Consolidated Financial Results for the First Three Quarters Ended December 31, 2004
February 9, 2005
Note: The following report is a translation of the Japanese-language original.
Company Name: Japan Petroleum Exploration Co., Ltd.
(Company Code: 1662, First Section, Tokyo Stock Exchange)(URL: http://www.japex.co.jp/)
President: Yuji Tanahashi
Inquiries: Koichi Shimomura, Manager, Media Relations, Administration Department
TEL: (03) 5461-7413
1. Notes Relating to Preparation of Quarterly Financial Statements(1) Use of simplified accounting procedures: Yes
Income taxes are calculated using an estimated annual income tax rate based on the statutory tax rate.
(2) Changes in accounting treatment from the most recent consolidated fiscal year: Yes(Accounting Standards for Impairment of Fixed Assets)
JAPEX has applied in advance Accounting Standards for Impairment of Fixed Assets (Opinions on Accounting Standards for
Impairment of Fixed Assets, Business Accounting Council, August 9, 2002) and Guidance for the Application of AccountingStandards for Impairment of Fixed Assets (Accounting Standards Board of Japan, Business Accounting Standards Application
Policy No. 6, October 31, 2003).
Although the Company has recognized impairment losses for the third quarter, these losses have been offset by a reversal of
accrual for losses on projects, as shown on the quarterly income statement. Consequently, the adoption of accounting standards
for impairment of fixed assets has had no impact on income before income taxes and minority interests for the period underreview.
(3) Changes in scope of consolidation and application of equity method: Yes
Consolidated (Added): 2 companies; Equity-method (Excluded): 2 companies

2. Consolidated Financial Results for the First Nine Months of Fiscal 2005 (April 1, 2004 – December 31, 2004)(1) Consolidated Operating Results (Amounts less than one million yen have been omitted)

FY05 First 3Qs
FY04 First 3Qs（Ref.）FY04 Full YearNet Sales(¥ milli%
on)73,3709.4
67,079−96,713Net Income per
Share
(¥)

FY05 First 3Qs
FY04 First 3Qs（Ref.）FY04 Full Year

Operating Income

Ordinary Income(¥ million)%(¥ million)%(¥ million)

%

7,652
8,593
12,449(11.0)

12,32910,102
14,468

22.0

8,708
7,123
9,960

22.3

−

−

Net Income−

Diluted Net Income
per Share(¥)

152. 36124. 62172. 76−−−(Notes)
1. Percentage figures for net sales, operating income and other items represent changes compared with the corresponding period of the previous fiscal
year.
2. Diluted net income per share is not shown because there are no shares with a dilutive effect.

Qualitative Information Concerning Consolidated Business Performance
For the first nine months of fiscal 2005, ended December 31, 2004, JAPEX reported consolidated net sales of ¥73,370 million,
up 9.4% year on year. Compared to the same period a year earlier, operating income declined 11.0% to ¥7,652 million, ordinary
income increased 22.0% to ¥12,329 million, and net income rose 22.3% to ¥8,708 million.
Third-quarter operating performance by business segment is as follows:
1. Oil and Natural Gas Segment(a) E&P DivisionThis division sells crude oil, natural gas and liquefied natural gas (LNG). This division posted net sales of ¥59,388 million, an
increase of 3.6% from a year earlier on the back of rising crude oil prices.

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(b) Contract Services Division
The Contract Services Division accepts orders mainly for drilling projects and geological and geophysical surveys. Net sales
for the period were ¥3,854 million, up 46.5% year on year, mainly reflecting an increase in the volume of orders for contract
services.
(c) Other Businesses DivisionThis division mainly carries out the manufacturing and trading of petroleum products such as LPG and fuel oil, thetransmission of third-party natural gas and petroleum products, and other miscellaneous consignment orders. Net sales totaled¥9,147 million, a year-on-year increase of 50.7%. This rise was primarily attributable to an increase in revenues fromthird-party oil and natural gas transmissions and higher sales of petroleum products.
2. Geothermal Energy Segment
Geothermal Energy DivisionThis division primarily sells steam used for electric power generation. For the period under review, the division reported net
sales of ¥979 million, down 5.1% from a year earlier, reflecting lower steam sales volume.

(2) Consolidated Financial Position
Total Assets(¥ million)
368,206
243,095
246,765

Dec. 31, 2004
Dec. 31, 2003
(Ref.)
Mar. 31, 2004

Shareholders’ Equity(¥ million)
278,812
192,356
195,715

Shareholders’ Equity
Ratio
%
75.7
79.1
79.3

Shareholders’ Equity
Ratio per Share(¥)
4,878.26
3,365.54
3,422.80(3) Consolidated Cash Flows
Operating Activities

FY05 First 3Qs
FY04 First 3Qs（Ref.）FY04 Full Year(¥ million)
11,36913,596
21,522

Investing Activities(¥ million)(604)(5,730)(12,677)

Financing Activities(¥ million)(5,634)(4,122)(4,599)Cash and Cash
Equivalents at
Period-End(¥ million)
32,937
27,40527,851

Qualitative Information Concerning Consolidated Financial Position
Total assets as of December 31, 2004 stood at ¥368,206 million, an increase of ¥121,441 million from March 31, 2004. This rise
was mainly attributable to the revaluation of shares held in INPEX Corporation following this company’s listing on the First
Section of the Tokyo Stock Exchange on November 17, 2004. Also as a result of this listing, shareholders’ equity rose ¥83,096
million, to ¥278,812 million.
As of December 31, 2004, cash and cash equivalents on a consolidated basis stood at ¥32,937 million, an increase of ¥5,086
million compared with the end of the previous fiscal year.
(Cash Flows from Operating Activities)
Operating activities provided net cash of ¥11,369 million, mainly reflecting cash from income before income taxes andminority interests of ¥11,638 million and depreciation and amortization of ¥10,475 million, against an increase in inventoriesof ¥5,314 million, income taxes paid of ¥3,407 million and other uses of cash.
(Cash Flows from Investing Activities)
Investing activities used net cash of ¥604 million, primarily attributable to cash of ¥7,061 million used for the purchase ofproperty, plant and equipment and ¥5,103 million from proceeds from the purchase of consolidated subsidiary stock
accompanied by changes in the scope of consolidation (the net amount after deduction of expenses for the acquisition of sharesin Japex New Nanhai Ltd. and Jawa Oil Co., Ltd. from funds held by these companies).
(Cash Flows from Financing Activities)
Financing activities used net cash of ¥5,634 million, reflecting mainly outflows of ¥2,829 million for cash dividends paid and¥1,864 million for the repayment of long-term debt.

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3. Results Forecasts for Fiscal 2005 (April 1, 2004 – March 31, 2005)
Net Sales

Ordinary Income(¥ million)
Net Income

Full Year
Consolidated(¥ million)
99,558(¥ million)
16,470(¥ million)
11,043

Non-consolidated

85,21012,199

9,041(Reference)
Note: There has been no change to the full-year consolidated and non-consolidated forecasts announced on November 15, 2004. The above forecasts
have been prepared based on information available to management at the time of release. Actual results may differ from forecasts due to a range offactors.

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1.Consolidated Quarterly Balance Sheets(¥ million)
FY05 First 3Qs
Description

FY04

ChangeFY04 First 3Qs

As of Dec. 31, 2004 As of Mar. 31, 2004

As of Dec. 31, 2003

(Assets)
ⅠCurrent assets
1. Cash and deposits

30,564

22,201

8,363

23,203

2. Notes and accounts receivable

12,401

11,430971

9,740

3. Marketable securities

6,004

9,854

(3,849)11,321

4. Inventories

11,430

6,116

5,314

8,050

5. Other current assets

7,761

5,343

2,417

5,834

Less: Allowance for doubtful receivables

(14)

(13)

(0)

(9)

68,14854,932

13,21558,140Total current assets
ⅡFixed assets
1. Property, plant and equipment(1) Buildings and structures

45,53253,411(7,878)53,632(2) Machinery and equipment

26,361

23,697

2,663

12,343(3) Land

11,351

12,051(700)

11,998(4) Other property, plant and equipment

10,908

11,415(506)

16,183

Total property, plant and equipment

94,154

100,576(6,422)

94,157

1,749

819

929

724

2. Intangible fixed assets
3. Investments and others(1) Investments in securities

199,71384,771

114,941

83,362(2) Others

16,015

19,121(3,106)

20,337

Less: Allowance for doubtful receivables

(195)

(123)

(71)

(117)

Allowance for losses on overseas investments(11,379)(13,334)

1,954(13,508)

Total investments and others

204,154

90,436

113,718

90,073

Total fixed assets

300,057

191,832

108,225

184,955

368,206

246,765

121,441

243,095

5,901

2,353

3,547

2,195

−

600

(600)

525

9,006

2,306

6,700

2,308

Total assets(Liabilities)
I Current liabilities
1. Notes and accounts payable
2. Short-term bank loans
3. Current portion of long-term debt
4. Other current liabilities

16,93011,539

5,391

9,988

Total current liabilities

31,837

16,79815,03815,0179,450

II Long-term liabilities
1. Long-term debt

414

9,003

(8,589)2. Deferred tax liabilities

38,536−38,536−

3. Accrued retirement benefits for employees

4,147

3,574

573

4,030

4. Accrued retirement benefits for officers

720

696

23

663

5. Accrued estimated cost of abandonment of wells

2,371

2,423

(51)

2,525

6. Accrual for losses on projects

2,340

10,975(8,635)

11,562

7. Other reserves

62

−

62

−

8. Other long-term liabilities

439

2,186

(1,747)

2,152

Total long-term liabilities

49,03228,85920,17230,384

Total liabilities

80,87045,65835,21145,402

8,524

5,392

3,132

5,336

(Minority interests)
Minority interests in consolidated subsidiaries(Shareholders’ equity)
I Common stock

14,28814,288−14,288II Retained earnings

186,590

180,826

5,764

177,988

III Unrealized holding gain on securities

78,055

3,412

74,643

2,638

IV Translation adjustments(119)(2,810)2,691(2,558)

(3)

(1)

(2)

(0)

V Treasury stock
Total shareholders’ equity

278,812

195,715

83,096

192,356

Total liabilities, minority interests and shareholders’ equity

368,206

246,765

121,441

243,095-4-

2. Consolidated Quarterly Statements of Income(¥ million)
Description

FY05 First 3Qs

FY04 First 3Qs

Apr. – Dec. 2004

Apr. – Dec. 2003

I Net sales
II Cost of sales
Gross profit

Change

FY04
Apr. 03 – Mar. 04

73,37067,0796,291

96,713

46,87440,7396,134

58,06026,49626,339156

38,653

3,845

3,590

254

5,888

III Exploration expenses
1. Exploration expenses
2. Exploration subsidies

(81)

(483)

402

(675)

3,763

3,106

657

5,213

15,07914,639440

20,990

7,652

8,593

(941)

12,449

1. Interest income

883

922

(38)

1,192

2. Dividend income

1,240

1,034

205

1,298

3. Equity in profit of non-consolidated subsidiaries and affiliates

1,029

−

1,029

−

4. Reversal of allowance for losses on overseas investments

1,194

2,531

(1,337)2,705

5. Reversal of accrual for losses on projects

809

−

809

−

6. Other non-operating income

771

514

256

759

5,929

5,003

925

5,956

Total exploration expense
IV Selling, general and administrative expenses
Operating income
V Non-operating income

Total non-operating income
VI Non-operating expenses
1. Interest expense

205

267

(62)

346

2. Loss on sale of securities

145

−

145

34

3. Devaluation loss on securities

128

57

70

498

4. Equity in losses of non-consolidated subsidiaries and affiliates

−

2,335

(2,335)2,072

5. Provision for accrued estimated cost of abandonment of wells

380

70

310

160

6. Provision for losses on projects

−

285

(285)

129

7. Other non-operating expenses

392

478

(86)

695

Total non-operating expenses

1,252

3,495

(2,243)

3,937

Ordinary income

12,32910,102

2,227

14,468

2

24

(22)

25

1. Loss on disposal of fixed assets

637

208

429

286

2. Earthquake disaster recovery expenses

55

−

55

−

11,638

9,918

1,720

14,207

2,575

2,555

20

3,955

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

Income before income taxes and minority interests
Income taxes
Minority interests
Net income

-5-

354

240

114

291

8,708

7,123

1,585

9,960

3. Consolidated Quarterly Statements of Cash Flows(¥ million)
Description
I Operating activities
1. Income before income taxes and minority interests
2. Depreciation and amortization
3. Loss on devaluation of marketable securities and investments in securities
4.Increase (decrease) in allowance for doubtful receivables
5. Increase in provision for accrued retirement benefits for employees
6. Increase (decrease) in provision for accrued retirement benefits for officers
7. Increase (decrease) in provision for accrued estimated cost of abandonmentof wells
8. Decrease in provision for allowance for losses on overseas investments and

FY05 First 3Qs
Apr. – Dec. 2004

FY04 First 3Qs
Apr. – Dec. 2003

FY04
Apr. 03 – Mar. 04

11,638
10,475
128
72
567
23

9,918
7,548
57
(23)
757
64

14,207
11,043
498
(27)
303
97

(62)

(555)

(638)

(1,836)(3,069)(3,830)(2,124)205(1,957)267(2,491)
346

(134)

(186)

(305)

232

−

34

(1,029)(375)(5,314)
−
−
1,335
371
604
14,776(3,407)
11,369

2,335
2,002
735
(321)
209
(2,640)(46)
169
15,265(1,668)13,596

2,072
310
2,669
−
−
(2,161)(211)
1,408
23,326(1,803)
21,522

(40)
330
(100)
3,637
(7,061)
154(355)(7,531)
4,111

(330)
−
(2,998)4,444(6,363)34(291)(6,264)
4,072

(335)
15
(2,998)7,890(15,734)38(423)(9,030)
5,106

5,103

−

−

(263)
53
2,030
(673)
(604)

(527)
543
1,884
67
(5,730)

(89)
554
2,638
(309)
(12,677)

III Financing activities
1.Decrease in short-term bank loans
2. Repayment of long-term debt
3. Purchase of treasury stock
4. Cash dividends paid
5. Dividends paid to minority shareholders
6. Interest paid
Net cash used in financing activities(593)(1,864)(2)(2,829)(192)(152)(5,634)(375)(1,865)(0)(1,428)(197)(255)(4,122)(300)(2,315)(1)(1,428)(197)(356)(4,599)IV Effect of exchange rate changes on cash and cash equivalents
V Increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of year
VII Cash and cash equivalents at period-end

(43)
5,086
27,851
32,937(204)
3,539
23,866
27,405(260)
3,984
23,86627,851

accrual for losses on projects
9. Interest and dividend income
10. Interest expense
11. Gain on redemption and sales of marketable securities and investments insecurities
12. Loss on redemption and sales of marketable securities and investments insecurities
13. Equity in losses (profits) of non-consolidated subsidiaries and affiliates
14. Decrease (increase) in notes and accounts receivable
15. Decrease (increase) in inventories
16. Increase in prepaid expense
17. Decrease in advances
18. Increase (decrease) in notes and accounts payable
19. Increase (decrease) in consumption tax payable
20. Other, net
Subtotal
19. Income taxes (paid) refunded
Net cash provided by operating activities
II Investing activities
1. Investments in time deposits
2. Proceeds from time deposits
3. Payments for purchase of marketable securities
4. Proceeds from redemption and sale of marketable securities
5. Additions to property, plant and equipment
6. Proceeds from sales of property, plant and equipment
7. Additions to intangible fixed assets
8. Payments for purchase of investments in securities
9. Proceeds from redemption and sale of investments in securities
10. Proceeds from purchase of consolidated subsidiary stock accompanied bychanges in scope of consolidation
11. Increase in loans receivable
12. Decrease in loans receivable
13. Interest and dividends received
14. Other, net
Net cash used in investing activities-6-4.Status of Production and Sales
１．Production(1) Oil and Natural Gas Segment
Division

FY05 First 3Qs

Product

Apr. 1 – Dec. 31, 2004
Crude
E&P

(Ref.) FY04
Apr. 1, 2003 – Mar. 31, 2004

kl

412,748(2,358)742,321 thousand ㎥(2,032)Natural gas

Other
Businesseskl

462,779(53,985)

oil

FY04 First 3Qs
Apr. 1 –Dec. 31, 2003

574,417 kl（3,131）

718,599 thousand ㎥(5,357)

1,036,120 thousand ㎥（7,231）

LN

G

14,181

ｔ

4,105

ｔ

6,589

ｔ

L

P

G

7,112

ｔ

7,564

ｔ

10,811ｔ

35,080kl

38,274kl

52,393kl

Fuel oil, etc.

（Notes）
1. The figures in parentheses in E&P represent overseas production and are included in the total.
2. Part of the oil production volume is used as a feedstock for LPG, fuel oil and other products.
3. Part of the natural gas production volume is used as a feedstock for LNG, LPG and other energies.

(2) Geothermal Energy Segment
Division

FY05 First 3Qs

Product

Apr. 1 – Dec. 31, 2004
Geothermal

Steam

Energy767,264

FY04 First 3Qs
Apr. 1 – Dec. 31, 2003

ｔ848,753(Ref.) FY04
Apr. 1, 2003 – Mar. 31, 2004

ｔ1,107,443

ｔ

２．Sales(1) Oil and Natural Gas Segment
Division

FY05 First 3Qs
Apr. 1 – Dec. 31, 2004

Product

VolumeAmount
kl

Crude

Oil

1,087,755

Volume(¥ million)

29,551Natural Gas

873,617

1,162,330

N

G

Subtotal
Contract
services
Subtotal

26,422

PG

24,618912,817kl

1,528,507(¥million)

32,963thousand㎥

30,115

1,296,389

ｔ

42,560ｔ

3,415

51,6972,610

75,883

3,837−

59,388−57,344−79,361

−

3,854

−

2,630

−

7,049

−

3,854

−

2,630

−

7,049

21,772ｔ(¥ million)

1,126

21,624kl

Other
Businesses(¥million)

Amount

68,791ｔ

L

Volumethousand㎥ｔ

LAmountkl

thousand㎥

E&P（Ref.）FY04
Apr. 1, 2003 Mar. 31, 2004

FY04 First 3Qs
Apr.1 – Dec. 31, 2004ｔ(¥ million)

1,033

31,506kl(¥ million)

1,514
kl

Fueloil,etc

66,926

2,993

59,704

2,472

89,0903,517

O t h e r s

−

5,026

−

2,565

−

4,182

Subtotal

−

9,147

−

6,071

−

9,213

Total

−

72,390−66,046−

95,624-7-

(2)Geothermal Energy Segment
Division

Product

FY05 First 3Qs
Apr. 1 – Dec. 31, 2004
VolumeGeothermal
EnergyAmount
ｔ

Steam
Total

（Ref.）FY04
Apr. 1, 2003 Mar. 31, 2004

FY04 First 3Qs
Apr. 1 – Dec. 31, 2003
VolumeAmountｔ(¥ million)

VolumeAmountｔ(¥ million)(¥ million)

722,926

979

813,191

1,032

1,061,336

1,089

−

979

−

1,032

−

1,089

（Notes）
1. Others in Other Businesses include revenue from the transmission of third-party gas through JAPEX’s pipeline network and salescommissions.
2. Monetary amounts in the tables do not include consumption tax.

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