Consolidated Financial Results for the Three Months Ended June 30, 2010

<under Japanese GAAP>
August 6, 2010
Note: The following report is a summary of the Japanese-language original.

Company name:
Listing:
Securities code:
URL:
President:
Inquiries:

Japan Petroleum Exploration Co., Ltd.
Tokyo Stock Exchange, First Section1662
http://www.japex.co.jp/
Osamu Watanabe
Shigeyoshi Hasegawa, Manager, Media Relations, Media and Investor Relations Department
TEL: (03) 6268-7110
Scheduled date to file Quarterly Report:
August 12, 2010
Scheduled date to commence dividend payments:–
Presentation of supplementary material on quarterly financial results:
Yes
Holding of quarterly financial results presentation meeting:
None(Millions of yen with fractional amounts discarded, unless otherwise noted)

1.
(1)Consolidated financial results for the three months ended June 30, 2010
(April 1, 2010 – June 30, 2010)(Percentages indicate year-on-year changes.)
Consolidated operating results (cumulative)
Net sales

Three months ended

Operating income

Millions of yen% Millions of yen

Ordinary income% Millions of yen

Net income% Millions of yen%

June 30, 2010

46,52623.1

5,176 107.2

6,194

32.4

3,730

(9.2)

June 30, 2009

37,790(36.1)

2,497 (45.8)

4,679 (15.2)

4,106

(1.8)

Net income per share

Diluted net
income per share

Three months ended

Yen

Yen

June 30, 2010

65.27

–

June 30, 2009

71.85

–

(2)

Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of June 30, 2010

471,173369,27876.7

6,322.32

As of March 31, 2010

521,009398,74775.0

6,839.05

Reference: Equity

2.

As of June 30, 2010: 361,337 million yen

As of March 31, 2010:

390,870 million yen

Cash dividends

Fiscal year ended
March 31, 2010
Fiscal year ending
March 31, 2011
Fiscal year ending
March 31, 2011
(Forecasts)
Note:

First quarter
Yen

Second quarter
Yen

Annual dividends
Third quarter
Yen

Fiscal year-end
Yen

–

20.00

–

20.00

40.00

20.00

–

20.00

40.00

Total
Yen

–

Revisions to the forecasts of cash dividends in the current quarter: None

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3.

Consolidated financial forecasts for the fiscal year ending March 31, 2011 (April 1, 2010 - March 31, 2011)(Percentages indicate year-on-year changes.)
Net sales

Operating income

Ordinary income

Net income

Net income pershare

Millionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%Yen

For the six months ending
September 30, 2010

91,123

29.1

4,185

46.1

5,231

0.9

2,143

(38.7)

37.49

Fiscal year ending March
31, 2011

196,891

9.5

13,2671.1

14,908(35.8)

10,265(42.8)

179.60Note:

Revisions to the consolidated financial forecasts in the current quarter: None

4.
(1)

Others (For details, please refer to “Other Information” on page 4.)
Changes in significant subsidiaries during the current quarter: None
Note:

(2)

Application of simplified accounting and specific accounting: Yes
Note:

(3)

Application of simplified accounting and specific accounting for preparing quarterly consolidated financial
statements

Changes in accounting policies and procedures and methods of presentation
a. Changes due to revisions to accounting standards and other regulations: Yes
b. Changes due to other reasons: Yes
Note:

(4)

Changes in specified subsidiaries resulting in changes in the scope of consolidation during the current quarter

Changes in accounting policies and procedures and methods of presentation for preparing quarterly consolidated
financial statements stated in the section of “Changes in significant matters forming the basis of preparing thequarterly consolidated financial statements”

Number of issued shares (common stock)a. Total number of issued shares at the end of the period (including treasury stock)
As of June 30, 2010
57,154,776 shares
As of March 31, 2010
57,154,776 sharesb. Number of treasury shares at the end of the period
As of June 30, 2010
2,033 shares
As of March 31, 2010
1,961 sharesc. Average number of shares during the period (cumulative from the beginning of the fiscal year)
Three months ended June 30, 2010
57,152,796 shares
Three months ended June 30, 2009
57,152,961 shares* Indication regarding execution of quarterly review proceduresThis quarterly financial results report is not subject to the quarterly review procedures in accordancewith the Financial Instruments and Exchange Act. At the time of disclosure of this quarterly financial
results report, the quarterly review procedures in accordance with the Financial Instruments andExchange Act are in progress.
* Proper use of financial forecasts, and other special matters
The forward-looking statements, including the financial forecasts shown in this document are based on
information currently available to the Company and on certain assumptions deemed to be reasonable.
Actual performance and other results may differ materially from these forecasts due to various factors.
For the suppositions that form the assumptions for financial forecasts and cautions concerning the use thereof,
please refer to the section of “Qualitative information regarding consolidated financial forecasts” on page 3 of theattached material to the quarterly financial results report.

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(Attached Material)
1. Qualitative Information Regarding Consolidated Results for the Three Months Ended June 30, 2010
(1) Qualitative information regarding consolidated operating results
During the three months ended June 30, 2010 (from April 1, 2010 to June 30, 2010), net sales was ¥46,526
million, an increase of ¥8,736 million (+23.1%) year on year, as gross profit increased by ¥2,239 million(+17.7%) year on year to ¥14,914 million. The main factors behind the year-on-year increase in net sales
include not only an increase in net sales thanks to rise in bitumen prices, but also an increase in net sales of oil
products, etc. by Japex Energy Co., Ltd., which became a consolidated subsidiary of JAPEX in the third
quarter of the previous fiscal year. The main factor behind the year-on-year increase in gross profit is the risein bitumen prices and crude oil prices.
Exploration expenses decreased by ¥463 million (-16.2%) year on year to ¥2,402 million due to a decrease inoverseas expenditures, despite an increase in domestic expenditures, with selling, general and administrative
expenses up ¥24 million (+0.3%), remaining roughly at the same level, and as a result, operating income
increased by ¥2,678 million (+107.2%) year on year to ¥5,176 million.
Ordinary income was ¥6,194 million, an increase of ¥1,514 million (+32.4%) year on year due to an increasein operating income despite decreasing factors such as a decline in equity in earnings of affiliates and anincrease in loss on valuation of securities.
Income before income taxes and minority interests was ¥3,816 million, a decrease of ¥770 million (-16.8%)
year on year due in part to the recording as extraordinary loss of ¥2,339 million of loss on adjustment forchanges of accounting standard for asset retirement obligations and net income was ¥3,730 million, a decreaseof ¥375 million (-9.2%) year on year.
Below is a breakdown of sales.
(i) E&P
Net sales from E&P (including liquefied natural gas (LNG) and bitumen) was ¥36,253 million, an
increase of ¥1,571 million (+4.5%) year on year, mainly due to rise in bitumen prices.
(ii) Contract services
Net sales from contract services (involved in drilling and geophysical surveys) was ¥1,024 million, an
increase of ¥604 million (+144.0%) year on year.
(iii) Other businesses
Net sales from other businesses, such as the sale of oil products, including liquefied petroleum gas (LPG)
and fuel oil, the transportation of natural gas and oil products on consignment as well as othersubcontracted tasks, was ¥9,248 million, an increase of ¥6,559 million (+244.0%) year on year partly
because of an increase in net sales of oil products, etc. of Japex Energy Co.,Ltd., which became aconsolidated subsidiary of JAPEX in the third quarter of the previous fiscal year.

(2) Qualitative information regarding consolidated financial position
At the end of the first quarter, as compared to the end of the previous fiscal year, total assets decreased by¥49,835 million to ¥471,173 million. This is mainly due to a decrease in investment securities due to the fallin the stock price of INPEX CORPORATION.
Regarding liabilities and net assets, total liabilities was down ¥20,366 million from the previous fiscal year
end to ¥101,895 million, with total net assets also down ¥29,468 million to ¥369,278 million, mainly due tothe decrease in both deferred tax liabilities and valuation difference on available-for-sale securities brought
upon by the aforementioned decrease in investment securities.

(3) Qualitative information regarding consolidated financial forecasts
Regarding consolidated financial forecasts, an examination of the first quarter results revealed that no changes
are necessary to the six months and full-year forecasts released on May 14, 2010.

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2. Other Information(1) Summary of changes in significant subsidiaries
No items to report(2) Summary of simplified accounting and specific accounting
a. Deferral accounting of cost variance
Cost variance arising from seasonal changes in production level is deferred as current assets (other) andcurrent liabilities (other) because such variance is expected to be almost completely eliminated by the endof the cost accounting period.
b. Calculation of taxes
For the taxes, JAPEX and some of its consolidated subsidiaries compute first by reasonably estimating theeffective tax rate after applying tax effect accounting against income before income taxes and minority
interests for the fiscal year including this first quarter, and next by multiplying the quarterly income before
income taxes and minority interests by such estimated effective tax rate. Note that income taxes–deferred isincluded in income taxes.

(3) Summary of changes in accounting policies and procedures and methods of presentation• Changes in accounting standards
a. Application of accounting standard for asset retirement obligations
Effective from this first quarter, JAPEX adopted the “Accounting Standard for Asset Retirement
Obligations” (ASBJ Statement No. 18, March 31, 2008) and the “Guidance on Accounting Standard for
Asset Retirement Obligations” (ASBJ Guidance No. 21, March 31, 2008). Accordingly, the provision forcost of abandonment which was previously recorded was transferred to asset retirement obligations.
As a result, operating income decreased by ¥129 million, ordinary income increased by ¥73 million,
income before income taxes and minority interests decreased by ¥2,266 million. The change in asset
retirement obligations due to the application of this accounting standard and guidance amounted to ¥4,267
million.
b. Application of the “Accounting Standard for Equity Method of Accounting for Investments” and the“Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using theEquity Method”
Effective from this first quarter, JAPEX adopted the “Accounting Standard for Equity Method of
Accounting for Investments” (ASBJ Statement No. 16, March 10, 2008) and the “Practical Solution on
Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method” (ASBJ
PITF No. 24, March 10, 2008).
There was no effect from this change on ordinary income or income before income taxes and minority
interests.
c. Application of accounting standards for business combinations, etc.
Effective from this first quarter, JAPEX adopted the “Accounting Standard for Business Combinations”(ASBJ Statement No. 21, December 26, 2008), the “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, December 26, 2008), the “Partial amendments to AccountingStandard for Research and Development Costs” (ASBJ Statement No. 23, December 26, 2008), the“Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, December 26, 2008), the“Accounting Standard for Equity Method of Accounting for Investments” (ASBJ Statement No. 16,
December 26, 2008) and the “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ Guidance No. 10, December 26, 2008).
d. Change in depreciation method for significant depreciable assets (property, plant and equipment)
Effective from the third quarter of the previous fiscal year, JAPEX changed depreciation method for theassets held for management purposes of the Hokkaido Division Office from the declining-balance method,which was previously applied at the Sapporo Division Office, to the straight-line method. Accordingly, thedepreciation method for that Office’s assets held for management purposes used in the first quarter of theprevious fiscal year and this first quarter differs.
The effect of this change on operating income, ordinary income and income before income taxes andminority interests for the first quarter of the previous fiscal year, where applying the method after thechange, is immaterial.

-4-3. Consolidated financial statements(1) Consolidated quarterly balance sheets(Millions of yen)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures, net
Other, net
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Allowance for overseas investment loss
Total investments and other assets
Total noncurrent assets
Total assets-5-

As of June 30, 2010

As of March 31, 2010
(Summary)

28,90015,101
21,739
4,684
532
4,524
29,149(3)
104,628

24,314
19,774
17,669
4,632
386
5,398
33,403(10)
105,569

50,537
97,911
148,449

50,84893,917
144,765

7,387
7,387

7,450
7,450

193,124
22,917(46)(5,288)210,708
366,545
471,173

246,141
22,921(46)(5,793)
263,223
415,439
521,009(Millions of yen)

Liabilities
Current liabilities
Notes and accounts payable-trade
Income taxes payable
Provision
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Provision for cost of abandonment
Other provision
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets-6-

As of June 30, 2010

As of March 31, 2010
(Summary)

4,386
397
23
11,732
16,539

5,914
2,159
138
13,773
21,98624,11643,176
6,587
–
621
9,858
994
85,355
101,895

24,471
61,386
6,429
6,216
847
–
923
100,275
122,261

14,288274,445(10)
288,724

14,288271,858(10)
286,137

74,230(53)(1,563)
72,613
7,941
369,278
471,173

106,89624(2,186)
104,733
7,876
398,747
521,009(2) Consolidated quarterly statements of income(Millions of yen)Three months ended
June 30, 2009

Three months ended
June 30, 2010

(April 1, 2009 –June 30, 2009)
37,79025,115
12,675(April 1, 2010 –June 30, 2010)
46,526
31,611
14,914

2,892
(25)
2,866
7,310
2,497

2,487
(84)
2,402
7,335
5,176

1,527
612
708
2,848

1,251
79
504
1,834

–
315
193
157
666
4,679

517
–
–
299
817
6,194

2
147
0
150

9
–
0
10

11
231

48
–

–

2,339

243
4,586
355
–
124
4,106

2,387
3,816
(121)
3,937
207
3,730

Net sales
Cost of sales
Gross profit
Exploration expenses
Exploration expenses
Exploration subsidies
Total exploration expenses
Selling, general and administrative expenses
Operating income
Non-operating income
Dividends income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Loss on valuation of securities
Provision for overseas investment loss
Provision for cost of abandonment
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Reversal of allowance for doubtful accounts
Gain on prior period adjustment
Other
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Retirement benefit expenses for prior periods
Loss on adjustment for changes of accounting standard
for asset retirement obligations
Total extraordinary losses
Income before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in income
Net income-7-(3) Notes on premise of going concern
No items to report(4) Notes on significant changes in the amount of shareholders’ equity
No items to report(5) Other notes
Changes in presentation method(Consolidated quarterly balance sheets)
The “buildings and structures, net,” which was included in “property, plant and equipment” of noncurrent
assets as of June 30, 2009 is presented separately as of June 30, 2010, because it exceeded 10% of the total
assets. The “buildings and structure, net” included in “property, plant and equipment” of noncurrent assets
as of June 30, 2009, amounted to ¥51,537 million.
(Consolidated quarterly statements of income)1. The “loss on valuation of securities,” which was included in “other” of non-operating expenses for thethree months ended June 30, 2009 is presented separately from the three months ended June 30, 2010,
because it exceeded 20% of the total non-operating expenses. The “loss on valuation of securities”
included in “other” of non-operating expenses for the three months ended June 30, 2009, amounted to¥0 million.
2. Following the adoption of the “Cabinet Office Ordinance Partially Revising Regulation on Terminology,
Forms and Preparation of Financial Statements” (Cabinet Office Ordinance No. 5, March 24, 2009)
based on the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
December 26, 2008), “income before minority interests” is included in the consolidated statements ofincome for the three months ended June 30, 2010.

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4. Supplemental Information
Status of production and salesa.

Production
Three months ended
June 30, 2010
(April 1, 2010 –June 30, 2010)

Three months ended
June 30, 2009
(April 1, 2009 –June 30, 2009)
147,493

134,244614,401(18,027)(1,426)(21,556)

Natural gas(thousand m3)

273,565

290,364

1,250,630(13,254)(3,824)(48,395)

LNG (t)11,236

14,75557,59998,597102,045

411,603(98,597)(102,045)(411,603)

Crude oil (kl)E&P

(Reference)
Fiscal year ended
March 31, 2010
(April 1, 2009 – March 31, 2010)

Bitumen (kl)Notes: 1. The figures in parentheses represent overseas production and are included in the total.
2. Part of the natural gas production volume is used as a feedstock for LNG.
3. Bitumen is a type of extra-heavy oil extracted from oil sands.

b.

Sales
Three months ended
June 30, 2009
(April 1, 2009 –June 30, 2009)
AmountVolume(Millions of yen)

E&P

Three months ended
June 30, 2010
(April 1, 2010 –June 30, 2010)
AmountVolume(Millions of yen)

(Reference)
Fiscal year ended
March 31, 2010
(April 1, 2009 – March 31, 2010)
AmountVolume(Millions of yen)

Crude oil (kl)458,977

16,348324,825

15,393

1,714,012

69,308Natural gas(thousand m3)

319,813

13,779356,459

14,226

1,499,236

55,593

LNG (t)38,816

3,035

48,6303,155

186,268

12,268Bitumen (kl)

98,074

1,517

101,901

3,477

411,394

11,433

Subtotal

34,681

36,253

148,604

419

1,024

4,859

Oil products
Otherbusinesses Others

–

7,507

–

–

1,741

–

Subtotal

2,689

9,248

26,289Total

37,79046,526

179,752

Contract services

Notes: 1. Effective from the three months ended June 30, 2010, JAPEX changed the presentation method of “Other
businesses” to disclose its sales amounts breakdown as “Oil products” and “Others,” therefore, sales amounts
relating to “Other businesses” for the three months ended June 30, 2009 and the fiscal year ended March 31, 2010
are omitted.
2. “Oil products” includes liquefied petroleum gas (LPG), fuel oil, diesel oil and kerosene, and “Others” includes thetransportation of natural gas and oil products on consignment as well as other subcontracted tasks.
3. Monetary amounts in the table do not include consumption taxes.

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