Consolidated Financial Results for the Six Months Ended September 30, 2014
<under Japanese GAAP>
November 7, 2014
Note: The following report is a summary of the Japanese-language original.

Company name: Japan Petroleum Exploration Co., Ltd.
Listing:
Tokyo Stock Exchange, First Section
Securities code: 1662
URL:
http://www.japex.co.jp/
President:
Osamu Watanabe
Inquiries:
Samdeck Nakamoto, General Manager, Media and Investor Relations Department
TEL: +81-3-6268-7110 (from overseas)
Scheduled date to file Quarterly Report:
November 12, 2014
Scheduled date to commence dividend payments:
December 2, 2014
Presentation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results presentation meeting (for analysts and institutional investors): Yes(Millions of yen with fractional amounts discarded, unless otherwise noted)

1.
(1)Consolidated financial results for the six months ended September 30, 2014
(April 1, 2014 – September 30, 2014)(Percentages indicate year-on-year changes.)
Consolidated operating results (cumulative)
Net sales

Six months ended

Operating income

Millions of yen% Millions of yen

Ordinary income% Millions of yen

September 30, 2014

146,850

22.1

15,110

September 30, 2013

120,281

13.5

11,543 549.1

Note: Comprehensive income: Six months ended September 30, 2014:
Six months ended September 30, 2013:

24,736%24.3

18,87318.8

19,902 549.9

15,883–

Diluted net
income per share
Yen

Yen

September 30, 2014330.23–September 30, 2013277.91–(2)% Millions of yen

30,375 million yen (151.7 %)12,067 million yen (– %)Net income per share
Six months ended

30.9

Net income

Consolidated financial position
Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen%

As of September 30,
2014

696,945526,345

65.0

As of March 31, 2014

663,038

496,915

63.7

Reference: Equity

2.

As of September 30, 2014: 453,010 million yen

As of March 31, 2014: 422,336 million yen

Cash dividends

Fiscal year ended
March 31, 2014
Fiscal year ending
March 31, 2015
Fiscal year ending
March 31, 2015
(Forecasts)

First quarter
Yen

Second quarter
Yen

Annual dividends
Third quarter
Yen

Fiscal year-end
Yen

–

25.00

–

25.00

50.00

–

25.00
–

25.00

50.00

Note: Revisions to the forecasts of cash dividends most recently announced: None

-1-

Total
Yen

3.

Consolidated financial forecasts for the fiscal year ending March 31, 2015 (April 1, 2014 – March 31, 2015)(Percentages indicate year-on-year changes.)
Net sales

Fiscal year ending
March 31, 2015

Operating income

Ordinary income

Net income pershare

Net income

Millionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%Yen324,378

17.3

34,68140.8

48,81911.2

35,37421.9

618.95

Note: Revisions to the consolidated financial forecasts most recently announced: Yes

*
(1)

Notes
Changes in significant subsidiaries during the six months under review (changes in specified subsidiaries
resulting in the change in scope of consolidation): None

(2)

Application of specific accounting for preparing quarterly consolidated financial statements: Yes
Note: For details, please refer to “(2) Application of specific accounting for preparing quarterly consolidated financial statements” of“2. Matters regarding summary information (notes)” on page 4 of the attached material.

(3)

Changes in accounting policies, changes in accounting estimates, and restatementa.
Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
b. Changes in accounting policies due to other reasons: Nonec.
Changes in accounting estimates: None
d. Restatement: None
Note: For details, please refer to “(3) Changes in accounting policies, changes in accounting estimates, and restatement” of “2. Mattersregarding summary information (notes)” on page 4 of the attached material.

(4)

Number of issued shares (common shares)a.
Total number of issued shares at the end of the period (including treasury shares)
As of September 30, 2014
57,154,776 shares
As of March 31, 2014
57,154,776 sharesb. Number of treasury shares at the end of the period
As of September 30, 2014
2,139 shares
As of March 31, 2014
2,139 sharesc.
Average number of shares during the period (cumulative from the beginning of the fiscal year)
Six months ended September 30, 2014
57,152,637 shares
Six months ended September 30, 2013
57,152,637 shares* Indication regarding execution of quarterly review procedures
At the time of disclosure of this quarterly financial results report, the quarterly review procedures for thequarterly consolidated financial statements in accordance with the Financial Instruments and Exchange Act are
in progress.
* Proper use of financial forecasts and other special matters
The forward-looking statements, including the financial forecasts shown in this document are based on
information currently available to the Company and on certain assumptions deemed to be reasonable. As such,they do not constitute guarantees by the Company of future performance. Actual performance and other results
may differ materially from these forecasts due to various factors.
For the suppositions that form the assumptions for financial forecasts and cautions concerning the use thereof,
please refer to “(3) Explanation of consolidated financial forecasts and other forward-looking statements” of“1. Qualitative information regarding settlement of accounts for the six months ended September 30, 2014” onpage 3 of the attached material to the quarterly financial results report.
(Method of accessing supplementary material on quarterly financial results)
JAPEX plans to hold a presentation meeting for institutional investors and analysts on November 10, 2014.
JAPEX plans to post the material distributed at this presentation meeting on its website promptly after the
meeting is held.

-2-

(Attached Material)
1. Qualitative information regarding settlement of accounts for the six months ended September 30,
2014(1) Explanation of operating results
During the six months ended September 30, 2014, net sales was at ¥146,850 million, an increase of ¥26,568
million (+22.1%) year on year. Gross profit increased by ¥2,354 million (+7.3%) year on year to ¥34,515
million. The main factors behind the year-on-year increases in net sales and gross profit were increases insales volumes of crude oil overseas and natural gas overseas and a rise in sales prices of domestic natural gas.
Although overseas exploration expenses increased, domestic exploration expenses decreased, and as a result
exploration expenses decreased by ¥2,463 million (-43.0%) year on year to ¥3,260 million. Selling, generaland administrative expenses increased by ¥1,250 million (+8.4%) year on year to ¥16,143 million. As a result,operating income increased by ¥3,567 million (+30.9%) year on year to ¥15,110 million.
Ordinary income amounted to ¥24,736 million, an increase of ¥4,834 million (+24.3%) year on year, mainly
because of an increase in share of profit of entities accounted for using equity method.
Income before income taxes and minority interests increased by ¥4,845 million (+24.3%) year on year to¥24,750 million. After deducting income taxes and minority interests, net income came to ¥18,873 million, an
increase of ¥2,990 million (+18.8%) year on year.
Below is a breakdown of sales.
(i) E&P
Net sales from E&P (including liquefied natural gas (LNG) and bitumen) came to ¥120,415 million, an
increase of ¥25,801 million (+27.3%) year on year. This was mainly the result of increases in sales
volumes of crude oil overseas and natural gas overseas and a rise in sales prices.
(ii) Contract Services
Net sales from contract services (involved in drilling and geological surveys) came to ¥3,250 million, adecrease of ¥754 million (-18.8%) year on year.
(iii) Other Businesses
Net sales from other businesses, such as the sale of oil products, including liquefied petroleum gas (LPG),
fuel oil and the like, the transportation of natural gas, etc., as well as other subcontracted tasks, came to¥23,184 million, an increase of ¥1,521 million (+7.0%) year on year.

(2) Explanation of financial position
At the end of the second quarter, as compared to the end of the previous fiscal year, total assets increased by¥33,907 million to ¥696,945 million. The main factor behind this increase was an increase of ¥31,584 million
in total property, plant and equipment, including construction in progress, etc.
Total liabilities increased by ¥4,476 million from the previous fiscal year-end to ¥170,599 million. The main
factor behind this increase was an increase of ¥4,070 million in total non-current liabilities mostly comprisedof an increase in deferred tax liabilities.
Total net assets increased by ¥29,430 million from the previous fiscal year-end to ¥526,345 million. The main
factors behind this increase were an increase of ¥18,742 million in retained earnings and an increase of¥11,932 million in total accumulated other comprehensive income.

(3) Explanation of consolidated financial forecasts and other forward-looking statements
JAPEX expects that the consolidated financial forecasts for net sales, operating income, ordinary income andnet income for the fiscal year ending March 31, 2015 will be higher compared to the previous financial
forecasts announced on May 12, 2014. The factors contributing to this rise are an increase in sales prices due
to an increase in oil prices and the yen depreciation in foreign exchange rates, and an increase in share of-3-

profit of entities accounted for using equity method, which offset the negative factors such as a decrease insales volume of crude oil.
The latest financial forecasts are based on a Japan Crude Cocktail (JCC) price of $100 per barrel and an
exchange rate of ¥105/$ for the third quarter period (October 2014 to December 2014) and a JCC price of $85
per barrel and an exchange rate of ¥105/$ for the fourth quarter period (January 2015 to March 2015).
Please refer to the “Notice of Financial Forecast Revision” released on the same day of this report, November
7, 2014.

2. Matters regarding summary information (notes)(1) Changes in significant subsidiaries during the six months under review
No items to report(2) Application of specific accounting for preparing quarterly consolidated financial statements
a. Deferral accounting of cost variance
Cost variance arising from seasonal changes in production level is deferred as current assets (other)because such variance is expected to be almost completely eliminated by the end of the cost accounting
period.
b. Calculation of taxes
For the taxes, JAPEX and some of its consolidated subsidiaries compute first by reasonably estimating theeffective tax rate after applying tax effect accounting against income before income taxes and minority
interests for the fiscal year including the six months ended September 30, 2014, and next by multiplying
the quarterly income before income taxes and minority interests by such estimated effective tax rate.
However, in cases where the calculation of taxes using such estimated effective tax rate yields a result thatis not reasonable to a significant extent, the effective statutory tax rate is used.
Note that income taxes - deferred is included in income taxes.

(3) Changes in accounting policies, changes in accounting estimates, and restatement
Changes in accounting policies(Application of Accounting Standard for Retirement Benefits and its Guidance)
For the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012) and the“Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012), theCompany has applied the provisions set forth in the main clauses of Paragraph 35 of the AccountingStandard for Retirement Benefits and Paragraph 67 of the Guidance on Accounting Standard for
Retirement Benefits from the first quarter ended June 30, 2014, and reviewed the determination ofretirement benefit obligations and current service cost. Accordingly, the Company changed the method of
attributing expected benefit to periods from the straight-line basis to the benefit formula basis as well as
amended the calculating method of the discount rate.
Application of the Accounting Standard for Retirement Benefits and its Guidance is in line with thetransitional measures provided in Paragraph 37 of the Accounting Standard for Retirement Benefits. In
accordance with such measures, the effect of the change in the determination of retirement benefit
obligations and current service cost has been added to or deducted from retained earnings as of the
beginning of the six months ended September 30, 2014.
As a result of this change, as of the beginning of the six months ended September 30, 2014, net defined
benefit liability decreased ¥1,874 million and retained earnings increased ¥1,297 million. In addition, theeffect of these changes on operating income, ordinary income and income before income taxes andminority interests for the six months ended September 30, 2014 is immaterial.
.

-4-3. Consolidated financial statements(1) Consolidated quarterly balance sheet(Millions of yen)
As of March 31, 2014
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Construction in progress
Other, net
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Allowance for overseas investment loss
Total investments and other assets
Total non-current assets
Total assets-5-

As of September 30, 2014

81,031
37,222
41,203
4,653
128
6,285
24,731(48)
195,209

71,776
21,223
46,119
4,841
290
8,877
19,201(40)
172,289

88,541
112,011200,552

102,198
129,938
232,137

11,365
11,365

11,27011,270190,765
69,468(39)(4,284)
255,910
467,828
663,038

217,837
68,287(39)(4,838)281,247
524,655
696,945(Millions of yen)

Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Provision
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Deferred tax liabilities
Provision
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets-6-

As of March 31, 2014

As of September 30, 2014

23,61028,169370
31,30483,454

6,832
36,811
558
39,65983,861

21,63632,509936
6,845
16,001
4,738
82,668
166,123

20,87440,045924
4,561
16,057
4,274
86,738
170,599

14,288318,433(10)
332,711

14,288337,175(10)351,453

84,856

100,345

(56)
5,166
(340)
89,62474,579496,915
663,038

(43)
1,558
(303)
101,557
73,335526,345696,945

(2) Consolidated quarterly statement of income and Consolidated quarterly statement ofcomprehensive income
Consolidated quarterly statement of income
Six months ended
September 30, 2013
(April 1, 2013 –September 30, 2013)
120,281
88,12032,161

Net sales
Cost of sales
Gross profit
Exploration expenses
Exploration expenses
Exploration subsidies
Total exploration expenses
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Provision for allowance for losses on overseas
investments
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Subsidy income
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in income
Net income-7-(Millions of yen)Six months ended
September 30, 2014
(April 1, 2014 –September 30, 2014)
146,850
112,334
34,515

5,728
(4)
5,723
14,893
11,543

3,387
(126)
3,260
16,143
15,110

1,209
1,181

1,154
1,104

4,041

7,187

2,394
8,826

1,204
10,651

270

318

–

558

197
467
19,902

148
1,026
24,736

40
0
41

42
0
42

35
2
38
19,905
3,983
15,92138
15,88328–
28
24,750
4,781
19,968
1,095
18,873

Consolidated quarterly statement of comprehensive income
Six months ended
September 30, 2013
(April 1, 2013 –September 30, 2013)15,921

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to minority
interests-8-(Millions of yen)Six months ended
September 30, 2014
(April 1, 2014 –September 30, 2014)
19,968(6,852)
(437)
3,459
–

15,483
6(5,084)
37

(23)

(35)

(3,854)
12,067

10,40630,375

11,74530,805

322

(430)

(3)

Notes to consolidated financial statements(Notes on premise of going concern)
No items to report(Notes on significant changes in the amount of shareholders’ equity)
No items to report-9-4. Supplemental information
Status of production and sales
1. Production
Six months ended
September 30, 2013
(April 1, 2013 –September 30, 2013)

Six months ended
September 30, 2014
(April 1, 2014 –September 30, 2014)(Reference)
Fiscal year ended
March 31, 2014
(April 1, 2013 – March 31, 2014)

209,333

959,072

828,870(9,935)(759,035)(424,040)

Natural gas(thousand m3)

504,685

627,616

1,104,533(38,774)(194,138)(170,549)

LNG (t)10,803894

12,235

165,551

152,305

344,757(165,551)(152,305)(344,757)

Crude oil (kl)E&P

Bitumen (kl)Notes: 1. The figures in parentheses represent overseas production and are included in the total.
2. Part of the natural gas production volume is used as a feedstock for LNG.
3. Bitumen is a type of extra-heavy oil extracted from oil sands.

2. SalesSix months ended
September 30, 2013
(April 1, 2013 –September 30, 2013)
AmountVolume(Millions of yen)

E&P

(Millions of yen)

(Reference)
Fiscal year ended
March 31, 2014
(April 1, 2013 – March 31, 2014)
AmountVolume(Millions of yen)

Crude oil (kl)712,272

48,808954,605

68,1181,559,888

108,408

Natural gas(thousand m3)

614,873

31,883775,20737,4581,418,963

71,584

LNG (t)91,037

8,811

88,7499,455

268,510

26,202

Bitumen (kl)

165,479

5,110

152,709

5,382

342,565

10,962

Subtotal

94,614120,415

217,157

4,005

3,250

8,740

Oil products/merchandise

17,813

19,55042,860

Others

3,849

3,633

7,830

Subtotal

21,662

23,18450,691

Total

120,281

146,850

276,588

Contract services
Otherbusinesses

Six months ended
September 30, 2014
(April 1, 2014 –September 30, 2014)
AmountVolumeNotes: 1. “Oil products/merchandise” includes liquefied petroleum gas (LPG), fuel oil, gas oil and kerosene, and “Others”
includes the transportation of natural gas, etc., as well as other subcontracted tasks.
2. Monetary amounts in the table do not include consumption taxes.

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