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

Presentation Meetingof Consolidated Financial Results
for the Fiscal Year Ended March 31, 2016
(FY3/16)
May 13 , 2016

Japan Petroleum Exploration Co .,Ltd.

Cautionary Statement
Any information contained herein with respect to JAPEX’s plans, estimates, strategies
and other statements that are not historical facts are forward-looking statements about
the future performance of JAPEX. Readers should be aware that actual results andevents may differ substantially from these projections due to various factors.
The provision of this document should not be construed as a solicitation for investment.
Copyright : All information contained herein is protected by copyright, and may not be
copied or reproduced without prior consent of JAPEX.
Note: Abbreviations used herein are as follows:
1H = First half (1Q-2Q)
2H = Second half (3Q-4Q)(a) = Actual results(e) = Estimates
FY = Fiscal Year (FY3/16, for instance, means 12 months ended March 31, 2016)
Any inquiries about the information contained herein or other Investor Relations questions
are requested to be directed to:Investor Relations Group,Media & Investor Relations Department,
Japan Petroleum Exploration Co., Ltd.
Tokyo, JAPANTEL: +81-3-6268-7111

2

Contents

Ⅰ. Business Overview
President

Osamu Watanabe

Ⅱ. Actual Results for FY3/16
Executive Officer Michiro Yamashita

Ⅲ. Estimates for FY3/17
Executive Officer Michiro Yamashita

3

Ⅰ. Business Overview
President Osamu Watanabe

42013-03
2013-04
2013-05
2013-06
2013-072013-08
2013-09
2013-10
2013-112013-12
2014-01
2014-022014-032014-04
2014-05
2014-06
2014-072014-08
2014-09
2014-10
2014-11
2014-12
2015-01
2015-022015-032015-04
2015-05
2015-06
2015-072015-08
2015-09
2015-10
2015-11
2015-12
2016-01
2016-02
2016-03［Crude Oil Price US$/bbl]
$120
¥160

$110
¥150

$100
¥140

Crude Oil price US$/bbl (Left axis)$90

5

Exchange Rate
JP¥/US$(Right axis)
¥130

$80
¥120

$70
¥110

$60
¥100

$50
¥90

$40
¥80

$30
¥70

［Foreign Exchange Rate JP¥/US$］

Trends in Crude Oil Prices and Foreign Exchange Rate

Actual Results for FY3/16 and Estimate for FY3/17 (Highlight)■ Actual Results for FY3/16 (vs FY3/15)

Billion ¥FY3/15(a)

FY3/16
(a)

304.9

240.3

-64.6

-21%

Operating Income

32.1

8.3

-23.8

-74%

Ordinary Income

54.8

4.6

-50.1

-91%

Profit attributableto owners of parent

29.5

2.0

-27.4

-92%

Billion JP¥
Net Sales

JCC Price(US$/bbl)
Exchange Rate
(JP¥/US$)

Change

96.48

51.48

-45.00-46%

106.23121.06+14.83+14%

FY3/16(a)

FY3/17
(e)

240.3

194.5

-45.7

-19%

Operating Income

8.3

0.4

-7.9

-95%

Ordinary Income

4.6

1.0

-3.6

-78%

Profit attributableto owners of parent

2.0

1.9

-0.1

-5%

51.48

45.00

-6.48

-12%

121.06115.00-6.06-5%

Net Sales

JCC Price(US$/bbl)
Exchange Rate
(JP¥/US$)

70.0

304.9
300.0

250.0

Net Sales (Left Axis)

150.0

60.0

240.3

54.8

50.0

194.5

200.0

■ Estimates for FY3/17 (vs FY3/16)
Billion JP¥

Billion ¥

350.0

32.1

30.0

29.5

100.0

Change

6

40.0

20.0

8.3

50.0

4.6

10.0

2.0

0.0

FY3/15 (a)FY3/16 (a)1.9
0.4 1.0
FY3/17 (e)Right Axis
Operating Income
Ordinary Income
Profit attributable to owners of parent

0.0

＜Follow-Up of the Mid-Term Business Plan＞

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

1.2 million kW＋αPower generation
FID

Domestic Gas
SupplyCompletion of Soma
LNG Terminal

Domestic gas

Improverevenue andprofitShareholder
returnTransaction volumeof natural gas
2.5 million ton(in LNG equivalent)Business Prospect
Geothermal generation,
MH and CCS

Environment andInnovative Technology

Environment and Innovative
Technology

Management of ongoing projects

RRR＞1

E&P

E&P

Substantial
Shareholder
return

E&P

Expansion of profit
Establish re-Investment cycle
CSR Management

FY3/12- FY3/15

CSR Management

Re-Investment Cycle

FY3/16 – FY3/20
7

CSR Management

FY3/26

＜Follow-Up of the Mid-Term Business Plan＞

Perception of Business Environment ①External Environment Perception at the Mid-Term Business Plan (Summary)① Actualized fluctuation risk of international crude oil price② Geopolitical Risk
③ Intensifying competition of domestic gas business④ Measure for global environmental problems
 It is unlikely to reach the international agreement to restrain fossil fuels by a large extent,
and in mid-long terms, demands for oil and natural gas particularly in emerging countries
will increase drastically. Oil and natural gas will continue to play major role in aninternational primary energy.

External environment afterward Low price of Oil and Natural gas ⇒ Excess in supply may continue Adoption of COP21/Paris Agreement ⇒ Movement to reduce Greenhousegases may be accelerated

 Our Current Perception
We are considering following trends: E&P industries are holding down investments, concern overunmet supply in the future, and estimated growth in oil demand of the emerging countries. We
will continue to follow the trends carefully, but at this time, our current perception of theexternal environment stay the same, and we will continue to execute strategy of Long-TermBusiness Vision and Medium-Term Business Plan.
8

＜Follow-Up of the Mid-Term Business Plan＞

Perception of Business Environment ②Oil Price/Exchange Rate
 Revision of Oil Price and Exchange Rate Forecast based on the decline of oil prices
from the time plan has been unveiled.
 We are estimating slower recovery of oil prices
Positive Factors

120

Demand growth mainly in China, Southeast Asia, and Middle East
Middle Eastern countries has shifted from “focusing on Share” to“ focusing on price” due to fiscal uncertainty.
• Progress on negotiations between producing countries etc.

•
•
100

Previous
Forecast

US$/bbl80

60

Negative Factors

40

Brent
WTI
JCC

20

0

Current
Forecast

2014

2015

2016

• Further economic stall of China• Increase in production, mainly by enhanced
economic efficiency of shale business• Further restraints on carbon resources etc.

2017

2018

2019

2020

Base Case (figures in parentheses are previous forecasts)
2016
Oil Price
Exchange Rate

US$/bbl45 (65)

2017

2018

2019

55 (70)60 (75)65 (80)￥115/US$ (120) ・ ￥80/CA$ (105)92020
70 (90)＜Follow-Up of the Mid-Term Business Plan＞
Progress situation ①Current status of ongoing projects
 Domestic supply business E&P business＜Most important mission＞
Establish comprehensive supply system of natural gas.
"Supply", “Procurement" diversification in both sides.

＜Most important mission＞Overseas
Steady management of ongoing projects

Soma LNG terminal

Canada Shale Gas and LNG project






Upstream: Based on the low gas price, continuation of
the upstream development that takes into account theeconomic efficiency.
Midstream: The pursuit of economic efficiency for FID
after the Government approval.

Toward the start of operation in March 2018, during theconstruction work.
It embarked on operations organizational structuredevelopment.

Soma power generation


Toward the start of operation in January 2020, underconsideration work.

Canada Oil Sands projectEnvironment and innovative technology business

＜Most important mission＞

For the start of production in 2017 1H, steadymanagement of the Hangingstone expansion
development.

Efforts acceleration of large-scale projects (CCS/MH)
CCS

Iraq : Garraf projectMethane hydrate

100,000 bbl/d stable production is ongoing.
A step-by-step development towards 230,000 bbl/d isunder discussion with the government.

The start of CCS demonstration project from April 2016.

Second offshore production test of MH in preparation in 2017.

Indonesia: Kangean project

Geothermal energyPreparing for the start of TSB Phase-2 gas production
in 2019 2Q.

10Drilling planned for third exploratory well in Musadake(FY3/17).

＜Follow-Up of the Mid-Term Business Plan＞
Progress situation ②Action plan under the low oil price Risk analysis in the case of low oil & gas prices. Conducting a thorough cost reduction.

Canada Oil Sands
Hangingstone 3.75 section

Canada LNG
Upstream Gas Exploration

Productionand Sales

LNG project

Expansiondevelopment

 Development work ongoing.
 Targeting the start of production in 1H 2017.

 Proceeding the Environmental Impact Assessment (Approvaldelay).
 Planning a thorough cost reduction.

Iraq
Garraf oil field

Indonesia Kangean
TSB Phase2

Productionand Sales中 Control drilling and production plan in order to improve the
試 掘 準 備 中
project company's balance of payments, based on the local gas
price trends.

 Temporary suspension of the production operation to
improve the operating net cash flow and further pursue
the opportunity of more profitable production.

HE Exploration

開 Pre-FID
発 準 備

Expandeddevelopment in
preparation

Productionand Sales

Prospecting
in preparation

 Impact of a low oil price is minor.

 Decision of additional investment plan to enable selfturnover of cash flow and dividend suspension in the
project company.

Prospecting of South Saubi structure Reduction of drilling costs that take advantage of thedrop in market conditions.

Other Cost reduction with a focus on exploration expenses and SG&A expenses (22% decrease in exploration expenses andSG&A expenses, comparing FY3/16 and FY3/17. See p.36).
 Capital expenditures suppression (28% decrease, comparing FY3/16 and FY3/17. See next page).
 Freezing of new investment
 Consider the transfer of non-core assets (Reached an agreement to transfer Aceh Block A, Indonesia).

11

＜Follow-Up of the Mid-Term Business Plan＞
Progress situation ③Timeline of major projects
Transition of capital investment and depreciation
FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21

Billion ¥Billion ¥
1,500
150

Canada Oil Sands
Expansion projectPending
approval

Iraq Garraf

Operational expansion

Indonesia Kangean◆Achieve the target(Production and sale, Preparing
expanding development)

15.5

14.9

1,000
100

production volume

150
15◆Commencementof production(Development)

127.2

Canada LNG◆◆(Production and Sales) Gradual increase of
production volume

Upstream Gas
Development◆

Canada LNG◆◆

FID after government approval

Pre-FID

Power generation(Under construction)

10
100

84.2
60.5

◆

◆Completion of the LNG terminal

LNG terminal / theconnecting pipeline

97.7

500
50

Commencementof LNG
production

Conditional
FID

Soma

Soma

16.8 17.0◆ ◆(Under construction) Commencement of production

TSB phase 2

LNG project

200
20◆Commencement of receiving LNG◆FID (targeting 2016)(Proceeding the Environmental Impact
Assessment)-

FY3/14◆Commencement ofcommercial operation

12

FY3/15

Capital
設備投資
investment

FY3/16

FY3/17(e)Depreciation
減価償却費

5
50

＜Follow-Up of the Mid-Term Business Plan＞

Progress situation ④Transition of production volume and proved reserves

 Actual result on FY3/16; 73,000BOED / 349MMBOE
 1% decrease in production volume. While Canada shale gas production volume has increased, domestic
production was declining and economic share by cost recovery progress of Iraq Garraf project was
reduced.
 12% increase in proved reserves by the evaluation review of the progress of Canada shale gas
development and Canada oil sands expansion project.
 Through further development of Canada Shale Gas project and progress of Iraq Garraf project, JAPEX
aim at the achievement of the medium-term business plan.
Production
volumeProvedreserves(10 thousands BOED)

国内 ■Overseas
海外■Domestic■Domestic
国内 ■Overseas
海外

7.4

7.3
【Target 】

4.8
3.8 3.6
0.8 1.1
3.0

2.5

5.4

5.4

307

10.0

2.7
2.1

(MMBOE)

2.0

1.9

FY3/12 FY3/13 FY3/14 FY3/15 FY3/16

FY3/20305 313

349

550

223
38

160

193

203

255

185

147

112

110

94

FY3/14

FY3/15

FY3/16

FY3/12

FY3/13

Previous Med‐Term Business Plan

Previous Med‐Term Business Plan

*These figures concerning production volume and proved reserves mean the amount by economic share of JAPEX group.

13【Target 】

FY3/20＜Follow-Up of the Mid-Term Business Plan＞
Profit Outlook and Shareholder Return

Due to the sharp decline of oil price, consolidated profit and loss in FY3/16
has decreased significantly. Outlook also FY3/17 remains at a low level.

Maintaining the stable shareholder return in a low oil price environment,
attempt to secure future revenues by large-scale ongoing project
management, thorough cost reduction and the synergistic effect of the oil
price recovery.
Transition of Consolidated Profit and Loss (100M Yen)
Actual290

Estimates
295‐Gradual oil price recovery‐Profit contribution of ongoing projects
Impact of oil
price decline

170

PNWL start up

Impairment loss
for Yufitsu→

100Power generation start up
Expansion gas business20

19

FY3/16

FY3/17(e)▲8FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

Mid‐Term Business Plan

14

HE start up

Beginning of FY3/20(e)＜Follow-Up Our Mid-Term Business Plan＞
CSR – Promotion priority agenda “SHINE”
S
H
I
N
E

：Stable & Sustainable Energy Supply：HSE as Our Culture：Integrity & Governance：Being a Good Neighbor：The Employer of Choice

TARGET

the Ratio of Female Managers

2014
3.4％
TOPIC

We are implementing core CSR policies, expressedwith the acronym SHINE, to grow as a trusted global
company by meeting the expectations andrequirements of our diverse stakeholders.

【Target】
2015 ・・・・・ 2020
4.5％ ⇒ More than 10.0％

Selection as the FY2015 Nadeshiko Brand

JAPEX was selected as one of the FY2015
Nadeshiko Brand enterprises which encourage
women to play active roles in the workplace by
the METI and the Tokyo Stock Exchange.

15

＜Appendix＞

E&P Business ①

Domestic exploration: Result for FY3/16 & Plan for FY3/17● Drilling work FY3/16
Total
Depth
MinamiKashiwazaki
SK-1D

1Q
4

5

2Q
6

7

8

3Q
9

10

4Q

11 12

1

2

3

2,900mabandon(Exploratory Well)■ Geophysical prospecting survey work FY3/16
Nagaoka and Ojiya-city, Niigata pref. (82 point)
Uonuma MT 3D Work planned from Sep. to Nov.
(Electromagnetic survey: Investigate the electricalresistivity of the underground rock)● Drilling / Geophysical prospecting survey work
schedule for FY3/17
Total
Depth

1Q
4

5

2Q
6

7

8

3Q
9

10

11

Minami-Kashiwazaki SK-1D(2,900m)

4Q
12

1

2

3

Uonuma MT 3D (82 point)* Domestic exploration is not scheduled in FY3/17
16

＜Appendix＞

E&P Business ②
Current status of global business
Oil Sands project

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

Sakhalin

Shale Gas/LNG project

Sakhalin 1 project

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

CanadaIraq Garraf oil field(Production & Development)

Japex (U.S.) Corp. (Production)

Middle East
Southeast Asia
Indonesia Kangean Block(Production & Development)

focus areas
Blocks owned by our consolidated
subsidiaries or equity-method affiliates
17＜Appendix＞

E&P Business ③
Canada Shale Gas and LNG project
Shale Gas development
and Production project(Up-stream)

LNG project(Middle-stream)

Block /
Proposed site

North Montney Area,
British Columbia,
CanadaLelu Island,
The Port of Prince
Rupert, B.C.

Interest

10% Interest

10% Equity

PETRONASPETRONAS(Including subsidiaries)(Including subsidiaries)

Production and sales
of Natural Gas

FEEDOperator
Current status

Calgary

Prince Rupert(Proposed LNG
plant site)

North Montney（Block)Pipeline

Vancouver Calgary
Export LNG to Japan■Project Schedule
2013

Conclusion of contract,
Production and sales of Natural Gas

June 2015

Conditional Final Investment Decision

July 2015

Approval of the Project Development Agreementby the Legislative Assembly of B.C.

2H 2016

FID of LNG plant after Government Approval2020 or laterFirst LNG production (12MMtonnes/y)Lelu Island, Proposed LNG plant site18

＜Appendix＞

E&P Business ④
Canada Oil Sands project
Project

Canada Oil Sands Co., Ltd. (CANOS)

Company

Operator : Japan Canada Oil Sands Ltd. (JACOS)

Hangingstone 3.75 section

100％ Interests

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

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

Expansion project of undeveloped part ofHangingstone area
Block

75％ Interests

In development

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

12％ Interests

In appraisal

Other bitumen leases(include Corner, Chard & Thornbury)

Considering future
activities

Calgary
FORT McMURRAY Area
Hangingstone
3.75 Section(“Demo area”)

Hangingstone
expansiondeveloping area

Corner JV lease■Schedule of Hangingstone Expansion
2013

Feb. ： Started early civil work for construction facilities

2014

Aug. ： Completed early civil work and started construction offacilities

2015

Feb. ： Completed exploration of horizontal wells

1H 2017

Commencement of production

19

Construction site of central facility for
Hangingstone Expansion

＜Appendix＞

E&P Business ⑤
Iraq : Garraf oil field

Project
company
Interest

Japex Garraf Ltd.

30％ (cost share 40%)
Operator ： PETRONAS

Field

GarrafBaghdadGarraf oil field

In Production

Samawah2013

Expected cumulative production :2030

Nasiriyah
BasrahAround 1.1 billion bbl■ Time Schedule
2013

First oil production on August 31
Average daily production : Approximately 64,000 bbl/d

2014- 2016

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

Achieving production of 230,000 bbl/d* Gradual increase of production volume

Garraf crude
oil hasoil
beensmoothly fromshippedfrom oil
BasrahSteadyproduction
Garraffield

20

＜Appendix＞

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

Pagerungan Utara oil field（Production suspended）

Jakarta
Pagerungan gas field (Production)
West Java Pipeline

Java Island
Bali Island
to Surabaya

Kangean Energy

ProjectIndonesia Ltd. (KEI)
Company

Sepanｊang Island oil field(Production suspended)

TSB gas field（Production-partly）
Sirasun gas field

Terang gas field

Batur gas field+ 2 other, Equity-method affiliate

Interest

25％ (Operator : KEI)

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

21

FPU (floating Production Unit) in the Terang gas field＜Appendix＞

E&P Business ⑦
Sakhalin 1 project

Project
Company

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

Interest

SODECO

Sakhalin 1 Consortium
Exxon Neftegas Ltd.
30%
Others40%

SODECO
30%

Minister of
Economy, JAPEX
Trade and 15.29%
Industry
50.00%
Others
34.71%

Arkutun-Dagi

ChayvoIn Production at each fields

Block

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

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

ArkutunDagi

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

22

The Arkutun-Dagi offshore field
Started commercial production of crude oil.

＜Appendix＞ Domestic supply business ①
Construction of Soma LNG terminal■Soma LNG terminal Facilities
Site

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

Capacity

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

Receiving
capacity

LNG ocean-going vessel ：Full set (maximum
210,000m3 class)
LPG domestic vessel ：Full set (maximum 2,500m3
class)

Vaporizers

Sending power ： 7.0MPa 150t/h

Shipping
facilities

LNG domestic vessel ：maximum 4,800 m3 class
Tanker truck ：5 lanes, 30t/h

Commencementof operation

March 2018 (Planned)■Connecting pipeline facilities
Starting point /End point

Starting point ：Soma LNG terminal
End point ：Iwanuma brunch Valve station (Iwanuma
city, Miyagi Pref.)Caliber

20B

Pressure

7Mpa

LengthAround 39km

Commencementof operation

March 2018 (Planned)■ Soma LNG terminal
Panoramic view of the LNG
tank and landfill

23■ Connecting gas P/L
between Soma and Iwanuma
Installation work for arcuate longtube over the Abukuma river

＜Appendix＞ Domestic supply business ②
Soma power generation■Outline of the plan of Soma natural gas power plant(provisional name)

Driving force

Gas turbine and steam power(combined cycle system)

Output power

Approximately 1.2 million kW(approximately 600 thousand kW×2)

Current status

Establishment of Fukushima Gas Power Co., Ltd. /Proceeding environmental assessment■Schedule (Planned)
Nov. 4, 2014

Submission of “the Document on Primary Environmental Impact Consideration”
to the METI

Jan. 5, 2015

Written opinion issued by the METI on “the Document on Primary Environmental
Impact Consideration”

Apr. 23, 2015

Establishment of Fukushima Gas Power Co., Ltd.

May. 7, 2015

Submission of “the Draft of the Assessment method” to the METI

Oct.6, 2015

Receipt of the recommendation of “the Draft of the Assessment method” from
the METIMid 2016

Submission of “the Draft Environmental Impact Statement” to the METIMid 2017

Completion of procedures of the Environmental Impact Assessment /Commencement of construction

2020

Commencement of commercial operation

24

Rendering of the Soma LNG Terminal
and Natural Gas Power Plants

Targeting commercial operations toTokyo metropolitan area in 2020.
Revitalization of local area
(Job creation, Enterpriseattractions, etc.)

＜Appendix＞ Environment and innovative technology

Geothermal, MH, CCS, Solar power

Geothermal power

CCS

Mt. Musa area
（Shibetsu Town）

Tomakomai City

●
●

●
●
Mt. Furebetsu
south area
（Kushiro City)

Photo provided by JapanCCS Co., Ltd* Ongoing local negotiation.

Facilities of CCS demonstration
project in Tomakomai city

Solar power

Provisional jet testin Mt. Musa area

Methane Hydrate● Bandai area

Mega-solar power station at JAPEX
Hokkaido district office●Offshore Atsumi and
Shima peninsulas

25

Photo provided by JOGMEC

The world’s first offshore methane hydrate
gas production tests

Ⅱ. Actual Results for FY3/16
Executive Officer

Michiro Yamashita

26

Actual Results

Actual Results for FY3/16 (Highlight)
billion JP¥

FY3/16
FY3/15 (a)Initial Estimate(e) (May.12, ‘15)

Revised Estimate(e) (Nov.6, ‘15)

Revised Estimate(e) (Feb.5, ‘16)(a)

Net Sales

304.9

271.1

257.7

245.7

240.3

Operating Income

32.1

9.1

8.6

8.6

8.3

Ordinary Income

54.8

14.0

5.8

5.1

4.6

Profit attributable toowners of parent

29.5

11.7

6.9

5.2

2.0

JCC Price(US$/bbl)

96.48

60.00

54.81

51.37

51.48

Exchange Rate
(JP¥/US$)106.23115.00120.82121.05121.06

Assumptions

 Initial Estimate (May. 2015)
Revised Estimate (Nov. 2015)
Revised Estimate (Feb. 2016)【-】Decline in sales prices for oil and gas,
Foreign currency translation adjustments on the foreign currency denominated debt,
Fluctuation in foreign currency exchange gains and losses,
An increase in the tax expense.
 Revised Estimate (Feb. 2016)
Second revision (Apr. 2016) and Actual Result (May.2016)【-】 Decrease of crude oil sales volume from overseas,
Impairment Loss.

27

Actual Results

Actual Sales of Natural Gas for FY3/16 (year-on-year)
FY3/15

Sales volume : Million M3
Net sales : Million JP¥

1H (a)

FY3/16
Full (a)1H (a)

changeFull (a)1H

FullSales volume

775

1,710

820

1,780

+45

+70

Net sales

37,45883,97433,031

68,469-4,427-15,505

Domestic gas

Sales volume

578

1,276

579

1,276

+0

-0

(Domestically
produced gas)

Sales volume

(382)

(813)

(361)

(769)

(-21)

(-44）

Overseas gas

Sales volume

196

434

241

504

+45

+70

Natural gas
Breakdown(Million M3)

2,000
Sales volume of overseas subsidiary gas

1,800
1,600
1,400

434

504

1,276

1,276

Sales volume of domestic gas

1,200
1,000
800
600
400
Sales volume of “Overseas subsidiary gas” stated herein are amounts ofJapex (U.S.) Corp. and JAPEX Montney Ltd..

200-

FY3/15 (a)FY3/16 (a)28Actual Results

Actual Sales of Crude Oil for FY3/16 (year-on-year)
FY3/15

Sales volume : Thousand KL
Net sales : Million JP¥

FY3/16change
1H

Full

3,233

+372

+837

57,148102,918-16,352-30,428

367

180

340

-10

-27

13,76823,857

8,427

13,815-5,341-10,042

Sales volume

273

830

669

1,616

+396

+786

Net sales

18,56843,466

24,416

48,384+5,847+4,918

Sales volume

152

332

143

306

-9

-26

Net sales

5,382

12,105

2,927

4,894

-2,454-7,211

JCC price

US$/bbl110.06

96.48

59.21

51.48

-50.85-45.00

Bitumen price (***)

US$/bbl

53.36

50.48

26.16

21.05

-27.20-29.43JP¥ / US$102.13106.23121.44121.06+19.31+14.83

Crude oil

1H (a)

Full (a)1H (a)

Full (a)Sales volume

1,107

2,396

1,480

Net sales

73,500133,346

Sales volume

190

Net sales

Breakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)
Assumptions

Exchange rate
(*)
(**)
(***)

Sales volume and net sales of “Domestic crude oil” stated herein do not include purchased crude oil.
Sales volume and net sales of “Overseas crude oil” stated herein are amounts of 3 overseas subsidiaries (Japex (U.S.) Corp., JAPEX Montney Ltd.
and Japex Garraf Ltd.).
Royalty is excluded in the net sales and price of Bitumen. From the 3Q FY3/16, Japan Canada Oil Sands Ltd., overseas consolidated subsidiaries,
have changed functional currency from Canadian dollar to US dollar.

29

Actual Results

Actual Results for FY3/16 (year-on-year)
FY3/15

FY3/16(a)(a)

Net sales

304,911240,302-64,609

Gross profit

70,26247,279-22,983

Exploration expenses

4,489

6,516

+2,027

Million JP¥

ChangeSG&A expenses

33,62532,426-1,199Operating income

32,146

8,336-23,810Non-operating income(expenses)

22,692-3,684-26,376

Ordinary income

54,8394,652-50,187

Extraordinary income(losses)-4,465-3,143+1,322

Income taxes

17,644

6,388-11,256

Profit attributable tonon-controlling interests(losses)

3,161-6,970-10,131

Profit attributable toowners of parent

29,567

2,090-27,477

30

Causes of increase(+) or decrease(-)
Gross profit
Domestic crude oil and natural gas - ¥10.3 billion
Overseas consolidated subsidiaries - ¥11.6 billion
Exploration expenses
Domestic exploration- ¥0.4 billion

Overseas exploration+ ¥2.5 billion

Non-operating income (expenses)
Equity in earnings- ¥10.3 billion
Foreign currency translation adjustments on debt,
Fluctuations in foreign currency exchange gains
and losses
Marginal profit ¥6.6 billion (FY3/15)→Losses ¥8.8 billion (FY3/16)- ¥ 15.4 billion

Extraordinary income (losses)
Decrease of an impairment loss + ¥0.9billion

Ⅲ. Estimates for FY3/17
Executive Officer

Michiro Yamashita

31

Estimates for FY3/17

Revised Full Year Estimates for FY3/17[Assumptions for Crude Oil Prices and Exchange Rate]
Upper: from January 2015 to March 2016.
Lower: from January 2016 to March 2017.

Jan.-Mar. Apr.-Jun.
WTI

US$/bbl

JCC price

US$/bblExchange rate JP\/US$

JACOS
Bitumen

US$/bbl

JML
Gas

CA$/mcf

1.
2.

2015(a)2016(e)

48.70
35.00

57.75
46.50
42.03
48.75
40.00 40.00 50.00
41.25
56.49
62.50
48.91
36.82
51.48
40.00 40.00 50.00 50.00 45.00
119.74 123.31 120.76 120.09 121.06
115.00 115.00 115.00 115.00 115.00

22.37
6.35
2.37
1.95

30.64
11.53
2.35
1.87

2015(a)2016(e)2015(a)2016(e)2015(a)2016(e)2015(a)2016(e)Jul.-Sep. Oct.-Dec. Jan.-Mar.

Full
year

19.70
2.30
1.85

13.55
1.57
1.85

21.05
8.39
2.12
1.88

“JACOS Bitumen” stated herein Bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction of Royalty).
Assuming a temporary suspension of the production operation at the Hangingstone Demonstration Project
area from May 2016, not estimate the 2H sales.
“JML Gas” stated herein Gas sales price of JAPEX Montney Ltd. (Deduction of Royalty)
32

Estimates for FY3/17

Estimated Natural Gas Sales in FY3/17
Sales volume : Million M3
Net sales : Million JP¥

FY3/16
1H (a)

FY3/17Full (a)1H (e)

changeFull (e)1H

FullSales volume

820

1,780

871

1,811

+51

+31

Net sales

33,031

68,46924,88954,607-8,142-13,862

Domestic gas

Sales volume

579

1,276

570

1,259

-8

-17

(Domestically
produced gas)

Sales volume

(361)

(769)

(341)

(737)

(-20)

(-32)

Overseas gas

Sales volume

241

504

300

551

+59

+47

Natural gas ：Breakdown(Million M3)

2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
-

Sales volume of overseas gas

504

551

1,276

1,259

Sales volume of domestic gas

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

FY3/16 (a)FY3/17 (e)33Estimates for FY3/17

Estimated Crude Oil Sales in FY3/17
FY3/16

Sales volume : Thousand KL
Net sales : Million JP¥

FY3/17change1H (a)

Full (a)1H (e)

Full (e)Sales volume

1,480

3,233

1,280

2,564

-200

-669

Net sales

57,148102,918

32,23376,286-24,915-26,632

Sales volume

180

340

150

296

-30

-44

Net sales

8,427

13,815

4,671

10,288-3,756-3,527

Sales volume

669

1,616

669

1,326

-0

-290

Net sales

24,416

48,384

15,86636,182-8,550-12,202

Sales volume

143

306

93

94

-50

-212

Net sales

2,927

4,894

538

568

-2,389-4,326

JCC price

US$/bbl

59.21

51.48

40.00

45.00

-19.21-6.48

Bitumen price (***)

US$/bbl

26.16

21.05

7.96

8.39

-18.20-12.66

Exchange rateJP¥ /US$

121.44121.06115.00115.00

-6.44

-6.06

Crude oil

1H

Full

Breakdown
Domestic crude oil (*)

Overseas crude oil (**)

Bitumen (***)
Assumptions

(*)
(**)

Sales volume and net sales of “Domestic crude oil” stated herein do not include purchased crude oil.
Sales volume and net sales of “Overseas crude oil” stated herein are amounts of 3 overseas subsidiaries (Japex (U.S.) Corp., JAPEX Montney Ltd.
and Japex Garraf Ltd.).
(***) Royalty is excluded in the net sales and price of Bitumen. Japan Canada Oil Sands Ltd., overseas consolidated subsidiaries, has decided totemporarily suspend a production operation of bitumen at the Hangingstone Demonstration Project area from the middle of May 2016. Japan Canada Oil
Sands Ltd., have changed functional currency from Canadian dollar to US dollar from the 3Q FY3/16.

34

Estimates for FY3/17

Estimates for FY3/17
Million JP¥

FY3/16

FY3/17(a)(e)

ChangeCauses of increase(+) or decrease(-)
Gross profit

Net sales

240,302

194,575-45,727

Domestic crude oil and natural gas
Overseas consolidated subsidiaries

Gross profit

47,27930,547-16,732

Exploration expenses

6,516

1,867

-4,649

Exploration expenses

SG&A expenses

32,42628,280-4,146

Overseas exploration

Operating income

8,336

400

-7,936

SG&A expenses

Non-operating income(expenses)-3,684614+4,298

Ordinary income

4,652

1,014

Consignment revenue

Domestic exploration-3,143-69+3,074

Income taxes

6,388

2,510

-3,878Losses attributable tonon-controlling interest(-)-6,970-3,550+3,420

Profit attributable toowners of parent

2,090- ¥1.5 billion

Cost Reduction, Decrease in depreciation- ¥1.0 billion

Non-operating income (expenses)
Equity in earnings- ¥2.8 billion
Foreign currency translation adjustments on debt,
Fluctuations in foreign currency exchange gains andlosses+¥8.2 billion

Extraordinary income (losses)
Decrease in the impairment loss

1,985

-105

35

- ¥1.0 billion- ¥3.6 billion

Decrease of transportation cost and G&A expenses of
JACOS-3,638Extraordinary income(losses)- ¥8.6 billion- ¥5.9 billion- ¥2.5 billion+¥3.0 billion

Estimates for FY3/17

Assumptions and Impact on Profits
Assumptions

JCC price

Exchange rate

Canadian gas prices

45.00 US$/bbl

115.00 JP¥ / US$1.88 CA$/mcf

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

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

FY3/17
Impact on Profits

1 US$/bbl increase in
JCC prices would pushprofits up by...

Operating incomeJP¥ 490 millionJP¥ 260 millionJP¥ 1,480 million

Net incomeJP¥ 340 millionJP¥ 140 millionJP¥ 630 million

FY3/16

Assumptions

1H (a)

2H (a)

FY3/17Full (a)1H (e)

2H (e)

Full (e)changeJCC price

US$/bbl

59.21

42.89

51.48

40.00

50.00

45.00

-6.48

Exchange rate

JP¥/US$

121.44120.47121.06115.00115.00115.00-6.06

Canadian gas prices

CA$/mcf

2.36

1.88

2.12

1.91

1.85

1.88

-0.24

Note:

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

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

 CCS

Carbon dioxide Capture and Storage COP

Conference Of the Parties CSR

Corporate Social Responsibility

 E&P

Exploration and Production

 FID

Final Investment Decision

 GHG

Greenhouse Gas

 HE

Hangingstone Expansion

 HSE

Health, Safety and Environment

 IOR (EOR) Improved (Enhanced) Oil Recovery
 JCC

Japan Crude Cocktail

 JOGMEC

Japan Oil, Gas and Minerals National Corporation

 LNG

Liquefied Natural Gas

 MH

Methane Hydrate

 P/L

Pipeline

 PNWL

Pacific North West LNG

 ROE

Return on Equity

 RRR

Reserves Replacement Ratio SODECO

Sakhalin Oil & Gas Development Co., Ltd.

 TSB

Terang, Sirasun, Batur

 WTI

West Texas Intermediate37