Consolidated Financial Results for the Nine Months Ended December 31, 2008
February 10, 2009
Note: The following report is an English translation of the Japanese-language original.

Company name:
Listing:
Securities code:
URL:
President:
Inquiries:

Japan Petroleum Exploration Co., Ltd.
Tokyo Stock Exchange, First Section1662
http://www.japex.co.jp/
Osamu Watanabe
Shigeyoshi Hasegawa, Manager, Media Relations, Media and Investor Relations Department
TEL: (03) 6268-7110
Scheduled date to file Quarterly Report:
February 12, 2009

(Millions of yen with fractional amounts discarded, unless otherwise noted)

1.
(1)Consolidated financial results for the nine months ended December 31, 2008
(April 1, 2008 - December 31, 2008)
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, 2008

164,912－

19,704

December 31, 2007

141,33928.6

15,479 (27.1)

Net income per share% Millions of yen% Millions of yen

%

－

－

10,420－22,468 (10.7)

17,381(6.7)

19,898

Diluted net
income per share

Nine months ended

Yen

Yen

December 31, 2008

182.33－

December 31, 2007

304.12－(2)

Net income

Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of December 31, 2008

505,360

382,47374.1

6,554.94

As of March 31, 2008

620,946448,22670.8

7,696.00

Reference: Equity

2.

As of December 31, 2008: 374,634 million yen

As of March 31, 2008: 439,852 million yen

Cash dividends
Cash dividends per share
Record dateFiscal year ended
March 31, 2008
Fiscal year ending
March 31, 2009
Fiscal year ending
March 31, 2009
(Forecast)First quarter

Second quarter

Third quarter

Fiscal year-end

Annual

Yen

Yen

Yen

Yen

Yen

–

20.00

–

20.00

40.00

–

20.00

–

––

––

––

––

––

20.00

40.00

Note: Revisions to the forecasts of cash dividends in the current quarter: None

–1–

3.

Consolidated financial forecasts for the fiscal year ending March 31, 2009 (April 1, 2008 - March 31, 2009)(Percentages indicate year-on-year changes.)
Net sales

Fiscal year ending March
31, 2009

Operating income

Ordinary income
Millions ofyenMillions ofyen%Millions ofyen%

204,154(1.7)

19,444(0.9)%

20,497 (24.8)

Net income pershare

Net income
Millions of
yen

%

Yen

11,641 (42.1)

203.68

Note: Revisions to the consolidated financial forecasts in the current quarter: Yes

4.
(1)

OthersChanges in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change
in scope of consolidation): None

(2)

Application of simplified accounting and special accounting for preparing the quarterly consolidated financial
statements: Yes
Note:

(3)

Changes in accounting policies, procedures, and methods of presentation for preparing the quarterly
consolidated financial statements (changes described in the section of “Changes in significant matters forming
the basis of preparing the quarterly consolidated financial statements”)
a. Changes due to revisions to accounting standards and other regulations: Yes
b. Changes due to other reasons: Yes
Note:

(4)

For more details, please refer to the section of “4. Others” of “[Qualitative Information and Financial
Statements]” on page 4.

For more details, please refer to the section of “4. Others” of “[Qualitative Information and Financial
Statements]” on page 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, 2008
57,154,776 shares
As of March 31, 2008
57,154,776 sharesb. Number of treasury shares at the end of the period
As of December 31, 2008
1,712 shares
As of March 31, 2008
1,407 sharesc. Average number of shares during the period (cumulative from the beginning of the fiscal year)
Nine months ended December 31, 2008
57,153,249 shares
Nine months ended December 31, 2007
57,153,456 shares* Proper use of financial forecasts, and other special matters
1. Concerning the financial forecasts for the fiscal year ending March 31, 2009, refer to “Notice of Financial
Forecast Revision” released today.
The forecast statements shown in this document are based on information that was available at the time of
preparation. Actual performance may differ materially from these forecasts due to various factors.
2. Commencing with the current fiscal year, quarterly consolidated financial statements conform to the“Accounting Standard for Quarterly Financial Reporting” (ASBJ [Accounting Standards Board of Japan]
Statement No. 12) and the “Guidance on Accounting Standard for Quarterly Financial Reporting” (ASBJ
Guidance No. 14). They are also prepared in accordance with the “Regulation for Quarterly Consolidated
Financial Statements.”–2–

[Qualitative Information and Financial Statements]
1.

Qualitative information regarding consolidated operating results
During the nine months ended December 31, 2008 (from April 1, 2008 to December 31, 2008), net sales was¥164,912 million, an increase of ¥23,573 million (+16.7%) year on year.
Gross profit was ¥57,184 million, an increase of ¥12,123 million (+26.9%) year on year reflecting a rise in
crude oil and bitumen prices. Although there was a ¥5,439 million (+70.1%) increase year on year to ¥13,199
million in exploration expenses incurred due to seismic survey activities in Niigata Prefecture, Hokkaido andIndonesia as well as exploratory drilling activities at off the coast of Niigata Prefecture, in the Philippines andAkita Prefecture, and a ¥2,459 million (+11.3%) increase year on year in selling, general and administrative
expenses to ¥24,280 million, operating income increased year on year by ¥4,224 million (+27.3 %) to ¥19,704
million.
Ordinary income was ¥19,898 million, a decrease of ¥2,569 million (-11.4%) year on year due to the postingof a devaluation loss on securities and a foreign exchange loss, lower dividend income and the equity in loss
(previously equity in profit) of non-consolidated subsidiaries and affiliates, among others.
Income before income taxes and minority interests decreased ¥6,199 million year on year (-28.6%) to ¥15,481
million, with net income standing at ¥10,420 million, a decrease of ¥6,960 million (-40.0%) year on year, due
in part to the posting of a loss on disposal of fixed assets and an impairment loss as extraordinary losses
caused by the abandoning of a portion of the Numanohata SK-8D well due to its inability to produce acommercial quantity. The well was spudded in May 2008 for production drilling at the Yufutsu oil and gas
field in Hokkaido.
Below is a summary of earnings by business division.
(i)

E&P Division
The E&P Division sells crude oil, natural gas, liquefied natural gas (LNG) and bitumen. During the ninemonths ended December 31, 2008, this Division posted net sales of ¥152,175 million, up ¥23,579 million(+18.3%) year on year primarily on the back of soaring crude oil and bitumen prices in spite of adecrease in the amount of Sakhalin crude oil traded compared to the same period of the previous fiscal
year.

(ii) Contract Services Division
The Contract Services Division is primarily involved in drilling and geophysical surveys. During thenine months ended December 31, 2008, it recorded net sales of ¥2,003 million, down ¥59 million(-2.9%) year on year.
(iii) Other Businesses Division
The Other Businesses Division is primarily involved in the sale of oil products, including liquefied
petroleum gas (LPG) and fuel oil, the transportation of natural gas and oil products on consignment aswell as other subcontracted tasks. During the nine months ended December 31, 2008, this Division
posted net sales of ¥10,733 million, up ¥53 million (+0.5%) year on year.

2.

Qualitative information regarding consolidated financial position
At the end of the third quarter, as compared to the end of the previous fiscal year, total assets decreased by¥115,585 million to ¥505,360 million. The main reasons for this were a decrease in investments in securities
due to the decline in the stock price of INPEX CORPORATION
Total liabilities, on the other hand, decreased by ¥49,832 million to ¥122,887 million and total net assets
decreased ¥65,752 million to ¥382,473 million due to a decrease in deferred tax liabilities and difference on
valuation of other marketable securities, respectively, as a result of a decrease in the aforementioned
investments in securities.

3.

Qualitative information regarding consolidated financial forecasts
The full-year forecast released on November 7, 2008 has been revised. Please refer to the “Notice of Financial
Forecast Revision” released on the same day of this report, February 10, 2009.

–3–

4.

Others(1)

Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change
in scope of consolidation)
No items to report.

(2)

Application of simplified accounting and special accounting for preparing the quarterly consolidated financial
statements
a. Deferral accounting of cost variance
Cost variance arising from seasonal changes in production level is deferred as current liabilities (othercurrent liabilities) because such variance is expected to be almost completely eliminated by the end of thecost accounting period.
b. Calculation of taxes
For the taxes, the Company and some of its consolidated subsidiaries compute first by reasonably
estimating the effective tax rate after applying tax effect accounting against income before income taxes
and minority interests for the fiscal year including the third quarter under review, and next by multiplying
the quarterly net income before income taxes and minority interests by such estimated effective tax rate.
Note that deferred income taxes is included in income taxes.

(3)

Changes in accounting policies, procedures, and methods of presentation for preparing the quarterly
consolidated financial statementsa. Commencing with the current fiscal year, quarterly consolidated financial statements conform to the“Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No. 12) and the “Guidance on
Accounting Standard for Quarterly Financial Reporting” (ASBJ Guidance No. 14). They are also preparedin accordance with the “Regulation for Quarterly Consolidated Financial Statements.”
b. Commencing with the first quarter, consolidated financial statements conform to the “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”(PITF Practical Solution No. 18, May 17, 2006). This change has no impact on operating income, ordinary
income and income before income taxes and minority interests for the nine months ended December 31,
2008.
c. Before the change, the accounting treatment for finance lease transactions not involving the transfer ofownership followed the method similar to that applicable to ordinary operating lease transactions, but the“Accounting Standard for Lease Transactions” (ASBJ Statement No. 13, revised March 30, 2007) and the“Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, revised March 30,2007) are allowed to be applied from the quarterly consolidated financial statements for the fiscal year
beginning April 1, 2008 or later, commencing with the first quarter, the Company applies these standard
and guidance to all lease transactions beginning on and after aforementioned date, and the accounting
treatment for such transactions follows the method similar to that applicable to ordinary purchase and sales
transactions.
Meanwhile, depreciation of leased assets pertaining to finance lease transactions not involving the transferof ownership is computed on a straight-line method over the lease period as durable period without residual
value.
Also, the accounting treatment for finance lease transactions not involving the transfer of ownership whosetransaction commenced before the first fiscal year in which the accounting standard is applied,
continuously follows the method similar to that applicable to ordinary operating lease transactions.
The impact of this change on operating income, ordinary income and income before income taxes andminority interests for the nine months ended December 31, 2008 is minimal.

–4–5. Consolidated financial statements(1) Consolidated balance sheets(Millions of yen)

As of December 31, 2008

As of March 31, 2008
(Summary)

Cash and deposits

32,017

27,794

Notes and accounts receivable

18,48925,865Marketable securities

9,414

17,724Merchandise and finished products

4,433

3,921

Work in process

1,905

271

Raw materials and supplies

6,217

6,299

Other current assets

21,166

7,141

(10)

(10)

93,63489,008140,567

141,162

Others

4,787

6,179

Total intangible fixed assets

4,787

6,179

Investments in securities

255,941

376,137

Others

18,267

16,177(68)(97)

AssetsCurrent assets

Less: Allowance for doubtful receivables
Total current assets
Fixed assets
Property, plant and equipment
Intangible fixed assets

Investments and others

Less: Allowance for doubtful receivables
Less: Allowance for losses on overseas
investments
Total investments and others(7,770)(7,621)

266,371384,595

Total fixed assets

411,726

531,937

505,360

620,946

Total assets–5–

(Millions of yen)

As of December 31, 2008

As of March 31, 2008
(Summary)

7,762

13,469301

590

Other current liabilities

18,361

24,797

Total current liabilities

26,42538,857Long-term debt

23,837

21,922

Deferred tax liabilities
Accrued retirement benefits for
employees
Other reserves

61,482

101,477

5,699

5,272

4,975

5,076

Other long-term liabilities

465

113

Total long-term liabilities

96,461

133,862

Total liabilities

122,887

172,720

Capital14,28814,288Retained earnings

253,359245,225(9)(7)

267,639

259,506

108,959

179,629

(218)

(0)

Liabilities
Current liabilities
Notes and accounts payable
Provision

Long-term liabilities

Net assets
Shareholders’ equity

Treasury stock
Total shareholders’ equity
Difference on valuation and conversion,etc.
Difference on valuation of othermarketable securities
Deferred gains (loss) on hedging
Translation adjustments
Total difference on valuation andconversion, etc.
Minority interests(1,744)716

106,995

180,346

7,838

8,373

Total net assets

382,473448,226

Total liabilities and net assets

505,360

620,946–6–

(2) Consolidated statement of income(Millions of yen)

Net sales

Nine months ended
December 31,2008(April 1, 2008 –December 31, 2008)
164,912

Costs of sales

107,727

Gross profit

57,184

Exploration expenses
Exploration expenses
Exploration subsidies

14,119(920)

Total exploration expenses

13,199Selling, general and administrative expenses

24,280Operating income

19,704Non-operating income
Interest income

1,032

Dividend income

2,677

Other non-operating income

1,237

Total non-operating income

4,947

Non-operating expenses
Devaluation loss on securities

1,783

Exchange loss

1,567

Other non-operating expenses

1,402

Total non-operating expenses

4,753

Ordinary income

19,898Extraordinary income
Subsidy income

191

Other extraordinary income

5

Total extraordinary income

196

Extraordinary losses
Loss on disposal of fixed assets

2,343

Impairment loss

2,263

Other extraordinary losses

6

Total extraordinary losses
Income before income taxes and minority
interests
Income taxes

15,481

Minority interests

1,091

Net income

10,420

4,613

3,968

–7–

Commencing with the current fiscal year, quarterly consolidated financial statements conform to the“Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No. 12) and the “Guidance on
Accounting Standard for Quarterly Financial Reporting” (ASBJ Guidance No. 14). They are also prepared inaccordance with the “Regulation for Quarterly Consolidated Financial Statements.”(3)

Notes on premise of going concern
No items to report(4)

Notes on significant changes in the amount of shareholders’ equity
No items to report–8–Reference:
Consolidated financial statements for the nine months ended December 31, 2007
(Summary) Consolidated statement of income

Description

First 3Qs ended
December 31, 2007
(April 1, 2007 December 31, 2007)
Amount (¥ million)I.

Net sales

141,339

II.

Cost of sales

96,278Gross profit

45,060III. Exploration expenses
1. Exploration expenses

7,822

2. Exploration subsidies(62)

Total exploration expenses

7,760

IV. Selling, general and administrative expenses

21,820Operating income
V.

15,479Non-operating income

1.

Interest income

1,149

2.

Dividend income

3,419

3.

Equity in profit of non-consolidated
subsidiaries and affiliates

1,495

4.

Reversal of allowance for losses on overseas
investments

1,271

5.

Reversal of accrual for losses on projects

220

6.

Other non-operating income

800

Total non-operating income

8,355

VI. Non-operating expenses
1.

Interest expense

196

2.

Loss on sales of securities

174

3.

Provision for accrued estimated cost ofabandonment of wells

429

4.

Exchange loss

315

5.

Other non-operating expenses

252

Total non-operating expenses

1,367

Ordinary income

22,468VII. Extraordinary income
1.

Reversal of allowance for doubtful receivables

42.

Gain on sales of fixed assets

1

Total extraordinary income

5

VIII. Extraordinary losses
1.

Loss on disposal of fixed assets

116

2.

Earthquake disaster recovery expenses

675

3.

Other extraordinary losses

0

Total extraordinary losses

792

Income before income taxes and minority
interests

21,681

Income taxes

3,648

Minority interests

650

Net income

17,381–9–

6. Other information
Status of production and salesa. Production
Division

E&P

Product

First 3Qs ended
December 31, 2007
(April 1, 2007 –December 31, 2007)

Nine months ended
December 31, 2008
(April 1, 2008 –December 31, 2008)(Reference)
Fiscal year ended March 31, 2008
(April 1, 2007 –March 31, 2008)

Crude oil (kl)

536,652(105,466)

541,046(107,059)

761,636(147,397)

Natural gas(thousand m3)

901,681(44,756)

906,328(44,059)

1,288,606(58,946)

LNG (t)20,69829,556

33,610307,107(307,107)

312,186(312,186)

410,363(410,363)

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 heavy crude oil extracted from oil sands.

b. SalesDivisionFirst 3Qs ended
December 31, 2007
(April 1, 2007 –December 31, 2007)
AmountVolumeNine months ended
December 31, 2008
(April 1, 2008 –December 31, 2008)
AmountVolumeCrude oil (kl)

1,457,589

81,024

1,407,057

90,843

2,041,192

117,923Natural gas(thousand m3)

1,020,591

32,726

1,030,981

36,966

1,486,910

48,982

LNG (t)118,959

7,086

128,974

9,389

170,453

10,285

Bitumen (kl)

307,5297,757

313,028

14,975

409,743

10,468Subtotal––––

128,595––––

152,175––––

187,660

Product(Million of yen)

E&P

Contract services
Other businesses
Total

2,062
10,680141,339(Million of yen)

2,003
10,733
164,912(Reference)
Fiscal year ended March 31, 2008
(April 1, 2007 –March 31, 2008)
AmountVolume(Million of yen)

Notes: 1. Other Businesses Division is primarily involved in the sale of oil products, including liquefied petroleum gas (LPG)
and fuel oil, as well as transportation of natural gas and oil products on consignment.
2. Monetary amounts in the table do not include consumption tax.

– 10 –

5,395
14,582
207,638