidiaries and associates for their operating capital and are exposed to credit
risk. The Group manages the credit risk appropriately by monitoring the collection status of the loans receivable.
Notes and accounts payable - trade and accounts payable - other are due within one year. Accounts payable - trade andothers relating to LNG purchase are exposed to foreign currency fluctuation risk, which is hedged primarily throughforeign exchange forward contracts.
Implementation and management of derivative transactions, including foreign exchange forward contracts, are basedon the internal regulations which prescribe the authorization and maximum upper limit of the transactions, and thedepartment responsible for derivative transactions executes transactions after obtaining approval from the person
responsible for authorization. The Group enters into transactions only with creditworthy financial institutions to
mitigate the counterparty risk. Details of hedge accounting, such as hedging instruments and hedged items, hedging
policy and the method for assessing hedge effectiveness are described above in “Significant hedge accounting” of“Disclosure of accounting policies.”
Liquidity risk associated with financing is managed mainly by preparing monthly financial plans.
(3) Supplementary information on fair value of financial instruments
As the calculation of fair values of financial instruments includes variable factors, those values may vary if different
assumptions are applied.
Also, for the contract amount and other figures related to derivative transactions described in the “Notes to consolidated
financial statements (Derivative Transactions),” the contract amount itself does not indicate market risk related toderivative transactions.

- 118 -

2. Fair value of financial instruments
Consolidated balance sheet amount, fair value and the difference are as follows. “Cash and deposits,” “Notes and accounts
receivable - trade,” “Securities,” “Notes and accounts payable - trade,” “Current portion of long-term borrowings,” and“Income taxes payable” are not stated as they are cash, and settled within a short period of term and their fair values
approximate their carrying amounts.
As of March 31, 2023
Consolidated balance
sheet amount(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Investment securities (*1, *2)

81,081

82,241

1,160(2) Long-term loans receivable

1,307

1,307

–

Total assets

82,38883,5481,160(1) Long-term borrowings

250

250

–

Total liabilities

250

250

–

Derivative transactions (*3)

31

31

–

(*1) Investments in partnerships and other similar entities for which equity interests are reported on a net basis on the consolidatedbalance sheet are not included in (1) Investment securities. The consolidated balance sheet amount of these investments is¥10,116 million.
(*2) Shares without market value are not included in “(1) Investment securities.” The consolidated balance sheet amount of suchfinancial instruments is as follows:
Category
As of March 31, 2023 (Millions of yen)
Unlisted equity securities
24,743(*3) Receivables and payables arising from derivative transactions are presented on a net basis.
As of March 31, 2024
Consolidated balance
sheet amount(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Investment securities (*1, *2)

134,210135,290

1,080(2) Long-term loans receivable

1,247

1,247

–

135,457

136,537

1,080(1) Long-term borrowings

–

–

–

Total liabilities

–

–

–

1,430

1,430

–

Total assets

Derivative transactions (*3)(*1) Investments in partnerships and other similar entities for which equity interests are reported on a net basis on the consolidatedbalance sheet are not included in (1) Investment securities. The consolidated balance sheet amount of these investments is¥23,284 million.
(*2) Shares without market value are not included in “(1) Investment securities.” The consolidated balance sheet amount of suchfinancial instruments is as follows:
Category

As of March 31, 2024 (Millions of yen)

Unlisted equity securities
22,920(*3) Receivables and payables arising from derivative transactions are presented on a net basis.

- 119 -

Note 1: Redemption schedule of monetary receivables and securities with maturities after the consolidated closing date
As of March 31, 2023
Due within one Due after one year Due after five years
Due after ten years
year
through five years through ten years(Millions of yen)
(Millionsofyen)(Millions of yen) (Millions of yen)
Cash and deposits

191,954–––

Notes and accounts receivable - trade47,993

–

–

–

–

–

–

5,732

–

–

–

–

–

400

537

369

239,947

400

537

6,102

Securities and investment securities
Held-to-maturity debt securities
Corporate bonds
Available-for-sale securities withmaturities
Debt securities (corporate
bonds)
Long-term loans receivable
Total
As of March 31, 2024
Due within one Due after one year Due after five years
Due after ten years
year
through five years through ten years(Millions of yen)
(Millionsofyen)(Millions of yen) (Millions of yen)
Cash and deposits

169,995–––

Notes and accounts receivable - trade

40,790

–

–

–

–

–

–

5,413

–

–

–

111

–

448

535

264

210,785

448

535

5,789

Securities and investment securities
Held-to-maturity debt securities
Corporate bonds
Available-for-sale securities withmaturities
Debt securities (corporate
bonds)
Long-term loans receivable
Total- 120 -

Note 2: Repayment schedule of long-term borrowings after the consolidated closing date
As of March 31, 2023
Due after one year Due after five years
Due after ten years
Due within one year
through five years through ten years(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
Long-term borrowings
Total

260

250

–

–

260

250

–

–

As of March 31, 2024
Due after one year Due after five years
Due after ten years
Due within one year
through five years through ten years(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
Long-term borrowings
Total

250

–

–

–

250

–

–

–

3. Breakdown of financial instruments by level within the fair value hierarchy
Fair values of financial instruments are categorized into the following three levels according to the observability andmateriality of inputs used in the measurement of fair values.
Level 1: Fair value measured using observable inputs, i.e., quoted prices in active markets for assets or liabilities
being measured.
Level 2: Fair value measured using observable inputs other than Level 1 inputs.
Level 3: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement iscategorized in its entirety in the level of the lowest level input that is significant to the entire measurement.
(1) Financial instruments recorded at fair value in the consolidated balance sheet
As of March 31, 2023
Category

Fair value (Millions of yen)
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Equity securities

76,614––

76,614––––Currency-related transactions

–

6

–

6

Commodity-related transactions

–

52

–

52

76,61459–

76,673Currency-related transactions

–

1

–

1

Commodity-related transactions

–

26

–

26

Total liabilities

–

27

–

27

Debt securities (corporate bonds)
Derivative transactions

Total assets
Derivative transactions- 121 -

As of March 31, 2024
Category

Fair value (Millions of yen)
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Equity securities

129,887––

129,887

–

111

–

111

Currency-related transactions

–

1

–

1

Commodity-related transactions

–

1,430

–

1,430

129,887

1,544－

131,431

Currency-related transactions

–

–

–

–

Commodity-related transactions

–

2

–

2

Total liabilities

–

2

–

2

Debt securities (corporate bonds)
Derivative transactions

Total assets
Derivative transactions(2) Financial instruments other than those recorded at fair value in the consolidated balance sheet
As of March 31, 2023
Category

Fair value (Millions of yen)
Level 1

Level 2

Level 3

Total

Investment securities
Held-to-maturity debt securities
Corporate bonds

–

–

5,611

5,611

Equity securities

–

14

–

14

Long-term loans receivable

–

1,307

–

1,307

–

1,321

5,611

6,933

–

250

–

250

–

250

–

250

Available-for-sale securities

Total assets
Long-term borrowings
Total liabilities- 122 -

As of March 31, 2024
Category

Fair value (Millions of yen)
Level 1

Level 2

Level 3

Total

Investment securities
Held-to-maturity debt securities
Corporate bonds

–

–

5,276

5,276

Equity securities

–

14

–

14

Long-term loans receivable

–

1,247

–

1,247

–

1,262

5,276

6,538

–

–

–

–

–

–

–

–

Available-for-sale securities

Total assets
Long-term borrowings
Total liabilities

Note: Explanation of valuation techniques and inputs used in the fair value measurement
Investment securities
Listed shares are valued using quoted prices. As listed shares are traded in active markets, their fair value is classified as Level
1.
The fair value of shares other than listed shares is classified as Level 2 because they are traded infrequently in the public market
and not considered to have quoted prices in active markets.
The fair value of debt securities (corporate bonds) is measured based on quotes, etc. provided by financial institutions, and isclassified as Level 2.
The fair value of held-to-maturity debt securities is measured using the discounted cash flow method based on future cash flows
from debt securities and appropriate benchmarks such as market rate of return. As unobservable inputs have a significant effecton the fair value measurement, it is classified as Level 3.
Long-term loans receivable
The fair value of long-term loans receivable is measured using the discounted cash flow method based on future cash flows andappropriate benchmarks such as market rate of return, and is classified as Level 2.
Derivative transactions
The fair value of derivative transactions is measured based on quotes, etc. provided by financial institutions, and is classified as
Level 2.
Long-term borrowings
The fair value is measured using the discounted cash flow method based on the sum of principal and interest, remaining
maturities and an interest rate reflecting credit risk, and is classified as Level 2.

- 123 -

(Securities)
1. Held-to-maturity debt securities
As of March 31, 2023
Consolidated balance
sheet amount(Millions of yen)
Securities whose fair value exceeds
their consolidated balance sheet
amountUnrealized gain (loss)(Millions of yen)

4,459

5,611

1,152

–

–

–

4,459

5,611

1,152

Securities whose fair value does
not exceed their consolidatedbalance sheet amount
Total

Fair value(Millions of yen)

As of March 31, 2024
Consolidated balance
sheet amount(Millions of yen)
Securities whose fair value exceeds
their consolidated balance sheet
amountUnrealized gain (loss)(Millions of yen)

4,204

5,276

1,072

–

–

–

4,204

5,276

1,072

Securities whose fair value does
not exceed their consolidatedbalance sheet amount
Total

Fair value(Millions of yen)

2. Available-for-sale securities
As of March 31, 2023
Consolidated balance
sheet amount(Millions of yen)

Acquisition cost
(Millions of yen)

Unrealized gain
(loss)(Millions of yen)

75,20910,96564,243

1) Corporate bonds

–

–

–

2) Other debt securities

–

–

–

–

–

–

75,20910,96564,243

1,412

1,532

(120)

1) Corporate bonds

–

–

–

2) Other debt securities

–

–

–

3,000

3,000

–

4,412

4,532

(120)

79,621

15,49764,123Type(1) Equity securities(2) Debt securities
Securities whose consolidatedbalance sheet amount exceeds
their acquisition cost(3) Other
Subtotal(1) Equity securities(2) Debt securities
Securities whose consolidatedbalance sheet amount does notexceed their acquisition cost(3) Other
Subtotal
Total- 124 -

As of March 31, 2024
Consolidated balance
sheet amount

Type(Millions of yen)
(1) Equity securities

Unrealized gain
(loss)

Acquisition cost
(Millions of yen)

(Millions of yen)

129,887

12,491

117,396

1) Corporate bonds

20

20

0

2) Other debt securities

–

–

–

–

–

–

129,907

12,511

117,39666–1) Corporate bonds

91

94

(3)

2) Other debt securities

–

–

–

3,000

3,000

–

3,097

3,101

(3)

133,005

15,612

117,393(2) Debt securities
Securities whose consolidatedbalance sheet amount exceeds
their acquisition cost(3) Other
Subtotal(1) Equity securities(2) Debt securities
Securities whose consolidatedbalance sheet amount does notexceed their acquisition cost(3) Other
Subtotal
Total
3. Impaired securities

During the year ended March 31, 2023, the Group recorded impairment losses of ¥10 million on available-for-salesecurities without market value.
During the year ended March 31, 2024, the Group recorded no impairment loss on securities.
If the market value of the securities other than shares without market value declines by 50% or more from its
acquisition cost as of the end of the fiscal year, in principle, the Group recognizes the difference between the market
value and the acquisition cost as impairment losses. If the decline ranges between about 30% and 50%, the Group
recognizes impairment losses for the necessary amount considering its recoverability.
If the real value of shares without market value declines by 50% or more from its acquisition cost, the Group
recognizes impairment losses for the decline, considering its recoverability.

- 125 -

(Derivative transactions)
Derivative transactions for which hedge accounting is applied(1) Currency-related transactions
As of March 31, 2023
Hedge accounting
methodType of transaction

Major hedged
items

Contract
Due after one year
Fair value
amount, etc.
(Millions of yen) (Millions of yen)
(Millions of yen)

Foreign exchange forward
contracts
BuyingGeneral treatment

Allocation method
for foreignexchange forward
contracts, etc.

US dollar

Accounts
payable - trade

1,580

–

6

US dollar

Accounts
payable - other

43

–

(1)

Accounts
payable - trade

2,420

–

4,044

–

Foreign exchange forward
contracts
BuyingUS dollar
Total(Note)
5(Note) As foreign exchange forward contracts, etc. subject to the allocation method are accounted for together with the hedged
accounts payable - trade, their fair value is included in that of the accounts payable - trade.
As of March 31, 2024
Hedge accounting
methodType of transaction

Major hedged
items

Contract
Due after one year
Fair value
amount, etc.
(Millionsof yen)(Millions of yen)
(Millions of yen)

Foreign exchange forward
contracts
General treatment

BuyingUS dollar

Accounts
payable - other

47

–

1

47

–

1

Due after one year
(Millions of yen)

Fair value(Millions of yen)

4,853

1,369

26

4,853

1,369

26

Total
(2) Commodity-related transactions
As of March 31, 2023
Hedge accounting
methodType of transaction

Major hedged
items

Contract
amount, etc.
(Millions of yen)

Crude oil swap contracts
General treatment

Receive fixed rates andpay floating rates

Proceeds fromsale of crude oil

Total- 126 -

As of March 31, 2024
Hedge accounting
methodType of transaction

Major hedged
items

Contract
Due after one year
Fair value
amount, etc.
(Millions of yen) (Millions of yen)
(Millions of yen)

Crude oil swap contracts

General treatment

Receive fixed rates andpay floating rates

Proceeds fromsale of crude oil

11,7292,145

114

Proceeds fromsale of LNG

5,904

–

1,313

17,634

2,145

1,428

LNG swap contracts
Receive fixed rates andpay floating rates
Total- 127 -

(Retirement benefits)
1. Overview of retirement benefit plans adopted
JAPEX and its domestic consolidated subsidiaries have defined benefit plans, i.e., defined benefit corporate pension plans
and lump-sum retirement payment plans.
Certain domestic consolidated subsidiaries participate in the Smaller Enterprise Retirement Allowance Mutual Aid
System and calculate retirement benefit liabilities and retirement benefit expenses using the simplified method.
2. Defined benefit plans(1) Reconciliation between retirement benefit obligations at the beginning of period and the end of period (excluding
plans applying the simplified method shown in (3))(Millions of yen)

Retirement benefit obligations at beginning of period
Service costs
Interest costs
Actuarial gains and losses
Retirement benefits paid
Retirement benefit obligations at end of period

Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

14,782880
128
363(1,777)

14,377860
125
92(1,369)14,377

14,086(2) Reconciliation between plan assets at the beginning of period and the end of period (excluding plans applying thesimplified method shown in (3))(Millions of yen)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

Plan assets at beginning of period
Expected return on plan assets
Actuarial gains and losses
Contributions from employer
Retirement benefits paid

14,831
148
(358)
443
(1,250)13,813
138
1,818
425
(966)

Plan assets at end of period

13,813

15,229(3) Reconciliation between retirement benefit liabilities of plans applying the simplified method at the beginning of
period and the end of period(Millions of yen)
Fiscal year ended
Fiscal year ended
March 31, 2023
March 31, 2024
Retirement benefit liability at beginning of period
1,105
1,160
Retirement benefit expenses
232
260
Retirement benefits paid
(99)
(148)
Contributions to plans
Retirement benefit liability at end of period- 128 -

(77)

(76)

1,160

1,195

(4) Reconciliation between retirement benefit obligations and plan assets at the end of period and retirement benefit
liability and retirement benefit asset on the consolidated balance sheets(Millions of yen)
As of March 31, 2023
Funded retirement benefit obligations

As of March 31, 2024

Plan assets

12,109(13,813)

11,866(15,229)

Unfunded retirement benefit obligations(1,703)
3,428(3,363)
3,414

1,724

51

3,428
(1,703)3,414(3,363)

1,724

51

Net retirement benefit liability (asset) on consolidatedbalance sheet
Retirement benefit liability
Retirement benefit asset
Net retirement benefit liability (asset) on consolidatedbalance sheet(5) Breakdown of retirement benefit expenses(Millions of yen)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Retirement benefit expenses calculated by simplified
method

880
128
(148)
(327)

860
125
(138)
(327)

232

260

Retirement benefit expenses on defined benefit plans

765

780

(6) Remeasurements of defined retirement benefit, net of tax
The breakdown of items (before tax effect) recorded in remeasurements of defined retirement benefit, net of tax is asfollows:(Millions of yen)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

Actuarial gains and losses(1,049)

1,399

Total

(1,049)1,399(7) Remeasurements of defined retirement benefit
The breakdown of items (before tax effect) recorded in remeasurements of defined retirement benefit is as follows:(Millions of yen)
As of March 31, 2023

As of March 31, 2024

Unrecognized actuarial gains and losses

983

2,383

Total

983

2,383

- 129 -

(8) Plan assets
1) Breakdown of plan assets
The percentage of various assets to total plan assets by main category is as follows:
As of March 31, 2023

As of March 31, 2024

Debt securities

57%

49%

Equity securities
Cash and deposits
Other

32%
4%
8%

41%
3%
7%

Total

100%

100%

2) Determination of long-term expected rate of return
In order to determine the long-term expected rate of return on plan assets, the Group considers the current andexpected allocation of plan assets and the current and expected long-term rate of return from various assets
constituting plan assets.
(9) Actuarial assumptions
Main actuarial assumptions (weighted averages)

Discount rateLong-term expected rate of return- 130 -

As of March 31, 2023

As of March 31, 2024

0.9%
1.0%

0.9%
1.0%

(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities(Millions of yen)
As of March 31, 2023

As of March 31, 2024

96

45

Net tax loss carried forward (Note 2)

40,13040,580Retirement benefit liability

1,009

1,077

Depreciation on non-current assets
Payable for retirement benefits for directors and otherofficers
Assets retirement obligations

4,707

4,048

58

56

5,684

6,476

Impairment losses on non-current assets

2,150

2,157

Investment securities

1,144

841

Deferred tax assets
Allowance for overseas investment loss

4–

Foreign tax credit carried forward

1,543

2,218

Other

6,655

6,392

63,18363,895(25,844)(19,272)(15,177)(16,524)(41,021)(35,797)

22,16228,097

Tax credit carried forward

Subtotal deferred tax assets
Valuation allowance for net tax loss carried forward (Note2)
Valuation allowance for total of deductible temporary
differences
Total valuation allowance (Note 1)
Total deferred tax assets
Deferred tax liabilities
Reserve for mine prospecting(8,403)(8,821)

Valuation difference on available-for-sale securities
Reserve for tax purpose reduction entry of non-current
assets
Undistributed earnings(17,800)(32,715)

(191)

(181)

(1,799)

(471)

(477)

(794)

(9,063)(16,419)

Deferred gains or losses on hedges(97)(3,277)

Other

(976)

(1,417)

Total deferred tax liabilities(38,810)(64,098)

Net deferred tax liabilities(16,648)(36,000)

Retirement benefit asset
Depreciation of foreign subsidiaries, etc.

(Changes in presentation)“Deferred gains or losses on hedges,” which were included in “Other” under deferred tax liabilities in the previous fiscal
year, are separately presented in the fiscal year under review because of the increased quantitative significance. To reflect
this change in presentation, the note for the previous fiscal year has been reclassified.
Accordingly, “Other” totaling ¥(1,074) million presented under deferred tax liabilities for the previous fiscal year has been
reclassified as “Deferred gains or losses on hedges” of ¥(97) million and “Other” of ¥(976) million.
Notes: 1 The change in valuation allowance is mainly due to a decrease in net tax loss carried forward at the Group level.
2 Net tax loss carried forward and breakdown of deferred tax assets thereof by expiration dates- 131 -

As of March 31, 2023
Expire in one
year or less(Millions of yen)

Expire after one Expire after five Expire after ten
year throughyears throughyears/No
five years
ten years
expiration date(Millions of yen)

(Millions of yen)

(Millions of yen)

Total
(Millions of yen)

Net tax loss carried forward
(a)

–

288

29,335

10,506

40,130

Valuation allowance

–

(203)

(25,640)–(25,844)

Deferred tax assets

–

84

3,694

10,506(b) 14,285(a) Net tax loss carried forward is calculated by multiplying the effective statutory tax rate.
(b) Deferred tax assets of ¥14,285 million are recognized for net tax loss carried forward of ¥40,130 million (calculated bymultiplying the effective statutory tax rate). Valuation allowance has not been recognized for the part of net tax loss
carried forward which is expected to be recoverable from the estimated taxable income in the future.
As of March 31, 2024
Expire in one
year or less(Millions of yen)

Expire after one Expire after five Expire after ten
year throughyears throughyears/No
five years
ten years
expiration date(Millions of yen)

(Millions of yen)

(Millions of yen)

Total
(Millions of yen)

Net tax loss carried forward
(c)

–

215

23,317

17,04740,580

Valuation allowance––(19,271)(0)(19,272)

Deferred tax assets

–

215

4,045

17,046(d) 21,308(c) Net tax loss carried forward is calculated by multiplying the effective statutory tax rate.
(d) Deferred tax assets of ¥21,308 million are recognized for net tax loss carried forward of ¥40,580 million (calculated bymultiplying the effective statutory tax rate). Valuation allowance has not been recognized for the part of net tax loss
carried forward which is expected to be recoverable from the estimated taxable income in the future.
2. Reconciliation of the effective tax rates reflected in the consolidated statement of income and the effective statutory tax
rates
As of March 31, 2023

As of March 31, 2024

28.0

28.0

(0.4)

(0.3)

0.4

1.0

(2.4)

0.7

(12.1)(7.9)

Tax rate differences with consolidated subsidiaries

(0.4)

(1.6)

Taxation differences with foreign subsidiaries

0.5

(2.5)

Consolidation adjustment items

1.6

(1.7)

Tax credit

2.7

(0.5)

Other

0.3

2.3

18.2

17.5

Effective statutory tax rate
(Adjustments)
Income not taxable permanently for income tax purposes(e.g., dividend income)Expenses not deductible permanently for income tax
purposes (e.g., entertainment expenses)
Consolidation adjustment items related to the application of
the equity method
Change in valuation allowance

Actual effective tax rate after applying tax effect accounting- 132 -

(Asset retirement obligations)
1. Asset retirement obligations recognized in the consolidated balance sheets
Asset retirement obligations recognized by the Group are determined based on the estimated costs ofdecommissioning oil and natural gas wells and production facilities in accordance with laws, land lease contracts,
etc. for wells and production facilities in Japan and overseas, and the appropriate discount rates.
The Group estimates the periods in which the obligations are paid out to be approximately 2 to 38 years fromacquisition of assets. This estimate is reasonably made based on the plans for decommissioning wells and facilitiesor the estimated producing lives of fields if no such plan exists. Discount rates applied are (0.186)% to 2.287% for
domestic obligations and 2.25% to 5.29% for overseas.
Although the future costs to be incurred upon decommissioning and timing when the obligations are incurred are
based on the Group’s best estimate, uncertainty exists regarding both the amount and timing of incurring thesecosts.
Changes in the balance of asset retirement obligations are as follows:(Millions of yen)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

Balance at beginning of period
Increase due to acquisition of new assets
Increase (decrease) due to change inestimate (Note)
Accretion expense
Liabilities settlement
Foreign currency translation adjustment
Other changes, net

19,539232

20,043
1,519

3

2,876

182
(8)
57
37

155
(19)
112
–

Balance at end of period

20,043

24,687

Note: Regarding the asset retirement obligations recorded as expenses pertaining to the future withdrawal ofoffshore platform and well abandonment in domestic oil and gas fields (hereinafter “expenses pertaining to
the withdrawal, etc.”), the estimate of the expenses pertaining to the withdrawal, etc. required at the end of
the projects was changed in the fiscal year ended March 31, 2024 as a result of obtaining new information
regarding the expenses pertaining to the withdrawal, etc. The amount increase of ¥2,966 million due to theestimate change was added to the asset retirement obligations balance before the change.
Furthermore, due to said changes in the estimate, operating profit for the fiscal year ended March 31, 2024
decreased by ¥2,215 million, and ordinary profit and profit before income taxes both decreased by ¥2,929
million.
2. Asset retirement obligations other than those recognized in the consolidated balance sheets
The Group has obligations to restore sites to their original condition in accordance with laws, land lease contracts,
etc. regarding oil and natural gas production facilities. However, maintaining and ensuring a stable supply of natural
gas in the Infrastructure/Utility Business, which is the Group’s primary business operation, is of high public
interest; therefore, even after completion of production activities, the Group plans to continue to use some of theassets held for the purpose of producing and selling oil and gas on a permanent basis in order to fulfill the
responsibilities as a supplier for users of natural gas by holistically integrating these assets. Thus, the Group does
not recognize the relevant asset retirement obligations since it is impossible at this point to estimate asset retirement
obligations on a reasonable basis as of March 31, 2024.

- 133 -

(Revenue recognition)
1. Information on disaggregation of revenue from contracts with clients
Fiscal year ended March 31, 2023 (April 1, 2022 – March 31, 2023)(Millions of yen)
Reportable segment
North

Japan
Crude oil

EuropeAmerica

Middle East

Total

22,618

8,764–

24,28355,666

–

360

–

–

360

Subtotal

22,618

9,124–

24,28356,026Natural gas (Japan)

92,540–––92,540

LNG

45,614–––45,614

Electricity

58,735–––58,735

Others

5,988

–

–

–

5,988

202,879–––

202,879

7,750

–

–

–

7,750

56,573–––56,573

2,112

–

–

–

2,112

66,435–––66,435

Revenue from contracts with clients

291,933

9,124–

24,283

325,341

Revenue from other sources

11,11336––

11,150Net sales to outside clients

303,047

9,161–

24,283

336,492

E&P Business
Natural gas (overseas)

Infrastructure/Utility
Business

Subtotal
Contract services
Other businesses

Oilproducts/merchandise
OthersSubtotal- 134 -

Fiscal year ended March 31, 2024 (April 1, 2023 – March 31, 2024)(Millions of yen)
Reportable segment
North

Japan
Crude oil

EuropeAmerica

Middle East

Total

19,41030,107

2,282

36,182

87,983

–

675

327

–

1,002

Subtotal

19,41030,782

2,609

36,182

88,986Natural gas (Japan)

77,903–––77,903

LNG

28,345–––28,345

Electricity

53,272–––

53,272Others

7,197

–

–

–

7,197

166,718–––

166,718

6,395

–

–

–

6,395

55,423–––55,423

2,137

–

–

–

2,137

63,956–––

63,956250,084

30,782

2,609

36,182

319,660

Revenue from other sources

6,378

(175)

–

–

6,203

Net sales to outside clients

256,463

30,6072,609

36,182

325,863

E&P Business
Natural gas (overseas)

Infrastructure/Utility
Business

Subtotal
Contract services
Other businesses

Oilproducts/merchandise
OthersSubtotal

Revenue from contracts with clients

2. Information that provides the basis for understanding revenue from contracts with clients
Information that provides the basis for understanding revenue is as presented in “Notes to consolidated financial
statements (Notes to significant accounting policies for preparation of consolidated financial statements), 4. Disclosureof accounting policies, (5) Accounting policies for significant revenues and expenses.”- 135 -

3. Information on relationship between satisfaction of performance obligations under contract with customers and cash
flows generated from said contracts, and amount and timing of revenue expected to be recognized in the following fiscal
year onward based on contracts with clients existing as of March 31, 2024
(1) Balances, etc. of contract assets and contract liabilities(Millions of yen)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

Receivables from contracts with clients at beginning of period

42,92447,609Receivables from contracts with clients at end of period

47,60940,099Contract assets at beginning of period

405

480

Contract assets at end of period

480

820

Contract liabilities at beginning of period

258

155

Contract liabilities at end of period

155

115

Contract assets consist primarily of unbilled receivables from construction contracts. Contract liabilities are mainly related toadvances received from customers for construction contracts.
During the fiscal year ended March 31, 2024, the Group recognized an immaterial amount of revenue, which was previously
included in contract liabilities as of the beginning of the period. The revenue the Group recognized related to performanceobligations that were satisfied, or partially satisfied, in previous periods was immaterial.
(2) Transaction price allocated to the remaining performance obligations
The following table summarizes the aggregate transaction price allocated to the remaining performance obligations inconstruction contracts, etc. and the period over which revenue is expected to be recognized. The Group has applied thepractical expedient to exclude the transactions for contracts with an original expected duration of one year or less and thevariable consideration allocated to unsatisfied performance obligations for long-term sales contracts, etc.
(Millions of yen)
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2024

One year or less

155

300

Over one year

26

16

Total

181

316

4. Note to provision for loss on construction contracts
Provision for loss on construction contracts included in cost of sales is presented in “Notes to consolidated financial
statements (Consolidated statement of income).”- 136 -

(Segment information, etc.)[Segment information]
1. Summary of reportable segments
The JAPEX Group’s reportable segments are those for which separated financial information is available and which
are periodically examined by the Board of Directors to determine allocation of managerial resources and assessbusiness performance, among components of the JAPEX Group.
In addition to business activities in Japan, the JAPEX Group has developed business activities overseas through a
project company established at each business location.
Therefore, the JAPEX Group consists of segments by business location and considers “Japan,” “North America,”“Europe” and “Middle East” as reportable segments.
“Japan” consists of business activities such as exploration, development, and production of crude oil and natural gas,and sales of crude oil as the E&P Business in Japan; sales of natural gas and LNG, contract services for transportationof natural gas, and generation and sales of electric power, etc. as the Infrastructure/Utility Business; and manufacturing,purchase, sale and transportation of oil products, contract services for well drilling work, etc. as the Other Businesses.
“North America” consists of business activities such as exploration, development, production, sale, etc. of crude oiland natural gas as E&P Business in North America.
“Europe” consists of business activities such as development, production, sale, etc. of crude oil and natural gas as E&P
Business in Europe.
“Middle East” consists of business activities such as development, production, sale, etc. of crude oil as E&P Businessin the Middle East.
2. Method for calculating net sales, profit (loss), assets and other items by reportable segment
The method for accounting for reported operating segments is basically the same as the description in “Notes tosignificant accounting policies for preparation of consolidated financial statements.” Profit of reportable segments isthe figure based on operating profit. Intersegment revenue and transfers are based on prevailing market prices.

- 137 -

3. Information regarding net sales, profit (loss), assets and other items by reportable segment
Fiscal year ended March 31, 2023 (April 1, 2022 – March 31, 2023)(Millions of yen)Amounton theAdjustment consolidated(Note 2)
financialstatements(Note 3)

Reportable segment
Europe

Total

9,161

–

24,283

336,492

–

–

–

–

–

303,047

9,161–

24,283

Segment profit(loss)

68,855

4,210

(170)

Segment assets

71,44527,662

10,044

Total

303,047

Others(Note 1)

MiddleEast

Net sales
Net sales tooutside clientsIntersegment
sales ortransfers

Japan

North
America

Total– 336,492–

336,492

–

–

–

–

336,492– 336,492–

336,492(112)

72,783–72,783(10,697)62,085

20,61125,450145,170– 145,170

423,009568,180

3,654

–

293

13,991–

13,991

265

14,257

326

–

–

(11)

315

6,793

7,109

–

7,109

1,107

–

–

286

1,394

10,26911,664–

11,664

5,898

25,7386,300–

37,937–37,937

195

38,132Other items
Depreciation
Share of profit(loss) of entities
accounted forusing equity
methodInvestments inentities
accounted forusing equity
methodIncrease inproperty, plantand equipment
and intangible
assets- 138 -

Fiscal year ended March 31, 2024 (April 1, 2023 – March 31, 2024)(Millions of yen)Amounton theAdjustment consolidated(Note 2)
financialstatements(Note 3)

Reportable segment
EuropeTotal

30,6072,609

36,182

325,863

6

–

–

–

6

256,470

30,6072,609

36,182

Segment profit

51,13011,417426

Segment assets

69,73880,333

11,161

Total

256,463

Others(Note 1)

MiddleEast

Net sales
Net sales tooutside clientsIntersegment
sales ortransfers

Japan

North
America

Total– 325,863–

325,863

–

6

(6)

–

325,869– 325,869(6)

325,863

4,750

67,725–67,725(12,477)

55,24728,197

22,618200,887– 200,887

460,041

660,928

15,181

695

293

27,331–

27,331

315

27,646

168

(49)

(529)

2

(407)

622

214

–

214

1,526

1,457

3,032

–

6,015

7,532

13,547–

13,547

6,445

65,6904,652

076,788–76,788266

77,055

Other items
Depreciation
Share of profit(loss) of entities
accounted forusing equity
methodInvestments inentities
accounted forusing equity
methodIncrease inproperty, plantand equipment
and intangible
assets

Notes: 1. The “Others” category represents operating segments that are not included in reportable segments, andincludes Russia, etc.
2. Major components of adjustment are as follows:(1) Segment profit (loss)(Millions of yen)
Fiscal year ended
Fiscal year ended
March 31, 2023
March 31, 2024
Elimination of intersegment transactions
1
1
Corporate expenses *Total(10,698)(12,478)(10,697)(12,477)* Corporate expenses are mainly general and administrative expenses and experimentation and researchexpenses, all of which are not attributable to the reportable segments.
(2) Segment assets(Millions of yen)
As of March 31, 2023
Elimination of intersegment transactions
Corporate assets *1
Other assets *2
Total- 139 -

As of March 31, 2024

(10)

(9)

2,277

1,604

420,743

458,445

423,009460,041

*1. Corporate assets are mainly assets for management by the headquarters that do not belong to thereportable segments.
*2. Assets allocated to segments are recoverable accounts included in property, plant and equipment,
intangible assets, and investments and other assets, whereas other assets are assets other than property,
plant and equipment, intangible assets, and recoverable accounts that are not allocated to segments.
3. Segment profit (loss) was adjusted to operating profit in the consolidated statement of income.

- 140 -

[Related information]
Fiscal year ended March 31, 2023 (April 1, 2022 – March 31, 2023)
1. Information by product or service(Millions of yen)
E&P Business

Natural gas Natural gas(overseas)(Japan)Crude oil
Net sales tooutside clients

Infrastructure/Utility Business

55,703360

LNG

97,360Electricity

51,572Others58,735

5,988

Other businesses
Contract
services

Oil products/
merchandise

7,750

56,573

Net sales tooutside clients

Total

Others2,447

336,492

2. Information by geographical area
(1) Net sales(Millions of yen)
Japan

US

303,009

Iraq
9,161

Others

24,299Total
21

336,492

Note: Net sales are classified into countries or regions based on the place where products, etc. were delivered andthe location where services were rendered.
(2) Property, plant and equipment(Millions of yen)
US

Japan
72,789UK
25,010

Others
20,611

Total–

118,411

3. Information by major client(Millions of yen)
Name of client

Net sales

TOHOKU NATURAL GAS Co., Inc.

38,133- 141 -

Related segment
JapanFiscal year ended March 31, 2024 (April 1, 2023 – March 31, 2024)
1. Information by product or service(Millions of yen)
E&P Business

Natural gas Natural gas(overseas)(Japan)Crude oil
Net sales tooutside clients

Infrastructure/Utility Business

87,8081,002

81,487

LNG

Electricity

30,190

Others53,272

7,197

Other businesses
Contract
services

Oil products/
merchandise

6,395

55,423

Net sales tooutside clients

Others
3,087

Total

325,863

2. Information by geographical area
(1) Net sales(Millions of yen)Japan
256,438

US

Iraq

30,607

Others36,207

Total

2,609

325,863

Note: Net sales are classified into countries or regions based on the place where products, etc. were delivered andthe location where services were rendered.
(2) Property, plant and equipment(Millions of yen)Japan
70,404

USUK
77,698Others28,197

Total
0176,300

3. Information by major client
The information is omitted because there are no sales to external customers that account for 10% or more of the net
sales in the consolidated statement of income.
[Information on impairment losses on non-current assets by reportable segment]
Not applicable.
[Information on amortization and unamortized balance of goodwill by reportable segment]
Not applicable.
[Information on gain on bargain purchase by reportable segment]
Not applicable.

- 142 -

[Information on related parties]
1. Related party transactions
Transactions between the company submitting consolidated financial statements and related parties
Unconsolidated subsidiaries and associates of the company submitting consolidated financial statements
Fiscal year ended March 31, 2023 (April 1, 2022 – March 31, 2023)
Type

Names ofcompany, etc.

Location

Associate

TOHOKU
NATURALGAS Co.,Inc.

Aoba-ku,
SendaiCity,
Miyagi

Associate

Fukushima
Gas PowerCo., Ltd.

Chiyodaku, Tokyo

Share capital
Balance at
JAPEX’s stakeTransaction
end ofor capital Description and percentage Relationship Description ofamount Account title
withrelatedperiodcontribution of business of voting rights
transaction(Millions of yen)
party(Millions of yen)
(Millions of yen)held (%)

300

537

Purchase andSale of naturalsale of(Ownership)
Sale of naturalgas
natural gas in DirectgasInterlocking
45.00
the Tohoku(Note (1))
officers
regionOutsourcing Redemption ofof powercorporate
Operation
generationbonds
and contract
operations(Note (2))
work ofContract work
(Ownership)
powerof LNG
generation Direct
regasification
33.30
business
Pledge ofoperations
using acollateral
Pledge ofnatural gas(Note (3))
collateral
power plant
Interlocking
officers

37,915

Accounts
receivable trade

4,277

636

Investment
securities

4,459

32,788––

Note: Terms and conditions of transactions and policies on determination thereof, etc.
(1) Prices for sale of natural gas to TOHOKU NATURAL GAS Co., Inc. are determined considering the market price.
(2) JAPEX underwrote corporate bonds issued by FGP and determined the interest rate of the corporate bonds
reasonably in consideration of market interest rates. The balance as of the end of the period is the amount used forthe consolidated balance sheet, and it reflects a deduction of ¥1,272 million due to the application of the equity
method.
(3) JAPEX provides FGP with certificates of FGP shares and corporate bonds held by JAPEX as collateral for its
borrowings from financial institutions. The transaction amount is the balance of borrowings corresponding toassets pledged as collateral as of the end of the period.
Fiscal year ended March 31, 2024 (April 1, 2023 – March 31, 2024)
Names ofcompany, etc.

Type

Associate

Fukushima
Gas PowerCo., Ltd.

Location

Chiyodaku, Tokyo

Share capital
Transaction
Balance at
JAPEX’s stakeend ofor capital Description and percentage Relationship Description of amountwithrelatedAccount
title
periodcontribution of business of voting rights
transaction (Millions of
party(Millions of yen)
(Millions of yen)held (%)
yen)

537

Outsourcingof power
Operation
generationand contract
operations
work ofContract work
(Ownership)
powerof LNG
generation Direct
regasification
33.30
business
operations
using aPledge ofnatural gas
collateral
power plant
Interlocking
officers

Pledge ofcollateral(Note)

30,374––

Note: Terms and conditions of transactions and policies on determination thereof, etc.
JAPEX provides FGP with certificates of FGP shares and corporate bonds held by JAPEX as collateral for its
borrowings from financial institutions. The transaction amount is the balance of borrowings corresponding to assets
pledged as collateral as of the end of the period.
2. Notes to parent company or material associates(1) Information on parent company
Not applicable.
(2) Summarized financial information on material associates
Not applicable for the fiscal year ended March 31, 2024.

- 143 -

(Per Share Information)
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

Net assets per share¥7,849.18¥9,532.46

Basic earnings per share¥1,236.65¥994.43

Notes: 1. Diluted earnings per share is not presented, since there is no dilutive share.
2. The shares of JAPEX held by the Board Benefit Trust (BBT) are included in the treasury shares that are deducted from thetotal number of issued shares at the fiscal year end when calculating net assets per share (71,100 shares in the fiscal year
ended March 31, 2023, and 62,600 shares in the fiscal year ended March 31, 2024).
Moreover, they are also included in the treasury shares that are deducted when calculating the average number of shares
during the period in order to calculate basic earnings per share (72,604 shares in the fiscal year ended March 31, 2023, and65,270 shares in the fiscal year ended March 31, 2024).
3. The basis for calculation of basic earnings per share is as follows:
Fiscal year ended
March 31, 2023

Fiscal year ended
March 31, 2024

67,39453,661––

Profit attributable to owners of parent related to common
stock (Millions of yen)

67,39453,661

Average number of shares during the period (Thousands ofshares)54,49753,961

Profit attributable to owners of parent (Millions of yen)Amounts not attributable to common shareholders (Millionsof yen)- 144 -

(Significant subsequent events)(Stock split and partial amendment to the Articles of Incorporation)
JAPEX resolved at the meeting of the Board of Directors held on May 14, 2024, to conduct a stock split and partially amend
its Articles of Incorporation in connection with this split.
1. Purpose of the stock split
The purpose of the stock split is to increase the liquidity of its shares and expand the investor base by reducing the priceper unit of investment.
2. Outline of the stock split(1) Method of the stock split
Each share of common stock owned by shareholders listed or recorded in the closing register of shareholders on therecord date of September 30, 2024, will be split into five shares.
(2) Number of shares to be increased by the stock split
Total number of issued shares before the stock split

54,300,076 shares

Number of shares to be increased by the stock split
217,200,304 shares
Total number of issued shares following the stock split
271,500,380 shares
Total number of authorized shares following the stock split
600,000,000 shares
Note: The total number of shares issued above is expected to change during the period up to the record date of thestock split due to the repurchase and cancellation of treasury shares.
(3) Schedule of the stock split
Public notice of record date
Record date
Effective date

September 13, 2024
September 30, 2024
October 1, 2024

(4) Effect on per share information
Per share information based on the assumption that the stock split was conducted at the beginning of the previous
fiscal year is as follows.
As of March 31, 2023
Net assets per share

As of March 31, 2024

¥1,569.84
Fiscal year ended
March 31, 2023

Basic earnings per share
Diluted earnings per share¥1,906.49
Fiscal year ended
March 31, 2024

¥247.33¥198.89––

3. Partial amendment to the JAPEX’s Articles of Incorporation in connection with the stock split(1) Purpose of the amendment
In connection with the stock split, an associated article of the Article of Incorporation will be amended effective
October 1, 2024, in accordance with Article 184, Paragraph 2 of the Companies Act.
(2) Details of the amendment
Details of the amendment are as follows:
Current Articles of Incorporation(Total Number of Issuable Shares)
Article 6.
The total number of the Company’s issuable sharesshall be one hundred and twenty million(120,000,000) shares.

- 145 -

(The underlined text is to be amended.)
Proposed Amendment(Total Number of Issuable Shares)
Article 6.
The total number of the Company’s issuable sharesshall be six hundred million (600,000,000) shares.

(3) Schedule of the amendment
Effective date

October 1, 2024

4. Other information(1) Change in the amount of stated capital
There will be no change in the amount of stated capital as a result of the stock split.
(2) Dividends
As the stock split takes effect on October 1, 2024, the year-end dividend for the year ended March 31, 2024, with arecord date of March 31, 2024, and the interim dividend for the year ending March 31, 2025, with a record date of
September 30, 2024, will be paid based on the total number of issued shares before the stock split.
(Acquisition of an equity interest by a consolidated subsidiary)
JAPEX resolved at the meeting of the Board of Directors held on May 30, 2024, to acquire an equity interest in Gulf CoastLNG Holdings LLC (hereinafter “GCLH”), a sub-subsidiary of JERA Co., Inc., through its consolidated subsidiary, JAPEX(U.S.) Corp. (hereinafter “JUS”), and subsequently acquired the equity interest on June 10, 2024.
As a result of this transaction, GCLH has become an entity accounted for using the equity method.
1. Purpose of the acquisition of equity interest
In the “JAPEX Management Plan 2022–2030” formulated in March 2022, JAPEX has set the expansion of profits in the
Infrastructure/Utilities (I/U) field as one of priority goals in order to establish a profit structure that is less susceptible tochanges in the external environment, such as oil price fluctuations. As part of this effort, JAPEX has been studying thepossibility of entering into overseas liquefied natural gas (hereinafter “LNG”) supply infrastructure projects.
The “Freeport LNG Project” liquefies natural gas procured from the U.S. gas market at the LNG production facilities
near Freeport, Texas, United States, and exports it outside the United States (hereinafter, the “project”). Through JAPEX’s
participation in the project, JAPEX intends to secure long-term stable cash flow in the United States, where country risk
is low, and to further expand our earnings through future facility expansion.
2. Name of the company from which the equity interest was transferred
JERA Americas Inc.
3. Overview of the company in which JAPEX acquired the equity interest(1) Name:
Gulf Coast LNG Holdings LLC(2) Location:
Texas, United States(3) Description of business: Ownership of interests in the operating company of the project, Freeport LNG
Development, L.P.
4. Acquisition cost and equity ratio after the acquisition(1) Acquisition cost:
US$379 million(2) Equity ratio after the acquisition: 15%- 146 -

(Business combination through acquisition)
JAPEX resolved at the meeting of the Executive Committee held on June 14, 2024, to acquire all shares of Longboat JAPEX
Norge AS (hereinafter “LJN”), an equity-method associate of JAPEX, held by Longboat Energy plc (hereinafter “LBE”)
and make LJN a subsidiary of JAPEX, and concluded a share purchase agreement as of the same date. The completion of
the share acquisition is subject to, among other conditions, the completion of transfer procedures of debt guarantees
provided by LBE to JAPEX and approval by the Norwegian government.
1. Outline of the business combination(1) Name of the controlled company and its business description
Name:
Longboat JAPEX Norge AS
Business description: Exploration, development and production of petroleum resources offshore Norway(2) Reason for the share acquisition
JAPEX places the acquisition of new oil and natural overseas gas interests as one of the priority items in the “JAPEXManagement Plan 2022–2030” formulated in March 2022, and has positioned the North Sea as one of its main target
areas. Based on this policy, in July 2023, JAPEX acquired shares in LJN to lay the foundation for its businessexpansion in Norway. LJN is currently engaged in exploration and development in multiple oil and natural gas
licenses in the Norwegian North Sea. In addition, the acquisition of interests in production assets was completed in
January 2024, and crude oil and natural gas production from the assets has begun in the Norwegian business.
Following the change in the management of LBE in May 2024, there has been a reconsideration of the Norwegianbusiness policy, and as a result of discussions with LBE regarding the future management policy for LJN, JAPEX
has decided to expand its Norwegian business by making LJN a subsidiary.
(3) Date of the business combination
Second quarter of the fiscal year ending March 31, 2025 (scheduled)(4) Legal form of the business combination
Acquisition of shares in consideration for cash(5) Name of the company after the business combination
To be determined(6) Percentage of voting rights held after the acquisition
Percentage of voting rights held immediately before the business combination: 49.9%
Percentage of voting rights to be additionally acquired:
50.1%
Percentage of voting rights held after the acquisition:
100.0%
2. Acquisition cost of the acquired company and breakdown by type of consideration
Consideration for shares to be additionally acquired: US$2.5 million in cash

- 147 -

5) Annexed Consolidated Detailed Schedules
Schedule of corporate bonds
Not applicable.
Schedule of borrowings, etc.
Balance at
beginning of
periodAverage
Balanceat end of period interest rate

Borrowing period

–

–

–

–

Current portion of long-term borrowings

260

250

0.45

–

Current portion of lease obligations

243

262

5.12

–

Long-term borrowings, less current portion

250

–

–

–

1,449

1,324

5.12

2025 to 2033

–

–

–

–

2,203

1,836

–

–

Category(Millions of yen)

Short-term borrowings

Lease obligations, less current portion
Other interest-bearing debt
Total

(Millions of yen)(%)

Notes: 1. “Average interest rate” indicates the weighted average interest rate on the balance of borrowings at the end of the period.
2. The average interest rate is not presented for lease obligations that are recorded on the consolidated balance sheets at theamount before deduction of the amount equivalent to interest included in the aggregate lease payments, but is presented only
for those accounted for using the principle method.
3. The scheduled repayment amount of lease obligations (excluding current portion) for five years after the consolidated balance
sheet date are as follows.
Due after one year throughDue after two years
Due after three years
Due after four years
two years
through three years
through four years
through five years(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
Lease obligations

252

241

211

191

Schedule of assets retirement obligations
Balance at beginning
Increase during period Decrease during periodof period
Category(Millions of yen)
(Millions of yen)
(Millions of yen)
Under the Petroleum andInflammable Natural Gas Resources
Development Law
Under the provisions of local laws
and contracts with regard to oil andnatural gas production facilities
overseas

Balance at end of
period(Millions of yen)

9,738

1,465

–

11,203

1,151

1,545

158

2,538

7,030

1,807

–

8,837

2,123

3

19

2,107

20,043

4,822

177

24,687

Under the Act on Prevention ofMarine Pollution and Maritime
Disaster
Under the provision of land lease
contracts and otherTotal- 148 -

(2) Other
Quarterly information for the fiscal year ended March 31, 2024
(Quarterly cumulative period)First three months

First six months

First nine months

Fiscal year
under review

Net sales (Millions of yen)

61,321

150,708

229,938

325,863

Profit before income taxes(Millions of yen)

18,20939,121

48,141

68,784

Profit attributable to owners of parent(Millions of yen)

12,99927,77036,51553,661

Basic earnings per share (Yen)239.73512.09673.93994.43(Fiscal period)
Basic earnings per share (Yen)First quarter

Second quarter

239.73272.36- 149 -

Third quarter
161.68Fourth quarter
321.72

2. Non-consolidated Financial Statements, etc.
(1) Non-consolidated Financial Statements
1) Balance sheet(Millions of yen)
As of March 31, 2023
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Investments in leases
Merchandise and finished goods
Raw materials and supplies
Advance payments to suppliers
Prepaid expenses
Accrued revenue
Accounts receivable - other
Advances paid
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Structures
Wells
Machinery and equipment
Vessels
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress
Wells in progress
Total property, plant and equipment
Intangible assets
Leasehold interests in land
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable from subsidiaries
and associates
Long-term prepaid expenses
Prepaid pension costs
Other
Allowance for doubtful accounts
Allowance for overseas investment loss
Total investments and other assets
Total non-current assets
Total assets

132,041*433,348–
2,093
19,697321765*430*410,796*4502*42,045
201,641

9,049

97,659*419,187

2
2,433
17,913
–
1,143
*4248
*45,150*4610*45,045
149,393

8,618*124,233*121,892*116,978*114,118

151
516
191
859

143
534
150
828

*292,996*2156,217

7,944

46,7272,541
299*413,458(19)(7,920)224,347
291,075
492,7162,506
527*415,032(19)(2,715)339,812403,516
552,910576

0
0*11,596
9,466
76
514
3,376
65,868*2115,047- 150 -

As of March 31, 2024

4,871

0
0
*11,439
9,464
79
406
1,984
62,875*2121,537

(Millions of yen)
As of March 31, 2023
Liabilities
Current liabilities
Accounts payable - trade
Lease liabilities
Accounts payable - otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Deposits received from subsidiaries and associates
Provision for bonuses for directors (and otherofficers)
Provision for loss on disaster
Other
Total current liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Provision for retirement benefits
Provision for share awards
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for overseas investment loss
Reserve for mine prospecting
Reserve for tax purpose reduction entry of
non-current assets
Reserve for exploration
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

As of March 31, 2024

*419,959

199*412,945*47,058
6,959–
158
27,955- 151 -

*43,182

202*45,103*49,489

1,561
3
164
27,573

62

61

2,119
92
77,509*4431

47,944

1,320
14,5531,847
70
15,300591
33,683111,193

1,171
34,876
1,766
73
17,610256
55,754
103,699

14,28814,288

3,572

3,572

211
21,400–22,400492

467

47,246
121,600
127,248
321,771(136)
335,923

47,246
121,600
154,625
349,911(8,094)356,105

46,32084,679(721)
45,599381,522492,716

8,425
93,105449,211552,910169

2) Statement of income(Millions of yen)
Fiscal year ended
March 31, 2023
Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Reversal of allowance for overseas investment loss
Foreign exchange gains
Gain on derivatives
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on valuation of shares of subsidiaries andassociates
Provision for overseas investment loss
Administrative expenses of inactive oil and gas field
Provision for loss on disaster
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitFiscal year ended
March 31, 2024

*1233,160*1150,165

82,994

63,388*13,230*13,934*1, *224,390*1, *223,106

55,37336,347*1405*11,685*17,201*112,350

*116

*1640

10

1,147

1,387
49
1,509
*11,100
4,074
67,169

–
827
49
*1811
3,476
54,808

0
0

0
0

19
–
19
67,149
7,003
1,376
8,379
58,76917
0
18
54,790
5,688
2,229
7,917
46,872

–
1,746
6,082
*1434
15,871- 152 -

*1190,114*1126,726

3,761
2,885
–
*11,254
21,936

3) Statement of Changes in Equity
Fiscal year ended March 31, 2023 (April 1, 2022 – March 31, 2023)(Millions of yen)
Shareholders’ equity
Retained earnings

Capital surplus

Other retained earnings

SharecapitalBalance at beginningof period
Changes during period
Reversal of reservefor overseas
investment loss
Provision of reserve
for mine prospecting
Reversal of reserve
for mine prospecting
Reversal of reserve
for tax purpose
reduction entry of
non-current assets
Reversal of generalreserve

14,288Other capitalsurplus

Legal retained
earnings

Reserve foroverseas
investment
loss

Reserve formine
prospecting

Reserve fortax purpose
reduction
entry of noncurrent assets

Reserve for
exploration

Generalreserve

–

3,572

834

18,419518

47,246

171,600

Retainedearnings
brought
forwardTotal
retainedearnings

38,353

280,543

622

–

5,300

(5,300)–(2,319)

2,319

–

25

–

50,000

–

(622)

(25)
(50,000)

Dividends of surplus(9,537)(9,537)

ProfitPurchase of treasury
shares
Disposal of treasury
sharesCancellation oftreasury shares
Transfer fromretained earnings tocapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of
period58,76958,769––(8,004)8,004(8,004)(8,004)

–

–

–

(622)

2,980

(25)

－

(50,000)

88,894

41,227

14,288

–

3,572

211

21,400492

47,246

121,600

127,248

321,771

Shareholders’ equity
TreasurysharesBalance at beginning of
periodChanges during period
Reversal of reservefor overseas
investment loss
Provision of reserve
for mine prospecting
Reversal of reserve
for mine prospecting
Reversal of reserve
for tax purpose
reduction entry of
non-current assets
Reversal of generalreserve–(3,886)

Valuation and translation adjustments

Totalshareholders’equityValuationdifference on
available-forsale securities

290,945

48,340

Deferred
gains orlosses onhedges(1,413)

Totalvaluation andtranslation
adjustments

Total net
assets

46,927

337,872

–

–

–

–

–

–

–

–

–

–

Dividends of surplus(9,537)(9,537)

ProfitPurchase of treasury
shares
Disposal of treasury
shares

58,76958,769(4,263)(4,263)(4,263)88

8- 153 -

Cancellation oftreasury shares
Transfer fromretained earnings tocapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of
period

8,004

–

–

–

–
(2,019)691(1,327)(1,327)

3,749

44,977(2,019)691(1,327)43,650(136)

335,923

46,320(721)

45,599381,522- 154 -

Fiscal year ended March 31, 2024 (April 1, 2023 – March 31, 2024)(Millions of yen)
Shareholders’ equity
Retained earnings

Capital surplus

Other retained earnings
SharecapitalBalance at beginningof period
Changes during period
Reversal of reservefor overseas
investment loss
Provision of reserve
for mine prospecting
Reversal of reserve
for mine prospecting
Reversal of reserve
for tax purpose
reduction entry of
non-current assets
Reversal of generalreserve

14,288Other capitalsurplus

Legal retained
earnings

Reserve foroverseas
investment
loss

Reserve formine
prospecting

Reserve fortax purpose
reduction
entry of noncurrent assets

Reserve for
exploration

Generalreserve

Retainedearnings
brought
forward

–

3,572

211

21,400492

47,246

121,600

127,248

321,771

211

–

4,500

(4,500)–(3,500)

3,500

–

25

–

(211)

(25)

Total
retainedearnings–

Dividends of surplus(18,732)(18,732)

ProfitPurchase of treasury
shares
Disposal of treasury
sharesCancellation oftreasury shares
Transfer fromretained earnings tocapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of
period46,872

46,872
–
–
–
–

–

–

–

(211)

1,000

(25)

–

–

27,37728,14014,288

–

3,572

–

22,400467

47,246

121,600

154,625

349,911

Shareholders’ equity
TreasurysharesBalance at beginning of
periodChanges during period
Reversal of reservefor overseas
investment loss
Provision of reserve
for mine prospecting
Reversal of reserve
for mine prospecting
Reversal of reserve
for tax purpose
reduction entry of
non-current assets
Reversal of generalreserve(136)

Dividends of surplus
ProfitPurchase of treasury
shares
Disposal of treasury
sharesCancellation oftreasury shares

Valuation and translation adjustments

Totalshareholders’equityValuationdifference on
available-forsale securities

335,923

46,320

Deferred
gains orlosses onhedges

(721)

Total
valuation andtranslation
adjustments

Total net
assets45,599381,522

–

–

–

–

–

–

–

–

–

–

(18,732)(18,732)

46,872

46,872(7,973)(7,973)(7,973)

15

15

15

–

–

- 155 -

Transfer fromretained earnings tocapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of
period––38,3599,146

47,50647,506(7,957)

20,18238,3599,146

47,506

67,688(8,094)356,105

84,6798,425

93,105449,211- 156 -

Notes to non-consolidated financial statements(Significant accounting policies)
1. Accounting policy for measuring assets(1) Securities
・Held-to-maturity debt securities

Stated at amortized cost・Shares of subsidiaries and associates

Stated at cost using the moving average method

・Available-for-sale securities
Available-for-sale securities other than shares, Stated at fair value based primarily on market price at theetc. without market pricefiscal year-end. Unrealized gains or losses are recognizeddirectly in net assets and the cost of securities sold isdetermined using the moving-average method.

Shares, etc. without market priceStated at cost using the moving average method
Investments in limited investment partnerships and silent
partnerships are recorded by adding or subtracting the amountof equity interest in the net assets of the partnerships to/from“investment securities.”(2) Derivatives

Stated at fair value.

(3) Inventories

Stated at cost (a method in which carrying amount is written
down based on any decline in profitability).

・Merchandise and finished goods

Stated by the first-in, first-out method.

・Raw materials and supplies

Stated by the moving average method.

2. Accounting policy for depreciation/amortization of non-current assets
Sendai gas pipelines, Shiroishi-Koriyama gas pipelines,(1) Property, plant and equipment(excluding leased assets)

Soma-Iwanuma gas pipelines, assets of the Hokkaido
District Office and Soma District Office, and buildings(excluding attached facilities) acquired on or after April 1,
1998, are depreciated by the straight-line method. Other
assets are depreciated by the declining-balance method.
The principal useful lives are summarized as follows:
Buildings: 2 to 50 years
Structures: 2 to 60 years
Wells: 3 years
Machinery and equipment: 2 to 17 years(2) Intangible assets (excluding leased assets)

Amortized by the straight-line method. Capitalized computer
software costs are amortized by the straight-line method
over a period of 5 years, which is the period available forinternal use.

(3) Leased assets

Finance leases which do not transfer ownership of the leased
assets to the lessee
Leased assets are depreciated by the straight-line method
over the lease terms with no residual value.

3. Accounting policies for provisions(1) Allowance for doubtful accounts

To provide for potential credit losses on receivables, theallowance for doubtful accounts is recorded at the amountdetermined based on the historical experience of bad debt
with respect to ordinary receivables, plus an estimate of
uncollectible amounts determined by reference to specificdoubtful receivables from customers which are experiencing
financial difficulties.

- 157 -

(2) Provision for bonuses for directors (and otherTo provide for the payment of bonuses to directors and otherofficers)

officers, the provision for bonuses for directors (and otherofficers) is recorded at the estimated amount of payment at
the end of the fiscal year under review.

(3) Provision for retirement benefits

To provide for the payment of retirement benefits toemployees, etc., the provision for retirement benefits isrecorded at the estimated amount of retirement benefit
obligations and plan assets at the end of the fiscal year underreview.
In calculating retirement benefit obligations, JAPEX uses thebenefit formula basis to attribute expected retirement
benefits to periods up to the end of the fiscal year underreview.
Prior service costs are amortized as incurred by the straightline method over a certain period (10 years), which is shorter
than the average remaining service years of the employees.
Actuarial gains and losses are amortized in the following
year in which the gains or losses are recognized by thestraight-line method over a certain period (10 years), whichis shorter than the average remaining service years of theemployees.

(4) Allowance for overseas investment loss

The allowance for overseas investment loss is recorded at
the amount determined based on the investees’ financial
position and other relevant factors for possible losses arisingfrom investments in the exploration and development ofoverseas natural resources.

(5) Provision for share awards

To provide for the payment of JAPEX’s shares, etc. todirectors (excluding outside directors) and executive officers
who do not concurrently serve as directors, the provision forshare award is recorded at the estimated amount of shareawards at the end of the fiscal year under review, in
accordance with the Rules on Provision of Shares to
Officers.

(6) Provision for loss on disaster

The provision for loss on disaster is recorded at theestimated amount of payment for restoration expenses
accompanying disasters.

4. Accounting policies for revenues and expenses
JAPEX conducts the “E&P Business,” the “Infrastructure/Utility Business,” and “Other businesses” at businesslocations in Japan.
With regard to revenues from contracts with clients of JAPEX, the main performance obligations in key businesses
and the timing at which these obligations are typically satisfied (i.e., when revenues are typically recognized) are as
follows.
(1) E&P BusinessIn the E&P Business, exploration, development, production, and sales of crude oil and natural gas are conducted atbusiness locations in Japan. It is determined that in these sales, legal ownership and physical possession of assets,
as well as significant risks and economic rewards associated with ownership of assets, are transferred, and the rightto receive consideration for delivered products is obtained, at the time the products are delivered to clients. Thus,
revenue is recognized at that time.
(2) Infrastructure/Utility BusinessIn the Infrastructure/Utility Business, sales of gases (natural gas and LNG) and electricity are conducted at business- 158 -

locations in Japan. It is determined that in these sales, legal ownership and physical possession of assets, as well as
significant risks and economic rewards associated with ownership of assets, are transferred, and the right to receive
consideration for delivered products is obtained, at the time the products are delivered to clients. Thus, revenue isrecognized at that time.
(3) Other businesses
In the Other businesses, contract services (drilling, etc.) and sales of oil products, etc. are conducted at businesslocations in Japan. As for contract services, when control over goods or services is transferred to clients over acertain period of time, revenue is recognized according to progress in the satisfaction of performance obligations.
For measurement of progress, the input approach based on incurred costs is used. It is determined that in sales ofoil products, etc., legal ownership and physical possession of assets, as well as significant risks and economic
rewards associated with ownership of assets, are transferred, and the right to receive consideration for delivered
products is obtained, at the time the products are delivered to clients. Thus, revenue is recognized at that time.
For all businesses, in assessing performance obligations, it is examined whether JAPEX acts as a principal or an agent.
If the nature of its promise is a performance obligation to provide the specified goods or services itself, as a principal
it presents revenue at the gross amount of consideration in its statement of income. If the nature is a performanceobligation to make arrangements so that these goods or services are provided by other parties, as an agent it presents
revenue at the amount of commissions or fees, or the net amount of consideration, in its statement of income.
Revenue is recognized based on the transaction price under contracts with clients. If a contract contains multiple
performance obligations, the transaction price is allocated to each performance obligation at a ratio of standalone
selling price. Since consideration for transactions is usually paid within one year after the satisfaction of performanceobligations, such consideration does not include any significant financing component.
5. Accounting policy for translating foreign currency-denominated assets and liabilities into yen
Monetary receivables and payables denominated in foreign currencies are translated into yen at the spot exchange rateon the balance sheet date, and the resulting translation adjustments are presented as foreign exchange gains or losses.
6. Hedge accounting(1) Hedge accounting method

Deferral hedge accounting is adopted for hedge transactions.
Foreign exchange forward contracts are accounted for using
the allocation method if they meet certain criteria.

(2) Hedging instruments and hedged items

Hedging instruments: Foreign exchange forward contracts and
LNG swaps
Hedged items: Accounts payable – trade and proceeds from saleof LNG(3) Hedging policy

To avoid future foreign currency fluctuation risk associatedwith foreign currency transactions, etc., JAPEX enters into
hedge transactions only in connection with the relevant
assets, liabilities and forecast transactions.

(4) Method of assessing the effectiveness of hedges

JAPEX assesses whether the critical terms of the hedging
instruments and hedged items are closely aligned, and thehedge transactions are effective in offsetting the pricefluctuation, etc. at the inception of the hedge and on an
ongoing basis. Forward exchange contracts accounted forusing the allocation method are not subject to the assessmentof hedge effectiveness.

- 159 -

(Significant accounting estimates)
Recoverability of deferred tax assets(1) Amounts recorded in the non-consolidated financial statements for the fiscal years ended March 31, 2023 and 2024
(Millions of yen)
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2024

11,788

9,959

Deferred tax assets
Note: The amount is before netting out with deferred tax liabilities.

(2) Information about significant accounting estimates on identified items
The method of calculating the amount in (1) is the same as that described in “Notes to consolidated financial
statements, (Significant accounting estimates), Recoverability of deferred tax assets.”(Changes in accounting estimates)
Changes in asset retirement obligations estimates
Regarding the asset retirement obligations recorded as expenses pertaining to the future withdrawal of offshore platform
and well abandonment in domestic oil and gas fields (hereinafter “expenses pertaining to the withdrawal, etc.”), the estimateof the expenses pertaining to the withdrawal, etc. required at the end of the projects was changed as a result of obtaining
new information regarding the expenses pertaining to the withdrawal, etc. The amount increase of ¥2,028 million due to theestimate change was added to the asset retirement obligations balance before the change.
Furthermore, due to said changes in the estimate, operating profit for the fiscal year ended March 31, 2024 decreased by¥1,277 million, and ordinary profit and profit before income taxes both decreased by ¥1,991 million.
(Additional information)
Share-based compensation planThis information is not presented as the same information is disclosed in the “Notes to consolidated financial statements(Additional information).”- 160 -

(Balance sheet)*1. For assets acquired in previous years, the amount of reduction entry due to receipt of a government subsidy is ¥5,000
million. The balance sheet amount is stated net of this amount. The following table summarizes the amount of suchaccumulated reduction entry of property, plant and equipment.
(Millions of yen)
As of March 31, 2023
Structures

As of March 31, 2024
42

42Machinery and equipment

4,759

4,759

Tools, furniture and fixtures

198

198

*2. The following assets were pledged as collateral for borrowings of subsidiaries and associates.
(Millions of yen)
As of March 31, 2023
Investment securities
Shares of subsidiaries and associates

As of March 31, 2024

5,732
605

5,413
602

3. Liabilities for guarantees
JAPEX provides guarantees for borrowings and other obligations from financial institutions to the following subsidiaries
and associates.
(Millions of yen)
As of March 31, 2023

As of March 31, 2024

Abashiri Biomass Power 2 LLC.

2,218

Abashiri Biomass Power 3 LLC.

1,964

Abashiri Biomass Power 3 LLC.

2,107

Abashiri Biomass Power 2 LLC.

1,845

Ozu Biomass Power Co., Ltd.

412

Kumamoto Mirai LNG Co., Ltd.

19

Kumamoto Mirai LNG Co., Ltd.
Employees (borrowings for housing funds)

25
16

Employees (borrowings for housing funds)

11

Total

4,781

Total

3,840

*4. Monetary receivables from and payables to subsidiaries and associates (excluding those presented separately)(Millions of yen)
As of March 31, 2023
Short-term receivables
Long-term receivables
Short-term payables
Long-term payables

6,016
130
2,520
–

As of March 31, 2024
12,043130
3,416–

5. JAPEX has entered into overdraft agreements and loan commitment agreements with four banks to facilitate efficient
procurement of working capital. The unused balances of these agreements as of March 31, 2023 and 2024 are as follows:(Millions of yen)
As of March 31, 2023

As of March 31, 2024

Total overdraft limit and commitment line
Executed borrowings

86,129–88,811–

Unused balance

86,12988,811- 161 -

(Statement of income)*1. Transactions with subsidiaries and associates(Millions of yen)
Fiscal year ended March 31, 2023 Fiscal year ended March 31, 2024
Volume of operating transactions
Net sales

45,962

39,721

Purchases

15,584

14,838Volume of other transactions

4,075

10,009*2. Selling expenses for the fiscal years ended March 31, 2023 and 2024 roughly account for 56% and 46% of SG&A
expenses, respectively, while general and administrative expenses for 44% and 54%, respectively.
Below is a breakdown of major expense items and amount of selling, general and administrative expenses:(Millions of yen)
Fiscal year ended March 31, 2023 Fiscal year ended March 31, 2024
Compensation for directors and other officers

377

371

Salaries for employees, etc.

6,859

7,329

Retirement benefit expenses

370

379

Freight costs

2,547

1,781

Cost of outsourcing construction work

3,305

3,789

Depreciation

3,435

2,683

(Securities)
Shares of subsidiaries and associates
Fiscal year ended March 31, 2023
With regard to the shares of subsidiaries and associates (balance sheet amounts are ¥95,627 million and ¥19,419
million, respectively), JAPEX does not disclose their fair value because of the lack of quoted market prices.
Fiscal year ended March 31, 2024
With regard to the shares of subsidiaries and associates (balance sheet amounts are ¥99,056 million and ¥22,480
million, respectively), JAPEX does not disclose their fair value because of the lack of quoted market prices.

- 162 -(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities(Millions of yen)
As of March 31, 2023

As of March 31, 2024

Deferred tax assets
Allowance for overseas investment loss

2,217

760

Net tax loss carried forward

29,061

23,193

Provision for retirement benefits

517

558

Depreciation on non-current asset
Investment securities and shares of subsidiaries andassociates

4,573

3,914

565

234

Asset retirement obligations

4,326

4,976

Impairment losses on non-current assets

2,021

2,023

4

–

3,942

2,814

47,23038,475(25,452)(19,199)(35,441)
11,788(28,515)(7,980)(8,397)
–

(191)

(181)

Tax credit carried forward
Other
Subtotal deferred tax assets
Valuation allowance for net tax loss carried forward
Valuation allowance for total of deductible temporary
differences
Total valuation allowance
Total deferred tax assets
Deferred tax liabilities
Reserve for mine prospecting
Reserve for overseas investment loss
Reserve for tax purpose reduction entry of non-current
assetsValuation difference on available-for-sale securities
Deferred gains or losses on hedges(9,989)(82)(32,715)(26,341)(44,836)(189)

Total deferred tax liabilities
Deferred tax liabilities, net(14,553)(Changes in presentation)

9,959(17,800)
(97)

Other

(9,315)(3,276)(265)(34,876)“Deferred gains or losses on hedges,” which were included in “Other” under deferred tax liabilities in the previous fiscal
year, are separately presented in the fiscal year under review because of the increased quantitative significance. To reflect
this change in presentation, the note for the previous fiscal year has been reclassified.
Accordingly, “Other” totaling ¥(287) million presented under deferred tax liabilities for the previous fiscal year has been
reclassified as “Deferred gains or losses on hedges” of ¥(97) million and “Other” of ¥(189) million.

- 163 -

2. Reconciliation of the effective tax rates reflected in the consolidated statement of income and the effective statutory tax
rates
(%)

Effective statutory tax rate
(Adjustments)
Income not taxable for income tax purposes (e.g., dividend
income)Expenses not deductible for income tax purposes (e.g.,entertainment expenses)

As of March 31, 2023

As of March 31, 2024

28.0

28.0

(1.8)

(3.6)

0.5

Change in valuation allowance

22.4

Taking over tax losses carried forward from liquidation ofsubsidiaries(40.3)

1.3(12.1)–Tax credit
Taxable temporary differences relating to shares ofsubsidiaries and others

3.4
0.0

(0.6)

Other

0.3

0.2

12.5

14.5

Actual effective tax rate after applying tax effect accounting

1.3(Changes in presentation)“Taxable temporary differences relating to shares of subsidiaries and others,” which were included in “Other” in the previous
fiscal year, are separately presented in the fiscal year under review because of the increased significance. To reflect thischange in presentation, the note for the previous fiscal year has been reclassified.
Accordingly, 0.3% presented in “Other” for the previous fiscal year has been reclassified as “Taxable temporary differences
relating to shares of subsidiaries and others” of 0.0% and “Other” of 0.3%.
(Revenue recognition)
Information that provides the basis for understanding revenue from contracts with clients is as presented in “Notes(Significant accounting policies), 4. Accounting policies for revenues and expenses” in the financial statements.

- 164 -

(Significant subsequent events)(Stock split and partial amendment to the Articles of Incorporation)
JAPEX resolved at the meeting of the Board of Directors held on May 14, 2024, to conduct a stock split and partially amend
its Articles of Incorporation in connection with this split. As the same information is disclosed in detail in the “Notes toconsolidated financial statements (Significant subsequent events),” only the effect of the stock split on per share information
is presented below.
Effect on per share information
Per share information based on the assumption that the stock split was conducted at the beginning of the previous fiscal
year is as follows.
As of March 31, 2023
Net assets per share

As of March 31, 2024

¥1,407.15
Fiscal year ended
March 31, 2023

Basic earnings per share
Diluted earnings per share¥1,699.57
Fiscal year ended
March 31, 2024

¥215.68¥173.73––(Business combination through acquisition)
JAPEX resolved at the meeting of the Executive Committee held on June 14, 2024, to acquire all shares of Longboat JAPEX
Norge AS, an associate of JAPEX, and make the company a subsidiary of JAPEX. For details, the same information isdisclosed in the “Notes to consolidated financial statements (Significant subsequent events).”- 165 -

4) Annexed Detailed Schedules
Schedule of total property, plant and equipment(Millions of yen)

Additions

Deductions

Depreciation

Buildings

9,049

67

2

495

8,618

14,793Structures

24,233

197

0

2,537

21,892

128,059

576

5,718

0

1,422

4,871

66,26916,978

1,893

7

4,746

14,118102,714

Vessels

0

–

–

–

0

24

Vehicles

0

–

–

0

0

16

Tools, furniture and fixtures

1,596

285

7

434

1,439

10,498

Land

9,466

0

2

–

9,464

–

Leased assets

76

21

–

18

79

3,552

Construction in progress

514

6,266

6,374

–

406

–

Wells in progress

3,376

2,750

4,142

–

1,984

–

Total

65,86817,20010,536

9,656

62,875

325,929

Leasehold interests in land

151

–

7

–

143

–

Software

516

220

1

201

534

532

Other

191

214

241

14

150

97

859

435

250

215

828

629

Category

Balance at
beginning of
periodType of assets

Wells
Property, plant and equipment

Machinery and equipment

Intangible assets

Total

Note: Major components of increase during period are as follows:
Wells: Drilling of a production well at the Katakai gas field

Balance at Accumulatedend of period depreciation¥4,085 million

Schedule of allowances and provisions
Account title

Balance at beginning
Increase during period Decrease during periodof period(Millions of yen)
Balance at end of
periodAllowance for doubtful
accounts

19

–

–

19

Allowance for overseas
investment loss

7,920

1,045

6,250

2,715

Provision for bonuses for
directors (and other officers)

62

61

62

61

Provision for loss on disaster

2,119

67

2,017

169

Provision for share awards

70

36

32

73

- 166 -

(2) Components of major assets and liabilities
This information is not presented as JAPEX prepares the consolidated financial statements.
(3) Other
Not applicable.

- 167 -

Item 6. Outline of Share-related Administration of Reporting Company
Fiscal year

From April 1 to March 31

Ordinary General Meeting of Shareholders

June

Record date

March 31

Record date of dividends of surplus

September 30
March 31

Number of shares constituting one unit

100 shares

Purchase of shares of less than one unit

Handling officeTransfer agent(Special account)
Stock Transfer Agency Department, Head Office, Mizuho Trust & Banking
Co., Ltd.
1-3-3 Marunouchi, Chiyoda-ku, Tokyo, Japan(Special account)
Mizuho Trust & Banking Co., Ltd.
1-3-3 Marunouchi, Chiyoda-ku, Tokyo, Japan

Forwarding office
Purchase fee――――――
Amounts equivalent to fees determined by the share handling regulationsof JAPEX in relation to entrustment of the purchase and sale of securities

Method of public notice

Public notice shall be given electronically; provided, however, that in theevent that JAPEX is unable to give electronic public notice due to an
accident or other unavoidable reason, public notice shall be given by
publication in The Nihon Keizai Shimbun published in Tokyo.
JAPEX will give public notice on the following URL:
https://www.japex.co.jp/

Special benefits for shareholders

Not applicable.

Note:

Provisions regarding rights pertaining to shares of less than one unit
The Articles of Incorporation of JAPEX has the following provisions regarding rights pertaining to shares of less than one
unit:
Article 9 (Rights Pertaining to Shares of Less than One Unit (tangen)
Any Company shareholder holding less than one unit (tangen) shall be unable to exercise any rights other than those set out
below:
1. Rights stipulated in the items of Article 189, paragraph 2 of the Companies Act
2. Rights of pre-emption in respect of issues of shares or grants of share acquisition rights, in proportion to theirshareholdings.

- 168 -

Item 7. Reference Information of Reporting Company
1. Information about Parent of Reporting Company
JAPEX does not have any company or entity as its parent.

2. Other Reference Information
From the beginning of the fiscal year under review until the filing date of this Annual Securities Report, JAPEX has filed thefollowing documents:(1) Annual Securities Report, attached document thereof and Confirmation Letter
Filed for the 53rd term ended March 31, 2023 (from April 1, 2022 to March 31, 2023) with the Director-General of the Kanto
Local Finance Bureau on June 27, 2023.
(2) Internal Control Report and attached document thereof
Filed with the Director-General of the Kanto Local Finance Bureau on June 27, 2023.
(3) Quarterly Securities Reports and Confirmation Letter
Filed for the first quarter (from April 1 to June 30, 2023) of the 54th term ended March 31, 2024 with the Director-General of
the Kanto Local Finance Bureau on August 10, 2023.
Filed for the second quarter (from July 1 to September 30, 2023) of the 54th term ended March 31, 2024 with the DirectorGeneral of the Kanto Local Finance Bureau on November 10, 2023.
Filed for the third quarter (from October 1 to December 31, 2023) of the 54th term ended March 31, 2024 with the DirectorGeneral of the Kanto Local Finance Bureau on February 9, 2024.
(4) Extraordinary Reports
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 9-2 (Result of exercise of voting rights at a general
meeting of shareholders) of the Cabinet Office Ordinance on Disclosure of Corporate Affairs with the Director-General of the
Kanto Local Finance Bureau on July 3, 2023.
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 9 (Changes in representative directors) of the Cabinet
Office Ordinance on Disclosure of Corporate Affairs with the Director-General of the Kanto Local Finance Bureau on December
20, 2023.
(5) Share Buyback Reports
Filed for the reporting period from November 1 to November 30, 2023 with the Director-General of the Kanto Local Finance
Bureau on December 14, 2023.
Filed for the reporting period from December 1 to December 31, 2023 with the Director-General of the Kanto Local Finance
Bureau on January 12, 2024.
Filed for the reporting period from January 1 to January 31, 2024 with the Director-General of the Kanto Local Finance Bureau
on February 14, 2024.
Filed for the reporting period from February 1 to February 29, 2024 with the Director-General of the Kanto Local Finance
Bureau on March 14, 2024.
Filed for the reporting period from March 1 to March 31, 2024 with the Director-General of the Kanto Local Finance Bureau
on April 12, 2024.
Filed for the reporting period from April 1 to April 30, 2024 with the Director-General of the Kanto Local Finance Bureau on
May 14, 2024.
Filed for the reporting period from May 1 to May 31, 2024 with the Director-General of the Kanto Local Finance Bureau on
June 13, 2024.
(6) Amendment Report of the Annual Securities Report and Confirmation Letter
Filed for the 52nd term ended March 31, 2022 (from April 1, 2021 to March 31, 2022) with the Director-General of the Kanto
Local Finance Bureau on May 2, 2023.
Filed for the 53rd term ended March 31, 2023 (from April 1, 2022 to March 31, 2023) with the Director-General of the Kanto
Local Finance Bureau on August 10, 2023.

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Section 2 Information about Reporting Company’s Guarantor, etc.
Not applicable.

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Independent Auditor’s Report and Internal Control Audit Report

June 26, 2024

The Board of Directors
Japan Petroleum Exploration Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office
YUKAWA Yoshio
Designated and Engagement Partner
Certified Public Accountant

YAMAZAKI Kazuhiko
Designated and Engagement Partner
Certified Public Accountant

MORONUKI Kentaro
Designated and Engagement Partner
Certified Public Accountant<Audit of Consolidated Financial Statements>
OpinionPursuant to the provisions of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, we have audited the consolidated
financial statements of Japan Petroleum Exploration Co., Ltd. (the “Company”) provided in the Financial Information section in the
Company’s Annual Securities Report, namely, the consolidated balance sheet as of March 31, 2024, and the consolidated statement ofincome, consolidated statement of comprehensive income, consolidated statement of changes in equity, and consolidated statement ofcash flows for the fiscal year from April 1, 2023 to March 31, 2024, and the notes to significant accounting policies for preparation of
consolidated financial statements and other notes and the annexed consolidated detailed schedules.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of theCompany and its consolidated subsidiaries (collectively, the “Group”) as of March 31, 2024, and its consolidated financial performanceand cash flows for the fiscal year then ended in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Recoverability of Deferred Tax Assets
Key Audit Matters and the Reasoning

Auditor’s Response

As described in “Notes to consolidated financial statements,(Significant accounting estimates),” the Group recorded deferred
tax assets before offsetting deferred tax liabilities of ¥28,097
million as of March 31, 2024. Of the item above, the Company
submitting consolidated financial statements recorded deferred
tax assets of ¥9,959 million including ¥3,993 million recognized
for some part of net tax loss carried forward.
As a result of performing the scheduling of deductible temporary

For the purpose of considering the recoverability of deferred tax
assets of the Company, we examined the appropriateness of thecorporate judgments and reasonably estimable periods of futuretaxable income relating to corporate classifications based on the
Implementation Guidance on Recoverability of Deferred Tax
Assets (ASBJ Guidance No.26), including whether or not suchjudgements and periods satisfy the requirements of paragraph 29of the same Implementation Guidance. Since the reasons forhaving incurred significant net tax loss had been discussed inand before the previous fiscal year, we especially discussed thebusiness environment surrounding the Company with its
management and examined whether the Company could show
reasonable grounds that it would generate taxable income before
adding/deducting temporary differences for approximately three
to five years in the future.
Furthermore, to consider the appropriateness of the estimation of
taxable income for the following fiscal year, we discussed withmanagement the management environment and underlying
business plans, including the decarbonization trends, the effectsof economic sanctions adopted against Russia and the situationin the Middle East, and trends in the domestic economy. We
mainly performed the procedures below:– We compared the actual sales volumes with the estimatesformulated in the past to assess the effectiveness of theestimation processes determined by management.
– We considered the consistency between the estimates oftaxable income for the following fiscal year and the businessplans approved by management, and discussed withmanagement when there was a gap therebetween.
– We compared crude oil and natural gas prices, the basis ofselling prices, with estimated prices announced by external
research firms, and discussed with management the impact of
the economic environment, such as the decarbonization trends,
on the prices of crude oil and natural gas.
– We compared sales volumes with past results for each major
product and merchandise, such as crude oil, natural gas, andelectricity, and considered the consistency between production
amounts and the results of reserve assessment for crude oil andnatural gas.
In addition to the above, when the scheduling of deductible

differences based on the estimated taxable income before
adding/deducting temporary differences over the reasonably
estimable period as of the end of the current fiscal year, theGroup recorded its deferred tax assets for the recoverable
deductible temporary differences and net tax loss carriedforward.
The recoverability of deferred tax assets largely depends on theestimation of future taxable income. Selling prices and volumes
are used as primary assumptions for estimating the timing andamount of future taxable income.
E&P Business and Infrastructure/Utility Business are primarybusinesses of the Company. These primary assumptions are
significantly affected by irreversible structural changes anddecarbonization trends in various areas such as energy demandand environmental issues. These estimates largely depend on
business plans and also impacts the determination of reasonably
estimable periods of future taxable income according tocorporate classifications based on the Implementation Guidanceon Recoverability of Deferred Tax Assets (ASBJ Guidance
No.26). Such estimates entail uncertainties under which
management has difficulty making decisions and providing
evidence. In addition, deferred tax assets have significance interms of amount. Taking these matters into consideration, we
determined that recoverability of deferred tax assets of theCompany is a key audit matter.

temporary differences and taxable temporary differences at theend of the fiscal year was based on management’s judgment, weconsidered the consistency with the business plans, anddiscussed with management such matters.
Other Information
The other information consists of the information included in the annual securities report, other than the consolidated financial
statements, the non-consolidated financial statements, and our auditor’s reports thereon. Management is responsible for the preparationand disclosure of the other information. The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ execution of duties relating to the design and operations of the reporting process about the other information.

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Our opinion on the consolidated financial statements does not cover the other information, and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtainedin the audit or otherwise appears to be materially misstated, and to pay attention to whether there are any other indications of material
errors in the other information aside from such material inconsistency.
If we conclude that there is a material misstatement of this other information based on the work we have performed, we are required toreport that fact.
We have nothing to report in this regard.
Responsibilities of Management, the Audit & Supervisory Board Members and the Audit & Supervisory Board for the Consolidated
Financial Statements
Management is responsible for preparing and fairly presenting these consolidated financial statements in accordance with accounting
principles for consolidated financial statements generally accepted in Japan, and for designing and operating such internal control as
management determines necessary to enable the preparation and fair presentation of the consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare theconsolidated financial statements with the assumption of the Group’s ability to continue as a going concern and disclosing, as requiredby accounting principles generally accepted in Japan, matters related to going concern.
The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the Directors’ executionof duties relating to the design and operations of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion on the consolidated
financial statements based on our audit from an independent standpoint. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:・Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, anddesign and perform audit procedures responsive to those risks. The procedures selected or applied depend on the auditor’s judgement.
In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for our risk
assessments, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on the effectivenessof the Group’s internal control.
・Evaluate the appropriateness of accounting policies used by the management and their method of application, as well as thereasonableness of accounting estimates made by the management and related notes thereto.
・Conclude on the appropriateness of management’s use of the going concern basis for preparing the consolidated financial statements.
And, based on the audit evidence obtained, determine whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related notes to the consolidated financial statements or, if such notes are
inadequate, to express a qualified opinion with exceptions on the consolidated financial statements. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
・Evaluate whether the overall presentation of the consolidated financial statements and the notes thereto are in accordance withaccounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the consolidated
financial statements, including the notes thereto, and whether the consolidated financial statements represent the underlying
transactions and accounting events in a manner that achieves fair presentation.
・Obtain sufficient appropriate audit evidence regarding the financial information of the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of the audit of consolidated financial
statements. We remain solely responsible for our audit opinion.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit, and other matters required by auditing standards.

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We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied to reduce threats to an acceptable level.
Of the matters communicated with the Audit & Supervisory Board Members and the Audit & Supervisory Board, we determine thosematters that were of most significance in the audit of the consolidated financial statements of the current period as key audit matters in
our auditor’s report and describe the matters in our auditor’s report. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.

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(TRANSLATION ONLY)<Audit of Internal Control>
OpinionPursuant to Article 193-2, paragraph 2 of the Financial Instruments and Exchange Act, we have audited the Internal Control Report ofJapan Petroleum Exploration Co., Ltd. as of March 31, 2024.
In our opinion, the accompanying Internal Control Report, in which Japan Petroleum Exploration Co., Ltd. states that internal control
over financial reporting was effective as of March 31, 2024, presents fairly, in all material respects, the assessment of internal control
over financial reporting, in accordance with assessment standards for internal control over financial reporting generally accepted inJapan.
Basis for Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting generally
accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Internal
Control Audit section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant toour audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management, the Audit & Supervisory Board Members and the Audit & Supervisory Board for the Internal Control
ReportManagement is responsible for designing and operating effective internal control over financial reporting, and for preparing and fairly
presenting its report on internal control in accordance with standards for assessment of internal control over financial reporting generally
accepted in Japan.
The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing and verifying the designand operating effectiveness of internal control over financial reporting.
Internal control over financial reporting may not fully prevent or detect misstatements in financial reporting.
Auditor’s Responsibilities for the Internal Control Audit
Our responsibilities are to obtain reasonable assurance about whether the Internal Control Report is free from material misstatement andto issue an internal control audit report that includes our opinion on the Internal Control Report based on our internal control audit froman independent standpoint.
In accordance with auditing standards for internal control over financial reporting generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:・Perform audit procedures to obtain audit evidence for the assessment results for internal control over financial reporting in the internal
control report. Internal control audit procedures selected and applied depend on the auditor’s judgment, taking into account thesignificance of effects on the reliability of financial reporting.
・Evaluate the overall presentation of the Internal Control Report, including the appropriateness of the scope, procedures and results ofmanagement’s assessments of internal control over financial reporting.
・Obtain sufficient appropriate audit evidence about the results of the assessments of internal control over financial reporting in theInternal Control Report. We are responsible for the direction, supervision and performance of the audit of the Internal Control Report.
We remain solely responsible for our audit opinion.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the scope and timing of
the planned internal control audit, results thereof, significant deficiencies in internal control to be disclosed that we identify during our
audit and those that were remediated, and other matters required by auditing standards for internal control.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied to reduce threats to an acceptable level.
<Fee-related Information>
The fees for the audits of the financial statements of the Company and its subsidiaries and other services provided by us and other EY
member firms for the year ended March 31, 2024 are presented in “4. Corporate Governance, (3) Audits” included in “Information about
Reporting Company.”
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisionsof the Certified Public Accountants Act of Japan.

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Notes:1. The original of the above Independent Auditor’s Report is kept separately by the Company (the reporting company of theAnnual Securities Report).
2. The associated XBRL data are not included in the scope of the audit.

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Independent Auditor’s Report

June 26, 2024

The Board of Directors
Japan Petroleum Exploration Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office
YUKAWA Yoshio
Designated and Engagement Partner
Certified Public Accountant
YAMAZAKI Kazuhiko
Designated and Engagement Partner
Certified Public Accountant
MORONUKI Kentaro
Designated and Engagement Partner
Certified Public Accountant<Audit of Non-consolidated Financial Statements>
OpinionPursuant to the provisions of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, we have audited the nonconsolidated financial statements of Japan Petroleum Exploration Co., Ltd. (the “Company”) provided in the “Financial Information”
section in the Company’s Annual Securities Report, namely, the non-consolidated balance sheet as of March 31, 2024, and the nonconsolidated statement of income and non-consolidated statement of changes in equity and the notes to significant accounting policies
for the 54th fiscal year from April 1, 2023 to March 31, 2024, and the related notes and the annexed detailed schedules.
In our opinion, the accompanying non-consolidated financial statements present fairly, in all material respects, the financial position of
the Company as of March 31, 2024, and its financial performance for the fiscal year then ended in accordance with accounting principles
generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the non-consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the non-consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the non-consolidated financial
statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.
Recoverability of Deferred Tax Assets
As described in “Notes to non-consolidated financial statements, (Significant accounting estimates),” the Company recorded deferred
tax assets before offsetting deferred tax liabilities of ¥9,959 million as of March 31, 2024. Of the item above, the Company recorded
deferred tax assets of ¥3,993 million for some part of net tax loss carried forward. The statement is omitted because the details are thesame as those of the key audit matters (Recoverability of Deferred Tax Assets) described in the auditor’s report for the consolidated
financial statements.

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Other Information
The other information consists of the information included in the annual securities report, other than the consolidated financial
statements, the non-consolidated financial statements, and our auditor’s reports thereon. Management is responsible for the preparationand disclosure of the other information. The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ execution of duties relating to the design and operations of the reporting process about the other information.
Our opinion on the non-consolidated financial statements does not cover the other information, and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the non-consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the non-consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated, and to pay attention to whether there are any otherindications of material errors in the other information aside from such material inconsistency.
If we conclude that there is a material misstatement of this other information based on the work we have performed, we are required toreport that fact.
We have nothing to report in this regard.
Responsibilities of Management, the Audit & Supervisory Board Members and the Audit & Supervisory Board for the Non-Consolidated
Financial Statements
Management is responsible for preparing and fairly presenting non-consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for designing and operating such internal control as management determines necessary toenable the preparation and fair presentation of the non-consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the non-consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare thenon-consolidated financial statements with the assumption of the Company’s ability to continue as a going concern and disclosing, as
required by accounting principles generally accepted in Japan, matters related to going concern.
The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the Directors’ executionof duties relating to the design and operations of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the non-consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion on the non-consolidated
financial statements based on our audit from an independent standpoint. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these non-consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:・Identify and assess the risks of material misstatement of the non-consolidated financial statements, whether due to fraud or error, anddesign and perform audit procedures responsive to those risks. The procedures selected or applied depend on the auditor’s judgement.
In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for our risk
assessments, while the purpose of the audit of the non-consolidated financial statements is not expressing an opinion on theeffectiveness of the Company’s internal control.
・Evaluate the appropriateness of accounting policies used by the management and their method of application, as well as thereasonableness of accounting estimates made by the management and related notes thereto.
・Conclude on the appropriateness of management’s use of the going concern basis for preparing the non-consolidated financial
statements. And, based on the audit evidence obtained, determine whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related notes to the non-consolidated financial statements or, if
such notes are inadequate, to express a qualified opinion with exceptions on the non-consolidated financial statements. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
・Evaluate whether the overall presentation of the non-consolidated financial statements and the notes thereto are in accordance withaccounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the non-consolidated
financial statements, including the notes thereto, and whether the non-consolidated financial statements represent the underlying- 178 -

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transactions and accounting events in a manner that achieves fair presentation.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit, and other matters required by auditing standards.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied to reduce threats to an acceptable level.
Of the matters communicated with the Audit & Supervisory Board Members and the Audit & Supervisory Board, we determine thosematters that were of most significance in the audit of the non-consolidated financial statements for the current fiscal year as key audit
matters in our auditor’s report and describe the matters in our auditor’s report. We describe these matters in our auditor’s report unlesslaw or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
<Fee-related Information>
The fees-related information is presented in the auditor’s report for the consolidated financial statements.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Company which is required to be disclosed pursuant to the provisionsof the Certified Public Accountants Act of Japan.

Notes 1. The original of above Independent Auditor’s Report is kept separately by the Company (the reporting company of the Annual
Securities Report).
2. The associated XBRL data are not included in the scope of the audit.

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