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

July 29, 2021
Japan Petroleum Exploration Co., Ltd.

Ending our Promotion of the Oil Sands Project in Canada,
the Change in Subsidiary, the Recognition of Extraordinary Losses,
and the Voluntary Return of Executive Compensation

Japan Petroleum Exploration Co., Ltd. (JAPEX) announced that its Board of Directors has resolved today
to end our promotion of the oil sands project in Canada (hereinafter the "Project") by Japan Canada Oil Sands
Limited (JACOS), and to transfer all shares of JACOS, holding its 100% shares through Canada Oil Sands
Co., Ltd. (CANOS), a consolidated subsidiary, to HE Acquisition Corporation (HAC).
As a result of this matter, JAPEX expects a change in the subsidiary, recognition of extraordinary losses inthe fiscal year ending March 31, 2022, and voluntary return of executive compensation.

1. Ending our promotion of the Oil Sands Project in Canada
The Project promotes the development and production of oil sands in the Hangingstone leases in Alberta,
Canada. JAPEX, through JACOS, has contributed to establish and spread the technology of oil sands
development and production in Canada since the 1970s. At present, JACOS has been producing bitumen, anextra-heavy oil, of the range of 20,000 barrels per day in the current production area of the Hangingstone
leases, which started production in 2017.
On the other hand, JAPEX formulated the medium-term business plan in 2018 with the recognition of thenecessity to transform our business structure for the sustainable growth even in the market environment of50-60 US dollars per barrel. Based on the recognition, our E&P projects have been striving to improve theirprofitability by optimizing the business portfolio, including the sale of the assets.
The environment surrounding the E&P business is expected to become even more severe due to theprolonging effects of the COVID-19 since early last year, including the structural changes by the new normal
after the COVID-19 and acceleration of the global decarbonization. In light of this situation, we have decided
to end our promotion of the Project and to transfer all shares of JACOS, after considering the medium- to longterm position of the Project as we continue to strengthen our resilience to low oil prices and a low-carbonenvironment.
We will promptly conclude the share transfer agreement between CANOS and HAC and proceed with thenecessary procedures. For details on the share transfer, please refer to "2. Change in subsidiary."
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2. Change in subsidiary
1) Reason for the change
To transfer all shares of JACOS held through CANOS (93.60% of voting rights held by JAPEX; 94.58% ofvoting rights held by the Company including indirect ownership) in accordance with the decision to end topromote the Project.
2) Outline of the subsidiary subject to change
(1)

Name

Japan Canada Oil Sands Limited (JACOS)(2)

LocationSuite 2300, 639 5th Avenue SW, Calgary, Alberta T2P 0M9, Canada

(3)
(4)
(5)
(6)
(7)

(8)

(9)

Title and Name ofRepresentative
Description of Business
Share Capital

IKENO Tomonori, President
Exploration, development and production of oil sands under leaseagreements in Canada
788,255(thousand USD)

Date of Incorporation
Major Shareholder andShareholding Ratio

August 4, 1978
Canada Oil Sands Co., Ltd. (100%)
CapitalJAPEX indirectly holds 100% shares of JACOS

Relationshipthrough CANOS.

Relationship with thePersonnelCompany

Relationship

JAPEX has dispatched four directors to JACOS.

Business

There are transactions related to the dispatch ofRelationshipdirectors and employees from JAPEX to JACOS.

Business results of this company for the past three years
Fiscal year

December 2018

December 2019

December 2020

Net assets (thousand USD)

777,441

797,918

712,564

Total assets (thousand USD)

1,418,944

1,457,680

1,311,194

Net assets per share (USD)

25.65

26.33

23.51

Net sales (thousand USD)

271,317

410,965

209,614△55,113

52,124△69,773△52,715

32,280△85,042

Net profit (thousand USD)

△52,715

20,476△85,354Net profit per share (USD)

△1.73

0.67

△2.81

Dividend per share (USD)－－－

Operating profit (thousandUSD)
Ordinary profit (thousandUSD)

Page 2 / 43) Outline of the other party to the share transfer
(1)

Name

HE Acquisition Corporation（HAC）*(2)Location

Suite 1220, 407-2nd Street, Calgary, Alberta, T2P 2T8, CanadaTitle and Name of(3)Representative

Robert Logan, President and CEO(4)

Description of Business

Development and production operations of oil sands(5)

Date of Incorporation

July 12, 2021

Major Shareholder and(6)Shareholding Ratio

GAC HoldCo Inc 100%
CapitalN/A

Relationship
Personnel(7)

N/A

Relationship with theRelationship

CompanyBusiness

N/A

Relationship
Related parties

N/Astatus*Note: This company is a privately-held company and the information of its share capital, net assets and total assets is notdisclosed.

4) Number of shares to be transferred and status of shares held before and after the transfer
(1)

(2)

Number of shares held
before the change

30,302,083(Number of voting rights：30,302,083)(Percentage of voting rights held: 100%)

Number of shares

30,302,083

transferred(Number of voting rights：30,302,083)
Not disclosed due to confidentiality agreement between the parties.

(3)

Transaction price

The price is determined by negotiation with the counterparty througha fair process.(*)(4)

Number of shares held
after the change0(Number of voting rights：0)(Percentage of voting rights held：0%)*Note: TD Securities acted as a financial advisor to CANOS in connection with the transaction.

5) Schedules(1)

Date of resolution by theBoard of Directors

July 29, 2021

(2)

Date of contract execution

July 29, 2021 (Planned on July 28, 2021 at MDT)(3)Date of share transfer

September 15, 2021 (Planned)

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3. Extraordinary losses recognition related to the transaction
JAPEX expects to record approximately 90 billion yen of a loss on sale of subsidiary shares under
extraordinary loss in the consolidated financial results for the second quarter of the fiscal year ending March31, 2022, concerning the sale of JACOS shares held by CANOS.
The consolidated financial forecast for the fiscal year ending March 31, 2022, including this matter, iscurrently under review and will be disclosed at the time of the announcement of the first quarter financial
results scheduled on August 10, 2021.
In the non-consolidated financial results for the same quarter, JAPEX expects to record approximately 80
billion yen of loss on valuation of subsidiary shares related to CANOS shares held by the Company, andapproximately 10 billion yen of provision for loss on guarantees associated with the Company's guarantee
obligations for a portion of JACOS's borrowings from financial institutions, under the extraordinary losses.
Note: The above extraordinary loss amounts are based on currently available information and certain assumptions. Actual
amounts may differ due to various factors.

4. Voluntary Return of Executive Compensation
In consideration of the prospect of a significant downward revision to the consolidated businessperformance forecast for the fiscal year ending March 31, 2022, due to the recognition of the extraordinary
losses, we have received a proposal for the voluntary return of executive compensation and has decided toaccept it as described below.
1) Details of the voluntary return of executive compensation
Representative Director and Chairman

30% of Monthly CompensationRepresentative Director and President
Representative Director, Executive Vice President (1 person)
Director, Senior Managing Executive Officer (1 person)
Director, Managing Executive Officer (1 person)
Managing Executive Officer (1 person)
Executive Officer (1 person)
2) Period of voluntary return
3 months from August, 2021.
###Page 4 / 4

10% of Monthly Compensation