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

June 27, 2018
Company Name: Japan Petroleum Exploration Co., Ltd. (JAPEX)Securities Code: 1662 (First Section of Tokyo Stock Exchange)
Representative: Hideichi Okada, President
Inquiries:

Media and Investor Relations Dept.

Tel:+81-3-6268-7110

Transition to 20,000 barrels/d Stable Production Operations
at the Hangingstone Oil Sands ProjectJapan Petroleum Exploration Co., Ltd. (JAPEX) announces the transition to stable bitumen (ultraheavy crude oil extracted from oil sands) production operations of 20,000 barrels per day scale at theHangingstone leases in the Province of Alberta, Canada, where JAPEX, through its consolidated
subsidiary, Japan Canada Oil Sands Limited (JACOS), has been proceeding with development work
(the Hangingstone Oil Sands Project (*1)).
At the Hangingstone Oil Sands Project, JAPEX, through JACOS, commenced drilling of wells andconstruction of facilities in February 2013 aiming at production of bitumen with a daily volume of20,000 barrel scale using the SAGD method (*2). Construction of Central Processing Facility wascompleted in February 2017, injection of steam into the oil sand reservoir was started in late April
2017 as the final preparation step for start-up of production operations (*3), and commenced
production operations in August 2017 (* 4).
Aiming for stable production in latter 2018, the start-up of the operation has gone well, and withthe average of the daily production volume in the recent one month period exceeding 20,000 barrels
per day, the Hangingstone Oil Sands Project has now shifted to the stable production phase.
With its extensive experience of approximately 40 years in the Canadian oil sands business, wewill continue the stable production operations of bitumen for years to come. We will aim tostrengthen the competitiveness and maximize the value of the project by reductions of operating
expenses, general administrative expenses and future capital expenditures, as well as pursuing thepossibility of further improvement of SAGD method including adoption of new technologies.
The consolidated financial forecasts for the fiscal year ending March 31, 2019, remain unchanged
regardless of this matter.

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(Location of Hangingstone leases)(Note)(*1)

The Hangingstone Oil Sands Project is a joint project between JACOS having a participatinginterest of 75% and acting as the operator and NEXEN Energy ULC (a wholly owned subsidiary ofCNOOC Limited) with a participating interest of 25%.

(*2)

In SAGD, two wells with horizontal sections of between 500m and 1,000m in length are drilled witha spacing of approximately 5m between the upper and lower wells in the oil sands layer located at300m underground. The extraction process involves heating the oil sands layer by continuously
injecting high-temperature, high-pressure steam into the upper well to provide liquidity to thebitumen, which in turn flows down to the lower well and is recovered along with hot water. JACOS
has been achieving operational efficiencies that minimize freshwater consumption by recycling atleast 90% of the hot water produced. Heading in to the start-up process, steam is injected into bothproduction well and steam injection well (steam circulation mode) and once sufficient rise intemperature and pressure of the oil sands layer occurs, the wells are switched to full scale use
mode (Semi SAGD/SAGD mode).

(*3)

Press Release by JAPEX, May 2, 2017 “Steam injection starts in Hangingstone Oil Sands Projectat Hangingstone leases in the Province of Alberta, Canada”.

(*4)

Press Release by JAPEX, August 8, 2017, “Start of Production Operations in Oil Sands Project atHangingstone in the Province of Alberta, Canada, and Decision not to Re-start SAGD Operationsin the 3.75 Section Area”.
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