Consolidated Financial Results for the First Three Quarters Ended December 31, 2005
February 10, 2006
Note: The following report is a translation of the Japanese-language original.
Company Name: Japan Petroleum Exploration Co., Ltd.
(Company Code: 1662, First Section, Tokyo Stock Exchange)(URL: http://www.japex.co.jp/)
President: Yuji Tanahashi
Inquiries: Koichi Shimomura, Manager, Media Relations, Administration Department
TEL: (03) 5461-7413
1. Notes Relating to Preparation of Quarterly Financial Statements(1) Use of simplified accounting procedures: Yes
Income taxes are calculated using an estimated annual income tax rate based on the statutory tax rate.
(2) Changes in accounting treatment from the most recent consolidated fiscal year: No(3) Changes in scope of consolidation and application of equity method: Yes
Consolidated (Added): 1 company(Excluded): 1 company
Equity-method (Excluded): 1 company

2. Consolidated Financial Results for the First Nine Months of Fiscal 2006 (April 1, 2005 – December 31, 2005)(1) Consolidated Operating Results (Amounts less than one million yen have been omitted)

FY06 First 3Qs
FY05 First 3Qs（Ref.）FY05 Full YearNet Sales(¥ million)%
93,129 26.9
73,3709.4
103,150

Operating Income(¥ million)%
17,476128.4
7,652(11.0)
14,678Net Income per
Share

Diluted Net Income
per Share(¥)
FY06 First 3Qs
FY05 First 3Qs（Ref.）FY05 Full Year

Ordinary Income(¥ million)%
22,648 83.7
12,329 22.0
19,001Net Income(¥ million)%
14,632
68.0
8,708
22.3
13,234(¥)
256. 01
152. 36230. 05−−−(Notes)
1. Percentage figures for net sales, operating income and other items represent changes compared with the corresponding period of the previous
fiscal year.
2. Diluted net income per share is not shown because there are no shares with a dilutive effect.

Qualitative Information Concerning Consolidated Business Performance
For the first nine months of fiscal 2006, ended December 31, 2005, JAPEX reported consolidated net sales of ¥93,129
million, up 26.9%, from the same period of the previous fiscal year. Compared to the same period a year earlier, operating
income increased 128.4% to ¥17,476 million, ordinary income increased 83.7% to ¥22,648 million, and net income rose
68.0% to ¥14,632 million.
Below is a summary of operating performance by business division.
Oil and Natural Gas Segment(a) E&P DivisionThis division sells crude oil, natural gas and liquefied natural gas (LNG). This division posted net sales of ¥79,298 million,
an increase of 33.5% from the same period of the previous fiscal year, on the back of soaring crude oil prices and higher sales
volume of natural gas.
(b) Contract Services Division
The Contract Services Division accepts orders mainly for drilling projects and geological and geophysical surveys. Net sales
for the period were ¥4,070 million, up 5.6% from the same period of the previous fiscal year.
(c) Other Businesses DivisionThis division mainly carries out the manufacturing and trading of petroleum products such as LPG and fuel oil, thetransmission of third-party natural gas and petroleum products, and other miscellaneous consignment orders. Net sales
totaled ¥9,760 million, an increase of 6.7% from the same period of the previous fiscal year.

-1-

In addition, with Japex Geothermal Kyushu Ltd. having withdrawn from the geothermal energy business in the previous
fiscal year, net sales of geothermal energy division, which is not appropriated from this first quarter, decreased ¥979 million
from the same period of the previous fiscal year.
(2) Consolidated Financial Position
Total Assets

Shareholders’ Equity(¥ million)
538,584368,206
393,733

Dec. 31, 2005
Dec. 31, 2004
(Ref.) Mar. 31, 2005(¥ million)
389,666
278,812293,152

Shareholders’ Equity
Ratio
%
72.4
75.7
74.5

Shareholders’ Equity
Ratio per Share(¥)
6,817.87
4,878.26
5,127.67(3) Consolidated Cash Flows
Operating Activities

FY06 First 3Qs
FY05 First 3Qs（Ref.）FY05 Full Year

Investing Activities(¥ million)
20,396
11,36921,936(¥ million)(17,481)(604)(15,805)

Financing Activities(¥ million)(2,628)(5,634)786

Cash and Cash
Equivalents at
Period-End(¥ million)
35,56432,93734,568

Qualitative Information Concerning Consolidated Financial Position
Total assets as of December 31, 2005 stood at ¥538,584 million, an increase of ¥144,851 million from March 31, 2005. This
rise was mainly attributable to an increase in unrealized holding gain on securities due to valuation gains on shares of INPEXCorporation. Shareholders’ equity rose ¥96,513 million from March 31, 2005, to ¥389,666 million.
As of December 31, 2005, cash and cash equivalents on a consolidated basis stood at ¥35,564 million, an increase of ¥996
million compared with the end of the previous fiscal year.
(Cash Flows from Operating Activities)
Operating activities provided net cash of ¥20,396 million, mainly reflecting cash from income before income taxes of ¥22,582
million.
(Cash Flows from Investing Activities)
Investing activities used net cash of ¥17,481 million, primarily attributable to cash of ¥17,134 million used for the purchase ofproperty, plant and equipment.
(Cash Flows from Financing Activities)
Financing activities used net cash of ¥2,628 million, reflecting mainly inflows of ¥8,000 million of proceeds from long-term
debt and ¥2,774 million of increase in short term loans, and outflows of ¥8,559 million for the repayment of long-term debt,¥2,129 million for cash dividends paid and ¥2,029 million of payment for capital reduction for minority interests.

3. Revision of Consolidated Forecast for Fiscal Year 2006(April 1, 2005 – March 31, 2006)(Full Year)Net Sales

Ordinary Income(¥ million)(¥ million)

Net Income(¥ million)

Previous Forecast: （A）

122,224

25,02816,476

Current Forecast: （B）

132,709

29,661

19,169Change: （B – A）

10,485

4,633

2,692

Change (%)

8.6%

18.5%

16.3%

103,150

19,001

13,234（Ref.）FY05 Full Year

Estimated net income per share( full year) : ¥335.39
Note: (1) Previous forecast is the one released on November 14, 2005
(2) 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.

Qualitative Information Concerning Forecast
For the current consolidated forecast for fiscal year 2006 ending March 31, 2006, mainly due to a rise in crude oil prices andhigher sales volume of natural gas and trading crude oil, the Company expects net sales to rise ¥10.4 billion, or 8.6% to¥132.7 billion, ordinary income to increase ¥4.6 billion, or 18.5% to ¥29.6 billion and net income to increase ¥2.6 billion, or
16.3% to ¥19.1 billion, compared with the previous one released on November 14, 2005, respectively.
These forecasts were formulated on the following assumptions :1) 4th quarter’s price of US$55/bbl for imported crude oiland 2) 4th quarter’s exchange rate of ¥115/US$-2-

（Reference）: Non-consolidated Forecast for Fiscal Year 2006(April 1,2005−March 31,2006) − revised
Annual Dividend per Share(Full Year)Net Sales

Ordinary Income(¥ million)

Full Year

91,461Net Income(¥ million)

InterimYear-end

(¥)

(¥)

(¥)

15.00

25.00

40.00

(¥ million)

17,993

12,918Estimated net income per share( full year) : ¥226.02
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.

Revision of Non-consolidated Forecast for Fiscal Year 2006(April 1, 2005 – March 31, 2006)(Full Year)Net Sales

Ordinary Income(¥ million)(¥ million)

Net Income(¥ million)

Previous Forecast: （A）

88,535

16,222

11,936

Current Forecast: （B）

91,461

17,993

12,918Change: （B – A）

2,926

1,771

982

Change (%)

3.3%

10.9%

8.2%

（Ref.）FY05 Full Year86,66914,56910,765(Attached material)
Ⅰ. Consolidated Quarterly Balance Sheet for the 3rd Quarter of FY2006
Ⅱ. Consolidated Statement of Income for the First 3Qs of FY2006
Ⅲ. Consolidated Statements of Cash Flows for the First 3Qs of FY2006
Ⅳ. Status of Production and Sales-3-

Ⅰ.Consolidated Quarterly Balance Sheet for the 3rd Quarter of FY2006(¥ million)
3rd Q of FY06
Description

FY05

Change3rd Q of FY05

As of Dec. 31, 2005 As of Mar. 31, 2005

As of Dec. 31, 2004

(Assets)
ⅠCurrent assets
1. Cash and deposits

33,677

32,778898

30,564

2. Notes and accounts receivable

14,366

13,913453

12,4013. Marketable securities

3,238

6,688

(3,449)6,004

4. Inventories

9,391

9,158

233

11,4305. Other current assets

11,755

8,268

3,487

7,761

Less: Allowance for doubtful receivables
Total current assets

(14)

(17)

3

(14)

72,41470,788

1,625

68,148

ⅡFixed assets
1. Property, plant and equipment(1) Buildings and structures

43,73046,023(2,292)45,532(2) Machinery and equipment

28,97926,3202,659

26,361(3) Land

13,087

11,191

1,896

11,351(4) Other property, plant and equipment

16,766

11,398

5,367

10,908

Total property, plant and equipment

102,564

94,933

7,630

94,154

6,075

7,004

(928)

1,749

(1) Investments in securities

353,167

216,467

136,699

199,713(2) Others

12,61813,062(443)

16,015

(243)

(211)

(31)

(195)

Allowance for losses on overseas investments(8,012)(8,312)

299(11,379)

Total investments and others

357,529

221,005

136,524

204,154

Total fixed assets

466,170

322,944

143,226

300,057

Total assets

538,584

393,733

144,851368,206

1. Notes and accounts payable

3,084

3,047

36

5,901

2. Short-term bank loans

2,932

−

2,932

−

414

8,973

(8,559)9,006

2. Intangible fixed assets
3. Investments and others

Less: Allowance for doubtful receivables(Liabilities)
Ⅰ Current liabilities

3. Current portion of long-term debt
4. Other current liabilities

17,64517,085560

16,930Total current liabilities

24,07629,105(5,028)31,837

Ⅱ Long-term liabilities
1. Long-term debt

15,000

7,000

8,000

414

2. Deferred tax liabilities

93,393

46,21347,17938,536

3. Accrued retirement benefits for employees

4,521

3,831

690

4,147

4. Accrued retirement benefits for officers

731

773

(41)

720

2,827

2,690

137

2,371

6. Accrual for losses on projects

945

1,688

(742)

2,340

7. Other long-term liabilities

95

77

18

501

Total long-term liabilities

117,516

62,27555,24149,032

Total liabilities

141,593

91,38050,21280,870

7,324

9,199

(1,874)8,524

5. Accrued estimated cost of abandonment of wells(Minority interests)
Minority interests in consolidated subsidiaries(Shareholders’ equity)
Ⅰ Common stock

14,28814,288−14,288Ⅱ Retained earnings

203,510

191,116

12,393

186,590

Ⅲ Unrealized holding gain on securities

171,464

88,313

83,15078,055

407

(561)

969

(119)

Ⅳ Translation adjustments
Ⅴ Treasury stock

(4)

(4)

(0)

(3)

Total shareholders’ equity

389,666

293,152

96,513278,812

Total liabilities, minority interests and shareholders’ equity

538,584

393,733

144,851368,206-4-

Ⅱ. Consolidated Statements of Income for the First 3Qs of FY2006(¥ million)
Description

FY06 First 3Qs

FY05 First 3Qs

Apr. – Dec. 2005

Apr. – Dec. 2004

Ⅰ Net sales

93,129

Ⅱ Cost of sales

ChangeFY05
Apr. 04 – Mar. 05

73,37019,759103,150

51,303

46,874

4,428

61,046

41,826

26,496

15,33042,104

1. Exploration expenses

7,511

3,845

3,665

6,445

2. Exploration subsidies(1,082)（81）(1,001)

(317)

6,428

3,763

2,664

6,127

17,921

15,0792,841

21,29817,476

7,652

9,824

14,678Gross profit
Ⅲ Exploration expenses

Total exploration expense
Ⅳ Selling, general and administrative expenses
Operating income
Ⅴ Non-operating income
1. Interest income

1,003

883

119

1,164

2. Dividend income

1,605

1,240

365

1,669

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

594

1,029

(435)

116

4. Reversal of allowance for losses on overseas investments

299

1,194

(894)

1,376

5. Reversal of accrual for losses on projects

740

809

(69)

957

6. Foreign exchange profit

697

−

697

−

1,079

771

308

1,127

6,020

5,929

91

6,411

7. Other non-operating income
Total non-operating income
Ⅵ Non-operating expenses
1. Interest expense

110

205

(95)

261

2. Loss on sale of securities

20

145

(125)

145

3. Devaluation loss on securities

1

128

(126)

121

4. Provision for accrued estimated cost of abandonment of wells

370

380

(10)

513

5. Other non-operating expenses

345

392

(46)

1,046

848

1,252

(403)

2,088

22,64812,32910,31819,001

2

2

0

−

68

637

(568)

665

Total non-operating expenses
Ordinary income
Ⅶ Extraordinary income
1. Reversal of allowance for doubtful receivables
Ⅷ Extraordinary losses
1. Loss on disposal of fixed assets

−

55

(55)

206

22,582

11,638

10,943

18,129

Income taxes

6,798

2,575

4,222

4,270

Minority interests

1,151

354

796

624

Net income

14,632

8,708

5,923

13,234

2. Earthquake disaster recovery expenses
Income before income taxes and minority interests-5-

Ⅲ. Consolidated Statements of Cash Flows for the First 3Qs of FY2006(¥ million)
Description
Ⅰ Operating activities
1. Income before income taxes and minority interests
2. Depreciation and amortization
3. Amortization of goodwill
4. Loss on devaluation of marketable securities and investments in securities
5.Increase (decrease) in allowance for doubtful receivables
6. Increase in provision for accrued retirement benefits for employees
7. Increase (decrease) in provision for accrued retirement benefits for officers
8. Increase (decrease) in provision for accrued estimated cost of abandonmentof wells
9. Decrease in provision for allowance for losses on overseas investments andaccrual for losses on projects
10. Interest and dividend income
11. Interest expense
12. Gain on redemption and sales of marketable securities and investments insecurities
13. Loss on redemption and sales of marketable securities and investments insecurities
14. Equity in losses (profits) of non-consolidated subsidiaries and affiliates
15. Decrease (increase) in notes and accounts receivable
16. Decrease (increase) in inventories
17. Increase (decrease) in notes and accounts payable
18. Increase (decrease) in consumption tax payable
19. Other, net
Subtotal
20. Payment of debt guarantee
21. Income taxes (paid) refunded
Net cash provided by operating activities
Ⅱ Investing activities
1. Investments in time deposits
2. Proceeds from time deposits
3. Payments for purchase of marketable securities
4. Proceeds from redemption and sale of marketable securities
5. Additions to property, plant and equipment
6. Proceeds from sales of property, plant and equipment
7. Additions to intangible fixed assets
8. Payments for purchase of investments in securities
9. Proceeds from redemption and sale of investments in securities
10. Payments for purchase of consolidated subsidiary stock accompanied bychanges in scope of consolidation
11. Proceeds from purchase of consolidated subsidiary stock accompanied bychanges in scope of consolidation
12. Increase in loans receivable
13. Decrease in loans receivable
14. Interest and dividends received
15. Other, net
Net cash used in investing activities
Ⅲ Financing activities
1. Increase(decrease) in short-term bank loans
2. Proceeds from long-term debt
3. Repayment of long-term debt
4. Purchase of treasury stock
5. Cash dividends paid
6. Dividends paid to minority shareholders
7. Interest paid
8. Payment for capital reduction for minority interests
Net cash used in financing activities
Ⅳ Effect of exchange rate changes on cash and cash equivalents
Ⅴ Increase (decrease) in cash and cash equivalents
Ⅵ Cash and cash equivalents at beginning of year
Ⅶ Decrease in cash and cash equivalents accompanied by exclusion of
consolidation
Ⅷ Cash and cash equivalents at period-end-6-

FY06 First 3Qs
Apr. – Dec. 2005

FY05 First 3Qs
Apr. – Dec. 2004

FY05
Apr. 04 – Mar. 05

22,582
10,344
752
1
28
690
(41)

11,638
10,475
−
128
72
567
23

18,12914,081
−
121
90
244
76

88

(62)

(12)

(1,039)(1,836)(2,173)(2,608)110(2,124)205(2,833)
261

(399)

(134)

(239)

20

232

452

(594)
(442)
(233)
300
(480)
(5,181)
23,896(1,984)(1,515)(1,029)(375)(5,314)
1,335
371
604
14,776(116)(1,823)(3,042)
152
783
1,922
26,075−(3,407)−(4,139)20,39611369

21,936(105)455(5,998)10,451(17,134)8(486)(8,277)
2,076

(40)
330
(100)
3,637
(7,061)
154(355)(7,531)
4,111

(30)
330
(100)
4,220
(11,978)550(586)(14,588)
7,435

−

−

(2,269)

−

5,103

−

(3,119)
2,064
2,547
35
(17,481)

(263)
53
2,030
(673)
(604)

(1,127)
186
2,815
(662)
(15,805)

2,774
8,000
(8,559)(0)(2,129)(609)(74)(2,029)(2,628)(593)−(1,864)(2)(2,829)
(192)
(152)
−
(5,634)

(600)
7,000
(2,311)(2)(2,854)
(192)
(252)
−
786

786
1,072
34,568(43)
5,086
27,851(199)
6,717
27,851(76)−−

35,56432,93734,568

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

FY06 First 3Qs

Product

Apr. 1 – Dec. 31, 2005
Crude

oil

Natural gas
E&P
L

Other
Businesses

N

G

kl

586,415(123,449)ｔ

B i t u m e n339,317 kl(339,317)

L

7,911

ｔ

40,713kl

P

G

Fuel oil, etc.

(Ref.) FY05
Apr. 1, 2004 – Mar. 31, 2005

kl

462,779(53,985)

902,777 thousand ㎥(47,769)
18,729FY05 First 3Qs
Apr. 1 –Dec. 31, 2004

696,814 kl（101,436）

742,321 thousand ㎥(2,032)
14,181

1,091,902 thousand ㎥（2,904）ｔ

19,771

−

ｔ

−

7,112

ｔ

10,338ｔ

35,080kl

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 a heavy oil extracted from oil sands.

(2) Geothermal Energy Segment
Division

Product

FY06 First 3Qs
Apr. 1 – Dec. 31, 2005

Geothermal
Energy

Steam

−

ｔ

FY05 First 3Qs
Apr. 1 – Dec. 31, 2004

767,264ｔ(Ref.) FY05
Apr. 1, 2003 – Mar. 31, 2005

863,241ｔ(Note)
1.No steam production has been made from the first quarter ended June 30, 2005, reflecting the withdrawal of Japex
Geothermal Kyushu Ltd. from the geothermal energy business in the previous fiscal year.

-7-2．Sales(1) Oil and Natural Gas Segment

Division

FY06 First 3Qs
Apr. 1 – Dec. 31, 2005

Product

VolumeAmount
kl

Crude

Oil

Volumekl

29,551kl

38,211

thousand㎥

873,617

29,284(¥million)

1,380,337

thousand㎥

974,245

Amount(¥millio

1,087,755

41,047thousand㎥

Natural Gas

Amo
unt

Volume(¥ million)

1,021,993（Ref.）FY05
Apr. 1, 20034Mar. 31, 2005

FY05 First 3Qs
Apr.1 – Dec. 31, 2004

26,422

1,276,887

39,867

E&P
ｔ

L

N

G

ｔ

82,30868,791

4,098kl

B i t u m e n

kl

−

−

−

−

4,868
−

59,388−82,966

−

4,070

−

3,854

−

6,987

4,070

−

3,854

−

−
ｔ

G

ｔ

(¥ million)

18,964

1,175

6,987
ｔ

(¥ millio

21,772

kl

(2)

kl

79,298Subtotal

Other
Businesses

4,888

−

Contract
servicesP

98,825

3,415

338,181Subtotal

L

ｔ

1,126

(¥ million)

30,781

kl

1,622

kl

Fueloil,etc

73,388

4,117

66,926

2,993

94,4304,202

O t h e r s

−

4,467

−

5,026

−

6,553

Subtotal

−

9,760

−

9,147

−

12,378

Total−

93,129−72,390−102,332

Geothermal Energy Segment
Division

Product

FY05 First 3Qs
Apr. 1 – Dec. 31, 2004
VolumeGeothermal
EnergyAmount
ｔ

Steam
Total

VolumeAmountｔ(¥ million)−−（Ref.）FY04
Apr. 1, 2003 Mar. 31, 2004

FY04 First 3Qs
Apr. 1 – Dec. 31, 2003−−

VolumeAmountｔ(¥ million)(¥ million)

722,926

979

813,999

818

−

979

−

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 has been made from the first quarter ended June 30, 2005, reflecting the withdrawal of Japex Geothermal
Kyushu Ltd. from the geothermal energy business in the previous fiscal year.
3. Each amount of money in the tables does not include consumption tax.

-8-