Consolidated Financial Results for Fiscal Year Ended March 31, 2004
May 17, 2004
Note: The following report is a summary of the Japanese-language original.
Company Name: Japan Petroleum Exploration Co., Ltd.
Stock Listing: Tokyo Stock Exchange
Company Code: 1662
Location of Head Office: Tokyo(URL: http://www.japex.co.jp/)
President: Yuji Tanahashi
Inquiries: Koichi Shimomura, Manager, Media Relations, Administration Department TEL: (03) 5461-7413
Date of the Board of Directors meeting to settle year-end consolidated accounts: May 17, 2004
U.S. GAAP not applied
1. Consolidated Results for FY 2004 (April 1, 2003 – March 31, 2004)(1) Consolidated Operating Results(Amounts less than one million yen have been omitted)
Net Sales

FY2004
FY2003(¥ million)
96,71390,683Net Income

FY2004
FY2003(¥ million)
9,960
8,828

Operating Income

%
6.6
1.1

%
12.8
69.8

(¥ million)
12,44915,828

Ordinary Income%(21.3)
44.0(¥ million)
14,46812,769

%
13.3
28.2

Net Income
Per Share

Diluted Net
Income per
Share

Return on
EquityOrdinary
Income-to-Total
Assets Ratio

Ordinary
Income-to-Net
Sales Ratio(¥)
172.76153.14

(¥)
−
−

%
5.2
4.8

%
5.9
5.3

%
15.0
14.1

(Notes)1.
Equity in net income (loss) of unconsolidated subsidiaries and affiliates
FY2004 (¥2,072) million FY2003 (¥722) million
2.
Average number of outstanding shares (Consolidated):
FY2004: 57,154,715 shares FY2003: 57,154,776 shares
3.
Changes in accounting methods: None
4.
Percentage figures for net sales, operating income and other items represent changes compared with the previous fiscal year.
5.
Diluted net income per share is not shown because there are no shares with a dilutive effect.

(2) Consolidated Financial Position
Total Assets

FY2004
FY2003(¥ million)
246,765
242,455

Shareholders’ Equity(¥ million)
195,715
186,914(Note) Number of shares issued and outstanding (consolidated) at fiscal year-end:1

Shareholders’ Equity Ratio

Shareholders’ Equity
per Share

%
79.3
77.1
FY2004 57,154,472
FY2003 57,154,776(¥)
3,422.80
3,268.99

(3) Consolidated Cash Flows
Operating Activities

FY2004
FY2003

Investing Activities(¥ million)
21,522
21,619Financing Activities(¥ million)(12,677)(11,915)

Cash and Cash Equivalents
at Period-End(¥ million)(4,599)(7,981)(¥ million)
27,851
23,866(4) Number of consolidated Subsidiaries and Affiliates
Consolidated subsidiaries: 13
Non-consolidated subsidiaries accounted for by the equity method: 1
Equity method affiliates: 11(5) Changes in Scope of Consolidation and Application of equity method
Consolidated subsidiaries (Added): 1(Excluded): 0
Equity method affiliates (Added): 0(Excluded): 5
2. Forecasts for FY 2005 (April 1, 2004 – March 31, 2005)
Net SalesInterim Period
Fiscal Year-end

Ordinary Income(¥ million)
37,10084,163(¥ million)
2,518
11,313Net Income(¥ million)
3,055
9,556

(Reference) Estimated net income per share for the year ending March 31, 2005 is ¥167.19
Note: The above estimates have been made based on information available as of the date of this release. Actual results may differ from theseestimates due to a variety of factors. Please refer to the attached materials for more information related to these estimates.

2II. Management Policies
1. Fundamental Business Policies
Since its establishment in 1955, Japan Petroleum Exploration Co., Ltd. (JAPEX) has pursued its missionof contributing to Japan’s energy supplies by securing reserves and expanding production centered on the
exploration, development, and sale of petroleum and natural gas. Guided by this mission, the Company
has steadily discovered petroleum and natural gas reserves to result in the business base of today.
In light of its expanding role as a supplier and, consequently, related increases in its responsibility tosociety, JAPEX Group is actively focused on constructing a new business model that not only relies on
expanding reserves but also upgrading and expanding transmission systems for natural gas and otherinitiatives. As such, the Group aims to move forward as a company with the competitive capabilities
required to respond to changes in its operating environment. The section below outlines the Group’sbusiness philosophy in this respect.

Taking on the challenge of new energy value creation and increasing corporate
value
・Contribute to the supply of energy through global exploration and production (E&P) activities.
・Contribute to coexistence between the planet and its population by developing and promoting
the use of environment-friendly natural gas.
・Pursue sustainable growth and maximize shareholder value by placing top priority on winningand maintaining the trust of society, customers, shareholders and employees.
2. Fundamental Policy on Dividends
The Company’s basic policy is to sustain stable dividends over the long term. Taking into account themedium-term outlook for the business, dividend payments are set based on respect for the return of profits
to shareholders. While considering the need to acquire new reserves as an energy company that plays arole in providing stable supplies of petroleum and natural gas, indispensable resources for society, thepolicy also takes into account the need for retained earnings to finance the acquisition of new reserves andto upgrade and improve transmission systems, primarily pipelines.
3. Medium-term Business Strategy and Critical Issues
Japan’s energy industry is entering an era of full-scale competition, ushered in by rapid deregulation,
beginning with revisions to the Gas Business Law and the Electric Utility Law. As such, competition isintensifying almost on a daily basis with the entry of new players into each energy sector.
Specifically, the Gas Business Law was revised in April 2004, thereby further expanding the scope of
deregulation. In addition, the Japanese government has introduced a concept of “common carrier” in gas
transmission. Under this concept, companies, including JAPEX, that possess gas pipelines above a certain
capacity are obligated to open their pipelines for third party access. As a result of these and otherdevelopments, the Company’s gas business is facing a major turning point.
In the current environment, natural gas, a major earnings base for the JAPEX Group, is drawing
significant attention for its clean energy characteristics. Going forward, the Company believes demand fornatural gas is likely to rise steadliy due to the proliferation of distributed energy sources, including micro
gas turbines and fuel cells, and acceleration in the expansion and upgrade of natural gas supply networks.
This presents opportunities for JAPEX to further develop its natural gas business. Moreover, petroleum
will continue to play a critical part in the Group’s business base, based on recognition of the central role
this resource still plays as a primary energy source in Japan.

3

Accordingly, expanding natural gas sales and enlarging reserves of petroleum and natural gas are criticalissues for the Company.
Expanding sales of natural gas and upgrading and expanding the supply system
To cope with the intensifying competitive environment, the Company must be able to address the
expectations and requirements of a much broader user base. Specifically, the Company is working toconstruct a natural gas business that seamlessly integrates services and facilities, from upstream (E&P)
through mid-stream (transmission and storage) to downstream (marketing). The Company is therefore
promoting sales to existing major gas suppliers and city gas providers, tapping overseas gas sources toreplenish domestic reserves, and working to strengthen its distribution and storage network, which allows
the Group to more fully leverage its upstream divisions.
From this perspective, the Company is stepping up efforts to expand sales of natural gas passing throughits Yufutsu-Sapporo and Niigata-Sendai pipelines. Simultaneously, it is working to expand and upgrade its
transmission network by constructing a new natural gas pipeline to the city of Koriyamashi by way of
Fukushima, by branching its Niigata-Sendai pipeline.
JAPEX’s LNG Satellite System is designed to serve customers in geographic areas not reached by its
pipeline network. LNG is loaded onto tanker trucks and railway tank containers and shipped to the Tohoku,
Kanto, Hokuriku, and Kyushu regions to supply natural gas to a broader base of customers. The Company
is also working to promote sales to users within Hokkaido by dispatching LNG tank containers from its
LNG plant in Yufutsu, which is located in the region.
Securing overseas gas sources is another critical issue for JAPEX. While continuing to purchase LNG
from Malaysia LNG Tiga, a contract started in March 2003, the Company also actively participates in the
Sakhalin Pipeline Project, a strategic initiative to build an international pipeline to supply natural gas toJapan from the extensive gas fields to be developed in the Sakhalin I Project.
Conducting efficient E&P and securing new reserves
With its business centered on E&P, the JAPEX Group continually works to sustain and expand its reserves,and strives to further expand and upgrade its system for providing stable supplies of petroleum and natural
gas over the long term. Specifically, to expand domestic reserves, the Company is conducting exploration,
mainly in Niigata, Akita, and Hokkaido prefectures with the aim of adding substantial new gas reserves. It
is also conducting exploration aimed at tapping reserves in areas surrounding existing gas fields. In thisway, the Company is able to conduct interlocking, tactical exploration that affords greater efficiencies.
Furthermore, recognizing the importance of maintaining a stable revenue from the overseas E&P business,
the Company is working to increase operating efficiency and carry out exploration in areas identified as
key geographies. Specifically, the Company aims to increase the efficiency of operations at fields where it
currently carries out oil and gas production. Moreover, in uncovering new business, the Company seeks toacquire the rights to oil and gas fields that are already on stream, as well as fields that have been
discovered but remain undeveloped, both of which offer relatively low risk and rapid returns, withconsideration given to the balanced preservation of exploration assets over long-term operating periods.
The Japan Oil, Gas and Metals National Corporation (JOGMEC) was established in February 2004,
inheriting the functions of Japan National Oil Corporation (JNOC). As such, Japan is heading for a turning
point in terms of reinforcing its system for promoting the nation’s resource and energy policies. The
JAPEX Group is committed to flexibly and appropriately responding to the upcoming changes from theperspective of maximizing its corporate value.

4Addressing environmental issues
As global environmental issues become more serious, JAPEX, as a company that supplies
environment-friendly natural gas, feels an obligation to contribute to environmental protection. The
Company therefore works to increase environmental awareness within the company through ongoing useof internal environment management systems (acquisition of ISO14001), and reducing the environmental
impact of its business activities.
JAPEX will continue pushing ahead with efforts to inject added value into the supply of natural gas, andappropriately apply Group technologies in the environment business field. To this end, the Company isproactively taking on R&D themes in new fields such as gas-to-liquid technology, which can be used to
extract liquid fuel from methane, the main component of natural gas.
The JAPEX Group aims to utilize these activities to further strengthen its operating base and enhance its
competitiveness, thereby bolstering operating efficiency. The ultimate goal is to achieve sustainable
development and maximize shareholder value.
4. Basic stance and progress on strengthening corporate governance(1) Basic stance on corporate governance
The JAPEX Group recognizes the importance of corporate governance in translating efficientmanagement into higher earnings and in ensuring the company plays a valuable useful in society. The
Company therefore makes it a top priority to continually reinforce and upgrade its corporate governancesystems.
(2) Measures to strengthen corporate governance
The Board of Directors and corporate auditors (together with the Audit Committee, comprising all the
Company’s auditors) are responsible for overseeing executive actions carried out by each director. JAPEX
therefore employs what is known as a Corporate Auditing System.
The Board of Directors meets monthly. In addition to making decisions pertaining to important businessand affairs of the corporation, the Board oversees executive actions based on status reports it receives
from directors. Also, from the perspective of speeding up decision-making, an Executive Committee,
comprising full-time directors that reside in Tokyo, meets weekly to make decisions regarding items thatare not subject to decision by the Board of Directors. It also deliberates on items in support ofdecision-making by the Board. No outside directors are appointed to the Executive Committee.
Corporate auditors, who attend Board meetings on an as-needed basis, also exchange opinions with Board
members with executive functions as part of their oversight function. In June 2003, the Company
appointed an additional outside auditor, bringing the number of outside auditors to two (out of a total offour). Outside auditors have no special interests in the Company.
In addition to implementing corporate governance based on this management structure, the Company
conducts investor relations activities, including holding earnings results meetings and posting data on its
corporate website, to increase management transparency, with the goal of ensuring optimal businessexecution in any operating environment.
5. Basic policies on relationships with related parties (parent company and others)
As of March 31, 2004, JNOC held 49.94% of the Company’s outstanding shares. In addition, some
JAPEX subsidiaries and affiliates engaged in overseas E&P activities received equity investment as wellas credit guarantees from JNOC.
Directors and employees of JNOC do not serve concurrently as directors of JAPEX. The Company loans

5employees to JNOC in order to co-operate in R&D activities (as of March 31, 2004, two JAPEX
employees were seconded to JNOC).
The JAPEX Group conducts basic exploration and various research activities for JNOC on a contract basis.
The price terms for these contracts are determined as direct expenses plus a marginal amount of related
administrative expenses.
Pursuant to the Law on Abolition of the JNOC and the Metal Mining Agency of Japan, officiallyannounced in July 2003, JOGMEC was established on February 29, 2004, taking over many of thefunctions of the JNOC, including investment/credit guarantees, R&D, and the re-commissioning of basic
research in Japan.

6III. Business Results and Financial Position
1. Business Results(1) Overview of the fiscal year ended March 31, 2004
In the fiscal year ended March 31, 2004, the Japanese economy began largely unchanged from the end of
the previous year. However, from the middle of the year, signs of a recovery emerged and the economy
continued to rebound solidly toward the end of the year supported by capital investment and exports.
Looking at petroleum market conditions, although the yen strengthened in the currency market, prices forinternationally traded crude oil stabilized at a high level, supporting firm prices for domestic crude oil.
Still, due to acceleration in the pace of deregulation, domestic natural gas prices remained problematic for
the Company amid escalating competition among energy sectors.
Under these conditions, the JAPEX Group worked to maintain robust pipeline operations with the aim of
ensuring stable supplies of affordable and safe energy over the long term. In addition, the Group focused
its collective efforts on efficient E&P both in Japan and overseas.
In the fiscal year ended March 31, 2004, consolidated net sales totaled ¥96,713 million, up ¥6,029 million,
or 6.6%, from the previous fiscal year. Driving this growth was firm prices for crude oil and higher sales
volume for crude oil and natural gas, as well as government orders for exploration drilling.
Operating income totaled ¥12,449 million, down ¥3,378 million, or 21.3%, from the previous fiscal year,
reflecting a higher cost of sales associated with increased sales of natural gas and government orders for
exploration drilling, as well as a greater volume of domestic exploration work. Ordinary income totaled¥14,468 million, up ¥1,698 million, or 13.3%, from the previous fiscal year. Key factors supporting thisrise were lower investment in overseas exploration and a reduction in valuation losses on marketablesecurities.
As a result, consolidated net income totaled ¥9,960 million, up ¥1,132 million, or 12.8%, from theprevious fiscal year.
Below is a summary of earnings data for each of the Company’s business segments by division.
① Oil and Natural Gas Segment(a) E&P Division
The E&P division sells crude oil, natural gas and liquefied natural gas (LNG). Net sales totaled ¥79,361
million, up ¥4,079 million, or 5.4%, from the previous fiscal year, reflecting a sharp rise in crude oil
prices and higher sales volume for crude oil and natural gas.
(b) Contract Services Division
The Contract Services Division accepts orders mainly for drilling projects and geological and geophysicalsurveys. Net sales totaled ¥7,049 million, up ¥1,234 million, or 21.2%, from the previous fiscal year. This
growth was mainly due to government orders for exploration drilling .
(c) Other Businesses DivisionThis division mainly includes the manufacturing and trading of products such as LPG and fuel oil, thetransmission of third-party gas, and other miscellaneous consignment orders. Net sales totaled ¥9,213
million, up ¥823 million, or 9.8%, from the previous fiscal year, reflecting higher orders for third-party
gas transmission and higher sales volume for petroleum products.

7

② Geothermal Energy Segment
Geothermal Energy Business
The Geothermal Energy Business sells steam used for electric power generation and undertakes work
related to geothermal exploration technology and R&D on a contract basis. Net sales totaled ¥1,089
million, down ¥107 million, or 9.0%, reflecting lower steam sales volume.
(2) Outlook for the fiscal Year Ending March 31, 2005
In the fiscal year ending March 31, 2005, the Company expects consolidated net sales to decline ¥12,500
million from the previous fiscal year to ¥84,100 million, based mainly on projections for lower sales volume
for crude oil and natural gas and lower selling prices.
The Company forecasts that ordinary income will decline ¥3,100 million, or 21.8%, to ¥11,300 million due
to higher depreciation and increased exploration expenses, which is expected to more than offset lower costs
stemming from reduced purchases of crude oil and natural gas products commensurate with lower sales.
The Company expects net income to fall ¥400 million, or 4.0%, to ¥9,500 million, chiefly reflecting
increased purchases of shares in Japex New Nanhai Ltd. to make the company a subsidiary. This will resultin a reassessment of allowance for losses on overseas investments, which is expected to increase
extraordinary income by ¥800 million from the previous fiscal year.
These forecasts were formulated on the following assumptions: 1) a price of US$28/barrel for imported
crude oil and 2) an exchange rate of ¥105/US$.
A number of risks and uncertainties have the potential to affect JAPEX’s business performance, including,but not limited to, the following:① Operational risk
The JAPEX Group’s business requires substantial investment over long periods in the exploration stage.
However, there is no guarantee that resources will be discovered. As such, the Company’s business is highrisk by nature. Moreover, even after resources are discovered, heavy investment is still required, including
for the drilling of development wells and the construction of related production and transmission facilities.
Accordingly, long lead times are typically required from the time of project initiation to investment
recovery and contribution to profits. In the meantime, there is a risk that various changes in the operating
environment will prevent desired investment objectives from being attained.
② Factors causing volatility in crude oil sales
JAPEX markets crude oil in Japan at international prices. Consequently, the price at which the Company
sells crude oil is affected by market trends, such as the level of output set by OPEC and trends in theinternational balance of supply and demand, as well as fluctuations in exchange rates. To reduce
associated risks, the Company engages in crude oil swap transaction, although this approach does notentirely eliminate all associated risks.
③ Factors causing volatility in natural gas sales
Selling prices for natural gas are normally set based on fixed contracts with customers and denominated inyen. As such, prices are not affected by short-term fluctuations in prices for internationally traded natural
gas or exchange rates. However, volumes of gas sales to local distribution companies(LDCs) do exhibit
seasonality, that is, lower demand in the summer and higher demand in the winter. In addition, sales
volume declines during warm winters. Furthermore, over the longer term, deregulation of Japan’s energy
markets carries the risk of lower unit selling prices and lower sales volume for natural gas.

8(3) Distribution of Dividends
The Company plans to pay an annual dividend of ¥35 (to be paid in full at the end of the period),
comprising an ordinary dividend of ¥30 per common share and an additional ¥5 dividend to commemorate
the Company’s listing on the First Section of the Tokyo Stock Exchange. The ordinary dividend of ¥30
per common share is ¥5 higher than in the previous fiscal year. In light of the fact that sales and earnings
rose for the second straight year in the fiscal year ended March 31, 2004, the Company decided to increase
its dividend as a means of returning profits to shareholders.
Consequently, the dividend payout ratio for the year was 21.0% and the ratio of dividends to shareholders'equity was 1.1% on a unconsolidated base.

2. Financial Condition(1) Overview of the Fiscal Year Ended March 31, 2004
① Balance sheet
Total assets at the end of the fiscal year stood at ¥246,765 million, an increase of ¥4,309 million, or 1.8%,
from the previous fiscal year. Of the total amount, current assets accounted for ¥54,932 million, an
increase of ¥282 million, or 0.5%, and fixed assets accounted for ¥191,832 million, up ¥4,027 million, or
2.1%.
Of fixed assets, tangible fixed assets rose ¥5,315 million, or 5.6%. This rise was mainly due to capital
expenditures in excess of depreciation related to construction of the Akebono well site at the Yufutsu
field, and construction of the flowing line, expansion and renovation of the production facility in Yufutsu,
and construction of an LNG plant.
Investments in securities declined ¥3,006 million, or 3.4%, to ¥84,771 million, while allowance for losses
on overseas investments fell ¥3,325 million, or 20.0%, to ¥13,334 million. Both fell mainly because of the
dissolution of business ties with Japan Azerbaijan Oil Co., Ltd., which led to a devaluation of thatcompany’s stock and an associated reversal on allowance for losses on overseas investments.
Total liabilities declined ¥4,483 million, or 8.9%, to ¥45,658 million. Of the total, current liabilities fell
¥1,388 million, or 7.6%, to ¥16,798 million, while fixed liabilities declined ¥3,095 million, or 9.7%, to¥28,859 million.
The decline in total liabilities mainly reflected a ¥3,122 million, or 57.0%, decrease in notes and accounts
payable. Interest-bearing debt (short-term debt, long-term debt, and the current portion of long-term debt)
declined ¥2,615 million, or 18%.
Shareholders’ equity rose ¥8,800 million, or 4.7%, to ¥195,715 million. The primary factors underlying
the increase were a rise in retained earnings and an increase in unrealized holding gains on securities.
Retained earnings rose ¥8,456 million, or 4.9%, to ¥180,826 million, reflecting net income less dividends
paid. Owing to higher stock prices, unrealized holding gains on securities rose ¥1,107 million, or 48.1%,
to ¥3,412 million.
As a result, the shareholders’ equity ratio rose from 77.1% to 79.3%, and shareholders’ equity per share
increased from ¥3,268.99 to ¥3,422.80.
Credit guarantees for bank loans taken out by affiliated company and others, treated as contingent
liabilities, rose ¥3,008 million, or 21.5%, to ¥17,030 million.

9

② Cash flows
Net cash provided by operating activities was ¥21,522 million, a decrease of ¥97 million, or 0.5%, fromthe previous fiscal year. The main components were ¥14,207 million in net income before income taxes
and ¥11,043 million in depreciation.
Net cash used in investing activities amounted to ¥12,677 million, up ¥761 million, or 6.4%, from theprevious fiscal year. The main use was, as noted earlier in the discussion of balance sheet items,
construction of the Akebono well site at the Yufutsu field and construction of the flowing line, expansion
and renovation of the production facility in Yufutsu, and construction of an LNG plant. Expenditures toacquire fixed tangible assets totaled ¥15,734 million, up ¥3,826 million, or 32.1%.
Net cash used in financing activities was ¥4,599 million, down ¥3,381 million, or 42.4%, from theprevious fiscal year. The main component was the repayment of loans and the payment of dividends.
As of March 31, 2004, cash and cash equivalents totaled ¥27,851 million, up ¥3,984 million, or 16.7%
compared to the end of the previous fiscal year. This increase was mainly attributable to the net impact of
the aforementioned cash flows and translation differences due to fluctuations in exchange rates.
(2) Outlook for the Fiscal Year Ending March 31, 2005
The Company projects that, in net cash provided by operating activities, net income before income taxes
will decline from the year under review. Depreciation is forecasted at approximately ¥13,800 million.
In net cash used in investing activities, the Company is projecting that roughly ¥14,000 million will used forcapital expenditure, including projects to upgrade capacity. Still, the Company expects that capital
expenditure will be lower than fiscal year under review.
In net cash used in financing activities, the Company expects to pay a term-end dividend of ¥35 and aninterim dividend of ¥15. The Company also plans to continue repaying interest-bearing debt to result in abalance of around ¥10,400 million.
In addition, the Company anticipates the consolidation of Japex New Nanhai Ltd. will add roughly ¥4,000
million to cash and equivalents.
Based on the aforementioned factors, the Company expects cash and equivalents as of March 31, 2005 to belargely unchanged from the end of the fiscal year under review.
(3) Cash Flow Indicators
Fiscal Years Ended March 31

2000

2001

2002

2003

Shareholders’ equity ratio (%)
68.8
75.2
77.1
−
Shareholders’ equity ratio on−−−−
mark-to-market basis (%)
Debt repayment period (years)
2.0
1.2
0.7
−
Interest coverage ratio (times)
14.2
12.5
34.5
−
Notes:
Shareholders’ equity ratio: Shareholders’ equity/total assets
Shareholders’ equity ratio on mark-to-market basis: Total market capitalization/total assets
Debt repayment period: Interest-bearing debt/net cash provided by operating activities

10

2004
79.3
96.4
0.6
60.3

Interest coverage ratio: Net cash provided by operating activities/interest paid
* The Company started compiling consolidated financial statements in the fiscal year ended March 31, 2001.
* JAPEX listed on the Tokyo Stock Exchange on December 10, 2003.
* The various indicators are calculated based on consolidated financial figures.
* Total market capitalization is calculated using the closing stock price at the end of the term multiplied by the
number of shares outstanding at the end of the term (excluding treasury stock).
* Net cash flow from operating activities is that shown on the statement of consolidated cash flows.
Interest-bearing debt is all debt subject to interest payments within debt shown on the consolidated balance
sheets. Interest paid is that shown on the consolidated statement of cash flows.

11

Ⅳ．Consolidated Financial Statements
１．Consolidated Balance Sheets(As of March 31, 2003)
Description

Amount (¥ million)(As of March 31, 2004)（％）

Amount (¥ million)（％）(Assets)
Ⅰ

Current assets
１．Cash and deposits

20,162

22,201

２．Notes and accounts receivable

11,746

11,430３．Marketable securities

8,191

9,854

４．Inventories

8,785

6,116

５．Deferred income taxes

567

726

６．Other current assets

5,227

4,617

(31)

(13)

Less: Allowance for doubtful receivables
Total current assets
Ⅱ54,65022.5

54,932

22.3

Fixed assets
１．Property, plant and equipment(1)Buildings and structures
Accumlated depreciation and amortization(2)Wells

121,43164,113

123,744
57,31770,332

26,792

Accumlated depreciation and amortization(3)Machinery and equipment
Accumlated depreciation and amortization

23,26230,295
3,529

23,15447,36334,33853,411

7,140

59,61913,02435,921

23,697(4)Land12,011

12,051(5) Construction in progress

4,611

1,370

(6) Other property, plant and equipment
Accumlated depreciation and amortization

13,195
8,429

Property, plant and equipment, net
２．Intangible fixed assets

10,097
4,765

7,193

2,904

95,261

39.3

100,576

40.8

565

0.2

819

0.3

３．Investments and others(1)Investments in securities

87,77884,771(2)Long-term loans

3,320

2,562

(3)Deferred income taxes

6,993

4,966

(4)Others

10,67911,592

(134)

(123)

(16,659)(13,334)

Less: Allowance for doubtful receivables
Allowance for losses on overseas
investments
Total investments and others

91,97838.0

90,436

36.6

Total fixed assets

187,805

77.5

191,832

77.7

Total assets

242,455

100.0

246,765

100.0

12

(As of March 31, 2003)

Description(As of March 31, 2004)（％）

Amount (¥ million)（％）

Amount (¥ million)(Liabilities)
Ⅰ

Current liabilities
１．Notes and accounts payable

5,476

2,353

900

600

2,315

2,306

４．Income taxes payable

840

1,610

５．Other current liabilities

8,655

9,928

Total current liabilities

18,186

２．Short-term bank loans
３．Current portion of long-term debt

Ⅱ

7.5

16,798

6.8

Long-term liabilities
１．Long-term debt

11,3099,003

２．Accrued retirement benefits for employees

3,276

3,574

３．Accrued retirement benefits for officers

598

696

４．Accrued estimated cost of abandonment of wells

3,122

2,423

５．Accrual for losses on projects

11,48010,975

６．Other long-term liabilities

2,166

2,186

Total long-term liabilities

31,95413.2

28,859

11.7

Total liabilities

50,141

20.7

45,658

18.5

5,400

2.2

5,392

2.2

Ⅰ Common stock

14,2885.9

14,288

5.8

Ⅱ Retained earnings

172,370

71.1

180,826

73.2(Minority interests)
Minority interests in consolidated subsidiaries(Shareholders’ equity)

Ⅲ

Unrealized holding gain on securities

2,304

0.9

3,412

1.4

Ⅳ

Translation adjustments(2,048)(0.8)(2,810)(1.1)

Ⅴ

Treasury stock

-

-

(1)

(0.0)

Total shareholders’ equity

186,91477.1

195,715

79.3

Total liabilities, minority interests and shareholders’equity242,455

100.0

246,765

100.0

13

２．Consolidated Statements of Income
FY2003(Apr. 1, 2002 – Mar. 31, 2003)
Description（％）

Amount (¥ million)

FY2004(Apr. 1, 2003 – Mar. 31, 2004)（％）

Amount (¥ million)Ⅰ

Net sales

90,683100.0

96,713100.0

Ⅱ

Cost of sales

52,288

57.7

58,06060.038,39442.3

38,65340.0

Ⅲ

Exploration expenses

5,213

5.4

Gross profit

１．Exploration expenses

3,695

２．Exploration subsidies

(582)

Ⅳ

Selling, general and administrative expenses

Ⅴ

Non-operating income

Operating income(675)

19,452

21.4

20,99021.7

15,82817.5

12,449

12.9

5,956

6.2

3,937

4.1

14,468

15.0

25

0.0

1,192

２．Dividend income

1,226

1,298

３．Gain on sale of securities

88

244

４．Reversal of allowance for losses on overseas
investments

-

2,705

637

3,406

3.7

515

Non-operating expenses
１．Interest expense

590

346

２．Loss on sale of securities

295

34

2,236

498

４．Equity in losses of unconsolidated subsidiaries andaffiliates

722

2,072

５．Provision for allowance for losses on overseas
investments

151-

６．Provision for accrued estimated cost of abandonmentof wells

986

160

７．Provision for losses on projects

821

129

８．Other non-operating expenses

661

Ordinary income

6,465

7.1

695

12,769

14.1

65

0.1

25

262

0.3

286

12,57213.9

Extraordinary income
１．Reversal of allowance for doubtful receivables

Ⅷ

3.4

1,454

３．Devaluation loss on securities

Ⅶ

3,113

１．Interest income

５．Other non-operating income
Ⅵ

5,888

65

Extraordinary losses
１．Loss on disposal of fixed assets

262

Income before income taxes and minority interests
Current income taxes

1,654

Deferred income taxes

1,916

Minority interests
Net income

14

286

0.3

14,207

14.7

2,568
3,571

4.0

3,955

4.1

172

0.2

1,386

291

0.3

8,828

9.7

9,960

10.3

３．Consolidated Statements of Shareholders’ Equity

Description

FY2003(Apr. 1, 2002 – Mar. 31, 2003)

FY2004(Apr. 1, 2003 – Mar. 31, 2004)

Amount (¥ million)

Amount (¥ million)

Retained earnings
Ⅰ

Balance at beginning of year

Ⅱ

Add:
１．Net incomeⅢⅣ

165,042

8,828

8,828

172,370

9,960

9,960

Deduct:１．Cash dividends paid

1,428

1,428

２. Bonuses to officers

7275

３. Decrease from exclusion from consolidation

0

1,501
172,370

Balance at end of year

15

-

1,504
180,826

４．Consolidated Statements of Cash Flows

Description

FY2003(Apr. 1, 2002 –Mar. 31, 2003)

FY2004(Apr. 1, 2003 –Mar. 31, 2004)

Amount (¥ million)

Amount (¥ million)

Ⅰ Operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss on devaluation of marketable securities and investments in securities
Decrease in allowance for doubtful receivables
Increase (decrease) in provision for accrued retirement benefits for employees
Increase (decrease) in provision for accrued retirement benefits for officers
Decrease in provision for accrued estimated cost of abandonment of wells
Decrease (increase) in provision for allowance for losses on overseas investments and accrualfor losses on projects
Interest and dividend income
Interest expense
Gain on redemption and sales of marketable securities and investments in sessecurities
Loss on redemption and sales of marketable securities and investments in securities
Equity in losses of unconsolidated subsidiaries and affiliates
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable
Increase (decrease) in consumption tax payable
Other, net
Subtotal
Income taxes (paid) refunded
Net cash provided by operating activities

12,572
9,817
2,236
(104)
(188)
(28)
(25)

14,207
11,043
498
(27)
303
97
(638)

132

(3,830)(2,681)
590
(108)
295
722
(1,172)(2,261)
1,654
259
(305)
21,405
214
21,619(2,491)
346
(305)
34
2,072
310
2,669
(2,161)(211)
1,408
23,326(1,803)
21,522(25)
1,029(1,079)7,515(11,908)8(94)(14,434)
4,773
(441)
65
(500)
500
2,651
21
(11,915)(335)
15(2,998)7,890(15,734)38(423)(9,030)
5,106
(89)
554
2,638
(309)
(12,677)

650(6,377)(1,428)(197)(627)(7,981)(270)
1,452
22,592(179)(300)(2,315)(1)(1,428)(197)(356)(4,599)(260)
3,984
23,866-23,86627,851Ⅱ Investing activities
Investments in time deposits
Proceeds from time deposits
Payments for purchase of marketable securities
Proceeds from redemption and sale of marketable securities
Additions to property, plant and equipment
Proceeds from sales of property, plant and equipment
Additions to intangible fixed assets
Payments for purchase of investments in securities
Proceeds from redemption and sale of investments in securities
Increase in loans receivable
Decrease in loans receivable
Increase in money trusts
Decrease in money trusts
Interest and dividends received
Other, net
Net cash used in investing activities

Ⅲ Financing activities
Increase (decrease) in short-term bank loans
Repayment of long-term debt
Purchase of treasury stock
Cash dividends paid
Dividends paid to minority shareholders
Interest paid
Net cash used in financing activities

Ⅳ Effect of exchange rate changes on cash and cash equivalents
Ⅴ Increase in cash and cash equivalents
Ⅵ Cash and cash equivalents at beginning of year
Ⅶ Decrease in cash and cash equivalents arising from exclusion from consolidation
Ⅷ Cash and cash equivalents at period-end

16

V. Status of Production and Sales
1.

Production(1) Oil and Natural Gas Segment
Division

Product

FY 2003(Apr. 1, 2002 – March 31, 2003)

FY2004(Apr. 1, 2003 – Mar. 31, 2004)

510,249 kl

574,417 kl（5,031）（3,131）

Crude oil
E&P

950,158 thousand m3

Natural gas

1,036,120 thousand m3（10,506）（7,231）

LNG−

6,589ｔLPG

ｔ11,231Other Businesses

10,811ｔkl

Fuel oil, etc.
36,655(Notes)1. The figures in parentheses in E&P Operations represent overseas production and are included in the total.
2. Part of the oil production volume is used as a feedstock for LPG, fuel oil and other products.
3. Part of the natural gas production volume is used as a feedstock for LNG, LPG and other products.

52,393kl(2) Geothermal Energy Segment
Division
Geothermal Energy
Business2.

Product
Steam

FY 2003(Apr. 1, 2002 – Mar. 31, 2003)

FY2004(Apr. 1, 2003 – Mar. 31, 2004)

1,157,389ｔ

1,107,443ｔ

FY 2003(Apr. 1, 2002 – Mar. 31, 2003)
VolumeAmount

FY2004(Apr. 1, 2003 – Mar. 31, 2004)
VolumeAmountSales(1) Oil and Natural Gas Segment
Division

Productkl
Crude oilE&P(¥ million)

1,445,798

30,743thousand m3
Natural gas

kl

32,963thousand m3

1,154,764

41,47942,5601,296,389

t

t

LNG

61,294

3,058

75,883

3,837

Subtotal−

75,281−

79,361

−

5,815

−

5,815

Contract Services
Subtotalt
LPG
Other Businesses(¥ million)

1,528,507

36,400−−71,518

7,049(¥ million)t(¥ million)

1,786

31,506

1,514

kl

kl
Fuel oil, etc.

7,049

2,811

89,0903,517

Others

−

3,793

−

4,182

Subtotal

−

8,390

−

9,213

Total
−
89,486−(Notes)1. Others in Other Businesses includes revenue from the transmission of third-party gas through JAPEX’s pipeline network and salescommissions.
2. Monetary amounts in the table do not include consumption tax.

17

95,624

(2) Geothermal Energy Segment
Division

Product

FY 2003(Apr. 1, 2002 – Mar. 31, 2003)
VolumeGeothermal Energy
BusinessAmountt

FY2004(Apr. 1, 2003 – Mar. 31, 2004)
Volume(¥ million)

Amountt(¥ million)

Steam

1,080,685

1,196

1,061,336

1,089

Total

−

1,196

−

1,089

(Note)
1. Monetary amounts in the table do not include consumption tax.

18

Unconsolidated Financial Results for Fiscal Year Ended March 31, 2004
May 17, 2004
Note: The following report is a summary of the Japanese-language original.
Company Name: Japan Petroleum Exploration Co., Ltd.
Stock Listing: Tokyo Stock Exchange
Company Code: 1662
Location of Head Office: Tokyo(URL: http://www.japex.co.jp/)
President: Yuji Tanahashi
Inquiries: Koichi Shimomura, Manager, Media Relations, Administration Department TEL: (03) 5461-7413
Date of the Board of Directors meeting to settle year-end
Interim dividend system: Yes
consolidated accounts: May 17, 2004
Date of the Annual General Meeting of Shareholders:
Trading unit system: One unit 100 shares
June 24, 2004
1. Results for FY 2004 (April 1, 2003 – March 31, 2004)(1) Unconsolidated Operating Results(Amounts less than one million yen have been omitted)
Net Sales

FY2004
FY2003

FY2004
FY2003Operating Income％(¥ million)
82,34377,490(¥ million)
10,506
13,9596.3
2.3

Net Income

Net Income Per
Share(¥ million)
％
9,602
14.5
8,385
105.7

(¥)
166.56145.44

Diluted Net
Income Per
Share

Ordinary Income％(¥ million)(24.7)
12,481
58.8
11,578
Ordinary Incometo-Total Assets
Ratio

Return on
Equity

％

(¥)
−
−

％
5.8
5.5

5.3
4.8

％
7.8
43.4
Ordinary
Income-to-Net
Sales Ratio

％
15.2
14.9

(Notes)6.
Average number of outstanding shares: FY2004: 57,154,715 shares
FY2003: 57,154,776 shares
7.
Changes in accounting methods: None
8.
Percentage figures for net sales, operating income and other items represent changes compared withthe previous fiscal year.
4. Diluted net income per share is not shown because there are no shares with a dilutive effect.

(2) Dividends
Dividends Per Share for the Fiscal Year

FY2004
FY2003

(¥)
35.00
25.00

InterimYear-end

Dividends（Full Year）

0.00
0.00

(¥)
35. 0025. 00(¥ million)
2,000
1,428

(¥)

Payout Ratio

％
21.0
17.2

Dividends-to-Shareholders Equity
Ratio

％
1.1
0.8

(Note) The FY2004 year-end dividend comprises a ¥30 normal dividend and a ¥5 commemorative dividend.

(3) Unconsolidated Financial Position
Total Assets

FY2004
FY2003

Shareholders’ Equity(¥ million)
217,802212,488(¥ million)
186,923
177,774(Notes) Number of shares issued and outstanding at fiscal year-end:

Shareholders’ Equity
Ratio

％
85.8
83.7
FY2004 57,154,472
FY2003 57,154,776
FY2004 304
FY2003 0

Number of treasury stock at fiscal year-end:

19

Shareholders’ Equity Per
Share

(¥)
3,269.05
3,109.13

2. Unconsolidated Forecast for FY 2005 (April 1, 2004 – March 31, 2005)

InterimFiscal Yearend

Net Sales

Ordinary Income

Net Income(¥ million)
33,26672,809(¥ million)
2,458
9,819

(¥ million)
2,516
8,291

Dividends Per Share for
the Fiscal Year
InterimYear-end(¥)
15. 00−(Reference) Estimated net income per share for the year ending March 31, 2005 is ¥145.06
The above estimates have been made based on information available as of the date of this release.
Actual results could differ significantly from these estimates due to a variety of factors.

20

(¥)
−
15.00

(¥)
−
30.00