Consolidated Financial Results for the Nine Months Ended December 31, 2020
<under Japanese GAAP>
February 8, 2021
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:
https://www.japex.co.jp/
Representative: Masahiro Fujita, Representative Director and President
Inquiries:
Masaru Asai, General Manager, Corporate Communication Office
TEL: +81-3-6268-7110 (from overseas)
Scheduled date to commence dividend payments:–
Scheduled date to file Quarterly Report:
February 9, 2021
Presentation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results presentation meeting (for analysts): Yes(Millions of yen with fractional amounts discarded, unless otherwise noted)

1.
(1)Consolidated financial results for the nine months ended December 31, 2020
(April 1, 2020 – December 31, 2020)(Percentages indicate year-on-year changes.)
Consolidated operating results (cumulative)
Net sales

Nine months ended

Operating profit

Millions of yen% Millions of yen

Profit attributable toowners of parent

Ordinary profit% Millions of yen% Millions of yen%

December 31, 2020

150,099 (39.4)(4,448)–(2,948)–(3,776)–

December 31, 2019247,819

11,533–

19,84961.7

16,55645.2

19.5

Note: Comprehensive income: Nine months ended December 31, 2020:
Nine months ended December 31, 2019:

Basic earnings per share(14,732) million yen
20,791 million yen

(– %)
(– %)

Diluted earnings per share

Nine months ended

Yen

Yen

December 31, 2020

(66.12)–

December 31, 2019289.68–(2)

Consolidated financial position
Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen%

As of December 31,
2020

596,808421,333

64.6

As of March 31, 2020

627,132

440,157

64.2

Reference: Equity

2.

As of December 31, 2020: 385,289 million yen

As of March 31, 2020: 402,706 million yen

Cash dividends

Fiscal year ended
March 31, 2020
Fiscal year ending
March 31, 2021
Fiscal year ending
March 31, 2021
(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 latest forecasts of cash dividends: None

-1-

AnnualYen

3.

Consolidated financial forecasts for the fiscal year ending March 31, 2021 (April 1, 2020 – March 31, 2021)(Percentages indicate year-on-year changes.)
Net sales

Fiscal year ending
March 31, 2021

Operating profit

Ordinary profit

Profit attributable Basic earnings per
to owners of parent
shareMillionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%Yen

227,826(28.5)

5,157(63.9)

9,191(71.8)

7,472(72.1)

130.92

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

*
(1)
(2)

Notes
Changes in significant subsidiaries during the nine months under review (changes in specified subsidiaries
resulting in the change in scope of consolidation): None
Application of specific accounting for preparing quarterly consolidated financial statements: Yes
Note: For details, please refer to “(3) Notes to consolidated financial statements (Application of specific accounting for preparing
quarterly consolidated financial statements)” of “2. Consolidated financial statements and significant notes thereto” on page 9 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: Noneb. Changes in accounting policies due to other reasons: Nonec.
Changes in accounting estimates: None
d. Restatement: None(4)

Number of issued shares (common shares)
a. Total number of issued shares at the end of the period (including treasury shares)
As of December 31, 2020
57,154,776 shares
As of March 31, 2020
57,154,776 sharesb. Number of treasury shares at the end of the period
As of December 31, 2020
79,982 shares
As of March 31, 2020
2,303 sharesc. Average number of shares during the period (cumulative from the beginning of the fiscal year)
Nine months ended December 31, 2020
57,116,753 shares
Nine months ended December 31, 201957,152,539 shares* Quarterly financial results reports are exempt from quarterly review conducted by certified public
accountants or an audit corporation.
* 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 andother 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 nine months ended
December 31, 2020” on page 4 of the attached material to the quarterly financial results report.

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(Attached Material)
1. Qualitative information regarding settlement of accounts for the nine months ended December 31,
2020(1) Explanation of operating results
During the nine months ended December 31, 2020, net sales was ¥150,099 million, a decrease of ¥97,719
million (-39.4%) year on year. Gross profit was ¥18,741 million, a decrease of ¥16,416 million (-46.7%)
year on year. Major factors behind the year-on-year decreases for net sales and gross profit were decreases
in the sales volume and sales price of crude oil from the Garraf Oil Field in the southern part of the
Republic of Iraq, decreases in the sales volume and sales price of crude oil and natural gas in Japan, and a
decline in diluted bitumen sales.
Exploration expenses was ¥706 million, a decrease of ¥10 million (-1.5%) year on year. Selling, generaland administrative expenses was ¥22,483 million, a decrease of ¥424 million (-1.9%) year on year. As aresult, operating profit deteriorated by ¥15,981 million year on year to an operating loss of ¥4,448 million(operating profit of ¥11,533 million in the same period of the previous fiscal year).
Ordinary profit deteriorated by ¥22,798 million year on year to an ordinary loss of ¥2,948 million (ordinary
profit of ¥19,849 million in the same period of the previous fiscal year), due mainly to the turnaround fromforeign exchange gains to foreign exchange losses.
Profit before income taxes deteriorated by ¥22,656 million year on year to a loss before income taxes of¥2,970 million (profit before income taxes of ¥19,686 million in the same period of the previous fiscal
year). Profit attributable to owners of parent deteriorated by ¥20,332 million year on year to a loss
attributable to owners of parent of ¥3,776 million (profit attributable to owners of parent of ¥16,556
million in the same period of the previous fiscal year).
Below is a breakdown of net sales.
(i) E&P BusinessNet sales from the E&P Business came to ¥54,123 million, a decrease of ¥91,154 million (-62.7%)
year on year. This was mainly the result of decreased sales volumes and sales prices of crude oil anddiluted bitumen.
(ii) Infrastructure/Utility BusinessNet sales from the Infrastructure/Utility Business came to ¥67,691 million, an increase of ¥6,428
million (+10.5%) year on year. This was mainly the result of the full-scale inclusion of sales ofelectricity with the commencement of commercial operations at the Fukushima Natural Gas Power
Plant of the No. 2 Unit, which began operations in August 2020, in addition to the No. 1 Unit, whichbegan operations in April 2020 despite decreased sales volumes and sales prices of natural gas in Japanand sales prices of liquefied natural gas (LNG).
(iii) Other Businesses
Net sales from other businesses, such as the contract services (drilling and geological surveys, etc.),
sale of oil products, including liquefied petroleum gas (LPG), fuel oil and the like, as well as othersubcontracted tasks, came to ¥28,284 million, a decrease of ¥12,994 million (-31.5%) year on year.

(2)

Explanation of financial position
At the end of the third quarter, total assets decreased by ¥30,324 million from the previous fiscal year-end
to ¥596,808 million.
Current assets decreased by ¥28,643 million from the previous fiscal year-end. This was mainly due todecreases in cash and deposits, raw materials and supplies, and notes and accounts receivable - trade. Noncurrent assets decreased by ¥1,680 million from the previous fiscal year-end due to a decrease ininvestment securities resulting from the fall in market values and a decrease in property, plant andequipment resulting from the progress in the depreciation, despite an increase in recoverable accounts
included in other under investments and other assets, with investment being made.
-3-

Liabilities decreased by ¥11,501 million from the previous fiscal year-end to ¥175,474 million.
Current liabilities increased by ¥199 million from the previous fiscal year-end. This was mainly due to thereclassification of long-term borrowings with repayments due in one year or less from non-current
liabilities despite a decrease in notes and accounts payable - trade. Non-current liabilities decreased by¥11,700 million from the previous fiscal year-end. This was mainly due to a decrease in deferred tax
liabilities resulting from the above-mentioned fall in market values of investment securities and a decreasein long-term borrowings resulting from the impact of fluctuation in foreign exchange rates and thereclassification of borrowings with repayments due in one year or less to current liabilities as stated above.
Net assets decreased by ¥18,823 million from the previous fiscal year-end to ¥421,333 million.
The main factors were decreases in retained earnings and valuation difference on available-for-sale securities.

(3) Explanation of consolidated financial forecasts and other forward-looking statements
The consolidated financial forecasts for the fiscal year ending March 31, 2021 have been revised from theforecasts announced on November 10, 2020.
Please refer to the “Notice of Financial Forecasts Revision” released on February 8, 2021, the same day ofthis report.

-4-

2. Consolidated financial statements and significant notes thereto(1) Consolidated quarterly balance sheet(Millions of yen)
As of March 31, 2020
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
Buildings and structures, net
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 December 31, 2020

160,077
27,510
4,000
5,223
167
11,1414,966(31)
213,054

140,321
23,492
4,030
4,392
338
7,036
4,829
(30)
184,410

173,682
120,355
294,038

163,646
118,667
282,313

6,823
6,823

6,400
6,400

88,922
25,052(44)(715)
113,216
414,078
627,132

88,69735,489(44)(458)
123,683
412,397596,808

(Millions of yen)

Liabilities
Current liabilities
Notes and accounts payable - trade
Provisions
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Retirement benefit liability
Provisions
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
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
Non-controlling interests
Total net assets
Total liabilities and net assets-6-

As of March 31, 2020

As of December 31, 2020

12,237555
22,94535,738

11,648443
23,84635,938

118,774
9,878
3,528
798
15,432
2,824
151,236
186,975

108,908
8,442
3,406
464
15,648
2,664
139,536
175,474

14,288350,934(11)
365,212

14,288343,388(151)
357,525

33,06129,019

181
3,494
756
37,49437,450440,157
627,132(1,570)(313)
628
27,76336,044421,333
596,808

(2) Consolidated quarterly statement of income and Consolidated quarterly statement ofcomprehensive income
Consolidated quarterly statement of income(Millions of yen)
Nine months ended
December 31, 2019
Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Operating profit (loss)
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
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Profit (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent-7-

Nine months ended
December 31, 2020

247,819
212,661
35,157716
22,907
11,533150,099
131,358
18,741706
22,483(4,448)

846
2,996

371
1,439

6,796

5,312

1,561
12,201

648
7,772

3,486
–
398
3,885
19,849

2,162
3,652
458
6,273
(2,948)

0
0

10
10

149
14
163
19,686
3,105
16,58024
16,55627
532(2,970)1,860(4,830)(1,054)(3,776)

Consolidated quarterly statement of comprehensive income(Millions of yen)
Nine months ended
December 31, 2019
Profit (loss)
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 noncontrolling interests-8-

Nine months ended
December 31, 2020

16,580(4,830)7,554
4(3,138)(155)(4,044)(197)(4,181)
(128)

(53)

(1,349)4,211
20,791(9,901)(14,732)

20,893(13,507)(102)(1,225)

(3) Notes to consolidated financial statements(Notes on premise of going concern)
No item to report.

(Notes on significant changes in the amount of shareholders’ equity)
No item to report.

(Changes in the scope of consolidation or the scope of application of the equity method)
Significant changes in the scope of application of the equity method
Effective the three months ended June 30, 2020, Fukushima Gas Power Co., Ltd., an affiliate of theCompany, became an equity method affiliate of the Company due to its increased material significancefollowing the launch of its power business upon the start of commercial operations of the Fukushima
Natural Gas Power Plant in April 2020.

(Application of specific accounting for preparing quarterly consolidated financial statements)
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.

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 profit before income taxes for the fiscal year
including the third quarter, and next by multiplying the quarterly profit before income taxes 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.

-9-(Additional information)
Financial covenants
A part of loans from financial institutions to JAPEX Montney Ltd., a consolidated subsidiary of theCompany, amounting to ¥28,671 million includes certain financial covenants clauses. JAPEX MontneyLtd. has been breaching the financial covenants clauses as it has been in a state of insolvency. However,creditor financial institutions have agreed to suspend execution of their rights in relation to an acceleration
clause until March 2021.

Accounting estimates in connection with the spread of novel coronavirus disease (COVID-19)
While the dissipation of the COVID-19 pandemic remains uncertain as of the end of the third quarter,
prolonged stagnation is seen in economic activities in Japan and overseas. Although the timing COVID-19
dissipates is still unknown and difficult to be predicted, the Company expects that the situation will
gradually recover as time goes by.
The Garraf Oil Field in the southern part of the Republic of Iraq, which had temporarily suspended its
development and production operation due to the impact of COVID-19, resumed its production operationfrom July last year. However, due to restrictions on transfer and other factors, the additional development
was delayed and therefore, the increase in production volume to a scale of 230,000 barrels a day, which
was expected at the end of last year, will be delayed to later years. Also, scheduling and other mattersconcerning the development in the UK North Sea’s Seagull field, for which we are aiming for productioncommencement by the end of this year, are subject to change.
Concerning the impact on sales volumes of crude oil, natural gas, diluted bitumen, electricity, etc. during
the nine months ended December 31, 2020, the sales volume of the crude oil from the above-mentioned
Garraf project decreased by 757,000 kl (-83.1%) year on year to 154,000 kl. In the oil sand development
business in Canada, the sales volume of diluted bitumen decreased by 352,000 kl (-27.3%) year on year to937,000 kl due to the curbing of production in response to the deteriorated business environment. In Japan,
the sales volume of natural gas declined by 43 million cubic meters (-5.1%) year on year to 813 million
cubic meters, due to the sluggish economic activity.
The crude oil price plummeted towards the end of April last year with the energy demand in the doldrums;
however, the price has recovered subsequently with the current price at about US$50 per barrel as a resultof oil-producing countries having implemented a series of coordinated production cuts. The Company
expects the crude oil price to remain at the current level throughout the fiscal year ending March 31, 2021,
and regain its momentum to hit the pre-COVID-19 pandemic level after some time.
Meanwhile, the prolonging of the effects of the COVID-19 pandemic and the global movement toward
decarbonization could give rise to the possibility of irreversible structural changes in various areas such asenergy demand and environmental concerns, which could significantly change the business environment
surrounding the Company. In recognition of the above, the Company is currently reexamining its mediumto long-term projections for the business environment and oil prices and reevaluating the main assets of the
JAPEX Group.
Should assumptions change under such circumstances, the Company has options involving impairment of
non-current assets and recoverability of deferred tax assets with respect to accounting estimates of highuncertainty. With respect to making such judgments, these accounting items are largely dependent on
estimates of future revenue and cash flows, such that the JAPEX Group is likely to generate from its
primary business activities. Accordingly, possibilities may involve recognition of impairment loss withrespect to non-current assets and reversal of deferred tax assets listed on the consolidated balance sheet in
the event that forecasts project further decreases in such revenue and cash flows brought about by
declining sales prices or decreases in sales volume.

- 10 -

3. Supplemental information
Status of production and sales(1) Production
Nine months ended
December 31, 2020
(April 1, 2020 –December 31, 2020)

Nine months ended
December 31, 2019
(April 1, 2019 –December 31, 2019)
Crude oil (kl)E&P
Business

Natural gas(thousand m3)
Bitumen (kl)(Reference)
Fiscal year ended
March 31, 2020
(April 1, 2019 – March 31, 2020)

904,172

598,126

1,215,690(678,804)(370,288)(913,298)

810,969

735,998

1,083,862(322,018)(343,449)(434,194)864,674

622,332

1,130,169(864,674)(622,332)(1,130,169)

LNG (t)4,341
3,341Electricity(thousand
2,374
1,743,254
kWh)
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.
4. “Electricity,” in addition to the solar power plant (mega solar) on the grounds of the Hokkaido District Office,includes the electricity generated by Fukushima Natural Gas Power Plant, which started commercial operations
from the fiscal year ending March 31, 2021.
Infrastructure/
UtilityBusiness- 11 -

4,405
3,049

(2) Sales
Nine months ended
December 31, 2019
(April 1, 2019 –December 31, 2019)
Net sales
Sales volume(Millions of yen)

Crude oil (kl)E&P
Business

Dilutedbitumen (kl)Natural gas(overseas)(thousand m3)(Millions of yen)

108,049

1,447,872

38,122

2,924,245

128,152

1,290,970

35,674

937,981

14,071

1,639,689

45,025

319,702

1,554

340,972

1,929

431,1472,265

145,277

54,123

175,443

Natural gas(Japan)(thousand m3)

857,194

44,316

813,368

36,6581,268,448

64,965

LNG (t)205,391

14,402

213,258

11,059273,312

19,3952,387

95

2,080,915

16,654

110,167974

Electricity(thousand kWh)
Others

2,449

3,319

3,353

61,26367,691

88,68812,903

5,962

15,003

26,86021,00837,502

1,514

1,313

2,184

Subtotal

41,27828,28454,690

Total

247,819150,099

318,822

Subtotal

Otherbusinesses(Millions of yen)

(Reference)
Fiscal year ended
March 31, 2020
(April 1, 2019 – March 31, 2020)
Net sales
Sales volume2,323,025

Subtotal

Infrastructure/Utility
Business

Nine months ended
December 31, 2020
(April 1, 2020 –December 31, 2020)
Net sales
Sales volume

Contract
Services
Oil products/merchandise
Others

Notes: 1. “Crude oil” includes crude oil that the JAPEX Group produces in oil fields and the crude oil purchased from othercompanies.
2. Diluted bitumen is bitumen diluted by ultra-light crude oil for pipeline transportation.
3. “Natural gas (Japan)” of the Infrastructure/Utility Business refers to gas supplied in Japan via pipeline andcomprises the total of natural gas produced in Japan and regasified LNG. Natural gas (Japan) is classified underthe Infrastructure/Utility Business, since both natural gas produced in Japan and LNG vaporized gas are soldtogether by the Company’s supply network, which consists of the natural gas fields in Japan and the LNG
terminals that vaporize gas linked by a pipeline network.
4. “Others” of the Infrastructure/Utility Business includes commissioned transportation of natural gas and contracted
vaporization of LNG used for power plant fuel.
5. Under the Other businesses, “Oil products/merchandise” includes liquefied petroleum gas (LPG), fuel oil, gas oiland kerosene, and “Others” includes other subcontracted tasks.
6. Monetary amounts in the table do not include consumption taxes.

- 12 -