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

May 14, 2020
Company Name: Japan Petroleum Exploration Co., Ltd. (JAPEX)
Representative: Masahiro Fujita, Representative Director and President
Security Code:

1662 (First Section of Tokyo Stock Exchange)

Inquiries:

Media and Investor Relations Dept.

TEL.:+81-3-6268-7110

Introduction of a Performance-linked Share based Compensation Plan

Japan Petroleum Exploration Co., Ltd. (JAPEX, “the Company”) tentatively decided to
introduce a performance-linked share based compensation plan for the Directors excluding theOutside Directors and Executive Officers who do not concurrently serve as Directors(hereinafter collectively referred to as “Directors, etc.”), which is called the “Board Benefit
Trust (BBT)” (hereinafter “the Plan”) in the Board of Directors held today. The Plan subjects
to the approval at the 50th Ordinary Meeting of Shareholders to be held on June 26, 2020, andtherefore notifies as follows.

1.

Background and the Purpose of the Plan
The Board of Directors decided to introduce the Plan, subject to the approval at the Ordinary

Meeting of Shareholders, to further clarify the linkage between compensation for the Directors,etc. and the corporate performance and share value of the Company, and to ensure that not
only the benefits of increases in share prices but also the risk of a decrease in share prices isshared between Directors, etc. and the shareholders, in order to further motivate Directors,etc. to contribute to the improvement of the business performance and corporate value overthe medium-to-long term. The Company has established the Nomination and Compensation
Advisory Committee under the Board of Directors, in order to make the procedures fordetermining compensation, etc. transparent and objective, and the introduction of the Plan
has been deliberated by said Nomination and Compensation Advisory Committee.
With the introduction of the Plan, the compensation of the Company’s Directors will consistof monthly compensation, bonus, and performance-linked share-based compensation. The ratio
ofperformance-linkedcompensation(bonusandperformance-linkedshare-basedcompensation) to total compensation is expected to be roughly 20%, after the introduction ofthe Plan.
12. Amount of compensation, etc. and reference information for the Plan
(1) Outline of the Plan
The Plan is a performance-linked share-based compensation plan under which the Company’sshares are acquired through a trust, using money contributed by the Company as the financial
funds (hereinafter the trust that is established based on the Plan is referred to as the “Trust”),and Directors, etc. are provided with the Company’s shares and an amount of money
equivalent to the market value of the Company’s shares (hereinafter referred to as the“Company’s Shares, etc.”) through the Trust, in accordance with the Rules on Provision ofShares to Officers established by the Company. The Directors, etc. shall receive the Company’sShares, etc. upon their retirement from office, in principle.
(2) Persons eligible for the Plan
Directors (excluding Outside Directors) and Executive Officers who do not concurrently serve
as Directors(3) Trust period
From August 2020 (planned) until the termination of the Trust. (With regard to the trust
period, we shall not set a specific date for the termination of the Trust, and the Trust willcontinue as long as the Plan continues. The Plan will terminate upon the delisting of theCompany’s shares or abolition of the Rules on Provision of Shares to Officers, or in certain
other cases.)(4) Trust amount (amount of compensation, etc.)
Subject to approval at 50th Ordinary General Meeting of the Shareholders, the Company will
introduce the Plan for the three fiscal years from the fiscal year ending March 31, 2021 to thefiscal year ending March 31, 2023 (hereinafter, such three-fiscal-year period is referred to as
the “Initial Period,” while the Initial Period and each five consecutive fiscal year period
following the Initial Period are respectively referred to as the “Applicable Period”), as well as
each Applicable Period that follows, and contribute money as defined below to the Trust, as
the financial funds for the Trust to acquire the Company’s shares for the purpose of providing
the Company’s Shares, etc. to Directors, etc.
The Company will initially contribute funds of up to 141 million yen (including 63 million yenfor Directors) to the Trust, as the necessary funds for the Initial Period, upon establishing theTrust (August 2020 (planned)).
Furthermore, after the expiration of the Initial Period, in principle, the Company will makeadditional contributions to the Trust of up to 235 million yen (including 105 million yen forDirectors) for each Applicable Period until the termination of the Plan. However, in the casethat such additional contributions are made, if the Company’s shares (excluding the number2

of the Company’s shares that have not yet been provided to Directors, etc. equivalent to points
granted to them for each Applicable Period up to the immediately preceding Applicable Period)and money remain in the Trust (such shares and money are collectively referred to as the“Remaining Shares, etc.”), the total amount of the Remaining Shares, etc. (the amount for theCompany’s shares shall be the book value on the final day of the immediately preceding
Applicable Period) and additionally contributed money shall not exceed 235 million yen(including 105 million yen for Directors).
Moreover, the Company shall disclose information in a timely and appropriate manner, in theevent of a decision to make additional contributions.
(5) Acquisition method of the Company’s shares and number of shares to be acquired
The Trust shall acquire the Company’s shares through the stock market on which theCompany’s shares are listed, or by way of subscribing to a disposition of the Company’streasury shares, using the money contributed in accordance with (4) above as the funds.
Up to 94,200 shares shall be acquired without delay, after the establishment of the Trust in
the Initial Period.
The details of the acquisition of the Company’s shares by the Trust shall be disclosed in atimely and appropriate manner.
(6) Calculation method of the number of the Company’s Shares, etc. to be provided to Directors,etc.
Based on the Rules on Provision of Shares to Officers, the Company shall grant Directors, etc.
a specified number of points determined after having given consideration to factors related to
the respective fiscal years, such as their positions and the Company’s business performance(from the perspective of maintaining the basic policy for long-term stable dividends, theCompany plans to use the annual dividend amount as an indicator for evaluation ofperformance during the Initial Period, and to set a target value of 50 yen per share, with arange of fluctuation from 0% to 120%, assuming that the payout ratio at the target value is100%). The total number of points granted to Directors, etc. per fiscal year shall be limited to31,400 points (including 14,000 points for Directors). This was decided based on acomprehensive consideration of the current level of officer compensation, as well as trends andfuture prospects, etc. for the number of Directors, etc., and was judged to be appropriate.
Each point granted to the Directors, etc. shall be converted into one common share of theCompany at the time of the provision of the Company’s Shares, etc., as explained in (7) below(provided, however, in the case where the Company’s shares become the subject of a share split,
allotment of shares without contribution, or consolidation of shares, etc. after this proposal isapproved, the limit on the number of points, accumulated number of points granted, or theconversion rate shall be adjusted in a reasonable manner, in proportion to the relevant ratio,3etc.).
The number of shares equivalent to the maximum number of points granted to Directors, etc.
per fiscal year (31,400 shares), as a percentage of the total number of issued shares (as ofMarch 31, 2020; excluding treasury shares) is approximately 0.05%.
The number of points for Directors, etc. to be used as the basis for the provision of theCompany’s Shares, etc. described in (7) below shall be the accumulated points granted toDirectors, etc. by the time of their retirement from office, in principle (hereinafter referred toas the “Number of Points Held” for the points calculated in this manner).
(7) Provision of the Company’s Shares, etc.
If a Director, etc. retires from office and fulfills the beneficiary requirements stipulated in theRules on Provision of Shares to Officers, the Director, etc. may receive the provision of theCompany’s shares from the Trust after his/her retirement from office, in accordance with theNumber of Points Held as explained in (6) above, in principle, by completion of the prescribed
procedures to become a beneficiary. However, if the requirements stipulated in the Rules on
Provision of Shares to Officers are fulfilled, a Director, etc. can receive monetary provisions
equivalent to the market value of the Company’s shares, in place of provision of the Company’sshares, for a certain proportion. In this case, the Trust may sell the Company’s shares in orderto make the monetary provisions.
(8) Exercising voting rights
Voting rights of the Company’s shares held in the Trust shall not be exercised, withoutexception, at the instruction of the trust administrator. This is intended to ensure that theexercise of voting rights of the Company’s shares held in the Trust is neutral with respect tothe management of the Company.
(9) Handling of dividends
The dividends of the Company’s shares held in the Trust shall be received by the Trust, andshall be used primarily for acquisition of the Company’s shares, or for trust fees to the trustee
pertaining to the Trust. Upon any termination of the Trust, any dividends, etc. remaining in
the Trust shall be donated to organizations that have no conflict of interest with the Companyor its officers, or provided to the Directors, etc. in office at that point in time in a proportionate
manner, depending on the number of points respectively held.

(10) Handling of the termination of the Trust
The Trust will terminate in cases such as the delisting of the Company’s shares or abolition ofthe Rules on Provision of Shares to Officers.
4With regard to the Company’s shares among the residual assets of the Trust at the time oftermination of the Trust, the Company plans to acquire all such shares without consideration,and cancel them by resolution of the Board of Directors. Of the residual assets of the Trust at
the time of termination of the Trust, the balance of said money excluding money donated toorganizations or provided to Directors, etc. in accordance with (9) above, will be provided tothe Company.
<Structure of the Plan>[Trustor](3) Acquisitionof shares(5) Non-exercise of
voting rights[Trustee]Mizuho Trust & Banking Co., Ltd.
(Re-trusted to theTrust & Custody Services Bank, Ltd.)The Company’s shares

Trust administrator

Instructions on
non-exercise of voting rights(6) Provision of theCompany’s Shares,etc.

[Beneficiary]
Directors, etc. who have retired
and satisfy the beneficiary
requirements(1) The Company will establish the Rules on Provision of Shares to Officers within the scope of theframework approved in this proposal.
(2) The Company will entrust money within the scope approved in this proposal.
(3) The Trust will acquire the Company’s shares through the stock market on which the Company’s sharesare listed, or by way of subscribing to a disposition of the Company’s treasury shares, using the money
entrusted as in (2) above as the funds.
(4) The Company will grant points to Directors, etc. in accordance with the Rules on Provision of Shares toOfficers.
(5) The Trust will not exercise voting rights of the Company’s shares held in the Trust in accordance with
the instructions of the trust administrator, who is independent from the Company.
(6) The Trust will provide those individuals who retire from office as Directors, etc. and fulfill the beneficiary
eligibility requirements stipulated in the Rules on Provision of Shares to Officers (hereinafter referred toas the “Beneficiaries”) with the Company’s shares, according to the number of points granted to therelevant Beneficiary. However, if a Director, etc. fulfills the requirements stipulated in the Rules on
Provision of Shares to Officers, the Company will provide the Director, etc. with money equivalent to5

Acquisition of beneficiary(2) Entrustment of money

Directors, etc.

(4) Granting of points

The Company

[Outline of the Trust](1) Name:(2) Trustor:(3) Trustee:(4) Beneficiaries:(5) Trust administrator:(6) Type of trust:(7) Date of conclusion of trust agreement:(8) Date of entrustment of money:(9) Period of trust:

Board Benefit Trust (BBT)
Japan Petroleum Exploration Co., Ltd. (JAPEX)
Mizuho Trust & Banking Co., Ltd.
(Re-Trustee: Trust & Custody Services Bank, Ltd.)

Directors, etc. who have retired and satisfy the beneficiary
requirements stipulated in the Rules on Provision of Shares toOfficers
Planned to call for the selection of a third-party with no vested
interest in JAPEX
Money trust other than cash trust (third-party beneficiary trust)August 2020 (planned)
August 2020 (planned)
From August 2020 (planned) until termination of the trust(The trust will continue, without a specific termination date, as longas the Plan continues.)###6/6