■ INPEX CORPORATION (TSE1605)
Presentation on financial results for the three months ended Mar. 31, 2020
Summary of Q&A session
Date
Number of attendees
Key questions：：：

May 12, 2020
Approximately 80

Q1. INPEX’s Medium‐term Business Plan outlines plans to firstly allocate 1.7
trillion yen for growth investment out of the total 2.5 trillion yen cash flowfrom operations, then allocate the rest to debt repayment and shareholder
returns, assuming a Brent oil price of 60 US dollars per barrel. However,facing a prolonged low oil price environment, how would you allocate cash
flow? What would be the cash flow allocation plan in case of a Brent oil priceof 30 dollars per barrel?
A1. In terms of cash flow for the fiscal year ending December 31, 2020 (hereinafterreferred to as FY2020), the oil price dropping from 60 dollars per barrel to 35+
dollars per barrel will result in a 500 billion yen decrease in net sales.
Therefore, operating cash flow will decrease to a considerable extent.
However, we expect to see a year‐on‐year increase in free cash flow for theFY2020 to approximately 150 billion yen (deducting investment fromoperating cash flow before exploration expenditure inclusive of Ichthys
downstream JV) as a result of multiple factors including: an 82 billion yen
reduction in total expenditure (sum of exploration and capital expenditure,etc.); the partial fixture at the beginning of the fiscal year of the oil priceapplicable to Ichthys LNG Project shipments in the first and second quarters;
and factoring in the comparatively high oil prices during January andFebruary 2020.
There is currently no change to our plans of allocating free cash flow in theorder of debt reduction, shareholder returns and investment for growth, as
outlined in the Medium‐term Business Plan.
Q2. Would INPEX be able to secure enough cash flow in order to pay out theforecasted annual dividend of 24 yen per common stock for FY2020?
A2. As stated above, we expect to generate free cash flow of approximately 150
billion yen (deducting investment from operating cash flow beforeexploration expenditure inclusive of Ichthys downstream JV) for FY2020. We
plan to allocate our free cash flow in the order of debt reduction, shareholder
returns and investment for growth.
Despite the challenging business environment, we plan to maintain stabledividend payouts in order to enhance shareholder returns as outlined in theMedium‐term Business Plan. Based on this, we have revised our annual
dividend forecast for FY2020 to 24 yen per common stock.
Q3. During the 2007‐2008 global financial crisis brought on by the collapse ofLehman Brothers, INPEX achieved a net positive income by conducting cost
cutting initiatives. Would INPEX be able to achieve a net positive income
even in this low oil price environment? How much capacity do you have left
for further cost cuts? What are the exact figures for the stated 20%+ capex
reduction and 40%+ exploration cost reduction plans?
A3. It is difficult to draw comparisons between the state of the economy then andnow, in simple terms. The world’s economic growth rate during the 2007‐2008 global financial crisis was minus 0.5% whereas now the IMF isforecasting a minus 3.0% growth rate as a result of the spread of COVID‐19.
The decline in energy demand during the global financial crisis was about 3
million barrels per day, while currently, energy demand is considered tohave fallen by between 20 to 30 million barrels per day. We therefore
recognize that we must be prepared for a scenario in which the current, low
oil price environment will persist for a certain amount of time.
For specific cost reduction figures, please refer to page 10 of the online
presentation material. However, we will not limit ourselves to these figures
and will endeavor to conduct additional cost cutting initiatives.
While the net income forecast for FY2020 would have turned negative basedon calculations using the oil price sensitivity provided at the beginning of thecurrent fiscal year, we are forecasting a net positive result driven by ourvarious cost cutting initiatives and other factors.
Q4. Are there any impairment loss risks associated with Ichthys and otherprojects? Are impairment tests conducted quarterly?
A4. We would like to refrain from commenting on the risk of impairment losses
pertaining to individual projects. Impairment loss tests are conductedquarterly based on future oil price outlooks and in consultation with anexternal auditor.
Q5. Are there any significant changes to the sensitivities (representing the impacton net income) for FY2020 announced in February, given the revised
consolidated financial forecasts due to the substantial decline in crude oil
prices? The press release states that “INPEX is currently revaluating theassets of the INPEX Group.” Do you recognize that the long‐term oil priceoutlooks (providing the basis for these revaluations) need to be changed?
A5. There is no change to the oil price sensitivity announced in February. We willconsider future oil price outlooks with the external auditor and conduct
impairment tests based on the discount rate, taking into account the market
consensus.
Q6. What is Ichthys’ contribution to the company’s profit for the first quarter of
FY2020? In addition, what measures are you taking to make Ichthys
profitable under the current crude oil price assumptions?
A6. Ichthysʹ contribution to the company’s profit for the first quarter of FY2020
was low to mid 20 billion yen. Ichthys’ contribution to the company’s profit
for FY2020 is expected to be around 12 billion yen.
We expect Ichthys to financially support the company even with oil prices
maintaining their current level for a certain amount of time. However, torespond to the low oil price era, we will implement measures such as
postponing or reducing investment, reviewing operations and streamlining
logistics, etc.
Q7. The net income forecast for the six months ending December 31, 2020 (thirdand fourth quarters) is minus 25 billion yen. If the oil price remains at 30
dollars per barrel over the medium term, what measures are you consideringin order to achieve profitability?
A7. In addition to investment and cost reduction, INPEX will rigorously screenand evaluate new projects. Even if the current low oil price environment
persists for more than a year, INPEX will build a strong corporate structure
to sustain stable business operations.

Q8. Is the annual dividend for FY2020 fixed at 24 yen per common stock? Is there
any possibility of an upside spurred by a rise in oil prices, etc.?
A8. The consolidated financial forecast and dividend forecast have been revised
in line with the announcement of the financial results for the first quarter ofFY2020. The final interim and year‐end dividends will be determined basedon the oil price situation etc. at the end of the second quarter and at the endof FY2020.
EndCautionary Statement
This document includes forward‐looking information that reflects the plans and expectations of theCompany. Such forward‐looking information is based on the current assumptions and judgments of
the Company in light of the information currently available to it, and involves known and unknown
risks, uncertainties, and other factors. Such risks, uncertainties and other factors may cause theCompany’s performance, achievements or financial position to be materially different from any
future results, performance, achievements or financial position expressed or implied by suchforward‐looking information. Such risks, uncertainties and other factors include, without limitation:
 Price volatility and change in demand in crude oil and natural gas
 Foreign exchange rate volatility
 Change in costs and other expenses pertaining to exploration, development and production
The Company undertakes no obligation to publicly update or revise the disclosure of information inthis document (including forward‐looking information) after the date of this document.
This document is an English language translation of the document originally created in Japanese. Incase of discrepancies, the Japanese version prevails.