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

Financial Results

for the Six Months Ended September 30, 2020

November 10, 2020

Japan Petroleum Exploration Co., Ltd.
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

Contents
Ⅰ. Financial Highlights and Business Overview
Masahiro Fujita

Representative Director and President, Chief Executive Officer

Ⅱ.

Financial Results
for the Six Months Ended September 30, 2020

Ⅲ.

Revised Financial Forecasts
for the Fiscal Year Ending March 31, 2021
Michiro Yamashita
Director, Managing Executive Officer

Note) These charts will be also used as the explanatory material in the financial briefing to beheld on November 11, 2020.

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

2

Ⅰ. Financial Highlights and Business Overview

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

3

Financial Highlights and Shareholder Return■ FY3/21 1-2Q Results （Year-on-Year）

 Despite starting electricity sales aligned to the operation commencement of the Fukushima Natural Gas Power
Plant*, profits declined due to a significant drop in crude oil prices and a decline in sales volume by the
COVID-19 pandemic.
(Billion Yen)

FY3/20 1-2Q (a)FY3/21 1-2Q (a)Change

162.3

98.1

-64.2

-40%

Operating profit (loss)

7.7

-6.2

-14.0

-

Ordinary profit (loss)

13.6

-6.8

-20.4

-

Profit (loss) attributable to owners of parent

12.0

-6.9

-19.0

-

Net sales■ FY3/21 Full Year Forecast Revision （vs. Aug.11 Forecasts）

 Profits are expected to improve due to increase in sales prices and sales volumes of diluted bitumen, anddecrease in foreign exchange losses.
(Billion Yen)

Aug. 11, 2020 (f)Nov. 10, 2020 (f)Change

219.9

208.0

-11.8

-5%

Operating loss

-7.7

-5.3

+2.3

-

Ordinary loss

-5.4

-2.4

+2.9

-

Loss attributable to owners of parent

-6.5

-1.9

+4.6

-

Net sales■ Shareholder Return

 Annual dividend forecast for the fiscal year ending March 31, 2021 remains unchanged at 50 JPY per share (25JPY at the interim and 25 JPY at the year-end)Note) *Operated by Fukushima Gas Power Co., Ltd., which is invested by 5 companies as partners, including JAPEX
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

4

FY3/21 Current Progress on Main Business■Business development：□Growth investment／●Demonstration or Examination phase：○ Growth investment

E&P Business[Maintain and Increase domestic production volume] Shallow Reservoir of Yufutsu Oil and Gas Field at Hokkaido: Crude oil production started in June, 2020
[Develop overseas E&P projects and improve profitability]
 Garraf Oil Field in Iraq: Temporarily suspended operations due to the COVID-19 (Production resumed in July)

COVID-19
Infection The plateau production target of 230,000 barrels per day at the Iraqi Garraf Field is not expected at the end of 2020.
 The development schedule for U.K. North Sea Seagull Field (scheduled to begin production at the end of 2021) may be affected.
 Considering investments to current projects and reviewing overseas portfolio, taking market conditions such as crude oil prices
into account.

Infrastructure/Utility Business[Solid business foundation against oil price volatility]
 Fukushima Natural Gas Power Plant*: Commenced commercial operation in August.
• The second phase construction of Soma LNG terminal such as No. 2 LNG tank and additional gasification facility :Transferred the full-scale operation in August.
[Renewable energy development] Large-scale offshore wind power generation in Japan: Participated in consortiums, including north Akita, Akita central,and offshore Yuza of Yamagata, which are under preparation for the public tender
COVID-19
Infection

 Despite the temporary decline in domestic gas demands mainly by the COVID-19, the I/U business itself will be able to secure acertain profits by flexible LNG procurement and additional electricity sales.

New Business Development[New business model construction]○ Early-introduction of LNG-fuel trucks: Launched local industrial study groups at Hokkaido and Tohoku in September.
Note) *Operated by Fukushima Gas Power Co., Ltd., which is invested by 5 companies as partners, including JAPEX (33% share)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

5

Electricity: Sales Start from the Power Plant at Soma


Significance of the project Stable and flexible supply of environmental-friendly electricity generated by LNG as a fuel.
 Contribution to the Fukushima Innovation Coast Initiative and the economic and industrial developmentof the surrounding area.

Contribution to profit Began the electricity sales as a solid business foundation against oil price volatility.
 Revenue by the tolling model-based commissioned operation, such as receiving, regasifying, andsupplying LNG as a fuel of the power generation.

FGP’s Tolling Model
Deliver the electricity
equivalent to the brought-in LNG
to each partner

Electricity
Supply and sale
electricity individually

Electricity

5 partners(FGP shareholders)
JAPEX’s share：33％
Each partner individually
procures their fuel LNG
and sales their electricity

Generate electricity by regasified LNG,
Deliver the electricity to each partner
Outsource LNG
receiving and regasification/
Operation and management of
FGP facilities at the terminal

Regasified
LNG

Outsource LNG
receiving to regasifying,and power generation

Fukushima Gas Power Co., Ltd. (FGP)

Fukushima Natural Gas Power Plant

Regasify and supply
fuel LNG to the plantat FGP's request

JAPEX

LNG

Soma LNG Terminal

Procure and bring individuallyin a quantity of LNG equivalent
to the required electricity

Receive, store, regasify and supply
regasified LNG to the plants / Execute
operation and management of FGP facilities

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

6

FY3/21 Current Progress on Main ESG Challenges
E

Environment[Contribution to the Low-carbonization]
 Listed in the “Zero-Emission Challenge Companies” by METI in October.
•

S

Nominated JAPEX's activities on the "CCUS R&D and development and demonstration project" and "R&D of supercritical geothermal power
generation technology" commissioned by NEDO (New Energy and Industrial Technology Development Organization)

Social[Stable Energy Supply] [To COVID-19] Introduced a non-contact cargo handling at the Soma LNG Terminal since April.
•

A temporary procedure to reduce interpersonal contacts ensuring safety, when receiving LNG from an ocean-going vessel to a terminal[Developing a Rewarding work environment] [To COVID-19] Trial and expanding "new normal” workstyle since April.
•
•
•


G

•

Expanded working-from-home system, temporarily abolished core hours of the flex-time working
Enhanced a remote access environment and recommended online meetings with inside and outside
Installed a guidelines for active communication between in offices and at home

Establishment of the “JAPEX Health Management Declaration” in October.
Clarified the health improvement of employees and their families as a management challenge

Governance[Strengthen Corporate Governance Structure] Increased the number of independent directors, shortened the term of officeof directors, and revised the executive compensation plan in June.
•

Taking the Companywide measures
to minimize the impactof the COVID-19
Continuing usual operations
in domestic oil and gas fields
and gas supply facilities

Increasing the number of independent directors from 3 to 4, the ratio of independent directors ismore than 1/3 of all directors[Enhance Governance] Participated in the “United Nations Global Compact” in May.

[Risk Management] [To COVID-19] Applied the business continuity structure against the COVID-19 since February.
•

Based on the existing business continuity plan, appropriate review is undertaken such as the company-wide and thoroughly measures forpreventing infection, and the communication/decision-making process.

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

7

Ⅱ.

Financial Results
for the Six Months Ended September 30, 2020

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

8

E&P Business Sales for 1-2Q FY3/21 (Year-on-Year)
FY3/20 1-2Q(a)Net sales：Million Yen

FY3/21 1-2Q(a)SalesvolumeNet sales

Sales
volume-93,417

1,469

ChangeNet sales

Sales volume-

37,547-

68,902

1,126

28,452

-343

147

7,371

138

3,726

629

28,719187

4,701

Purchased crude oil

692

32,812800

20,024

Diluted bitumen*2

838

23,385

613

7,757

212

1,129

229

1,336

E&P Business-Net sales-①-55,870

-60%

-23%

-40,450

-59%

-9

-6%

-3,645

-49%

-442

-70%

-24,017-84%-12,787-39%(Breakdown)
Crude oil
Crude oil
- Japan
Crude oil- overseas*1

Natural Gas- Overseas＊3

Thousand KL

Million M3②+107 +16%

④

③

-224

-27%

-15,627

-67%

+16

+8%

+207

+18%

Main factors for change① Decrease in sales volume and price of crude oil (overseas), and sales price of purchased crude oil and diluted
bitumen.
② Decrease in sales volume and price of crude oil from Garraf Oil Field in Iraq.
③ Decrease in sales price of purchased crude oil from SODECO.
④ Decrease in sales price and sales volume, due to the reduction in production of diluted bitumen at the
Hangingstone Lease in Canada.
*1 Including the amounts of 3 overseas subsidiaries (Japex Garraf Ltd., JAPEX Montney Ltd. and Japex (U.S.) Corp.)*2 Royalty is excluded in the net sales and price of diluted bitumen*3 Including the volume of 2 overseas subsidiaries (JAPEX Montney Ltd. and Japex (U.S.) Corp.)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

9

I/U Business Sales for 1-2Q FY3/21 (Year-on-Year)
FY3/20 1-2Q(a)Net sales：Million Yen
Infrastructure /Utility Business

Sales
volume-FY3/21 1-2Q(a)Net sales

Sales
volumeChangeNet sales

Sales volume--40,303-43,982533

28,232520

25,059216-

Net sales-① +3,679+9%(-3,173-11%(Breakdown)
Natural Gas- JapanMillion M3- Produced in Japan
LNG

270
Thousand Ton

Electricity

Million kWh

Others*1

-

-

②

-12

-2%

-53

-20%

-54

-36%

149

10,319

94

6,475

③

1

72

1,274

10,042④ +1,272 +70,599%

-

2,405

-

1,679

-

-

-

-

-3,843-37%+9,969+13,796%
+725

+43%

Main factors for change① Increase in electricity sales volume and revenue of commissioned regasification of LNG.
② Decrease in sales price and decrease in sales volume, mainly due to the economic stagnation by COVID-19.
③ Decrease in sales volume.
④ Increase in electricity sales volume, due to the commercial operation commencement of the Fukushima
Natural Gas Power Plant.

*1 Including the revenue from contracted transportation of natural gas and commissioned regasification of LNG
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

10

1-2Q FY3/21 Results (Year-on-Year)
FY3/20
1-2Q (a)Million Yen

FY3/21
1-2Q (a)ChangeNet sales

162,346

98,127-64,219-40%

Gross profit

23,101

8,884-14,217-62%

Operating profit (loss)

7,730-6,271-14,001-%

Ordinary profit (loss)

13,636-6,837-20,473-%

Profit (loss) attributable to owners ofparent12,069-6,975-19,045-%

Oil Price, Exchange Rate and Sales Price
FY3/20
1-2Q (a)WTI
Crude oil price (CIF)

USD/bbl

FY3/21
1-2Q (a)Change

57.51

39.59

-17.92

69.13

38.11

-31.02

Exchange rate

JPY/USD

109.78107.46-2.32

JACOS Diluted bitumen＊1

USD/bbl

41.20

18.64

-22.57

JML Natural gas*2

CAD/mcf

1.82

2.09

+0.28

*1 Diluted bitumen sales price of Japan Canada Oil Sands Ltd. (Excl. Royalty)*2 Natural gas sales price of JAPEX Montney Ltd. (Excl. Royalty)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

11

Analysis of 1-2Q FY3/21 Net Income Result (Year-on-Year)
Rounded to the nearest 100 million yen

Billion Yen

JACOS
JML

-10.6 bn.
+0.4 bn.

JML
JACOS

-5.2 bn.
-0.6 bn.

SODECO
EMPI

Net
incomeOperating profit (loss) *-14.0 bn.

-2.2 bn.
+1.3 bn.

Non-operating income (loss)-6.5 bn.

Net
income1-2Q
FY3/20(a)

E&P
overseas

E&P
Japan

I/U

OthersForeignexchange
gains andloss

Equity on
earnings

OthersExtraordinary
incomeIncometaxes

Profitattributable
to noncontrollinginterest

1-2Q
FY3/20(a)

2.2

11.9

-2.7

-3.7

1.5

4.4

0.0

-0.0

1.5

0.0

1-2Q
FY3/21(a)

-8.0

5.5

-0.0

-3.7

-4.0

3.4

0.0

-0.0

0.6

-0.5

* The amounts in the operating income breakdown by business segment are the figures for the Group’s internal management
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

12

1-2Q
FY3/21(a)

Ⅲ.

Revised Financial Forecasts
for the Fiscal Year Ending March 31, 2021

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

13

E&P Business Sales Forecasts for FY3/21 (vs Aug. 11 Forecasts)
Previous(f)Aug. 11, 2020

Net sales：Million Yen

Revised(f)Nov. 10, 2020

ChangeSales
volumeNet sales

Sales
volume-84,379-76,872

2,529

63,771

2,117

53,840-412-16%-9,930

-16%

319

8,980

301

8,176

-18

-6%

-803

-9%

709

16,858548

13,280

②

-160

-23%

-3,578-21%

Purchased crude oil

1,500

37,932

1,266

32,384

③

-233

-16%

-5,548-15%

Diluted bitumen*2

1,273

17,807

1,303

20,142

④

+29

+2%

+2,334

+13%

498

2,800

489

2,889

-9

-2%

+89

+3%

E&P Business-

Sales volume

Net sales-

Net sales-①-7,506-9%(Breakdown)
Crude oil
Crude oil
- Japan
Crude oil- overseas*1

Natural Gas- Overseas＊3

Thousand KL

Million M3

Main factors for change① Decrease in sales volume of crude oil (overseas) and purchased crude oil② Decrease in sales volume of crude oil from Garraf Oil Field in Iraq
③ Decrease in sales volume of purchased crude oil from SODECO④ Increase in sales volume and price of diluted bitumen from the Hangingstone Lease in Canada*1 Including the amounts of 3 overseas subsidiaries (Japex Garraf Ltd., JAPEX Montney Ltd. and Japex (U.S.) Corp.)*2 Royalty is excluded in the net sales and price of diluted bitumen*3 Including the volume of 2 overseas subsidiaries (JAPEX Montney Ltd., and Japex (U.S.) Corp.)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

14

I/U Business Sales Forecasts for FY3/21 (vs Aug. 11 Forecasts)
Previous(f)Aug. 11, 2020

Net sales：Million Yen

Infrastructure /Utility Business

Sales
volume-Net sales

Revised(f)Nov. 10, 2020
Sales
volumeChangeNet sales

Sales volume--

91,725-93,454

1,125

49,3301,115

49,262

Net sales-①+1,728

+2%

-68

-0%

Breakdown
Natural Gas- JapanMillion M3- Produced in Japan

482

-

489

-

Thousand Ton

291

15,796284

16,055

Electricity

Million kWh

2,867

22,055

2,955

23,474

Others*1

-

-

4,542

-

4,662

LNG

②

-10

-1%

+6

+1%

-6

-2%

+258

+2%

+87

+3%

+1,419

+6%

-

+119

+3%

-

Main factors for change① Increase in electricity sales volume and price② Increase in sales volume and price*1 Including the revenue from contracted transportation of natural gas and commissioned regasification of LNG
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

15

-

-

FY3/21 Forecasts (vs Aug. 11 Forecasts)
Previous(f)Aug.11,2020Million Yen

Revised(f)Nov.10,2020

ChangeNet sales

219,923

208,075-11,848-5%

Gross profit

23,96226,805+2,843+12%

Operating loss

-7,763-5,378+2,385-%

Ordinary loss

-5,429-2,462＋2,967-%

Loss attributable to owners of parent-6,517-1,900+4,617-%

Oil Price, Exchange Rate and Sales PricePrevious(f)Aug.11,2020

WTI
Crude oil price (CIF)

USD/bblRevised(f)Nov.10,2020

Change

37.55

39.08

+1.53

40.80

39.14

-1.66

Exchange rate

JPY/USD

108.01106.65-1.36

JACOS Diluted bitumen＊1

USD/bbl

20.58

23.18

+2.60

JML Natural gas*2

CAD/mcf

2.01

2.09

+0.08

*1 Diluted bitumen sales price of Japan Canada Oil Sands Ltd. (Excl. Royalty)*2 Natural gas sales price of JAPEX Montney Ltd. (Excl. Royalty)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

16

Analysis of FY3/21 Net Income Forecasts (vs Aug. 11 Forecasts)
Rounded to the nearest 100 million yen

Billion Yen

JACOS

Net
income+2.0 bn.

JML+1.7 bn.
Japex Garraf -0.6 bn.

Operating profit (loss) ＊+2.4 bn.

Non-operating income (loss)-0.6 bn.

Net
incomeFY3/21(f)Aug. 11

E&P
overseas

E&P
Japan

I/U

OthersForeignexchange
gains andloss

Equity on
earnings

OthersExtraordinary
incomeIncometaxes

Profitattributable
to noncontrollinginterest

FY3/21(f)Aug. 11

-13.7

7.4

4.8

-6.2

-3.7

5.4

0.5

-0.0

1.8

-0.7

FY3/21(f)Nov. 10

-11.8

7.6

5.2

-6.5

-2.6

5.1

0.4

-0.0

0.2

-0.8

* The amounts in the operating income breakdown by business segment are the figures for the Group’s internal management
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

17

FY3/21(f)Nov. 10

E&P Business Sales Forecasts for FY3/21 (Year-on-Year)
FY3/20(a)Net sales：Million Yen

FY3/21 Revised(f)Nov. 10, 2020

ChangeSales
volumeNet sales

Sales
volume-175,443-

76,872-

2,924

128,152

2,117

53,840-807

304

14,800

301

8,176

1,123

45,372548

13,280Purchased crude oil

1,496

67,9791,266

Diluted bitumen*2

1,639

45,025431

2,265

E&P Business-

Sales volume

Net sales

Net sales-①-98,570

-56%

-28%

-74,311

-58%

-3

-1%

-6,624

-45%

②

-574

-51%

-32,092-71%

32,384

③

-229

-15%

-35,595

-52%

1,303

20,142

④

-336

-21%

-24,883

-55%

489

2,889

+58

+13%

+624

+28%

(Breakdown)
Crude oil
Crude oil
- Japan
Crude oil- overseas*1

Natural Gas- Overseas＊3

Thousand KL

Million M3

Main factors for change①Decrease in sales volume and price of crude oil (overseas) and diluted bitumen②Decrease in sales volume and price of crude oil from Garraf Oil Field in Iraq
③Decrease in sales volume and price of purchased crude oil from SODECO④Decrease in sales volume and price of diluted bitumen from the Hangingstone Lease in Canada*1 Include the amounts of 3 overseas subsidiaries (Japex Garraf Ltd., JAPEX Montney Ltd. and Japex (U.S.) Corp.)*2 Royalty is excluded in the net sales and price of diluted bitumen*3 Include the volume of 2 overseas subsidiaries (JAPEX Montney Ltd., and Japex (U.S.) Corp.)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

18

I/U Business Sales Forecasts for FY3/21 (Year-on-Year)
FY3/21 Revised(f)Nov. 10, 2020

FY3/20(a)Net sales：Million Yen

Infrastructure /Utility Business

Sales
volume-Net sales

Sales
volumeChangeNet sales

Sales volume--

88,688-93,454

1,268

64,965

1,115

49,262

Net sales-①+4,765+5%-15,703-24%(Breakdown)
Natural Gas- JapanMillion M3- Produced in Japan

582

-

489

-

②

-153

-12%

-93

-16%
+4%

Thousand Ton

273

19,395284

16,055+11

Electricity

Million kWh

110

974

2,955

23,474④ +2,845 +2,583%

Others*1

-

-

3,353

-

4,662

LNG

-

-

-

③

-3,339--17%+22,500 +2,310%+1,308+39%

Main factors for change① Increase in electricity sales volume.
② Decrease in sales price and decrease in sales volume, mainly due to the economic stagnation by COVID-19.
③ Decrease in sales price.
④ Increase in electricity sales volume due to the commercial operation commencement of the Fukushima
Natural Gas Power Plant*1 Including the revenue from contracted transportation of natural gas and commissioned regasification of LNG
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

19

FY3/21 Forecasts (Year-on-Year)
Million Yen

FY3/21 Revised(f)Nov. 10, 2020

FY3/20(a)ChangeNet sales

318,822208,075-110,746-35%

Gross profit

47,04226,805-20,237-43%

Operating loss

14,283-5,378-19,662-%

Ordinary loss

32,635-2,462-35,097-%

Loss attributable to owners ofparent26,815-1,900-28,715-%

Oil Price, Exchange Rate and Sales Price
FY3/21 Revised(f)Nov. 10, 2020

FY3/20(a)WTI
Crude oil price (CIF)

USD/bblChange

57.14

39.08

-18.06

68.11

39.14

-28.97

Exchange rate

JPY/USD

109.15106.65-2.50

JACOS Diluted bitumen＊1

USD/bbl

39.85

23.18

-16.67

JML Natural gas*2

CAD/mcf

1.77

2.09

+0.32

*1 Diluted bitumen sales price of Japan Canada Oil Sands Ltd. (Excl. Royalty)*2 Natural gas sales price of JAPEX Montney Ltd. (Excl. Royalty)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

20

Analysis of FY3/21 Net Income Forecasts (Year-on-Year)
Rounded to the nearest 100 million yen

Billion Yen

JML
J Garraf
JACOS-3.9 bn.
-0.7 bn.
-0.5 bn.

SODECO
DGN
EMPI-7.3 bn.
-0.8 bn.
+1.3 bn.

Dividend income -2.9 bn.
Interest income -0.7 bn.

JACOS-14.3 bn.

Net
incomeOperating profit (loss)＊-19.7 bn.

Non-operating income (loss)-15.4 bn.
OthersExtraordinary
incomeIncometaxes

Profitattributable
to noncontrollinginterest

12.0

4.0

-0.7

4.8

0.3

5.1

0.4

-0.0

0.2

-0.8

OthersForeignexchange
gains andloss

Equity on
earnings

-5.2

-5.8

2.4

5.2

-6.5

-2.6

FY3/20(a)

E&P
overseas

E&P
Japan

I/U

FY3/21(a)

2.7

22.6

FY3/21(f)Nov. 10

-11.8

7.6

Net
income* The amounts in the operating income breakdown by business segment are the figures for the Group’s internal management
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

21

FY3/21(f)Nov. 10Cash Flows and Debt
Million Yen

FY3/20(a)

FY3/21(a)

FY3/20(a)

FY3/21
(f)

1Q-2Q

1Q-2Q

Full year
1Q-4Q

Full year 1Q-4Q
Aug. 11

Nov. 10

Cash flows from operating
activities

37,061

14,76969,89527,68525,450Depreciation

12,422

10,45525,19022,03022,201

Recoverable cost (Recovery)

26,583

3,161

41,04014,153

10,667-11,353-813-18,701-29,213-29,855

Purchase of property, plantand equipment-2,464-9,601-7,566-16,249-15,997

Recoverable cost (Payments)-13,865-10,810-30,226-16,610-16,175-8,435-7,616-13,743-13,080-13,049

Interest-bearing debt*1--

140,848

125,111125,111

EBITDA*2--

58,29522,191

25,002

Debt-to-EBITDA ratio

-

-

2.4

5.6

5.0

Cash flows from investing
activities

Cash flows from financing
activities*1 Interest-bearing debt includes lease obligations, retirement benefit liabilities and contingent liabilities*2 EBITDA is the total of operating profit, depreciation, interest and dividends received on investment cash flow
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

22

(Reference) Impact on FY3/22 Results from the Adoption of
the Accounting Standard for Revenue Recognition
 The recognition of revenues for some transactions will be revised, with the adoption of"Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29) from the
beginning of the fiscal year ending March 31, 2022.
•

The main impact of the change in presentation of certain purchase and sales transactions for crude oiland natural gas, which are currently recorded in both net sales and cost of sales, is expected to be achange in the presentation of gross amounts to net amounts.

•

If the new standard is applied to the forecasted sales of 208.0 billion yen in the FY3/21, sales are
expected to decrease by approx. 35 billion yen (see table below).

•

While "sales" and "sales volume" are down, there is no impact on operating income and net income.

Simulation of applying the new standard to the earnings forecast for the FY3/21
Billion Yen
Estimated
FY3/21amount of

Forecasts

application of the
new standard

ChangeAmountMajor transactions where revenue recognition will berevisedVolumeE&P Buisness

76.8

45.3

-31.5

-1,240Thousand KL

I/U Buisness

93.4

90.7

-2.7

-65Million m3

Other

37.7

36.4

-1.3

-

208.0

172.4

-35.6

Total Net sales

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

23

To be changed the presentation of some crude oil purchaseand sales transactions from gross to net
To be changed the presentation of some domestic natural
gas purchase and sales transactions from gross to net
To be excludes diesel fuel transaction tax and oil and gas
tax, which are currently included in sales, from sales

Appendix

1. Net Sales

2. Financial Results

3. Price Assumptions for FY3/21 Forecasts

4. Sensitivities Analysis on FY3/21 Forecasts Basis (3Q-4Q)
5. Main Business and Major Assets
6. Glossary

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

24

1. Net Sales - E&P BusinessMillion Yen

FY3/20(a)1Q

Sales
Sales volume of Crude oil(Thousand KL)
Net sales
Sales volume of Crude oil - Japan(Thousand KL)
Net sales
Sales volume of Crude oil - overseas*1(Thousand KL)
Net sales

Sales volume of Purchased crude oil(Thousand KL)
Net sales

Sales volume of Diluted bitumen(Thousand KL)
Net sales*2
Sales volume of Natural gas -overseas*3(Million M3)

Net sales
WTI（USD/bbl）
Crude oil price (CIF)(USD/bbl) *42Q

FY3/21(a)1Q-2Q

Full year
1Q-4Q

1Q

2Q

FY3/21(f)1Q-2Q

Full year
Aug. 11

Nov. 10

54,13339,284

93,417

175,443

22,904

14,64237,547

84,37976,872

891

578

1,469

2,924

687

438

1,126

2,529

2,117

42,717

26,18568,902

128,152

15,936

12,51528,452

63,77153,840

79

68

147

304

60

78

138

319

301

3,997

3,374

7,371

14,800

1,800

1,926

3,726

8,980

8,176

465

163

629

1,123

168

18

187

709

548

21,737

6,981

28,71945,372

4,393

307

4,701

16,85813,280

346

346

692

1,496

458

341

800

1,500

1,266

16,982

15,82932,812

67,979

9,742

10,281

20,02437,93232,384

402

436

838

1,639

410

203

613

1,273

1,303

10,68912,69623,38545,025

6,258

1,499

7,757

17,807

20,142

108

104

212

431

111

118

229

498

489

726

403

1,129

2,265

709

627

1,336

2,800

2,889

54.90

59.82

57.51

57.14

46.17

27.94

39.59

37.55

39.08

68.77

69.95

69.13

68.11

44.41

33.34

38.11

40.80

39.14

Exchange rate (JPY/USD) *4

111.11108.26109.78109.15108.04106.88107.46108.01106.65

Diluted bitumen*2 (USD/bbl)

37.98

44.20

41.20

39.85

22.30

11.29

18.64

20.58

23.18

JML natural gas*5 (CAD/mcf)

2.28

1.33

1.82

1.77

2.36

1.85

2.09

2.01

2.09

*1 Including the amounts of 3 overseas subsidiaries (Japex Garraf Ltd., JAPEX Montney Ltd. and Japex (U.S.) Corp.)*2 Royalty is excluded in the net sales and price of diluted bitumen*3 Including the volume of 2 overseas subsidiaries (JAPEX Montney Ltd., and Japex (U.S.) Corp.)*4 Domestic sales price average of crude oil referring to crude oil (CIF) price and its conversion exchange rate
*5 Gas sales price of JAPEX Montney Ltd. (Excl. Royalty)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

25

1. Net Sales – I/U BusinessMillion Yen

FY3/20(a)
1Q

Sales

2Q

FY3/21(a)1Q-2Q

Full year
1Q-4Q

1Q

2Q

FY3/21(f)1Q-2Q

Full year
Aug. 11

Nov. 10

23,171

17,13140,30388,68820,99722,98543,982

91,72593,454

267

266

533

1,268

248

271

520

1,125

1,115

14,846

13,38628,23264,965

12,79812,26025,05949,33049,262

137

132

270

582

109

106

216

482

489

111

38

149

273

53

41

94

291

284

7,501

2,817

10,31919,395

3,597

2,878

6,475

15,796

16,055

Sales volume of Electricity(Million kWh)

1

0

1

110

448

826

1,274

2,867

2,955

Net sales

40

31

72

974

3,493

6,548

10,042

22,05523,474

Others*1

783

895

1,679

3,353

1,108

1,297

2,405

4,542

4,662

Sales volume of Natural gas –Japan (Million M3)
Net sales
Sales volume of Naturalgas Produced in Japan(Million M3)

Sales volume of LNG(Thousand ton)
Net sales*1 Including the revenue from contracted transportation of natural gas and commissioned regasification of LNG
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

26

2. Financial Results
Million Yen

FY3/20(a)1Q

Net sales

2Q

FY3/21(a)1Q-2Q

Full year
1Q-4Q

1Q

2Q

FY3/21(f)1Q-2Q

Full year
Aug. 11

Nov. 10

93,252

69,093

162,346

318,82251,01847,10898,127219,923

208,075

E&P Business

54,13339,284

93,417

175,443

22,904

14,64237,547

84,37976,872

Infrastructure/Utility Business

23,171

17,13140,30388,68820,99722,98543,982

91,72593,454

Others15,94812,67828,62554,690

7,116

9,480

16,59743,81837,748

Cost of sales

80,81258,432

139,244271,780

48,61940,62389,242

195,961

181,270

Gross profit

12,440

10,661

23,10147,042

2,399

6,485

8,884

23,96226,805

217

140

358

893

206

180

387

1,055

1,004

SG&A expenses

7,605

7,407

15,01331,864

7,443

7,325

14,76930,66931,178Operating profit

4,617

3,113

7,730

14,283-5,250-1,021-6,271-7,763-5,378Non-operation income

4,292

1,613

5,906

18,351-4,325

3,759

-566

2,334

2,915

307

277

584

1,096

216

117

334

362

410

Interest expenses-1,237-1,196-2,433-4,641-972-809-1,782-2,685-2,574

Dividend income

1,649

8

1,658

5,618

49

1,283

1,332

2,709

2,726

Share of profit of entities accounted forusing equity method

2,390

2,015

4,405

11,960

2,116

1,250

3,366

5,444

5,112

Provision for overseas investment

85

85

171

342

85

85

171

342

342

Foreign exchange gains and loss

1,099

384

1,484

2,425

-5,8091,837-3,971-3,654-2,553

-3

38

35

1,550

-10

-6

-17

-185

-547

8,909

4,726

13,63632,635-9,575

2,737-6,837-5,429-2,462

-4

-14

-19

-731

-3

-11

-15

-28

-39

Profit before income taxes

8,905

4,712

13,61731,903-9,5782,725-6,852-5,457-2,501

Income taxes

-206

1,718

1,512

4,788

173

463

636

1,778

243

Profit attributable to non-controlling interests

159

-124

34

299

-215

-298

-514

-718

-844

Profit attributable to owners of parent

8,951

3,118

12,06926,815-9,5362,561-6,975-6,517-1,900Exploration expenses

Interest income

Other
Ordinary profit
Extraordinary income

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

27

2. Segment Profit
Million Yen

FY3/20
(a)
1Q

Japan

North
America

EuropeMiddleEast

Others*1

Operating profit

*1
*2
*3

1Q-2Q

Full year
1Q-4Q

1Q

FY3/21
(f)

2Q

1Q-2Q

Full year
Aug.11

Nov. 10

5,623

3,565

9,188

18,834

790

4,558

5,348

13,21813,878

59

22

82

152

157

27

185

362

145

1,311

1,477

2,788

3,422

-4,223-3,268-7,492-12,606-10,374

-

-

-

-

-

-

-

-

-

-71

-14

-85

-164

-42

-18

-61

-156

-149

-

-

-

-

-

-

-

-

-

-169

235

66

612

301

-83

217

230

101

Share of profit of entities
accounted for using equity method

-1

0

-1

-8

-2

0

-2

-6

-4

Operating profit

-1

0

-1

-1

-

-

-

-

-

2,331

1,994

4,325

11,816

1,961

1,223

3,184

5,087

4,971

-2,076-2,151-4,227-8,419-2,075-2,207-4,283-8,449-8,833

4,617

3,113

7,730

14,283-5,250-1,021-6,271-7,763-5,378

Share of profit of entities
accounted for using equity method

Operating profit
Share of profit of entities
accounted for using equity method

Operating profit
Share of profit of entities
accounted for using equity method

Operating profit

Share of profit of entities
accounted for using equity method

Adjustments
andeliminations
Amounts on
consolidated
statement ofincome2Q

FY3/21(a)Operating profit

Include the Sakhalin Oil and Gas Development Co., Ltd., Energi Mega Pratama Inc., etc.
Mainly intersegment elimination and corporate expense.
Furthermore, Corporate expense represents mainly general and administrative expenses and experiment and research expense that are not allocated to reporting segments.
Segment profit (loss) is reconciled to operating profit in the consolidated statements of income.

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

28

3. Price Assumptions for FY3/21 Forecasts
2020

WTI

Crude oil price (CIF)

Exchange rate

USD/bbl**

USD/bbl

JPY/USD

2021

Full year

Jan.-Mar.

Apr.-Jun.

Jul.-Sep.

Oct.-Dec.

Jan.-Mar.

Aug. 1146.17*

28.02

36.70

35.00

-

37.55

Nov. 1046.17*

27.94*

40.84*

36.67

-

39.08

Aug. 11-44.41*

40.00

40.00

40.00

40.80

Nov. 10-44.41*

33.34*

40.00

40.00

39.14

Aug. 11-108.04*108.00108.00108.00108.01

Nov. 10-108.04*106.88*106.00106.00106.65

Aug. 1122.30*

11.81

23.26

21.43

-

20.58

Nov. 1022.30*

11.29*

30.21

24.56

-

23.18

Aug. 11

2.36*

1.87

1.78

2.05

-

2.01

Nov. 10

2.36*

1.85*

1.84

2.28

-

2.09

Sales Price
JACOS
Diluted bitumen***

JML
Natural gas****

USD/bbl

CAD/mcf*
Actual**Domestic sales price average of crude oil referring to crude oil (CIF) price and its conversion exchange rate*** Diluted bitumen sales price of Japan Canada Oil Sands Ltd. (Excl. Royalty)**** Natural Gas sales price of JAPEX Montney Ltd. (Excl. Royalty)
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

29

4. Sensitivities Analysis on FY3/21 Forecasts Basis（Period of FY3/21 3Q-4Q）
FY3/21
3Q-4Q
Assumptions

Crude oil price

Crude oil price
(CIF)
USD
40.00/bbl

Impacts on profit（Million Yen）
Fluctuation

OperatingprofitNatural gas
price in Canada¥106.00/USD
CAD 2.06/mcf¥79.51/CAD

Main factors for change

Increase factor “+” / Decrease factor “( )”+ Sales of oil and gas

Increase by
1USD/bbl

WTI
USD 38.75/bbl
Exchange rate

Profit(loss)
attributable toowners ofparent1 weaker yen
against USD

10

20(Increase in LNG procurement cost)

65

61+ Sales of diluted bitumen

0-60+ Sales of oil and gas(Increase in LNG procurement cost)+ Sales of shale gas in Canada

Increase by
1CAD/mcf-57-49(Increase in operation cost of theHangingstone lease)【Assumption】
・Changes in equity method investment gain are not included in the above amount.
・In addition to the impact of exchange rate fluctuations shown on the above, translation adjustments of foreign-currency-denominated receivables and payables also occur.
Actual profits are influenced by various other factors besides crude oil prices and exchange rates.
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

30

5. E&P Business - Major E&P Projects
Canada Oil Sands Project
U.K. North Sea Seagull Project(Development)(Production)

Russia Sakhalin-1 Project(Production / Development)

Canada Shale Gas Project(Production / Development)

Oil and Gas Fields in Japan
Iraq Garraf Project(Production)

United States Tight Oil Project(Production / Development)(Production / Development)Indonesia Kangean Project(Production)

Block, lease or projects in which the JAPEX Group participates
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

31

E&P Business - North America
Canada Oil Sands Project
Project

Canada Shale Gas Project

Canada Oil Sands Co., Ltd. (CANOS)

company

JAPEX‘s share 94.58%
Overseas subsidiary：
Japan Canada Oil Sands Ltd. (JACOS)

Block

Hangingstone Leases (Operator)

Interest

75％ (JAPEX net 70.935%)

Block

North Montney Area

Interest

10% (JAPEX net 5.5％ )Continuing flexible operation in line with market
conditions with 20,000bbl/d level bitumen

OperatorproductionGrossproduction
rate

JAPEX Montney Ltd. (JML)

Status

Production
Status

Project
company

Production/Development

Executing the development plan prioritizing thearea with high economics. Working on to maximize
the value and economics of the project.

Petronas Energy Canada Ltd.

Gross production 12,640,000M3/d, Approx (74,000boe/d)rate
as average of Jan.-Jun. 2020

18,000bbl/d

as average of Jan.-Jun. 2020

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

JAPEX’s share 55％

32

E&P Business - Europe/Middle East
Iraq Garraf Project

U.K. North Sea Seagull Project
JAPEX’s share 100％

Project
company

Japex Garraf Ltd. JAPEX’s share 55%

Field

Garraf Oil Field

Seagull Field

Project share

30% (JAPEX Net 16.5%)

Project
company

JAPEX UK E&P Ltd.

Block
Interest

Production* and Development toward
Plateau production target of 230,000
bbl/d**

15％ (JAPEX Net 15％)
StatusDevelopment

StatusOperator

Development work in progress to commencement
production at the end of 2021(Timing ofachievement is unforeseeable under the Covid-19
pandemic situation)

Neptune E&P UK Limited

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

33* Resumed production from mid-July after suspension ofoperations since mid-March 2020**Under the Covid-19 pandemic situation, achievement of
the plateau production target is not expected by the endof 2020

Operator

PETRONAS Carigali Iraq Holding B.V. (PCIHBV)

Gross
production rate

Approx. 70,000bbl/d (Average for Jan.-Jun. 2020,excl.106 days of production suspension period)

E&P Business - Other Areas
Indonesia Kangean Project
Project
company

Energi Mega Pratama Inc.

Block

Kangean Block

Interest

100％ (JAPEX net 25%)

Status

Production

Operator

Kangean Energy Indonesia Ltd.

Gross
production
rate

4,950,000M3/d

Russia Sakhalin-1 Project

JAPEX’s share 25%
2 other affiliates(Approx. 30,000boe/d)
as average of Jan.- Jun. 2020

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

34

Project
company

Sakhalin Oil and Gas Development
Co., Ltd. (SODECO)

Block

Chayvo, Odoptu and Arkutun-Dagi
FieldsInterest

30%（JAPEX net 4.59%）

StatusDevelopment/ Production

Operator

Exxon Neftegas Ltd.

JAPEX’s share 15.29%

E&P Business - Japan | I/U Business
E&P Business – Oil and Gas Fields in Japan Operating 10 oil and gas fields in Japan• Started crude oil production from shallow reservoir of the Yufutsu Oil and Gas Field in Hokkaido on June 2020.

 Efforts to maintain and increase domestic oil and gas production volume and reserves• Considering developments around the existing fields to add the short-term production volume and reserves.
• Considering to additional E&P potential leveraging national surveys aiming to increase reserves over the mid-long term

I/U Business - Domestic Natural Gas Supply
 Supplying domestic-produced natural gas along with LNG by our domestic natural gas supply network• Total length over 800 km of high-pressure gas pipeline network with the Niigata-Sendai Gas Pipeline as main line.
• LNG handling sites such as the Yufutsu LNG Receiving Terminal in Hokkaido, the Soma LNG Terminal at Fukushima, andNihonkai LNG Co., Ltd. Niigata Terminal in Niigata.
• LNG satellite system for supplying LNG in liquid form, utilizing various methods such as tank trucks, tanks on rail, andcoastal vessel.

 Commissioned works concerning the fuel LNG of the Fukushima Natural Gas Power Plant*1 such asreceiving, storing, regasifying LNG, and supplying the regasified LNG to the power plant

I/U Business – Electric Power Fukushima Natural Gas Power Plant：in commercial operation（No.1: April 2020, No.2: August 2020）
 Renewable energy: Running the two mega solar projects in Hokkaido, and seeking new opportunities• Examining new development projects and business opportunities, particularly in large-scale offshore wind power andbiomass ones.
●Currently ongoing projects of renewable energy• (Tentative name) Wind power project at Noshiro-town, Mitane-town, Oga-town offshore in Akita Prefecture (North Akita)• (Tentative name) Wind power project at Akita central sea offshore• (Tentative name) Wind power project offshore Yuza-town, Yamagata Prefecture*1

Executing operation and management work by Fukushima Gas Power Co., Ltd., invested 5 companies including JAPEX.

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

35

New Business Development
Next-generation Technology Development
 CCS / CCUS••

CCS demonstration project in the Tomakomai area conducting by Japan CCS Co., Ltd.(JCCS): Monitoring is ongoing after reaching
300,000 tons of CO2 injection as the cumulative amount.
“Research and development of CO2 storage technology for safe CCS implementation” of NEDO’s and demonstration project:participating in as a member of the Geological Carbon dioxide Storage Technology Research Association.

 Technology of methane hydrate development•

Participating in offshore production test of sand-layer type methane hydrate, as a member of Japan Methane Hydrate Operating Co.,Ltd.

 Technology for deep-sea mineral resources survey•

Participating in a program of the “Developing Innovative Technologies for Exploration of Deep Sea Resources” led by JAMSTEC,
which is one of the Cross-ministerial Strategic Innovation Promotion Program (SIP) Phase 2 of Cabinet Office, as a member of the
Research and Development Partnership for Next-Generation Technology of Marine Resources Survey (J-MARES).

New Business Model Development New LNG supply model development in Japan••

Early realization of LNG bunkering：considering the gradual introduction in the next few years according to the replacement timingof vessels, which are routed our LNG handling bases such as Hokkaido, Tohoku, and Niigata area.
Implementation of LNG fueled trucks：Launched study groups at Hokkaido and Tohoku region.

 LNG midstream and downstream business in overseas••

Seeking opportunities to participate in LNG bunkering businesses
Aiming to participate in LNG related businesses, including LNG receiving terminal, satellite station, and container filling equipment

New Business Seeds
 Development and supply of new energy•

Build a value chain for sustainable aviation fuel (SAF) utilizing used cooking oil as feedstock：Continuing a feasibility study Solution development in field adjacent to existing business•

Considering the opportunities for development and marketing projects with our group companies and others
 Oil related solution Marketing: Sales of a oil absorption fiber “Abura Kuraudo,” developed by the venture company OLX LTD.

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

36

6. Glossary■Abbreviations
BOE(D)

Barrels of Oil Equivalent (per Day)

CCS

Carbon dioxide Capture and Storage

CCUS

Carbon dioxide Capture, Utilization and Storage

CIF

Cost, Insurance and Freight

FID

Final Investment Decision

GHG

Greenhouse Gas

HSE

Health, Safety and Environment

JCC

Japan Crude Cocktail

MH

Methane Hydrate

RRR

Reserve Replacement Ratio

SAF

Sustainable Aviation Fuel

WTIWest Texas Intermediate■Main Subsidiaries and Affiliates
JACOS

Japex Canada Oil Sands Limited

Canada / Oil Sands Project

Japex Garraf

Japex Garraf Ltd.

Iraq / Garraf Project

JML

JAPEX Montney Ltd.

Canada / Shale Gas Project

SODECO

Sakhalin Oil & Gas Development Co., Ltd.

Russia / Sakhalin-1 Project

EMPI

Energi Mega Pratama Inc.

Indonesia / Kangean Project

DGN

Diamond Gas Nethelands B.V.

Malaysia LNG Project 3（Tiga）

FGP

Fukushima Gas Power Co., Ltd.

Natural gas-fired electric power generation Business

Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

37

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 basedon 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.
Copyright : All information contained herein is protected by copyright, and may not be
copied or reproduced without prior consent of JAPEX.
Note: Abbreviations used herein are as follows:(a) = Actual results(f) = Forecasts
FY = Fiscal Year (FY3/21, for instance, means 12 months ending March 31, 2021)
Any inquiries about the information contained herein or other Investor Relations questions
are requested to be directed to:
Corporate Communication Office
Japan Petroleum Exploration Co., Ltd. (JAPEX)Tokyo, JAPANTEL: +81-3-6268-7111
Copyright © 2020 Japan Petroleum Exploration Co., Ltd. All rights reserved.

38