Japan Petroleum Exploration Co., Ltd. (JAPEX)Securities Code: 1662 (Prime Market of the Tokyo Stock Exchange)
Summary of Q&A Session in Briefing on Results for the Fiscal Year Ended March 31, 2023 to Institutional Investors andAnalysts
Date and time:

Monday, May 15, 2023, 11:00–12:05 (both offline and online)

Attendance:

44 attendees (institutional investors and analysts)

Key Questions and Answers:
Q1: How will the financial forecast for this fiscal year be affected by the current spot LNG price? Specifically, please
let us know its impact on the forecasts of profit on sales of natural gas in the domestic E&P business andmarginal gain on LNG procurement in the Infrastructure/Utility Business.
A1: During the fiscal year ended March 31, 2023 (hereinafter, the “previous fiscal year”), the spot LNG price was hovering
between $35 and $40/mmbtu. In the meantime, the financial forecast for the fiscal year ending March 31, 2024
(hereinafter, “this fiscal year”) is based on the assumption that the price will settle down to around $15/mmbtu in thisfiscal year.
While the sales price average of domestic natural gas for this fiscal year is expected to remain high in the first quarterdue to the impact of raw material slide time lag, we expect a drop in the sales price from the second quarter onwards
with the impact fading away. This results in a ¥10.0 billion year-on-year decrease in forecasted operating profit from thesale of domestic natural gas in the domestic E&P business. About half of this ¥10.0 billion decrease in operating profit isattributable to the expected cooling of the spot LNG price hike, and the other half to the lowered JCC price and foreignexchange rate assumptions.
On the other hand, in the Infrastructure/Utility (I/U) Business, marginal gain on LNG procurement and others isprojected to be ¥6.0 billion, compared to the actual results for the previous fiscal year of ¥24.5 billion. We also expect
marginal gain on raw material slide time lag of approximately ¥6.0 billion for this fiscal year, compared to marginal lossof ¥3.5 billion in the previous fiscal year. This is because we made this forecast based on the assumption of a decline inthe JLC price.
Q2: What is your outlook for the future profit contribution and peak production of the tight oil development projectin the United States?
A2: Annual production for the previous fiscal year was 860,000 barrels of crude oil equivalent. Meanwhile, annual
production will likely to be around 3.6 million barrels of crude oil equivalent for this fiscal year. We have factored
operating profit of ¥10.4 billion and net income of ¥8.8 billion in our financial forecast. For the next fiscal year ending
March 31, 2025, we expect around 20% year-on-year decreases in both production and operating profit. We arecurrently making various efforts to maintain the production and operating profit levels for this fiscal year, such as efforts
to acquire additional interests.

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Q3: Please share your thoughts on your cash and deposits utilization policy from a perspective of improving capitalefficiency.
A3: The balance of cash and deposits as of March 31, 2023 amounted to ¥191.9 billion, and we are aware of the high levelof cash in the balance sheet. One of the factors for the high cash level is the simultaneous increases in cash and deposits
and current liabilities. While cash and deposits increased by ¥44.0 billion from the end of March 2022, trade payables
and other current liabilities increased by ¥39.0 billion year on year.
We currently require a total of ¥85.0 billion to ¥90.0 billion funds, which include funds held by overseas projects,
namely Japex Garraf Ltd. (Japex Garraf), Japex (U.S.) Corp. (JUS), and JAPEX UK E&P Ltd. (JUK), of about ¥45.0billion and the entire Group’s working capital of about ¥40.0 billion. The rest of the cash and deposits, which comes to¥100.0 billion, is the amount supposed to be used for investment. To address this, we have been working to explore andstructure various projects.
Q4: What is the expected impact on your business performance of the Seagull Project in the U.K. North Sea, which isanticipated to start production during this fiscal year?
A4: With the assumptions of production starting in the middle of this year and annual production of 760,000 barrels, weforecast operating profit of approximately ¥4.0 billion using the Brent price assumption of $75/barrel. However, thespecific start timing of production has not yet been fixed, and there may be a slippage in the timing to a certain extent.
For the next three fiscal years, including this fiscal year, the project’s operating profit contribution is expected to bebetween ¥3.0 billion and ¥4.0 billion per year, using the crude oil price assumption of $70 to $75/barrel. However, thecontribution to net income is likely to be more limited than initially expected because of the application of a recently
introduced windfall profit tax of 75% until 2028 in the U.K.
Q5: Please explain how you will improve your shareholder return and cash build-up, as well as the current PBR ofbelow 1x.
A5: While we intend to maintain a payout ratio of 30% for the time being, we may have a chance to review the shareholder
return policy in the future. On the other hand, we think there is no immediate remedy for the cash build-up and PBR ofbelow 1x. The Company is currently in a transition period to change its business structure drastically. Therefore, toimplement and achieve the management plan we formulated a year ago, we will make investment in projects that
contribute to our growth in accordance with the plan. We are aware that the current PBR of below 1x is partially due tothe market’s perception that it is quite hard to expect future growth in our business that is centered on oil and gas, in theface of the future megatrend of decarbonatization. The Company expects that oil and gas will still play a pretty majorrole among the entire energy sources at least until around 2050. Based on this, we will strive to achieve both stableenergy supply and decarbonatization by using CCS and CCUS. We are intending to improve our PBR through efforts toincrease business profit from non-E&P businesses and improve the market’s perception of the future of the E&P
business company, as well as through the realization of more E&P projects and their profit contribution.

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Q6: What are the composition ratios of the E&P business, the I/U business, and the CN business to total assets ofapproximately ¥570.0 billion?
A6: The total amount of business assets amounts to approximately ¥200.0 billion by subtracting the amount ofcross-shareholdings and others from the balance sheet (BS) amount of non-current assets of ¥286.0 billion. This ¥200.0billion includes approximately ¥60.0 billion of assets, including Soma LNG Terminal and pipelines, attributable to theI/U business; approximately ¥20.0 billion of assets attributable to the domestic E&P business; and the remaining
attributable to the overseas E&P business. While there are hardly any assets relating to the CN business at this point, theoutstanding balance of renewable energy-related investments, including investment in silent business partnerships andthat in funds, stood at around ¥11.0 billion as of March 31, 2023.
Q7: I agree with what you said that there is no immediate remedy for the current PBR of below 1x from theperspective of the target of 1x, but I would like you to elaborate on whether management has intention tomanage the BS and how much interest outside directors have in this issue.
A7: They have high interest in BS management, and we of course think we should not leave our BS as it is. However, ourhighest-priority management issue is to restructure our business portfolio, and we therefore are focusing on the left-handside of the BS first. And then we will tackle issues in the right-hand side of the BS, such as a required level of equity
capital, adequate level of leverage, and optimal capital structure, taking into account the types and quantities of risks towhich our business assets are exposed.
Q8: As for the TSE’s requirements for improvement of the current PBR of below 1x, please share your timeline of
responsive measures you will take during this fiscal year. I also request you to disclose your improvement plan,
including target performance indicators, when you announce the financial results for the first half of this fiscal
year.
A8: Our executive officers and outside directors are all fully aware of the requirements imposed by the TSE. Although wehave intention to discuss this issue at the Bord of Directors and other meetings, we have not yet decided a concrete
timeline at the moment. With regard to current state analysis, which is one of the TSE’s requirements, we believe that theprevious explanation about our analysis on the market’s perception of the Company, whose business is centered on oiland gas, covers that requirement in essence. We will consider how and when to make a disclosure of this issue, including
indicators and other information, in light of the requirements from the TSE.
Q9: Please tell us about the current status of acquiring new projects for the tight oil development project in theUnited States.
A9: We are working hard to maintain production and profit level. Although the WTI price has recently fallen to $70/barrel, it
is still not easy to acquire new assets as their prices remain high. We will continue to pursue our policy to acquire newassets at reasonable prices.

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Q10: What is the basis for calculation of the forecasted marginal gain on LNG procurement of ¥6.0 billion in the I/Ubusiness for this fiscal year?
A10: The figure was estimated based on our proprietary calculation formula using the JKM and JCC price assumptions of$15/mmbtu and $75/barrel, respectively. How the JKM price affects the JLC price depends on factors such as how
much LNG inventory electric power providers will build up. Therefore, I would like you to take it as only an estimate
made by the Company at this point.
Q11: How did you factor SODECO in your financial forecast for this fiscal year?
A11: We did not factor equity in earnings of SODECO in our financial forecast for this fiscal year. This contributes to the ¥3.8
billion year-on-year decrease in profit.
Q12: What are the factors behind the 13% decrease in forecasted sales volume of domestic crude oil for this fiscalyear? Also, please let us know your outlook for the next fiscal year and beyond.
A12: Domestic crude oil production has been decreasing mainly due to natural decline. We have been making every effort tominimize such a decline, such as drilling new wells at the Katakai Gas Field. However, we need to assume that
production of not only crude oil but also gas will decrease in the longer term.
Q13: Please explain the progress in your new investment projects as details as you can.
A13: We are currently screening quite a few investment projects that we have at the moment, according to their different
phases. I would like to refrain from giving the specific number of investment projects that we are currently working on,
but once a certain number of these projects are realized, we will be able to move forward to achieve our managementplan.
Q14: On what condition will you revise the dividend payout ratio that you set at 30% a year ago?
A14: Before considering a revision, we would like to show you the outline of a new form of the Company first. And thenonce we can establish a new business foundation, we will consider revising our dividend payout ratio. For that reason,
we intend to keep it at 30% for the time being.

Cautionary Statement
This document contains future outlooks such as plans, forecasts, strategies, and others which are not historical fact and these are
made by the management’s judgement based on the obtainable information at the time of the disclosure. Actual results may
significantly differ from those future outlooks due to various factors.
This document is not intended to invite investment.

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail.

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