INPEX CORPORATION

Financial Results
for the Six Months ended September 30, 2013

November 8, 2013

Agenda1. Corporate Overview
Toshiaki Kitamura
Representative Director, President & CEO

2. Financial Results for the six months ended
September 30, 2013
Masahiro Murayama
Director, Managing Executive Officer
Head of Finance & Accounting Division1

Cautionary Statement
This presentation includes forward‐looking information that reflects the plan and
expectations of the Company. Such forward‐looking information is based on thecurrent assumptions and judgments of the Company in light of the information
currently available to it, and involves known and unknown risk, uncertainties, andother factors. Such risks, uncertainties and other factors may cause the Company’s
performance, achievements or financial position to be materially different from any
future results, performance, achievements or financial position expressed or impliedby such forward‐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 the exploration, development
and production
The Company undertakes no obligation to publicly update or revise the disclosureof information in this presentation (including forward‐looking information) after thedate of this presentation.
2

Corporate Overview

Toshiaki Kitamura
Representative Director, President & CEO

First‐Half 2013 Corporate Highlights (1/3)■ Half‐year Results ‐(Apr.2013 ‐Sep.2013) ‐■ Net Production(Apr.2013 ‐Sep.2013)■ Ichthys‐‐‐4

Net income ¥80.0billion (28.1% decrease YoY)

‐ 403 thousand BOED (0.2% decrease YoY)‐‐

■ AbadiNet sales ¥650.4 billion (12.4% increase YoY)‐

EPC works progressing in due course
In Jun. 2013, steel cut ceremony of FPSO (Floating Production Storage
and Offloading), which is one of the major offshore floatingproduction facilities.
In Sep. 2013, Accommodation Village at Howard Springs, Darwin
opened for about 1,000 of the Project’s construction workforce.
Project progress rate: Approx. 31%
Front End Engineering and Design (FEED) works are ongoing(Subsea
facilities：started in Nov., 2012/FLNG：started in Jan., 2013)
Drilling works for 3 delineation wells and 1 exploratory well started
in Jun., 2013.

First‐Half 2013 Corporate Highlights (2/3)
Continuous Enhancement of E&P Activities(Medium to Long Term Vision of INPEX‐Management Policy No.1)
 Acquisition of New Exploration Blocks• JPDA11‐106 contract area at the Joint Petroleum Development Area (Apr.)• Area 15, Oriental Republic of Uruguay(May)• Cooperation Agreement with Rosneft for Magadan 2 and 3 blocks in the
Sea of Okhotsk, Russia (May)• Exploration Block WA‐494‐P, Offshore Western Australia(Jun.)• Zapadno‐Yaraktinsky block and Bolshetirsky block, Irkutsk, Russia(Sep.)
 Progress of Exploration Activity• Encountered oil pay in Walker Ridge 95/96/139/140 Blocks, U.S. Gulf of
Mexico (Aug.)

5

First‐Half 2013 Corporate Highlights (3/3)
Strengthening Gas Supply Chain (Medium to Long Term Vision of
INPEX‐Management Policy No.2)
 Ichthys LNG Project to Secure New Shipping Vessels (Jun.) Completion of constructing “Naoetsu Line” and “Shin Nagaoka
Line”, Japan (Natural Gas Trunk Pipelines) (Jun.) LNG SPA concluded with Chubu Electric for INPEX’s Naoetsu LNG
Terminal (Jul.) First LNG carrier arrived at Naoetsu LNG Terminal(Aug.)
Reinforcement of Renewable Energy Initiatives (Medium to Long Term
Vision of INPEX‐Management Policy No.3 ) “INPEX Mega Solar Joetsu” started power generation in Joetsu City,
Niigata, Japan (Apr.) Drilling of exploratory wells for geothermal energy development in
Hokkaido and Akita, Japan(Jul.) Joint Study for geothermal energy development in Fukushima,
Japan(Sep.)
6

Ichthys LNG Project (1/2)
 Status of current works[Offshore facilities]‐ Engineering, procurement & construction of CPF and FPSO ongoing‐ Manufacturing 42” linepipes completed and coating process ongoing‐ Procurement & fabrication of subsea facilities ongoing[Onshore facilities]‐ Procurement & construction of onshore LNG plant ongoing‐ Site preparation works ongoing‐ Started construction for module offload facility, jetties and tanks for LNG,
LPG and condensate‐ Dredging work in Darwin Harbour ongoing‐ Opened Accommodation Village with 1,000 beds. Construction for another
2,500 beds ongoing.
 Project progress: Approx. 31%
 Agreed to transfer equity share to CPC

2009

2010

2011

2012
FID

2013



Proved reserves: Approx. 1,030
million BOE *Production volume (expected):‐8.4 million t/y of LNG‐Approx. 1.6 million t/y of LPG‐Approx. 100,000 bbl/d ofcondensate (at peak)
CAPEX: US$34.0 billion
Participating Interest: INPEX(Operator) 66.07%**, TOTAL 30%,
Tokyo Gas 1.575%, Osaka Gas
1.200%, Chubu Electric Power0.735%, Toho Gas 0.420%
FID in January 2012Production start : By the end of
2016* The figure is based on INPEX’s Participatinginterest of 66.07%.
**Including 2.625% equity interest in the process oftransfer to CPC

2014

2015

2016
Production
start‐up

Present

Offshore FEED work
Offshore EPC Preparation work
Offshore EPC
Onshore FEED
Onshore EPC Preparation work
Onshore EPC
7

Drilling Production Wells

Ichthys LNG Project (2/2)
Construction of CPF Hull in Korea

FPSO Hull 1st Steel Cutting Ceremony in Korea

42” Linepipe Coating Yard in Indonesia
8

Onshore LNG Plant Sitein DarwinAbadi LNG Project

Development at Abadi (image)•Drilling rig■Plan of Development (POD‐1)

‐ Stage 1 Development‐ Development Concept : Floating LNG‐ Production Volumes : 2.5 million t/y of LNG
8,400 bbl/d of condensate■Participating Interest•‐ INPEX(Operator) : 65%, Shell 35%••
9

SURF (subsea production facilities) FEED commenced in
November 2012. FLNG FEED commenced in January 2013.
AMDAL(Environmental & Social Impact Assessment
Process) ongoing
Plans to complete the AMDAL report by the end of 2013
and to obtain final approval from the Ministry ofEnvironment.
Strategic alliance with Shell
Shell provides technical services and assigns secondees
PS Contract requires to transfer a 10% participating interest
to an Indonesian participant to be designated by theIndonesian Government.
Further approach for future subsequent development
utilizing the gas reserves
With FEED started, part of contingent resources upgraded
and booked as probable reserves (FY March 2013)
Started to drill 3 delineation wells and 1 exploratory wellfrom June 2013

Strengthening Gas Supply Chain
 Construction of Naoetsu LNG Terminal

海上生産施設– In Aug., first LNG carrier arrived at Naoetsu LNG
Terminal– Targeting commercial operation from January 2014

 Expansion of Natural Gas Pipeline Network

海上生産施設– In Jul., completion of constructing “Naoetsu Line”
and “Shin Nagaoka Line” to connect Naoetsu LNG
Terminal with the existing pipeline network– Construction of “Toyama Line” started in Spring
2012, and to be completed in 2014

 Procurement of LNG carrier– In Jun., agreed on shipbuilding and shipping
contracts for two new vessels to deliver LNG from
Ichthys Project to Japan and Taiwan
10（image picture））

First‐Half 2013 Topics (1/2)
Production/Development

Exploration activity

Kashagan Oil Production Facility■ Kashagan oil field started production of
crude oil
–
–

–
–
11

The production capacity in the initial period isanticipated to be ramped up towards 370,000 b/d.
The Kashagan field represents the largest oil
accumulation in the North Caspian Sea withestimated recoverable reserves of some 9 to 13 billion
barrels of oil in place.
Kalamkas, Aktote, Kairan and Southwest Kashagan
structures are under evaluation.
Participating interest :7.56%■ Encountered oil pay in Walker Ridge
95/96/139/140 Blocks U.S. Gulf of
Mexico– INPEX to hold a 15% participating interest and tocarry out exploration activity with Shell (Operator)and Anadarko with a 70% and a 15% participatinginterest respectively– The parties encountered an oil bearing zone withapproximately 36m net pay in the exploration well
(Yucatan North‐1).

First‐Half 2013 Topics (2/2)
Exploration projects
Participation in Zapadno‐
Yaraktinsky block andBolshetirsky block, onshore
Irkutsk, Russia
Acquisition of Exploration
Block WA‐494‐P, Offshore
Western Australia– Participating interest ：100%（Operator：INPEX）

Entered into Cooperation
Agreement with Rosneftfor Magadan 2 and 3
blocks in the Sea of
Okhotsk, Russia

Acquisition of JPDA11‐106
contract area
– Participating interest ：35.47%（Operator：ENI）

Acquisition of Area 15
Oriental Republic of Uruguay– Participating interest ：30%
（Operator：Tullow）
12

Net Production* (April – September 2013)
500(MBOED)

400

404

403

3%

5%

39%

300
200
100
0

41%

6%

46%

13

7%

41%

6%

6%

Sep. 2012

Sep. 2013

Japan
Eurasia
Americas

Main increasing factor
・ Increase in production in Middle East /Africa region due to the acquisition of interestin the Block 14, Republic of Angola andcapacity building in the ADMA Block, Abu
Dhabi( + 11MBOED)

Asia/Oceania
Middle East/Africa* The production volume of crude oil and natural gas under the production sharing contracts
entered into by INPEX Group corresponds to the net economic take of the Group.

Main decreasing factor
・ Decrease in production in the Kitan Oil
Field due to natural decline (‐11MBOED)

Financial Results for the six months ended
September 30, 2013

Masahiro Murayama
Director, Managing Executive Officer
Head of Finance & Accounting Division

Highlights of the Consolidated Financial Results
for the six months ended September 30, 2013
Apr.‐Sep. ’12

Apr.‐Sep. ’13

Change%Change

578.5

650.4

71.9

12.4%

Crude Oil Sales

367.8

426.7

58.9

16.0%

Natural Gas Sales (including LPG)

195.0

214.8

19.8

10.2%

Others

15.6

8.8

(6.7)

(43.3%)

Operating Income (Billions of yen)

337.9

344.2

6.2

1.8%

Ordinary Income (Billions of yen)

363.8

350.6

(13.1)(3.6%)Net Income

111.3

80.0

(31.3)(28.1%)

76.27(30,508.24)

54.84(21,934.51)(21.43)(‐8,573.73)(28.1%)Net Sales(Billions of yen)(Billions of yen)

Net income per share (Yen) *(Reference: amount before stock split)

Average number of shares issued and outstanding during the six months ended September 30, 2013(consolidated): 1,460,357,200

Average crude oil price (Brent) ($/bbl)

109.19106.53(2.66)(2.4%)

Average exchange rate (¥/$)

79.41

98.86

19.45 Yen

24.5% Yen

depreciation

depreciation*The company conducted a stock split at a ratio of 1:400 of common stock on October 1, 2013.
Net income per share is calculated based on the assumption that the stock split was conducted on April 1, 2012.
Net income per share before the stock split is also calculated for the reference purpose.

15

Crude Oil Sales
Apr.‐Sep. ‘12

Change%Change

Net Sales (Billions of yen)

367.8

426.7

58.9

16.0%

Sales volume (thousand bbl)

42,12040,578(1,543)(3.7%)

Average unit price of overseas
production ($/bbl)

109.24106.21(3.03)(2.8%)

Average unit price of domestic
production(¥/kl)

59,214

66,878

7,664

12.9%

Average exchange rate (¥/$)

79.50

98.86

19.36 Yen
depreciation

24.4% Yen
depreciation

Change%Change

Sales volume by region(thousand bbl)

Apr.‐Sep. ‘12

Apr.‐Sep. ‘13

Japan

3
(0 thousand kl)

383(61 thousand kl)

380(60 thousand kl)‐

Asia/Oceania

10,710

6,552(4,159)(38.8%)

Eurasia (Europe/NIS )

4,169

4,978

809

19.4%

Middle East/Africa

27,20528,644

1,438

5.3%

Americas

33

21

(12)

(35.7%)

42,12040,578(1,543)(3.7%)

Total
16

Apr.‐Sep. ‘13

Natural Gas Sales (excluding LPG)
Apr.‐Sep. ‘12

Apr.‐Sep. ‘13

Change%Change

Net Sales (Billions of yen)

180.5

203.9

23.4

13.0%

Sales volume (million cf)

153,562

159,671

6,109

4.0%

Average unit price of overseas
production ($/thousand cf)

13.96

12.83

(1.13)(8.1%)

Average unit price of domestic
sales(¥/ m3)

46.53

49.68

3.15

6.8%

Average exchange rate (¥/$)

79.49

98.60

19.11 Yen
depreciation

24.0% Yen
depreciation

Sales volume by region(million cf)

Apr.‐Sep. ’12

Apr.‐Sep. ’13

29,096(780 million m3*)
Purchased Volume
259million m3*

29,395(788 million m3*)
Purchased Volume
260million m3*

299(8 million m3*)

1.0%

1 million m3*

Asia/Oceania

112,423

110,432(1,991)0.4%(1.8%)

Eurasia (Europe/NIS )

‐

‐

‐

‐

Middle East/Africa

‐

‐

‐

‐

Americas12,043

19,844

7,800

64.8%

153,562

159,671

6,109

4.0%

Japan

Total

Change%Change* 41.8605MJ / 1m3(FYI) LPG Sales

Apr.‐Sep. ‘12
17

Net Sales (Billions of yen)

14.4

Apr.‐Sep. ‘13
10.8

Change(3.6)%Change(25.1%)

Analysis of Net Sales Increase(Billions of Yen)

700

Crude Oil(13.1)Natural Gas (including LPG) +1.7

116.7
(6.7)

600

(11.3)

500(26.6)
Crude OilNatural Gas (including LPG)

400
300

+82.7
+33.9

650.4

578.5

Crude Oil(10.7)Natural Gas (including LPG) (15.8)

200
100
0
Net Sales
Apr.‐Sep.‘12

18

Decrease inSales Volume

Decrease in
Unit Price

Exchange rate
(Depreciation of Yen)

OthersNet Sales
Apr.‐Sep. ’13

Statement of Income(Billions of Yen)

Apr.‐Sep. ’13

Change%Change

Net Sales

578.5

650.4

71.9

12.4%

Cost of Sales

201.9

249.2

47.2

23.4%

Exploration expenses

4.0

16.6

12.5

307.7%

Selling, general andadministrative expenses

34.4

40.3

5.8

17.1%

Operating Income

337.9

344.2

6.2

1.8%

Crude Oil sales :426.7(Change)+58.9

Natural Gas sales* :214.8(Change)+19.8

Cost of sales for
Crude Oil :145.9(Change)+28.5

Cost of sales for
Natural Gas* :97.1(Change)+23.3

Other income

39.2

18.3

(20.9)(53.2%)

Other expenses

13.4

11.9

(1.4)

(11.1%)

Ordinary Income

363.8

350.6

(13.1)(3.6%)

Interest income

Income taxes‐current

236.2

227.7

(8.4)

(3.6%)

Absence of one‐off gain ontransfer of mining rights (22.7)

Income taxes‐deferred

12.0

42.5

30.5

253.9%

Minority interests

4.1

0.2

(3.9)

(95.0%)

111.3

80.0

(31.3)(28.1%)Net Income＊Including LPG

19

Apr.‐Sep. ’12

Main Factors for change;+5.6

Main Factors for change;
Equity in losses of affiliates+3.4
Absence of loss on valuation of
investment securities(4.9)

Other Income/Expenses(Billions of Yen)

Apr.‐
Sep. ’13

Change%Change

Other income

39.2

18.3

(20.9)(53.2%)

Interest income

3.1

8.7

5.6

183.2%

Dividend income

2.0

2.1

0.1

9.0%

Equity in earnings of affiliates

2.8

‐

(2.8)

(100.0%)Gain on transfer of mining rights

22.7

‐

(22.7)(100.0%)Foreign exchange gain

0.4

‐

(0.4)

(100.0%)

Other

8.1

7.3

(0.7)

(9.1%)

Other expenses

13.4

11.9

(1.4)

(11.1%)

Interest expense

0.5

1.1

0.5

94.9%

‐

3.4

3.4

‐

Provision for allowance for recoverable
accounts under production sharing

3.2

0.4

(2.8)

(87.1%)

Provision for exploration projects

2.2

0.6

(1.6)

(72.5%)

Loss on valuation of investment securities

4.9

‐

(4.9)

(100.0%)

‐

1.2

1.2

‐

2.4

5.0

2.6

106.6%

Equity in losses of affiliates

Foreign exchange loss
Other
20

Apr.‐
Sep. ’12

Analysis of Net Income Decrease(Billions of Yen)
Main Factors;

200

116.7

180

‐ Decrease in gain on sales of investment securities(’12: Sales of the Ichthys downstream JV share, etc.)‐ Absence of one‐off gain on transfer of mining rights(’12: Gain on transfer of the Ichthys upstream JV share, etc.)

(6.7)

(4.9)
(22.7)

160
140(47.2)

120

(8.1)

100

(11.3)

80
60

111.3

(26.6)

Main Factors‐ Increase due to Yen
depreciation against the
US dollar(5.8)(23.8)

3.9(22.0)

40

80.0

20
0
Net Income Decrease in Decrease in Exchange Rate Others
Apr.‐Sep.’12 Sales Volume Unit Price (Depreciationof Yen)Increase in
Cost of
Sales

Increase in Increase in Other Income Increase in Decrease in Net Income
Exploration
SG&A and Expenses Income Minority Apr.‐Sep. ‘13
Expenses andTax
Interest
Allowance forpayableExploration*

Net Sales*Provision for allowance for recoverable accounts under production sharing and Provision for exploration projects

21Balance Sheet(Billions of yen)
Current assets

Mar. ’13

Sep. ’13

Change%Change

1,106.5

1,052.5(53.9)(4.9%)

Tangible fixed assets

584.5

738.3

153.7

26.3%

Intangible assets

380.1

414.4

34.2

9.0%

Recoverable accounts under
production sharing

590.5

636.9

46.3

7.9%

Other

1,067.2

1,051.9(15.3)(1.4%)

Less allowance for recoverable
accounts under production sharing(112.8)(119.2)

(6.3)

5.7%

Total assets

3,616.1

3,774.9

158.7

4.4%

Current liabilities

414.9

355.2

(59.6)(14.4%)

Long‐term liabilities

530.1

594.6

64.4

12.2%

2,670.9

2,824.9

154.0

5.8%

189.6

195.6

5.9

3.1%

3,616.1

3,774.9

158.7

4.4%

1,699.10(679,640)

1,800.50(720,198)

101.40(40,558)

6.0%

Total net assets(Minority interests)
Total liabilities and net assets
Net assets per share (Yen) **(Reference: amount before stock split)

22

Available fund (Billions of yen)
1,512.0*
Breakdown
・Cash and deposits:
573.4
・Long‐term time deposits : 414.8
・ Marketable securities :201.5
・Available investment securities :322.1*Amounts to be allocated to theinvestments for development andexploration activities until the year
ending March 31, 2017 following the“Medium‐To Long –Term Vision of
INPEX”.

**The company conducted a stock split at a ratio of 1:400 of common stock on October 1, 2013.
Net assets per share is calculated based on the assumption that the stock split was conducted on April 1, 2012.
Net assets per share before the stock split is also calculated for the reference purpose.

Shareholders’ equity
Retained earnings :+67.3

Accumulated othercomprehensive income :+80.7

・Unrealized holding gain on
securities: +18.1
・Unrealized gain (loss) fromhedging instruments : (36.9)
・Translation adjustments: +99.6

Statement of Cash Flows(Billions of Yen)

Apr.‐Sep. ’12

Apr.‐Sep. ’13

Change%Change

Income before income taxes and minority interests

363.8

350.6

(13.1)(3.6%)

Depreciation and amortization

25.9

23.9

(2.0)

(7.7%)

Recovery of recoverable accounts under production
sharing (capital expenditures)

26.3

30.9

4.5

17.5%

Recoverable accounts under production sharing (operating expenditures)(4.6)(20.9)(16.3)

354.6%

Income taxes paid

(287.1)(290.7)

(3.5)

1.2%

Other

(13.6)(22.6)

(8.9)

65.9%

Net cash provided by operating activities

110.6

71.2

(39.4)(35.6%)

5.0(281.3)(286.3)－%Purchase of tangible fixed assets(67.9)(139.1)(71.1)

104.7%

Purchases of marketable securities/investment securities and proceedsfrom sales of marketable securities/investment securities (Net)

157.8

231.8

73.9

46.8%

Investment in recoverable accounts under production
sharing (capital expenditures)(41.2)(53.7)(12.4)

30.2%

Long‐term loans made/Collection of long‐term loans receivable(91.6)

57.0

148.6

－%

Payments for purchase of mining rights(157.6)(27.0)

130.5(82.8%)

Proceeds from transfer of mining rights

17.1

－

(17.1)(100.0%)

Other

(2.5)

23.9

26.5

－%

(180.9)(188.4)

(7.5)

4.2%

7.5

25.3

17.8

238.3%

175.9

156.0

(19.8)(11.3%)

Payments for / Proceeds from long‐term time deposits

Net cash used in investing activities
Net cash provided by financing activities
Cash and cash equivalents at end of the period

23Differences between Consolidated Financial Forecasts andActual Results for the six months ended September 30, 2013
‐ Assumptions
1st half (Previous Forecasts)(August 2, 2013)
Crude oil price (Brent) (US$/bbl)

101.7

Exchange rate (yen/US$)

96.9(November 7, 2013)

1st half (Actual Results)

Crude oil price (Brent) (US$/bbl)

106.5

Exchange rate (yen/US$)

98.9‐ Differences between Consolidated Financial Forecasts and Actual Results for the six months ended September 30,2013
Previous Forecasts(August 2, 2013)

24

Actual Results

Change% Change

Net Sales (billions of yen)

603.0

650.4

47.4

7.9%

Operating income (billions of yen)

304.0

344.2

40.2

13.2%

Ordinary income (billions of yen)

312.0

350.6

38.6

12.4%

Net income (billions of yen)

69.0

80.0

11.0

15.9%

Revisions of Financial Forecasts
for the year ending March 31, 2014
‐ Assumptions(August 2, 2013)

1st half

2nd half

Full year

Crude oil price (Brent) (US$/bbl)

101.7

100.0

100.8

Exchange rate (yen/US$)

96.9

95.0

95.9

(November 7, 2013)

1st half

2nd half

Full year

Crude oil price (Brent) (US$/bbl)

106.5*1

100.0

103.3

Exchange rate (yen/US$)

98.9*295.0

96.9*1 1st quarter (Actual) : US$ 103.4/bbl, 2nd quarter (Actual) : US$109.7/bbl*2 1st quarter (Actual) : ¥98.8/US$1, 2nd quarter (Actual) : ¥99.0/US$‐ Financial Forecasts for the year ending March 31, 2014
Previous forecasts(August 2, 2013)

Revised forecasts(November 7, 2013)

Change% Change

1,222.0

1,268.0

46.0

3.8%

Operating income (billions of yen)

615.0

651.0

36.0

5.9%

Ordinary income (billions of yen)

637.0

671.0

34.0

5.3%

Net income (billions of yen)

142.0

153.0

11.0

7.7%

Net Sales (billions of yen)

‐ Dividend per share

End of 2Q

Year ending March 31, 2014 (yen)3,600

End of fiscal year
(forecast)

9 *3*3 The year‐end dividends for the fiscal year ending March 31, 2014 is provided after taking into consideration the effect of the stock split taking place at a ratio of

25 1:400 as to a common stock with October 1, 2013 as the effective date.

Net Income Sensitivities (1/2)
 Sensitivities of crude oil price and foreign exchange fluctuation on
consolidated net income for the year ending March 31, 2014 (Note 1)(This is the sensitivity as of the announcement made in May 2013. The impact of
Exchange Rate is shown in more detail below.)(Billions of yen)

Crude Oil Price; $1/bbl decrease (increase) (Note 2)‐2.2 (+2.2)

Exchange Rate; ¥1 appreciation (depreciation) against the
U.S. dollar‐1.0 (±0)

 Flow effect on net income from operating activities (Note 3)
 Stock effect on net income (valuation for assets and liabilities
denominated in the U.S. dollar) (Note 4)‐2.6 (+2.6)+1.6 (‐2.6)(Note1) The sensitivities represent the impact on net income for the year ending March 31, 2014 against $1 /bbl decrease (increase) of Brent
crude oil price on annual average and ¥ 1 appreciation (depreciation) against the U.S. dollar. These are based on the financial
situation at the beginning of the fiscal year (or, as of the announcement in May 2013). These are information purpose only and theactual impact may be subject to changes in production volumes, capital expenditures and cost recoveries, and may not be constant,depending on crude oil prices and exchange rates.
(Note2) This is a sensitivity on net income by fluctuation of crude oil price and is subject to the average price of crude oil (Brent) in thefiscal year.
(Note3) This is a sensitivity on net income from operating activities by fluctuation of the yen against the U.S. dollar and is subject to theaverage exchange rate in the fiscal year.
(Note4) This is the impact of foreign exchange differences for foreign currency‐denominated assets and liabilities, and is affected by thedifference between the exchange rate at the end of the fiscal year and the end of the previous fiscal year. In this fiscal year, as
foreign currency‐denominated debt is greater than foreign currency‐denominated assets due to an increase in foreign currency
debt, exchange valuation gains will occur when the yen is appreciated against foreign currency, while exchange valuation losses
will occur when the yen becomes weaker against foreign currency. In addition, because of the impact of deferred tax accounting,the sensitivity is subject to change in the yen appreciation and depreciation phase against the U.S. dollar.
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Net Income Sensitivities (2/2)
Details on valuation for assets and liabilities denominated in the U.S. dollar

Exchange gain/loss is booked in theStatements of Income.

Exchange gain/loss directly affects net assets
in the balance sheet (in the form of
unrealized exchange gain/loss).

The assets and liabilities denominated in the U.S. dollar are practically balanced as above.
Some portion of assets is bonds denominated in the U.S. dollar, and exchange gain/loss derived fromthe yen appreciation / depreciation against the U.S. dollar of such portion does not affect a Statementof Income, but net assets in the balance sheet (expressed in unrealized holding gain on securities) in
the form of unrealized exchange gain/loss.
As redemption of these bonds denominated in the U.S. dollar is scheduled to be made within the next
two years, profit or loss will be booked in a Statement of Income at the time of redemption. In
addition, if such redeemed amounts are deposited in the form of U.S. dollar, assets and liabilities
denominated in the U.S. dollar will be gradually balanced, from a view point of Statement of Income,and, accordingly, sensitivities on valuation for assets and liabilities denominated in the U.S. dollar is
expected to be close to zero.
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When sensitivities of valuation for assets and liabilities denominated in the U.S. dollar become zero,sensitivity of exchange rate will only drive from flow effect from operating activities.