Actual Results

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

Presentation of Consolidated Financial Results
Ended March 31, 2010
May 17, 2010

Japan Petroleum Exploration Co., Ltd.
1

copyright© JAPAN PETROLEUM EXPLORATION Co.,LTD. All rights reserved.

Cautionary Statement
Any information contained herein with respect to JAPEX’s plans, estimates, strategies and otherstatements that are not historical facts are forward-looking statements about the future performance of
JAPEX. Readers should be aware that actual results and events may differ substantially from theseprojections 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 the prior consent of JAPEX.

Note: The following abbreviations are used within this document:
1H = First half (1Q-2Q)
2H = Second half (3Q-4Q)(a) = Actual result(e) = Estimate
Any inquiries about the information contained herein or other Investor Relations questions should be directed to:Investor Relations Group, Media & Investor Relations Department,
Japan Petroleum Exploration Co., Ltd.
TEL: +81-3-6268-7111

2

Contents

1. Business Overview
and Follow-up of Mid-Term Business Plan

2. Consolidated Financial Results for the Fiscal Year Ended
March 31, 2010

3. Forecasts for the Fiscal Year Ending March 31, 20113

Business Overview
andFollow-up of Mid-Term Business Plan
President

Osamu Watanabe

4Business Overview

¥130

$130

¥125

$120

¥120

$110

¥115

$100

¥110

$90

Exchange Rate￥/$ (right axis)

$80
$70
$60

¥105
¥100
¥95

US$-denominated Price$／bbl (left axis)

¥90

$50

¥85

$40

¥80

Japan Crude Cocktail (JCC) Price in the first ten days of 2010 April ona prompt report basis： ＄78.82 /bbl
¥ 91.01 /＄5[Exchange Rate] \ ／ $$140

2007-01
2007-022007-03
2007-04
2007-05
2007-06
2007-072007-08
2007-09
2007-10
2007-11
2007-12
2008-01
2008-022008-03
2008-04
2008-05
2008-06
2008-072008-08
2008-09
2008-10
2008-11
2008-12
2009-01
2009-022009-032009-04
2009-05
2009-06
2009-072009-08
2009-09
2009-10
2009-11
2009-122010-01
2010-022010-032010-04[Price] $-denominated $/bbl

Trends in Crude oil prices and Foreign exchange rates

Business Overview

Actual Results of FY 2010 and Forecasts for FY2011 [Highlight]
210
205
200

(Unit： billion yen)

207.6
202.1

Net sales

196.8【Actual Results of FY 2010 】

195

Operating income： ¥13.1billion

190（year on year -¥6.9bilｌion）

185

179.7

Net income： ¥17.9billion

180（year on year +¥5.3billion)

175
30
27.2

25
23.2

22.3
19.6

20.0

Operating income： ¥13.2billion
14.9

12.5

13.1

15

（year on year +¥0.1billion）

10

Net income: ¥10.2billion

13.2
10.2

（year on year -¥7.6billion）
5-0
FY2009Operating income【Forecasts for FY 2011】

20

20.0
17.9

FY2008Assumptions:
Crude oil price； $67.50/bbl, Exchange rate； ¥92.74/$-$22.22(YOY)-¥9.82/$ (YOY)FY2010Ordinary income

FY2011(e)

Net income

6

Assumptions:
Crude oil price; $80.00/bbl, Exchange rate; ¥90.00/$+$12.50/bbl (YOY)-¥2.74/$ (YOY)Follow-up of Mid-Term Business Plan

Follow-up of Mid-Term Business Plan for the period from FY2009 to FY2013I.

Definition of the Follow-up of Mid-Term Business PlanII.

Basic strategies for JAPEX expansion

III. Revision of preconditions(assumptions of crude oil price and exchange rate)

Ⅳ． Progress toward the achievement of the numerical targets
1．Proved reserves
2．Natural gas sales volume
3．Income and expenditure （Natural gas sales, Domestically produced crude
oil sales, Consolidated income and operating cash flows, allocations of operating
cash flows）

Ⅴ ．Summary
Details of the JAPEX Group Mid-Term Business Plan (for the period from FY2009 to FY2013) announced on May 21, 2008 canbe accessed on the JAPEX website at the following URL :http://www.japex.co.jp/english/pdf/2008/20080521en_midtermplan_japex.pdf “JAPEX Group Mid-Term Business Plan “ (press
release)Also details of the revision of Mid-Term Business Plan (for the period from FY2009 to FY2013) announced on May 15, 2009 canbe accessed on the JAPEX website at the following URL :http://www.japex.co.jp/english/pdf/2009/JAPEX_Presentation_E_20090515.pdf “Presentation of Consolidated Financial Results for
the Fiscal Year Ended March 31, 2009 “ （P7－P18 ）7

Follow-up of Mid-Term Business Plan

Ⅰ． Definition of the Follow-up of Mid-Term Business Plan
(May 2009) We revised some parts, such as income and expenditure targets, of JAPEX Group
Mid-Term Business Plan announced in May 2008 in light of the rapid deterioration of
the global economic situation and a sharp decline in crude oil prices.
(May 2010)
 We outline in this material the Follow-up of Mid-Term Business Plan for the period
from FY2009 to FY2013 made on the basis of the changes occurred after the above
revision in the business environment.

Mid-Term Business Plan（announced in May 2008 ）－Rapid deterioration of global－Rapid deterioration of global
economic situation
economic situation－Sharp decline in crude oil prices－Sharp decline in crude oil prices

Basic
Basicstrategies
strategiesfor
forJAPEXJAPEXexpansion
expansionSpecific policies and approaches
Provedreserves

Natural gas
sales
volumes

May 2008

PartialPartial revision
revision

Income andexpendituretargets

May 2009
8

Reflection
Reflection ofof thethesubsequentchanges
subsequent changes
inin thethe businessbusiness
environment
environment

Follow-up
Follow-up
ofof
Mid-Term
Mid-Term
Business
BusinessPlan
Plan

(for
(forthetheperiod
periodfrom
from
FY2009FY2009totoFY2013)
FY2013)

May 2010

Follow-up of Mid-Term Business Plan

Ⅱ．Basic strategies for JAPEX expansion
 Three basic strategies for expansion and current approaches
Basic strategy

1.
1.Sustaining
Sustaining

andandincreasing
increasing
reserves
reservesthroughthrough
exploration
explorationandanddevelopment
development

2.
2.Strengthening
Strengthening
our
ournatural
naturalgas
gas
integrated
integrated
operation
operationsystemsystem3.
3.Pursuing
Pursuing

technological
technological
R&D
R&Dactivities
activities
andinitiatives
and initiativestoto
address
addressglobal
globalenvironmental
environmental
challenges
challenges

OutlineCurrent approaches
・Acquisition of E&P right relating to Garraf oil
field in Iraq

・Maintaining and expanding reserves that
become depleted by production and sales.

・Acquisition of the interest of the CBM blockin Indonesia

・Bolstering a long-term, secure oil and natural
gas supply system.

・Promoting examination of the Hangingstoneoilsands expansion project in Canada（Submitted an application for approval to expand theoperation on April 29, 2010）

・Implementing and strengthening gas
integration as an efficient system integrating
upstream, midstream and downstream
operations.
・Organically integrating our distinctive
facilities and service functions.

・Striving to reduce the environmental impactof our operations and becoming proactively
involved in tree-planting programs.
・Promoting technological R&D of CCS,
methane hydrate, GTL and DME, etc.

9・Establishment of Japex Energy Co.,Ltd.
・Decision of the construction of LNG terminalin Yufutsu area (Hokkaido) for domestic
vessels

・Engaging in CCS feasibility studies for the
implementation of large-scale CCS
demonstrations through Japan CCS Co., Ltd.
・Construction of the environmentally-friendly
facility for processing flared gas in Hokkaido
division officeFollow-up of Mid-Term Business Plan

Ⅲ． Revision of preconditions（ Assumptions of crude oil price and exchange rate ）We assume the preconditions as below, reflecting the steady recovery of the crude
oil price after 2009 ：Crude oil price：
price Expected to keep a plateau of $80/bbl after FY11
Exchange rate：
rate Expected to keep the same level of Oct.2009-Feb. 2010
（around ¥90/$）after FY11
Preconditions of revised plan
FY09 (a)FY10（a）

FY11（e）

FY12（e）

FY13（e）

89.7

67.5

80

80

80

102.6

92.7

90

90

90

Crude oil price($/bbl）

Exchange rate(¥/$)

At time of last year’s revision

Crude oil priceassumptions were:
FY10-FY11: $40/bbl
FY12:$60/bblFY13:$80/bbl140

Crude oil price rose reflecting the
expectation of the global economic
recovery (including the U.S.)

Crude oil price jumped
mainly because of the influxof speculative moneyin the market

120
100

80
80
60

Expected to keep a plateau of$80/bbl after FY11

40
20

10

2010.01

2009.09

2009.05

2009.01

2008.09

2008.05

2008.01

2007.09

2007.05

2007.012006.09

2006.05

2006.012005.09

2005.05

2005.01

2004.09

2004.050
2004.01$-denominated $/bbl[Crude oil price (JCC) ]160

Follow-up of Mid-Term Business Plan

Ⅳ． Progress toward the achievement of the numerical targets
1．Proved reserves

Our target is to double our proved reserves from ones as of end-March 2007 to 350 million BOE by
end-March 2013.

Proved reserves as of end-March 2010 decreased by 18 million BOE (around -7%) to 254 million
BOE compared to ones as of end -March 2009. Factors in the decrease are decrease due to
production (around 14 million BOE) and changes due to revaluation (around 4 million BOE).



We aim to exceed the target reserves through steady efforts toward the realization of thedevelopment of Garraf oil field in Iraq, for which we secured wining bid in 2009, and theHangingstone oil sands expansion project in Canada.
Trends in proved oil and gas reserves
TargetMillion of BOE

300

200

272

Million of BOE
350

300

272

254

250

225

31
28

254
26
23

200

176

150
100

350

le
doub

350

250

Proved reserves (by geographical segment)

2 03

1 91

35 0
150

17 5
1 31

100

50

44

50

Mar.31, 2007

Mar.31, 2008

69

63

Mar.31, 2009

Mar.31, 2010

Natural gas

205

Mar.31,2009

Mar.31,201050

0

Crude oil (incl. bitumen)

213

Mar.31, 2013

Target in mid-term plan

110Overseas(equity-method affiliates)
Overseas(consolidated)Japan(consolidated)Follow-up of Mid-Term Business Plan

Ⅳ．Progress toward the achievement of the numerical targets
2．Natural gas sales volume

Target for natural gas sales volume (including LNG satellite supply) is
2.0 billion m3 by FY2014.
FY08 to FY10･････ sales volume remained roughly flat mainly due to theeconomic slump.
FY11 ･････
we expect around 7% increase of the sales volume YOY.
we continue our efforts toward the target.
Natural gas sales target volume

Trends of natural gas sales volume
Sales volume target

billion m3

2.0 billion
2.0 m3/year

2.0
May 2009
Revision

2.0 billion m3
By FY14

1.86

Current status

FY10 ：

1.74 billion m3

1.74

1.5

FY11(e) ：1.86 billion m3
1.0
FY08

12

FY09

FY10

FY11(e)FY14(e)Follow-up of Mid-Term Business Plan

Ⅳ．Progress toward the achievement of the numerical targets
3．Income and expenditure (1)Target for net sales of natural gas and domestically produced crude oil is ¥110 billion in FY2013 on theassumption of crude oil price of US$80/bbl.
Estimated net sales of natural gas and domestically produced crude oil is ¥101.5 billion in FY2011. From
now on, we aim to meet the target by means of increasing the sales volume and revision of selling prices
for natural gas to appropriate levels.

Approach for revising selling prices for natural gas to appropriate levels:⇒ For the purpose of adjusting selling prices of natural gas to a level that reflects changes in the energy market to acertain extent, we will expand the number of large-scale customers to whom we can apply LNG CIF-linked prices.
⇒ METI consolidated the feedstock cost adjustment system for the mixed supply of domestically produced natural gas
and imported LNG, and the system was applied to our wholesale clientele. In response, we revised and continue toreview our natural gas pricing system.

May 2009
Revision¥110 billion

in FY13

Current status

FY10 ：¥91 billion

FY11(e) ： ¥101.5 billion

Net sales of natural gas anddomestically produced oil

Billion yen

Target¥110 billion

110

¥/m3
50

100

45

90

40

80

35

70

Net sales of natural gas and domestically produced oil
Sales price of natural gas（supplied by pipeline）

60

25
20

50
FY 08

13

30

FY 09

FY 10

FY 11(e)FY 13(e)Sales price of natural gas

Trends in sales price of natural gas

Target for sales of Natural gas and domestically produced crude oil

Follow-up of Mid-Term Business Plan

Ⅳ．Progress toward the achievement of the numerical targets
3．Income and expenditure (2)Consolidated income and Operating cash flows
 Estimated Net income of FY09 to FY13(average) is assumed toamount to ¥15 billion, up ¥4 billion（36％） compared to May 2009 revision.
 Estimated Operating Cash flows before deduction of taxes and exploration
expenses of FY09 to FY13(cumulative) is assumed to amount to ¥275 billion, up¥45 billion（20％） compared to May 2009 revision.
 The increase in net sales and operating cash flows are mainly due to :- revision of crude oil price assumption- efforts of revising selling prices for natural gas to appropriate levels- reduction in selling, general and administrative expenses
Estimated consolidated operating cash flows

Estimated consolidated income(Billion yen)(Billion yen, before deduction of taxes and exploration expenses)

May 2009 Revision

May 2010 follow-up

May 2009 Revision

May 2010 follow-up(FY09-FY13 average)(FY09-FY13 average)(FY09-FY13 cumulative)(FY09-FY13 cumulative)

Gross profit

53

57

Gross profit

265

285

Exploration
expenses

11

11

SG&A

-155

-150

Depreciation

120

120

Net income

11

Cost Recovery （Iraq）

－

20

230

275

15

Total
【Note】

The five-year average is shown because estimated net income, etc. for each fiscal year fluctuates considerably due tofactors such as crude oil price, exchange rate trends and the occurrence of exploration investment.
Actual net income for FY09(a): ¥12.6 billion
for FY10(a)： ¥17.9 billion

Estimated net income for FY11：¥10.3 billion

14

Follow-up of Mid-Term Business Plan

【For Reference】
Estimated capital expenditure and depreciation and amortization

 Consolidated depreciation and amortization will decrease after its peak in FY2012.
We expected depreciation and amortization would reach a peak in around FY2011-2013 at the time of
May 2009 Revision.
 Non-consolidated capital expenditure and amortization for the period from FY2009 to FY2013(cumulative) will increase around ¥6 billion compared to May 2009 Revision. Main reason of increaseof ¥5 billion is construction of LNG Terminal for domestic vessels in Yufutsu area (Hokkaido).
Expected capital expenditure for each fiscal year will increase or decrease in accordance with the revised business plan.

May 2010 Follow-up

At time of May 2009 Revision
Unit: billion yen

Unit: billion yen

35

35
Capital expenditure (Non-Consolidated)
Depreciation(Consolidated)
Depreciation(Non-Consolidated)

30

Capital expenditure (Non-Consolidated)
Depreciation(Consolidated)
Depreciation(Non-Consolidated)

30

25

25

20

20

15

15

10

10

5

5

0

0
F Y09

F Y10

F Y11

F Y12

F Y13

F Y14

F Y09

【Note】 Non-consolidated capital expenditure for FY09 and FY10 includes
both “ Property, plant and equipment“ and “Intangible assets”

15

F Y10

F Y11

F Y12

F Y13

F Y14

Follow-up of Mid-Term Business Plan

Ⅳ．Progress toward the achievement of the numerical targets
3．Income and expenditure(3)Allocations of operating cash flows （Revision）

The following projects are added to the investment plan.
1. the development of Garraf oil field in Iraq
2. the Hangingstone oil sands expansion project in Canada (the FID has not been made yet.)
Even on the basis of addition of the above projects, total amounts of the investment for the period from FY2009 to
FY2013 are within the expected operating cash flows.
In case operating cash flows fall short of the target due to various reasons such as volatility in crude oil prices, weconsider adding borrowing funds timely. Based on the Mid-Term Business Plan, we are able to get the funding for our
future growth strategy after setting aside funds for tax payments and shareholder return.
（Billion yen）
Allocations of operating cash flows

May 2009 Revision

May 2010 Follow-up

FY09 to FY13
Operating cash flows(five-year cumulative) (a)FY09 to FY13

FY09 to FY13 FY11 to FY13

(a)

(e)

275

104

171

90
40
37
20

96
96 ＊
43
14

54
8
16
10

42
88
27
4

Total investment(d)＝(b)＋(c)

187

249

88

161

Balance after deduction
from cumulative operating
cash flows (a)－(d)

43

26

16

10

Uses of above balanceTax, Shareholder return,
New investment, etc.

Investment

230

Capitalinvestment(b)
Exploration
investment(c)

Domestic
Overseas
Domestic
Overseas

Same as left (we are prepared to consider borrowing funds)＊including investment through the loans to our equity-method affiliates

16Follow-up of Mid-Term Business Plan

VI . Summary

We announced the partial revision of the Mid-Term Business Plan in May 2009. In the light of subsequentsituations such as a steady rise in crude oil price and some signs of an economic recovery, we make a follow-up of
the Mid-Term Business Plan for the period from FY2009 to FY2013.



We continuously adhere to the basic policies which are composed of the following strategies to expand business.
1. Sustaining and increasing reserves through exploration and development
2. Strengthening our natural gas integrated operation system
3. Pursuing technological R&D activities and initiatives to address global environmental challenges

With respect to proved reserves, we aim to exceed the target reserves through steady efforts toward the realizationof the development of Garraf oil field in Iraq and the Hangingstone oil sands expansion project in Canada.

Consolidated income and operating cash flows for the period from FY2009 to FY2013 estimated in May 2009 arerevised up due to the following reasons.
1. revision of crude oil price assumption
2. revising selling prices for natural gas to appropriate levels
3. reduction in selling, general and administrative expenses



The following projects are added to the investment plan.
1. the development of Garraf oil field in Iraq
2. the Hangingstone oil sands expansion project in Canada (the FID has not been made yet.)
Even on the basis of addition of the above projects, total amounts of the investment for the period from FY2009 to
FY2013 are within the expected operating cash flows.



In case operating cash flows fall short of the target due to various reasons such as volatility in crude oil prices, weconsider adding borrowing funds timely. Based on the Mid-Term Business Plan, we are able to get the funding for
our future growth strategy after setting aside funds for tax payments and shareholder return.

17

Business Overview

Domestic exploration plan for FY2011
 Exploration and Extension well drilling schedule
FY2011
Total
Depth

1Q
4

Akebono SK-5D Extension well
Otomo A1

5

6

7

2Q

3Q

4Q

8

9 10 11 12 1

25,100 m3

Akebono SK-5D(5,100m)○

Exploration well 3,100 m

 Geophysical prospecting survey plan
• 2D seismic survey ：● Exploration well:○ Extension well:■ Seismic survey:

31.0km in Akita Prefecture (Oga Peninsula)• 3D seismic survey：
88.0km2 in Akita Prefecture (around Yurihara)

Oga Hanto 2D (31km)■
Otomo A1 (3,100m) ●■Yurihara 3D (88km2)

Result of Exploration and Extension well in FY2010
FY2010
Total
Depth

1Q

2Q

3Q

4Q

Result4 5 6 7 8 9 10 11 12 1 2 3

Yashimakogen SK-1D Exploration well 3,502 m

Abandoned

2,300 mSucceeded

Iwafune-oki MS-B18-1 Extention well

18

1 well1 well2 sites

Business Overview

CAPEX plan for FY 2011
[Unit: billion yen]

FY08

FY09

FY10

FY11
(e)

billion yen

billion yen

45

Capital expenditure

41.7

30.9

28.8

31.5
40

Depreciation and amortization

16.6

21.5

23.2

45

24.7

35

35

0.7

30
25

Domestic CAPEX ¥19.9 billion

20

36.6

15

16.6

Hokkaido ：Niigata ：Niigata ：ItemExpansion of production facility in Yufutsu
oil and gas field (to be continued to FY2012)
Drilling 1 production well onshore
Expansion of production facility in oil and gas
fields (continued from FY2010)

Overseas CAPEX ¥11.6 billion
Area

21.5

Development of Garraf oil field
Improvement of production facility for theoil sands project (3.75 section area).

Indonesia：

Development of gas field (Block A)

19

25

24.7

20

24.1

19.9

10

5

5

-

FY09

CAPEX（ overseas）

Iraq：
Canada：

23.2

11.6

15

30.2

10

FY08

Item

30

4.7

Main items of CAPEX for FY2011
Area

40

5.1

CAPEX（ domestic）
Depreciation and amortization

FY10

FY11
(e)

Business Overview

Overseas business: Basic Strategy
Ensure an appropriate portfolio balance both exploration projects &development projects
Set strategic regions, continue the regions-focused strategy
Seek up-stream & mid-stream LNG projects
CanadaOil sands development(production & exploration (reserve evaluation))

Iran: JJI S&N (production)
Iraq: Garraf oil field (development)

Middle East

North Africa
2 blocks in Libya(exploration)

Legend=Strategic regions=Blocks in which our consolidated
subsidiaries, equity-method affiliates, etc.
hold interest.

20

Sakhalin
Sakhalin 1 Project(production)

Southeast Asia
Indonesia:
Kangean Block (production & development),
Block A (development), Buton (exploration),
Universe Gas & Oil (production)
Japan CBM (exploration)

Business Overview

Current status of overseas business ① Canada： Oil sands

 Canada Oil Sands Co., Ltd.

 Operator: Japan Canada Oil Sands Limited (JACOS)

Consolidated subsidiary (86.64% owned by JAPEX)(Canadian subsidiary, wholly owned by Canada Oil Sands Co., Ltd. ) Production Area:
Areas in which JACOS holds interest in oil sands leases

producing around 7,000 bbl/d of bitumen
at 19 pairs of SAGD wells in 3.75 section area(100% interest) of theHangingstone area Current status of development of undeveloped part ofHangingstone area (75% interest) ：－ Plan to commence bitumen production with expected capacityof up to 35,000 bbl/d in addition to existing operations.
－ Submitted an application for approval to expand the operationin April 2010 and started work on the front-end engineering
design (FEED).
－ The final investment decision (FID) will be made after obtaining
the regulatory approval－Construction is expected to begin
in the winter of 2011 to 2012
－Production startup is anticipated by the end of 2014

 Contingent resources of undeveloped oil sands areas
held by JACOS:
1,717 million barrels(as of end-December 2008)

Areas where oil sand resources were evaluated:
The Hangingstone area, the Chard area, the Corner area and the Thornbury area were evaluated.
The evaluated areas consist of solely owned and jointly owned areas, are 788.4km2 (gross) or 373.4km2 (net).
Bitumen also exists in the Liege area, but there is no bitumen development plan at present due to the subsurface
conditions of its existence.

21

Business Overview

Current status of overseas business ② Iraq： Garraf oil field■ Type of Contract:■ Counterparty:■ Contract term:■ Effective date:

Development and Production Service Contract
South Oil Company (SOC)
20years（may be extended for a maximum 5 years）
February 10, 2010

Contractors:
Petronas(Operator)
Payment share
Participating interest

60%
45%

JAPEX

North Oil
Company
(NOC)

40%
30%

-%
25%

■ Production plan: early production system

Garraf・ commence initial production at 50,000 bbl/d in 2012・ increase production by 50,000 bbl/d annually・ achieve plateau production target of 230,000 bbl/d in 2016.

■ Expected cumulative production during thecontract term: 1.2 billion barrels

22

Business Overview

Current status of overseas business ③ Sakhalin: Sakhalin 1 Project
OVERVIEW
0

OdoptuOdoptuPAD#2

5

Sakhalin 1 Consortium

10

Kilometers

PAD#1

CompanyCountry

Interest

Exxon Neftegas Ltd.

U.S.

30.0%

Sakhalin Oil and Gas
Development Co., Ltd.

Japan

30.0%

Sakhalinmorneftegas-Shelf

Russia11.5%

RN-AstraRussia8.5%

ONGC Videsh Ltd.

India

20.0%

 Sakhalin Oil and Gas Development Co., Ltd. (SODECO)
Minister of Economy, Trade and Industry
JAPEX
ITOCHU Corp.
Marubeni Corp.
OthersOil to Onshore Processing
Facility at Chayvo Bay

50.00%
14.46%
14.46%
11.68%
9.40%【Chayvo】
OnshoreProcessing
Facility
PAD
Oil Line to
DeKastri

2005:

Commenced production of crude oil. (for Russian domestic market)

Oct.

2006

:

Commenced exports of Sokol crude.

Feb.

2007

:

Reached peak gross production target (250,000 bbl/d).

Jan.

2008

:

Reached cumulative production of 100 million bbl.

Mar.

2008

:

First dividend【Odoptu】

CIDS

Val

Oct.

May 2009:
Started drilling of production well
Latter half of 2010: Plan to commence production【Arkutun-Dagi】 Now under preparation for development

ChayvoChayvoChayvoArkutun - Dagi
Arkutun-Dagi

23

Business Overview

Current status of overseas business ④ Libya: Block 40-3/4, Block 176-4

 Japex Libya Ltd.: Consolidated subsidiary (wholly owned by JAPEX)Offshore Block 40-3/4(coastal area of the Mediterranean Sea) Interest： 42% (Operator)
 Operating result and plan:Mar.-Apr. 2009: Drilled 1st exploration well(⇒abandoned).
May 2010 :Tripoli

Block 40-3/4

Spuded 2nd exploration well.

Block 176-4

Onshore Block 176-4(southwest area of Murzuk region)
 Interest: 100% (Operator)
 Operating result:
Jul.-Sep. 2009: Drilled 1st exploration well(⇒abandoned).

Conducting technical training for engineers from Libyan National Oil Corporation to strengthen mutual
relations.

24Business Overview

Current status of overseas business ⑤ Indonesia: Kangean Block Kangean Energy Indonesia Ltd. (KEI) and two other companies：
companies： EquityEquity-method affiliates
 Block Name: Kangean Block (offshore East Java）
 JAPEX Interest：25%
Jakarta Operator: KEISurabaya Current gross production:
Java Island
Crude oil equivalent of around
10,000 boe/d.

 Pagerungan Utara oil field :Plan to commence production of
4,500 bbl/d in Oct. 2010.

Pagerungan Utara oil field (Development)
West Kangean gas field (Exploration)
Kangean Island

Pagerungan gas field (Production)

 TSB gas field:
Plan to commence production of
300 million cf/d (around 50,000 boe/din crude oil equivalent) in end-2011.

 Plan to expand gross production

East Java Pipeline

TSB gas field (Development)
To
Surabayato around 60,000 boe/d through theabove additional production

 Production Sharing Contract(PSC)： Effective till 2030

25

SepanｊSepanｊang Island oil field (Production)

Business Overview

Current status of overseas business ⑥ Indonesia: Block A Japex Block A Ltd. ：Consolidated subsidiary (wholly owned by JAPEX)(state-run electric power company)(state-run fertilizer plant)

3 gas development fields

 Block Name: Block A (northern Sumatra)□ Interest: 16.67%

 PSC: till end-Aug. 2011 【⇒now applying to extend】
 After success of extending PSC…..
・ plan to commence production in the middle of 2012
・ gross production for 3 gas fields of around 100 million cf/d(around 20,000 boe/d in crude oil equivalent ）26□ Operator: Medco

Business Overview

Current status of overseas business ⑦ Indonesia: Buton Block Japex Buton Ltd.:
Consolidated subsidiary(wholly owned by JAPEX)Block Name:

Buton Block(onshore/offshore block on Buton Island,Southeast Sulawesi)

Interest:
Operator:

40%
Japex Buton Ltd.



Operating results and plans：
2008：
・ Airborne gravity and magnetic surveys
・ 2D seismic surveys

Jakarta2010 4Q：･Plan to drill 1 exploration(obligatory) well(under preparation)

27

Business Overview

Technological R&D initiatives
CCS ( Carbon-dioxide Capture and Storage )Japan CCS Co., Ltd. (incorporated May 2008) is engaged in the following studies for the implementation of large-scale
CCS demonstrations in Japan.
・Feasibility Study on a Total System from Electric Power Generation to CO2 Storage (project funded by NEDO)
・CO2 reduction technology demonstration project (project funded by METI)GTL (Gas to Liquid)
Nippon GTL Technology Research Association (incorporated October 2006) is conducting demonstrations for thecommercialization of GTL technology.
・April 2009 Completion of demonstration plant (500bbl/d)・2009-2011 Demonstrative operation

Methane Hydrate
Participating and cooperating in the Japanese Government’s Methane Hydrate Development Plan aiming for commercial
production by 2018

DME (dimethyl ether)
Fuel DME Production Co., Ltd. is engaged in various activities to promote widespread use of DME.
・June 2008
Completion of manufacturing plant (80,000 ton/year)
・January 2009 Started deliveries

28

Actual Results

Consolidated Financial Results
for the Fiscal Year
Ended March 31, 2010
Senior Managing Director

29

Hiroshi Sato

Consolidated financial results
for the fiscal year ended March 31, 2010 (Highlight)

Actual Results

FY2010FY2008FY2009(a)(a)

Net sales

207,638

202,127

129,313

153,422173,148

177,851

179,752

Operating income

19,62520,090

931

6,454

7,994

11,192

13,119Ordinary income

27,24722,358

5,919

10,74812,534

19,72823,206

Net income

20,097

12,560

4,726

7,744

9,135

15,566

17,939[ million Yen]

Initial estimate
Revised estimate(1) Revised estimate(2) Revised estimate(3)announced May 14 announced Aug.7
announced Nov.6
announced Feb.9

(e)

(e)

(e)

(e)

Actualresult(a)[Oil price and Exchange rate assumptions]
JCC price( USD / bbl )

76.21

89.71

40.00

57.38

64.31

66.41

67.50

Exchange rate ( Yen / USD )114.66102.56

90.00

91.39

92.43

92.73

92.74

Bitumen price ( CAD / bbl )

35.02

66.57

30.00

43.60

46.61

50.25

50.15

Exchange rate ( Yen / CAD )116.35

74.84

75.00

80.00

80.00

88.07

88.07

Initial estimate (May) for FY2010 ⇒ Revised estimates (1) (August(August) and (2) (November)
Recovery of crude oil prices and bitumen prices

Decrease in natural gas demand

Revised estimate (2) (November(November)) for FY2010 ⇒ Revised estimate (3) (February(February))
Rise in crude oil prices

Increase in dividends income

Revised estimate (3) (February) for FY2010 ⇒ Actual results
・Rise in crude oil prices
・Increase in natural gas demand

Posting gain on change in equity occurring
after the listing of an equity-method affiliate

・Increase in equity in earnings of affiliates
・Increase in reversal of allowance for overseas investment loss

Operating income : ¥ 13.1billion （+¥1.9billion） ,Net income : ¥17.9billion （+¥2.3billion）
30

Actual Results

Actual sales of Crude oil in the fiscal year ended March 31, 2010 (YoY comparison)
FY2008Crude oil:

FY2009FY2010YoY change

1Q-2Q

1Q-4Q

1Q-2Q

1Q-4Q

1Q-2Q

1Q-4Q

(a)

(a)

(a)

(a)

(a)

(a)

1Q-2Q

1Q-4Q

Sales volume[thousand KL]

1,227

2,450

1,028

2,337

967

2,125

( 60)

( 211)Net sales[million Yen]

59,177

128,391

73,668

115,933

33,00880,742( 40,659)( 35,190)[ Breakdown of equity oil ]Domestically produced
crude oil:

Sales volume[thousand KL]

253

574

255

569

250

564

( 4)

( 5)

Net sales[million Yen]

12,80532,17019,70930,974

9,394

23,122( 10,314)( 7,852)

Overseas subsidiary
crude oil:

Sales volume[thousand KL]

83

144

76

141

23

25

( 53)

( 115)Net sales[million Yen]

3,806

7,483

5,527

9,065

598

690

( 4,929)( 8,375)

Bitumen:Sales volume[thousand KL]

195

409

205

417

188

411

( 17)

( 6)

Net sales[million Yen]

4,851

10,4689,500

13,0874,140

11,433( 5,360)( 1,653)[Oil price and Exchange rate assumptions]
JCC price( USD / bbl )Exchange rate
( Yen / USD )Bitumen price( CAD / bbl )Exchange rate
( Yen / CAD )65.08
119.9733.91
116.2476.21
114.6635.02
116.35115.39105.2069.77
105.21

89.71
102.56
66.57
74.84

56.83
96.36
42.10
82.97

67.50
92.74
50.15
88.07

( 58.56)( 8.84)( 27.66)( 22.24)( 22.22)( 9.82)( 16.42)
13.23

Sales volume and net sales of “Domestically produced crude oil” stated herein do not include purchased crude oil.
Sales volume and net sales of “Overseas subsidiary crude oil” are the sum totals of the sales volumes and net sales
reported by two overseas consolidated subsidiaries (Japex New Nanhai Ltd. and Japex (U.S.) Corp.).

31

Actual Results
Actual sales of Natural gas in the fiscal year ended March 31, 2010 (YoY comparison)

FY2008
1Q-2Q

1Q-4Q

1Q-2Q

1Q-4Q

1Q-2Q

1Q-4Q

(a)

(a)

(a)

(a)

(a)

(a)

1Q-4Q

1,485

643

1,499

( 3)

13

[million Yen]

20,102

48,982

22,90654,12624,92455,593

2,017

1,467

Sales volume [million m3]

487

1,124

481

1,101

454

1,079

( 27)

( 22)

Increased by 0.8% year on year
Essentially unchanged from the year-ago level

Decrease in demand for industrial use and commercial-scale utility gas customers
amid deteriorating economic conditions
Start of supply to new demand of industrial use

Net sales

1Q-2Q

647

Sales volume of “domestically produced gas” stated herein does not include purchased gas.

Sales volume

YoY change

1,486

Net sales

Of which,
Domestically produced gas:

FY2010631

Sales volume [million m3]

Natural gas:

FY2009

Increased by 2.7% year on year

Decline in selling prices based on pricing formula linked to LNG CIF price
Increase in sales volume and differential profit by price revisions of prior periods
32Consolidated financial results for the fiscal year ended March 31, 2010:
Causes of income fluctuations (YoY comparison)[ million Yen ]

FY09

FY10

1Q-4Q
(a)

1Q-4Q
(a)

≪Causes of increase or decrease (MEMO)≫
YoY change

Gross profit

Net sales

202,127

179,752( 22,374)

Domestic crude oil and natural gas
Overseas consolidated subsidiaries

Gross profit

67,68054,285( 13,394)

Exploration expenses

Exploration expenses

15,352

10,396( 4,956)

SG&A expenses

32,23730,769( 1,467)

Operating income

20,09013,119( 6,971)

Non-operating income(expenses)

2,267

10,087

7,819

Ordinary income

22,35823,206848

Extraordinary income(losses)( 5,250)

162

5,412

Income taxes
Minority interests in income
Net income

Actual Results

Domestic exploration
Overseas exploration(¥5.0 billion)(¥7.9 billion)¥5.1 billion(¥0.1 billion)

SG&A expenses
Special petroleum gain levy in China
Depreciation and amortization¥1.8 billion(¥0.3 billion)

NonNon-operating income (expenses)
Dividends income
Loss on valuation of securities
Provision for cost of abandonment
Foreign exchange losses¥2.8 billion¥1.8 billion¥1.2 billion¥1.2 billion

Extraordinary income (losses)(losses
3,565

4,443

877

Loss on retirement of noncurrent assets andimpairment loss for a production well
¥4.5 billion

981

986

4

Gain on change in equity occurring after
the listing of an equity-method affiliate¥1.2 billion

12,56017,9395,378

33

Forecasts

Forecasts for the Fiscal YearEnding March 31, 2011
Senior Managing Director

34

Hiroshi Sato

Consolidated financial estimates for the fiscal year ending March 31, 2011
– Main points compared with previous year
FY2009
1Q-2Q
1Q-4Q
(a)
(a)

FY2010
1Q-2Q
1Q-4Q
(a)
(a)

FY2011
1Q-2Q
1Q-4Q
(e)
(e)

Net sales

110,912202,127

70,567

179,752

91,123Operating income

12,54620,0902,864

13,119Ordinary income

13,321

22,3585,184

Net income

9,371

12,560[ million Yen]

Forecasts

YoY change
1Q-2Q

1Q-4Q

196,891

20,556

17,1384,185

13,267

1,321

148

23,206

5,231

14,90847( 8,299)

3,498

17,9392,143

10,265( 1,356)( 7,675)[Oil price and Exchange rate assumptions]
JCC price( USD / bbl )115.39

89.71

56.83

67.50

80.00

80.00

23.17

12.50

Exchange rate ( Yen / USD )105.20102.56

96.36

92.74

90.00

90.00

( 6.36)( 2.74)

Bitumen price( CAD / bbl )

69.77

66.57

42.10

50.15

58.35

56.65

16.25

6.50

Exchange rate ( Yen / CAD )105.21

74.84

82.97

88.07

85.00

85.00

2.03

( 3.07)Main points compared with previous yearOperating income+¥0.1billion


Ordinary income¾¾

Gross profit
Exploration expenses andSG&A expenses+¥1.3billion
1.3billion-¥¥1.1billion
1.1billion Domestic exploration expenses¾

Non-operating income(expenses)-¥8.4billion¾

Extraordinary income (losses) -¥2.2billion-¥8.2billion

Net income-¥7.6billion ¾+¥2.8billion.8billion

Income Taxes

35

Dividends income,Equity in earnings (losses) of affiliates
Application of new accounting standards

Forecasts

Estimated Crude oil sales for the fiscal year ending March 31, 2011
FY2009
1Q-2Q(a)
Crude oil:

FY2010

1Q-4Q
(a)

1Q-2Q
(a)

FY2011

1Q-4Q(a)

YoY change

1Q-2Q
(e)

1Q-4Q
(e)

1Q-2Q

1Q-4Q

Sales volume[thousand KL]

1,028

2,337

967

2,125

969

2,017

2

( 108)Net sales[million Yen]

73,668

115,933

33,00880,74240,536

83,713

7,527

2,971

[ Breakdown of equity oil ]Domestically produced
crude oil:

Sales volume[thousand KL]

255

569

250

564

270

594

19

30

Net sales[million Yen]

19,70930,974

9,394

23,122

12,29726,804

2,903

3,682

Overseas subsidiary
crude oil:

Sales volume[thousand KL]

76

141

23

25

2

5

( 21)

( 21)

Net sales[million Yen]

5,527

9,065

598

690

67

128

( 531)( 562)

Bitumen:Sales volume[thousand KL]

205

417

188

411

196

410

8

( 1)

Net sales[million Yen]

9,500

13,0874,140

11,433

6,116

12,4301,976

997[Oil price and Exchange rate assumptions]
JCC price( USD / bbl )Exchange rate
( Yen / USD )Bitumen price( CAD / bbl )Exchange rate
( Yen / CAD )115.39105.2069.77
105.21

89.71
102.56
66.57
74.84

56.83
96.36
42.10
82.97

67.50
92.74
50.15
88.07

80.00
90.00
58.35
85.00

80.00
90.00
56.65
85.00

23.17
( 6.36)
16.25
2.03

12.50
( 2.74)6.50( 3.07)

Sales volume and net sales of “Domestically produced crude oil” stated herein do not include purchased crude oil.
Sales volume and net sales of “Overseas subsidiary crude oil” are the sum totals of the sales volumes and net sales
reported by two overseas consolidated subsidiaries (Japex New Nanhai Ltd. and Japex (U.S.) Corp.).

36

Forecasts

Estimated Natural Gas sales in the fiscal year ending March 31, 2011
FY2009FY2010FY2011

1Q-2Q

1Q-4Q

1Q-2Q

1Q-4Q

1Q-2Q

1Q-4Q

(a)

(a)

(a)

(a)

(e)

(e)

YoY change
1Q-2Q

1Q-4Q

647

1,485

643

1,499

706

1,576

63

77

22,90654,12624,92455,593

26,81960,376

1,895

4,782

Of which,
Sales volume [million m3]
481 1,101
454 1,079
534
Domestically
produced
gas:
Sales volumeof “domestically
produced gas” stated herein does not include purchased gas.

1,188

79

109

Sales volume [million m3]

Natural gas:
Net sales

Sales volume[million Yen]

Increase by 5.1% year on year

Recovery in demand for industrial use and commercial-scale utility gas customers
In FY2010 , increase in new demand of natural gas for industrial use

Net sales

Increase by 8.6% year on year

Increase in sales volume and rise in selling prices based on pricing formula linked to LNG CIF price
Full-year application of the revised selling prices with the Introduction in January 2010 of thefeedstock cost adjustment system for the mixed supply of domestically produced natural gas andimported LNG for general gas utilities
Differential profit by price revisions of prior periods （FY2010）37

Consolidated financial estimates for the fiscal year ending March 31, 2011
Causes of income fluctuations (YoY comparison)
FY10

FY11

1Q-4Q
(a)

1Q-4Q
(e)

YoY change

Net sales

179,752

196,891

17,138Gross profit

54,28555,595

1,309

Exploration expenses

10,396

11,795

1,398

SG&A expenses

30,76930,533( 237)

Operating income

13,11913,267148[ million Yen ]Non-operating income(expenses)

10,0871,640( 8,447)

Ordinary income

23,206

14,908( 8,299)162( 2,073)( 2,235)

4,443

1,759

( 2,684)986

811( 175)

17,93910,265( 7,675)

Extraordinary income(losses)
Income taxes
Minority interests in income
Net income

38

Forecasts≪Causes of increase or decrease (MEMO)≫

Gross profit
Domestic crude oil and natural gas
Overseas consolidated subsidiaries+¥2.2 billion(¥ 0.7 billion)

Exploration expenses
Domestic exploration
Overseas exploration(¥3.2 billion)+¥1.9 billion)

NonNon-operating income (expenses)
Dividends income
Equity in earnings (losses) of affiliates(¥6.6 billion)(¥1.8 billion)

Extraordinary income (losses)
Effect of applying new accounting standards
for asset retirement obligations(¥2.0 billion)

Forecasts

Oil price and exchange rate assumptions in the fiscal year ending March 31, 2011
and impact on profits[Oil price and Exchange rate
assumptions]

JCC price( USD / bbl )Exchange rate ( Yen / USD )Bitumen price ( CAD / bbl )Exchange rate ( Yen / CAD )FY2009FY2010

1-4Q
(a)
89.71
102.5666.57
74.84

FY2011

1-4Q
1H (1-2Q) 2H (3-4Q)
(a)
(e)
(e)
67.50
80.00
80.00
92.74
90.00
90.00
50.15
58.35
55.10
88.07
85.00
85.00

Crude oil price assumption : $ 80 /bbl
Increase of $1/bbl in crude oil prices
would push profits up by…

Operating income¥350 million

Net income¥220 million

Exchange rate assumption : ￥90/$
A weakening in the yen to ￥5/＄ would
push profits up by…

Operating income¥850 million

Net income¥540 million

1-4Q
(e)
80.00
90.00
56.65
85.00

YoY change

Note: Since movements in bitumen selling
prices are often different frommovements in conventional crude oil
prices, the impact of crude oil prices
on oil sands business is not includedin the figures shown here.
Note: In addition to the impact of exchange rate
fluctuations shown on the left, translation
adjustments of foreign-currencydenominated receivables and payables(except for those subject to hedge
accounting) held by the Company and its
consolidated subsidiaries also occur(unrealized gains (losses) are recorded in
non-operating income (expenses )).

Bitumen price assumption : CAD 56.65 /bbl , ￥85/CAD
CAD56.65/bbl ［1H (Jan. - Jun. ) 58.35 + 2H (Jul. - Dec. ) 51.10］

Increase of 1 CAD/bbl in bitumen prices
would push profits up by…

Operating income

CAD 2.58million, ¥220 million

Net income

CAD 2.26million, ¥190 million

Note: The above figures are for reference purposes only.
Actual profits are influenced by a variety of other factors besides
besides crude oil prices and exchange rates.

39

12.50
( 2.74)6.50( 3.07)