Consolidated Financial Results for the Six Months Ended September 30, 2008
November 7, 2008
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:
November 13, 2008
Scheduled date to commence dividend payments:
November 28, 2008
(Millions of yen with fractional amounts discarded, unless otherwise noted)

1.
(1)Consolidated financial results for the six months ended September 30, 2008
(April 1, 2008 - September 30, 2008)
Consolidated operating results (cumulative)(Percentages indicate year-on-year changes.)
Net sales

Six months ended

Operating income

Millions of yen

Ordinary income% Millions of yen% Millions of yen% Millions of yen

%

–

–

9,371

–

13,825 (12.2)

9,695

(9.0)

September 30, 2008

110,912–September 30, 2007

91,36036.1

Net income per share

12,546

13,3219,031 (27.9)

Diluted net
income per share

Six months ended

Yen

Yen

September 30, 2008

163.96–

September 30, 2007

169.64–(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 September 30, 2008

566,812417,83772.2

7,163.98

As of March 31, 2008

620,946448,22670.8

7,696.00

Reference: Equity

2.

As of September 30, 2008: 409,444 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

Net income pershare

Net income

Millions ofyen%Millions ofyen%Millions ofyen%Millions of
yen

%

Yen

219,828

5.9

21,836

11.3

26,539(2.6)

19,828(1.3)

346.92

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 3.

For more details, please refer to the section of “4. Others” of “[Qualitative Information and Financial
Statements]” on page 3.

Number of issued shares (common stock)a. Total number of issued shares at the end of the period (including treasury stock)
As of September 30, 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 September 30, 2008
1,575 shares
As of March 31, 2008
1,407 sharesc. Average number of shares during the period (cumulative from the beginning of the fiscal year)
Six months ended September 30, 2008
57,153,292 shares
Six months ended September 30, 2007
57,153,492 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 for Fiscal Year Ending March 31, 2009” 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 six months ended September 30, 2008 (from April 1, 2008 to September 30, 2008), net sales was¥110,912 million, an increase of ¥19,551 million (+21.4%) year on year.
Gross profit was ¥38,704 million, an increase of ¥10,324 million (+36.4%) year on year reflecting a rise in
crude oil and bitumen prices. Although there was a ¥4,929 million (+95.2%) increase year on year to ¥10,106
million in exploration expenses incurred due to exploratory drilling activities, ongoing since the end of the last
fiscal year at three locations at Kita-Kanbara off the coast of Niigata Prefecture as well as in the Philippines,
and a ¥1,879 million (+13.3%) increase year on year in selling, general and administrative expenses to ¥16,051
million, operating income increased year on year by ¥3,514 million (+38.9 %) to ¥12,546 million.
Ordinary income was ¥13,321 million, a decrease of ¥504 million (-3.6%) year on year due to lower dividend
income and the posting of a foreign exchange loss and devaluation loss on securities.
Income before income taxes and minority interests increased ¥15 million (+0.1%) to ¥13,255 million with net
income standing at ¥9,371 million, a decrease of ¥324 million (-3.3%) year on year.
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 six
months ended September 30, 2008, this Division posted net sales of ¥102,189 million, up ¥18,496
million (+22.1%) 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 the six
months ended September 30, 2008, it recorded net sales of ¥1,356 million, up ¥441 million (+48.2%)
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 six months ended September 30, 2008, this Division posted
net sales of ¥7,366 million, up ¥614 million (+9.1%) year on year.

2.

Qualitative information regarding consolidated financial position
At the end of the second quarter, as compared to the end of the previous fiscal year, total assets decreased by¥54,134 million to ¥566,812 million. The main reasons for this were a decrease in investments in securities
due to the decline in the stock price of INPEX Holdings Inc., now “INPEX CORPORATION” as of October 1,
2008.
Total liabilities, on the other hand, decreased by ¥23,745 million to ¥148,974 million and total net assets
decreased ¥30,388 million to ¥417,837 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 August 8, 2008 has been revised. Please refer to the “Notice of Financial
Forecast Revision for Fiscal Year Ending March 31, 2009” released on the same day of this report, November
7, 2008.

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–3–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 second quarter under review, and next bymultiplying 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 six months ended September 30,
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 six months ended September 30, 2008 is minimal.

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

As of September 30, 2008

As of March 31, 2008
(Summary)

Cash and deposits

30,502

27,794

Notes and accounts receivable

15,69325,865Marketable securities

10,23817,724Merchandise and finished products

4,243

3,921

Work in process

1,581

271

Raw materials and supplies

7,640

6,299

Other current assets

22,089

7,141

(8)

(10)

91,98189,008145,959

141,162

Others

5,416

6,179

Total intangible fixed assets

5,416

6,179

Investments in securities

311,353

376,137

Others19,85916,177(67)(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(7,691)(7,621)

323,455

384,595

Total fixed assets

474,830

531,937

566,812620,946

Total assets–5–

(Millions of yen)

As of September 30, 2008

As of March 31, 2008
(Summary)

11,275

13,469467

590

Other current liabilities

20,261

24,797

Total current liabilities

32,00438,857Long-term debt

25,26321,922

Deferred tax liabilities

80,525

101,477

Provision

10,712

10,349Other long-term liabilities

467

113

Total long-term liabilities

116,969

133,862

Total liabilities

148,974

172,720

Capital14,28814,288Retained earnings

253,453245,225(8)(7)

267,733

259,506

142,839

179,629

(169)

(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

(959)

716

141,711

180,346

8,393

8,373

Total net assets

417,837

448,226

Total liabilities and net assets

566,812620,946–6–

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

Net sales

Six months ended
September 30,2008(April 1, 2008 –September 30, 2008)
110,912

Costs of sales

72,208Gross profit

38,704

Exploration expenses
Exploration expenses

11,026

Exploration subsidies(920)

Total exploration expenses
Selling, general and administrative
expenses
Operating income

10,106
16,051
12,546

Non-operating income
Interest income

723

Dividend income

1,447

Other non-operating income

1,224

Total non-operating income

3,396

Non-operating expenses
Devaluation loss on securities

975

Exchange loss

639

Other non-operating expenses

1,005

Total non-operating expenses

2,621

Ordinary income

13,321

Extraordinary income
Reversal of allowance for doubtfulreceivables
Total extraordinary income

55Extraordinary losses
Loss on disposal of fixed assets

70

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

70
13,255
3,351

Minority interests532

Net income

9,371

–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 six months ended September 30, 2007
(Summary) Consolidated interim statement of income
1st half ended September 30, 2007
(April 1, 2007 - September 30, 2007)
Description

Amount(Millions of yen)

(%)

I.

Net sales

91,360100.0

II.

Cost of sales

62,981

68.9

Gross profit

28,37931.1

III. Exploration expenses

5,176

5.7

IV. Selling, general and administrative expenses

14,171

15.5

9,031

9.9

5,509

6.0

715

0.8

13,825

15.1

5

0.0

Operating income
V.

Non-operating income

1. Interest income

794

2. Dividend income

2,277

3. Equity in profit of non-consolidated subsidiaries
and affiliates
4. Reversal of allowance for losses on overseas
investments

935
668

5. Reversal of accrual for losses on projects

122

6. Other non-operating income

709

VI. Non-operating expenses
1.

Interest expense99

2.

Loss on sales of securities

134

3. Provision for accrued estimated cost ofabandonment of wells

293

4.

188

Other non-operating expenses
Ordinary income

VII. Extraordinary income
1. Reversal of allowance for doubtful receivables

4

2. Other extraordinary income0

VIII. Extraordinary losses
1. Loss on disposal of fixed assets

38

2. Earthquake disaster recovery expenses

551

3. Other extraordinary losses

0

Income before income taxes and minority interests
Current income taxes

4,284

Deferred income taxes(1,175)

Minority interests
Net income

–9–

590

0.6

13,239

14.5

3,108

3.4

434

0.5

9,695

10.6

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

E&P

Product

1st half ended
September 30, 2007
(April 1, 2007 –September 30, 2007)

Six months ended
September 30, 2008
(April 1, 2008 –September 30, 2008)(Reference)
Fiscal year ended March 31, 2008
(April 1, 2007 –March 31, 2008)

Crude oil (kl)

350,295(81,335)

352,974(76,354)761,636(147,397)

Natural gas(thousand m3)

564,545(29,842)569,652(29,209)

1,288,606(58,946)

LNG (t)10,98815,921

33,610

194,912(194,912)

204,322(204,322)

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. SalesDivision

Product

1st half ended
September 30, 2007
(April 1, 2007 –September 30, 2007)
AmountVolume(Million of yen)

E&P

Six months ended
September 30, 2008
(April 1, 2008 –September 30, 2008)
AmountVolume(Million of yen)

(Reference)
Fiscal year ended March 31, 2008
(April 1, 2007 –March 31, 2008)
AmountVolume(Million of yen)

Crude oil (kl)

1,031,766

54,326

822,535

64,1672,041,192

117,923Natural gas(thousand m3)

631,765

20,102

647,121

22,906

1,486,910

48,982

LNG (t)74,067

4,413

79,895

5,615

170,453

10,285

Bitumen (kl)

195,580

4,851

205,685

9,500

409,743

10,468Subtotal

83,693102,189

187,660

Contract services

915

1,356

5,395

Other businesses

6,751

7,366

14,58291,360110,912

207,638

Total

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 –