Note: The following press release is an English translation of the Japanese-language original

Company Name: Japan Petroleum Exploration Co., Ltd. (JAPEX)
Representative: Hideichi Okada, President
Security Code:
1662 (First Section of Tokyo Stock Exchange)
Inquiries:
Media and Investor Relations Dept.
Tel.:+81-3-6268-7110

January 26, 2018

Notice of Recognition of Impairment Loss (Consolidated)and Loss on Valuation of Shares of Subsidiaries and Associates (Non-Consolidated)Japan Petroleum Exploration Co., Ltd. (JAPEX) announced that it will recognize an impairment loss(consolidated) and a loss on valuation of shares of subsidiaries and associates and a provision of allowance foroverseas investment loss (non-consolidated) in the third quarter of the fiscal year ending March 31, 2018(from October 1, 2017 to December 31, 2017) concerning the shale gas project in British Colombia, Canada(hereinafter "the Upstream Project") in which JAPEX has been participating through its overseas subsidiary,
JAPEX Montney Ltd. (JML).
1. Details of the Losses(1) Impairment Loss (Consolidated)
Following the decision of not proceeding with the Pacific NorthWest LNG Project (hereinafter "the PNW
LNG Project")(*1) which had pursued the possibility of producing LNG from the shale gas in the Upstream
Project, JML has decided to reduce the carrying amount of its asset to the recoverable amount based on therevised development plan of the Upstream Project without the assumption of the PNW LNG Project.
According to the decision as above, JAPEX will recognize 750 million Canadian dollars (approximately 68billion yen(*2)) of impairment loss as an extraordinary loss in the third quarter of the fiscal year ending
March 31, 2018.
(2) Loss on Valuation of Shares of Subsidiaries and Associates, and Provision of the Allowance for Overseas
Investment Loss (Non-Consolidated)
Owing to the significant decline of the value of JML's stock resulting from the recognition of theabove-mentioned impairment loss, JAPEX will recognize 39 billion yen of a loss on valuation of shares ofsubsidiaries and associates and 4.4 billion yen of a provision of the allowance for overseas investment loss
as an extraordinary loss in the third quarter of the fiscal year ending March 31, 2018.
2. Impacts on the Financial Statements
The estimated impact to profit (loss) attributable to owners of parent for the nine months ended
December 31, 2017 will be a loss of approximately 34 billion yen due to the recognition of an impairment
loss as above-mentioned.
The above-mentioned losses recognized in the non-consolidated financial statements will have no impact
on the consolidated financial results because those losses are eliminated in the consolidated financialstatements.
The consolidated financial forecasts for the fiscal year ending March 31, 2018 are under examination andwill be disclosed promptly if and when it becomes necessary.

3. Future of the Upstream ProjectDue to not having the assumption of the PNW LNG Project, the estimated sales volume of the shale gas
for the purpose of assessing the recoverable amount of JML’s assets was reduced, but the total shale gas
volume existing in the area of the Upstream Project is not reduced.
The Upstream Project will continue to pursue its efficient development and production as well as
maximizing the value of the project. JAPEX and JML remain committed to maximize the value of theUpstream Project taking advantage of our strengths and expertise in the E&P business.

Notes)*1: Refer to the announcement "Pacific NorthWest LNG Project in British Columbia, Canada, Is Not Proceeding" on July 25,
2017*2: Based on the assumption of an exchange rate as 90.69JPY/CAD
The assumptions and forecasts figures in this announcement are based on the currently available information. Actual
performances and other results may differ materially due to various factors in the future.

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