Consolidated Financial Results for the Interim Period Ended September 30, 2005
November 14, 2005
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 term-end consolidated accounts: November 14, 2005
U.S. GAAP not applied
1. Consolidated Results for the FY2006 Interim Period (April 1, 2005 – September 30, 2005)(1) Consolidated Operating Results(Amounts less than one million yen have been omitted)
Net Sales(¥ million))

Operating Income%(¥ million)

Ordinary Income%(¥ million)%

FY2006 Interim

59,221

27.7

8,461

169.5

12,45971.6

FY2005 Interim

46,3719.5

3,139(44.7)

7,259

1.2

FY2005 Full Year103,150

12,449Net Income

19,001Net Income per Share

Diluted Net Income per Share(¥ million)

%

(¥)

(¥)

FY2006 Interim

8,983

60.9

157.17−

FY2005 Interim

5,583

17.3

97.69

−

FY2005 Full Year
13,234230.05(Notes)
1. Equity in net income (loss) of non-consolidated subsidiaries and affiliates
FY2006 Interim: ¥392 million FY2005 Interim: ¥997 million FY2005 Full Year: ¥116 million
2. Average number of outstanding shares during the period (Consolidated):
FY2006 Interim: 57,153,779 shares FY2005 Interim: 57,154,267 shares FY2005 Full Year: 57,154,118 shares
3. Changes in accounting methods: No
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

Shareholders’ Equity

Shareholders’ Equity Ratio

Shareholders’ Equity
per Share(¥ million)(¥ million)%

FY2006 Interim

474,697354,72974.7

6,206.58

FY2005 Interim

247,756

202,17881.6

3,537.42

FY2005 Full Year393,733
293,152
74.5(Note) Number of shares issued and outstanding (consolidated) at period end:
FY2006 Interim 57,153,686 shares FY2005 Interim 57,154,063 shares FY2005 Full Year 57,153,822 shares(¥)

5,127.67(3) Consolidated Cash Flows
Operating Activities

Investing Activities

Financing Activities

Cash and Cash Equivalents
at Period-End(¥ million)(¥ million)(¥ million)

FY2006 Interim

12,355(16,033)(9,444)

21,840FY2005 Interim

6,874(1,522)(4,092)

29,205

FY2005 Full Year

21,936(15,805)786

34,568(4) Number of Consolidated Subsidiaries and Affiliates
Consolidated subsidiaries: 16
Non-consolidated subsidiaries accounted for by the equity method: 1
Equity-method affiliates: 8

1(¥ million)

(5) Changes in Scope of Consolidation and Application of Equity Method
Consolidated subsidiaries (Added): 0 (Excluded): 1
Equity-method affiliates (Added): 0(Excluded): 0
2. Forecasts for FY2006 (April 1, 2005 – March 31, 2006)
Net Sales

Ordinary Income(¥ million)

Full YearNet Income(¥ million)

122,224

25,028(¥ million)
16,476(Reference) Estimated net income per share is ¥ 288.27
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.

2II. Management Policies
1. Fundamental Business Policies
Since its establishment in 1955, Japan Petroleum Exploration Co., Ltd. (JAPEX) has pursued its mission ofcontributing 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 to society withregard to a stable supply, 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 other initiatives.
As such, the Group aims to move forward as a company with the competitive capabilities required to respond tochanges in its operating environment. The section below outlines the Group’s business 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 ofenvironment-friendly natural gas.
・Pursue sustainable growth and maximize shareholder value by placing top priority on winning andmaintaining 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 the medium andlong-term outlook for the business, dividend payments are set based on respect for the return of profits toshareholders. While considering the need to acquire new reserves as an energy company that plays a role inproviding stable supplies of petroleum and natural gas, indispensable resources for society, the policy also takes into
account the need for retained earnings to finance the acquisition of new reserves and to upgrade and improvetransmission 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 withrevisions to the Gas Business Law and the Electric Utility Law. As such, competition is intensifying almost on adaily 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 the “common carrier” concept in gas transmission. Under thisconcept, companies, including JAPEX, that possess gas pipelines above a certain capacity are obligated to open theirpipelines for third-party access. As a result of these and other developments, the Company’s gas business is facing amajor 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. Government efforts to bolster environmental measures in the wake ofenforcement of the Kyoto Protocols, coupled with activities to tackle global warming on the corporate and individuallevel, are likely to continue to drive demand for natural gas. This presents opportunities for JAPEX to further
develop its natural gas business.
Moreover, the mounting concerns over recent escalation in global fuel prices and supply stability, has underscoredthe importance of exploration and development operations. Based on recognition that petroleum will continue to playa critical part and the central role as a primary energy source in Japan, JAPEX Group, for its part, will continue toposition these activities as key elements of its business base. Accordingly, expanding natural gas sales andmaintaining and enlarging reserves of oil and natural gas are critical issues for the Company.

3Expanding sales of natural gas and upgrading and expanding the supply system
To cope with the intensifying competitive environment as well as expand sales of environment-friendly natural gas,
the Group is working to construct a natural gas business that seamlessly integrates services and facilities, fromupstream (E&P) through mid-stream (transmission and storage) to downstream (supply to large users and local
distribution companies, or LDCs).
From this perspective, the Company is stepping up efforts to expand sales of natural gas passing through its
Yufutsu-Sapporo and Niigata-Sendai pipelines. Simultaneously, it is working to expand and upgrade its transmission
network by constructing a new natural gas pipeline, slated for completion in 2006, between the cities of Shiraishi andKoriyama by branching from 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, Hokuriku, andKyushu regions to supply natural gas to a broader base of customers. To expand supply to users within Hokkaido by
LNG tank containers from its LNG plant in Yufutsu, which is located in the region, JAPEX is taking steps toaugment a liquefaction plant scheduled for completion in fiscal 2008.
Through the ongoing development of its gas operations, JAPEX is targeting natural gas sales volume of 1.7 billion
m3 in fiscal 2008. Moreover, leveraging the Group’s upstream division uniqueness, JAPEX is upgrading its natural
gas transmission and underground storage network organically linking a range of facilities and services in a drive to
put gas operations on a more solid footing.

Conducting efficient E&P and securing new reserves
With its business centered on E&P, the JAPEX Group continually works to maintain and expand its reserves, andstrives to further expand and upgrade its system for providing stable supplies of petroleum and natural gas over thelong term. Specifically, to significantly expand cost-competitive domestic reserves, a key source of earnings, theCompany 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 existinggas fields. In this way, the Company is able to conduct interlocking, tactical exploration that affords greater
efficiencies.
Furthermore, recognizing the importance of establishing a stable overseas business base from a long-term viewpoint,
the Company will work to increase operating efficiency and carry out exploration in areas identified as key
geographies. Specifically, the Company aims to increase the efficiency of operations and development 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 high early returns, with consideration given to thebalanced preservation of exploration assets over long-term operating periods. From a part of the Company's move,on Iraq, Japex has stepped into technical cooperation with the Ministry of Oil to establish firm relations with the
Ministry and on Libya, the Company has propelled exploration activities in the blocks granted through the tender ofOctober 2005 in Libya. And further, the Company will continue to secure new projects in its target E&P areas.

Addressing environmental issues
JAPEX, as a company that supplies environment-friendly natural gas, feels an obligation to contribute toenvironmental protection. The Company therefore works to increase internal environmental awareness throughongoing use of internal environment management systems (all company sites have acquired ISO 14001 certification),and to reduce the environmental impact of its business activities. At the same time, JAPEX is contributing toenvironmental activities on the societal level by, among other actions, participating in and funding afforestation
programs in Japan and overseas.
In Japan, emissions rights trading and other new environmental businesses are being steadily generated in an effort to4

help reduce the nation’s greenhouse gas levels. For its part, JAPEX will continue pushing ahead with efforts topromote natural gas use from a variety of angles, and appropriately apply Group technologies in the environment
business field. To this end, the Company is proactively 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, andtechnologies for storing carbon dioxide underground.
The JAPEX Group aims to utilize these activities to further strengthen its operating base and enhance its
competitiveness as well as bolster operating efficiency. The ultimate goal is to achieve sustainable development andmaximize 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 efficient management intohigher earnings and in ensuring the Company plays a valuable and useful role in society. The Company therefore
makes it a top priority to continually reinforce and upgrade its corporate governance systems.
(2) Measures to strengthen corporate governancec Company organizations
To clarify its business execution framework, JAPEX adopted the executive officer system on June 24, 2005.
Accompanying this change, the number of directors was reduced. Both these moves should expedite
decision-making by the Board of Directors.
The Board of Directors and corporate auditors (together with the Audit Committee, comprising all the Company’s
corporate auditors) are responsible for overseeing executive actions carried out by each director. JAPEX therefore
employs what is known as the corporate auditor system.
Board of Directors
The Board of Directors meets monthly. In addition to making decisions pertaining to important business and affairsof the corporation, the Board oversees executive actions based on status reports it receives from directors andofficers. Also, from the perspective of speeding up decision-making, an Executive Committee, comprising full-time
directors that reside in Tokyo, to make decisions regarding items that are not subject to decision by the Board of
Directors. It also deliberates on items in support of decision-making by the Board. There are no outside directors on
the Board of Directors.
Corporate Auditors and Audit Committee
Corporate auditors attend meetings of the Board of Directors, and full-time corporate auditors also attend meetings ofthe Executive Committee and other important Company meetings. At the same time, corporate auditors also
exchange opinions with Board members with executive functions as part of their oversight function.
The Company has four corporate auditors, one of whom is outside auditors. While each auditor has the authority to
conduct audits on an independent basis, general audit policy and the allocation of auditing tasks is decided by the
Audit Committee. One staff member, concurrently attached to JAPEX’s Internal Auditing Dept., is posted in theoffice that assists corporate auditors in the execution of their duties.
The Audit Committee receives pre-audit briefings from the independent auditor, as well as details on the specificareas audited upon receipt of the independent auditor’s report. As needed, the full-time corporate auditors also
receive status reports on the progress of audits by the independent auditor.
Outside auditor has no special conflicts of interests with the Company.

d Internal audits
The Internal Auditing Dept., which is under the direct authority of the Company president, is responsible formonitoring each department and division to ensure compliance with all laws and internal regulations in the course ofbusiness operations. One of the three members on staff serves concurrently in the Audit Committee office. Internal
audits are conducted based on yearly audit plans, with audit results reported to the president. The Internal Auditing
Dept. also provides instruction and advice to departments and divisions as needed.

5Internal audit reports submitted to the president are shared with the Audit Committee and the corporate auditors. The
Internal Auditing Dept. also provides briefings to full-time corporate auditors regarding the status of audits on aregular basis.
e IR activities
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, toincrease management transparency, with the goal of ensuring optimal business execution in any operating
environment.
fMatters regarding the independent auditor
Financial statements for the fiscal year ended March 31, 2006 were audited by Shin Nihon & Co. The names of thecertified public accountants (CPAs) responsible for executing audits and those assisting in audit operations aredetailed below.
CPAs responsible for audit execution (years of engagement)
Atsuhiro Umesawa (7 years)
Kiomi Horikoshi (1 year)
Staff assisting in audits
5 CPAs and 6 assistants

5. Relationships With Parent Company and Others
JAPEX has no parent company.

6III. Business Results and Financial Position
1. Business Results(1) Overview of the Interim Period
In the first half of fiscal 2006, ended September 30, 2005, the Japanese economy recovered moderately as the recent
improvement in the corporate sector spread to the household sector.
Meanwhile, in the petroleum market, international crude oil prices rose steadily, resulting in a sharp rise in prices fordomestic crude oil. Meanwhile, due to acceleration in the pace of deregulation, domestic natural gas prices remained
still weak 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 interim period ended September 30, 2005, consolidated net sales totaled ¥59,221 million, up ¥12,849 million,
or 27.7%, compared to a year earlier. Driving this growth was higher sales of crude oil on the back of rising prices
and other factors.
Operating income totaled ¥8,461 million, up ¥5,322 million, or 169.5%, from the previous interim period, due toalso a contribution of consolidated overseas project companies. Ordinary income totaled ¥12,459 million, up ¥5,199
million, or 71.6%, from a year earlier.
As a result, consolidated net income for the interim period totaled ¥8,983 million, up ¥3,399 million, or 60.9%, fromthe previous year.
Below is a summary of earnings data for each of the Company’s business divisions.
(a) E&P Division
The E&P division sells crude oil, natural gas and liquefied natural gas (LNG). Interim net sales totaled ¥49,859
million, up ¥12,718 million, or 34.2%, from a year earlier, primarily reflecting higher sales of crude oil on the backof rising prices and other factors.
(b) Contract Services Division
The Contract Services Division accepts orders mainly for drilling projects and geophysical surveys. Interim net sales
totaled ¥3,253 million, up ¥611 million, or 23.2%, from the previous interim period.
(c) Other Businesses DivisionThis division mainly includes the sale of petroleum products such as LPG and fuel oil, the transmission of
third-party gas and petroleum products, and other miscellaneous consignment orders. Interim net sales totaled¥6,107 million, up ¥193 million, or 3.3% from a year earlier.

(2) Financial Position
Interim Cash Flows
As of September 30, 2005, cash and cash equivalents totaled ¥21,840 million, down ¥12,727 million, or 36.8%,
compared to March 31, 2005. Below is a summary of interim cash flows of each activity.
Net cash provided by operating activities was ¥12,355 million, an increase of 79.7%, from the previous year. The
main components were ¥12,427 million in income before income taxes and minority interests and ¥6,714 million in
depreciation and amortization.
Net cash used in investing activities amounted to ¥16,033 million, an increase of 953.4%from a year earlier. This7

was mainly attributable to ¥11,534 million for the acquisition of property, plant and equipment and ¥7,939 million
for purchase of investments in securities.( This significant increase from a year earlier was due to 5,103 million in
the 1st half of fiscal 2005 in proceeds(*) from purchase of consolidated subsidiary stock accompanied by changes inscope of consolidation, which made net cash used in investing activities reduced.
Note: (*) a net cash inflow arising from the difference between outflows for purchase of shares in Japex New
Nanhai Ltd. and Jawa Oil Co., Ltd. and funds held by these companies.)
Net cash used in financing activities was ¥9,444 million, up 130.8% year on year. Main components were cash used
for the repayment of long-term debt of ¥8,153 million.
Cash Flow Indicators
Fiscal 2004
Shareholders’ equity ratio (%)
Shareholders’ equity ratio on
mark-to-market basis (%)
Debt repayment period (years)
Interest coverage ratio (times)

Fiscal 2005

Fiscal 2006

InterimYear-EndInterimYear-EndInterim

79.4

79.3

81.6

74.5

74.7

—

96.4

109.3

63.6

73.3

—
49.7

0.5
60.3

—
46.6

0.7
86.8

—
121.9

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
Interest coverage ratio: Net cash provided by operating activities/interest paid
* 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 ofcash flows.

(3) Forecasts for the Fiscal Year Ending March 31, 2006
For the fiscal year ending March 31, 2006, the Company expects consolidated net sales to increase ¥19 billion, or
18.5%, from the previous fiscal year, to ¥122.2 billion, based mainly on expected higher crude oil prices and afull year contribution of newly consolidated subsidiaries.
Although JAPEX anticipates increased exploration expenses related to more aggressive exploration activities during
the period, backing higher oil prices, the Company is projecting a year-on-year increase in ordinary income of ¥6billion, or 31.7%, to ¥25 billion. Compared to the previous year, net income is expected to increase by ¥3.2 billion, or
24.5%, to ¥16.4 billion.
The above forecasts assume: 1) prices of US$58/barrel and US$50/barrel for imported crude oil for the third andfourth quarters of fiscal 2006, respectively; and 2) an exchange rate of ¥110/US$ for both the third and fourth
quarters in the second half of fiscal 2006.
The following is a comparison of current forecasts with those announced on May 16, 2005.
(Millions of yen)
(Full Year)
Previous Forecasts: A
Current Forecasts: B
Change: B – A
Change (%)

Net Sales(¥ million)
96,897122,224
25,327
26.1%

Ordinary Income(¥ million)
18,63025,0286,398
34.3%

Net Income(¥ million)
13,615
16,476
2,861
21.0%

A number of risks and uncertainties have the potential to affect JAPEX’s business performance, including, but notlimited to, the following:8

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 high risk by nature.
Moreover, even after resources are discovered, heavy investment is still required, including for the drilling ofdevelopment wells and the construction of related production and transmission facilities. Accordingly, long leadtimes 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 at international prices. Consequently, the price at which the Company sells crude oil isaffected by market trends, such as the level of output set by OPEC and trends in the international balance of supply
and demand, as well as fluctuations in exchange rates. To reduce associated risks, the Company engages in crude oilswap transaction, although this approach does not entirely 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 in yen. 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.
(3) Distribution of Dividends
The Company will pay an interim dividend of ¥15.00 per share in accordance with a decision by the Board of
Directors on November 14, 2005.

9

Ⅳ．Consolidated Interim Financial Statements
１． Consolidated Interim Balance Sheets
Description

As of Sept. 30, 2005

As of March 31, 2005

Amount (¥ million)

Amount (¥ million)

ChangeAmount(¥ million)

As of Sept. 30, 2004
Amount (¥ million)(Assets)
Ⅰ

Current assets
１．Cash and deposits

20,561

32,778

２．Notes and accounts receivable

12,632

13,9139,728

３．Marketable securities

6,141

6,688

6,095

４．Inventories

9,216

9,158

9,535

５．Other current assets

10,566

8,268

6,770

Less: Allowance for doubtful receivables
Total current assets
Ⅱ

(15)

(17)

59,10270,78827,716(11)(11,686)

59,836

Fixed assets
１．Property, plant and equipment(1）Buildings and structures(2）Machinery and equipment(3）Land44,14728,307
13,001(4）Other property, plant and equipment

12,602２．Intangible fixed assets

46,023
26,32011,191
98,057

11,3986,446

45,993
21,831
11,233
94,933

3,123

7,004

(557)

14,06093,1191,892

３．Investments and others(1）Investments in securities

306,717

216,467

83,896(2）Others
Less: Allowance for doubtfulreceivables
Allowance for losses on overseas
investments
Total fixed assets

12,616

13,062

20,556

(231)

(211)

(184)

(8,012)311,089(8,312)

221,005

90,083(11,360)

92,908415,594

322,944

92,650187,920474,697393,733

80,963

247,756

１．Notes and accounts payable

4,749

3,047

2,464

２．Short-term bank loans
３．Current portion of long-term debt
４．Other current liabilities

2,773
820
12,1508,973
17,085

9,306
14,207

20,493

29,105

Total assets（Liabilities）
Ⅰ

Current liabilities

Total current liabilities
Ⅱ(8,611)

25,978Long-term liabilities
１．Long-term debt

7,000

7,000

２．Deferred tax liabilities

76,57046,213-

３．Accrued retirement benefits for employees

4,254

3,831

3,896

４．Accrued retirement benefits for officers
５．Accrued estimated cost of abandonment ofwells
６．Accrual for losses on projects

702

773

679

2,697

2,690

2,492
2,635

850

945

1,688

７．Other reserves

124

-

58

８．Other long-term liabilities

12

77

668

Total long-term liabilities

92,30762,27530,032

11,281

Total liabilities

112,801

91,38021,42037,259

7,166

9,199

(2,032)

8,319（Minority interests）
Minority interests in consolidated
subsidiaries（Shareholders’ equity）
Ⅰ

Common stock

14,28814,288-14,288Ⅱ
Ⅲ
Ⅳ

Retained earnings
Unrealized holding gain on securities
Translation adjustments

198,718
141,70916

191,116
88,313(561)

7,602
53,396578

184,323
3,865
(295)

Ⅴ

Treasury stock
Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity

(4)

(4)

(0)

(3)

354,729

293,152

61,576202,178474,697393,733

80,963

247,756

10

２．Consolidated Interim Statements of Income
Fiscal 2006
1st half
Description

Amount (¥ million)

Fiscal 2005
1st half

ChangeFiscal 2005

Amount (¥ million)

Amount(¥ million)

Amount (¥ million)Ⅰ

Net sales

59,221

46,371

12,849103,150

Ⅱ

Cost of sales

34,17030,285

3,885

61,04625,05016,086

8,963

42,104Gross profit
Ⅲ

Exploration expenses
１．Exploration expenses

5,625

２．Exploration subsidies(796)

Ⅳ Selling, general and administrative expenses
Operating income
Ⅴ

2,826

2,002

(317)

11,75910,1201,639

21,298

8,461

3,139

5,322

14,678

641

575

1,164

２．Dividend income

1,425

1,071

1,669

３．Equity in profit of non-consolidated subsidiaries
and affiliates

392

997

116

４．Reversal of allowance for losses on overseas
investments

299

1,213

1,376

５．Reversal of accrual for losses on projects

740

419

957

6,127

1,072

4,571

533

4,809

(237)

1,127

6,411

Non-operating expenses
１．Interest expense

73

141

261

２． Devaluation loss on securities

-

95

121

３．Provision for accrued estimated cost ofabandonment of wells

261

257

513

４．Other non-operating expenses

239

574

195

690

(115)

7,259

5,199

3

(0)

550

(516)

6,712

5,715

998

1,883

561

129

431

624

8,983

5,583

3,399

13,234

12,459

1,191

2,088
19,001

Extraordinary income
１．Reversal of allowance for doubtful receivables

Ⅷ

(81)

１．Interest income

Ordinary income
Ⅶ

4,829

6,445

Non-operating income

６．Other non-operating income
Ⅵ

2,908

2

2

3

-

-

Extraordinary losses
１．Loss on disposal of fixed assets

34

２．Earthquake disaster recovery expense-

Income before income taxes and minority
interests
2,918

Deferred income taxes(36)

Net income-

12,427

Current income taxes

Minority interests

550
34

665

1,912
2,882

(913)

206

871
18,129

1,801
2,469

4,270

11

３．Consolidated Interim Statements of Shareholders’ Equity

Description

Fiscal 2006
1st half
Amount (¥ million)

Fiscal 2005
1st half
Amount (¥ million)

Fiscal 2005
Amount (¥ million)（Retained earnings）
Ⅰ

Balance at beginning of year

Ⅱ

Add
１．Net income

Ⅲ

8,983

8,983

180,826

5,583

5,583

180,826

13,234

13,234

Deduct１．Cash dividends paid

1,285

2,000

2,857

２．Bonuses to officers

95

86

86

（Incl. statutory auditors）
３．Deduct of consolidated subsidiaries
Ⅳ

191,116

Balance at end of year

(

3)
0

(
1,381
198,718

3)

2,087

-

(

3)
-

184,323

2,944
191,11612

４．Consolidated Interim Statements of Cash Flows
Fiscal 2006
1st half
Description

Amount (¥ million)

Fiscal 2005
1st half
Amount(¥ million)

ChangeFiscal 2005

Amount(¥ million)

Amount (¥ million)

Ⅰ Operating activities
Income before income taxes and minority interests

12,427

6,712

18,129Depreciation and amortization

6,714

6,817

14,081

Amortization of goodwill
Loss on devaluation of marketable securities and investments in securities

503

-

-

-

95

121

Increase (decrease) in allowance for doubtful receivables

17

58

90

Increase (decrease) in provision for accrued retirement benefits for employees

422

317

244

Increase (decrease) in provision for accrued retirement benefits for officers
Increase (decrease) in provision for accrued estimated cost of abandonment of
wells
Decrease in provision for allowance for losses on overseas investments andaccrual for losses on projects
Interest and dividend income

(70)

(17)

76

(16)

65

(12)

(1,039)(1,465)(2,173)(2,067)(1,646)(2,833)

73

141

261

(346)

(58)

(239)

16

69

452

Interest expense
Gain on redemption and sales of marketable securities and investments insecurities
Loss on redemption and sales of marketable securities and investments insecurities
Equity in losses (gains) of unconsolidated subsidiaries and affiliates

(392)

(997)

(166)

Decrease (increase) in notes and accounts receivable

1,285

2,295

(1,823)

Decrease (increase) in inventories(58)(3,419)(3,042)

Increase (decrease) in notes and accounts payable

2,218(1,569)152

Increase (decrease) in consumption tax payable

(640)

67

783

(4,065)

1,345

14,982

8,813

6,169

(1,984)-(1,984)-(642)(1,938)

1,296(4,139)12,355

6,874

5,480

21,936

Investments in time deposits

(5)

(40)

Proceeds from time deposits

409

330

330

(5,998)

(100)

(100)

Other, net
Subtotal
Payment of debt guarantee
Income taxes paid
Net cash provided by operating activities

1,922
26,075

Ⅱ Investing activities

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

(30)

6,518

1,888

4,220

(11,534)(6,839)(11,978)

5

122

550

(302)

(216)

(586)

Payments for purchase of investments in securities(7,939)(5,687)(14,588)

Proceeds from redemption and sale of investments in securities
Payments from purchase of consolidated subsidiary stock accompanied bychanges in scope of consolidation
Proceeds from purchase of consolidated subsidiary stock accompanied by changes
in scope of consolidation
Increase in loans receivable

1,436

2,506

7,435

-

-

(2,269)

-

5,103

-

(3,107)(152)(1,127)

Decrease in loans receivable

1,856

33

186

Interest and dividends received

2,168

1,727

2,815

Additions to intangible fixed assets

Other, net

458

(197)

(16,033)(1,522)

2,734

(600)

(600)

-

-

7,000

Repayment of long-term debt

(8,153)(1,153)(2,311)

Acquisition of treasury stock

(0)

(1)

(2)

(1,285)(1,997)(2,854)

Dividends paid to minority shareholders

(609)

(192)

(192)

Interest paid

(101)

(147)

(252)

(2,029)-(9,444)(4,092)

Net cash used in investing activities(662)
14,511(15,805)

Ⅲ Financing activities
Increase (decrease) in short-term bank loans
Proceeds of long-term debt

Cash dividends paid

Payment of capital reduction for minority interests
Net cash used in financing activities
Ⅳ Effect of exchange rate changes on cash and cash equivalents(5,352)

786

471

93

377

(199)

Ⅴ Increase in cash and cash equivalents(12,651)

1,354(14,005)

6,717

Ⅵ Cash and cash equivalents at beginning of the period

34,56827,851

6,717

27,851

(76)

-

(76)

-

21,84029,205(7,364)34,568

Ⅶ Decrease in cash and cash equivalents accompanied by exclusion of consolidation
Ⅷ Cash and cash equivalents at period-end

13

Ⅴ.Status of Production and Sales
１．Production(1) Oil and Natural Gas Segment
Division

Crude

E&P

Fiscal 2006
1st half

Fiscal 2005
1st half

Product

oilkl

255,759(2,286)

Fiscal 2005
kl

378,307(80,960)

Natural gas

477,696thousand m3(1,665)577,172thousand m3(32,186)

L

7,253

11,531 t

NGt

696,814 kl（101,436）
1,091,902thousand m3（2,904）
19,771tkl

B i t u m e n
OtherBusinesses

L

P

G

Fuel oil, etc.

225,433(225,433)

−
4,640

t

23,010

kl

−

5,153

t

10,338t26,233kl

49,751kl（Notes）
1. The figures in parentheses in E&P 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 energies
4. Bitumen is heavy oil extracted from oil sands. .
(2) Geothermal Energy Segment
Division

Product

Geothermal
EnergySteamFiscal 2005
1st half

552,788

Fiscal 2006
1st halft

Fiscal 2005−

863,241t（Notes）
1. No steam production from the first quarter ended June 30, 2005, reflecting Japex Geothermal Kyushu Ltd. determined to cease
the geothermal energy business in the previous fiscal year..

14

２．Sales(1)Oil and Natural Gas Segment

Division

Fiscal 2005
1st half

Product

VolumeFiscal 2006
1st half

Amount
kl

Crude

Oil

Volume(¥ million)

693,467

E&P

Amountkl

18,476

26,592552,778

NG

18,50338,211

1,276,887

39,867t50,587

2,096
kl

2,532

98,8254,888kl

B i t u m e n−−

226,139

2,231

−

−

Subtotal−

37,141−49,859−82,966

−

2,641

−

3,253

−

6,987

−

2,641

−

3,253

−

6,987

Contract
services
Subtotal

t

L

P

G

(¥ million)

13,795t

669(¥ million)t

721

12,403kl

Other
Businesses

1,380,337

t

42,448(¥million)

thousand m3

622,473

16,568Amountkl

thousand m3t

L

Volume(¥million)

687,061thousand m3

Natural Gas

Fiscal 2005(¥ million)

30,781

kl

1,622
kl

Fueloil,etc

43,6881,950

38,3582,415

94,4304,202

O t h e r s

−

3,294

−

2,971

−

6,553

Subtotal

−

5,914

−

6,107

−

12,378

Total−

45,697−59,221−

102,332(2) Geothermal Energy Segment

Division

Fiscal 2005
1st half

Product

VolumeGeothermal
EnergyAmount
t

Steam
Total

Fiscal 2006
1st half
Volume(¥ million)

Fiscal 2005
Amountt527,863

674

−

−

674

−

Volumet−−

Amountt(¥ million)

813,999

818

−

818

（Notes）
1. Others in Other Businesses include revenue from the transmission of third-party gas through JAPEX’s pipeline network and salescommissions.
2. No steam product sales from the first quarter ended June 30, 2005, reflecting Japex Geothermal Kyushu Ltd. determined to cease
the geothermal energy business in the previous fiscal year..
3. Monetary amounts in the tables do not include consumption tax.

15