Consolidated Financial Results for the Nine Months Ended December 31, 2013
<under Japanese GAAP>
February 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:
Shoji Mihara, General Manager, Media and Investor Relations Department
TEL: +81-3-6268-7110 (from overseas)
Scheduled date to file Quarterly Report:
February 12, 2014
Scheduled date to commence dividend payments:–
Presentation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results presentation meeting:
None(Millions of yen with fractional amounts discarded, unless otherwise noted)

1.
(1)Consolidated financial results for the nine months ended December 31, 2013
(April 1, 2013 – December 31, 2013)
Consolidated operating results (cumulative)(Percentages indicate year-on-year changes.)
Net sales

Operating income% Millions of yen

Ordinary income

Nine months ended

Millions of yen

December 31, 2013180,259

9.6

15,977 113.7

30,030 157.9

18,161–

December 31, 2012

164,519

(0.7)

7,477

11,644(18,083)–

Note: Comprehensive income: Nine months ended December 31, 2013:
Nine months ended December 31, 2012:% Millions of yen

Net income

30.3

40.9

%

29,711 million yen (– %)-35,467 million yen (– %)Diluted net
income per share

Net income per share
Nine months ended

Yen

Yen

December 31, 2013317.77–

December 31, 2012

(316.41)–(2)% Millions of yen

Consolidated financial position
Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen%

As of December 31,
2013

645,355

462,368

63.4

As of March 31, 2013

525,172

403,625

72.8

Reference: Equity

2.

As of December 31, 2013: 409,020 million yen

As of March 31, 2013: 382,441 million yen

Cash dividends

Fiscal year ended
March 31, 2013
Fiscal year ending
March 31, 2014
Fiscal year ending
March 31, 2014
(Forecasts)

First quarter
Yen

Second quarter
Yen

Annual dividends
Third quarter
Yen

Fiscal year-end
Yen

–

20.00

–

20.00

40.00

–

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, 2014 (April 1, 2013 – March 31, 2014)(Percentages indicate year-on-year changes.)
Net sales

Fiscal year ending
March 31, 2014

Operating income

Ordinary income

Net income

Net income pershare

Millionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%Yen

272,802

18.1

21,54054.9

38,08335.6

24,089–421.49Note: Revisions to the consolidated financial forecasts most recently announced: Yes

*
(1)

Notes
Changes in significant subsidiaries during the nine 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 the section of “(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 restatement of prior period financial
statements after error corrections
a. Changes in accounting policies due to revisions to accounting standards and other regulations: Noneb. Changes in accounting policies due to other reasons: Nonec. Changes in accounting estimates: Yes
d. Restatement of prior period financial statements after error corrections: None
Note: For details, please refer to the section of “(3) Changes in accounting policies, changes in accounting estimates, and restatement ofprior period financial statements after error corrections” of “2. Matters regarding summary information (notes)” on page 4 of theattached material.

(4)

Number of issued shares (common stock)a. Total number of issued shares at the end of the period (including treasury stock)
As of December 31, 2013
57,154,776 shares
As of March 31, 2013
57,154,776 sharesb. Number of treasury shares at the end of the period
As of December 31, 2013
2,139 shares
As of March 31, 2013
2,139 sharesc. Average number of shares during the period (cumulative from the beginning of the fiscal year)
Nine months ended December 31, 2013
57,152,637 shares
Nine months ended December 31, 201257,152,637 shares* Indication regarding execution of quarterly review proceduresThis quarterly financial results report is not subject to the quarterly review procedures in accordance with the
Financial Instruments and Exchange Act. At the time of disclosure of this quarterly financial results report, thequarterly review procedures for the quarterly 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 the section of “(3) Explanation of consolidated financial forecasts and other forward-looking
statements” of “1. Qualitative information regarding settlement of accounts for the nine months ended
December 31, 2013” on page 4 of the attached material to the quarterly financial results report.
(Method of accessing supplementary material on quarterly financial results)
On February 7, 2014 (Friday), JAPEX plans to post supplementary material on its website.

-2-

(Attached Material)
1. Qualitative information regarding settlement of accounts for the nine months ended December 31,
2013(1) Explanation of operating results
During the nine months ended December 31, 2013, net sales was at ¥180,259 million, an increase of ¥15,740
million (+9.6%) year on year. This was mainly the result of an increase in sales prices due to the impact offoreign exchange rates, despite negative factors such as sales volume declines for crude oil and natural gas.
Gross profit increased by ¥7,653 million (+19.5%) year on year to ¥46,874 million. This was mainly the
result of the aforementioned increase in sales prices and a decrease in cost of sales due to decreased
depreciation and amortization and decreased variable cost in line with a decline in sales volume of naturalgas.
Exploration expenses decreased by ¥1,681 million (-17.9%) year on year to ¥7,692 million, due to aconsiderable decrease in overseas expenditures, and selling, general and administrative expenses increased by¥834 million (+3.7%) year on year to ¥23,204 million. As a result, operating income increased by ¥8,500
million (+113.7%) year on year to ¥15,977 million.
Ordinary income amounted to ¥30,030 million, increasing ¥18,385 million (+157.9%) year on year, mainly
because of the turnaround from equity in losses of affiliates recorded in the same period of the previous fiscal
year to equity in earnings of affiliates and an increase in foreign exchange gains.
Income before income taxes and minority interests was ¥21,978 million, increasing ¥45,042 million year on
year mainly as the result of a decrease in impairment loss on business assets for production operation at
Yufutsu Oil and Gas Field in Hokkaido, which was recorded under extraordinary loss due to a decline inproduction capacity at the said Oil and Gas Field. Net income was ¥18,161 million, increasing ¥36,245
million year on year despite an increase in income taxes.
Below is a breakdown of sales.
(i) E&P
Net sales from E&P (including liquefied natural gas (LNG) and bitumen) came to ¥138,978 million, an
increase of ¥9,451 million (+7.3%) year on year. This was mainly the result of an increase in net sales ofpurchased crude oil, particularly Sakhalin crude oil, reflecting an increase in sales prices due to a
substantial swing towards yen depreciation in foreign exchange rates, which outweighed sales volume
declines for domestically produced crude oil, bitumen and natural gas.
(ii) Contract Services
Net sales from contract services (involved in drilling and geological surveys) came to ¥6,326 million, an
increase of ¥2,385 million (+60.5%) 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 and oil products as well as other subcontracted tasks,
came to ¥34,953 million, an increase of ¥3,903 million (+12.6%) year on year.

(2) Explanation of financial position
At the end of the third quarter, as compared to the end of the previous fiscal year, although current assets
decreased, noncurrent assets increased, and total assets increased by ¥120,183 million to ¥645,355 million asa result.
The main factors for change in current assets were a decrease in securities and a decrease in short-term loans
receivable based on repo transactions included in other under current assets, despite an increase in cash anddeposits.
The main factors for change in noncurrent assets were as follows. In property, plant and equipment, there was
the recognition of assets relating to a project for the development and production of shale gas in British
Columbia, Canada and an increase in the investments relating to the development of oil sands in the
Hangingstone area in Alberta, Canada. In investments and other assets, there was an increase in investment-3-

securities owing to a rise in the stock prices of INPEX CORPORATION and other companies and an increasein equity in earnings of affiliates, and an increase in the investments relating to development of the Garraf
oilfield in Iraq.
Regarding liabilities and net assets, total liabilities increased by ¥61,440 million from the previous fiscal
year-end to ¥182,987 million, mainly the result of an increase in short-term loans payable, despite decreases
in notes and accounts payable-trade and in long-term loans payable. Total net assets increased by ¥58,742
million to ¥462,368 million as a result of increases in valuation difference on available-for-sale securities andin retained earnings.

(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, 2014 will be higher compared to the previous consolidated
financial forecasts announced on May 10, 2013. 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 inequity in earnings of affiliates, which offset the negative factors such as the change in estimates for asset
retirement obligations and the recording of impairment loss.
The latest consolidated financial forecasts have made the following changes in assumptions. The full-year(April 1, 2013 - March 31, 2014) Japan Crude Cocktail (JCC) price has been revised from $100 per barrel to$109.93 per barrel and the full-year foreign exchange rate has been revised from ¥90/$ to 98.43/$.
Please refer to the “Notice of Financial Forecast Revision and Recording of an Impairment Loss on Business
Assets” released on the same day of this report, February 7, 2014.

2. Matters regarding summary information (notes)(1) Changes in significant subsidiaries during the nine 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) andcurrent liabilities (other) because such variance is expected to be almost completely eliminated by the endof 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 nine months under review, 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 of prior period
financial statements after error corrections(Changes in accounting estimates)
In the natural gas supply business, which is JAPEX’s primary business operation, maintaining and ensuring
the stable supply of natural gas is of high public interest. Therefore, even after termination of production
operation, JAPEX planned to continue to use some assets held for the purpose of producing and selling oil
and gas on a permanent basis in order to fulfill its responsibilities as a supplier for users of natural gas byholistically integrating the assets held by the JAPEX Group. However, for certain assets that JAPEX canno longer expect to use following a study into their usability as of the end of the third quarter, the timing ofdecommissioning and other data can now be estimated. As a consequence, JAPEX has changed its
accounting estimates since it is now possible to reasonably estimate asset retirement obligations.
As a result of this change, operating income, ordinary income, and income before income taxes andminority interests for the nine months under review each decreased by ¥2,440 million.
.

-4-3. Consolidated financial statements(1) Consolidated quarterly balance sheets(Millions of yen)
As of March 31, 2013
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
Noncurrent 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 noncurrent assets
Total assets-5-

As of December 31, 2013

53,87032,33753,414
4,490
77
7,007
37,479(31)
188,645

83,03434,27434,220
4,539
385
4,869
19,787(38)
181,074

2,957
87,72590,68389,996
95,072
185,069

10,394
10,394

10,304
10,304

177,304
62,806(31)(4,630)235,449
336,526
525,172

196,052
77,267(39)(4,372)
268,907464,281645,355

(Millions of yen)
As of March 31, 2013
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Provision
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Other provision
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets-6-

As of December 31, 2013

18,947–
170
22,037
41,155

16,75855,402448
25,303
97,91324,19731,983
6,938
886
10,8585,526
80,391
121,547

22,11035,5186,433
891
15,192
4,927
85,074
182,987

14,288291,990(10)306,268

14,288
307,579(10)
321,857

78,310226(2,362)
76,173
21,183
403,625
525,172

85,65678
1,427
87,162
53,347462,368
645,355

(2) Consolidated quarterly statements of income and Consolidated quarterly statements ofcomprehensive income
Consolidated quarterly statements of income
Nine months ended
December 31, 2012
(April 1, 2012 –December 31, 2012)
164,519
125,298
39,220Net 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
Dividends income
Equity in earnings of affiliates
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Subsidy income
Gain on transfer of mining rights
Other
Total extraordinary income
Extraordinary loss
Impairment loss
Other
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes
Income (loss) before minority interests
Minority interests in income
Net income (loss)-7-(Millions of yen)
Nine months ended
December 31, 2013
(April 1, 2013 –December 31, 2013)180,259
133,385
46,874

9,374
–
9,374
22,369
7,477

7,841
(149)
7,692
23,204
15,977

1,449
2,538
–
1,400
5,388

1,833
2,247
7,396
3,597
15,074

220
533
467
1,221
11,644

560
–
461
1,021
30,030

345
2,572
6
2,924

40
–
0
41

37,031
601
37,632(23,063)(5,566)(17,497)586(18,083)

7,983
110
8,093
21,978
3,797
18,18019
18,161

Consolidated quarterly statements of comprehensive income
Nine months ended
December 31, 2012
(April 1, 2012 –December 31, 2012)
Income (loss) before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of theparentComprehensive income attributable to minority interests(17,497)-8-(Millions of yen)
Nine months ended
December 31, 2013
(April 1, 2013 –December 31, 2013)
18,180(19,070)
387
730

7,343
(160)
4,341

(17)

5

(17,969)(35,467)

11,53029,711(36,200)

29,150

732

561

(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(Other notes)(Significant impairment loss on noncurrent assets)
Owing to a re-evaluation of the production capacity at the Yufutsu Oil and Gas Field in Tomakomai City,
Hokkaido, the Company reduced the book value of the business assets for production operation at the said
Oil and Gas Field to their recoverable value and posted an impairment loss. The amount of impairment
loss recorded for the nine months ended December 31, 2013 was ¥7,983 million.

-9-4. Supplemental information
Status of production and sales
1. Production
Nine months ended
December 31, 2013
(April 1, 2013 –December 31, 2013)

Nine months ended
December 31, 2012
(April 1, 2012 –December 31, 2012)
Crude oil (kl)E&P

Natural gas(thousand m3)
LNG (t)Bitumen (kl)(Reference)
Fiscal year ended
March 31, 2013
(April 1, 2012 – March 31, 2013)

361,253

318,779

482,306(2,882)(17,441)(5,840)806,025

796,253

1,080,116(866)(97,460)(1,199)226

12,235602

259,828

258,174

348,948(259,828)(258,174)(348,948)

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. SalesNine months ended
December 31, 2012
(April 1, 2012 –December 31, 2012)
AmountVolume(Millions of yen)

E&P

Nine months ended
December 31, 2013
(April 1, 2013 –December 31, 2013)
AmountVolume(Millions of yen)

(Reference)
Fiscal year ended
March 31, 2013
(April 1, 2012 – March 31, 2013)
AmountVolume(Millions of yen)

Crude oil (kl)

1,088,919

62,563

955,164

66,3891,335,639

78,834Natural gas(thousand m3)

1,067,339

47,377985,960

49,7601,455,708

69,795

LNG (t)159,964

12,922

147,954

14,551

229,242

19,098Bitumen (kl)262,390

6,663

257,3128,277

349,198

9,694

Subtotal

129,527

138,978

177,423

Contract services
Oil products
Other/merchandisebusinesses
Others

3,941

6,326

9,674

25,112

29,30436,034

5,938

5,649

7,953

Subtotal

31,05034,95343,988

Total

164,519

180,259

231,086

Notes: 1. “Oil products/merchandise” includes liquefied petroleum gas (LPG), fuel oil, gas oil and kerosene, and “Others”
includes the transportation of natural gas and oil products as well as other subcontracted tasks.
2. Monetary amounts in the table do not include consumption taxes.

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