Note : This document has been translated from the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original shallprevail.

Annual Securities Report(Report pursuant to Article 24, Paragraph 1 of the
Financial Instruments and Exchange Act)
Fiscal year
From: April 1, 2021
(The 52nd term)
To: March 31, 2022

Japan Petroleum Exploration Co., Ltd.
1-7-12 Marunouchi, Chiyoda-ku, Tokyo(E00041)This document has been produced to be printed on a paper document that contains the contents of the Annual
Securities Report filed to the Financial Services Agency via the Electronic Disclosure for Investors’ NETwork(EDINET) system.

Table of Contents
Page
Cover
Section 1 Company Information ……………………………………………………………………………………………
Item 1. Overview of Company……………………………………………………………………………………………
1. Key Financial Data ……………………………………………………………………………………………
2. History …………………………………………………………………………………………………………
3. Description of Business…………………………………………………………………………………………
4. Subsidiaries and Associates……………..………………………………………………………………………
5. Employees………………………………………………………………………………………………………
Item 2.
Overview of Business……………………………………………………………………………………………
1. Management Policy, Business Environment, and Issues to be Addressed………………………………………
2. Business and Other Risks ………………………………………………………………………………………
3. Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows …………
4. Material Contracts………………………………………………………………………………………………

1
1
1
3
4
6
10
12
12
15
21
34

5. Research and Development Activities …………………………………………………………………………

35

Item 3.

Information about Facilities …………………………………………………………………………………… 36
1. Overview of Capital Expenditures …………………………………………………………………………… 36
2. Major Facilities (Facilities by Office) ………………………………………………………………………… 37
3. Planned Addition, Retirement, and Other Changes of Facilities ……………………………………………… 38
Item 4.
Information about Reporting Company………………………………………………………………………… 39
1.
Company’s Shares, etc. ……………………………………………………………………………………… 39(1) Total number of shares ……………………………………………………………………………………… 39(2) Share acquisition rights……………………………………………………………………………………… 39(3) Exercises of moving strike convertible bonds, etc. ………………………………………………………… 39(4)
Changes in number of issued shares, share capital and legal capital surplus ……………………………… 39(5)
Shareholding by shareholder category……………………………………………………………………… 39(6)
Major shareholders ………………………………………………………………………………………… 40(7)
Voting rights………………………………………………………………………………………………… 41(8)Share ownership plan for Directors and other Officers and employees …………………………………… 42
2. Acquisition and Disposal of Treasury Shares………………………………………………………………… 43
3. Dividend Policy ……………………………………………………………………………………………… 44
4. Corporate Governance ……………………………………………………………………………………… 45
Item 5.
Financial Information…………………………………………………………………………………………… 72
1. Consolidated Financial Statements, etc. ……………………………………………………………………… 73(1) Consolidated financial statements…………………………………………………………………………… 73(2) Other ………………………………………………………………………………………………………… 121
2. Non-consolidated Financial Statements, etc. ………………………………………………………………… 122(1) Non-consolidated financial statements……………………………………………………………………… 122(2) Components of major assets and liabilities ………………………………………………………………… 137(3) Other………………………………………………………………………………………………………… 137
Item 6.
Outline of Share-related Administration of Reporting Company ……………………………………………… 138
Item 7.
Reference Information of Reporting Company………………………………………………………………… 139
1. Information about Parent of Reporting Company …………………………………………………………… 139
2. Other Reference Information ………………………………………………………………………………… 139
Section 2 Information about Reporting Company’s Guarantor, etc. ……………………………………………………… 141
Independent Auditor’s ReportCoverDocument title

Annual Securities Report

Clause of stipulation

Article 24, paragraph 1 of the Financial Instruments and Exchange Act

Place of filing

Director-General of the Kanto Local Finance Bureau

Filing dateJune 28, 2022

Fiscal year

The 52nd term (April 1, 2021 to March 31, 2022)

Company name

Japan Petroleum Exploration Co., Ltd.

Company name in English

Japan Petroleum Exploration Co., Ltd.

Title and name of representative

FUJITA Masahiro, Representative Director and President

Address of registered headquarters

1-7-12 Marunouchi, Chiyoda-ku, Tokyo

Telephone number+81-3-6268-7001

Name of contact person

OKAMOTO Mitsumasa, Manager of Document Administration Group,
Administration & Legal Dept.

Nearest place of contact

1-7-12 Marunouchi, Chiyoda-ku, Tokyo

Telephone number+81-3-6268-7001

Name of contact person

OKAMOTO Mitsumasa, Manager of Document Administration Group,
Administration & Legal Dept.

Place for public inspection

Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

Section 1 Company Information
Item 1. Overview of Company
1. Key Financial Data
(1) Consolidated financial data
Fiscal year

48th

Fiscal year ended

49th

50th

51st

52nd

March 31, 2018 March 31, 2019 March 31, 2020 March 31, 2021 March 31, 2022

Net sales(Millions of yen)

230,629

267,980

318,822240,078

249,140

Ordinary profit(Millions of yen)

3,828

12,52332,635

10,001

43,674

Profit (loss) attributable to(Millions of yen)owners of parent(30,959)

14,77026,815(2,725)(30,988)

Comprehensive income(Millions of yen)

(50,730)(7,804)(6,254)(1,574)(18,992)

Net assets(Millions of yen)459,255

450,156

440,157

434,492

402,770

Total assets(Millions of yen)

699,536

655,288627,132

624,786

471,941

Net assets per share(Yen)

7,438.23

7,287.32

7,046.18

7,011.36

6,679.85

Basic earnings (loss) per
share

(Yen)

(541.70)258.44469.18(47.73)(545.64)

Diluted earnings per share

(Yen)

–

–

–

–

–

Equity ratio

(%)

60.8

63.6

64.2

64.0

78.7

Return on equity

(%)

–

3.5

6.5

–

–

Price-earnings ratio(Times)

–

9.27

3.79

–

–

Net cash provided by (used(Millions of yen)in) operating activities

52,88130,97069,89543,263(1,052)

Net cash provided by (used(Millions of yen)in) investing activities(54,218)(13,969)(18,701)(6,453)52,067

Net cash provided by (used(Millions of yen)in) financing activities(1,196)(15,493)(13,743)(15,626)(70,939)

Cash and cash equivalents(Millions of yen)at end of period

99,892

100,633

138,259

157,963

144,513

Number of employees

1,788

1,741

1,739

1,780

1,634

[489]

[494]

[473]

[464]

[443]

[Separately, average
number of temporary(Persons)

employees]
Notes: 1. The amounts of diluted earnings per share are not stated since there were no dilutive shares and basic losses per share
were recorded for the 48th, 51st, and 52nd terms.
2. For the 48th, 51st, and 52nd terms, the figures of return on equity and price-earnings ratio are not stated since losses
attributable to owners of parent were recorded.
3. The “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16,2018) and other relevant standards have been applied since the beginning of the 49th term, and therefore, key financial
data for the 48th term are computed with the amendments applied retrospectively.
4. The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised
ASBJ regulations have been applied from the beginning of the fiscal year under review, and therefore, key financial
data for the fiscal year under review are computed with the accounting standard and relevant regulations applied.

-1-(2) Financial data of reporting company
Fiscal year

48th

Fiscal year ended

49th

50th

51st

52nd

March 31, 2018 March 31, 2019 March 31, 2020 March 31, 2021 March 31, 2022

Net sales(Millions of yen)

165,134

180,024

217,079

169,195

133,642

Ordinary profit(Millions of yen)

20,292

21,536

29,71824,54939,018

Profit (Loss)(Millions of yen)

(26,666)

23,76525,413(26,664)(20,003)

Share capital(Millions of yen)

14,28814,28814,28814,28814,288

Number of issued shares (Thousand shares)

57,154

57,154

57,154

57,154

57,154

Net assets(Millions of yen)

388,976

391,225

380,442362,065

337,872

Total assets(Millions of yen)491,223

467,656442,637

467,262423,049(Yen)

6,805.92

6,845.27

6,656.63

6,343.70

6,072.94

20.0

40.0

50.0

50.0

50.0

[10.0][10.0][25.0][25.0][25.0]Net assets per share
Dividends per share[Interim dividend pershare of the above](Yen)

Basic earnings (loss) per
share

(Yen)

(466.58)415.82444.66(466.92)(352.20)

Diluted earnings per
share

(Yen)

–

–

–

–

–

Equity ratio

(%)

79.2

83.7

85.9

77.5

79.9

Return on equity

(%)

–

6.1

6.6

–

–

Price-earnings ratio(Times)

–

5.76

4.00

–

–

Dividend payout ratio

(%)

–

9.6

11.2

–

–

920

904

919

937

965

[197]

[200]

[193]

[203]

[205]

Number of employees[Separately, average
number of temporary
employees](Persons)

Total shareholder return

(%)

96.1

96.4

74.0

86.9

109.1

(%)

[118.9][97.7][60.9][78.2][147.5]Highest stock price

(Yen)

3,340

3,290

3,280

2,500

3,045

Lowest stock price

(Yen)

2,070

1,775

1,541

1,624

1,714

[Comparative index:
TOPIX (mining
industry) Total Return
Index by industry]

Notes: 1. The amounts of diluted earnings per share are not stated since there were no dilutive shares and basic losses per share
were recorded for the 48th, 51st, and 52nd terms.
2. For the 48th, 51st, and 52nd terms of reporting company, the figures of return on equity, price-earnings ratio, anddividend payout ratio are not stated since losses attributable to owners of parent were recorded.
3. The “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16,2018) and other relevant standards have been applied since the beginning of the 49th term, and therefore, key financial
data for the 48th term are computed with the amendments applied retrospectively.
4. The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised
ASBJ regulations have been applied from the beginning of the fiscal year under review, and therefore, key financial
data for the fiscal year under review are computed with the accounting standard and relevant regulations applied.
5. The highest and lowest stock prices are quoted prices on the First Section of the Tokyo Stock Exchange.

-2-2. History
In December 1955, Japan Petroleum Exploration Co., Ltd. was founded as a special company under the Law of Japan Petroleum
Exploration Co., Ltd. In October, 1967, when Japan Petroleum Development Corporation (JPDC) was founded, this special
company was dissolved with all of its goodwill invested into JPDC. The business activities of this special company were
continued as a division of JPDC. This form of business operation was implemented as a three-year time-limited measure as set
forth in the Supplementary Provisions of the Japan Petroleum Development Corporation Law. Accordingly, in April 1970, theabove division separated from JPDC to be reorganized as Japan Petroleum Exploration Co., Ltd. (hereinafter “JAPEX” or the“Company”), which is a private company under the Commercial Law.
Thus, although the Company was established in April 1970, the start of its business dates back to December 1955, when theabove special company was founded. For this reason, the following history starts from December 1955.
Dec. 1955
Founded as a special company under the name of Japan Petroleum Exploration Co., Ltd, thepredecessor of the Company (hereinafter referred to as the “Predecessor Company”), with thegovernment’s contribution exceeding 50% (56% at the foundation)
Mar. 1958
Discovered the Mitsuke oil field in Niigata
Jul. 1958

Discovered the Sarukawa oil field in Akita

Jun. 1959

Discovered the Higashi-Niigata gas field in Niigata

Dec. 1960

Discovered the Katakai gas field in Niigata

Jun. 1962

Established JAPEX SKS Corporation (currently a consolidated subsidiary of JAPEX)

Feb. 1966

Established North Sumatra Offshore Petroleum Exploration Co., Ltd. (currently INPEXCORPORATION)
Dissolved and integrated into Japan Petroleum Development Corporation (JPDC) as its division upon
foundation of JPDC
Discovered the Yoshii gas field in Niigata

Oct. 1967
Apr. 1968
Apr. 1970

Separated from JPDC and reorganized as a private company, Japan Petroleum Exploration Co., Ltd.
(with JPDC succeeding the government’s equity stake in the Predecessor Company)

May 1971

Established Japex Offshore Ltd. (currently a consolidated subsidiary of JAPEX) (Note 1)

Oct. 1971

Established SK ENGINEERING CO., LTD. (currently a consolidated subsidiary of JAPEX)

Jun. 1976

Discovered the Yurihara oil and gas field in Akita

Apr. 1983

Established JGI, Inc. (currently a consolidated subsidiary of JAPEX) (Note 2)

Mar. 1989

Discovered the Yufutsu oil and gas field in Hokkaido

Mar. 1996

Completed construction of the Niigata-Sendai gas pipeline with a total length of 251 km capable ofsupplying natural gas to an extensive area

Oct. 2003

Established Shirone Gas Co., Ltd. (currently a consolidated subsidiary of JAPEX) (Note 3)

Dec. 2003

Listed on the First Section of the Tokyo Stock Exchange

May 2007

Acquired an equity stake in Energi Mega Pratama Inc. (a corporation of the British Virgin Islands that
operates in the Kangean Block in Indonesia, currently an equity-method associate of JAPEX)

Nov. 2009

Acquired equity stake in Japex Energy Co., Ltd. (currently a consolidated subsidiary of JAPEX)

Mar. 2010

Established Japex Garraf Ltd. (currently a consolidated subsidiary of JAPEX) (Note 4)

Mar. 2014
Apr. 2015

Established JAPEX UK E&P Ltd. (a corporation of the United Kingdom for exploration activities in a
block located offshore of Aberdeen in the UK North Sea, currently a consolidated subsidiary of JAPEX)
Established Fukushima Gas Power Co., Ltd. (currently an equity-method associate of JAPEX)

Mar. 2018

Commenced operation of the Soma LNG Terminal in Fukushima

Apr. 2020

Commenced sale of electricity generated by Fukushima Gas Power Co., Ltd. (Note 5)

Apr. 2022
Notes: 1.
2.
3.
4.
5.

Transferred from the First Section to the Prime Market of the Tokyo Stock Exchange (TSE) in responseto the restructure of TSE’s market segments
Japex Offshore Ltd. discovered the Aga-oki oil and gas field and the Iwafune-oki oil and gas field both in Niigata
in March 1972 and in June 1983, respectively.
The Company entrusts a major portion of its geophysical exploration work to JGI, Inc.
Shirone Gas Co., Ltd. commenced general gas utility services in April 2004.
Japex Garraf Ltd. commenced production at the Garraf oil field in August 2013.
Fukushima Gas Power Co., Ltd. started the commercial operation of Unit No. 1 and Unit No.2 of the Fukushima
Natural Gas Power Plant in April and in August, respectively, in 2020.

-3-

3. Description of Business
As of March 31, 2022, the JAPEX Group comprises JAPEX, 22 subsidiaries and 20 associates. Our main business categories are
the “E&P Business,” the “Infrastructure/Utility Business,” and “Other businesses.” In addition to its business activities in Japan,
the JAPEX Group is conducting business overseas through its project companies established considering their business locations.
The JAPEX Group consists of segments by business location. The description of business in each business segment and thepositioning of JAPEX, the subsidiaries, and the associates are as follows:Business Segment
Japan

North America

EuropeMiddle East

Other

Description of Business(1) E&P Business
JAPEX and its consolidated subsidiary Japex Offshore Ltd. produce crude oil and natural gas in Japan. In
addition, the consolidated subsidiary North Japan Oil Co., Ltd. purchase and sells JAPEX’s crude oil.
(2) Infrastructure/Utility BusinessIn addition to the domestic natural gas produced by the JAPEX Group, JAPEX regasifies LNG fromimported LNG at the Soma LNG Terminal and Nihonkai LNG Co., Ltd.’s Niigata LNG Terminal. This gas
is sold to customers in regions along JAPEX’s own gas pipeline network spanning over 800 km in length.
The consolidated subsidiary Shirone Gas Co., Ltd. and the associate TOHOKU NATURAL GAS Co., Inc.
sell gas received from JAPEX’s wholesale supply. The consolidated subsidiary Akita Natural Gas PipelineCo., Ltd. transports the natural gas that JAPEX sells in Akita Prefecture. In Hokkaido, JAPEX receives
LNG from coastal vessels at the Yufutsu LNG Receiving Terminal and sells the regasified LNG anddomestic natural gas to customers in the prefecture.
In addition, JAPEX and some of its associates supply LNG via an LNG satellite system using tank trucks
and tank containers to meet demand for natural gas in the areas outside of its pipeline network.
Also, JAPEX provides gas transportation services using its pipeline network to gas transportation service
clients.
JAPEX’s associate Fukushima Gas Power Co., Ltd. (FGP) conducts power generation business at the
Fukushima Natural Gas Power Plant, which is adjacent to the Soma LNG Terminal. JAPEX contracts with
FGP to convert LNG to electricity and sells electricity mainly to other retail electric providers. In addition,
JAPEX is contracted by FGP for regasification of the LNG used as fuel for the power plant.
To stably procure the necessary LNG for the Gas Business and Electric Power Business, JAPEX works hardto diversify its suppliers and contract terms.
(3) Other businesses
The consolidated subsidiary SK ENGINEERING CO., LTD. is contracted by JAPEX and other companies
for well drilling and maintenance operations.
The consolidated subsidiary Geophysical Surveying Co., Ltd. is contracted by JAPEX and other companies
to conduct geophysical logging and mud logging related to well drilling and maintenance operations. Mudlogging refers to recording the results of surveys and analyses of mud that is circulated in wells during
drilling and the excavated top layer of earth that is brought to the surface by the mud.
The consolidated subsidiary JGI, Inc. is contracted by JAPEX and other companies to conduct geophysicalexploration.
The consolidated subsidiary Japex Energy Co., Ltd.’s main business is the sale of oil products. Thissubsidiary sells LPG to JAPEX and other oil products to JAPEX SKS Corporation and other companies.
E&P Business
When conducting exploration and development of crude oil and natural gas fields overseas, in most cases,
JAPEX establishes a company for each project to ensure efficient operations, and promotes project as joint
ventures with other companies in an effort to diversify risks.
In North America, the consolidated subsidiary Japex (U.S.) Corp. participates in a project at the production
stage.
E&P Business
The consolidated subsidiary JAPEX UK E&P Ltd. participates in a project at the development stage in the
UK North Sea.
E&P Business
The consolidated subsidiary Japex Garraf Ltd. participates in a project at the production stage in the Garraf
oil field in the Republic of Iraq.
E&P Business
JAPEX also has business segments in Southeast Asia (the associate Energi Mega Pratama Inc. participatesin a project at the production stage) and Russia (the associate Sakhalin Oil and Gas Development Co., Ltd.
participates in project at the production stage).

-4-

The following chart summarizes the structure of the Group’s businesses. In this chart, business segments are in parentheses while
description of business are in square brackets.
[E&P Business](Russia)(North America)

Production-stage company

Production-stage company

Sakhalin Oil and Gas
Development Co., Ltd.

Japex (U.S.) Corp.

Sale of crude oil(Middle East)(Southeast Asia)

Production-stage company

Production-stage company

Japex Garraf Ltd.

Energi Mega Pratama Inc.

Sale of crude oil

Sale of crude oil andnatural gas (overseas)(Europe)(Japan)Sale of crude oil

North Japan Oil Co., Ltd.
Sale of crude oil

Japex Offshore Ltd.

Some othercompanies[Infrastructure/Utility Business](Japan)Sale of natural gas
Sale of natural gas

JAPEX

Sale of natural gas(domestic) andelectricity, etc.

Shirone Gas Co., Ltd.
Sale of natural gas

TOHOKU NATURAL GAS Co., Inc.
Transportation of natural gas

Akita Natural Gas Pipeline Co., Ltd.
Contracting-out of power generation

Fukushima Gas Power Co.,
Ltd.

Contracting-out of regasification

Some othercompanies[Other Business](Japan)Sale of LPG, etc.

Japex Energy Co., Ltd.

Sale of LPG, etc; andmanagement of real estate

JAPEX SKS Corporation
Sale of oil products, etc.

Well drilling and maintenanceConduct of various
kinds of contracted
work; and sale of oil
products, etc.

SK ENGINEERING CO., LTD.

Geophysical logging and mud logging
Geophysical exploration, etc.
Some othercompanies

JGI, Inc.

LegendConsolidated subsidiary
Associate-5-

Clients

4. Subsidiaries and Associates

Company name

Address

Share capitalor capital
contribution

JAPEX’s stakeand percentage ofvoting rights held
Main businesses
Stake(Millions of yen)(%)

Percentage
of votingrights held(%)

Description of relationship(Consolidated
subsidiaries)

Akita Natural Gas
Pipeline Co., Ltd.

Akita City,
Akita

SK ENGINEERING
CO., LTD.

Chiyoda-ku,
Tokyo

JAPEX SKS
Corporation

North Japan Oil Co.,Ltd.

Shirone Gas Co., Ltd.
(Note 1)

Japex Pipeline Ltd.

JGI, Inc. (Note 1)

GeophysicalSurveying Co., Ltd.

Minato-ku,
Tokyo

Sakata City,
Yamagata

Tsubame City,
Niigata

Nagaoka City,
NiigataBunkyo-ku,
TokyoChiyoda-ku,
Tokyo

250

Transportation ofnatural gas by pipeline
in Akita Prefecture

300

Provision of contracted
well drilling andengineering services

90

Manufacture and sale ofoil products; real estate
management; andinsurance agency

80

Sale of crude oil,recycling of waste oil,
contracted
transportation of crude
oil

3,000

Production, supply andsale of gas in Tsubame
City and Niigata City,
Niigata Prefecture

80

Pipeline maintenanceand management

2,100

Conduct of contracted
geophysical exploration
work and developmentof geophysicalexploration technology

446

Conduct of contracted
geophysical logging andmud-logging work-6-

100.00100.00100.00100.00100.00100.00100.00100.00–Transporting JAPEX’s
natural gas.
Interlocking officers: Yes–

Conducting a contractedout part of JAPEX’s welldrilling work.
Interlocking officers: Yes–

Purchasing crude oil andnatural gas from JAPEX.
Also selling products suchas LPG to JAPEX; andmanaging real estate of
JAPEX.
Interlocking officers: Yes–

Purchasing crude oil fromJAPEX. Also conducting
contracted transportationof JAPEX’s crude oil.
Interlocking officers: Yes–

Purchasing JAPEX’s
natural gas to supply it ascity gas.
Interlocking officers: Yes–

Conducting maintenanceand management work for
JAPEX’s main gas
pipelines.
Interlocking officers: Yes–

Conducting geophysicalexploration work
contracted out by JAPEX.
Interlocking officers: Yes–

Conducting contracted
geophysical logging andmud-logging work for
JAPEX’s well drilling
work.
Interlocking officers: YesCompany name

Address

Share capitalor capital
contribution

JAPEX’s stakeand percentage ofvoting rights held
Main businesses
Stake(Millions of yen)

Japex (U.S.) Corp.
(Note 1)

Canada Oil Sands
Co., Ltd. (Note 1)

Houston,Texas, UnitedStatesChiyoda-ku,
Tokyo

JAPEX UK E&P Ltd. London,(Note 1)
UnitedKingdom

Kita-ku,
North Japan Security
Niigata City,
Service Co., Ltd.
Niigata

Japex Offshore Ltd.
(Note 1)GEOSYS, Inc. (Note 3)

Japex Energy Co.,
Ltd. (Note 5)

Japex Garraf Ltd. (Note1)

Chiyoda-ku,
TokyoBunkyo-ku,
Tokyo

Taito-ku,Tokyo

Chiyoda-ku,
Tokyo

53,000(thousandUS dollars)

34,863

110,662(thousandBritishpounds)

30

5,963

49

(%)

Percentage
of votingrights held(%)

Description of relationship

Exploration,
development andproduction of petroleum
resources in the UnitedStates, and capital
participation in the
Malaysia LNG project

100.00–Interlocking officers: Yes

Investment in
exploration anddevelopment of oilsands through Japan
Canada Oil Sands
Limited

100.00–Interlocking officers: Yes

Exploration anddevelopment of
petroleum resources in
the UK North Sea

100.00–Interlocking officers: Yes

89.42

–

Providing security
services to JAPEX, thesubsidiary Japex Offshore
Ltd., and other associatedcompanies.
Interlocking officers: Yes

70.61

–

Purchasing crude oil andnatural gas from JAPEX.
Interlocking officers: Yes–

Providing businesssupport to the subsidiary
JGI, Inc.
Interlocking officers: Yes

Industrial safety
services, security
services
Exploration,
development andproduction of petroleum
resources on thecontinental shelf of the
Sea of Japan
Conduct of contracted
geophysical exploration
work; and sale ofgeophysical explorationequipment

57.82(57.82)90

Purchase and sale of
LNG, oil products, etc.

90.00

–

Selling products such as
LPG to JAPAX, thesubsidiary JAPEX SKS
Corporation, and otherassociated companies.
Interlocking officers: Yes

20,930Exploration,
development andproduction of petroleum
resources in the Garraf
oil field, Iraq

55.00

–

Selling crude oil to
JAPEX.
Interlocking officers: Yes-7-

Company name

Address

Share capitalor capital
contribution

Main businesses

JAPEX’s stakeand percentage ofvoting rights held
Stake

(Millions of yen)(%)

Percentage
of votingrights held(%)

Description of relationship(Equity-method
associate)
TOHOKU
Aoba-ku,
NATURAL GAS Co., Sendai City,Inc.
Miyagi

Chiyoda-ku,
TELNITE CO., LTD.
Tokyo

Fukushima Gas
Power Co., Ltd.

Chiyoda-ku,
Tokyo

300

98

537

Purchase and sale ofnatural gas in the
Tohoku region

Manufacture and sale ofdrilling fluid chemicals;
and provision of mud
services

Operation andcommissioning ofPower generation
business using a natural
gas power plant

45.00

47.00

33.30

–

Purchasing natural gas
from JAPEX.
Interlocking officers: Yes–

Selling drilling fluid
chemicals to JAPEX.
Also providing contracted
mud services for
JAPEX’s well drilling
work.
Interlocking officers: Yes–

Conducting contracted
operation of power
generation for JAPEX,
namely converting LNG
to electricity. Also
contracting-out
regasification of LNG to
JAPEX.
Having its debt obligation
collateralized by JAPEX’s
assets.
Interlocking officers: Yes

Sakhalin Oil and Gas
Minato-ku,
Development Co.,
Tokyo
Ltd.

British Virgin
Energi Mega Pratama
Islands
Inc.

22,592

1,000(thousandUS dollars)

Exploration,
development andproduction of petroleum
resources on Sakhalin
Island and its land shelfin the RussianFederation
Exploration,
development andproduction of petroleum
resources in the easternJava Sea, Republic ofIndonesia

-8-

15.29

–

Selling part of its crude
oil to JAPEX.
Interlocking officers: Yes

25.00

–

Interlocking officers: YesCompany name

Address

Share capitalor capital
contribution

JAPEX’s stakeand percentage ofvoting rights held
Main businesses(Millions of yen)

Kangean Energy
Indonesia Ltd. (Notes 2

Delaware,
United Sates

10 (thousand
US dollars)and 4)EMP Exploration
London,(Kangean) Ltd. (Notes 2 Unitedand 4)
Kingdom

Diamond Gas
Amsterdam,
Netherlands B.V. (Note
Netherlands
3)

100 (British
pounds)5,536(thousandUS dollars)

Percentage
of votingrights held
(%)

Stake
(%)

Description of relationship

Exploration,
development andproduction of petroleum
resources in the easternJava Sea, Republic ofIndonesia–[100.00]–

Having JAPEX as aguarantor for a part of its
liabilities for production
facilities.
Interlocking officers: Yes

Exploration,
development andproduction of petroleum
resources in the easternJava Sea, Republic ofIndonesia–[100.00]–

Interlocking officers: Yes

Investment in Malaysia
LNG Tiga Sdn Bhd’sbusinesses, which
produce LNG in
Malaysia

20.00(20.00)–Interlocking officers: Yes

Three othercompanies
Notes: 1. The company is a specified subsidiary.
2. The figure inside the square brackets under “Percentage of voting rights held” represents the percentage held by parties
who are closely related to or aligned with the Company and is excluded from the above percentage.
3.
4.
5.

The figure inside the parentheses under “Percentage of voting rights held” represents the percentage of indirectly held
voting rights and is included in the above percentage.
The company is considered to be an associate because JAPEX has a substantial influence thereon despite having a stake
therein that is less than 20%.
The amount of sales of Japex Energy Co., Ltd. (excluding intercompany sales) exceeded 10% of the amount ofconsolidated net sales of the Company.
Information on profit or loss, etc. (Millions of yen): (1) Net sales
41,268(2) Ordinary profit
426(3) Profit(4) Net assets(5) Total assets

-9-

279
1,382
7,445

5. Employees(1) Information about consolidated companies
As of March 31, 2022
Segment

Number of employees (Persons)Japan
North America

1,253 [349]5[1]Europe1[–]Middle East

1[–]

Total for reportable segments

1,260 [350]

Other
Corporate (company-wide)
Total

–

[–]

374

[93]

1,634 [443]Notes: 1.

The number of employees represents the number of regular employees, which excludes the number of temporary
employees provided inside the square brackets.
2. “Other” represents business segments other than the reportable segments and includes locations such as Southeast Asia.
3. The number of employees provided under “Corporate (company-wide)” represents the number of employees belonging
to administration divisions that cannot be classified to any specific segment.
4. The number of employees (including temporary employees) decreased by 167 from March 31, 2021 to March 31, 2022
mainly because the Company transferred all the shares of Japan Canada Oil Sands Limited (JACOS), which was one of
the Company’s consolidated subsidiaries.
(2) Information about Reporting Company
As of March 31, 2022

Number of employees (Persons)Average age (Years old)

Average length of service(Years)965 [205]

40.48

16.02

Segment

Average annual salary (Yen)8,544,503

Number of employees (Persons)Japan

591 [112]

North America–[–]

Europe–[–]Middle East–[–]

Total for reportable segments

591 [112]

Other
Corporate (company-wide)
Total
Notes: 1.
2.
3.
4.
5.

–

[–]

374

[93]

965 [205]

The number of employees represents the number of regular employees, which excludes the number of temporary
employees provided inside the square brackets.
Persons seconded to JAPEX from outside JAPEX are excluded from the calculations of average age, average length ofservice, and average annual salary.
Average annual salary includes bonuses and extra wages.
“Other” represents business segments other than the reportable segments and includes locations such as Southeast Asia.
The number of employees provided under “Corporate (company-wide)” represents the number of employees belonging
to administration divisions that cannot be classified to any specific segment.

- 10 -

(3) Labor union
Employees of the Company have a union called JEC RENGO Sekiyu Kaihatsu Rodokumiai (Petroleum Development Labor
Union), and the number of union members is 691 (including those seconded to outside JAPEX from JAPEX) as of March 31,
2022.
Labor-management relations have remained favorable, and there are no special matters to be noted as to the relationship withthe labor union.

- 11 -

Item 2. Overview of Business
1. Management Policy, Business Environment, and Issues to be Addressed
Please note that any forward-looking statements in the following discussion are based on the judgement of the JAPEX Group’s
management as of the end of the fiscal year under review.
(1) Basic management policies of the company
As a company focusing mainly on the exploration, development, production, and sale of oil and natural gas, with the missionof contributing to stable energy supply in Japan through securing reserves and expanding production, the JAPEX Group has
established its business foundation by continuously discovering new oil and gas reserves, since its foundation in 1955.
As the JAPEX Group’s supply volume increases, its social responsibility for stable energy supply is growing. Meanwhile, it
has become crucial for the Group to build a new business model based on, among other things, irreversible changes in theenergy supply and demand structure driven by the progress in global decarbonization. Therefore, JAPEX aims to develop as acompany with market competitiveness whilst adapting to changes in its business environment. Our corporate vision is asfollows:
Contribute to society through stable supply of energy and address social issues towards Sustainable Development Goals- Explore, develop, produce and distribute oil and natural gas domestically and internationally d.
- Further strengthen the natural gas supply chain, built on our domestic infrastructures, by combining the electric power
supply business.
- Contribute to resolving energy and climate change related challenges towards a sustainable society through developing andcommercializing new technologies, drawing on our expertise.
- Achieve sustainable growth and maximize corporate value, while placing top priority on maintaining trust with all
stakeholders.
(2) Medium- to long-term management strategies and issues to be addressed
Based on “Long-Term Vision 2030” and “Medium-term Business Plan 2018-2022,” both of which were formulated in May
2018, JAPEX has been pushing forward with its efforts to grow to the integrated energy company utilizing our oil and gas E&P
and its supply bases. As part of efforts we made for oil and natural gas E&P in fiscal 2021, JAPEX has ended its participationin the oil sands project and the shale gas project in Canada to improve our profitability by optimizing the business portfolio.
Also, JAPEX has purchased treasury shares based on the resolution of the meeting of the Board of Directors held in November
2021 to expand shareholders’ returns and improve equity efficiency. (The period for purchasing treasury shares was to be from
November 10, 2021 to November 9, 2022. All of the treasury shares will be cancelled on November 30, 2022.)
In light of the irreversible changes in the energy supply and demand structure driven by the progress in global decarbonization,in May 2021, we have formulated “JAPEX2050: Toward a Carbon-Neutral Society” (hereinafter referred to as “JAPEX2050”),
which outlines our responsibilities that we must take on to realize a carbon-neutral society and presents a direction for ourbusiness development.
Considering the drastic changes in our business environment, we have formulated “JAPEX Management Plan 2022–2030” as a
medium -to long- term management plan in March 2022, with the aim of improving profitability and transforming into thebusiness structure set forth in “JAPEX2050.”
Outlines of “JAPEX2050” and “JAPEX Management Plan 2022–2030” are as follows.
[JAPEX2050]
1) GHG emission reduction target(a) Achieve net-zero emissions (Scope1 + Scope2) from JAPEX operations in 2050
As a first step, reduce the CO2 emission intensity of JAPEX operations by 40% in FY2030 compared to FY2019.
Note: Scope1: Direct emission of greenhouse effect gas generated from emission sources owned or managed bycompanies or households
Scope2: Indirect emission of greenhouse effect gas accompanying use of electricity, steam and heat- 12 -

(b) Strengthen line of business that contribute to the reduction of our supply chain emissions (Scope3)
Contribute to establish new technologies and energy supply with lower environmental impact, for reducing CO2
emissions in our supply chain.
Note: Scope3: Indirect emission in supply chain except cases of Scope22) Focused efforts to realize a carbon-neutral society(a) Turn Carbon Neutral into a profitable business based on CO2 injection and storage technology
Aim to achieve the early implementation and commercialization of CCS (Carbon dioxide Capture and Storage)/CCUS(Carbon dioxide Capture, Utilization, and Storage) as a pioneer in Japan.
- Make the most of JAPEX strengths accumulated through oil and natural gas E&P in exploring and selecting candidate
deep saline aquifers for implementations, drilling injection wells, and monitoring stored CO2.
- Make contributions to CO2 transportation by leveraging our experience and expertise in natural gas and LNG(liquefied natural gas) supply.
Strive to collaborate and enter into carbon-neutral businesses areas, where synergies with CCS and CCUS can be
expected.
- Focus on BECCS (Bio-energy with Carbon Capture and Storage) and natural gas-fired power plants with CCS as
assumed areas of collaboration- Consider entering into business areas of carbon-recycling, including blue hydrogen and methanation.
(b) Expand participation in renewable energy projects
Aim to increase renewable energy projects in which JAPEX participates while utilizing knowledge and experience inconventional businesses.
- Increase the business opportunities and examine commercialization, mainly in biomass power generation leveraging
experiences in natural gas power generation business and offshore wind power generation which have an affinity withknowledge and experience of E&P.
(c) Stable supply of oil and natural gas
Recognizing that oil and natural gas will remain as one of the major energy sources worldwide, continue to meet thedemand for them.
As a comprehensive energy company, aim to achieve a carbon-neutral society through the use of CCS/CCUS and otherdecarbonization technologies, rather than through a complete shift away from oil and natural gas.
- Participate in natural gas development projects and consider employing CCS/CCUS in them.
- Horizontally deploy various supply methods for natural gas and LNG to meet demand for fuel switching from coaland heavy oil.
[JAPEX Management Plan 2022–2030]
1) Basic policy
Improve profitability and build business foundation for 2030 and beyond- Aim to achieve a reasonable profit level considering capital costs and enhance shareholder returns by focusing onpriority items in the business fields of E&P, Infrastructure/Utility, and Carbon Neutral.
2) Management goals(a) Quantitative targets- Business profit: ¥50 billion scale as of FY2030 (Interim target: ¥30 billion scale as of FY2026)- ROE: 8% as of FY2030 (Interim target: 5% as of FY2026)- Profit composition target on E&P-to-non E&Ps: 5-to-5 as of FY2030 (Interim target: 6-to-4 as of FY2026)
Note: Business profit the figure is calculated by subtracting head office administrative expenses and other expenses
of approximately ¥6 billion from the sum of operating profit and share of profit of entities accounted for using- 13 -

equity method (including profits to be distributed under limited partnership and silent partnership agreements)
in each business field. The forecast crude oil price used in this calculation is JCC US$50 per barrel.
(b) Carbon neutral related target- Launch CCS/CCUS hub & cluster model business utilizing our existing domestic oil and gas fields and others by
FY2030- Reduce GHG emission intensity of JAPEX operations by 40% in FY2030 compared to FY2019
3) Fund allocation- Out of a total of ¥500 billion in cash inflows, allocate ¥450 billion in growth investments and ¥50 billion in shareholder
returns4) Profit targets and priority items of each business field(a) E&P field
Contribute to early expansion of profit scale and respond to low-carbonization- Business profit target: ¥27 billion as of FY2030 (Interim target: ¥23 billion as of FY2026)- Priority items
Domestic: Conduct stable production of oil and natural gas in existing oil and gas fields, pursue additional
development at existing oil and gas fields and their surrounding areas, and reduce GHG emissions at
oil and gas production locations
Overseas: Steadily promote existing projects and acquire new interests(b) Infrastructure/Utility field
Transform business structure to withstand market changes such as oil price volatility- Business profit target: ¥27 billion as of FY2030 (Interim target: ¥12 billion as of FY2026)- Priority items
Domestic: Maintain and expand gas supply volumes, continue stable operations of FGP power plant, make steadyprogress in on-going development projects of renewable energy, and participate in additional projects
Overseas: Participate in an LNG supply infrastructure development project and consider possible participation in
renewable energy projects
Note: FGP: Abbreviation of Fukushima Gas Power Co., Ltd. managing Fukushima Natural Gas Power Plant (ourinvestment ratio of 33%)(c) Carbon Neutral field
Contribute to smooth transition for a carbon-neural society in 2050
- Business profit target: ¥2 billion as of FY2030 (Interim target: ¥1 billion as of FY2026)- Priority items
Domestic: Launch CCS/CCUS hub and cluster model business utilizing existing oil and gas fields and others
Overseas: Participate in CCS projects in systematically advanced areas and participate in feasibility studies on
CCS/CCUS in emerging countries5) Return to shareholders
Our basic shareholder return policy is to pay dividends in line with our financial results each fiscal year, with a target
consolidated dividend payout ratio of 30% starting from interim- and year-end dividends of the fiscal year ending March
31, 2023. At the same time, we will do our utmost to maintain an annual dividend of ¥50 per share, even if we suffer from a
temporary setback in our business performance due to changes in the business environment and other factors. (However,for a fiscal year in which a drastic change in profit attributable to owners of parent is recorded due to extraordinary income
or losses and other special factors, the amount of dividends will be determined in consideration of such impact.)
We will strive to improve profitability and build medium- to long-term business foundation through the above-mentioned
approaches, contributing to realization of a carbon-neutral society in 2050.

- 14 -

2. Business and Other Risks
The following risk information includes major items that may have an impact on the JAPEX Group’s operating results and financial
position. Recognizing the possibility of the occurrence of these risks, we strive to avoid their occurrence and to take appropriate
measures in the event of their occurrence.
JAPEX manages risks through the Management Risk Committee and other various internal committees. For further information,please refer to “Item 4. Information about Reporting Company, 4. Corporate Governance, (1) Overview of corporate governance, 3)
Other matters regarding corporate governance (Status of development of risk management system).”
The following risks are determined by JAPEX as major risks after discussions at the Management Risk Committee and the Board of
Directors meetings. The operating results and financial position of the JAPEX Group may be affected by risks that are not listed
below. This section contains forward-looking statements based on the judgment of the Company’s management as of the filing date.
(1) Risks related to commodity prices and exchange rates
1) Fluctuation risks in crude oil and natural gas prices
The JAPEX Group is engaged in the E&P Business in Japan and overseas and the Infrastructure/Utility Business in Japan.
The net sales and operating profit of these businesses are significantly affected by fluctuations in crude oil and natural gas
prices.
For example, our operating profit for the fiscal year ending March 31, 2023 is estimated to increase or decrease by ¥240
million when the oil price increases or decreases by US$1 per barrel. This increase or decrease includes the impact of changes
in the procurement cost of LNG, which is linked to the price of crude oil, and resulting changes in sales prices of domestic
natural gas and electricity. However, actual operating profit will be affected by a variety of factors other than those mentioned
above.
If the carrying amount of business assets at that point in time is not expected to be recovered from future profits due to a
reduction in the estimated medium- to long-term sales prices of crude oil, natural gas, etc., an impairment loss will berecorded for the assets, which may have a negative impact on the financial position and operating results of the JAPEXGroup.
2) Exchange rate fluctuation risks
Fluctuations in the exchange rate between the US dollar and Japanese yen have an impact on net sales and operating profit,
etc., because the JAPEX Group sells crude oil and natural gas produced in Japan in yen-denominated terms that refer to thecustoms clearance price (CIF price) of crude oil and LNG. Such fluctuations will also affect the domestic sales prices ofnatural gas made from imported LNG and electricity fueled by imported LNG and will affect the purchase prices as well.
Our operating profit for the fiscal year ending March 31, 2023 is estimated to increase or decrease by ¥410 million when theexchange rate increases or decreases by ¥1/US dollar.
(2) Risks related to business[E&P Business]
1) Risks related to E&P business investment (exploration and development investment)
The general characteristics of our E&P businesses include the following investment-related risks.
(a) Risks related to exploration investment
In exploration activities, we first identify the geological structure of the target area by analyzing the geological conditions,strata, and geophysical exploration. If the area is evaluated as positive, we conduct exploratory drilling to confirm the extent
of the oil and gas reservoirs and the amount of resources. However, geological uncertainty cannot be eliminated even with therecent development of exploration technology. It is not always possible to discover crude oil and natural gas on the expectedscale. Therefore, due to the failure of exploration activities, we may not be able to recover the expenditures previously
invested, and we may incur investment losses.
(b) Risks related to development investment
When moving onto the development of oil and gas fields, we strive to make rational final investment decisions based on avariety of information and assumptions obtained at that time, such as the estimated amount of resources obtained throughexploration activities, the construction and operating costs of wells, production and transportation facilities, and the estimatedsales prices of products. However, we may not be able to make a final investment decision due to a variety of factors,
including changes in equipment specifications as a result of subsequent detailed technical studies, price hikes in materials and- 15 -

services required for development, delays in government approval procedures and drilling work, new geological problems in
the production stage, and declines in crude oil and natural gas prices. In addition, due to the same factors above, theprofitability of the business may become lower than expected at the time of the final investment decision. As a result,investment losses may be incurred due to the inability to recover expenditures previously invested.
(c) Risks related to future well abandonment
The JAPEX Group’s current production wells and fields need to be abandoned after the end of production. The Group records
the present value of the costs in relation to abandonments of wells and fields based on current estimates as asset retirement
obligations. In the future, if the estimated amount is expected to be insufficient due to changes in the abandonment plan,tightening of regulations, or soaring prices of materials and equipment, it may be necessary to increase the amount of asset
retirement obligations, which may have an adverse impact on the financial position and operating results of the JAPEXGroup. For details of asset retirement obligations, please refer to “Item 5. Financial Information, 1 Consolidated Financial
Statements, etc., (1) Consolidated financial statements, Notes to consolidated financial statements (Asset retirement
obligations).”(d) Risks due to long investment payback period
The E&P businesses require a long period of time and substantial investment in exploration phase, from the initial basic
survey to the discovery of resources through drilling, and in the development phase, which involves drilling of development
wells and construction of production and transportation facilities after the discovery of resources. Therefore, it usually takes along lead time from the start of a business to the recovery of investment and the contribution to profits. During this period,changes in the business environment may result in an increase in investment (including those resulting from delays indevelopment schedules), a decrease in demand, a decline in sales prices, an increase in operating costs, and fluctuations inforeign exchange rates, which may lower the profitability of the business. Such changes also may prevent the recovery of
expenditures previously incurred and result in investment losses.
(e) Risks related to reserves and production volume
In order to maintain and develop the E&P businesses, it is necessary to compensate for and expand reserves and production,
which will decrease in line with production activities, in the medium- to long- term through continuous acquisition of mineralrights, exploration and development efforts. However, due to the existence of the risks listed in “(a) Risks related to
exploration investment” through “(d) Risks due to long investment payback period” above, as well as the risks related tooverseas E&P businesses and risks related to climate change as described below, if such operations are not successful, theamount of reserves and production may decrease in the future, which may adversely affect the JAPEX Group’s operating
results.
Reserves are evaluated based on the quantity of oil and gas in surface form that is estimated to be economically andoperationally extractable from known oil and gas reservoirs at the time of evaluation based on geological and engineering
data. The quantity may be revised upward or downward according to review based on new data to be obtained in the future,changes in economic conditions, and changes in internationally recognized reserve definitions. For details, please refer to “3.
Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows, (1) Overview of operating
results, (d) Reserves of the JAPEX Group.”2) Risks specific to overseas E&P business investment
In addition to the “1) Risks related to E&P business investment (exploration and development investment)” above, theoverseas E&P businesses have the following risks as a general trend.
(a) Country risk
Some of our overseas E&P businesses are conducted in regions with relatively high country risk. Political, economic, andsocial turmoil (including significant deterioration in public safety), changes in legislation, taxation systems, or policies inthese countries may adversely affect the smooth execution of the Group's overseas business.
(b) Market risk
Crude oil and natural gas produced in overseas E&P businesses are sold in the most advantageous market that has been
selected for each project after comprehensive consideration about transportation capacity by pipeline, etc., and production andsales costs for maximizing business profits. However, due to factors such as the nature of the products and the supply anddemand environment, we may be forced to sell our products at a significant discount to typical crude oil and natural gas priceindices (WTI, Henry Hub, etc.), which may worsen the profitability of our business.

- 16 -

(c) Partner risk
When a large amount of investment is required to carry out the business, or when there are high risks in terms of technology,
etc., we engage in joint business with other companies as partners, rather than with ourselves, in order to diversify funds andrisks.
In making decisions regarding joint ventures, each partner is generally granted voting rights according to the amount ofinterests held, and we have no controlling authority in joint ventures in which we hold only a minor share. As a result, ourintentions are not necessarily reflected in decisions on exploration and development plans, etc., and if such decisions are
made in a manner that is not in line with our interests, we may not be able to obtain expected profits.
The major overseas E&P businesses in production that require a considerable amount of funds are as described in “3) Risks
related to major individual projects in overseas E&P businesses” below.
3) Risks related to major individual projects in overseas E&P businessesa) Iraq Garraf oil field development project
JAPEX has been participating in the development and production project in Garraf oil field located in the southern part of the
Republic of Iraq through its investment in a consolidated subsidiary Japex Garraf Ltd. (investment ratio at the end of the
fiscal year ended March 2022: 55.00%), which holds 30% working interest in the project and provides 40% of funding.
JAPEX has been promoting development businesses jointly with the operator, PETRONAS Carigali Iraq Holding B.V. (thesubsidiary of PETRONAS).
The production started in August 2013, and the project is currently conducting additional development work under the final
development plan to increase crude oil production, while allocating the proceeds from the sale of collected crude oil to capital
investment.
The production volume, sales volume, and net sales and operating profit of the project may decrease due to the deteriorationof the political, social, and security situation in the country and the agreement of the OPEC to reduce production. In addition,in the event of an increase in costs, delays in development schedules, or a decrease in production, there may be a shortage ofcrude oil sales revenue to fund capital expenditures, resulting in an increase in the Company’s financial burden.
(b) Russia Sakhalin-1 Project
JAPEX has been participating in the development of crude oil and natural gas off the coast of Sakhalin Island, Russia (Russia
Sakhalin-1 Project) through its investment in Sakhalin Oil and Gas Development Co., Ltd. (investment ratio at the end of the
fiscal year ended March 2022: 15.29%).
As for the production and sales of crude oil and gas in the Russia Sakhalin-1 Project, its operating profit is significantly
affected by fluctuations in crude oil and natural gas prices, as described in “(1) Risks related to commodity prices andexchange rates, 1) Fluctuation risks in crude oil and natural gas prices” above. Sakhalin Oil and Gas Development Co., Ltd. is
an important associate of JAPEX. If the operating profit of Sakhalin Oil and Gas Development Co., Ltd. significantly
decreases due to such factors, the JAPEX Group’s operating results may be adversely affected. Due to the strained situation in
Ukraine, on March 1, 2022, US-based ExxonMobil, the operator of the project, announced its withdrawal from the project.
The operating results of the JAPEX Group may be adversely affected if our business activities will be restrained for a long
period due to the impact of the economic sanction against Russia.
[Infrastructure/Utility Business]
1) Risks related to natural gas sales
From the perspective of mitigating the impact of various risks in our E&P businesses, JAPEX is working to expand the volumeof natural gas we handle as part of our Infrastructure/Utility Business. We are actively engaged in the development of demandby utilizing existing natural gas pipelines and supplying LNG by the LNG satellite system using tank trucks and other means
beyond the reach of our pipelines. However, the Group’s operating results may be adversely affected by factors such as a decline
in the current handling volume of natural gas (including the volume of transportation service for third parties), a failure todevelop new demand, or a decline in unit sales prices. Those factors are due to the decreasing population arising from thedecreasing birthrate and aging population, the lower utilization ratio of users’ capacity and more intensified competition among
companies in the same industry.
We are striving to procure LNG that will be required based on future sales volume projections by combining long-term
contracts with spot contracts to ensure both stability in procurement and flexibility in response to demand fluctuations.
However, in the event of an unexpected decrease in demand, we may not be able to cope with the situation by simply- 17 -

adjusting the amount of LNG procured through spot contracts, and may incur a payment under the take or pay clause in along-term contract for untaken LNG volumes or resell the LNG at a lower price.
Although we have taken measures such as appropriately transferring fluctuations in LNG procurement prices to sales prices,
we may not be able to transfer such fluctuations to sales prices sufficiently if the LNG procurement prices rise in a shortperiod of time. In such a case, there is a possibility that the JAPEX Group’s financial position and operating results may be
adversely affected.
2) Risks related to natural gas thermal power generation business
JAPEX has invested in Fukushima Gas Power Co., Ltd., the main promoter of the natural gas-fired power generation
business at Soma Port in Fukushima (investment ratio at the end of the fiscal year ended March 31, 2022: 33.30%), where weare engaged in the power generation business using the power generation capacity equivalent to the investment ratio.
We have concluded long-term sales contracts with several customers, mainly retailers, for a significant portion of theelectricity we take. However, the JAPEX Group’s operating results may be adversely affected in the event that a decrease inelectricity sales volume or sales unit price occurs in the future due to procurement of alternative power sources required for
dealing with power plant equipment trouble or intensified completion among power sources.
[Overall business]
1) Risks related to accidents and disasters
The JAPEX Group strives to maintain the integrity of its facilities (such as natural gas pipelines) and develop emergency
response measures including security systems and Business Continuity Plans (BCPs) for operations such as well drilling,
production and transportation of crude oil and natural gas, and storage, regasification, and transportation of LNG. However,
we cannot completely prevent the risk of human and property damage or the inability to operate oil and gas fields due tooperational accidents and disasters (including abnormal weather, earthquakes, and other natural disasters), the spread of
epidemics (pandemics), crime and terrorism (including cybersecurity-related ones). In such an event, not all of the damage iscovered by insurance. In addition to direct damage, it could result in secondary damage such as loss of income due tointerruption of sales, compensation for damage to customers to whom we are obligated to supply, compensation for damage
due to environmental pollution such as soil, air, water, and ocean, administrative punishment, and loss of public trust.
2) Risks related to COVID-19
While the timing of when the COVID-19 pandemic will end remains uncertain, the spread of COVID-19 and the measurestaken in various countries, such as urban blockades, declaration of a state of emergency, and priority measures to prevent the
spread of COVID-19, may reduce demand for oil, natural gas, and electricity and, furthermore, may cause a decline in theprices of crude oil, natural gas, and electricity. In addition, the JAPEX business activities may be stagnant or delayed due toinfection of JAPEX employees or restrictions on the movement of materials and equipment necessary for JAPEX employees
or business activities.
We have continued to take measures to prevent infection and spread of COVID-19. As part of such measures, we haveestablished an emergency task force to deal with measures against COVID-19 within the Company. We have also
implemented measures such as expanding the flextime system, telecommuting, restricting non-urgent business trips in Japanand to overseas, and workplace vaccination, as well as restricting access to the central monitoring and control room atdomestic operation sites.
3) Risks related to climate change
Following the adoption of the Paris Agreement, efforts have been made worldwide to reduce greenhouse gases, which areconsidered to be the cause of climate change and global warming, and the movement toward the realization of a low-carbon
society is accelerating.
Recognizing the importance of responding to climate change, JAPEX has been implementing necessary measures in suchareas as governance, business strategies, risk management, and emissions management based on the TCFD recommendations.
Of the risks related to climate change, risks associated with the transition to a low-carbon or decarbonized society (policy andregulatory risks, technology risks, market risks, etc.) and physical risks due to natural disasters (acute risks caused by sudden
meteorological events including typhoons and chronic risks associated with long-term climate change including sea level rise)
may become apparent in the medium- to long- term. As a result, if climate change policies are strengthened in various
countries and environmental laws and regulations, including carbon taxes, are revised or newly introduced, there is a

- 18 -

possibility ’hat the JAPEX's business value may be damaged due to a decrease in domestic and overseas demand for oil andnatural gas, a prolonged slump in sales prices, and additional costs.
4) Risks related to acquisition of new projects and establishment of new businesses
As described in “Item 2. Overview of Business, 1. Management Policy, Business Environment, and Issues to be Addressed,”in May 2021, JAPEX announced the “JAPEX2050.” It outlines our responsibilities and issues to be addressed to realize acarbon-neutral society, as well as our future actions and direction for our business development. Also, in March 2022, JAPEX
announced the “JAPEX Management Plan 2022–2030” as the medium- to long- term management plan with the aim oftransforming into the business structure set forth in “JAPEX2050.” The “JAPEX2050” and “JAPEX Management Plan 2022–
2030” state that we will work on the E&P field; Infrastructure/Utility field with a focus on the supply of renewable energy;
and other areas related to CCS (capture and storage of CO2) and CCUS (capture, utilization, and storage of CO2) as ourbusiness foundation. However, if these efforts do not lead to the acquisition of new projects or the establishment of new
businesses, it may adversely affect the JAPEX Group’s operating results.
3. Specific laws and regulations
1) Laws and regulations related to gas and electric utilities
As part of various deregulation measures aimed at introducing the principle of completion in the Japanese gas industry, therevised Gas Business Act was enacted on April 1, 2017. Under the Gas Business Act, LNG terminals of a certain size or
larger are required to be opened to third parties in addition to natural gas pipelines, for which a third-party consignment
obligation has been imposed. JAPEX believes that such deregulation will stimulate the Japanese gas market as a whole andincrease demand for natural gas. This will increase the marketing flexibility of the JAPEX Group, leading to the expansion ofbusiness domains and customer bases. On the other hand, the progress of such structural reforms may lead to severe pricecompetition, which may have a negative impact on the JAPEX Group’s natural gas sales.
In the electric power business, the government is promoting electric power system reforms to ensure a stable supply ofelectricity, minimize electricity charges, make choices for households and other users, and expand business opportunities forcompanies. These reforms may have a negative impact on the Company's electricity sales in the future due to a review ofpolicies related to the electric power business and changes in market conditions associated with such policies.
2) Other laws and regulations specific to the JAPEX Group’s business
Due to the nature of the Group's business, the Group's operations may impose various environmental burdens. The JAPEXGroup therefore has taken all necessary procedures, including the acquisition of licenses and approvals from regulatory
authorities, submission of notifications, and provision of product information to customers, in accordance with the Mine
Safety Act, High Pressure Gas Safety Act, and other relevant laws and regulations, in a legal and appropriate manner, and noserious problems have occurred to date. However, if the current laws and regulations are strengthened in line with increasing
global environmental awareness, an increase in costs related to additional facilities and operational measures could have anegative impact on the JAPEX Group’s operating results.
4. Risks associated with the variation in INPEX CORPORATION's stock priceAs of the end of the fiscal year ended March 31, 2022, JAPEX held 3.85% of the shares of INPEX CORPORATION. As ofthe end of the fiscal year under review, the balance of investment securities of the JAPEX Group was ¥108,910 million, of
which ¥76,963 million was for the shares of INPEX CORPORATION. If the stock price of the company fluctuates, it may
affect the financial position of the JAPEX Group.
5. The Company’s shares held by the government
In December 2003, JAPEX listed its shares on the First Section of the Tokyo Stock Exchange through a secondary offering ofsome of the shares held by the then Japan National Oil Corporation (JNOC). As a result, the percentage of shares held by the
JNOC declined from 65.74% to 49.94%.
With the abolition of JNOC, the remaining shares of JAPEX held by JNOC were transferred to the government (Minister of
Economy, Trade and Industry) on April 1, 2005. An equivalent of 15.94% of the shares held by JNOC were sold with atransfer date of June 15, 2007. As a result, the percentage of shares held by the Minister (after deducting treasury shares) was
reduced to 34.88% as of March 31, 2022. The remaining shares may continue to be sold, and the timing, method, and quantityof such sale may have an impact on the JAPEX's stock price.
There is a memorandum of understanding between the government and JAPEX regarding the holding of these shares. It states- 19 -

that JAPEX will consult with the government regarding “amendments to the articles of incorporation,” “changes in capital orissuance of corporate bonds,” “settlement of accounts and appropriation of retained earnings,” “transfer or acquisition of partor all of the operation,” “determination of candidates for directors,” and “matters that have a significant impact on assets orbusiness management.” This memorandum is managed in a manner that respects the independence of JAPEX’s management,
and the existence of the memorandum has never hindered JAPEX’s business or restricted the contents of its business.
6. Compliance
The JAPEX Group must fulfill the following social responsibilities in conducting business in Japan and overseas.
(a) Compliance with laws and regulations
Comply with laws and regulations including the Companies Act, the Tax Act, the Financial Instruments and Exchange Act,
the Anti-Monopoly Act, the Labor Standards Act, environment-related laws, information security-related laws, anti-bribery
laws, the Mining Act, the Gas Business Act, and other business laws.
(b) Implementation of information security measures
Appropriately manage confidential information, including collected personal information, so as not to be leaked or used forother purposes in the course of business.
(c) Blocking unfair trade
Do not engage in unfair transactions such as bribery or giving benefits to anti-social forces.
(d) Respect for human rights
Do not engage in or participate in human rights violations throughout the supply chain, including discrimination, harassment,
forced or child labor, and unfair interference with the rights of indigenous peoples.
In order to fulfill these social responsibilities, the JAPEX Group strives to raise awareness of compliance and human rights
among its officers and employees through in-house training and other means. In addition to establishing internal rules andcommittees (please refer to “Item 4. Information about Reporting Company, 4. Corporate Governance, (1) Overview ofcorporate governance” below), we have established internal control systems for internal audits and financial reporting.
However, if JAPEX’s officers and employees conduct any illegal or improper activities, it may cause tangible damage, suchas the suspension of oil and gas production operations and the incurrence of legal expenses, as well as intangible damage,such as loss of public trust, which may have a negative impact on the JAPEX Group’s operating results.

- 20 -

3. Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows(1) Overview of operating results
The overviews of the financial position, operating results and cash flows (hereinafter referred to as “operating results”) of
JAPEX Group (JAPEX, consolidates subsidiaries and equity-method associates of the Company) for the fiscal year ended
March 31, 2022 are as follows.
(a) Overviews of financial position and operating results
In the fiscal year ended March 31, 2022, the Japanese economy remained under difficult circumstances due to the impact of the
new coronavirus infection (COVID-19), and although temporarily there were signs of a recovery in consumer spending andindustrial production, the recovery trend was weak and uncertain.
The Japan Crude Cocktail (JCC) price was in an upward trend from the upper $60s per barrel at the beginning of the fiscal year
against the backdrop of accelerated normalization of economic activities. Since February, the price has been soaring due toconcerns over crude oil and natural gas supply from Russia as the situation in Ukraine became more strained, and it was in thelower $90s per barrel by the end of the fiscal year.
In the currency exchange market, the yen was in the upper ¥100/US$ level at the beginning of the fiscal year, but the yen
depreciation trend strengthened going into the second half of the fiscal year, and was around the mid ¥110 level at the end of
the fiscal year. As a result, the JAPEX Group’s average oil sales price for the fiscal year rose compared to the previous fiscalyear.
On the other hand, the JAPEX Group continued to face a severe domestic market environment with respect to natural gas sales.
In addition to competition with prices of other oil products, that was due to continuing competition in the entire energy industry
driven by the full retail liberalization of electricity and gas.
Under such circumstances, although the JAPEX Group has been promoting business based on “Long-Term Vision 2030 and
Mid-Term Business Plan 2018-2022” announced in May 2018, the business environment surrounding the JAPEX Group has
been undergoing significant changes, such as the further acceleration of global decarbonization among others, and it has
become necessary to respond to these changes quickly and flexibly. For this reason, during the fiscal year ended March 31,
2022, in May 2021, we formulated and announced “JAPEX2050,” which outlines the responsibilities and challenges we musttake in order to achieve global net-zero CO2 emissions by 2050, and the direction for JAPEX’s future actions and businessdevelopment, and then in March 2022, we formulated and announced the “JAPEX Management Plan 2022-2030,” which isbased on the basic policy of improving profitability and building a business foundation for 2030 and beyond. Based on theseplans, we will continue to promote our business diligently.
During the fiscal year, net sales was ¥249,140 million, an increase of ¥9,062 million (+3.8%) year on year. Gross profit was¥49,903 million, an increase of ¥13,368 million (+36.6%) year on year. Main factors behind the year-on-year increase for net
sales and increase for gross profit were improvements in sales of crude oil in Japan and diluted bitumen due to a rise in crude
oil prices, despite a decrease in revenue due to the net presentation of most of the crude oil purchase and sales following theapplication of the Accounting Standard for Revenue Recognition.
Exploration expenses was ¥359 million, a decrease of ¥629 million (-63.6%) year on year. Selling, general and administrative
expenses was ¥29,734 million, a decrease of ¥1,618 million (-5.2%) year on year. As a result, operating profit was ¥19,809
million, an increase of ¥15,616 million (+372.5%) year on year.
Ordinary profit was ¥43,674 million, an increase of ¥33,672 million (+336.7%) year on year, due mainly to the turnaroundfrom foreign exchange losses to foreign exchange gains and an increase in share of profit of entities accounted for using equity
method.
Loss before income taxes deteriorated by ¥11,178 million to ¥18,501 million year on year, mainly due to the recording of loss
on sale of shares of subsidiaries resulting from the transfer of all the shares in Japan Canada Oil Sands Limited (JACOS), a
consolidated subsidiary that promotes the oil sands project in Canada, and loss on transfer of interests resulting from the transfer
of JAPEX Montney Ltd. (JML)’s interest in the shale gas project of North Montney Area in British Columbia, Canada, despite
the recording of gain on sale of investment securities due to the sale of a portion of strategic shareholdings. Loss attributable toowners of parent deteriorated by ¥28,262 million to ¥30,988 million year on year.
Below is a breakdown of net sales.
(i) E&P BusinessNet sales from the E&P Business came to ¥73,422 million, a decrease of ¥24,059 million (-24.7%) year on year, mainly
due to a decrease in most of the crude oil purchase and sales due to the impact of the net presentation, despite higher- 21 -

sales prices of crude oil and diluted bitumen.
(ii) Infrastructure/Utility BusinessNet sales from the Infrastructure/Utility Business came to ¥119,845 million, an increase of ¥18,543 million (+18.3%)
year on year. This was mainly the result of higher sales prices of natural gas (Japan), liquefied natural gas (LNG), andelectricity, despite reduced sales volume for natural gas (Japan).
(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 other subcontracted tasks, came to ¥55,872
million, an increase of ¥14,578 million (+35.3%) year on year.
Below is a summary of performance by segment (before elimination of intersegment transactions).
Japan
Net sales in the Japan segment are mainly composed of crude oil and natural gas (including LNG), electricity, contract
services,
oil products and the like. During the fiscal year under review, net sales came to ¥192,669 million, a decrease of ¥20,649
million (-9.7%) year on year, due to a change of presentation from a gross basis to a net basis for transactions in which ourrole was agent,following the application of the Accounting Standard for Revenue Recognition, despite higher sales prices of crude oil,natural gas, electric power, etc. Segment profit increased by ¥2,751 million (+12.5%) year on year to ¥24,739 million, due toimprovements in sales of crude oil and natural gas.
North America
Net sales in the North America segment are mainly composed of crude oil and natural gas (including diluted bitumen). In thefiscal year under review,
net sales came to ¥33,814 million, an increase of ¥7,748 million (+29.7%) year on year due mainly to an improvementin sales prices of diluted bitumen in JACOS Hangingstone leases. Segment profit increased ¥11,163 million year on year to¥1,789 million (compared with a segment loss of ¥9,374 million in the previous fiscal year).
EuropeIn the Europe segment, exploration activities have been conducted in the UK North Sea block located offshore Aberdeen. In
the fiscal year under review, there was segment loss of ¥151 million (compared to segment loss of ¥132 million in theprevious fiscal year).
Middle East
Net sales from the Middle East segment are composed of crude oil. In the fiscal year under review, net sales came to¥22,657 million, an increase of ¥5,907 million (+35.3%) year on year, due mainly to a higher sales price. Segment profit
came to ¥2,644 million, an increase of ¥2,479 million year on year.
Total assets at the end of this fiscal year decreased by ¥152,845 million from the previous fiscal year-end to ¥471,941 million.
Current assets increased by ¥5,885 million from the previous fiscal year-end. This was mainly due to increases in notes andaccounts receivable - trade and income taxes refund receivable included in other, despite a decrease in cash and deposits. Noncurrent assets decreased by ¥158,730 million from the previous fiscal year-end. This was mainly due to a reversal of deferred
tax assets and a decrease in property, plant and equipment resulting from excluding JACOS from consolidation by the sale of
all the shares of JACOS, despite an increase in recovery accounts included in other under investments and other assets.
Liabilities decreased by ¥121,123 million from the previous fiscal year-end to ¥69,171 million.
Current liabilities decreased by ¥78,534 million from the previous fiscal year-end. This was due mainly to the decrease incurrent portion of long-term borrowings because of fulfilling its guarantee obligation for consolidated subsidiary JML’s
borrowings. Non-current liabilities decreased by ¥42,588 million from the previous fiscal year-end. This was mainly due to thedecrease in long-term borrowings by fulfilling guarantee obligation of JACOS’s borrowings.
Net assets decreased by ¥31,721 million from the previous fiscal year-end to ¥402,770 million.
The main factor was a decrease in retained earnings.

- 22 -

(b) Overview of cash flows for the fiscal year under review
As of March 31, 2022, cash and cash equivalents (hereinafter “net cash”) decreased by ¥13,449 million compared to the end of
the previous fiscal year to ¥144,513 million. Below is a summary of cash flows for each activity.
(Cash flows from operating activities)
Net cash used in operating activities amounted to ¥1,052 million. This was mainly due to loss before income taxes of ¥18,501
million, loss on sale of short-term and long-term investment securities of ¥53,579 million, and gain on forgiveness of debt of¥42,462 million.
(Cash flows from investing activities)
Net cash provided by investing activities amounted to ¥52,067 million. Net cash was mainly used in payments of recoverable
accounts of ¥23,244 million, while net cash was mainly provided by proceeds from sale and redemption of investment
securities of ¥53,062 million and of proceeds from sale of shares of subsidiaries resulting in change in scope of consolidationof ¥29,382 million.
(Cash flows from financing activities)
Net cash used in financing activities was ¥70,939 million. Net cash was mainly used in repayments of long-term borrowings of¥59,703 million.

- 23 -

(c) Status of production, orders received and sales(i) Status of production
Below is a status of production performance by segment for the fiscal year under review.
- JapanFiscal year ended
March 31, 2022
(April 1, 2021–
March 31, 2022)

E&P Business

Crude oil (kl)

280,997(8.8)

Natural gas (thousand m3)

542,563

(2.9)

–

–

2,136

(36.1)

2,655,529

4.4

Bitumen (kl)Infrastructure/Utility
Business

YoY (%)

LNG (t)Electricity (thousand kWh)

- North America
Fiscal year ended
March 31, 2022
(April 1, 2021–
March 31, 2022)

E&P Business

Infrastructure/Utility
Business

YoY (%)

Crude oil (kl)

37,000(48.6)Natural gas (thousand m3)

132,025(72.1)

Bitumen (kl)

656,377(26.2)

LNG (t)––Electricity (thousand kWh)––

- Middle East
Fiscal year ended
March 31, 2022
(April 1, 2021 –March 31, 2022)
Crude oil (kl)E&P Business

Infrastructure/Utility
Business

YoY (%)

488,391

3.9

Natural gas (thousand m3)––

Bitumen (kl)––

LNG (t)––Electricity (thousand kWh)––

Notes: 1. Part of the natural gas production volume is used as a feedstock for LNG.
2. Bitumen is a type of extra-heavy oil extracted from oil sands.
(ii) Status of orders received
The Company and its consolidated subsidiaries do not conduct production by order.

- 24 -

(iii) Status of sales
Below is a status of sales performance by segment for the fiscal year under review.
- JapanFiscal year ended
March 31, 2022
(April 1, 2021 –March 31, 2022)
Sales volume

Amount(Millions of yen)

Sales volume

312,181

16,951(86.1)(76.0)

Diluted bitumen (kl)

–

–

–

–

Natural gas (overseas)(thousand m3)

–

–

–

–

Crude oil (kl)E&P Business

Subtotal
Natural gas (domestic)(thousand m3)
Infrastructure/Utility
Business

LNG (t)Electricity (thousand kWh)Amount16,951(76.0)

1,061,244

58,024(10.3)

13.1

295,536

22,5964.0

44.9

3,023,294

34,3200.2

14.1

OthersOther businesses

YoY (%)

4,903

13.2

Subtotal

119,845

18.3

Contract services

6,395(16.2)

Oil products/merchandise

47,354

48.3

Others

2,122

22.7

Subtotal

55,872

35.3

Total

192,669(9.7)- 25 -

- North America
Fiscal year ended
March 31, 2022
(April 1, 2021 –March 31, 2022)

E&P Business

Sales volume

Amount(Millions of yen)

Sales volume

Crude oil (kl)

39,112

1,448(46.5)(3.5)

Diluted bitumen (kl)959,777

31,121(27.3)

43.5

Natural gas (overseas)(thousand m3)

130,2141,244(72.3)(56.7)

Subtotal

Infrastructure/Utility
BusinessAmount33,814

29.7

Natural gas (domestic)(thousand m3)

–

–

–

–

LNG (t)

–

–

–

–

Electricity (thousand kWh)

–

–

–

–

OthersOther businesses

YoY (%)––

Subtotal––

Contract services––

Oil products/merchandise––

Others––Subtotal

–

–

Total

33,81429.7- 26 -

- Middle East
Fiscal year ended
March 31, 2022
(April 1, 2021 –March 31, 2022)
Sales volume

Amount(Millions of yen)

318,632

22,657––

Diluted bitumen (kl)

–

–

–

–

Natural gas (overseas)(thousand m3)

–

–

–

–

Crude oil (kl)E&P Business

Subtotal

Infrastructure/Utility
Business

Sales volume

Amount–22,657Natural gas (domestic)(thousand m3)

–

–

–

–

LNG (t)

–

–

–

–

Electricity (thousand kWh)

–

–

–

–

OthersOther businesses

YoY (%)––

Subtotal––

Contract services––

Oil products/merchandise––

Others––Subtotal

–

–

Total

22,657–

Notes: 1. Intersegment transactions are offset and eliminated.
2. “Crude oil” includes crude oil that the JAPEX Group extracted from mines and crude oil purchased from othercompanies.
3. Diluted bitumen is bitumen diluted by ultra-light crude oil for pipeline transportation.
4. “Natural gas (domestic)” of the Infrastructure/Utility Business refers to gas supplied in Japan via pipeline and comprises
the total of natural gas produced in Japan and regasified LNG. Natural gas (domestic) is classified under the
Infrastructure/Utility Business, since both natural gas produced in Japan and regasified LNG are sold together by theCompany’s supply network, which consists of the natural gas fields in Japan and the LNG terminals that vaporize gas
linked by a pipeline network.
5. “Others” of the Infrastructure/Utility Business includes contracted transportation of natural gas and contracted
regasification of LNG used for power plant fuel, etc.
6. Under the Other businesses, “Oil products/merchandise” includes liquefied petroleum gas (LPG), fuel oil, gas oil andkerosene, and “Others” includes other subcontracted tasks.
7. At the beginning of the fiscal year under review, sales of crude oil in the Japan segment decreased significantly due thenet presentation of most of the crude oil purchase and sales for transactions in which our role was agent, following theapplication of the Accounting Standard for Revenue Recognition. Details are described in “Item 2. Overview of Business,
3. Management’s Discussion and Analysis of Financial Position, Operating Results and Cash Flows, (1) Overview ofoperating results, (a) Overviews of financial position and operating results.”- 27 -

(d) Reserves of the JAPEX GroupThe below table shows proved reserves held by the reporting company and its consolidated subsidiaries as of March 31, 2022
as well as proved reserves held by equity-method associates equivalent to the reporting company’s stake in such associates asof that date.
JAPEX and consolidated subsidiaries
Domestic

Overseas

Equity-method
associates of theCompany

Subtotal

Total

Proved reserves
Crude oil

Gas

Crude oil

Bitumen(Thousand kl) (Million m3) (Thousand kl) (Thousand kl)

As of March 31, 2021
Increase due to expansion
or discovery

Gas

Crude oil(Million m3)

Bitumen

Gas

Crude oil

Gas

Crude oil

BitumenGas(Thousand kl) (Thousand kl) (Million m3) (Thousand kl) (Million m3) (Thousand kl) (Thousand kl) (Million m3)

1,647

6,722

13,484

13,237

10,252

15,131

13,237

16,975

4,254

1,451

19,385

13,237

18,426

66

691

–

–

–

66

–

691

–

–

66

–

691

184

344

(730)

–

(1)

(546)

–

343

53

(50)

(494)

–

294

–

–

(551) (12,610)(9,605)(551) (12,610)(9,605)––(551) (12,610)(9,605)

(281)

(571)

(693)

(627)

(275)

(974)

(627)

(847)

(498)

(407)

(1,472)(627)(1,253)

1,616

7,187

11,510–371

13,127

–

7,557

3,808

995

16,934–

8,552

Change due to revision ofevaluation from theprevious fiscal year
Change due toacquisition and/or
divestiture
Decrease due to
production
As of March 31, 2022

Notes: 1.

Proved reserves held by the following consolidated subsidiaries include reserves attributable to non-controlling interests.
(Figures in parentheses are non-controlling interests’ percentage.)
Domestic: Japex Offshore Ltd. (29.39%)
Overseas: Canada Oil Sands Co., Ltd. (5.42%), JAPEX Montney Ltd. (45.00%), Japex Garraf Ltd. (45.00%)
2. Reserves of consolidated subsidiaries and equity-method associates whose balance sheet dates differ from theconsolidated balance sheet date are accounted for on the basis of the entity’s respective fiscal year-end.
3. We transferred all of the working interest held by JAPEX Montney Ltd. to Petronas Energy Canada Ltd., the operator of
the leases. Also, all of the shares of Japan Canada Oil Sands Co., Ltd. held by Canada Oil Sands Co., Ltd. were transferred
to HE Acquisition Corporation. The former and latter procedures were completed on July 5, 2021 and September 17,
2021, respectively. As a result of these transfers, overseas crude oil and gas under “JAPEX and consolidated subsidiaries”(reserves held by JAPEX Montney Ltd.) decreased by 1,422 thousand kl and 9,749 million m3, respectively, while
overseas bitumen under “JAPEX and consolidated subsidiaries” (reserves held by Canada Oil Sands Co., Ltd.) decreasedby 12,610 thousand kl. Those figures are included in “Change due to acquisition and/or divestiture.”

Proved reserves detailed in the above table represent the quantity of oil and gas in surface form that is estimated to beeconomically and operationally extractable from known oil and gas reservoirs at the time of evaluation based on geological andengineering data. The figures do not include the past production volumes or resource volumes related to undiscovered deposits.
As for the definitions of reserves, the Petroleum Resources Management System (PRMS), which were established in 2007 byfour organizations, namely the Society of Petroleum Engineers (SPE), the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), and the Society of Petroleum Evaluation Engineers (SPEE), have been widely
accepted as an international standard.
The figures presented in the tables above are based on JAPEX’s own evaluations in accordance with the PRMS’ definition of“proved reserves,” which was revised in 2018. The figures do not include reserves corresponding to “probable reserves” or“possible reserves,” i.e., reserves that have higher uncertainty regarding future extractability than proved reserves under the
PRMS. Further, under the same definitions, projects for which commercial development plans have not been finalized (even if
the existence of resource deposits has been confirmed) are separately classified from reserves as “contingent resources.”
Accordingly, the figures presented on this table do not include the JAPEX Group’s contingent resources in areas lacking
finalized development plans.
We acknowledge that the definition of proved reserves used by the U.S. Securities and Exchange Commission (SEC) is also
widely accepted, especially among investors in the United States. The definition of proved reserves by the SEC isfundamentally similar to that under the PRMS.

- 28 -

JAPEX discloses the figures based on its own judgment in accordance with the PRMS’ definition of proved reserves.
Regarding the reserves held by overseas project companies, we disclose the figures based on the economic shares specified in
the contracts among each project company and authorities such as the local government.
In addition, Ryder Scott Company, L.P. has been contracted by JAPEX to conduct a third-party assessment and appraisal of thevalidity of JAPEX’s evaluation and judgement for the quantity equivalent to around 77% of the proved reserves of JAPEX andits consolidated subsidiaries in Japan as of March 31, 2022 (the quantity is hereinafter referred to as “[1]”) as disclosed on theabove table. Regarding the overseas reserves, reserves held by Japex (U.S.) Corp., JAPEX UK E&P Ltd. and Kangean Energy
Indonesia Ltd. are assessed by third parties for the quantity equivalent to around 37% of the total proved reserves as of March
31, 2022 (the quantity is hereinafter referred to as “[2]”) as disclosed on the above table. As the figures of proved reserves
obtained by JAPEX’s own evaluation and the those obtained by the third-party assessments approximate, we believe that theformer figures are appropriate.
Reserves are ultimately a projection of future production capacity shrouded in uncertainty. Nevertheless, JAPEX strives toensure accurate evaluations based on currently available scientific evidence, including geological and engineering data. Despite
these efforts, the quantity may be revised upward or downward according to review based on new data to be obtained in the
future, changes in economic conditions, and changes in the internationally accepted definitions for reserves.
[1] We calculate 1 kiloliter of crude oil or bitumen as 1,033.1 cubic meters of natural gas (1BOE = 5.8Mscf).
[2] Same as [1].

- 29 -

(2) Management’s discussion and analysis of operating results and other relevant items
Views and issues analyzed/discussed with regard to the status of operating results and other relevant items from the
management’s perspective, are as follows.
Please note that any forward-looking statements in the following discussion are based on the judgement of the JAPEX Group’s
management as of the end of the fiscal year under review.
(a) Views and issues analyzed/discussed with regard to the financial position and the status of operating results and otherrelevant items
Loss attributable to owners of parent of the JAPEX Group for the fiscal year under review deteriorated by ¥28.2 billion year on
year to ¥30.9 billion, as shown in the below Chart 1 “Main factors for changes in profit or loss for the fiscal year under review(year on year).” Main factors for changes are analyzed per each line item profit as follows.
Chart 1: Main factors for changes in profit or loss for the fiscal year under review (YoY)(Operating profit: + ¥15.6 billion)
The main components of the increase of ¥15.6 billion in operating profit are as follows: an increase in operating profit
in the overseas E&P Business of ¥13.4 billion, an increase in operating profit in the domestic E&P Business of ¥11.7
billion, and a decrease in operating profit in the Infrastructure/Utility Business of ¥8.7 billion due to the absence of oneoff profit factor incurred in the previous fiscal year.
(i) Overseas E&P Business
The overseas E&P Business mainly covers JACOS and JML projects in the North America segment and Japex Garraf
projects in the Middle East segment.
Operating profit of the overseas E&P Business recorded an increase of ¥13.4 billion mainly due to the improvementin sales profit caused by higher diluted bitumen sales prices at JACOS.
Sales volume was 959 thousand kl, a decrease of 360 thousand kl (-27.3%) year on year due to the transfer of all theshares of JACOS in September 2021.
The sales price of diluted bitumen increased from US$25.06 per barrel of the previous fiscal year to US$46.90 per
barrel of the fiscal year under review, an increase of US$21.84 per barrel (+87.2%) year on year, as shown in the
below Chart 2 “Results of crude oil price and exchange rate (YoY).”
Japex Garraf Ltd. recorded its operating profit increase of ¥2.4 billion. As factors of this year-on-year increase,influence arising from the temporary suspension of development and production operations due to COIVD-19 wasdiminished in the previous fiscal year. Also, as Japex Garraf Ltd. adopted the method of performing provisional
settlement of accounts on the consolidated balance sheet date effective from the fiscal year under review, thesettlement of accounts for 15 months was applied in the fiscal year under review.

- 30 -

Chart 2: Results of crude oil price and exchange rate (YoY)
Upper: from January 2020 to March 2021
Lower: from January 2021 to March 2022

*1

USD/bbl

WTI

Crude oil CIF (JCC)
Exchange rate*2

*2

USD/bbl
JPY/USD

JACOS
Diluted bitumen*3

USD/bbl

FY3/21 (a)FY3/22 (a)FY3/21 (a)FY3/22 (a)FY3/21 (a)FY3/22 (a)FY3/21 (a)FY3/22 (a)Full year

Jan.-Mar.

Apr.-Jun.

Jul.-Sep.

Oct.-Dec.

Jan.-Mar.

45.10
58.10
-

28.54
66.07
44.41
64.25
108.04108.43

41.02
69.85
33.34
71.31
106.88109.96

42.77
44.51
77.30
105.46111.6949.99
82.70
104.03114.52

40.87
64.06
42.91
73.28
105.86111.20

22.30
40.99

11.29
49.75

29.77
51.26

31.25
-

-

25.06
46.90

*1 FY3/22 is the average WTI for diluted bitumen sales of Japan Canada Oil Sands Co., Ltd. (JACOS),
the former overseas subsidiary of JAPEX (until August 2021).
*2 Domestic sales price of crude oil referring to crude oil (CIF) price and its conversion exchange rate
*3 FY3/22 is the sales price of diluted bitumen (less royalty fee) of JACOS, the former overseas subsidiary of JAPEX(until August 2021).

(ii) Domestic E&P Business
The domestic E&P Business mainly covers production and sales activities for crude oil and natural gas conducted by
JAPEX and its consolidated subsidiary, Japex Offshore Ltd. Such activities are included in the Japan segment. Whilethe classification of crude oil (domestic) represents the sales for customers outside of the Group, natural gas(domestic) represents the deemed sales from transactions with the Infrastructure/Utility Business set for internalmanagement purposes.
The domestic E&P Business recorded an operating profit increase of ¥11.7 billion mainly due to higher crude oil andnatural gas sales prices*. As shown in the above Chart 2 “Results of crude oil price and exchange rate (YoY),” JCC
price rose from US$42.91 per barrel of the previous fiscal year to US$73.28 per barrel of the fiscal year underreview, a year-on-year increase of US$30.37 per barrel (+70.8%), causing an increase in operating profit.
* Sales prices of natural gas (domestic) represents transaction prices of natural gas supplied from the domestic E&P
Business to the Infrastructure/Utility Business set for internal management purposes.
(iii) Infrastructure/Utility Business
The Infrastructure/Utility Business mainly covers the sale of natural gas to customers in regions along JAPEX’s own
gas pipeline network and the sale of LNG via a satellite supply system using tanker trucks and railway tankcontainers to meet demand for natural gas in the areas outside of its pipeline network, as well as the sale ofelectricity.
The Infrastructure/Utility Business recorded a year-on-year operating profit decrease of ¥8.7 billion. This was due
mainly to absence of one-off profits from a surge in Japan Electric Power Exchange (JEPX) transaction prices in theprevious fiscal year and higher cost arising from procurement of alternative sources in a spot market due to
production problems which happened in LNG suppliers.
Ordinary profit for the fiscal year under review was ¥43.6 billion, an increase of ¥33.6 billion (+336.7%) year on year. The
increase of ¥33.6 billion was due mainly to an increase in operating profit mentioned above and an increase in non-operating
income and expenses of ¥18.0 billion, as shown in the above Chart 1 “Main factors for changes in profit or loss for the fiscal
year under review (YoY).”(Non-operating income and expenses:+¥18.0 billion)
A year-on-year increase of ¥10.6 billion in foreign exchange gains of was due mainly to the turnaround from foreignexchange losses to foreign exchange gains regarding a foreign currency deposit of Japex Garraf Ltd. and an increase inforeign exchange gains regarding JAPEX’s foreign currency denominated receivables and foreign currency deposit
caused by the yen depreciation.
A year-on-year increase of ¥8.4 billion in share of profit of entities accounted for using equity method was due mainly
to an increase in net sales from Sakhalin Oil and Gas Development Co., Ltd. caused by higher crude oil prices.

- 31 -

A year-on-year decrease of ¥1.0 billion in other non-operating income and expenses was due to the recording ofdelinquency charges of ¥3.3 billion, which was only partially offset by some positive factors such as an increase of ¥1.2
billion in dividend income and a decrease of ¥1.3 billion in interest expenses.
Loss before income taxes for the fiscal year under review deteriorated by ¥11.1 billion year on year to ¥18.5 billion. As shownin the above Chart 1 “Main factors for changes in profit or loss for the fiscal year under review (YoY),” the ¥11.1 billion
decrease was due to the decrease of ¥44.8 billion in extraordinary items, which more than offset the above-mentioned increasein ordinary profit.
Extraordinary items deteriorated because of negative factors, such as loss on transfer of interests of ¥44.7 billion recorded dueto the transfer of JML’s interest in the shale gas project and loss on sale of shares of subsidiaries of ¥94.3 billion resulting fromthe transfer of all the shares of JACOS, which significantly exceeded gain on sale of investment securities of ¥39.8 billion
recorded due to the sale of a portion of strategic shareholdings.
Loss attributable to owners of parent for the fiscal year under review amounted to ¥30.9 billion, a year-on-year decrease of¥28.2 billion. As shown in the above Chart 1 “Main factors for changes in profit or loss for the fiscal year under review(YoY),” the main factors behind the decrease of ¥28.2 billion were a decrease caused by the above-mentioned increase in loss
before income taxes as well as decreases in total income taxes and profit (loss) attributable to non-controlling interests totaling¥17.0 billion.
The amount of total income taxes, obtained by “income taxes – current” plus “income taxes – deferred,” was ¥9.6 billion, a
year-on-year decrease of ¥11.5 billion. Based on the medium- to long-term crude oil prices and future cash flows estimatedunder our management plan, we carefully considered the recoverability of deferred tax assets in the future. Accordingly, thedecrease in total income taxes was due mainly to an increase in income tax - deferred of ¥13.6 billion recorded by drawing
down deferred tax assets of ¥7.5 billion. The amount of profit (loss) attributable to non-controlling interests was ¥2.8 billion
for the fiscal year under review (a year-on-year decrease of ¥5.5 billion). This was due mainly to an increase in profit of Japex
Garraf Ltd. for the fiscal year under review.
(b) Analysis and discussion of cash flow and capital resources and liquidity of funds(Basic policy)
In line with our financial discipline outlining a “debt-to-EBITDA ratio < 2,” we will secure funds necessary for business
continuity and new investment, keeping our financial soundness. The below Chart 3 “Changes in a debt-to-EBITDA ratio”
shows the change of the ratio from the previous fiscal year to the fiscal year under review.
The balance of long-term borrowings (including current portion) recorded a year-on-year decrease of ¥111.5 billion due tothe transfer of all the shares of JACOS and the transfer of JML’s interest in the shale gas project.
As a result, we have achieved a “debt-to-EBITDA ratio < 2.” We will keep this figure as our financial discipline.
Chart 3: Changes in a debt-to-EBITDA ratio(Billions of yen)

FY3/21

FY3/22

Interest-bearing debt*1

118.7

6.1

EBITDA*2

37.1

57.3

Debt-to-EBITDA ratio

3.2

0.1

Notes: *1 Interest-bearing debt includes lease obligations, retirement benefit liabilities and contingent liabilities.
*2 EBITDA is the total of operating profit, depreciation, interest and dividends received based on investment cash flow statement.

- 32 -

(Funding methodology)
The JAPEX Group efficiently uses internal funds and loans from banks to secure necessary funds to meet the funddemand.
While the Group’s working capital is primarily procured using internal funds, the Group has introduced a CMS (cashmanagement systems) in an effort to improve funding efficiency and secure liquidity of funding.
Foreign currencies for transactions such as purchase of LNG are exposed to foreign currency fluctuation risk. The Group
mitigates such risk by utilizing foreign exchange forward contracts.
We have entered into loan commitment agreements with multiple banks to facilitate efficient procurement of working
capital. The Group can borrow money in yen or US dollar under these agreements.
(Funding use and allocation)(i) Consolidated financial position and funds allocation policy
The JAPEX Group has planned to allocate ¥450.0 billion to growth investments in fields such as E&P,
Infrastructure/Utility, Carbon Neutral fields and ¥50.0 billion to shareholder returns for 9 years from FY2022 to FY2030,
as shown in the below Chart 4 “JAPEX Management Plan 2022-2030, allocation policy.” Also, we have determined toadopt a consolidated dividend payout ratio for the basic policy for shareholder returns and to pay dividends in line withfinancial results with a target payout ratio of 30%.
The Group has planned to raise funds for the above-mentioned funds allocation of ¥500.0 billion through cash flows fromoperating activities of ¥380.0 billion and cash on hand and bank loans of ¥120.0 billion.
Chart 4: JAPEX Management Plan 2022-2030, allocation policy(ii) Approach for funds on hand
While the E&P Business, in particular, requires a large amount of investment funds, it usually takes a long time from thestart of the business to recover the investment. During this time, the business is exposed to the risk of changes in businessenvironment. In light of such business characteristics, we have managed funds properly thorough methods such as
preparing monthly financial plans, in order to secure liquidity on hand necessary for the smooth business operation.
(c) Significant accounting estimates and assumptions
The Group’s consolidated financial statements are prepared based on accounting principles generally accepted in Japan. The
management of the Group prepares these consolidated financial statements based on their estimates, which affect assets andliabilities on the balance sheet date, and the amounts and disclosure of revenues and expenses during the reporting period
within the range of certain accounting principles. Although the appropriateness of these estimates is continuously assessed
based on past results and circumstances and reviewed, when necessary, they may differ from actual results due to uncertainties
inherent to estimates.
The Group’s highly uncertain accounting estimates for the fiscal year under review include that for the recoverability ofdeferred tax assets. The recoverability of deferred tax assets is largely dependent on estimates of future earned revenue andgenerated cash flow from the Group’s main operation activities. Especially this item receives a direct influence from market
conditions such as crude oil prices and foreign exchange, and estimates of reserves.
The above-mentioned significant accounting estimates and assumptions used for the preparation of the consolidated financial
statements, among other matters, are as stated in “Item 5. Financial Information, 1 Consolidated Financial Statements, etc., (1)Consolidated financial statements, Notes to consolidated financial statements, (Significant accounting estimates).”- 33 -

4. Material Contracts(1) E&P BusinessContracting party

Outline of contracts

Japan Petroleum Exploration Co.,
Ltd.

Contract dateFebruary 23, 1983

Contract period

February 9, 1983 to the end of joint development(Reporting company)

Contract details

An agreement on a joint business regarding exploration, development
and production of oil and natural gas in Iwafune-oki area in of Niigata
Prefecture
Ratio of working interests of each company is as follows.
Japan Petroleum Exploration Co., Ltd.
46.667%
Japex Offshore Ltd.
33.333%Japex Garraf Ltd.
(Consolidated subsidiaries)

Contract date

January 18, 2010
As of March 31, 2010, contractual rights and obligations weretransferred from the reporting company.

Iraq Dhi Qar Oil Company
PETRONAS(Malaysia's state-owned oilcompany)
North Oil Company (Iraq)

Contract period

20 years from February 2010

Contract details

Service agreement for development and production in Garraf oil field in
the Republic of Iraq (*)

Japex Offshore Ltd.
(Consolidated subsidiary)
MITSUBISHI GAS CHEMICALCOMPANY, INC.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

20.000%(*) Service agreement for development and production: Under thiscontract format, an oil development company invest required funds
and technology to conduct development. Also, the oil development
company may recover invested funds from a certain ratio of produced
crude oil and natural gas and receive rewards in accordance with theamount of rewards per predetermined production.
Ratio of capital participation of each contractor is as follows.
PETRONAS
45%
Japex Garraf Ltd.
30%
North Oil Company (Iraq)
25%(2) Infrastructure/Utility BusinessContracting party
Japan Petroleum Exploration Co.,Ltd.
(Reporting company)
Malaysia LNG Tiga Sdn Bhd

Outline of contracts
Contract date

April 9, 2002

Contract period

20 years from April 2002

Contract details

A long-term sales and purchase agreement with Malaysia LNG Tiga Sdn
Bhd regarding purchase of LNG from Malaysia LNG Project 3(Sarawak, Malaysia)
Main contract terms are as follows.
(1) Purchase quantity: 480 thousand t/year at maximum
We are obliged to pay the amount equivalent to the prescribeduntaken production volume for each fiscal year (a take-or-pay
clause) and have a right to request the delivery of the untaken
volume at a later fiscal year.
(2) Delivery terms: Ex–Ship
We receive delivery at the Niigata Terminal of Nihonkai LNG Co.,

Ltd. and the Soma LNG Terminal.
Note: The contract period and the reception period of final cargos have been extended to theend of December 2022 at the longest.

- 34 -

5. Research and Development Activities
The JAPEX Group has been considering entry into the fields of next-generation technologies and new businesses. In addition toissues directly linked to businesses, we choose specific themes in technical domains such as exploration (geology), geophysicalexploration and production as well as in environmental business fields where such aforementioned technologies are applicable.
Subsequently we conduct research and development and studies on such themes.
Research tasks and R&D expenses per segment for the fiscal year under review are as follows.
(a) Japan
Research issues

PurposeTo establish the specifically optimized technology foreach research object through fusion between the

Research for selected andfocused exploration method

Researcher(Research system)

R&D expenses(Millions ofyen)

JGI, Inc.

28

JGI, Inc.

19

JGI, Inc.

17

JGI, Inc.

17

existing method and new element technologies
To develop the technology for estimating undergroundstructure and characteristics with integration of

Development of joint
inversion technology

reflection seismic surveys, electrical andelectromagnetic exploration, magnetic exploration andgravity exploration and develop work flows of data
analysis

Establishment of anelectromagnetic exploration
method for deep sea resource
exploration

To develop a package of an electromagnetic ocean
exploration at a reasonable price to understand, withhigh accuracy, underground characteristics of seafloorhydrothermal deposits and hydrocarbon reservoirs
through integrated analysis of the package with thereflection method data

Consideration on applicability

To improve and streamline our seismic surveys fromof new technologies toseismic surveys

economic, efficient and technological perspectives tomeet customers’ various needs

Research on oceanic highresolution exploration method

To develop various high-resolution oceanic exploration
methods, while putting into practice and upgrading
technologies used for such methods

JGI, Inc.

17

Establishment of the
exploration method for the sea
floor S-wave velocity
structure

To develop the exploration method of the S-wave
velocity structure at the sea floor, responding to dataacquisition operation in the ocean civil engineering
survey field

JGI, Inc.

13

Establishment of geologicalmodeling and simulation
technology applicable tohydrogeology analysis

To establish a workflow from geological modeling for
fluid movement analysis to fluid movement simulation
to expand and advance our business scope

JGI, Inc.

10

OthersJapan Petroleum
Exploration Co., Ltd.
JGI, Inc.

–

40

GEOSYS, Inc.
Total

164

(b) North America
Research issues

PurposeResearcher(Research structure)

R&D expenses(Millions of yen)Japan Canada Oil
Technology development foroil sandTo develop the assessment method for oil layers and theimprovement method of production process- 35 -

Sands Co., Limited(jointly conductedwith the Province ofAlberta, Canada,
etc.)

14

Item 3. Information about Facilities
1. Overview of Capital Expenditures
During the fiscal year under review, the Company made capital investment (after elimination of intersegment transactions) of¥13, 886 million, which corresponds to the total amount of property, plant and equipment and intangible assets acquired.
In the Japan segment, capital investment of ¥6,353 million was made mainly for the construction of production facilities.
In the North America segment, capital investment of ¥3,000 million was made, which mainly consists of the development
expenditure for the North Montney leases in Canada and the expansion development expenditure for the Hangingstone leases in
Canada.
In the Europe segment, capital investment of ¥4,532 million was made, which mainly consists of the development expenditure fora block (commonly known as Seagull Block) located offshore in the UK North Sea.
No capital investment was made in the Middle East and Other segments.
The other capital expenditure for the fiscal year under review includes the expenditure of ¥23,244 million for the development
and other projects at the Garraf oil field in Iraq in the Middle East segment, which was recorded as payments of recoverable
accounts.

- 36 -

2. Major Facilities (Facilities by Office)
Major facilities of the JAPEX Group by segment are as follows:(1) Japan(a) Reporting company
Carrying amount (Millions of yen)
Office(Location)

Description offacilities

Hokkaido District Office(Note 1)

Buildings
andstructures

Machinery,equipment
and vehicles

0

0

717

718

25,099

2,806

9,336

17,151

1,077

1

Wells

Other

Number of
employees(Persons)

Total

Production
facilities
Gas supply(Tomakomai City,
Hokkaido)

Land(Area: m2)

0(720,644)

facilities

0

0

0

0

36

1,734

85

1,321

33,013–

1,121

32,404

–

448

2,237

98
[20]

Offices

Akita District Office(Akita City, Akita)

Production
facilities

261(178,458)

Offices74[17]

Production
Nagaoka District Office(Note 2)(Nagaoka City, Niigata)facilities
Gas supply

3,700(626,007)

facilities

203
[51]

Offices
Manufacturing
Soma District Officefacilities(Soma County,

Gas supply

Fukushima)facilities

4,794(306,811)

91[6]

Offices
Research

Head Office(Chiyoda-ku, Tokyo andMihama-ku, Chiba City,
Chiba)

facilities
Welfare709(30,061)

facilities

499
[111]

Other

Notes: 1.

2.

In the fiscal year ended March 31, 2021, impairment losses were recorded on business assets related to the Yufutsu
oil and gas field in operation under the management of Hokkaido District Office. Their carrying amount shown in thetable is that after the write-off of the impairment losses.
The Company is renting a part of the gas pipeline used in the district for which Nagaoka District Office operates, andthis part is not included in the table.

(b) Domestic subsidiaries
Carrying amount (Millions of yen)Company name

Office(Location)

Description offacilities

Buildings
andstructures

Machinery,equipment
and vehicles

Land(Area: m2)

Wells

Other

Total

Number of
employees(Persons)

Head Office
Japex Offshore Ltd.
(Note 1)

Niigata District Office

Production(Chiyoda-ku, Tokyo

facilities

and Kita-ku, Niigata

Offices

0

0

97

2,350

57

154

19

0

98

584

542

0

1

543

–

89

3,054

317
(4,847)

–

112

642

–

–

137

156

–

27

942

(177,329)

37[22]

City, Niigata)
Shirone Gas Co.,Ltd.

Head OfficeGas supply(Tsubame City,

facilities,

Niigata)etc.

Ranzan Research

JGI, Inc.

Center(Ranzanmachi, Hiki
County, Saitama)

Geophysicalexplorationequipment

Head OfficeComputing(Bunkyo-ku, Tokyo)

equipment

516(14,146)

41
[11]

20
[6]
55
[32]

Head office and
JAPEX SKS

branches

Corporation(Minato-ku, Tokyo,(Note 2)

Tomakomai City,
Hokkaido, andProduction
facilities,
etc.

Mitsuke City, Niigata)- 37 -

232(2,499)76[79]

Notes: 1.

2.

In the fiscal year ended March 31, 2021, impairment losses were recorded on business assets related to the Iwafuneoki oil and gas field in operation under the management of Japex Offshore Ltd. Their carrying amount shown in thetable is that after the write-off of the impairment losses.
JAPEX SKS Corporation is leasing LNG supply facilities, which are not included in the table.

(2) North America(a) Overseas subsidiaries
Carrying amount (Millions of yen)
Office(Location)

Company name

Japex (U.S.) Corp.

Description offacilities

Head Office

Production(Houston, Texas,

facilities,

United States)

etc.

Buildings Machinery,andequipment
structures and vehicles
265

Land
(Area: m2)

Wells

–

1,840

–

Other

Number of
employees(Persons)

Total

0

5

2,106

[1]

Note:

Japan Canada Oil Sands Limited (JACOS), which had been a consolidated subsidiary of JAPEX, transferred all theshares of JACOS it held on September 17, 2021. In addition, JAPEX Montney Ltd. (JML), which had been a
consolidated subsidiary of JAPEX, transferred all 10% interest in the shale gas leases and its related asses on July 5,
2021. Accordingly, the facilities owned by JACOS and JML are no longer included in the major facilities of the
JAPEX Group.

Notes: 1.

The above figures represent carrying amounts after deducting the depreciation expenses at the end of the fiscal year
under review.
The figures in the square brackets represent the numbers of temporary employees, which is not included in thenumber above.

2.

3. Planned Addition, Retirement, and Other Changes of Facilities
The following describes the status and plans of addition, expansion, acquisition and renovation of major facilities as of March 31,
2022.
Japan
Estimated amount ofexpenditures
Company name
Office nameLocation

Description of facilities(Millions of yen)

FundingAmountmethodTotalamountNagaoka District
Office, Japan Petroleum
Exploration Co., Ltd.
Nagaoka District
Office, Japan Petroleum
Exploration Co., Ltd.

Notes: 1.

2.

Niigata City,

Heat capacity

Niigata

control facilities

Ojiya City,
Niigata

3,000

already

5,900

about 5,300 m)

commenced
To be completed

Increase in capacity after
completion

paid
2,846

One production well(with total depth ofCommenced/To be

687

Selffinancing
Selffinancing

October 2019
Not yet determined(Note 2)

(Note 1)
June 2022
February 2023–

As of March 31, 2021, these facilities were expected to be completed in March 2022. However, a part of theconstruction has not been completed, and the time of completion is not yet determined as of March 31, 2022. Notethat the majority of these facilities was already received and inspected, and started operations in November 2021.
No capacity increase is expected because these facilities are not intended to increase the gas transportation amount.

- 38 -

Item 4. Information about Reporting Company
1. Company’s Shares, etc.
(1) Total number of shares
1) Total number of shares
Class

Total number of shares authorized to be issued (Shares)

Common stock

120,000,000
Total

120,000,0002) Issued shares

Class

Number of shares issued as ofend of period(Shares)(March 31, 2022)

Number of sharesissued as of filing date
(Shares)(June 28, 2022)

Common stock

57,154,776

57,154,776

Total

57,154,776

57,154,776

Name of financial instruments
exchange on which securities
are listed or authorized
financial instruments businessassociation to which securities
are registered
Tokyo Stock ExchangeFirst section (as of the end of the
fiscal year under review)
Prime Market (as of the filing date)

The number ofshares constituting
one unit is
100 shares－－

Description(2) Share acquisition rights
1) Stock option plans
Not applicable.
2) Shareholder right plans
Not applicable.
3) Share acquisition rights for other uses
Not applicable.
(3) Exercises of moving strike convertible bonds, etc.
Not applicable.
(4) Changes in number of issued shares, share capital and legal capital surplus
Balance ofIncrease
Changes in the
Balance of
total number(decrease) in total
total number ofshare capitalDateof issued
number of issued(Thousands ofissued sharessharesshares(Shares)yen)(Shares)January 1, 2003
(Note)

42,866,082(Thousands of yen)

57,154,776–

Increase(decrease) in legal
capital surplus

Balance oflegal capitalsurplus(Thousands of yen)(Thousands of
yen)

–

–

14,288,694

Note: The increase in number of shares is a result of four-for-one stock split.
(5) Shareholding by shareholder category
As of March 31, 2022
Status of shares (one unit of shares: 100 shares)
Category

National andlocal
governments

Financial
institutions

FinancialserviceprovidersOther
corporations

12

31

28

202,077

99,289

35.36

17.38

Foreign investors, etc.

Individuals andothers

Total

Number ofshares ofless than one
unit(Shares)Nonindividuals

Individuals

167

227

14

8,637

9,116

－

11,841

54,851

159,859

113

43,368571,398

14,976

2.07

9.60

27.98

0.02

7.59

100.00－

Number ofshareholders(Persons)
Share ownership(Units)Percentage ofshareholdings (%)

Note: Of 1,442,982 treasury shares, 14,429 units are included in the “Individuals and others” column while 82 shares are included in
the “Number of shares of less than one unit” column. 760 units of JAPEX shares held by the Custody Bank of Japan, Ltd. (Trust
Account) as trust assets of the Board Benefit Trust are not included in treasury shares, but included in “Financial institutions.”- 39 -

(6) Major shareholders
As of March 31, 2022
Name

Address

Number of shares
held(Shares)

Shareholding ratio(excluding treasury
shares) (%)

Minister of Economy, Trade and Industry

1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo

19,432,724

34.88

The Master Trust Bank of Japan, Ltd.
(Trust account)

2-11-3 Hamamatsucho, Minato-ku, Tokyo

6,548,100

11.75

INPEX CORPORATION

5-3-1, Akasaka, Minato-ku, Tokyo

2,852,212

5.12

CEP LUX - ORBIS SICAV(Standing proxy: N.A. Tokyo Branch,
Citibank)

31 Z. A. BOURMICHT, L-8070
BERTRANGE, LUXEMBOURG(6-27-30, Shinjuku, Shinjuku-ku, Tokyo)

2,269,118

4.07

Custody Bank of Japan, Ltd. (Trust
Account)

1-8-12, Harumi, Chuo-ku, Tokyo

1,410,400

2.53

1,307,830

2.35

924,0121.66

898,020

1.61

ONE LINCOLN STREET, BOSTON MA
USA 02111(3-11-1 Nihonbashi, Chuo-ku, Tokyo)

739,634

1.33

1-5-5 Otemachi, Chiyoda-ku, Tokyo

720,152

1.29

37,102,202

66.60

NORTHERN TRUST CO. (AVFC) SUB
A/C USL NON-TREATY

50 BANK STREET CANARY WHARF(Standing proxy: Custody Service, Tokyo
Branch, the Hongkong and Shanghai
Banking Corporation Limited.)LONDON E14 5NT, UK(3-11-1 Nihonbashi, Chuo-ku, Tokyo)

JFE Engineering Corporation

2-2-3 Uchisaiwaicho, Chiyoda-ku, Tokyo

STATE STREET BANK AND TRUSTCOMPANY 505103

P.O. BOX 351 BOSTONMASSACHUSETTS 02101 U.S.A．

(Standing proxy: Settlement & Clearing
Services Dept., Mizuho Bank, Ltd.)(Shinagawa Intercity Tower A, 2-15-1,
Konan, Minato-ku, Tokyo)

SSBTC CLIENT OMNIBUS ACCOUNT(Standing proxy: Custody Service, Tokyo
Branch, the Hongkong and Shanghai
Banking Corporation Limited.)
Mizuho Bank, Ltd.
Total

－

Notes: 1. JAPEX holds 1,442,982 treasury shares, but is excluded from “Major shareholders.” These treasury shares do not include
76,000 shares of the Company held by the Custody Bank of Japan, Ltd. (Trust Account) as trust assets of the Board Benefit
Trust.
2. Change reports pertaining to large shareholding reports by Orbis Investment Management (Guernsey) Limited and its joint
holder Orbis Investment Management Limited dated April 4, 2022, are available for public inspection. However, theinformation in the reports is not stated in the preceding table since JAPEX has not confirmed the actual status ofshareholding as of March 31, 2022.
A summary of the reports is as follows:
Name

Address

Number of sharecertificates held
(Shares)

Shareholding
ratio (%)

Orbis Investment Management(Guernsey) Limited

1st Floor, Tudor House, Le Bordage, St. Peter Port,
Guernsey, GY1 1DB

1,570,400

2.75

Orbis Investment Management
LimitedOrbis House, 25 Front Street, Hamilton, HM 11,
Bermuda2,275,657

3.98- 40 -

(7) Voting rights
1) Issued shares
As of March 31, 2022
Category

Number of shares (Shares)

Number of voting rights

Description

Shares without voting rights

－

－

－

Shares with restricted voting rights(treasury shares, etc.)

－

－

－

Shares with restricted voting rights(others)－－－

Shares with full voting rights(treasury shares, etc.)

Common stock

1,442,900－－

Shares with full voting rights(others)

Common stock

55,696,900

556,969－

Shares of less than one unit

Common stock

Number of issued shares

14,976－－57,154,776

－

－

－

556,969－

Total number of voting rights
Notes: 1.

The number of “Shares with full voting rights (other)” of common stock includes 76,000 shares of the Company (760voting rights) held by the Custody Bank of Japan, Ltd. (Trust Account) as trust assets of the Board Benefit Trust.
2. The number of “Shares of less than one unit” of common stock includes 82 treasury shares held by the Company.
2) Treasury shares
As of March 31, 2022
Name ofshareholder
Japan Petroleum
Exploration Co.,
Ltd.
Total
Note

Address ofshareholder

Number of shares
held in own name(Shares)Number of shares
held in others’
names (Shares)

Total number ofshares held
(Shares)

Shareholding ratio(%)

1-7-12 Marunouchi,
Chiyoda-ku, Tokyo

1,442,900－

1,442,900

2.52－

1,442,900－

1,442,900

2.52

76,000 shares of the Company held by the Custody Bank of Japan, Ltd. (Trust Account) as trust assets of the Board Benefit
Trust are not included in treasury shares.

- 41 -

(8) Share ownership plan for Directors and other Officers and employees
1) Overview of the share ownership plan for Directors and other Officers
In accordance with the resolution of the 50th Ordinary General Meeting of Shareholders held on June 26, 2020, theCompany has introduced a “Board Benefit Trust (BBT)” (hereinafter the “Plan”), a performance-based stock compensation
plan for Directors (excluding Outside Directors) and Executive Officers who do not concurrently serve as Directors(hereinafter “Directors, etc.”).
<Structure of the Plan>(1) The Company will establish the Rules on Provision of Shares to Officers within the scope of the framework approved inthis proposal.
(2) The Company will entrust money within the scope approved in this proposal.
(3) The Trust will acquire the Company’s shares through the stock market on which the Company’s shares are listed, or by
way of subscribing to a disposition of the Company’s treasury shares, using the money entrusted as in (2) above as thefunds.
(4) The Company will grant points to Directors, etc. in accordance with the Rules on Provision of Shares to Officers.
(5) The Trust will not exercise voting rights of the Company’s shares held in the Trust in accordance with the instructions of
the trust administrator, who is independent from the Company.
(6) The Trust will provide those individuals who retire from office as Directors, etc. and fulfill the beneficiary eligibilit yrequirements stipulated in the Rules on Provision of Shares to Officers (hereinafter referred to as the “Beneficiaries”) with
the Company’s shares, according to the number of points granted to the relevant Beneficiary. However, if a Director, etc.
fulfills the requirements stipulated in the Rules on Provision of Shares to Officers, the Company will provide the Director,
etc. with money equivalent to the fair value of the Company’s common stock.
2) Total number/amount of shares to be delivered to Directors and other Officers
The Company will initially contribute funds of up to ¥141 million (including ¥63 million for Directors) to the Trust, as thenecessary funds for the initial three fiscal years, from the fiscal year ended March 31, 2021 to the fiscal year ending March 312023 (hereinafter, the Initial Period), upon establishing the Trust. Furthermore, after the expiration of the Initial Period, inprinciple, the Company will make additional contributions to the Trust of up to ¥235 million (including ¥105 million for
Directors) for every five fiscal years until the termination of the Plan.
3) Beneficiaries of the Plan
Beneficiaries are the retired Directors, etc., who satisfy the conditions in the Rules on Provision of Shares to Officers.

- 42 -

2. Acquisition and Disposal of Treasury SharesClass of Shares, etc.: Acquisition of common stock under Article 155, item 3 of the Companies Act(1) Acquisition by resolution of General Meeting of Shareholders
Not applicable.
(2) Acquisition by resolution of Board of Directors
Acquisition in accordance with the provisions of Article 156 of the Companies Act, as applied pursuant to Article 165,
paragraph 3 of the same act
Number of shares(Shares)Category
Status of resolution at the Board of Directors’ meeting (held on
November 9, 2021)(Purchase period: November 10, 2021 through November 9, 2022)

Total amount (Yen)

3,000,000

8,000,000,000

Treasury shares acquired before the fiscal year under review－－

Treasury shares acquired during the fiscal year under review

1,440,600

3,737,376,360

Total number and value of remaining shares resolved

1,559,400

4,262,623,640

52.0

53.3

675,500

1,779,170,986

29.5

31.0

Unexercised percentage as of the end of the fiscal year under review (%)
Treasury shares acquired during the period from April 1, 2021 until thefiling date of this Annual Securities Report
Unexercised percentage as of the filing date (%)
Note:

The number of treasury shares acquired during the period from April 1, 2021 until the filing date of this Annual Securities
Report does not include shares acquired through market purchase of treasury shares during the period from June 1, 2022 to
the filing date of this Annual Securities Report.

(3) Acquisition not based on resolution of General Meeting of Shareholders or Board of Directors’ meeting
Not applicable.
(4) Disposal of acquired treasury shares and number of treasury shares held
From April 1, 2021 until the
Fiscal year under review
filing date of this Annual
Securities Report
Category
Number of Total amount
Number of
Total amount ofsharesof disposal
sharesdisposal(Shares)(Yen)(Shares)(Yen)
Acquired treasury shares for which subscribers were solicited

－

－

－

－

Acquired treasury shares that were disposed of

－

－

－

－

Acquired treasury shares that were transferred for merger,
share exchange, share issuance and company split

－

－

－

－

Other (－)

－

－

－

－

1,442,982－

2,118,482－

Treasury shares held

Notes: 1. The number of shares held during the period from April 1, 2021 to the filing date of this Annual Securities Report does notinclude shares acquired through market purchase or shares of less than one unit during the period from June 1, 2022 to thefiling date of this Annual Securities Report.
2. The treasury shares held during the fiscal year under review and those held from April 1, 2021 until the filing date of thisAnnual Securities Report do not include 76,000 shares of the Company held by the Custody Bank of Japan, Ltd. (Trust
Account) as trust assets of the Board Benefit Trust.

- 43 -

3. Dividend Policy
JAPEX’s basic shareholder return policy is to maintain stable payout of dividends over the long term. Specific dividend amounts
are set in comprehensive consideration of profit situation of each fiscal year and future funding needs in line with medium- tolong-term forecasts of the business environment. At the same time, as a company responsible for stable supply of oil and naturalgas, which are indispensable resources for social life, we take into account our retained earnings for maintaining and expanding
supply infrastructure and investment aimed at securing new oil and natural gas reserves in Japan and overseas.
Based on this policy, we are scheduled to pay a dividend of ¥50 (an interim dividend of ¥25 and year-end dividend of ¥25) per
share for the fiscal year under review.
As stated in the shareholder return policy set forth in the “JAPEX Management Plan 2022-2030” announced on March 28, 2022,
the Company has decided to change its dividend policy for interim and year-end dividends from the fiscal year ending March2023 onwards as follows, in order to strengthen shareholder returns in light of the new management plan’s basic policies andprofit level forecasts.
“We recognize that returning profits to shareholders is an important management issue, as well as maintaining a soundmanagement base and strengthening our financial position. We aim to sustainably increase corporate value through proactive
investment using retained earnings and expansion of our business base, thereby sharing the fruits of our efforts with ourshareholders.
The Company’s basic policy for profit distribution is to pay dividends in line with business results for each fiscal year with atarget consolidated dividend payout ratio of 30%, while striving to maintain an annual dividend of ¥50 per share even in theevent of a temporary downturn in business performance due to factors such as changes in the business environment.
(However, in the year when profit attributable to owners of parent fluctuates significantly due to extraordinary income orloss or other exceptional factors, the amount of dividend will be determined in consideration of such fluctuations.)”
Pursuant to Article 454, paragraph 5 of the Companies Act, our Articles of Incorporation stipulate that the Company may, by aresolution of the Board of Directors, pay an interim dividend on September 30 of each year as the record date. The Company pays
dividends twice a year as dividends of surplus: an interim dividend and a year-end dividend. The amount of interim dividend isresolved at the meeting of the Board of Directors, year-end dividend at a General Meeting of Shareholders.
Dividends of surplus for the fiscal year are in accordance with the previous policy before the amendments and are as follows:
Total amount of dividends
Dividend per share
Date of resolution(Millions of yen)
(Yen)
Resolution at the Board of Directors’
meeting held on November 9, 2021

1,428

25

Resolutions at the Ordinary General Meetingof Shareholders held on June 28, 2022

1,392

25

- 44 -

4. Corporate Governance(1) Overview of corporate governance1) Basic views on corporate governanceContributing to society through stable energy supply and addressing social issues toward realizing the sustainable
development goals is the corporate vision of JAPEX. In order to achieve the corporate vision and to maximize our corporate
value in a medium- and long-term perspective, the efficient and transparent corporate management and the building of mutual
trust relationships with our stakeholders including shareholders through ensuring our accountability are required, andcorporate governance is one of our important topics as the foundation.
2) Outline of corporate governance structure and reasons for such structure(Outline of corporate governance)
At JAPEX, Directors and Executive Officers, who are appointed and assigned duties by the Representative Directors and theBoard of Directors, serve as operating officers. The Board of Directors and Audit & Supervisory Board Members, along with
the Audit & Supervisory Board that is comprised of all Audit & Supervisory Board Members, are responsible for supervising
the execution of their duties. (Company with an Audit & Supervisory Board)
The Board of Directors is held regularly once a month. Decisions on important business execution are left to the Board. It
also serves supervisory functions as it receives business execution reports from Directors or Executive Officers.
In addition, in order to strengthen the supervisory functions of the Board of Directors, JAPEX appointed five insightful andindependent Outside Directors. We actively listen to their opinions and advice on meeting agenda and deliberations, which
are highly independent from management and are essential to invigorate discussions at the Board of Directors’ meeting.
From the standpoint of accelerating the speed of decision-making, we hold the Executive Committee composed of Directors
and other officers of JAPEX to make decisions on the matters not involved by the decision-making standard of the Board of
Directors and to make a discussion to assist the decision-making in the Board of Directors. The Executive Committee is held
twice a month in principle, with extraordinary meetings held as needed.
The Nomination and Compensation Committee has been established under the Board of Directors, with a view toward
strengthening the supervisory function of the Board of Directors, by further ensuring transparency and objectivity of theprocedures for making decisions concerning nomination and compensation of Directors.
Members of the above organs as of the filing date are as follows:
OrgansBoard of Directors

Members
Chair: FUJITA Masahiro, Representative Director and President
Members: WATANABE Osamu, ISHII Yoshitaka, YAMASHITA Michiro, HIRATA
Toshiyuki, NAKAJIMA Toshiaki, ITO Tetsuo (Note 1) , YAMASHITA Yukari (Note 1),
KAWASAKI Hideichi (Note 1), KITAI Kumiko (Note 1), SUGIYAMA Yoshikuni (Note 1),
NAKAMURA Mitsuyoshi, MOTOYAMA Yoshihiko, KAWAKITA Chikara (Note 2),
MOTOYAMA Hiroshi (Note 2)

Audit & Supervisory Board

Chair: NAKAMURA Mitsuyoshi, Audit & Supervisory Board Member (Full-time)Members: MOTOYAMA Yoshihiko, KAWAKITA Chikara (Note 2), MOTOYAMA Hiroshi(Note 2)

Executive Committee

Nomination andCompensation Committee
Notes: 1.
2.

Chair: FUJITA Masahiro, Representative Director and President
Members: WATANABE Osamu, ISHII Yoshitaka, YAMASHITA Michiro, HIRATA
Toshiyuki, NAKAJIMA Toshiaki, SUGA Tsuyoshi, KAKU Senichiro, MATSUNAGA
Tadashi, NAKAMURA Tsuneta, ABE Satoshi, TEZUKA Kazuhiko
Chair: FUJITA Masahiro, Representative Director and President
Members: WATANABE Osamu, ITO Tetsuo (Note 1), YAMASHITA Yukari (Note 1),

KAWASAKI Hideichi (Note 1)
ITO Tetsuo, YAMASHITA Yukari, KAWASAKI Hideichi, KITAI Kumiko and SUGIYAMA Yoshikuni are theOutside Directors as defined under Article 2, item 15 of the Companies Act.
KAWAKITA Chikara and MOTOYAMA Hiroshi are the Outside Audit & Supervisory Board Members as
defined under Article 2, item 16 of the Companies Act.

In addition to the above structure, risk is managed by Risk Management Committee and other internal committees of theCompany. For details, please refer to 3) Other matters regarding corporate governance (Status of development of risk
management system).

- 45 -

<Corporate Governance Structure>(Reasons for adopting the current corporate governance structure)
As stated above, the Company has put in place a structure where Outside Directors comment on and supervise the corporate
management by operating officers from an independent standpoint and audits on Directors’ performance of duties are
conducted by Audit & Supervisory Board Members, along with the Audit & Supervisory Board. Such structure has beenworking well and fully ensures objective and appropriate decision-making. Therefore, we believe that JAPEX is capable ofstrengthening its corporate governance by adopting a corporate structure of a company with an audit & supervisory board.
3) Other matters regarding corporate governance(Matters concerning the development of internal control system)
At JAPEX, the Management Risk Committee and the Auditing Dept. take initiative to continue efforts to monitor and develop
a system to ensure appropriate business operations. JAPEX develops such a system required by the Companies Act and theRegulations for Enforcement of the Companies Act in accordance with the following policies.
(i)

Systems to ensure that the execution of duties by Directors complies with laws and regulations and the articles ofincorporation
JAPEX ensures mutual checks among Directors by having each Director submit proposals and reports to the Board of
Directors based on each responsibility and authority in accordance with regulations and decision-making standards of
the Board of Directors. In addition, Audit & Supervisory Board Members offer opinions to the Board of Directors where
necessary.

(ii)

Systems concerning the retention and management of information on the execution of duties by Directors
JAPEX retains the minutes of Board of Directors meetings, approval for management, various contracts, and othermajor documents that indicate the execution status of operations. The details of the system are stipulated by the
document handling regulations.

(iii) Regulations and other systems relating to manage risks of loss
JAPEX reviews the credit management regulations, market risk management and derivative trading regulations, andother emergency response procedures, and where necessary, prepares manuals and other documents from the perspectiveof risk management.
(iv) Systems to ensure that Directors execute their duties efficiently
The Board of Directors meets monthly in principle, to conduct swift decision-making on agenda items on which the
Executive Committee has deliberated in advance. The Board of Directors also ensures efficient execution by delegating
authority in accordance with the decisions and authorization regulations.
(v)

Systems to ensure that the execution of duties by employees complies with laws and regulations and the articles ofincorporation- 46 -At JAPEX, each department is managed their duties in accordance with various operating rules and manuals.
The Auditing Dept. audits the effectiveness of internal controls and report the results to President.
(vi) Systems to ensure appropriate business activities in a business group comprised of JAPEX and its subsidiaries
JAPEX appropriately applies the subsidiary and associate management regulation and the group managementagreement to support the development and operation of its subsidiaries’ internal control systems and risk management for
ensuring the appropriateness of the business operations of the entire corporate group. Our subsidiaries establish and operatea system similar to our system that is stipulated in the preceding five items, depending on the type of business, size, andother attributes. Our subsidiaries’ director report to us on the status of execution of their duties regularly or as needed. In
addition, our Auditing Dept. conducts audits on subsidiaries regularly.
(vii) Matters relating to employees who assist in the duties of Audit & Supervisory Board
At the request of its Audit & Supervisory Board, JAPEX appoints one or more employees as Audit & Supervisory Board
office members.
(viii) Matters relating to the independence of the employees set forth in the preceding item from Directors
Personnel-related decisions on the relevant employees, including appointment and transfer, are subject to the prioragreement of the Audit & Supervisory Board.
(ix) Matters relating to ensure the effectiveness of instructions given by Audit & Supervisory Board Members to the relevant
employees
The employees appointed by the Audit & Supervisory Board office perform their duties in accordance with the
instructions of the Audit & Supervisory Board, and operating departments cooperate with such employees in theperformance of their duties.
(x)

Systems for our Directors and employees and subsidiaries’ Directors to report to the Audit & Supervisory Board(a) Our Directors make monthly business reports at Board of Directors meetings and circulate requests for management
approval to Audit & Supervisory Board Members Note. In addition, Director or employee immediately reports to a
Member of the Audit & Supervisory Board if he/she discovers any facts that may cause significant damage to
JAPEX.
Note: Specifically, the full-time Audit & Supervisory Board Members receive requests for management approval inaccordance with the segregation of duties among Audit & Supervisory Board Members.
(b) Our subsidiaries’ director, audit & supervisory board member, or employee report to a Member of the Audit &Supervisory Board when he/she discovers any fact that may cause significant damage to JAPEX. The same also
applies to matters deemed necessary in connection with the performance of duties.

(xi) Systems to ensure that persons who made a report as set forth in the preceding item are not treated disadvantageously
due to such reporting
Applicable to JAPEX and its subsidiaries, the handling procedures for such reporting stipulates that no person who
made a report as set forth in the preceding item is subjected to any disadvantageous treatment for such reporting.
(xii) Matters relating to policies concerning the procedure for advance payment or reimbursement of expenses that arise in
the execution of duties by Audit & Supervisory Board Members, or other expenses or obligations that arise in suchexecution of duties
Audit & Supervisory Board Members may request prepayment, reimbursement, or other payment in case of necessary
to execute their duties by the writing with the reason, amount, and others. Based on the writing, JAPEX makes advancepayments or reimbursements.
(xiii) Other systems to ensure effective audits of Audit & Supervisory Board Members
The Auditing Dept. and the Accounting Auditor provide information regularly to Audit & Supervisory Board Members.
(xiv) System to ensure the appropriateness of documents and other information related to financial calculations
In order to ensure the reliability of financial reporting, an internal control system for financial reporting is established.
And it is ensured its proper operation and evaluation of its effectiveness.

- 47 -

(Status of development of risk management system)
In order to adequately operate the internal control system, we have set up various internal committees and developed asystem for risk management. Management risks in general and risks associated with individual businesses are evaluated andmanaged by the Management Risk Committee from a cross-sectional perspective, and deliberated by specialized committees
to mitigate the risks. For example, Investment Evaluation Committee verifies risks and the appropriateness of investments inimportant projects. Once the investment decision was made for an individual project, the Management Risk Committeemonitors the progress of the project and formulates measures against challenges faced by the project.
In an attempt to realize sustainable growth in a medium-to -long run, the Sustainability Committee was established. It
deliberates on “JAPEX Management Plan 2022–2030,” as well as important managerial policies concerning environment,social and governance (ESG), including the Company’s cross-sectional policies to respond to climate change. In cases whenmatters related to business and other risks are raised for deliberation at the Committee, insights obtained from the activitiesof the Management Risk Committee and the Investment Evaluation Committee shall be reflected or utilized in the
deliberation as appropriate. The Company has also established specialized committees the Information Security Committee
and the Health, Safety, Security and Environment (HSSE) Committee to deliberate important issues concerning information
security and occupational health-and-safety, respectively.
Deliberation results and verification results obtained by these internal committees are reported to the Executive Committee
and the Board of Directors as needed before they discuss related matters.
(System to ensure appropriate business activities in subsidiaries)
The Auditing Dept. conducts internal audits on our subsidiaries based on annual audit plan to ensure appropriateness of theirbusiness activities. Audit results are reported to the President, then to Audit & Supervisory Board Members, and corrective
actions are taken as needed.
The Auditing Dept. evaluates on the development and operating status of subsidiaries’ overall internal control for financial
reporting, and the evaluation results are utilized in internal control audits conducted by the Accounting Auditor, and are sharedwith Audit & Supervisory Board Members of the Company.
In accordance with subsidiary and associate management regulation, JAPEX concludes a group management agreement with
relevant companies to monitor their corporate management. The Company also conducts audits on our major subsidiaries byfull-time Audit & Supervisory Board Members and the Auditing Dept.
(Outline of the limited liability agreement)
JAPEX amended the articles of incorporation at the General Meeting of Shareholders as of June 2015, enacted the new article
related to the limited liability agreement with Outside Directors and Outside Audit & Supervisory Board Members, and each
Outside Directors and Outside Audit & Supervisory Board Members executed the agreement based on the above article. The
outline of the limited liability agreement is as follows:(i) The limited liability agreement with Outside Directors
In the case where Outside Director(s) is(are) liable for damages which have arisen to JAPEX under paragraph 1, Article
423 of the Companies Act, given his/her performance of duties are made faithfully and without any gross negligence,he/she should be liable for damages to JAPEX within the limit of minimum amount as stipulated in each item of paragraph
1, Article 425 of the Companies Act and should be exempted from any liabilities beyond the minimum amount by JAPEX.
(ii) The limited liability agreement with Outside Audit & Supervisory Board Members
In the case where Outside Audit & Supervisory Board Member(s) is(are) liable for damages which have arisen to JAPEX
under paragraph 1, Article 423 of the Companies Act, given his/her performance of duties are made faithfully and without
any gross negligence, he/she should be liable for damages to JAPEX within the limit of minimum amount as stipulated ineach item of paragraph 1, Article 425 of the Companies Act and should be exempted from any liabilities beyond theminimum amount by JAPEX.
(Outline of Directors’ and Officers’ liability insurance contract)
JAPEX has concluded a Directors’ and Officers’ liability insurance contract as stipulated in Article 430-3, paragraph 1 of
the Companies Act with an insurance company and fully bares the insurance premiums.
i) Scope of the persons insured
JAPEX’s Directors, Audit & Supervisory Board Members, Executive Officers, Counselors, and Fellows, including- 48 -

those who have already retired
Note: Persons with high expertise in the Company’s specific professional fields have been appointed as Fellows to
support corporate management (the Company has two Fellows as of the filing date).
ii) Outline of the insurance contract
This insurance contract covers compensation for damages borne by the insured persons (third-party damage suit andshareholder derivative suit) in the event of claims made against them for actions taken (or inaction) in their roles as an
officer of JAPEX during the coverage period. Provided, however, that there are certain exemptions. For example, thedamage caused as a result of any conduct in violation of laws and regulations or the damage covered by other forms of
insurance shall not be covered.
4) Quorum of Directors
The Articles of Incorporation of JAPEX stipulate that the number of Directors is to be 18 or less.
5) Requirement for the adoption of resolutions for electing Directors
Our Articles of Incorporation stipulate that the Directors of the Company shall be elected by a majority vote of all eligible
shareholders present at a General Meeting of Shareholders which shall have attendance of shareholders holding, in aggregate,
not less than one third (1/3) of the total voting rights of all eligible shareholders.
The Articles of Incorporation also stipulate that cumulative voting shall not be used for the resolution for electing Directors.
6) Decision-making body of interim dividends
Pursuant to Article 454, paragraph 5 of the Companies Act, our Articles of Incorporation stipulate that the Company may, by
a resolution of the Board of Directors, pay an interim dividend on September 30 of each year as the record date. This isintended to return profits to shareholders in a flexible manner.
7) Decision-making body for the purchase of treasury shares
Pursuant to Article 165, paragraph 2 of the Companies Act, our Articles of Incorporation stipulate that, upon resolution of theBoard of Directors, the Company may acquire its treasury shares by trading in the market etc. as stipulated in paragraph 1 ofthe same article. This is to facilitate the purchase of treasury shares with flexibility.
8) Requirement for the adoption of special resolution of General Meeting of Shareholders
Our Articles of Incorporation stipulate that resolutions under Article 309, paragraph 2 of the Companies Act shall only be
adopted by two thirds (2/3) or more of the votes of the shareholders at a General Meeting of Shareholders which shall haveattendance of shareholders holding, in aggregate, not less than one third (1/3) of the total eligible voting rights. This is intended
to facilitate smooth operations of the General Meeting of Shareholders.
Overview of the measures to prevent large-scale acquisition of our company’s shares (Takeover Defense Measures)(1) Basic policy regarding the person controlling decisions relative to policies for our finances and business
JAPEX considers that the person controlling our financial and business policy decisions should fully understand the content of
our finances and business and the source of our corporate value, and is eligible to protect and enhance corporate value andultimately the shareholders’ common interests in a continuing, sustainable manner.
JAPEX believes the decision on an acquisition proposal which is associated with the transfer of corporate control should
ultimately be made based on the general decision of our shareholders. Furthermore, JAPEX does not disapprove of large-scale
share acquisition that contributes to our corporate value and ultimately the shareholders’ common interests.
Nevertheless, among large-scale share acquisitions, there are many that do not contribute to the corporate value and theshareholders’ common interests, in light of their purpose, including such that cause a clear infringement on the corporate value
and the shareholders’ common interests, such that has the risk of a de facto coercion against the shareholders to sell their shares,
such that does not provide sufficient time and/or information for the Board of Directors and the shareholders consideration of the- 49 -

content of the large-scale share acquisition or for the Board of Directors to propose an alternative plan, and such that requireconsultation and negotiation with the acquirer to draw out a more favorable condition than the conditions presented from theacquirer.
The large-scale share acquirer should understand the source of our corporate value, not to mention the content of JAPEX’s
finances and business, and unless he or she protects and enhances them over medium to long term, our corporate value andultimately the shareholders’ common interests will be damaged.
JAPEX considers such a large-scale acquirer that does not contribute to our corporate value and the shareholders’ common
interests inappropriate as the controlling person to determine the policies of our finances and business, and thus consider
necessary to protect our corporate value and ultimately the shareholders’ common interests by taking essential and substantial
measures against such attempts.
(2) Source of our corporate value and special undertakings to realize the basic policy
1. Source of our corporate value
Since its establishment in 1955, JAPEX has expanded business with the main goal set at raising Japan’s self-sufficiency of oil andcombustible natural gas. Having started from zero reserve of oil and gas, JAPEX discovered new oil and gas fields one after
another, and has established its business foundation of today. JAPEX is engaged in exploration, development, and sale of oil andnatural gas as its core business.
The source of our corporate value lies in our integrated business model where we conduct exploration, development and sale byourselves after we acquire interest in oil and natural gas fields. JAPEX is a company that supplies energy which is vital toindustrial activities and our everyday activities. JAPEX takes on crucially important responsibility for ensuring and maintaining
stabile supply and safe operations and conducts a business with high public nature.
The Company’s integrated business model is backed by 1) advanced exploration technology for oil and natural gas, 2) oil-and-gas
field development technology with operation know-hows in and outside of Japan, and 3) a domestic natural gas pipeline network
which was built to facilitate transportation in Japan, and trustful relationships that have been built over the years amongcustomers, shareholders, local communities and other stakeholders, as a result of long record of stable supply utilizing such a
network.
It is not uncommon to take over ten years from a discovery of a new oil or gas field to reach production stage. Therefore, ourbusiness must be conducted with long-term perspective. At the same time, we are required to contribute to society, withconsideration given to preserve global environment. Considering today’s international energy situation, where global competition
to secure energy resources is likely to further intensify, it is essential for JAPEX to work to improve its technology and knowhows, secure human resources, strengthen trustful relationships with stakeholders in order to achieve the Company’s sustainablegrowth and enhancement of its corporate value. Through such efforts, we believe our corporate value would increase, which
would lead to ensure and improve common interest of our shareholders as in past years.
2. Undertakings to enhance corporate value
In May, 2021, we announced the “JAPEX2050,” which outlines responsibilities and challenges of JAPEX toward achievingcarbon-neutral society, while indicating the Company’s response to be taken and direction for future business development.
In March, 2022, we also formulated and announced the “JAPEX Management Plan 2022–2030,” a new management plan thataims to respond quickly and flexibly to changes in the business environment, such as increasingly accelerating global
decarbonization. Its basic policy is to improve profitability and build business foundation for 2030 and beyond. It outlines
management goals such as interim targets of FY2026, as well as basic policies on fund allocation and shareholders return. In
addition, it unveils priority items to be addressed to achieve business goals in such business field as E&P, Infrastructure/Utility
and Carbon Neutral.
By steadily implementing measures based on JAPEX2050 and JAPEX Management Plan 2022–2030, we will work towardachieving a carbon-neutral society in 2050 and continue to grow and further enhance our corporate value as an integrated energy
company.

- 50 -

3. Strengthening Corporate Governance
By implementing these measures above, we are determined to further increase our corporate value and secure and improveshareholders’ common interests. We strive to enhance corporate governance while operating with efficiency and transparency.
Building a trustful relationship with stakeholders is a sure way to achieve long and stable business development, and we believe
this is possible by ensuring accountability to all stakeholders, including shareholders.
At JAPEX, Directors and Executive Officers, who are appointed and assigned duties by the Representative Directors and theBoard of Directors, serve as operating officers. The Board of Directors and Audit & Supervisory Board Members, along with the
Audit & Supervisory Board that is comprised of all Audit & Supervisory Board Members, are responsible for supervising theexecution of their duties. (Company with an Audit & Supervisory Board)
In addition, in order to strengthen the supervisory functions of the Board of Directors, JAPEX appointed five insightful andindependent Outside Directors. We actively listen to their opinions and advice on meeting agenda and deliberations, which arehighly independent from management and are essential to invigorate discussions at the Board of Directors’ meeting. We have also
set up the Outside Officer Liaison Meeting as a place for outside officers to be pre-informed of the agenda to be discussed at theBoard of Directors’ meetings and exchange information and opinions each other so that they can be well informed and performtheir duties in most appropriate manner.
All Audit & Supervisory Board Members attend the Board of Directors’ meeting and full-time Audit & Supervisory Board
Members attend the Executive Committee and other important management meetings to perform the supervisory function overthe corporate management by exchanging opinions as necessary with Directors and Executive Officers responsible for businessexecution. Internal audits of JAPEX are conducted by the Auditing Dept. under the direct management of the President toconfirm the compliance with laws and internal regulations as well as the appropriateness of business operations of eachdepartment, including the verification of the effectiveness of internal control.
The Nomination and Compensation Committee has been established under the Board of Directors in order to strengthen the
supervisory functions of the Board of Directors by making procedures for the nomination of Directors and the determination of
their compensation transparent and objective.
As for the internal control, the Management Risk Committee takes initiative to continue efforts to monitor and develop a system
to ensure appropriate business operations.
In addition to such corporate governance in terms of management structure, we engage in IR activities such as holding financial
result briefings and enhancing websites to improve the transparency of management. Through these activities, we hope to realize
most appropriate business operation that best fits the changing circumstances of today.
(3) Undertakings based on the basic policy to prevent the controlling of decision of policies of our finances and business byinappropriate persons (the “Plan”)
1. The purpose of the Plan
The Plan has been introduced according to the basic policy described above (1) for the purpose of ensuring and improving ourcorporate value and the common interests of our shareholders.
The Board of Directors, as set forth in the Basic Policy, considers a person who performs the large-scale acquisition of JAPEX
share certificates, etc., without contributing to our corporate value and/or the common interests of our shareholders inappropriate
for making financial and business policy decisions regarding the Company. The Plan aims to prevent the control of our financial
and business policies by such inappropriate persons and deter large-scale acquisition that is detrimental to our corporate value
and/or the common interests of our shareholders. At the same time, the Plan shall allow the Company’s Board of Directors toensure the necessary information and time required to propose an alternative plan to our shareholders or for our shareholders to
sufficiently judge whether such a large-scale acquisition of JAPEX share certificates, etc., is acceptable and/or allow negotiationand other measures to be taken on behalf of our shareholders.
2. Overview of the Plan
The Plan determines the necessary procedure for achieving the aforementioned purpose, such as demanding the prior provision of
information from the acquirer, upon the emergence of a person who intends to acquire 20% or more of JAPEX share certificates,etc.
In case the decision of not implementing the Plan has been made by the Board of Directors based on the procedures of the Plan,- 51 -

the acquirer shall be authorized to make a large-scale acquisition of JAPEX share certificates, etc., only after such a board
decision.
In case the acquirer does not comply with the procedure set forth in the Plan or the intended large-scale acquisition of JAPEX
share certificates, etc., has a risk of impairing our corporate value and/or the common interest of our shareholders and if thepredetermined requirements for the implementation of the Plan are satisfied, JAPEX shall allot share options with exercise
conditions in which the exercise of rights by the acquirer is, in principle, impermissible or with acquisition clauses where JAPEX
may, in principle, acquire share options from persons other than the acquirer in exchange for JAPEX shares to all shareholders
excluding JAPEX at that point of time, through an allotment of share options without contribution.
In the event that the allotment of share options without contribution is executed according to the Plan, and associated by its
execution or acquisition by JAPEX, when JAPEX shares are issued to all shareholders except for the acquirer, the percentage ofvoting rights the acquirer holds may be diluted up to a maximum of approximately 50%.
With regard to the decision whether to implement or not implement the allotment of share options without contribution, or toacquire, according to the Plan, in order to eliminate the arbitrary decision of the Board of Directors, it shall undergo the objective
decision of the Independent Committee constituted only of Outside Director etc., who are independent from the Company’s
Board of Directors pursuant to the Independent Committee Provision.
Following persons are members of the Independent Committee.
TSUCHIYA Keiichiro, former President, Meiji University
ITO Tetsuo, Outside Director, JAPEXKAWAKITA Chikara, Outside Audit & Supervisory Board Member, JAPEX
Moreover, in the event that the allotment of share options without contribution is implemented according to the Plan, the Board of
Directors shall, in principle, convoke a general meeting of the shareholders to confirm the decision of the shareholders
concerning said implementation of the allotment of share options without contribution.
We aim to ensure transparency of the process of these procedures through the timely disclosure of appropriate information to ourshareholders.
The effective period of the Plan shall be until the close of the Ordinary General Meeting of the Shareholders regarding the latest
fiscal year ending within three years after the close of the Annual Shareholders’ Meeting, which is the same as the delegation
period of the authority to decide the matters concerning the allotment of the Share Options without contribution in the Plan to bein accordance with the resolution of the 50th Annual Shareholders’ Meeting held on June 26, 2020.
However, even before the expiration of the effective period, 1) if a resolution for withdrawing the above delegation to the Boardof Directors with regard to the decision on matters concerning the allotment of the Share Options without contribution in the Plan
is made at a general meeting of the shareholders, or 2) if a resolution to abolish the Plan is made by the Board of Directors, thePlan shall be abolished at that point in time.
Details of the Plan is available on our website. Please refer to our news release “Renewal of the Measures to Prevent Large-scale
Acquisition of Our Company Shares (Takeover Defense Measures)” issued on May 14, 2020.
(https://www.japex.co.jp/en/news/uploads/pdf/JAPEX20200514_TDM_Update_e.pdf)(4) Decision and its reason of the Board of Directors concerning the Plan
1. The Plan must be in accordance with the Basic Policy
The Plan is a framework in accord with the Basic Policy that ensures our corporate value and consequently the common interestof our shareholders, by enabling the decision-making of shareholders concerning the acceptance of the Acquisition, or ensuring
the information and time necessary for the proposal of an alternative plan by the Board of Directors, and/or enabling negotiationor other communication with the acquirer on behalf of the shareholders, in the event of Acquisition of JAPEX share certificates,
etc.
2. The Plan must not be such that is detrimental to the common interest of our shareholders and does not serve the purpose ofretaining the position of our corporate officers.
JAPEX considers the Plan to be not detrimental to the common interest of our shareholders and that it does not serve the purpose- 52 -

of retaining the position of our corporate officers for the following reasons:1) That the Plan satisfies the guiding requirements of the takeover defense measure:
The Plan satisfies the three principles (1) the principle of protecting and enhancing corporate value and shareholders’common interests; (2) the principle of prior disclosure and shareholders’ will; and (3) the principle of ensuring the necessity
and reasonableness of defensive measures, set forth in the Guidelines Regarding Takeover Defense for the Purposes ofProtection and Enhancement of Corporate Value and the Shareholders’ Common Interests announced by the Ministry of
Economy, Trade and Industry and the Ministry of Justice on May 27, 2005.
2) That the Plan respects the decision of the shareholders:
The introduction of the Plan was tabled and discussed at the 38th Ordinary General Meeting of Shareholders held on June25, 2008 to confirm the intention of shareholders and was approved at the meeting. So were the updates of the Plan at thefollowing Ordinary General Meetings of Shareholders: the 41st meeting held on June 24, 2011; the 44th meeting held on
June 25, 2014; the 47th meeting held on June 28, 2017; and the 50th meeting held on June 26, 2020.
And the Board of Directors made it clear that the Company holds a General Meeting of Shareholders to hear shareholders’decision regarding the implementation of the Plan for certain cases depicted in the Plan.
In addition, the Plan contains a sunset provision that stipulates an effective period of approximately three years. Alongside,even before the expiration of the effective period, if a resolution withdrawing the above delegation resolution is made at a
general meeting of the shareholders or if a resolution abolishing the Plan is made by the Board of Directors, the Plan shall beabolished at that point of time. In that context, the intention of our shareholders will be reflected on the prevalence of thePlan.
3) Respect for the decision of the Outsider Directors and information disclosure
The practical decisions on the operations of the Plan are executed by the Independent Committee which only consists of
Outside Directors who are independent.
Furthermore, the overview of the decision is to be disclosed to our shareholders, ensuring the framework for a transparent
operation of the Plan to serve the corporate value and the common interest of our shareholders.
4) Establishment of reasonable objective requirements
The Plan shall not be implemented if it does not meet the reasonable objective requirements, ensuring the framework toprevent the arbitrary implementation by the Board of Directors.
5) Hearing of opinions from third party experts
When an acquirer emerges, the Independent Committee may receive advice from financial advisors, certified public
accountants, lawyers, certified tax accountants, consultants, and other experts at the expense of JAPEX. This creates amechanism for securing fairness and objectivity of the decisions given by the Independent Committee to a stronger degree.
6) That the takeover defense measure is not a dead-hand or slow-hand type measure
A large-scale purchaser of JAPEX share certificates, etc. can appoint Directors of their own designation in a general meetingof the shareholders and abolish this Plan through the Board of Directors constituted of such Directors.
Therefore, the Plan is not a dead-hand type takeover defense measure (a takeover defense measure of which implementation
cannot be deterred even with the replacement of over half of the constituting members of the Board of Directors).
Furthermore, the assumption of Directors at JAPEX does not employ the staggered system, which does not make the Plan aslow-hand type takeover defense measure (a takeover measure of which implementation takes time to deter due to theimpossibility of an all-together replacement of the constituting members of the Board of Directors).

- 53 -

(2) Directors and Senior Management
1) List of Directors and Senior Management
Male: 13, Female: 2 (percentage of females among Directors and Audit & Supervisory Board Members: 13.3%)
Position

Name

Date of birthBusiness experience

NumberTerm of of shares
officeheld(Shares)

Apr. 1964 Joined the Ministry of International Trade and Industry
Jul. 1997 Vice Minister of International Trade and Industry
Representative Director

WATANABE

Chairman

Osamu

Dec. 6, 1940

Jul. 2002 Chairman, Japan External Trade Organization
Jun. 2007 Executive Vice President, JAPEX

Note 356,300Note 36,700

Note 33,000

Note 3

3,100

Jun. 2008 President and CEO, JAPEX
Jun. 2016 Representative Director and Chairman, JAPEX (to present)

Apr. 1977 Joined the Ministry of International Trade and Industry
Jul. 2008 Director-General, Trade and Economic Corporation Bureau, theMinistry of Economy, Trade and Industry
Nov. 2010 Executive Officer, Sumitomo Corporation
Jun. 2018 Representative Director, Executive Vice President, Sumitomo
Representative Director
President
Chief Executive Officer

Corporation
FUJITA
Masahiro

Nov. 12, 1954

Apr. 2019 Representative Director, Assistant to President and CEO,
Sumitomo Corporation
Jun. 2019 Representative Director, Executive Vice President, JAPEXOct. 2019 Representative Director, President & CEO, JAPEX (to present)
Oct. 2019 Chairman, JAPEX Montney Ltd.
Oct. 2019 Representative Director, President, JAPEX Offshore Ltd. (topresent)
Nov. 2019 Representative Director, President, JAPEX Garraf Ltd.
Apr. 1981 Joined JAPEX
Apr. 2010 General Manager of Technical Dept., Nagaoka Division OfficeJun. 2014 Executive Officer, General Manager of Nagaoka Division Office,Domestic Project Division
Apr. 2017 Executive Officer, General Manager of Nagaoka District OfficeJun. 2017 Managing Executive Officer, General Manager of Nagaoka District

Representative Director
Executive Vice President

OfficeNov. 2017 Managing Executive Officer, Vice President of Inter-regional Gas

Advisor to President,

Supply Division and President of Soma Project Division

President of PowerBusiness Division, inJun. 2018 Representative Director and President, Fukushima Gas Power Co.,ISHII Yoshitaka Apr. 3, 1957

Ltd. (to present)

charge of Secretary

Jun. 2018 Director, Managing Executive Officer, President of Inter-regional

Office, responsible for

Gas Supply Division and President of Soma Project & Power

Carbon Neutral Related

Business Division

Business

Oct. 2018 Director, Managing Executive Officer, President of Inter-regional
Gas Supply Division and President of Soma Project & PowerBusiness DivisionJun. 2020 Director, Senior Managing Officer, President of Power Business
Division (to present)
Jun. 2021 Representative Director, Executive Vice President, President ofPower Business Division (to present)
Apr. 1982 Joined JAPEX
Jun. 2005 General Manager of Corporate Planning Dept.

Director

Apr. 2010 Vice President of Environment and Innovative Technology Projects

Senior Managing
Executive Officer
In charge of Finance &Accounting Dept., Deal
Execution/PMI Support
Dept.

YAMASHITA
MichiroOct. 27, 1959

Division
Jun. 2011 Vice President of Environment and Innovative Technology Projects
Division
Jun. 2013 Executive Officer
Jun. 2016 Managing Executive Officer
Jun. 2018 Director, Managing Executive Officer
Apr. 2022 Director, Senior Managing Executive Officer (to present)- 54 -

Position

Name

Date of birthBusiness experience

NumberTerm of of shares
officeheld(Shares)

Apr. 1981 Joined JAPEX
Jun. 2005 President, Japan Canada Oil Sands Limited
Jun. 2012 Executive Officer, JAPEX
Jun. 2015 Managing Executive Officer
Director
Managing Executive
OfficerPresident, Overseas
Business Division I

Jun. 2017 Managing Director
HIRATA
Toshiyuki

Jun. 2017 Representative Director and President, Canada Oil Sands Co., Ltd.
Jan. 5, 1958

Jun. 2017 Chairman, Japan Canada Oil Sands Limited.

Note 34,600

Note 3

1,100

Note 3－Note 3－Note 3

1,000

Jun. 2018 Director, Managing Executive Officer
Jun. 2020 Director, Managing Executive Officer, President of Middle East,
Asia & Europe Project DivisionJun. 2020 President, JAPEX UK E&P Ltd.
Apr. 2022 Director, Managing Executive Officer, President of Overseas
Business Division I (to present)

Director

Apr. 1986 Joined JAPEXManaging Executive
Officer
In charge of Corporate
Communication Office,Jun. 2010 General Manager of Corporate Planning Dept.
NAKAJIMA
Toshiaki

May 1, 1962

Jun. 2011 General Manager of Corporate Planning Dept.
Jun. 2019 Executive Officer
Jun. 2021 Managing Executive Officer

and Corporate Strategy

Jun. 2022 Director, Managing Executive Officer (to present)

Dept.

Apr. 1975 Appointed as a prosecutor
Jun. 2001 Head of Special Investigation Force, Tokyo District Public
Prosecutors OfficeDirector

ITO Tetsuo

Mar. 15, 1948

Jan. 2009 Deputy Prosecutor-General, Supreme Public Prosecutors Office
Apr. 2011 Attorney, registered at Daiichi Tokyo Bar Association
Apr. 2011 Of Counsel at Nishimura & Asahi
Jun. 2016 Director (to present)
Oct. 1985 Joined The Institute of Energy Economics, Japan
Jun. 2011 Board Member, Unit Manager of Global Environment &Sustainable Development Unit, The Institute of Energy Economics,

Director

YAMASHITA
Oct. 23, 1959
YukariJapan
Jul. 2011 Board Member, Director in charge of the Energy Data andModelling Center, The Institute of Energy Economics, Japan
Jun. 2019 Director, JAPEX (to present)
Jun. 2020 Managing Director in charge of the Energy Data and Modelling
Center, The Institute of Energy Economics, Japan (to present)
Apr. 1970 Joined Oki Electric Industry Co., Ltd.
Apr. 2001 Executive Officer, Oki Electric Industry Co., Ltd.
Apr. 2004 Senior Vice President, Oki Electric Industry Co., Ltd.
Jun. 2005 Managing Director, Oki Electric Industry Co., Ltd.

Director

KAWASAKI
HideichiApr. 2009 Vice President, Representative Director, Oki Electric Industry Co.,
Jan. 10, 1947

Ltd.
Jun. 2009 President, Representative Director, Oki Electric Industry Co., Ltd.
Apr. 2016 Chairman of the Board, Representative Director, Oki ElectricIndustry Co., Ltd.
Jun. 2018 Chairman of the Board, Oki Electric Industry Co., Ltd.
Jun. 2020 Director, JAPEX (to present)- 55 -

Position

Name

Date of birthBusiness experience

NumberTerm of of shares
officeheld(Shares)

Apr. 1976 Joined Ministry of Labor
Jul. 1999 Deputy Governor, Shizuoka Prefecture
Aug. 2005Director General, Employment Environment and Equal
Employment, Children and Families Bureau, Ministry of Health,
Labor and Welfare
Director

KITAI Kumiko Oct. 29, 1952

Sep. 2006 Director-General of Secretariat, Central Labour Relations

Note 3－Note 3－Note 4300

Note 52,900

Note 6－

Commission
Aug. 2007Executive Director, Japan Industrial Safety and Health Association
Apr. 2012 Attorney registered at Daini Tokyo Bar Association (to present)
Jul. 2014 Attorney, Kachidoki Law Office (to present)
Jun. 2022 Director, JAPEX (to present)
Apr. 1978 Joined The Yomiuri Shimbun
Jun. 2010 Director, Tokyo Head Office, The Yomiuri Shimbun
Jun. 2011 Director, Yomiuri Shimbun Holdings (to present)
Jun. 2011 Managing Director, Tokyo Head Office, The Yomiuri Shimbun
Jun. 2012 Senior Managing Director, The Yomiuri Shimbun Tokyo Head
OfficeDirector

SUGIYAMA
Yoshikuni

Oct. 11, 1954

Jun. 2014 Representative Director, President, The Yomiuri Shimbun Seibu
Head OfficeJun. 2015 Representative Director, President, The Yomiuri Shimbun Osaka
Head OfficeJun. 2019 Board Director, Nippon Television Holdings, Inc.
Jun. 2020 Representative Director, President, Nippon Television Holdings,
Inc. (to present)
Jun. 2022 Director, JAPEX (to present)
Apr. 1982 Joined JAPEX
Jul. 2012 General Manager of Iraq Project Dept., Middle East, Africa &Europe Project Division
Jul. 2013 Advisor to President of Middle East, Africa & Europe Project

Audit & Supervisory
Board Member(full-time)

Division
NAKAMURA
MitsuyoshiAug. 18, 1958

Aug. 2014Vice President of Middle East, Africa & Europe Project DivisionSep. 2015 President of HSE Dept.
Jul. 2018 Advisor to President of Middle East, Africa & Europe Project
Division and General Manager of Dubai Representative Office,Middle East, Africa & Europe
Jun. 2020 Project Division Assistant of the executive in charge of HSE Dept.
Jun. 2021 Audit & Supervisory Board Member (to present)
Apr. 1983 Joined JAPEX
Jan. 2007 General Manager of Accounting and Procurement Dept., Sapporo

Audit & Supervisory
Board Member(full-time)

Division Office (later Hokkaido Division Office)
MOTOYAMA
YoshihikoApr. 23, 1960

Jul. 2013 General Manager of Procurement Dept.
Jun. 2019 Executive Officer
Jun. 2021 Advisor to President
Jun. 2021 Representative Director, President, JAPEX Offshore Ltd.
Jun. 2022 Audit & Supervisory Board Member (full-time), JAPEX
Apr. 1977 Joined the Ministry of FinanceJul. 2010 Commissioner, National Tax Agency
Oct. 2012 Professor, Graduate School of Law, Hitotsubashi University

Audit & Supervisory
Board Member

KAWAKITA
ChikaraJun. 2013 Outside Director, ITOCHU Corporation
Oct. 15, 1954

Oct. 2014 Deputy Chairperson, General Insurance Rating Organization ofJapan.
Jun. 2019 KONAMI HOLDINGS CORPORATION, Outside Audit &Supervisory Committee member
Jun. 2022 Outside Audit & Supervisory Board Member (to present)- 56 -

Position

Name

Date of birth

NumberTerm of of shares
officeheld(Shares)

Business experience
Apr. 1977 Joined The Industrial Bank of Japan, Limited (later Mizuho Bank,Ltd.)
Dec. 2002 General Manager of Head Office Sales Dept. No. 9, Mizuho
Corporate Bank
Apr. 2004 Executive Officer, General Manager of IT & System Management
Dept., Mizuho Corporate Bank
Apr. 2007 Managing Executive Officer, Mizuho Financial Group, Inc.

Audit & Supervisory
Board Member

MOTOYAMA
Jun. 15, 1954
HiroshiJun. 2007 Managing Director, Mizuho Financial Group, Inc.
Apr. 2009 Deputy President, Representative Director, Mizuho Corporate

Note 6－Bank
Jun. 2011 President & CEO, Representative Director, Mizuho Securities Co.,
Ltd.
Jun. 2016 President & CEO, IBJ Leasing Company, Ltd. (later Mizuho
Leasing Company, Limited.)
Jun. 2020 Advisor, IBJ Leasing Company (to present)
Jun. 2022 Outside Audit & Supervisory Board Member (to present)
Total

79,000Notes: 1. Directors ITO Tetsuo, YAMASHITA Yukari, KAWASAKI Hideichi, KITAI Kumiko and SUGIYAMA Yoshikuni are theOutside Directors as defined under Article 2, item 15 of the Companies Act.
2. Audit & Supervisory Board Members KAWAKITA Chikara and MOTOYAMA Hiroshi are the Outside Audit &Supervisory Board Members as defined under Article 2, item 16 of the Companies Act.
3. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within one year after the election on June 28, 2022.
4. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within four years after the election on June 25, 2021.
5. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within three years after the election on June 28, 2022.
6. The terms of office shall expire at the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year
ending within four years after the election on June 28, 2022.
7. Director YAMASHITA Yukari is registered as NIWA Yukari in national register. YAMASHITA has been used in career.
8. WASEDA Amane and ANRAKU Toshiyuki were appointed by the Company as Fellow as of June 24, 2015 and April 1,
2022 respectively. Fellows support the management with high degree of expertise in specialized fields.
9. JAPEX has introduced an Executive Officer System.
Executive Officers who are not concurrently serving as Directors are as follows:
Senior Managing

President of Marketing & Sales Division, in

Executive Officer

charge of Procurement Dept.

SUGA Tsuyoshi

Managing Executive President of Gas Supply & Facility
OfficerEngineering Division

KAKU Senichiro

In charge of Internal Control, Administration
Managing Executive& Legal Dept., Human Resource Dept., andOfficer
Information Technology Dept.

MATSUNAGA Tadashi

Managing Executive President of Domestic E&P Project Division,
NAKAMURA Tsuneta
Officerin charge of HSE Dept.
Vice President of Domestic E&P ProjectManaging Executive
Division, Vice President of Gas Supply &Officer
Facility Engineering Division

MIYADAI Takamasa

Managing Executive
President of Overseas Business Division II
Officer

ABE Satoshi

Managing Executive
President of Technical Division
OfficerTEZUKA Kazuhiko- 57 -

Executive Officer

General Manager of Nagaoka District Office

TAKAHATA Shinichi

Executive Officer

In charge of Environmental Business
Promotion Dept., and New Business
Promotion Dept.

IKENO Tomonori

Executive Officer

Vice President of Power Business Division

KASA Hirofumi

Executive Officer

Vice President of Overseas Business Division
YAMADA Tomomi
II, Advisor to President of Technical Division

Executive Officer

General Manager of Soma District Office

Executive Officer

Vice President of Marketing & Sales Division,
General Manager of Hokkaido Marketing & NAGAHAMA Yasushi
Sales Office of Marketing & Sales Division

Executive Officer

In charge of LNG Marketing & Procurement
OfficeOHAMA Tadashi

Executive Officer

Vice President of Power Business Division

YASUI Akira- 58 -NAKANO Masanori

Representative Director andPresident, North Japan
Security Service Co., Ltd.

2) Outside Officers(The number of Officers)
The number of the Company’s Outside Directors is five and the number of its Outside Audit & Supervisory Board Members
is two.
(Personal, capital, material business relationships or any other conflicts of interest with JAPEX)JAPEX has entered into business transactions with Nishimura & Asahi, where Outside Director ITO Tetsuo serves Of
Counsel. However, considering the scale and the nature of the transactions, the decision-making of JAPEX will not besignificantly affected. In addition, no relationships exist that may raise conflict of interest with our other general shareholders.
JAPEX has entered into business transactions with The Institute of Energy Economics, Japan, where Outside Director
YAMASHITA Yukari serves as a Managing Director. However, considering the scale and the nature of the transactions, thedecision-making of JAPEX will not be significantly affected. In addition, no relationships exist that may raise conflict ofinterest with our other general shareholders.
All the Outside Directors and Outside Audit & Supervisory Members, including the ones above, do not have conflicts ofinterest with JAPEX.
(Functions and roles to be played in corporate governance and criteria or policies concerning independence)
We believe that, by appointing Outside Directors, the supervisory functions of the Board of Directors will be strengthened.
We also believe that, by letting the Outside Directors and Outside Audit & Supervisory Board Members actively commenton and give advice on the meeting agenda, deliberations and other matters from an independent standpoint from management,
discussions because their opinion and advice are highly independent from the management, we can invigorate discussion at
the meeting of the Board of Directors.
JAPEX nominates Outside Directors who have experience as a corporate manager at a private firm, and persons with legal
expertise, among others, because such persons can provide supervision and wide-ranging proposals to our management basedon their abundant experience and deep insight. In addition to meeting the independence criteria stipulated by the Tokyo Stock
Exchange, JAPEX regards that a person is independent if the person does not meet any of the following conditions:i)

An executive of a company that provides products or services to JAPEX and for which the amount paid by JAPEX
exceeds 2% of the consolidated net sales of the company in any of the last three fiscal yearsii)

An executive of a company in which JAPEX’s borrowings account for more than 2% of the consolidated total assets of
JAPEX in any of the last three fiscal yearsiii) An executive of a company to which JAPEX provides products or services and whose payments to JAPEX exceed 2%of the consolidated net sales of JAPEX in any of the last three fiscal yearsiv) A person who has received compensation exceeding ¥10 million per year from JAPEX as a consultant, accounting
expert, or legal expert in any of the last three years in addition to officer compensation (in the case of an organizationsuch as a corporation or association, a person who belongs to such organization)v)

A relative within the second degree of kinship of a person who falls under any of (1) through (4) below:(1) A person listed in i) to iv) above(2) An executive of a subsidiary of JAPEX(3) A director who is not an executive of a subsidiary of JAPEX (limited to cases where an outside auditor is designatedas an independent officer)(4) A person who fell into (2) or (3) above, or was an executive of JAPEX (including a director who is not an executive
if an Outside Audit & Supervisory Board Member is designated as an independent officer) in the past three years- 59 -

(Our stance on the appointment)
We believe the current appointment of Outside Directors and Outside Audit & Supervisory Board Members is reasonablefrom a standpoint of governance such as the number and structure of Directors and Audit & Supervisory Board Members.

Outside Director

Name

Reasons for Appointment

ITO Tetsuo

He has extensive knowledge and experience as a legal specialist. We expect him
to identify the Company’s business challenges with accuracy, and pose questions
that contribute to reasonable and appropriate decision-making. Therefore, wehave appointed him an Outside Director.
She has extensive knowledge through her experience as a researcher at theinstitute which conducts survey and research on energy economics as well as
energy and environmental policies. We expect to receive valuable proposals thatwould bring JAPEX to grow steadily for a long time as a comprehensive energy
company as the company. We believe she would fit perfectly for the task.
Therefore, we have appointed her our Outside Director.
He has extensive knowledge on corporate management in general that come fromabundant managerial experience in global firms in telecommunications and otherareas. Based on the experience, we expect useful proposals from him which
would help JAPEX deal with range of challenges. Therefore, we have appointed
him our Outside Director.
She has deep insight that comes from abundant experience of working atgovernment offices in the field of labor administration and extensive knowledge
on labor and other laws. We expect her to provide supervision over and proposals
to our corporate management from a legal expert perspective. Therefore, we haveappointed her an Outside Director.
He has deep insight and abundant corporate management experience he has
acquired through his career at a newspaper company and others. We expect him toprovide supervision over our corporate management from an objective and neutral
standpoint as well as wide-ranging proposals that would bring JAPEX to growsustainably and enhance its corporate value in the medium to long run. Therefore,
we have appointed him an Outside Director.
Based on his abundant experience and deep insight in policy execution at the
Ministry of Finance and as a professor at a graduate school, we consider him
capable of conducting audits appropriately from an objective standpoint
independent from our management team engaged in JAPEX’s business execution.
Therefore, we have appointed him an Outside Audit & Supervisory Board
Member.
Based on his abundant corporate management experience and deep insight he has
acquired through his career at financial institutions, etc., we consider him capableof conducting audits appropriately from an objective standpoint independent fromour management team engaged in JAPEX’s business execution. Therefore, wehave appointed him an Outside Audit & Supervisory Board Member.

YAMASHITA
YukariKAWASAKI
Hideichi

KITAI Kumiko

SUGIYAMA
Yoshikuni

Outside Audit &Supervisory Board
MemberKAWAKITA
ChikaraMOTOYAMA
Hiroshi3) Mutual cooperation between Outside Directors and Outside Audit & Supervisory Board Members in supervision or audits
and internal audits, audits by Audit & Supervisory Board Members and accounting audits, and relationship with the internal
control division
Together with Audit & Supervisory Board Members, Outside Directors are pre-informed of audit plans and receive briefings
on auditing results upon receiving auditor’s reports from the Accounting Auditor. In addition, the Outside Officer Liaison
Meeting has been set up as a place for outside officers to be pre-informed of the meeting agenda at the Board of Directors’
meetings and to provide and exchange information.
Outside Audit & Supervisory Board Members are pre-informed of audit plans and receive briefings on auditing results uponreceiving auditor’s reports from the Accounting Auditor as members of the Audit & Supervisory Board. Reports on internal
audits conducted by the Auditing Dept. and the internal control report prepared by the department are submitted to the Audit& Supervisory Board and explained by the department.

- 60 -

(3) Audits
1) Audits by Audit & Supervisory Board Members(Structure and members)
The number of Audit & Supervisory Board Members is four, two of which are outside Audit & Supervisory Board Members.
Each member exercises auditing authority independently based on the auditing policy and each responsibility between themembers which are predetermined.
Audit & Supervisory Board Members KAWAKITA Chikara and MOTOYAMA Hiroshi both have considerable knowledge
on finance and accounting. While KAWAKITA acquired such knowledge from his experience in policy execution at the
Ministry of Finance, MOTOYAMA acquired it from his long-term experience at financial institutions.
(Activities)
All Audit & Supervisory Board Members attend the Board of Directors and the Outside Officer Liaison Meeting, and Audit& Supervisory Board Members attend the Executive Committee and other important management meetings to perform thefunction of management supervision by exchanging opinions as necessary with Directors and Executive Officers
responsible for business execution.
The Company holds a meeting of the Audit & Supervisory Board once a month, in principle. During the fiscal year underreview, the Company held 10 meetings of the Audit & Supervisory Board. The attendance rate of each Audit & Supervisory
Board Member is as follows:
Title
Audit & Supervisory Board

SHIMOYAMA

Member (full-time)

Koichi

Audit & Supervisory Board
Member (full-time)

NAKAMURA

Member (full-time)

Mitsuyoshi

Outside Audit & Supervisory

WATANABE

Board Member

Hiroyasu

Board Member

100% (10/10)

UCHIDA Kenji

Audit & Supervisory Board

Outside Audit & Supervisory

Attendance rate for the Audit & Supervisory Board
meetings during the fiscal year under review

Name

100% (2/2)
100% (8/8)
50% (5/10)

NAKAJIMA Norio

100% (10/10)

Notes: 1. An Audit & Supervisory Board Member UCHIDA Kenji’s rate of attendance is stated until the conclusion of the
51st Ordinary General Meeting of Shareholders held on June 25, 2021, when he retired.
2. An Audit & Supervisory Board Member NAKAMURA Mitsuyoshi’s rate of attendance is stated from the 51st
Ordinary General Meeting of Shareholders held on June 25, 2021, when he was elected.
3. Although an Audit & Supervisory Board Member WATANABE Hiroyasu could not attend some of the meetings
due to treatment and recovery at the hospital, he received relevant documents and reports and executed his duties
adequately even during such period.
The Audit & Supervisory Board resolves such matters as audit plans, formulation of audit reports, and appointment of the
Accounting Auditor. In addition, audit results on domestic offices and overseas business locations as well as major
subsidiaries are reported at the Board’s meetings.
The Audit & Supervisory Board is pre-informed of audit plans and receives briefings on auditing results upon receiving
auditor’s reports from the Accounting Auditor. In addition, full-time Audit & Supervisory Members receives reports on theimplementation status of audits as necessary.
2) Internal audits
Internal audits of JAPEX are conducted by the Auditing Dept. under the direct management of the President. The Auditing
Dept. has been assigned five staff members to conduct internal audits, and they confirm whether the business operations ofeach department are carried out in accordance with the laws and internal regulations.
Internal audits are conducted following the annual plan in order, and the Auditing Dept. reports the results of each audit to- 61 -

President and provides guidance and advice to the relevant business departments where necessary.
Reports on internal audits conducted by the Auditing Dept. are submitted to the President, as well as to the Audit &Supervisory Board, and the Accounting Auditor. The department gives explanation on the implementation status of audits tofull-time Audit & Supervisory Board Members on a regular basis.
The Auditing Dept. evaluates on the development and operating status of JAPEX’ internal control for financial reporting, andthe evaluation results are utilized in internal control audits conducted by the Accounting Auditor, and are shared with Audit& Supervisory Board Members of the Company.
3) Accounting audits(Matters concerning accounting firm)
Ernst & Young ShinNihon LLC. was the accounting firm that conducted audits on financial statements and internal control
for the fiscal year under review, and the continuous audit period is 47 years. Certified public accountants who executed theaudit duties are as follows:
Name: YUKAWA Yoshio, YAMAZAKI Kazuhiko, YOSHIDA Takeshi
Composition of assistants to the audit engagement: 10 certified public accountants and 24 other individuals(Policy and reasons for appointing audit firm)
The Company’s Audit & Supervisory Board has formulated “Standards for Appointment of Accounting Auditor.”
Specifically, the Board makes a decision on such appointment based on the comprehensive consideration after conducting
an interview with the audit firm to examine and confirm 1) outline of the audit firm; 2) system for conducting audits, etc.;
and 3) estimated audit fee, and exchanging opinions and coordinating with execution division.
Based on the above standard, the Company has reappointed Ernst & Young ShinNihon LLC.
When the Accounting Auditor has breached or contravened laws or regulations such as the Companies Act, has neglected
their duties, or has engaged in conduct unbecoming as an Accounting Auditor, or when considered necessary by the Audit &Supervisory Board, the Board decides the content of proposal on dismissal or non-reappointment of the Accounting Auditor.
Based on such decision, the Board of Directors submits the proposal to a General Meeting of Shareholders.
If the Accounting Auditor falls under any of the items of Article 340, paragraph 1 of the Companies Act, the Audit &Supervisory Board dismisses the Accounting Auditor with consent of all Audit & Supervisory Members. In such a case, an
Audit & Supervisory Board Member designated by the Audit & Supervisory Board shall report the dismissal of the
Accounting Auditor and the reason for it at the first General Meeting of Shareholders convened after the dismissal.
(Evaluation of audit firm by Audit & Supervisory Board and its members)
The Audit & Supervisory Board has formulated the “Standards for Evaluation of Accounting Auditor” consisting of sevenevaluation items: 1) quality control of the audit firm; 2) auditing team; 3) audit fee, etc.; 4) communication with Audit &Supervisory Members; 5) Relationship with management, etc.; 6) group audit; and 7) fraud risk. The evaluation was
conducted on auditing certified public accountants, etc. for each of the items above and concluded that the audit firm satisfied
all the standards.

- 62 -

4) Details of audit fees, etc.
(a) Audit fees paid to auditing certified public accountants, etc.
Previous fiscal year
Fees for audit

Category

Fiscal year under review

Fees for non-audit

Fees for audit

certification services

services

certification services

services(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

Reporting company
Consolidated
subsidiaries
Total

Fees for non-audit

74

16

74

10

24

1

23

–

99

17

98

10

(Previous fiscal year)
Non-audit services provided to the Company and its consolidated subsidiaries include advice concerning the “AccountingStandard for Revenue Recognition.”(Fiscal year under review)Non-audit services provided to the Company include advice concerning the “Accounting Standard for Revenue
Recognition,” as well as a study on revision of laws concerning Health, Safety and Environment (HSE).
Services provided to consolidated subsidiaries did not include non-audit services.
(b) Audit fees paid to the same network (Ernst & Young LLC.) to which auditing certified public accountants., etc. belong(excluding fees specified in (a) above)
Previous fiscal year
Category

Fees for audit

Fees for non-audit

certification services

Consolidated
subsidiaries
Total

Fees for audit

services(Millions of yen)
Reporting company

Fiscal year under review
Fees for non-audit

certification services(Millions of yen)services(Millions of yen)

(Millions of yen)

10

–

23

–

59

23

31

15

70

23

54

15

(Previous fiscal year)
Services provided to the Company did not include non-audit services.
Non-audit services provided to consolidated subsidiaries include tax-related advice and instruction to Japex (U.S.) Corp.,
Japan Canada Oil Sand Limited (JACOS) and Canada Oil Sands Co., Ltd. (CANOS).
(Fiscal year under review)
Services provided to the Company did not include non-audit services.
Non-audit services provided to consolidated subsidiaries include tax-related advice and instruction to Japex (U.S.) Corp.
(c) Details of fees for other significant audit certification services(Previous fiscal year)
Not applicable.
(Fiscal year under review)Not applicable.
(d) Policy for determining audit fees
Audit fees paid by the Company to auditing certified public accountant, etc. are determined based on a number of days
required for the audit and other factors.

- 63 -

(e) Reasons for the Audit & Supervisory Board’s consent to fees for the Accounting Auditor
The Audit & Supervisory Board, after receiving the necessary documents and reports from relevant departments of theCompany and the Accounting Auditor, assessed and deliberated whether the audit plans of the Accounting Auditor, the statusof the performance of duties by the Accounting Auditor, a calculation basis for the estimation of audit fees were appropriate.
Consequently, the Audit & Supervisory Board concluded that the amount was appropriate and consented to the amount offees to be paid to the Accounting Auditor in accordance with Article 399, paragraph 1 of the Companies Act.

- 64 -

(4) Compensation for Directors and other Officers
1) Policy for determining the compensation amount for Directors and other officers or the calculation method thereof(a) Compensation for Directors
Compensation for Directors is determined based on the policy for determining the compensation of directors set by the Boardof Directors after deliberation by the Nomination and Compensation Committee. In determining the details of compensationfor each Director for the fiscal year under review, the Nomination and Compensation Committee deliberated on the draft
based on the determination policy. The Board of Directors therefore judged that the details were in line with the determination
policy, with the respect for the Committee’s deliberation results. The policy for determining the compensation of directors isoutlined below.
・Regarding the compensation of directors, the compensation structure can function as anincentive to sustainably enhance corporate value. When deciding the compensation of

Basic policy

individual directors, our basic policy is to set an appropriate level in consideration of theroles aligned with their position.
・Specifically, the compensation of directors (excluding outside directors) comprises basecompensation and performance-linked compensation (bonuses and share-based
compensation). Compensation for outside directors is only base compensation, considering
their duty of supervising management.

Policy for determiningbase compensation(monetarycompensation)

Policy for determining
performance-linked, or
non-monetarycompensation・Base compensation of the Company’s directors is fixed monthly monetary compensationand is decided in comprehensive consideration of their position, balance with market
standard and employees’ salaries, number of years of service, and more.
・Of performance-linked compensation, bonuses are paid at certain times every year basedon consolidated net income as an indicator measuring their contribution to results for thecorresponding fiscal year. Specifics are decided in comprehensive consideration of theirposition, dividends, the level of employee bonuses, their contribution of directors tocorporate management in each fiscal year, past results, payment record, and more.
Note: The Board of Directors resolved at its meeting held on March 28, 2022 that the policy
for bonus payment from FY2022 onwards is to measure the contribution of the Boardof Directors to corporate management based on the achievement of previously set
annual goals and business plans (including GHG reduction target), human resource
management, leadership, and execution ability, in addition to contribution to businessperformance.
・Of performance-linked compensation, share-based compensation is based on the Rules on
Provision of Shares to Officers approved by the Board of Directors within the limit
approved at the General Meeting of Shareholders. JAPEX shares equivalent to the numberof points provided in line with their positions and performance (using annual dividend
amounts as a general rule as an indicator of performance evaluation from the perspective of
maintaining our basic policy on long-term stable dividends) and a monetary amountequivalent to the market price of said shares is provided as a general rule to directors uponretirement.

Policy concerning theratio of compensation

・We aim for the ratio of performance-linked compensation (bonuses and share-based
compensation) to total compensation to be around 30% at standard amounts. To ensure thecompensation system can better function as an incentive to sustainably enhance corporate
value, we will consider revising the ratio as appropriate.

- 65 -

Matters on
determination ofcompensation

・Regarding individual compensation, the representative director and president is entrustedwith the specific details based on a resolution by the Board of Directors. That authority
enables the allocation of bonuses based on each director’s base compensation and the
directors’ contribution to corporate management. It also enables the setting of the specifictiming of the payment.
・Calculation methods for base compensation and bonuses are deliberated in advance at theNomination and Compensation Committee. The representative director and president must
decide the method with respect to the results of the deliberations.
・The provision of points in share-based compensation is reported in advance of theNomination and Compensation Committee.

(b) Compensation of Audit & Supervisory Board Member
Compensation for Audit & Supervisory Board Members is determined after consulting with Audit & Supervisory Board
Members, and within the limit approved at a General Meeting of Shareholders.
(c) Details of non-monetary performance-linked compensation
In accordance with the resolution of the 50th Ordinary General Meeting of Shareholders held on June 26, 2020, the Company
has introduced a share-based compensation plan (Board Benefit Trust) for Directors (excluding Outside Directors) and
Executive Officers who do not concurrently serve as Directors, as mentioned in (h) below.
(d) Policy on determining payment ratios of performance-linked and non-performance-linked compensation
The policy is the same as (a) above.
(e) Indicators used for performance-linked compensation, reasons why we use them and how we decide on the amount of theperformance-linked compensation
Performance-linked compensation is composed of bonus and share-based compensation. For bonuses, consolidated profit isused as an indicator to measure contribution to business performance for the corresponding fiscal year. For share-based
compensation, annual dividend amount is used, as it reflects the evaluation of performance under the Company’s basic policyof long-term stable dividend payment. By setting these indicators, we aim to raise awareness Directors, etc. of improving
business performance for the corresponding fiscal year, as well as to motivate them to contribute to the improvement of thebusiness performance and corporate value of the Company over the medium and long term. The amount of performancelinked compensation is decided in accordance with the policy for determining compensation for Directors described in (a)above.
(f) Target and actual figures of indicators used for performance-linked compensation
Of performance-linked compensation, the specific target for the indicator used for bonuses (consolidated profit) has not beenset, as our business performance is often affected by external factors such as fluctuations of crude oil and natural gas prices
as well as foreign exchange rates, and therefore it is difficult to set accurate figure that works as an incentive. For the fiscal
year under review, the Company posted consolidated loss of ¥30,988 million. The target for the indicator used for sharebased compensation (annual dividend amount) was ¥50 per share as stated in (h) below, and the actual amount paid for the
fiscal year under review was ¥50 per share.
(g) Policy on determination of compensation amount by position or the calculation method thereof
As described in the policy for determining compensation for Directors in (a) above, our basic policy for deciding thecompensation amount for Directors is to set it at an appropriate level in consideration of their roles and others according totheir position.
(h) Summary of resolutions related to compensation at General Meetings of Shareholdersi) The following was resolved on monetary compensation for Directors at the General Meeting of Shareholders. The
number of eligible Directors as of the filing date is 11, including five Outside Directors.

- 66 -

Date of the General
Meeting of
Shareholders’ resolution

June 28, 2022, at the 52nd Ordinary General Meeting of Shareholders

Resolution summary

Up to ¥50 million per month (of which up to ¥5 million per month is for Outside Directors)
Note: The amount does not include the portion of employees’ salaries for Directors who
concurrently serve as employees.

ii) The following was resolved on share-based compensation for Directors at the General Meeting of Shareholders: The
number of eligible Directors (excluding Outside Directors) as of the filing date is six.
Date of the General
Meeting of
Shareholders’ resolution

June 26, 2020, at the 50th Ordinary General Meeting of Shareholders

Resolution summary

・ The Company will introduce a share-based compensation plan (Board Benefit Trust) for
Directors, etc. and provide the share-based compensation to the Company’s Directors
separately from their monetary compensation.
・ The outline of the Board Benefit Trust (BBT) is as sated below and the details are left to
the Board of Directors’ decision.

(Board Benefit Trust)
The Plan is a performance-linked share-based compensation plan under which the Company’s
shares are acquired through a trust (the “Trust”), using money contributed by the Company as
Outline of the Plan

financial funds, and Directors, etc. are provided with the Company’s shares and an amount ofmoney equivalent to the market value of the Company’s shares through the Trust, in
accordance with the Rules on Provision of Shares to Officers.

Persons eligible for thePlan

Directors (excluding Outside Directors) and Executive Officers who do not concurrently
serve as Directors

Timing of provision

Upon retirement from office

Number of shares to beprovided

Accumulated points calculated in accordance with the “Point calculation method” below.
Number of shares to be provided shall be decided upon retirement. (1 point = 1 share)

Applicable period for
granting points and

The applicable period shall be one year following the (re)appointment of an officer (from thedate of the Ordinary General Meeting of Shareholders to the prior day of the next year’s

timing thereof

Ordinary General Meeting of Shareholders), and points shall be granted at the date of theOrdinary General Meeting of Shareholders.

Conditions for granting
pointsEach of Directors, etc. shall be in office as of the last day (March 31) of the fiscal year
preceding the Ordinary General Meeting of Shareholders each year.

Point calculation
methodApplicable period

Trust account (amountof compensation, etc.)

Acquisition method of
the Company’s shares

The number of points shall be calculated in accordance with the Rules on Provision of Shares
to Officers based on position, the Company’s business performance, etc.
(*) The Company shall use the annual dividend amount as an indicator to evaluate
performance (target amount: ¥50), with a range of fluctuation from 0% to 120%, assumingthat the payout ratio at the target value is 100%.
The initial period shall be three fiscal years up to FY2022, and the subsequent applicable
period is expected to be every five fiscal years.
The Company shall contribute money as defined below to the Trust, as the financial funds for
the Trust to acquire the Company’s shares.
1) Initial three fiscal years: up to ¥141 million (including ¥63 million for Directors)
2) Every five fiscal years afterwards: up to ¥235 million (including ¥105 million for
Directors)
In principle, the Company’s shares shall be acquired from stock exchange markets (or may bethrough the disposal of the Company’s treasury shares).

iii) The following was resolved on compensation for Audit & Supervisory Board Members at the General Meeting of
Shareholders. The number of eligible Audit & Supervisory Board Members as of the filing date is four.

- 67 -

Date of the General
Meeting of
Shareholders’ resolution

June 24, 2015, at the 45th Ordinary General Meeting of Shareholders

Resolution summary

Up to ¥8 million per month(i) Name of the person responsible for deciding on compensation amount, calculation method thereof, and details and scopeof his/her discretion
Under (a) above, regarding individual compensation of Directors for the fiscal year under review, the Board of Directors
delegated the Representative Director and President FUJITA Masahiro to decide the amount of base compensation,
allocation of bonuses based on contribution to corporate management, and the specific timing of the payment for each
Director. The reason for the delegation is because the Representative Director and President is in the best position toevaluate each Director, while taking into account the comprehensive business performance of the Company and otherfactors. Before finally deciding on the delegated matters, their adequacy, etc. were verified by the Nomination andCompensation Committee.
(j) Activities of the Board of Directors and the Committee in deciding on compensation amount, etc.
Compensation for Directors and other officers for the fiscal year under review is decided after going through deliberation at
the Nomination and Compensation Committee, which is then followed by deliberation and resolution by the Board of
Directors. The following are activities for the fiscal year under review:(Board of Directors)
Date of meeting

Description

June 25, 2021

・Resolution on the compensation amount for Directors and the payment of retirement
benefits to retiring Directors

March 28, 2022

・Resolution on amendments to the policy for determining individual Directors’ compensation(Nomination and Compensation Committee)
Date of meeting
January 21, 2022

Description
・Deliberation on how to reflect contribution of Directors and Executive Officers in theirbonuses2) Total amount of compensation by position, type of compensation and number of recipients
Position
Directors(excluding Outside Directors)

Audit & Supervisory Board
Members(excluding Outside Audit &Supervisory Board Members)

Outside Officer

Total amount ofconsolidated
compensation(Millions of yen)

Total amount of each type of compensation(Millions of yen)
Share-based
Base compensation
Bonus
compensation

Number ofrecipients(Persons)

335

303

18

13

8

41

41

－

－

3

66

66

－

－

6

Note: 1. The above number of recipients includes one Director and one Audit & Supervisory Board Member who retired
upon the conclusion of the 51st Ordinary General Meeting of Shareholders held on June 25, 2021.
2. The above share-based compensation comprises the amount of provision equivalent to money provided based on theacquired points under share-based compensation that were provided during the fiscal year.
3. In addition to the above total amount, the Company paid ¥14 million to one Director retired at the conclusion of the
51st Ordinary General Meeting of Shareholders held on June 25, 2021 as the final payment amount of retirement
benefits associated with the abolishment of the retirement benefit plan, based on the resolution at the 45th Ordinary
General Meeting of Shareholders held on June 24, 2015.

- 68 -

(5) Shareholdings
1) Standards for and view on the classification of investment shares
JAPEX classifies shares of companies we have determined to be necessary to promote smooth business execution and tomaintain good business relationships for the purpose of achieving sustainable growth and enhancing medium- to long-term
corporate value as “investment shares held for purposes other than pure investment (strategic shareholdings)” separately frominvestment shares held for pure investment purposes.
2) Investment shares held for purposes other than pure investmenti) Shareholding policy, method of verification of the rationale for shareholdings, and details of verification by the Board of
Directors, etc. of the appropriateness of shareholdings of individual issues
To verify the reasonableness of these shareholdings, the Board of Directors performs a qualitative evaluation related to theappropriateness of the purpose of holding for each issue and a quantitative evaluation on whether the benefits and risks
from each holding are commensurate with the Company’s cost of capital every year. If we determine that it has becomeless reasonable to hold certain issues based on these evaluations, we reduce the number of those shareholdings.
ii) Number of issues and carrying amount
Number ofissuesTotal balance sheet amount(Millions of yen)

Unlisted shares

21

1,821

Shares other than unlisted
shares4

79,327(Issues whose number of shares increased during the fiscal year under review)
Total acquisition price related
Number of
to increase in number of sharesissues(Millions of yen)
Unlisted shares

1

1

Shares other than unlisted
shares––(Issues whose number of shares decreased during the fiscal year under review)
Total sales price related to
Number of
decrease in number of sharesissues(Millions of yen)
Unlisted shares––

Shares other than unlisted
shares1

50,560- 69 -

Reasons for the increase
Acquisition of new shares for expanding businessdomain–iii) Numbers of specified investment shares and deemed holding investment shares by issue, and their balance sheet amountSpecified investment shares

Issue

Fiscal year underreview
Number of shares(Shares)
Total balance sheet
amount(Millions of yen)

53,446,600

Previous fiscal year
Number of shares(Shares)
Total balance sheet
amount(Millions of yen)

106,893,200

INPEX
CORPORATION

76,963660,000

80,811

660,000

Nitto Boseki Co.,
Ltd.
1,861

2,656

Purpose of holding, quantitative effect of holding,and reason for increase in number of shares

Since JAPEX took initiative in establishing North
Sumatra Offshore Petroleum Exploration Co., Ltd.,the precursor to INPEX CORPORATION (hereinafter“INPEX”) in 1966, JAPEX has held a certain numberof its shares since then, although its management was
separated from ours later. INPEX places its upstream
oil and gas business as its core business, and jointly
promotes part of overseas projects with JAPEX.
JAPEX therefore holds INPEX’s shares to facilitate
the business relationship. Because the quantitative
effect of the shareholding involves trade secrets, etc.,

Holding of
JAPEX’ssharesYes

it is difficult to disclose such information. However,
JAPEX has conducted a qualitative assessment on theappropriateness of the purposes of holding as well as aquantitative assessment on benefits and risks
associated with the holding, and concluded that theshareholding was reasonable.
The company is an important customer along the
JAPEX’s natural gas pipeline, and JAPEX holds its
shares to maintain favorable trading relationship.
Because the quantitative effect of the shareholding
involves trade secrets, etc., it is difficult to disclosesuch information. However, JAPEX has conducted aqualitative assessment on the appropriateness of the
purposes of holding as well as a quantitative
assessment on benefits and risks associated with theholding, and concluded that the shareholding wasNoreasonable.
The company and JAPEX jointly conduct business at
the Group’s major oil and gas fields, namely Iwafune163,770

163,770

MITSUBISHIGAS CHEMICALCOMPANY, INC.
340

444

oki oil and gas field and Higashi-Niigata gas field.
JAPEX holds its shares to facilitate business
relationship as well as to maintain favorable trading
relationship. Because the quantitative effect of theshareholding involves trade secrets, etc., it is difficult
to disclose such information. However, JAPEX has
conducted a qualitative assessment on theappropriateness of the purposes of holding as well as aquantitative assessment on benefits and risks
associated with the holding, and concluded that theshareholding was reasonable.

- 70 -

Yes

110,000

110,000

Hokkaido Gas Co.,
Ltd.

161

176

The company is an important customer for our sale ofnatural gas in Hokkaido, and JAPEX holds its share to
maintain favorable trading relationship. Because thequantitative effect of the shareholding involves trade
secrets, etc., it is difficult to disclose such information.
However, JAPEX has conducted a qualitative
assessment on the appropriateness of the purposes ofholding as well as a quantitative assessment on
benefits and risks associated with the holding, andconcluded that the shareholding was reasonable.

Yes

Note: The Board of Directors verified the reasonableness of these shareholdings at its meeting held in December 2021.
JAPEX does not have deemed holdings of investment shares.
3) Investment shares held for pure investment purposes
Fiscal year under review
Category

Previous fiscal year

Total balance sheet
amount(Millions of yen)

Number of issues

Total balance sheet
amount(Millions of yen)

Number of issues

Unlisted shares

–

–

–

–

Shares other than unlisted
shares

3

89

3

126

Fiscal year under review
Category

Total of dividends
received (Millions ofyen)

Total of gain (loss) on
sale (Millions of yen)

Total of valuation gain
(loss) (Millions of yen)

Unlisted shares

–

–

–

Shares other than unlisted
shares4–

2- 71 -

Item 5. Financial Information
1. Basis for Preparation of Consolidated Financial Statements and Non-consolidated Financial Statements(1) The consolidated financial statements of the Company are prepared in accordance with the Ordinance on Terminology,
Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of1976).
(2) The non-consolidated financial statements of the Company are prepared in accordance with the Ordinance on the
Terminology, Forms, and Preparation Methods of Financial Statements (Ordinance of the Ministry of Finance No. 59 of
1963; hereinafter referred to as the “Ordinance on Financial Statements, etc.”).
The Company falls under the company allowed to file specified financial statements and prepares its non-consolidated
financial statements pursuant to the provisions of Article 127 of the Ordinance on Financial Statements, etc.

2. Audit Certificate
Pursuant to the provisions set forth in Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, the Company’s
consolidated and non-consolidated financial statements for the fiscal year from April 1, 2021 to March 31, 2022 have been
audited by Ernst & Young ShinNihon LLC.

3. Special Measures to Ensure the Appropriateness of Consolidated Financial Statements, etc.
The Company has taken special measures to ensure the appropriateness of the consolidated financial statements, etc. Specifically,
the Company has joined the Financial Accounting Standards Foundation and has participated in seminars held by the foundationin order to understand accounting standards properly and establish a system that allows the Company to adapt to changes inaccounting standards appropriately.

- 72 -

1 Consolidated Financial Statements, etc.
(1) Consolidated financial statements
1) Consolidated Balance Sheet(Millions of yen)
As of March 31, 2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Contract assets
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
Accumulated depreciation
Buildings and structures, net
Wells
Accumulated depreciation
Wells, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investment and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Allowance for overseas investment loss
Total investments and other assets
Total non-current assets
Total assets- 73 -

As of March 31, 2022

162,368

147,241*1 39,519*2 47,158

–
3,030
4,297
140
8,001
3,715
(38)
221,034

405
3,030
2,143
29
12,503
14,458(51)
226,920*3 327,422*3 178,766(169,580)
157,841
119,329(94,363)
24,965*3 145,143(117,309)
27,834
12,38534,537*3 36,783(27,603)
9,180
266,745(141,557)
37,20875,314(73,388)
1,925*3 146,470(122,216)
24,253
11,536
14,797*3 20,945(17,829)
3,116
92,837

6,129
6,129

5,802
5,802

*4, *5 105,070*4, *5 108,910

48
7,940
2,384
15,850(44)(373)
130,877
403,752
624,786

49
3,709
2,319
31,734(45)(297)
146,380
245,021471,941(Millions of yen)
As of March 31, 2021
Liabilities
Current liabilities
Notes and accounts payable - trade
Current portion of long-term borrowings
Contract liabilities
Provision for loss on disaster
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated 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
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets- 74 -

As of March 31, 2022

21,546
62,175–913
19,142
103,776

11,479
260
258
1,841
11,402
25,24150,1807,919
3,545
21,262
3,609
86,517
190,294510
16,867
3,376
19,5393,636
43,92969,171

14,288–344,438(151)
358,575

14,288
2,607
310,592(3,886)323,60244,228(488)(3,810)1,667
41,59634,320434,492
624,786

48,346(1,862)
89
1,464
48,036
31,131
402,770
471,941

2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodForeign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Late charges
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Gain on forgiveness of debts
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment losses
Loss on disaster
Loss on sale of shares of subsidiaries
Loss on transfer of interests
Loss on liquidation of subsidiaries
Other
Total extraordinary losses
Loss before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Loss
Profit (loss) attributable to non-controlling interests
Loss attributable to owners of parent- 75 -

240,078*1 249,140*2, *3 203,543*2, *3 199,237

36,534989*4, *5 31,352
4,192

49,903359*4, *5 29,734
19,809

412
2,823

266
4,049

5,808

14,226

–
846
9,891

10,002
1,535
30,080

2,529
–
639
912
4,081
10,001

1,187
3,335
–
1,693
6,215
43,674*6 11*6 1,307––1139,82642,462
83,596

*7 30

*7 46

*8 16,351–*9 948*9 1,416–––
5
17,335(7,322)
4,941(6,864)(1,923)(5,399)(2,673)(2,725)94,37344,724
3,889
1,321
145,772(18,501)
2,855
6,797
9,652
(28,153)
2,835(30,988)

Consolidated Statement of Comprehensive Income(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
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 non-controllinginterests- 76 -(5,399)(28,153)

11,160125(7,853)910

4,121(1,718)
6,412
(202)

(517)

547

* 3,825* 9,161(1,574)(18,992)

1,375(24,548)(2,949)5,556

3) Consolidated Statement of Changes in Equity
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

14,288Retained earnings–

Treasury shares

350,934(11)

Total shareholders’equity365,212

Changes during period
Dividends of surplus(2,857)(2,857)

Loss attributable to owners ofparent(2,725)(2,725)

Change in ownership interest ofparent due to transactions with
non-controlling interests–

Change in scope of
consolidation
Change in scope of equity
method

(0)

(0)

(911)

(911)

Purchase of treasury shares(140)

Disposal of treasury shares

(140)
–

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period––(6,495)(140)(6,636)

14,288–344,438(151)

358,575

Accumulated other comprehensive income
Valuationdifference Deferred gains
on available- or losses on
for-salehedgessecurities
Balance at beginning of period

33,061

181

Foreigncurrencytranslation
adjustment

Total
Remeasureme accumulated
nts of definedotherbenefit plans comprehensi
ve income

3,494

756

37,494Non-controllinginterests

Total net assets

37,450440,157

Changes during period
Dividends of surplus(2,857)

Loss attributable to owners ofparent(2,725)

Change in ownership interest ofparent due to transactions with
non-controlling interests–

Change in scope of
consolidation(0)

Change in scope of equity
method(911)

Purchase of treasury shares(140)

Disposal of treasury shares–

Net changes in items other thanshareholders’ equity

11,167(670)(7,305)

910

4,101

(3,130)971

Total changes during period

11,167(670)(7,305)

910

4,101

(3,130)(5,665)

Balance at end of period

44,228(488)(3,810)1,667

41,59634,320434,492- 77 -

Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

14,288Retained earnings–

Total shareholders’equityTreasury shares

344,438(151)

358,575

Changes during period
Dividends of surplus(2,857)(2,857)

Loss attributable to owners ofparent(30,988)(30,988)

Change in ownership interest ofparent due to transactions with
non-controlling interests

2,607

2,607

Change in scope of
consolidation–

Change in scope of equity
method–Purchase of treasury shares(3,737)(3,737)

Disposal of treasury shares2

2

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

–

2,607

(33,846)(3,734)(34,973)

14,288

2,607

310,592(3,886)323,602

Accumulated other comprehensive income
Valuationdifference Deferred gains
on available- or losses on
for-salehedgessecurities
Balance at beginning of period

44,228(488)

Foreigncurrencytranslation
adjustment

Total
Remeasureme accumulated
nts of definedotherbenefit plans comprehensi
ve income(3,810)1,667

41,596

Non-controllinginterests

Total net assets

34,320434,492

Changes during period
Dividends of surplus(2,857)

Loss attributable to owners ofparent(30,988)

Change in ownership interest ofparent due to transactions with
non-controlling interests

2,607

Change in scope of
consolidation–

Change in scope of equity
method–Purchase of treasury shares(3,737)

Disposal of treasury shares

2

Net changes in items other thanshareholders’ equity

4,117(1,374)

3,900

(202)

6,440

(3,189)3,251

Total changes during period

4,117(1,374)

3,900

(202)

6,440

(3,189)(31,721)

Balance at end of period

48,346(1,862)

89

1,464

48,036

31,131

402,770- 78 -

4) Consolidated Statement of Cash Flows(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Cash flows from operating activities
Loss before income taxes
Depreciation
Impairment losses
Loss on retirement of property, plant and equipment
Loss (gain) on valuation of short-term and long-term
investment securities
Increase (decrease) in allowance for doubtful accounts
Decrease (increase) in retirement benefit asset
Increase (decrease) in retirement benefit liability
Increase (decrease) in allowance for overseas
investment loss
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sale of short-term and long-term
investment securities
Loss (gain) on liquidation of subsidiaries
Share of loss (profit) of entities accounted for using
equity method
Loss on transfer of interests
Recovery of recoverable accounts
Gain on forgiveness of debts
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes
Other, net
Subtotal
Income taxes refund (paid)
Net cash provided by (used in) operating activities- 79 -(7,322)
22,59916,351
30(18,501)
17,721
–
45

12

–

6
(1,413)
16

15
64
(168)

(342)

(75)

(3,235)2,529(7)(4,316)
1,187(9,911)–53,579–3,899(5,808)(14,226)–
15,196–(12,188)
4,003
10,211
2,219
3,490
46,348(3,085)43,26344,724
17,780(42,462)(12,410)(2,737)(9,422)(2,360)(16,697)
5,726(6,778)(1,052)

(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Proceeds from sale and redemption of securities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Payments for asset retirement obligations
Purchase of investment securities
Proceeds from sale and redemption of investment
securities
Proceeds from sale of shares of subsidiaries resulting
in change in scope of consolidation
Payments of recoverable accounts
Loan advances
Proceeds from collection of loans receivable
Interest and dividends received
Proceeds from dividends of residual property
Proceeds from capital reduction of investments
Proceeds from transfer of interests
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Interest paid
Repayments of lease liabilities
Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 80 -(28,281)
46,446–(15,153)
21
(416)
(114)
(6,806)(41,247)
44,92030(16,278)
2,248
(290)
(128)
(11,827)–

53,062–*2 29,382(14,971)(26)
22
10,358
–
3,068
–
(598)
(6,453)(23,244)(6,721)
24
19,860
6
75
2,701
(507)
52,06775,079(77,813)(6,470)(140)(2,858)(180)(2,908)(335)

20,900(20,900)(59,703)(3,737)(2,857)(2,085)
(674)
(255)

–

(1,626)(15,626)(70,939)(1,479)6,475

19,703
138,259*1 157,963(13,449)
157,963*1 144,513

Notes to consolidated financial statements(Notes to significant accounting policies for preparation of consolidated financial statements)
1. Disclosure of scope of consolidation(1) Number of consolidated subsidiaries: 16
Names of major consolidated subsidiaries
JGI, Inc., Japex (U.S.) Corp., Japex Offshore Ltd., Shirone Gas Co., Ltd., Japex Energy Co., Ltd., and Japex
Garraf Ltd.
Japan Canada Oil Sands Limited, a former consolidated subsidiary, has been excluded from the scope of
consolidation because all the shares of the said company we held were sold.
JAPEX Montney Ltd., a former consolidated subsidiary, has been excluded from the scope of consolidation
because its liquidation was completed.
(2) Names of major unconsolidated subsidiaries, etc.
Major unconsolidated subsidiaries
Seiki Plant Services, Co., Ltd. and Japex Canada Limited(Reason for exclusion from the scope of consolidation)
These unconsolidated subsidiaries have been excluded from the scope of consolidation because they are small inscale, and have no material impact on consolidated financial statements in terms of the total amount of items
including total assets, net sales, profit or loss (amount proportionate to the Company’s equity interests), andretained earnings (amount proportionate to the Company’s equity interests).
2. Disclosure about application of equity method(1) Number of unconsolidated subsidiaries accounted for using equity method: 0(2) Number of associates accounted for using equity method: 11
Names of major unconsolidated subsidiaries and associates accounted for using equity method
Energi Mega Pratama Inc., Diamond Gas Netherlands B.V., Sakhalin Oil and Gas Development Co., Ltd. andFukushima Gas Power Co., Ltd.
(3) Certain unconsolidated subsidiaries (Seiki Plant Services Co., Ltd., Japex Canada Limited, etc.) and associates(DAIWA Exploration & Consulting Co., Ltd., Joban Kyodo Gas Co., Ltd., etc.) are excluded from the scope ofentities accounted for using the equity method because such exclusion has no material impact on the Company’s
consolidated financial statements in terms of profit or loss (amount proportionate to the Company’s equity
interests), retained earnings (amount proportionate to the Company’s equity interests), etc., and they are
immaterial as a whole.
(4) Entities accounted for using the equity method whose closing dates are different from the consolidated closing dateare accounted for on the basis of the entities’ respective closing date.
(5) Any difference between the cost and the underlying net equity at fair value of investments in entities accounted forusing the equity method is amortized by the straight-line method over a period of not exceeding 20 years, expect
for minor accounts that are amortized at one time as incurred.
3. Disclosure about fiscal years, etc. of consolidated subsidiaries
The balance sheet date of Japex (U.S.) Corp., Japex Garraf Ltd., and another consolidated subsidiary is December 31.
The consolidated financial statements of Japex Garraf Ltd. were previously prepared based on the last day of theconsolidated subsidiary’s fiscal year in the event that there was a difference of less than three months between the last
day of the consolidated subsidiary’s fiscal year and the consolidated balance sheet date. However, said subsidiary haschanged the method to perform a provisional settlement of accounts on the consolidated balance sheet date effectivefrom the fiscal year under review in order to offer more appropriate understanding of business information anddisclosure of the consolidated financial statements.
The financial statements of Japex (U.S.) Corp. and another consolidated subsidiary as of their balance sheet date areused in preparing the consolidated financial statements. The necessary adjustments have been made to the consolidated
financial statements for any significant transactions that took place between January 1 and the consolidated balance
sheet date March 31.

- 81 -

4. Disclosure of accounting policies(1) Accounting policy for measuring significant assets
1) Securities
Held-to-maturity debt securities
Stated at amortized cost.
Available-for-sale securities
Available-for-sale securities other than shares, etc. without market priceStated at fair value based primarily on the market price at the fiscal year-end. Unrealized gains and losses
are recognized directly in net assets and the cost of securities sold is determined using the moving-averagemethod.
Shares, etc. without market priceStated at cost using the moving-average method.
Investments in limited investment partnerships and silent partnerships are recorded by adding or
subtracting the amount of equity interest in the net assets of the partnerships to/from “investment
securities.”2) Derivatives
Stated at fair value.
3) Inventories
Stated at cost (a method in which carrying amount is written down based on any decline in profitability).
Merchandise and finished goods
Stated mainly by the first-in, first-out method.
Raw materials and supplies
Stated mainly by the moving-average method.
(2) Accounting policy for depreciation/amortization of significant assets
1) Property, plant and equipment (excluding leased assets)
Buildings (excluding attached facilities) acquired on or after April 1, 1998, facilities attached to buildings andstructures of certain domestic consolidated subsidiaries acquired on or after April 1, 2016, Sendai pipelines,
Shiroishi-Koriyama gas pipelines, Soma-Iwanuma gas pipelines, assets of the Hokkaido District Office andSoma District Office of the Company, and property, plant and equipment items held by three domestic
consolidated subsidiaries are depreciated by the straight-line method.
Property, plant and equipment items held by a foreign consolidated subsidiary are depreciated by the unit ofproduction method.
Other property, plant and equipment items (excluding leased assets) are depreciated by the declining-balancemethod.
The principal useful lives are as follows:
Buildings and structures: 2 to 60 years
Wells: 3 years
Machinery, equipment and vehicles: 2 to 22 years
2) Intangible assets (excluding leased assets)
Amortized by the straight-line method.
Capitalized computer software costs are amortized by the straight-line method over a period of 5 years, which isthe period available for internal use.
Intangible assets of one foreign consolidated subsidiary are mainly amortized by the unit of production method.
3) Leased assets
Finance leases which do not transfer ownership of the leased assets to the lessee
Leased assets are depreciated by the straight-line method over the lease terms with no residual value.

- 82 -

(3) Accounting standards for significant provisions
1) Allowance for doubtful accounts
To provide for potential credit losses on receivables, the allowance for doubtful accounts is stated at the amountdetermined based on the historical experience of bad debt with respect to ordinary receivables, plus an estimateof uncollectible amounts determined by reference to specific doubtful receivables from customers which areexperiencing financial difficulties.
2) Allowance for overseas investment loss
The allowance for overseas investment loss is stated at the amount determined based on the investees’ financial
position and certain other factors for possible losses arising from investments in the exploration anddevelopment of overseas natural resources.
3) Provision for loss on disaster
The provision for loss on disaster is stated at the estimated amount of payment for restoration expenses
accompanying disasters.
(4) Accounting treatment of retirement benefits
1) Method of attributing expected benefit to periods
The retirement benefit obligations for employees are attributed to each period by the benefit formula method
over the estimated years of service of the eligible employees.
2) Accounting treatment of actuarial gains and losses and prior service costs
Prior service costs are amortized as incurred by the straight-line method over a certain period (10 years), whichis shorter than the average remaining years of service of the employees.
Actuarial gains and losses are amortized in the following year in which the gains or losses are recognized by thestraight-line method over a certain period (10 years), which is shorter than the average remaining years ofservice of the employees.
3) Application of simplified method for smaller enterprises
Certain consolidated subsidiaries apply the simplified method for calculating retirement benefit expenses andliabilities based on the assumption that the benefits payable, which are calculated as if all eligible employees
voluntarily terminated their employment at fiscal year-end, approximates the retirement benefit obligation at
year’s end.
(5) Accounting standards for significant revenues and expenses
With regard to revenues from contracts with clients of the Company and its consolidated subsidiaries, the main
performance obligations in key businesses and the timing at which these obligations are typically satisfied (i.e.,
when revenues are typically recognized) are as follows.
The Company and its consolidated subsidiaries conduct the “E&P Business,” the “Infrastructure/Utility Business,”and “Other businesses” in the four reportable segments provided in the segment information: “Japan,” “North
America,” “Europe” and “Middle East.”
1) E&P BusinessIn the E&P Business, exploration, development, production, production services, and sales of crude oil and natural
gas are conducted at business locations in Japan and overseas. It is judged that in these sales, legal ownership andphysical possession of assets, as well as significant risks and economic rewards associated with ownership ofassets, are transferred, and the right to receive consideration for delivered products is obtained, at the time theproducts are delivered to clients. Thus, revenue is recognized at that time. As for production services, when control
over goods or services is transferred to clients over a certain period of time, revenue is recognized according toprogress in the satisfaction of performance obligations. For measurement of progress, the output approach basedon production volume is used.
2) Infrastructure/Utility BusinessIn the Infrastructure/Utility Business, sales of gases (natural gas and LNG) and electricity are conducted atbusiness locations in Japan. It is judged that in these sales, legal ownership and physical possession of assets, aswell as significant risks and economic rewards associated with ownership of assets, are transferred, and the right toreceive consideration for delivered products is obtained, at the time the products are delivered to clients. Thus,
revenue is recognized at that time.

- 83 -

3) Other businesses
In the Other businesses, contract services (drilling and geological surveys, etc.) and sales of oil products, etc. areconducted at business locations in Japan. As for contract services, when control over goods or services istransferred to clients over a certain period of time, revenue is recognized according to progress in the satisfactionof performance obligations. For measurement of progress, the input approach based on incurred costs is used. It is
judged that in sales of oil products, etc., legal ownership and physical possession of assets, as well as significant
risks and economic rewards associated with ownership of assets, are transferred, and the right to receive
consideration for delivered products is obtained, at the time the products are delivered to clients. Thus, revenue isrecognized at that time.
For all businesses, in identification of performance obligations, it is examined whether the JAPEX Group acts as aprincipal or an agent. If the nature of its promise is a performance obligation to provide the specified goods orservices itself, as a principal it presents revenue at the gross amount of consideration in its consolidated statementof income. If the nature is a performance obligation to make arrangements so that these goods or services areprovided by other parties, as an agent it presents revenue at the amount of commissions or fees, or the net amountof consideration, in its consolidated statement of income.
Revenue is recognized based on the transaction price under contracts with clients. If a contract contains multiple
performance obligations, the transaction price is allocated to each performance obligation at a ratio of standalone
selling price. Since consideration for transactions is usually paid within one year after the satisfaction of
performance obligations, such consideration does not include any significant financing component.
(6) Accounting policy for translating significant foreign currency assets and liabilities into yen
Monetary receivables and payables denominated in foreign currencies are translated into yen at the spot exchange
rate on the consolidated balance sheet date, and the resulting translation adjustments are presented as foreignexchange gains or losses. Meanwhile, assets, liabilities, revenues and expenses of foreign consolidated
subsidiaries, etc. are translated into yen at the spot exchange rate on their respective balance sheet dates, and theresulting translation adjustments are included in foreign currency translation adjustment under net assets.
(7) Significant hedge accounting
1) Hedge accounting method
Deferral hedge accounting is adopted for hedge transactions. Foreign exchange forward contracts are accounted
for by the allocation method if the foreign exchange forward contracts meet certain criteria to adopt the method.
2) Hedging instruments and hedge items
Hedging instruments: Foreign exchange forward contracts
Hedged items: Accounts payable - trade and accounts payable - other3) Hedging policy
To avoid future foreign currency fluctuation risk associated with foreign currency transactions, etc., the Company
enters into hedge transactions only in connection with the relevant assets, liabilities and forecast transactions.
4) Method of assessing the effectiveness of hedges
The Company assesses whether the critical terms of the hedging instruments and hedged items are closely aligned,
and the hedge transactions are effective in offsetting the price fluctuation, etc. at the inception of the hedge and on
an ongoing basis.
Forward exchange contracts accounted for by the allocation method are not subject to the assessment of hedge
effectiveness.
(8) Scope of cash and cash equivalents in the consolidated statement of cash flows
Cash and cash equivalents in the consolidated statement of cash flows consist of cash on hand, readily available
deposits and highly liquid short-term investments with maturities of three months or less when purchased that are
exposed to an insignificant risk of changes in value.

- 84 -

(9) Other material matters for preparation of consolidated financial statements
Accounting treatment of recoverable accounts
Investments made under a development and production service contract are included in recoverable accounts.
These investments are recovered through sales to customers of a portion of the crude oil production received basedon the contract.
In addition, an amount corresponding to the recovered investments at the time of sale is recorded as cost of sales.
(Significant accounting estimates)
Recoverability of deferred tax assets(1) Amounts recorded in the consolidated financial statements for the fiscal year ended March 31, 2022
(Millions of yen)
As of March 31, 2021
Deferred tax assets

As of March 31, 2022
29,017

20,837

Note: The amount is before offset with deferred tax liabilities.
(2) Information about significant accounting estimates on identified items
1) Calculation method
The Company reviews the recoverability of deferred tax assets in accordance with the “Implementation Guidanceon Recoverability of Deferred Tax Assets.”
As of March 31, 2022, deductible temporary differences which are deemed collectible and net tax loss carriedforward are recognized as deferred tax assets as a result of the scheduling of temporary differences based on theestimated amount of taxable income before adding or subtracting temporary differences for a reasonably estimableperiod in the future as of the end of the year ended March 31, 2022.
In addition, consolidated subsidiaries recognize deferred tax assets in accordance with respective accounting
standards they apply.
2) Major assumptions used for significant accounting estimates
The recoverability of deferred tax assets is largely dependent on estimates of future taxable income. The Company
and its consolidated subsidiaries estimate the timing and amount of future taxable income in accordance with the
tax laws of the respective countries. The assumptions underlying these estimates, such as the sales price of eachproduct, sales volume and foreign exchange rates, are incorporated into the business plans approved bymanagement.
As of March 31, 2022, the specific dissipation of the COVID-19 pandemic, which is one of the factors affecting
the above assumptions, still remains uncertain, and the impact on economic activities in Japan and overseas has
continued.
Although the current economic sanctions against Russia and the turmoil in the energy market have kept crude oiland natural gas prices high globally, we believe that various structural changes brought about by the prolonged
effects of the COVID-19 pandemic and progress on global decarbonization could be a risk factor for future demand
for fossil fuels. In light of the changes in the business environment surrounding our company and the trend of rising
global carbon prices, our projection for the medium- to long-term oil price is set at US$50 per barrel.
Taking into consideration the impact of such business conditions on the future business environment, the Company
has calculated the amount of deferred tax assets to the extent that it is probable that taxable income will be available
against which the deductible temporary differences, unused tax credit carried forward and net tax loss carriedforward can be utilized.
3) Effects on the consolidated financial statements for the year ending March 31, 2023
Changes in estimates due to changes in the above assumptions may affect taxable income and increase or decrease
the amount of deferred tax assets recorded for the Company and its consolidated subsidiaries.
The amount of deferred tax assets may also increase or decrease as a result of reexamining the reasonably estimableperiod in the future due to changes in the above assumptions in order to examine the recoverability using taxable
income based on future profitability and tax planning estimates for deductible temporary differences, unused tax
credit carried forward and net tax loss carried forward.

- 85 -

(Changes in accounting policies)
Application of Accounting Standard for Revenue Recognition, etc.
As the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised
ASBJ regulations were applied from the beginning of the fiscal year under review, we have recognized the revenue atthe time the control of promised goods or services is transferred to the client, at the amount expected to be received
upon the exchange of said goods or services. As a result, we have changed the method of recognizing revenue to a net
basis for certain purchase and sale transactions of crude oil, natural gas, etc., where we previously recognized revenue
on a gross basis, after determining its role (as principal or agent) in the provision of goods or services to clients.
The application of the Accounting Standard for Revenue Recognition and relevant revised ASBJ regulations is subject
to the transitional treatment provided for in the proviso to paragraph 84 of the Accounting Standard for Revenue
Recognition. The cumulative effect of the retrospective application, assuming the new accounting policy had been
applied to periods prior to the beginning of the fiscal year under review was added to or deducted from the opening
balance of retained earnings of the fiscal year under review, and thus the new accounting policy was applied from suchopening balance; provided, however, that the new accounting policy was not retrospectively applied to contracts forwhich nearly all the revenue amounts had been recognized according to the previous treatment in periods prior to thebeginning of the fiscal year under review, by applying the method provided for in paragraph 86 of the AccountingStandard for Revenue Recognition.
Consequently, for the fiscal year under review, net sales decreased ¥61,966 million, cost of sales decreased ¥61,906
million, and selling, general and administrative expenses decreased ¥59 million compared with those before theadoption of the Accounting Standard for Revenue Recognition. There was no effect on operating profit, ordinary profit,
and loss before income taxes. In addition, there was also no effect on the opening balance of retained earnings of the
fiscal year under review.
Due to the application of the Accounting Standard for Revenue Recognition and relevant revised ASBJ regulations,“notes and accounts receivable - trade” under current assets of the consolidated balance sheet as of the end of theprevious fiscal year has been included in “notes and accounts receivable - trade” and “contract assets” under current
assets from the consolidated balance sheet as of the end of the fiscal year under review, and “other” under current
liabilities of the consolidated balance sheet as of the end of the previous fiscal year has been included in “contract
liabilities” and “other” under current liabilities from the consolidated balance sheet as of the end of the fiscal year underreview. In accordance with the transitional treatment provided for in paragraph 89-2 of the Accounting Standard for
Revenue Recognition, figures for the previous fiscal year have not been restated in accordance with the new approach topresentation.
In accordance with the transitional treatment provided for in paragraph 89-3 of the Accounting Standard for Revenue
Recognition, notes on revenue recognition for the previous fiscal year are not presented.
Application of Accounting Standard for Fair Value Measurement, etc.
We have applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) andrelevant ASBJ regulations from the beginning of the fiscal year under review. And we have applied new accounting
policies stipulated in the Accounting Standard for Fair Value Measurement and relevant ASBJ regulations prospectively
in accordance with the transitional treatment provided for in paragraph 19 of the Accounting Standard for Fair Value
Measurement and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10,
July 4, 2019). There was no effect of this application on the consolidated financial statements.
In addition, fair value information by level within the fair value hierarchy is presented in the notes on financial
instruments. However, notes for the previous fiscal year are not presented in accordance with the transitional treatment
provided for in paragraph 7-4 of the “Implementation Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No. 19, July 4, 2019).

- 86 -

(Additional information)
Share-based compensation plan
The Company, based on the resolution of the 50th Ordinary General Meeting of Shareholders held on June 26, 2020,
has introduced a “Board Benefit Trust (BBT)” (hereinafter referred to as the “Plan”), a performance-linked share-based
compensation plan for the Company’s Directors (excluding Outside Directors) and Executive Officers who do notconcurrently serve as Directors (hereinafter collectively referred to as “Directors, etc.”). The Plan aims to further clarify
the linkage between compensation for Directors, etc. and the business performance and share value of the Company inorder to further motivate Directors, etc. to contribute to the improvement of the business performance and corporate
value of the Company over the medium and long term.
(1) Overview of the transaction
Under the Plan, Directors, etc. are provided with the Company’s shares and an amount of money equivalent to themarket value of the Company’s shares (hereinafter referred to as the “Company’s Shares, etc.”) through the trust
established based on the Plan, in accordance with the Rules on Provision of Shares to Officers established by theCompany.
The Directors, etc. shall receive the Company’s Shares, etc., upon their retirement from office, in principle.
(2) The Company’s shares remaining in the trust
The Company’s shares remaining in the trust are recorded as treasury shares under net assets at the carrying amountin the trust (except for incidental costs). The carrying amounts and the numbers of shares of the treasury shares as ofMarch 31, 2021 and 2022 were ¥140 million and 77,000 shares, and ¥137 million and 76,000 shares, respectively.
(Consolidated balance sheet)*1 Notes and accounts receivable - trade includes accounts receivable from construction contracts.
*2 Notes and accounts receivable - trade includes following receivables arising from contracts with clients.
(Millions of yen)
As of March 31, 2022
Notes receivable - trade
Accounts receivable - trade160
42,764

The above accounts receivable - trade includes accounts receivable from construction contracts.
*3. The amount deducted from the acquisition costs of property, plant and equipment due to government subsidies received,
etc. is as follows:(Millions of yen)
As of March 31, 2021
Buildings and structures
Machinery, equipment and vehicles
Other

As of March 31, 2022
42

42

4,851
198

4,856
198

*4 Investments in unconsolidated subsidiaries and associates are as follows:(Millions of yen)
As of March 31, 2021
Investment securities (equity securities)
Investment securities (investments in capital)
Investment securities (corporate bonds)

13,86804,510- 87 -

As of March 31, 2022
12,641
2,121
4,590

*5 The following assets were pledged as collateral for borrowings of subsidiaries and associates.
(Millions of yen)
As of March 31, 2021
Investment securities

As of March 31, 2022

4,797

4,869

In addition to the assets pledged as collateral above, investment securities of ¥2,110 million and ¥2,190 million, whichhave been reduced due to application of the equity method on the consolidated balance sheet, were pledged as collateral
as of March 31, 2022 and 2021, respectively.
*6. Contingent liabilities(Millions of yen)
As of March 31, 2021

As of March 31, 2022

(1) Liabilities for guarantees on borrowings to financial institutions
Employees (borrowings for housing funds)
Kumamoto Mirai LNG Co., Ltd.

38
38

Kumamoto Mirai LNG Co., Ltd.
Employees (borrowings for housing funds)

31
22

Greenland Petroleum Exploration Co., Ltd.

19

Greenland Petroleum Exploration Co., Ltd.

20(2) Guarantees on liabilities related to production facilities
Kangean Energy Indonesia Ltd.
736
Total

832

Kangean Energy Indonesia Ltd.

116

Total

191

*7 The Company and certain consolidated subsidiaries (JAPEX SKS Corporation, SK ENGINEERING CO., LTD., JGI,
Inc., Japex (U.S.) Corp., and Japex Energy Co., Ltd.) have entered into overdraft agreements and loan commitment
agreements with five banks (six banks in the previous fiscal year) to facilitate efficient procurement of working capital.
The unused balances of these agreements as of March 31, 2021 and 2020 are as follows:(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Total overdraft limit and commitment line
Executed borrowings

141,901
55,99388,988–

Unused balance

85,90888,988- 88 -

(Consolidated statement of income)*1 Revenue from contracts with clients
Revenue from contracts with clients is not disclosed separately from other sources of revenue in net sales. Net sales
includes ¥245,392 million of revenue from contracts with clients.
*2 Cost of sales includes the following write-downs of inventories due to decline in profitability.
(Millions of yen)
Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022
371

2,512

*3 Provision for loss on construction contracts included in cost of sales(Millions of yen)
Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022
88

40

*4 Below is a breakdown of major expense items and amount of selling, general and administrative expenses:(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Personnel expenses(of the above, retirement benefit expenses)
Freight costs
Depreciation

11,225
564
7,093
4,333

11,248
560
5,130
4,162

*5 Total amount of research and development expenses included in general and administrative expenses(Millions of yen)
Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022
190

179

*6 The main components of gain on sale of non-current assets are as follows:(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Buildings and structures
Machinery, equipment and vehicles
Land

3
7
–

0
0
1,290

*7 The main components of loss on retirement of non-current assets are as follows:(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Buildings and structures
Machinery, equipment and vehicles

1015- 89 -

736

*8 Impairment losses
In the fiscal year ended March 31, 2021, the JAPEX Group recognized impairment losses on the asset groups as shown
below.
Impairment losses
Use

Business assets related to
Yufutsu oil and gas field

Business assets related to
Iwafune-oki oil and gas field

Location

Tomakomai City,
Hokkaido and others

Tainai City, Niigata andothersType

Amount(Millions of yen)

Buildings and structures
Machinery, equipment andvehicles

1,598

Land

3,780

Other

2,326

Total

11,172

Machinery, equipment andvehicles

3,821

3,466

Other

824

Total

4,645

Other

533

The JAPEX Group deems a production facility, etc. as the minimum unit that generates largely independent cash
flows for business assets, and groups assets at the level of individual property for idle assets.
As for business assets related to the Yufutsu oil and gas field, the carrying amount of business assets for production
operation was written off to the recoverable amount, and the write-off was recorded as impairment losses under
extraordinary losses, based on review of future cash flows with a downward revision in the crude oil price forecast.
In addition, the recoverable amount of this asset group is mainly measured at value in use, which is recorded at the
memorandum value as the future cash flows are expected to be negative.
As for business assets related to the Iwafune-oki oil and gas field, the carrying amount of business assets for
production operation was written off to the recoverable amount, and the write-off was recorded as impairment losses
under extraordinary losses, based on review of future cash flows with an increase in asset retirement obligations due
to a change in the estimate for expenses related to the future withdrawal of the Iwafune-oki offshore platform andwell abandonment.
The recoverable amount for this asset group is measured from its value in use, then calculated by discounting future
cash flows at 8%.
*9 Losses on disasterFiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)
The JAPEX Group recorded losses due to damage caused by the earthquake that occurred off the coast of Fukushima
Prefecture in February 2021. Losses on disaster of ¥948 million includes provision for loss on disaster of ¥913 million.
Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
The JAPEX Group recorded losses due to damage caused by the earthquake that occurred off the coast of Fukushima
Prefecture in March 2022. Losses on disaster of ¥1,416 million includes provision for loss on disaster of ¥970 million.

- 90 -

(Consolidated statement of comprehensive income)* Reclassification adjustments and tax effects relating to other comprehensive income(Millions of yen)
Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

15,500–45,762(39,826)

Valuation difference on available-for-salesecurities
Gains (losses) arising during the year
Reclassification adjustments
Pre-tax amount

15,5005,936

Tax effect(4,339)(1,814)

Valuation difference on available-for-salesecurities

11,160

4,121

174
–

(2,386)–Pre-tax amountTax effect

174
(48)

(2,386)
668

Deferred gains or losses on hedges

125(1,718)Foreign currency translation adjustment
Gains (losses) arising during the year
Reclassification adjustments(7,852)(1)

7,601(1,188)Foreign currency translation adjustment(7,853)

6,412

Remeasurements of defined benefit plans, netof taxGains (losses) arising during the year
Reclassification adjustments

1,501
(237)

46
(328)

1,264
(354)

(281)
78

910

(202)

(626)
48
60

375
172
–

(517)

547

3,825

9,161

Deferred gains or losses on hedges
Gains (losses) arising during the year
Reclassification adjustments

Pre-tax amountTax effectRemeasurements of defined benefit plans,
net of tax
Share of other comprehensive income ofentities accounted for using equity method
Gains (losses) arising during the year
Reclassification adjustments
Adjustment for asset acquisition cost
Share of other comprehensive income ofentities accounted for using equity
methodTotal other comprehensive income- 91 -

(Consolidated statement of changes in equity)
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)
1. Class and total number of issued shares and class and number of treasury shares
Number of shares atthe beginning of the
Increase (Shares)
Decrease (Shares)
fiscal year (Shares)

Number of shares atthe end of the fiscal
year (Shares)

Issued shares
Common shares
Total

57,154,776––

57,154,776

57,154,776––

57,154,776

2,303

77,679–79,982

2,303

77,679–79,982

Treasury shares
Common shares
Total

Notes: 1. The increase of 77,679 treasury shares of common stock comprises an increase of 79 shares due to purchases of shares ofless than one unit and an increase of 77,600 shares due to an acquisition of the Company’s shares by the Board Benefit
Trust (BBT).
2. The number of treasury shares of common stock at the end of the fiscal year ended March 31, 2021 includes 77,600 shares
held by the Board Benefit Trust (BBT).
2. Dividends(1) Cash dividends paid
Resolution
Ordinary General
Meeting of
Shareholders held on
June 26, 2020

Class of shares

Total dividends

Dividends per share(Millions of yen)

(Yen)

Record date

Effective dateCommonshares1,428

25March 31, 2020

June 29, 2020

Meeting of the Board
Commonof Directors held on
sharesNovember 10, 2020

1,428

25

September 30, 2020

December 14, 2020

Note:

The total amount of the dividend at the meeting of the Board of Directors held on November 10, 2020 includes a dividendof ¥1 million for shares held by the Board Benefit Trust (BBT).
(2) Dividends payments whose record date is in the fiscal year under review but whose effective date is in the following
fiscal year

Resolution
Ordinary General
Meeting of
Shareholders held on
June 25, 2021
Note:

Total dividends
Class of shares (Millions of yen)

Commonshares

1,428

Source ofdividends
Retainedearnings

Dividends per
share

Record date

Effective date

March 31, 2021

June 28, 2021

(Yen)

25

The total amount of the dividend at the Ordinary General Meeting of Shareholders held on June 25, 2021 includes a
dividend of ¥1 million for shares held by the Board Benefit Trust (BBT).

- 92 -

Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
1. Class and total number of issued shares and class and number of treasury shares
Number of shares atthe beginning of the
Increase (Shares)
Decrease (Shares)
fiscal year (Shares)

Number of shares atthe end of the fiscal
year (Shares)

Issued shares
Common shares
Total

57,154,776––

57,154,776

57,154,776––

57,154,776

79,982

1,440,600

1,600

1,518,982

79,982

1,440,600

1,600

1,518,982

Treasury shares
Common shares
Total

Notes: 1. The increase of 1,440,600 treasury shares of common stock comprises an increase due to the purchase of treasury sharesby resolution of the Board of Directors.
2. The decrease of 1,600 treasury shares of common stock comprises a decrease due to the provision of shares through theBoard Benefit Trust (BBT).
3. The number of treasury shares of common stock includes shares held by the Board Benefit Trust (BBT) (77,600 shares atthe beginning of the fiscal year ended March 31, 2022 and 76,000 shares at the end of the fiscal year ended March 31,2022).
4. The Board of Directors resolved at its meeting held on November 9, 2021 to cancel treasury shares in accordance withthe provisions of Article 178 of the Companies Act. However, the cancellation procedures were not completed for thefollowing treasury shares by the end of the fiscal year ended March 31, 2022.
Carrying amount¥3,737 million
Class of shares
Common shares
Number of shares 1,440,600 shares
2. Dividends(1) Cash dividends paid
Resolution
Ordinary General
Meeting of
Shareholders held on

Class of shares

Total dividends

Dividends per share(Millions of yen)

(Yen)

Record date

Effective dateCommonshares1,428

25March 31, 2021

June 28, 2021

Meeting of the Board
Commonof Directors held on
sharesNovember 9, 2021

1,428

25

September 30, 2021

December 13, 2021

June 25, 2021

Notes: 1: The total amount of the dividend at the Ordinary General Meeting of Shareholders held on June 25, 2021 includes a
dividend of ¥1 million for shares held by the Board Benefit Trust (BBT).
2. The total amount of the dividend at the meeting of the Board of Directors held on November 9, 2021 includes a dividendof ¥1 million for shares held by the Board Benefit Trust (BBT).
(2) Dividends payments whose record date is in the fiscal year under review but whose effective date is in the following
fiscal year
Resolution
Ordinary General
Meeting of
Shareholders held on
June 28, 2022
Note:

Total dividends
Class of shares (Millions of yen)

Commonshares

1,392

Source ofdividends
Retainedearnings

Dividends per
share

Record date

Effective date

March 31, 2022

June 29, 2022

(Yen)

25

The total amount of the dividend at the Ordinary General Meeting of Shareholders held on June 28, 2022 includes a
dividend of ¥1 million for shares held by the Board Benefit Trust (BBT).

- 93 -

(Consolidated statement of cash flows)*1 Reconciliation of cash and cash equivalents at end of period and the amount recorded in the consolidated balance sheet(Millions of yen)
Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2022

Cash and deposits

162,368

147,241

Time deposits with maturity over three months(7,405)(5,727)

3,000

3,000

157,963

144,513

Short-term investments, etc. having maturities
within three months from the acquisition date
(Securities) Money management fund andothersCash and cash equivalents*2 Breakdown of assets and liabilities of a subsidiary excluded from the scope of consolidation due to the sale of its
shares during the fiscal year ended March 31, 2022
Japan Canada Oil Sands Limited was excluded from the scope of consolidation due to the sale of its shares. Its assets
and liabilities at the time of the sale is as follows:
Current assets
Non-current assets¥6,990 million¥128,628 million

Total assets¥135,619 million

Current liabilities
Non-current liabilities¥3,799 million¥689 million

Total liabilities¥4,489 million(Leases)
Operating lease transactions(As lessee)
Future lease payments(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Due within one year

100

879

Due after one year

62

6

Total

163

885

- 94 -

(Financial instruments)
1. Information about financial instruments(1) Policy for measures relating to financial instruments
The Group’s policy is to obtain operating funds ensuring funding liquidity and controlling risks. The Group raises
necessary funds mainly through funds on hand and bank loans. Domestic capital investment is financed by commercial
banks. The Group does not enter into derivative transactions for trading or speculative purposes but uses them to hedge
the undermentioned risks.
(2) Description of financial instruments and related risk and risk management
Operating receivables such as notes and accounts receivable - trade are exposed to customers’ credit risk. The Group
works to prevent bad debts by monitoring credit conditions, etc. of customers on a timely basis in accordance withinternal credit management rules.
Securities and investment securities mainly consist of equity securities of partner companies, and for those exposed tomarket fluctuation risk, fair value evaluation is reported to the directors on a regular basis in accordance with theinternal regulations. Investment securities mainly consist of equity securities of INPEX CORPORATION recorded at¥76,963 million and ¥80,811 million as of March 31, 2022 and 2021, the proportions of which to investment securities
are 70.7% and 76.9%, respectively.
Loans receivable are mainly loans to our subsidiaries and associates for their operating capital and are exposed to credit
risk. The Group manages the credit risk appropriately by monitoring the collection status of the loans receivable.
Notes and accounts payable - trade and accounts payable - other are due within one year. Accounts payable - trade andothers relating to LNG purchase are exposed to foreign currency fluctuation risk, and the risk is hedged mainly byforeign exchange forward contracts.
Borrowings are mainly for domestic capital investment.
In addition, foreign currencies to provide mainly for overseas business investment are exposed to foreign currency
fluctuation risk. The Group hedges such risk by utilizing foreign exchange forward contracts.
Implementation and management of derivative transactions, including foreign exchange forward contracts, are basedon the internal regulations which prescribe the authorization and maximum upper limit of the transactions, and thedepartment responsible for derivative transactions executes transactions after obtaining approval from the person
responsible for authorization. The Group enters into transactions only with creditworthy financial institutions to reducethe counterparty risk. Details of hedge accounting, such as hedging instruments and hedge items, hedging policy andthe method for assessing hedge effectiveness are described above in “Significant hedge accounting” of “Disclosure ofaccounting policies.”
Liquidity risk associated with financing is managed mainly by preparing monthly financial plans.
(3) Supplementary information on fair value of financial instruments
As the calculation of fair values of financial instrument includes variable factors, those values may vary if different
assumptions are applied.
Also, for the contract amount, etc. regarding derivative transactions described in the “Notes to consolidated financial
statements (Derivative Transactions),” the contract amount itself does not indicate market risk related to derivativetransactions.

- 95 -

2. Fair value of financial instruments
Consolidated balance sheet amount, fair value and the difference are as follows.
As of March 31, 2021
Consolidated balance
sheet amount(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Investment securities (*2)

84,251

84,2586(2) Long-term loans receivable

48

48

–

Total assets

84,29984,306

6(1) Long-term borrowings

50,18050,180–Total liabilities

50,18050,180

–

426

426

–

Derivative transactions (*3)(*1) “Cash and deposits,” “Notes and accounts receivable - trade,” “Securities,” “Notes and accounts payable - trade,” and“Current portion of long-term borrowings” are not stated as they are cash, and settled within a short period of term and theirfair values approximate their carrying amounts.
(*2) The following financial instruments are not included in “(1) Investment securities” as there were no market prices available
and it is extremely difficult to determine the fair value. The consolidated balance sheet amount of such financial instruments
is as follows:
Category
As of March 31, 2021 (Millions of yen)
Unlisted equity securities
16,307
Unlisted corporate bonds
4,510
The consolidated balance sheet amount of unlisted corporate bonds has been reduced by ¥1,858 million due to applicationof the equity method.
(*3) Receivables and payables arising from derivative transactions are presented on a net basis. Net payables are shown inparenthesis.
As of March 31, 2022
Consolidated balance
sheet amount(Millions of yen)
(1) Investment securities (*2, *3)

Fair value(Millions of yen)

Difference(Millions of yen)

84,01485,994

1,980

49

49

–

84,06386,044

1,980(1) Long-term borrowings

510

510

–

Total liabilities

510

510

–

Derivative transactions (*4)

38

38

–

(2) Long-term loans receivable
Total assets(*1) “Cash and deposits,” “Notes and accounts receivable - trade,” “Securities,” “Notes and accounts payable - trade,” and“Current portion of long-term borrowings” are not stated as they are cash, and settled within a short period of term and theirfair values approximate their carrying amounts.
(*2) Investments in partnerships and other similar entities for which equity interests are not included in (1) Investment securities
as they are reported on a net basis on the consolidated balance sheet. The consolidated balance sheet amount of theseinvestments is ¥7,787 million.
(*3) Shares without market value are not included in “(1) Investment securities.” The consolidated balance sheet amount of suchfinancial instruments is as follows:
Category
Unlisted equity securities

As of March 31, 2022 (Millions of yen)
17,108(*4) Receivables and payables arising from derivative transactions are presented on a net basis. Net payables are shown inparenthesis.

- 96 -

Note 1: Redemption schedule of monetary receivables and securities with maturities after the consolidated closing date
As of March 31, 2021
Due within one Due after one year Due after five years
Due after ten years
year
through five years through ten years(Millions of yen)
(Millions of yen) (Millions of yen) (Millions of yen)
Cash and deposits

162,365–––

Notes and accounts receivable - trade

39,519

–

–

–

–

–

–

6,369

30

30

–

–

–

40

7

–

201,915

70

7

6,369

Securities and investment securities
Held-to-maturity debt securities
Corporate bonds
Available-for-sale securities withmaturities
Debt securities (corporate
bonds)
Long-term loans receivable
Total
As of March 31, 2022
Due within one Due after one year Due after five years
Due after ten years
year
through five years through ten years(Millions of yen)
(Millions of yen) (Millions of yen) (Millions of yen)
Cash and deposits

147,239–––

Notes and accounts receivable - trade47,158

–

–

–

–

–

–

6,369

30

–

–

–

–

38

10

–

194,428

38

10

6,369

Securities and investment securities
Held-to-maturity debt securities
Corporate bonds
Available-for-sale securities withmaturities
Debt securities (corporate
bonds)
Long-term loans receivable
Total- 97 -

Note 2: Repayment schedule of long-term borrowings after the consolidated closing date
As of March 31, 2021
Due after one year Due after five years
Due within one year
Due after ten years
through five years through ten years(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
Long-term borrowings
Total

62,17525,61024,840–62,17525,61024,840–

As of March 31, 2022
Due after one year Due after five years
Due within one year
Due after ten years
through five years through ten years(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
Long-term borrowings
Total

260

510

–

–

260

510

–

–

3. Breakdown of financial instruments by level within the fair value hierarchy
Fair values of financial instruments are categorized into the following three levels according to the observability andmateriality of inputs used in the measurement of fair values.
Level 1: Fair value measured using observable inputs, i.e., quoted prices in active markets for assets or liabilities
being measured.
Level 2: Fair value measured using observable inputs other than Level 1 inputs.
Level 3: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement iscategorized in its entirety in the level of the lowest level input that is significant to the entire measurement.
(1) Financial instruments recorded at fair value in the consolidated balance sheet
As of March 31, 2022
Fair value (Millions of yen)
Category
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Equity securities

79,417––

79,417

–

38

–

38

79,41738–

79,455Derivative transactions
Currency-related transactions
Total assets- 98 -

(2) Financial instruments other than those recorded at fair value in the consolidated balance sheet
As of March 31, 2022
Fair value (Millions of yen)
Category
Level 1

Level 2

Level 3

Total

Investment securities
Held-to-maturity debt securities
Corporate bonds

–

–

6,563

6,563

Equity securities

–

14

–

14

Long-term loans receivable

–

49

–

49

–

63

6,563

6,627

–

510

–

510

–

510

–

510

Available-for-sale securities

Total assets
Long-term borrowings
Total liabilities

Note: Explanation of valuation techniques and inputs used in the fair value measurement
Investment securities
Listed shares are valued using quoted prices. As listed shares are traded in active markets, their fair value is classified as Level
1.
The fair value of shares other than listed shares is classified as Level 2 because they are traded infrequently in the public market
and not considered to have quoted prices in active markets.
The fair value of held-to-maturity debt securities is measured using the discounted cash flow method based on future cash flows
from debt securities and appropriate benchmarks such as market rate of return. As unobservable inputs have a significant effecton the fair value measurement, it is classified as Level 3.
Long-term loans receivable
The fair value of long-term loans receivable is measured using the discounted cash flow method based on future cash flows andappropriate benchmarks such as market rate of return, and is classified as Level 2.
Derivative transactions
The fair value of derivative transactions is measured based on quotes, etc. provided by financial institutions, and is classified as
Level 2.
Long-term borrowings
The fair value is measured using the discounted cash flow method based on the sum of principal and interest, remaining
maturities and an interest rate reflecting credit risk, and is classified as Level 2.

- 99 -

(Securities)
1. Held-to-maturity debt securities
As of March 31, 2021
Information of unlisted corporate bonds (consolidated balance sheet amount: ¥4,510 million) is not stated because it
is deemed to be extremely difficult to determine the fair value as the timing of redemption is undecided.
As of March 31, 2022
Consolidated balance
sheet amount(Millions of yen)
Securities whose fair value exceeds
their consolidated balance sheet
amountFair value(Millions of yen)

Unrealized gain (loss)(Millions of yen)

4,590

6,563

1,973

–

–

–

4,590

6,563

1,973

Securities whose fair value does
not exceed their consolidatedbalance sheet amountTotal
2. Available-for-sale securities
As of March 31, 2021
Consolidated balance
sheet amount(Millions of yen)

Acquisition cost
(Millions of yen)

Unrealized gain
(loss)(Millions of yen)

84,214

23,22560,9891) Corporate bonds

60

60

0

2) Other debt securities

–

–

–

–

–

–

84,27423,28560,9896

6–1) Corporate bonds

–

–

–

2) Other debt securities

–

–

–

3,000

3,000

–

3,006

3,006

–

87,281

26,29260,989Type(1) Equity securities(2) Debt securities
Securities whose consolidatedbalance sheet amount exceeds
their acquisition cost(3) Other
Subtotal(1) Equity securities(2) Debt securities
Securities whose consolidatedbalance sheet amount does notexceed their acquisition cost(3) Other
Subtotal
Total

Note: Unlisted equity securities (consolidated balance sheet amount: ¥2,438 million) are not included in the above“Available-for-sale securities” as they have no market prices, and their fair value is deemed extremely difficult todetermine.

- 100 -

As of March 31, 2022
consolidated balance
sheet amount

Type(Millions of yen)
(1) Equity securities

Unrealized gain
(loss)

Acquisition cost
(Millions of yen)

(Millions of yen)

79,417

12,491

66,925

1) Corporate bonds

–

–

–

2) Other debt securities

–

–

–

–

–

–

79,417

12,491

66,9256

6–1) Corporate bonds

30

30

–

2) Other debt securities

–

–

–

3,000

3,000

–

3,036

3,036

–

82,453

15,52766,925(2) Debt securities
Securities whose consolidatedbalance sheet amount exceeds
their acquisition cost(3) Other
Subtotal(1) Equity securities(2) Debt securities
Securities whose consolidatedbalance sheet amount does notexceed their acquisition cost(3) Other
Subtotal
Total
3. Available-for-sale securities soldFiscal year ended March 31, 2021
Not applicable.
Fiscal year ended March 31, 2022
Type(1) Equity securities

Sales amount(Millions of yen)

Total gain on sale(Millions of yen)

Total loss on sale(Millions of yen)

50,56039,826–

1) Corporate bonds

–

–

–

2) Other debt securities

–

–

–

–

–

–

50,56039,826–(2) Debt securities(3) OtherTotal
4. Impaired securities

During the year ended March 31, 2021, the Group recorded impairment losses for the amount of ¥12 million on
available-for-sale securities whose fair value is extremely difficult to determine.
During the year ended March 31, 2022, the Group recorded no impairment loss on securities.
If the market value of the security declines by 50% or more from its acquisition cost as of the end of the fiscal year,
the Group recognizes the difference between the market value and the acquisition cost as impairment losses. If thedecline ranges between about 30% and 50%, the Group recognizes impairment losses for the necessary amountconsidering its recoverability.

- 101 -

(Derivative Transactions)
Derivative transactions for which hedge accounting is applied
Currency-related transactions
As of March 31, 2021
Hedge accounting
methodType of transaction

Major hedged
items

Contract amount,
Due after one year
Fair valueetc.
(Millions of yen) (Millions of yen)
(Millions of yen)

Foreign exchange forward
contracts
BuyingGeneral treatment

US dollar

Accounts
payable - trade

2,188

–

28

US dollar

Accounts
payable - other

29,643–398

31,831

–

426

Total

Note: Method for measuring fair value
The fair value is measured based on quotes, etc. provided by financial institutions, etc.
As of March 31, 2022
Hedge accounting
methodType of transaction

Major hedged
items

Contract amount, Due after one year
etc.
(Millions of yen)

(Millions of yen)

Fair value(Millions of yen)

Foreign exchange forward
contracts
BuyingGeneral treatment

US dollar

Accounts
payable - trade

3,380

–

35

US dollar

Accounts
payable - other

34

–

2

British pound

Accounts
payable - other

16

–

0

3,432

–

38

Total

- 102 -

(Retirement benefits)
1. Overview of retirement benefit plans adopted
The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., defined benefit corporate
pension plans and lump-sum retirement payment plans.
Certain domestic consolidated subsidiaries participate in the Smaller Enterprise Retirement Allowance Mutual Aid
System and calculate retirement benefit liability and retirement benefit expenses using the simplified method.
2. Defined benefit plans(1) Reconciliation between retirement benefit obligations at the beginning of period and the end of period (excluding
plans applying the simplified method shown in (3))(Millions of yen)
Fiscal year ended March 31, Fiscal year ended March 31,
2021
2022
Retirement benefit obligations at beginning of period
Service costs
Interest costs
Actuarial gains and losses
Retirement benefits paid
Retirement benefit obligations at end of period

15,546935
134
68(1,400)15,285
932
132
(130)
(1,437)

15,285

14,782(2) Reconciliation between plan assets at the beginning of period and the end of period (excluding plans applying thesimplified method shown in (3))(Millions of yen)
Fiscal year ended March 31, Fiscal year ended March 31,
2021
2022
Plan assets at beginning of period
Expected return on plan assets
Actuarial gains and losses
Contributions from employer
Retirement benefits paid

14,035
140
1,570
457
(999)

15,204
152
(83)
464
(906)

Plan assets at end of period

15,204

14,831(3) Reconciliation between retirement benefit liabilities of plans applying the simplified method at the beginning of
period and the end of period(Millions of yen)
Fiscal year ended March 31, Fiscal year ended March 31,
2021
2022
Retirement benefit liability at beginning of period
1,045
1,079
Retirement benefit expenses
231
236
Retirement benefits paid
(118)
(128)
Contributions to plans
Retirement benefit liability at end of period- 103 -

(79)

(80)

1,079

1,105

(4) Reconciliation between retirement benefit obligations and plan assets at the end of period and retirement benefit
liability and retirement benefit asset on the consolidated balance sheets(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Funded retirement benefit obligations

12,81912,511

Plan assets(15,204)(14,831)

Unfunded retirement benefit obligations(2,384)
3,545(2,319)3,376

Net retirement benefit liability (asset) on consolidatedbalance sheet

1,160

1,056

Retirement benefit liability
Retirement benefit asset

3,545(2,384)

3,376(2,319)Net retirement benefit liability (asset) on consolidatedbalance sheet

1,160

1,056

(5) Breakdown of retirement benefit expenses(Millions of yen)
Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2022

Service costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of prior service costs
Retirement benefit expenses calculated by simplified
method

935
134
(140)
(154)
(82)

932
132
(152)
(328)
–

231

236

Retirement benefit expenses on defined benefit plans

924

819

(6) Remeasurements of defined benefit plans, net of tax
The breakdown of items (before tax effect) recorded in remeasurements of defined benefit plans, net of tax is asfollows:(Millions of yen)
Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2022

Prior service costs

(82)

–

Actuarial gains and losses

1,346

(281)

Total

1,264

(281)

(7) Remeasurements of defined benefit plans
The breakdown of items (before tax effect) recorded in remeasurements of defined benefit plans is as follows:(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Unrecognized actuarial gains and losses

2,315

2,033

Total

2,315

2,033

- 104 -

(8) Plan assets
1) Breakdown of plan assets
The percentage of various assets to total plan assets by main category is as follows:
As of March 31, 2021

As of March 31, 2022

Debt securities

55%

55%

Equity securities
Cash and deposits
Other

35%
2%
8%

33%
4%
8%

Total

100%

100%

2) Determination of long-term expected rate of return
In order to determine the long-term expected rate of return on plan assets, the Group considers the current andexpected allocation of plan assets and the current and expected long-term rate of return from various assets
constituting plan assets.
(9) Actuarial assumptions
Main actuarial assumptions (weighted averages)
Fiscal year ended
March 31, 2021
0.9%
1.0%

Discount rateLong-term expected rate of return- 105 -

Fiscal year ended
March 31, 2022
0.9%
1.0%

(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Allowance for overseas investment loss

104

83

Net tax loss carried forward (Note 2)

22,68749,188Deferred tax assets

Retirement benefit liability

1,057

991

Depreciation on non-current assets
Payable for retirement benefits for directors and otherofficers
Assets retirement obligations

22,516

5,286

60

57

5,803

5,333

Impairment losses on non-current assets

2,156

2,154

Investment securities

13,3901,261

Tax credit carried forward

3,909

3,940

Other

4,062

6,083

75,74974,380(12,743)(37,560)(33,988)(15,982)(46,732)(53,543)

29,017

20,837

Reserve for mine prospecting(5,830)(7,197)

Valuation difference on available-for-sale securities
Reserve for tax purpose reduction entry of non-current
assets
Undistributed earnings(16,770)(18,585)

(211)

(201)

Subtotal deferred tax assets
Valuation allowance for net tax loss carried forward (Note2)
Valuation allowance for total of deductible temporary
differences
Total valuation allowance (Note 1)
Total deferred tax assets
Deferred tax liabilities

(314)

(657)

Reserve for special depreciation

(28)

–

Retirement benefit asset

(686)

(617)

Depreciation of foreign subsidiaries, etc.

(3,812)(5,819)Other(1,341)(917)(28,996)(33,996)20(13,158)

Total deferred tax liabilities
Net deferred tax assets (liabilities)

Note 1 The change in valuation allowance is mainly due to an increase in net tax loss carried forward and a decrease indepreciation at the Group level.
2 Net tax loss carried forward and breakdown of deferred tax assets thereof by expiration dates
As of March 31, 2021
Expire in one
year or less(Millions of yen)

Expire after one Expire after five Expire after ten
year throughyears throughyears/No
five years

ten years

expiration date(Millions of yen)

(Millions of yen)

(Millions of yen)

Total
(Millions of yen)

Net tax loss carried forward
(a)

49

451

1,016

21,171

22,687

Valuation allowance

(49)

(399)

(999)

(11,296)(12,743)

Deferred tax assets

–

52

17

9,874

(b) 9,944- 106 -

(a) Net tax loss carried forward is calculated by multiplying the effective statutory tax rate.
(b) Deferred tax assets of ¥9,944 million are recognized for net tax loss carried forward of ¥22,687 million (calculated bymultiplying the effective statutory tax rate). Valuation allowance has not been recognized for the net tax loss carriedforward which is expected to be recoverable from the estimated taxable income in the future.
As of March 31, 2022
Expire in one
year or less

Expire after one Expire after five Expire after ten
year throughfive years

years throughten years

years/No
expiration date(Millions of yen)

(Millions of yen)

(Millions of yen)

46

662

40,1808,298

49,188Valuation allowance

(46)

(506)

(37,007)–(37,560)

Deferred tax assets

–

155

3,173

8,298

(d) 11,627(Millions of yen)

Net tax loss carried forward
(c)

Total
(Millions of yen)(c) Net tax loss carried forward is calculated by multiplying the effective statutory tax rate.
(d) Deferred tax assets of ¥11,627 million are recognized for net tax loss carried forward of ¥49,188 million (calculated bymultiplying the effective statutory tax rate). Valuation allowance has not been recognized for the net tax loss carriedforward which is expected to be recoverable from the estimated taxable income in the future.
2. Reconciliation of the effective tax rates reflected in the consolidated statement of income and the effective statutory tax
rates
The fiscal year ended March 31, 2021
This information is not presented as the Company recognized loss before income taxes.
The fiscal year ended March 31, 2022
This information is not presented as the Company recognized loss before income taxes.

- 107 -

(Asset retirement obligations)
1. Asset retirement obligations recognized in the consolidated balance sheets
Asset retirement obligations recognized by the Group are determined based on the estimated costs ofdecommissioning oil and natural gas wells and production facilities in accordance with laws, land lease contracts,
etc. for wells and production facilities in Japan and overseas, and the appropriate discount rates.
The Group estimates the periods in which the obligations are paid out to be approximately 2 to 35 years fromacquisition of assets. This estimate is reasonably made based on the plans for decommissioning wells and facilitiesor the estimated producing lives of fields if no such plan exists. Discount rates applied are (0.217)% to 2.287% for
domestic obligations and 2.09% to 4.84% for overseas.
Although the future costs to be incurred upon decommissioning and timing when the obligations are incurred are
based on the Group’s best estimate, uncertainty exists regarding both the amount and timing of incurring thesecosts.
Changes in the balance of asset retirement obligations are as follows:(Millions of yen)
Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2022

Balance at beginning of period
Increase due to acquisition of new assets
Increase due to change in estimate (Note 1)
Accretion expense
Liabilities settlement
Foreign currency translation adjustment
Other changes, net (Note 2)

15,660
66
5,677
222
(101)
(85)
(3)

21,436
530
(470)
207
(184)
273
(2,254)

Balance at end of period

21,436

19,539Notes: 1. Change in estimate for asset retirement obligations
The Company changed its estimate for asset retirement obligations that had been recorded as costs
related to the future removal of the offshore platform and well abandonment in the Iwafune-oki oil andgas field (hereinafter referred to as costs related to removal) due to the acquisition of new informationon costs related to removal in the year ended March 31, 2021. Accordingly, the Company has changed
its estimate for the costs related to removal to be required at the time of business termination. The
increase of ¥5,375 million due to the change in estimate has been added to the balance of asset retirement
obligations before the change in estimate.
As a result of this change in estimate, operating profit decreased by ¥873 million and loss before income
taxes increased by ¥4,441 million.
2. “Other changes, net” for the fiscal year ended March 31, 2022, represents a decrease due to the transfer
of all of 10% interests in the shale gas field of North Montney Area, British Columbia, Canada owned
by JAPEX Montney Ltd., along with related assets, in July 2021 and the transfer of all shares of Japan
Canada Oil Sands Limited in September 2021.
2. Asset retirement obligations other than those recognized in the consolidated balance sheets
The Group has obligations to restore sites to their original condition in accordance with laws, land lease contracts,
etc. regarding oil and natural gas production facilities. However, maintaining and ensuring a stable supply of natural
gas in the Infrastructure/Utility Business, which is the Group’s primary business operation, is of high public
interest; therefore, even after completion of production activities, the Group plans to continue to use some of theassets held for the purpose of producing and selling oil and gas on a permanent basis in order to fulfill the
responsibilities as a supplier for users of natural gas by holistically integrating these assets. Thus, the Group does
not recognize the relevant asset retirement obligations since it is impossible at this point to estimate asset retirement
obligations on a reasonable basis as of March 31, 2022.

- 108 -

(Business combinations)
Business divestiture
1. Outline of business divestiture(1) Name of successor company
HE Acquisition Corporation (HAC)(2) Description of business divested
The oil sands project in Canada promoted by Japan Canada Oil Sands Limited (JACOS), in which the Company
held 100% of the shares through Canada Oil Sands Co., Ltd., a consolidated subsidiary (the project that promotes
the development and production of oil sands in the Hangingstone leases in Alberta, Canada; hereinafter referred toas the “Project”)(3) Main reason for business divestiture
JAPEX formulated the medium-term business plan in May 2018 with the recognition of the necessity to transform
its business structure for the sustainable growth even in the market environment of US$50–60 per barrel. Based on
the recognition, its E&P projects have been striving to improve their profitability by optimizing the businessportfolio, including the sale of the assets. The environment surrounding the E&P business is expected to become
even more severe due to the prolonging effects of the COVID-19 since early last year, including the structuralchanges by the new normal after the COVID-19 and the acceleration of the global decarbonization. In light of thissituation, the Company has decided to end its promotion of the Project and to transfer all shares of JACOS, after
considering the medium- to long-term position of the Project, as the Company continues to strengthen its
resilience to low oil prices and a low-carbon environment. JAPEX has reached an agreement with HAC(headquartered in Alberta, Canada) for the transfer of all shares of JACOS.
(4) Date of business divestiture
September 17, 2021
(5) Other matters concerning the outline of the transaction including legal form
Share transfer in which consideration received is only property including cash
2. Outline of accounting treatment performed(1) Amount of transfer profit or loss
Loss on sale of shares of subsidiaries ¥94,373 million(2) Appropriate carrying amounts of assets and liabilities related to transferred business, and their breakdown
Current assets¥6,990 million
Non-current assets¥128,628 million
Total assets(3)¥135,619 million

Current liabilities
Non-current liabilities¥3,799 million¥689 million

Total liabilities¥4,489 million

Accounting treatment

The difference between the sales price and the consolidated carrying amount of the transferred shares wasrecorded as “Loss on sale of shares of subsidiaries” in extraordinary losses.
3. Reportable segment in which the divested businesses were included
North America segment
4. Approximate amounts of profits and losses related to the divested business recorded in the consolidated statement ofincome for the fiscal year ended March 31, 2022
Net sales¥31,121 million
Operating profit¥1,851 million- 109 -

(Revenue recognition)
1. Information on disaggregation of revenue from contracts with clients
Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)(Millions of yen)
Reportable segment
North

Japan

Crude oil

E&P Business

Infrastructure/Utility
Business

Middle East

Total

16,951

1,448–

22,65741,056

Diluted bitumen–

31,121––

31,121Natural gas (overseas)

–

1,244

–

–

1,244

Subtotal

16,95133,814–22,65773,422Natural gas (Japan)

58,024–––58,024

LNG

22,596–––

22,596

Electricity

34,320–––34,320

Others

4,903

–

–

–

4,903

119,845–––

119,845

6,395

–

–

–

6,395

47,354–––47,354

2,122

–

–

–

2,122

Subtotal

55,872–––55,872

Total

192,669

33,814–22,657249,140

Subtotal

Contract services

Other businesses

EuropeAmericaOilproducts/merchandise
OthersNote: 1 The amount of revenue from other sources is immaterial.
2. Information that provides the basis for understanding revenue from contracts with clients
Information that provides the basis for understanding revenue is as presented in “Notes to consolidated financial
statements (Notes to significant accounting policies for preparation of consolidated financial statements), 4. Disclosureof accounting policies, (5) Accounting standards for revenues and expenses.”- 110 -

3. Information on relationship between satisfaction of performance obligations under contract with customers and cash
flows generated from said contracts, and amount and timing of revenue expected to be recognized in the following
fiscal year onward based on contracts with clients existing as of March 31, 2022
(1) Balances, etc. of contract assets and contract liabilities
The beginning and ending balances of receivables arising from contracts with clients, contract assets, and contract
liabilities are as follows:(Millions of yen)
Fiscal year ended March 31, 2022
Receivables from contracts with clients at beginning of period

38,888

Receivables from contracts with clients at end of period

42,924Contract assets at beginning of period

169

Contract assets at end of period

405

Contract liabilities at beginning of period

52

Contract liabilities at end of period

258

Contract assets consist primarily of unbilled receivables from construction contracts. Contract liabilities are mainly related toadvances received from customers for construction contracts.
During the fiscal year ended March 31, 2022, the Company recognized an immaterial amount of revenue, which waspreviously included in contract liabilities as of the beginning of the period. The revenue the Company recognized related toperformance obligations that were satisfied, or partially satisfied, in previous periods was immaterial.
(2) Transaction price allocated to the remaining performance obligations
The following table summarizes the aggregate transaction price allocated to the remaining performance obligations inconstruction contracts, etc. and the period over which revenue is expected to be recognized. The Company has applied
the practical expedient to exclude the transactions for contracts with an original expected duration of one year or lessand the variable consideration allocated to unsatisfied performance obligations for long-term sales contracts, etc.
(Millions of yen)
Fiscal year ended March 31, 2022
One year or less

232

Over one year

114

Total

347

4. Note to provision for loss on construction contracts
Provision for loss on construction contracts included in cost of sales is presented in “Notes to consolidated financial
statements (Consolidated statement of income).”- 111 -

(Segment information, etc.)[Segment information]
1. Summary of reportable segments
The JAPEX Group’s reportable segments are segments for which separated financial information is available andwhich are periodically examined by the Board of Directors to determine allocation of managerial resources andassess business performance, among components of the JAPEX Group.
In addition to business activities in Japan, the JAPEX Group has developed business activities overseas through a
project company established at each business location.
Therefore, the JAPEX Group consists of segments by business location and considers “Japan,” “North America,”“Europe” and “Middle East” as reportable segments.
“Japan” consists of business activities such as exploration, development, and production for crude oil and naturalgas, and sales of crude oil as the E&P Business in Japan; sales of natural gas and LNG, contract services fortransportation of natural gas, and generation and sales of electric power, etc. as the Infrastructure/Utility Business;and manufacturing, purchase, sale and transportation of oil products, contract services for well drilling work, etc. as
the Other Businesses.
“North America” consists of business activities such as exploration, development, production, purchase, sale, etc. forcrude oil, natural gas and bitumen (extra-heavy oil extracted from oil sands) as E&P Business in North America.
“Europe” consists of business activities such as development of crude oil and natural gas as E&P Business in Europe.
“Middle East” consists of business activities such as development, production, sale, etc. of crude oil and natural gas
as E&P Business in the Middle East.
2. Method for calculating net sales, profit (loss), assets and other items by reportable segment
The method for accounting for reported operating segments is basically the same as the description in “Notes tosignificant accounting policies for preparation of consolidated financial statements.” Profit of reportable segments isthe figure based on operating profit. Intersegment revenue and transfers are based on prevailing market prices.
As described in “Changes in accounting policies,” we have applied the Accounting Standard for Revenue
Recognition and relevant revised ASBJ regulations from the beginning of the fiscal year ended March 31, 2022, andhave changed accounting treatment for revenue recognition. Accordingly, we have changed the method of calculating
profit or loss of operating segments.
3. Information regarding net sales, profit (loss), assets and other items by reportable segment
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)(Millions of yen)
Reportable segment
Others(Note 1)

Total

Amount on
consolidated
Adjustments
financial(Note 2)statements(Note 3)

Japan

North
America

EuropeMiddleEast

213,308

26,065–703

240,078–

240,078–

240,078

11––

16,045

16,056–

16,056(16,056)–

213,319

26,065–

16,749256,134–

256,134(16,056)

240,078

Segment profit(loss)

21,988(9,374)

(132)

165

12,645–

12,645(8,453)

4,192

Segment assets

79,397

180,230

7,968

13,211

280,808–

280,808

343,978

624,786

Depreciation

12,595

9,590

0

192

22,378–22,378221

22,599

Share of profit(loss) of entities
accounted forusing equity
method

(319)

–

–

(10)

(329)

6,138

5,808

–

5,808

Net sales
Net sales tooutside clientsIntersegment
sales ortransfers
Total

Total

Other items- 112 -

Investments inentities
accounted forusing equity
methodIncrease inproperty, plantand equipment
and intangible
assets

679

–

–

286

966

17,121

18,087–18,087

4,961

7,456

2,104

–

14,522–

14,522

149

14,672

Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)(Millions of yen)
Adjustments(Note 2)

Amount on
consolidated
financialstatements(Note 3)

Reportable segment

Japan

North
America

192,669

Others(Note 1)

Total

EuropeMiddleEast

Total

33,814–22,657249,140–

249,140–

249,140

–

–

–

–

–

–

–

–

–

Net sales
Net sales tooutside clientsIntersegment
sales ortransfers

192,669

33,814–22,657249,140–

249,140–

249,140

Segment profit(loss)

Total

24,739

1,789

(151)

2,644

29,022–

29,022(9,213)19,809Segment assets

75,607

4,631

13,88518,308112,433–

112,433

359,508

471,941

10,203

6,901

–

366

17,471–

17,471

250

17,721

(47)

–

–

(13)

(61)

14,287

14,226–

14,226

679

–

–

286

966

10,603

11,569–11,569

6,109

3,000

4,532

–

13,643–

13,643

243

13,886

Other items
Depreciation
Share of profit(loss) of entities
accounted forusing equity
methodInvestments inentities
accounted forusing equity
methodIncrease inproperty, plantand equipment
and intangible
assets

Notes: 1. The “Others” category represents operating segments that are not included in reportable segments, andincludes Russia, etc.
2. Major components of adjustment are as follows:(1) Segment profit (loss)(Millions of yen)
Fiscal year ended March Fiscal year ended March
31, 2021
31, 2022
Elimination of intersegment transactions
14
4
Corporate expenses *Total- 113 -

(8,467)(9,218)(8,453)(9,213)

* Corporate expenses are mainly general and administrative expenses and experimentation and researchexpenses, all of which are not attributable to the reportable segments.
(2) Segment assets(Millions of yen)
Elimination of intersegment transactions
Corporate assets *1
Other assets *2
Total

As of March 31, 2021

As of March 31, 2022

(586)

(12)

3,208

2,239

341,355

357,280

343,978359,508*1. Corporate assets are mainly assets for management by the headquarters that do not belong to thereportable segments.
*2. Assets allocated to segments are recoverable accounts included in property, plant and equipment,
intangible assets, and investments and other assets, whereas other assets are assets other thanproperty, plant and equipment, intangible assets, and recoverable accounts that are not allocated tosegments.
3. Segment profit (loss) was adjusted to operating profit in the consolidated statement of income.
4. Due to the change in the accounting treatment for revenue recognition, and compared with the figures obtainedby the previous treatment, net sales of “Japan” for the fiscal year ended March 31, 2022 decreased by ¥82,149
million. In addition, there is no impact on the segment profit.

- 114 -

[Related information]
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)
1. Information by product or service(Millions of yen)
E&P Business
Crude oil

Dilutedbitumen72,916

21,695Net sales tooutside clients

Infrastructure/Utility Business
Natural gas Natural gas(overseas)(Japan)2,870

51,291

LNG

Electricity

15,591Others30,087

4,331

Other businesses
Contract
services

Oil
products/merchandise

7,633

31,931

Net sales tooutside clients

Total
Others1,729

240,078

2. Information by geographical area
(1) Net sales(Millions of yen)Japan

Canada152,325

Russia25,745

Iraq

44,918Others

16,768Total
320240,078

Note: Net sales are classified into countries or regions based on the place where products, etc. were delivered and thelocation where services were rendered.
(2) Property, plant and equipment(Millions of yen)
Japan

UK

Canada81,422Others7,968

175,541

Total
1,812

266,745

3. Information by major client
This information is not presented as there are no clients that account for 10% or more of net sales on the consolidated
statement of income among net sales to external clients.
Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
1. Information by product or service(Millions of yen)
E&P BusinessNet sales tooutside clients

Infrastructure/Utility Business

Crude oil

DilutedbitumenNatural gas(overseas)

41,056

31,121

1,244- 115 -Natural gas(Japan)58,024

LNG

22,596

Electricity

34,320

Others4,903

Other businesses
Oilproducts/mer

Contract
services
Net sales tooutside clients

Total
Otherschandise

6,395

47,3542,122

249,140

2. Information by geographical area
(1) Net sales(Millions of yen)Japan

Canada192,592

Russia32,835

Iraq
57

Others

22,671

Total
984

249,140

Note: Net sales are classified into countries or regions based on the place where products, etc. were delivered and thelocation where services were rendered.
(2) Property, plant and equipment(Millions of yen)Canada

Japan

UK
–

76,753

Others
13,885

Total
2,198

92,837

3. Information by major client
This information is not presented as there are no clients that account for 10% or more of net sales on the consolidated
statement of income among net sales to external clients.
[Information on impairment losses on non-current assets by reportable segment]
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)(Millions of yen)Japan
16,351

North America–

EuropeMiddle East––

Corporate andelimination

Others–Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
Not applicable.
[Information on amortization and unamortized balance of goodwill by reportable segment]
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)
Not applicable.
Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
Not applicable.
[Information on gain on bargain purchase by reportable segment]
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)
Not applicable.
Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
Not applicable.

- 116 -–

Total
16,351

[Information on related parties]
1. Related party transactions(1) Transactions between the company submitting consolidated financial statements and related parties
Unconsolidated subsidiaries and associates of the company submitting consolidated financial statements
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)
Type

Associate

Associate

Names ofcompany, etc.

Location

Sakhalin Oiland GasMinato-ku,
Development Tokyo
Co., Ltd.

Fukushima
Gas PowerCo., Ltd.

Chiyodaku, Tokyo

Share capital
Balance at
JAPEX’s stakeTransaction
Relationshipor capitalend ofDescription and percentage
Description of amountwithrelatedAccount
title
contribution of business of voting rights
periodtransaction(Millions of yen)
party(Millions of yen)
(Millions of yen)held (%)

22,592

537

Exploration,
development (Ownership)
andDirectproduction of
15.29
oil resources

Purchase of
crude oilInterlocking
officers

Purchase of
crude oil
(Note 1)

Outsourcing Underwritingof powerof corporate
Operation
generationbonds
and contract
operations(Note 2)work ofContract work
power
(Ownership)of LNG
generation Direct
regasification
business
33.30
Pledge ofoperations
using acollateral
Pledge ofnatural gas(Note 3)collateral
power plant
Interlocking
officers

44,857

Accounts
payable trade

6,369

Investment
securities

40,622–

10,1484,510–

Note: Terms and conditions of transactions and policies on determination thereof, etc.
(1) Prices for purchase of crude oil from Sakhalin Oil and Gas Development Co., Ltd. are determined based on themarket price.
(2) The Company underwrites corporate bonds issued by FGP and determines the interest rate of the corporate bonds
reasonably in consideration of market interest rates. The balance as of the year-end is the amount used for the
consolidated balance sheet, and it reflects a deduction of ¥1,858 million due to the application of the equity method.
(3) The Company provides FGP with certificates of FGP shares and corporate bonds held by the Company as collateral
for its borrowings from financial institutions. The transaction amount is the balance of borrowings corresponding
to assets pledged as collateral as of the end of the period.
Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)
Type

Associate

Names ofcompany, etc.

Fukushima
Gas PowerCo., Ltd.

Location

Chiyodaku, Tokyo

Share capital
Transaction
Balance at
JAPEX’s stake
Relationshipor capitalend ofDescription and percentage
Description of amountwithrelatedAccount
title
contribution of business of voting rights
periodtransaction (Millions of
party(Millions of yen)
(Millions of yen)held (%)
yen)

537

Outsourcing Underwritingof powerof corporate
Operation
generationbonds
and contract
operations(Note 1)work ofContract work
power
(Ownership)of LNG
generation Direct
regasification
business
33.30
Pledge ofoperations
using acollateral
Pledge ofnatural gas(Note 2)collateral
power plant
Interlocking
officers–

35,168Investment
securities

–

4,590

–

Note: Terms and conditions of transactions and policies on determination thereof, etc.
(1) The Company underwrote corporate bonds issued by FGP and determined the interest rate of the corporate bonds
reasonably in consideration of market interest rates. The balance as of the year-end is the amount used for the
consolidated balance sheet, and it reflects a deduction of ¥1,778 million due to the application of the equity method.
(2) The Company provides FGP with certificates of FGP shares and corporate bonds held by the Company as collateral
for its borrowings from financial institutions. The transaction amount is the balance of borrowings corresponding
to assets pledged as collateral as of the end of the period.

- 117 -

(2) Transactions between consolidated subsidiaries of the company submitting consolidated financial statements andrelated parties
Companies, etc. having the same parent company as the company submitting consolidated financial statements,and subsidiaries, etc. of other subsidiaries and associates of the company submitting the consolidated financial
statements
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)

Type

Names ofcompany, etc.

Location

JAPEX’s
Balance atstake andTransaction
Relationshipend ofpercentage
Description of amountwith related
Account title
periodof votingtransaction
party(Millions of yen)rights held
(Millions of yen)

Share capitalor capital Description ofcontribution
business(Millions of yen)(%)

Company,
etc. in which
major
Japan Oil,shareholders Gas andof theMetalsCompany National
own a
Corporation
majority ofvoting rights

Minato-ku,
Tokyo

1,046,500(Note 1)

Support for
exploration anddevelopment ofoil resources,
etc.

–

Debt
guarantee

Debt guarantee
Note 2

55,834––

Note: Terms and conditions of transactions and policies on determination thereof, etc.
(1) The amount stated above is as of March 19, 2021.
(2) The Company has received debt guarantees for borrowings from financial institutions, and it pays a guarantee fee
calculated based on the amount of the debt guarantee. The transaction amount is the balance of guarantees received
as of the year-end.
Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)

Type

Names ofcompany, etc.

Location

JAPEX’s
Balance atstake andTransaction
Relationshipend ofpercentage
Description of amountwith related
Account title
periodof votingtransaction(Millions of yen)partyrights held
(Millions of yen)

Share capitalor capital Description ofcontribution
business(Millions of yen)(%)

Company,
etc. in which
major
Japan Oil,shareholders Gas andof theMetalsCompany National
own a
Corporation
majority ofvoting rights

Minato-ku,
Tokyo1,122,000(Note 1)

Support for
exploration anddevelopment ofoil resources,
etc.

–

Debt
guarantee

Performance ofguarantee(Note 2)

43,272––

Forgiveness ofdebt(Note 3)

41,796––

Note: Terms and conditions of transactions and policies on determination thereof, etc.
(1) The amount stated is as of December 27, 2021.
(2) The Japan Oil, Gas and Metals National Corporation performed guarantee obligations, by making payment bysubrogation of the Company’s borrowings from financial institutions. In connection with the performance of suchguarantee obligation, the Company recorded ¥3,335 million as a late charge.
(3) Regarding the reimbursement obligations arisen from the subrogation payment, the Company received forgivenessof debt in conjunction with the proceedings to dissolve and liquidate a subsidiary of the Company and recorded again on forgiveness of debt of ¥41,796 million.
2. Notes to parent company or material associates(1) Information on parent company
Not applicable.
(2) Summarized financial information on material associates
For the fiscal year ended March 31, 2022, the summarized financial information of all associates accounted forusing the equity method (11 companies), including a material associate, Sakhalin Oil and Gas Development Co.,
Ltd., is as follows:(Millions of yen)

- 118 -

Fiscal year ended March 31, Fiscal year ended March 31,
2021
2022
Total current assets
Total non-current assets

91,929169,489

124,848
158,960

Total current liabilities
Total non-current liabilities

58,169164,543

84,841160,014

Total net assets

38,706

38,953

Net sales
Profit before income taxes
Profit201,229
71,91741,604284,274
148,556
93,673(Per Share Information)

Net assets per share

Fiscal year ended
March 31, 2021
(April 1, 2020 –March 31, 2021)¥7,011.36

Fiscal year ended
March 31, 2022
(April 1, 2021 –March 31, 2022)¥6,679.85

Basic loss per share¥47.73¥545.64

Notes: 1. Diluted earnings per share is not presented, since basic loss per share was recorded and there is no dilutive share.
2. The Company’s shares held by the Board Benefit Trust (BBT) are included in the treasury shares that are deducted fromthe total number of issues shares at the fiscal year end when calculating net assets per share (77,600 shares in the fiscal
year ended March 31, 2021, and 76,000 shares in the fiscal year ended March 31, 2022).
Moreover, they are also included in the treasury shares that are deducted when calculating the average number of shares
during the period in order to calculate basic loss per share (46,021 shares in the fiscal year ended March 31, 2021, and76,486 shares in the fiscal year ended March 31, 2022).
3. The basis for calculation of basic loss per share is as follows:
Fiscal year ended
Fiscal year ended
March 31, 2021
March 31, 2022
(April 1, 2020 –(April 1, 2021 –March 31, 2021)
March 31, 2022)
Loss attributable to owners of parent (Millions of yen)
2,725
30,988Amounts not attributable to common shareholders (Millionsof yen)Loss attributable to owners of parent related to commonshares (Millions of yen)
Average number of shares during the period (Thousands ofshares)(Significant subsequent events)
Not applicable.

- 119 -

–

–

2,725

30,988

57,106

56,794

5) Annexed Consolidated Detailed Schedules
Schedule of corporate bonds
Not applicable.
Schedule of borrowings, etc.
Balance at
beginning of
periodCategory(Millions of yen)

Short-term borrowings

Balance
Averageat end of period interest rate
(Millions of yen)

Borrowing period

(%)

–

–

–

–

62,175

260

0.45

–

271

245

–

–

Long-term borrowings, less current portion

50,180510

0.452023 to 2025

Lease obligations, less current portion

1,705

1,572

–

2023 to 2031

–

–

–

–

114,332

2,588

–

–

Current portion of long-term borrowings
Current portion of lease obligations

Other interest-bearing debt
Total

Notes: 1. “Average interest rate” indicates the weighted average interest rate on the balance of long-term borrowings at the end of
the period.
2. The average interest rate on lease obligations is not presented because lease obligations are recorded on the consolidatedbalance sheets at the amount before deduction of the amount equivalent to interest included in the aggregate lease
payments.
3. The scheduled repayment amounts of long-term borrowing and lease obligations (excluding current portion) for five years
after the consolidated balance sheet date are as follows.
Due after one year throughDue after two years
Due after three years
Due after four years
two years
through three years
through four years
through five years(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
Long-term borrowings

260

250

–

–

Lease obligations

223

213

204

194

Schedule of assets retirement obligations
Balance at beginning
Increase during period Decrease during period
Categoryof period(Millions of yen)
(Millions of yen)
(Millions of yen)
Under the Petroleum andInflammable Natural Gas Resources
9,552
93
–
Development Law

Balance at end of
period(Millions of yen)
9,646

Under the Environmental Protection
and Enhancement Act, etc. enforcedin the Province of Canada

2,529

311

2,841

–

Under the provisions of local laws
and contracts with regard to oil andnatural gas production facilities
overseas

133

658

–

791

Under the Act on Prevention ofMarine Pollution and Maritime
Disaster

6,930

49

–

6,979

Under the provision of land lease
contracts and other

2,289

11

179

2,120

21,436

1,124

3,021

19,539Total- 120 -

(2) Other
Quarterly information for the fiscal year ended March 31, 2022
(Quarterly cumulative period)First three months

First six months

First nine months

Fiscal year
under review

Net sales (Millions of yen)

50,083

118,507

171,364

249,140

Profit (loss) before income taxes(Millions of yen)

10,489(119,315)(72,604)(18,501)

Profit (loss) attributable to owners ofparent(Millions of yen)

7,106

(119,676)(85,057)(30,988)

Basic earnings (loss) per share (Yen)

124.50(2,096.81)(1,491.67)(545.64)(Fiscal period)
Basic earnings (loss) per share (Yen)First quarter

Second quarter

124.50(2,221.29)- 121 -

Third quarter
608.28Fourth quarter
963.78

2. Non-consolidated Financial Statements, etc.
(1) Non-consolidated Financial Statements
1) Balance sheet(Millions of yen)
As of March 31, 2021
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Merchandise and finished goods
Raw materials and supplies
Advance payments to suppliers
Prepaid expenses
Accrued revenue
Accounts receivable - other
Advances paid
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Structures
Wells
Machinery and equipment
Vessels
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress
Wells in progress
Total property, plant and equipment
Intangible assets
Leasehold interests in land
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable from subsidiaries
and associates
Long-term prepaid expenses
Prepaid pension costs
Other
Allowance for doubtful accounts
Allowance for overseas investment loss
Total investments and other assets
Total non-current assets
Total assets- 122 -

As of March 31, 2022

108,323

103,939*４ 28,596*４ 36,133

3,826
6,381
4
495
*４ 20
*4 340*4 462*4 695
149,148

2,025
10,4400671*4 134*4 382*4 817*4 11,409
165,954

9,488

9,352

*1 27,715*1 26,884

113

85*1 24,613*1 20,688

1
3*1 1,902
10,31552
427–
74,6340
1*1 1,875
9,466
53
499
687
69,596

151
766
157
1,075

151
702
150
1,005

*2 93,025*2 94,833*2 154,241*2 82,833

23,951–

2,169–*4 1,543(22,956)(9,572)
242,403
318,113467,262

2,333
114*4 12,929(17)(6,533)
186,493
257,095
423,049

(Millions of yen)
As of March 31, 2021
Liabilities
Current liabilities
Accounts payable - trade
Lease liabilities
Accounts payable - otherAccrued expenses
Income taxes payable
Deposits received
Deposits received from subsidiaries and associates
Unearned revenue
Provision for bonuses for directors (and otherofficers)
Provision for loss on disaster
Asset retirement obligations
Other
Total current liabilities
Non-current liabilities
Lease obligations
Deferred tax liabilities
Provision for retirement benefits
Provision for share awards
Provision for loss on guarantees
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for overseas investment loss
Reserve for mine prospecting
Reserve for special depreciation
Reserve for tax purpose reduction entry of
non-current assets
Reserve for exploration
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

As of March 31, 2022

*4 22,033

211*4 3,529*4 5,246
1,748
136
24,01316- 123 -

*4 18,424

197*4 1,002*4 5,352

378
566
23,955
–

40

18

913
173
200
58,263

1,841–
248
51,985

1,640
4,631
2,396
23
22,811
15,060369
46,933
105,196

1,470
13,3152,098
47–
15,182
1,076
33,191
85,176

14,28814,288

3,572

3,572

1,512
14,91972

834
18,419–543

518

47,246
171,600
63,938303,404(151)
317,540

47,246
171,600
38,353
280,543(3,886)
290,945

44,218305
44,524362,065
467,262

48,340(1,413)46,927
337,872
423,049

2) Statement of income(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on valuation of shares of subsidiaries andassociates
Inactive facilities related expenses
Administrative expenses of inactive mountain
Commitment fees
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment losses
Loss on disaster
Bad debts written off
Loss on valuation of shares of subsidiaries
Provision of allowance for doubtful accounts for
subsidiaries and associates
Provision for loss on guarantees
Other
Total extraordinary losses
Loss before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Loss*1 169,195*1 133,642*1 134,883*1 98,357

34,312815*2 21,021
12,47535,285512*2 21,365
13,407*1 366*1 128*1 11,295*1 21,781

6

7,022

*1 1,417*1 1,611

13,08530,543*1 216

*1 25

–

3,555

280
59
344
*1 111
1,011
24,549225
63
292*1 770
4,932
39,018

0
–
0

1,291
39,826
41,117

19
948
–
–

32
–
1,416
12,76377,307

17,112–

22,811–
54,258(29,709)
3,585(6,629)(3,044)(26,664)–
1,048
92,568(12,432)
33
7,536
7,570
(20,003)*3 13,366- 124 -

3) Statement of Changes in Equity
Fiscal year ended March 31, 2021 (April 1, 2020 – March 31, 2021)(Millions of yen)
Shareholders’ equity
Retained earnings
Other retained earnings
SharecapitalBalance at beginning of
periodChanges during period

14,288Legalretainedearnings

3,572

Reversal of reserve foroverseas investment loss
Provision of reserve formine prospecting
Reversal of reserve formine prospecting
Reversal of reserve for
special depreciation
Reversal of reserve fortax purpose reduction
entry of non-current
assetsDividends of surplus
Loss
Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period

Reservefor special
depreciationReservefor tax
purposereduction
entry ofnoncurrent
assetsReservefor
explorationGeneralreserve

Retainedearnings
brought
forward144

568

47,246

171,600

93,554

332,926

1,027

–

–

1,800

(1,800)

–

–

(580)

580

–

–

72

–

–

25

–

–

(2,857)(2,857)(2,857)(26,664)(26,664)

ReserveforReserve foroverseasmine
investmen prospectingt loss2,540

13,700(1,027)

(72)
(25)

Total
shareholders’ equity(11)

347,203(26,664)
(140)

(140)

–

(1,027)

1,219

(72)

(25)

–

–

(29,616)(29,521)(140)(29,662)

14,288

3,572

1,512

14,91972

543

47,246

171,600

63,938303,404(151)

317,540

Valuation and translation adjustments

33,057

Deferred gains or losses
on hedges

Total valuation andtranslation adjustments

181

33,239

Reversal of reserve foroverseas investment loss
Provision of reserve formine prospecting
Reversal of reserve formine prospecting
Reversal of reserve for
special depreciation
Reversal of reserve fortax purpose reduction
entry of non-current
assetsDividends of surplus
Loss
Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period

Treasuryshares–Valuation difference on
available-for-sale securities

Balance at beginning of
periodChanges during period

Total
retainedearnings

Total net assets

380,442–––––(2,857)(26,664)(140)–
11,160124

11,284

11,284

11,160124

11,284(18,377)

44,218305

44,524362,065- 125 -

Fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022)(Millions of yen)
Shareholders’ equity
Retained earnings
Other retained earnings
SharecapitalBalance at beginning of
periodChanges during period
Reversal of reservefor overseas
investment loss
Provision of reserve
for mine prospecting
Reversal of reserve
for mine prospecting
Reversal of reserve
for special
depreciation
Reversal of reserve
for tax purpose
reduction entry of
non-current assets
Dividends of surplus
Loss
Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of
period14,288Legal retained
earnings

Reserve foroverseas
investment
loss

Reserve formine
prospecting

Reservefor special
depreciationReservefor tax
purposereduction
entry ofnoncurrent
assets

3,572

1,512

14,919

72

543

Total
shareholders’ equity(151)

317,540

Generalreserve

Retainedearnings
brought
forward47,246

171,600

63,938303,404678––(3,500)

–

–

–

–

72

–

–

25

–

–

(2,857)(2,857)(2,857)(20,003)(20,003)

3,500

(72)

(25)

(20,003)(3,737)(3,737)

2

2

–

–

(678)

3,500

(72)

(25)

–

–

(25,584)(22,860)(3,734)(26,595)

14,2883,572

834

18,419–518

47,246

171,600

38,353

280,543(3,886)

290,945

Valuation and translation adjustments

Loss
Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of
periodTreasurysharesReservefor
exploratio
n

(678)

Valuation difference on
available-for-sale securities

Balance at beginning of
periodChanges during period
Reversal of reservefor overseas
investment loss
Provision of reserve
for mine prospecting
Reversal of reserve
for mine prospecting
Reversal of reserve
for special
depreciation
Reversal of reserve
for tax purpose
reduction entry of
non-current assets
Dividends of surplus

Total
retainedearnings

44,218Deferred gains or losses
on hedges

Total valuation andtranslation adjustments

305

44,524

Total net assets

362,065–––––(2,857)(20,003)(3,737)2
4,121(1,718)

2,402

2,402

4,121

(1,718)2,402(24,192)

48,340(1,413)46,927

337,872- 126 -

Notes to non-consolidated financial statements(Significant accounting policies)
1. Accounting policy for measuring assets(1) Securities
・Held-to-maturity debt securities

Stated at amortized cost・Shares of subsidiaries and associates

Stated at cost using the moving average method

・Available-for-sale securities
Available-for-sale securities other than shares, Stated at fair value based primarily on market price at theetc. without market pricefiscal year-end. Unrealized gains or losses are recognizeddirectly in net assets and the cost of securities sold isdetermined using the moving-average method.

Shares, etc. without market priceStated at cost using the moving average method
Investments in limited investment partnerships and silent
partnerships are recorded by adding or subtracting the amountof equity interest in the net assets of the partnerships to/from“investment securities.”(2) Derivatives

Stated at fair value.

(3) Inventories

Stated at cost (a method in which carrying amount is written
down based on any decline in profitability).

・Merchandise and finished goods

Stated by the first-in, first-out method.

・Raw materials and supplies

Stated by the moving average method.

2. Accounting policy for depreciation/amortization of non-current assets(1) Property, plant and equipment (excluding leasedSendai pipelines, Shiroishi-Koriyama gas pipelines, Somaassets)

Iwanuma gas pipelines, assets of the Hokkaido District
Office and Soma District Office, and buildings (excluding
attached facilities) acquired on or after April 1, 1998, aredepreciated by the straight-line method. Other assets are
depreciated by the declining-balance method.
The principal useful lives are summarized as follows:
Buildings: 2 to 50 years
Structures: 2 to 60 years
Wells: 3 years
Machinery and equipment: 2 to 17 years(2) Intangible assets (excluding leased assets)

Amortized by the straight-line method. Capitalized computer
software costs are amortized by the straight-line method
over a period of 5 years, which is the period available forinternal use.

(3) Leased assets

Finance leases which do not transfer ownership of the leased
assets to the lessee
Leased assets are depreciated by the straight-line method
over the lease terms with no residual value.

3. Accounting standards for provisions(1) Allowance for doubtful accounts

To provide for potential credit losses on receivables, theallowance for doubtful accounts is stated at the amountdetermined based on the historical experience of bad debt
with respect to ordinary receivables, plus an estimate of
uncollectible amounts determined by reference to specificdoubtful receivables from customers which are experiencing
financial difficulties.

- 127 -

(2) Provision for bonuses for directors (and otherTo provide for the payment of bonuses to directors and otherofficers)

officers, the provision for bonuses for directors (and otherofficers) is stated at the estimated amount of payment at theend of the fiscal year under review.

(3) Provision for retirement benefits

To provide for the payment of retirement benefits toemployees, etc., the provision for retirement benefits isstated at the estimated amount of retirement benefit
obligations and plan assets at the end of the fiscal year underreview.
In calculating retirement benefit obligations, the Company
uses the benefit formula basis to attribute expected
retirement benefits to periods up to the end of the fiscal year
under review.
Prior service costs are amortized as incurred by the straightline method over a certain period (10 years), which is shorter
than the average remaining years of service of theemployees.
Actuarial gains and losses are amortized in the following
year in which the gains or losses are recognized by thestraight-line method over a certain period (10 years), whichis shorter than the average remaining years of service of theemployees.

(4) Allowance for overseas investment loss

The allowance for overseas investment loss is stated at theamount determined based on the investees’ financial positionand certain other factors for possible losses arising frominvestments in the exploration and development of overseas
natural resources.

(5) Provision for share awards

To provide for the payment of the Company’s shares, etc. todirectors (excluding outside directors) and executive officers
who do not concurrently serve as directors, the provision forshare award is stated at the estimated amount of shareawards at the end of the fiscal year under review, in
accordance with the Rules on Provision of Shares to
Officers.

(6) Provision for loss on disaster

The provision for loss on disaster is stated at the estimatedamount of payment for restoration expenses accompanying
disasters.

4. Accounting standards for revenues and expenses
With regard to revenues from contracts with clients of the Company, the main performance obligations in key
businesses and the timing at which these obligations are typically satisfied (i.e., when revenues are typicallyrecognized) are as follows.
The Company conducts the “E&P Business,” the “Infrastructure/Utility Business,” and “Other businesses” atbusiness locations in Japan.
(1) E&P BusinessIn the E&P Business, exploration, development, production, and sales of crude oil and natural gas are conductedat business locations in Japan. It is judged that in these sales, legal ownership and physical possession of assets,
as well as significant risks and economic rewards associated with ownership of assets, are transferred, and theright to receive consideration for delivered products is obtained, at the time the products are delivered to clients.
Thus, revenue is recognized at that time.

- 128 -

(2) Infrastructure/Utility BusinessIn the Infrastructure/Utility Business, sales of gases (natural gas and LNG) and electricity are conducted atbusiness locations in Japan. It is judged that in these sales, legal ownership and physical possession of assets, aswell as significant risks and economic rewards associated with ownership of assets, are transferred, and the rightto receive consideration for delivered products is obtained, at the time the products are delivered to clients. Thus,
revenue is recognized at that time.
(3) Other businesses
In the Other businesses, contract services (drilling, etc.) and sales of oil products, etc. are conducted at businesslocations in Japan. As for contract services, when control over goods or services is transferred to clients over acertain period of time, revenue is recognized according to progress in the satisfaction of performance obligations.
For measurement of progress, the input approach based on incurred costs is used. It is judged that in sales of oil
products, etc., legal ownership and physical possession of assets, as well as significant risks and economic
rewards associated with ownership of assets, are transferred, and the right to receive consideration for delivered
products is obtained, at the time the products are delivered to clients. Thus, revenue is recognized at that time.
For all businesses, in identification of performance obligations, it is examined whether the Company acts as aprincipal or an agent. If the nature of its promise is a performance obligation to provide the specified goods orservices itself, as a principal it presents revenue at the gross amount of consideration in its statement of income. If thenature is a performance obligation to make arrangements so that these goods or services are provided by otherparties, as an agent it presents revenue at the amount of commissions or fees, or the net amount of consideration, in
its statement of income.
Revenue is recognized based on the transaction price under contracts with clients. If a contract contains multiple
performance obligations, the transaction price is allocated to each performance obligation at a ratio of standalone
selling price. Since consideration for transactions is usually paid within one year after the satisfaction of performanceobligations, such consideration does not include any significant financing component.
5. Accounting policy for translating foreign currency-denominated assets and liabilities into yen
Monetary receivables and payables denominated in foreign currencies are translated into yen at the spot exchange
rate on the balance sheet date, and the resulting translation adjustments are presented as foreign exchange gains orlosses.
6. Hedge accounting(1) Hedge accounting method

Deferral hedge accounting is adopted for hedge transactions.
Foreign exchange forward contracts are accounted for by theallocation method if the foreign exchange forward contracts
meet certain criteria to adopt the method.

(2) Hedging instruments and hedge items

Hedging instruments: Foreign exchange forward contracts
Hedged items: Accounts payable - trade and accounts payable other(3) Hedging policy

To avoid future foreign currency fluctuation risk associatedwith foreign currency transactions, etc., the Company enters
into hedge transactions only in connection with the relevant
assets, liabilities and forecast transactions.

(4) Method of assessing the effectiveness of hedges

The Company assesses whether the critical terms of thehedging instruments and hedged items are closely aligned,
and the hedge transactions are effective in offsetting theprice fluctuation, etc. at the inception of the hedge and on an
ongoing basis. Forward exchange contracts accounted for by
the allocation method are not subject to the assessment ofhedge effectiveness.

- 129 -

(Significant accounting estimates)
Recoverability of deferred tax assets(1) Amounts recorded in the non-consolidated financial statements for the fiscal year ended March 31, 2022
(Millions of yen)
Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

18,894

12,821

Deferred tax assets
Note: The amount is before netting out with deferred tax liabilities.

(2) Information about significant accounting estimates on identified items
The method of calculating the amount in (1) is the same as that described in “Notes to consolidated financial
statements, (Significant accounting estimates), Recoverability of deferred tax assets.”(Changes in accounting policies)
Application of Accounting Standard for Revenue Recognition, Etc.
As the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised
ASBJ regulations were applied from the beginning of the fiscal year under review, we have recognized the revenue at thetime the control of promised goods or services is transferred to the client, at the amount expected to be received upon theexchange of said goods or services. As a result, we have changed the method of recognizing revenue to a net basis forcertain purchase and sale transactions of crude oil, natural gas, where we previously recognized revenue on a gross basis,
after determining its role (as principal or agent) in the provision of goods or services to clients.
The application of the Accounting Standard for Revenue Recognition and relevant revised ASBJ regulations is subject tothe transitional treatment provided for in the proviso to paragraph 84 of the Accounting Standard for Revenue
Recognition. The cumulative effect of the retrospective application, assuming the new accounting policy had been applied
to periods prior to the beginning of the fiscal year under review was added to or deducted from the opening balance ofretained earnings of the fiscal year under review, and thus the new accounting policy was applied from such opening
balance; provided, however, that the new accounting policy was not retrospectively applied to contracts for which nearly
all the revenue amounts had been recognized according to the previous treatment in periods prior to the beginning of the
fiscal year under review, by applying the method provided for in paragraph 86 of the Accounting Standard for Revenue
Recognition.
Consequently, for the fiscal year under review, net sales decreased ¥80,306 million, cost of sales decreased ¥80,246
million, and selling, general and administrative expenses decreased ¥59 million compared with those before the adoptionof the Accounting Standard for Revenue Recognition. There was no effect on operating profit, ordinary profit, and loss
before income taxes. In addition, there was also no effect on the opening balance of retained earnings of the fiscal year
under review.
Due to the application of the Accounting Standard for Revenue Recognition and relevant revised ASBJ regulations,“accounts receivable - trade” under “current assets” of the balance sheet at the end of the previous fiscal year has been
included in “accounts receivable - trade” and “other” as of the end of the fiscal year under review. In accordance with thetransitional treatment provided for in paragraph 89-2 of the Accounting Standard for Revenue Recognition, figures for theprevious fiscal year have not been restated in accordance with the new approach to presentation.
In accordance with the transitional treatment provided for in paragraph 89-3 of the Accounting Standard for Revenue
Recognition, notes on revenue recognition for the previous fiscal year are not presented.
Application of Accounting Standard for Fair Value Measurement, Etc.
We have applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) andrelevant ASBJ regulations from the beginning of the fiscal year under review. And we have applied new accounting
policies stipulated in the Accounting Standard for Fair Value Measurement and relevant ASBJ regulations prospectively
in accordance with the transitional treatment provided for in paragraph 19 of the Accounting Standard for Fair Value
Measurement and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July4, 2019). There was no effect of this application on the non-consolidated financial statements.

- 130 -

(Changes in presentation)
Statement of income“Foreign exchange gains,” which was included in “other” under “non-operating income” in the previous fiscal year isseparately presented in the fiscal year under review because of the increased quantitative significance. To reflect this change
in presentation, the non-consolidated financial statements for the previous fiscal year have been reclassified.
Accordingly, “other” of ¥1,423 million presented under “non-operating income” in the statement of income for the previous
fiscal year has been reclassified as “foreign exchange gains” of ¥6 million and “other” of ¥1,417 million.
(Additional information)
Share-based compensation planThis information is not presented as the same information is disclosed in the “Notes to consolidated financial
statements (Additional information).”(Balance sheet)*1. For assets acquired in previous years, the amount of reduction entry due to receipt of a government subsidy is ¥5,000
million. The balance sheet amount is stated net of this amount. The following table summarizes the amount of suchaccumulated reduction entry of property, plant and equipment.
(Millions of yen)
As of March 31, 2021
Structures

As of March 31, 2022
42

42

Machinery and equipment

4,759

4,759

Tools, furniture and fixtures

198

198

*2. The following assets were pledged as collateral for borrowings of subsidiaries and associates.
(Millions of yen)
As of March 31, 2021
Investment securities
Shares of subsidiaries and associates

As of March 31, 2022

6,369
619

6,369
610

3. Contingent liabilities(Millions of yen)
As of March 31, 2021

As of March 31, 2022

(1) Liabilities for guarantees on borrowings to financial institutions
Japan Canada Oil Sands Limited *1
JAPEX Montney Ltd. *2

28,272
6,800

Kumamoto Mirai LNG Co., Ltd.
Employees (borrowings for housing funds)

31
22

Employees (borrowings for housing funds)

38

Greenland Petroleum Exploration Co., Ltd.

20

Kumamoto Mirai LNG Co., Ltd.
Greenland Petroleum Exploration Co.,
Ltd.

38
19

Kangean Energy Indonesia Ltd.

116(2) Guarantees on liabilities related to production facilities
Kangean Energy Indonesia Ltd.
736
(3) Completion guarantee for pipeline construction
JAPEX Montney Ltd.

5,705

–

(4) Guarantee for letter of credit from financial institutions
Japan Canada Oil Sands Limited
4,469
Total

46,079- 131 -

–
Total

191

*1 Of this amount, ¥400 million is re-guaranteed by another company.
*2 The amount stated is net of provision for loss on guarantees of ¥22,811 million.

*4. Monetary receivables from and payables to subsidiaries and associates (excluding those presented separately)(Millions of yen)
As of March 31, 2021
Short-term receivables
Long-term receivables
Short-term payables
Long-term payables

2,676
91
18,317–

As of March 31, 2022
11,777130
15,630–5. The Company has entered into overdraft agreements and loan commitment agreements with four banks to facilitate
efficient procurement of working capital. The unused balances of these agreements as of March 31, 2021 and 2022
are as follows:(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Total overdraft limit and commitment line
Executed borrowings

66,100–84,458–

Unused balance

66,10084,458- 132 -

(Statement of income)*1. Transactions with subsidiaries and associates(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Volume of operating transactions
Net sales

23,19624,295Purchases

71,894

12,840Volume of other transactions

9,582

18,170*2. Selling expenses for the fiscal years ended March 31, 2021 and 2022 roughly account for 60% and 57% of SG&A
expenses, respectively, while general and administrative expenses for 40% and 43%, respectively.
Below is a breakdown of major expense items and amount of selling, general and administrative expenses:(Millions of yen)
Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022
Compensation for directors and other officers

432

411

Salaries for employees, etc.

6,512

6,460

Retirement benefit expenses

408

370

Freight costs

2,444

2,506

Cost of outsourcing construction work

2,940

2,652

Depreciation

3,677

3,559

- 133 -

*3. Impairment losses
In the fiscal year ended March 31, 2021, the Company recognized impairment losses on the asset groups as shown
below.
Use

Business assets related to
Yufutsu oil and gas field

Business assets related to
Iwafune-oki oil and gas field

Impairment losses
Amount (Millions of
Type
yen)

Location

Tomakomai City,
Hokkaido and others

Tainai City, Niigata andothersBuildings

1,062

Machinery and equipment

3,466

Land

3,780

Leased assets

1,234

Other

1,628

Total

11,172

Machinery and equipment

1,660

Other

533

The Company deems a production facility, etc. as the minimum unit that generates largely independent cash flows forbusiness assets, and groups assets at the level of individual property for idle assets.
As for business assets related to the Yufutsu oil and gas field, the carrying amount of business assets for production
operation was written off to the recoverable amount, and the write-off was recorded as impairment losses under
extraordinary losses, based on review of future cash flows with a downward revision in the crude oil price forecast.
In addition, the recoverable amount of this asset group is mainly measured at value in use, which is recorded at the
memorandum value as the future cash flows are expected to be negative.
As for business assets related to the Iwafune-oki oil and gas field, the carrying amount of business assets for production
operation was written off to the recoverable amount, and the write-off was recorded as impairment losses under
extraordinary losses, based on review of future cash flows with an increase in asset retirement obligations due to achange in the estimate for expenses related to the future withdrawal of the Iwafune-oki offshore platform and wellabandonment.
The recoverable amount for this asset group is measured from its value in use, then calculated by discounting future
cash flows at 8%.
(Securities)
Shares of subsidiaries and associates
Fiscal year ended March 31, 2021
With regard to the shares of subsidiaries and associates (balance sheet amounts are ¥135,608 million and ¥18,632
million, respectively), the Company does not disclose their fair value because of the lack of quoted market prices andthe inability to estimate fair value.
Fiscal year ended March 31, 2022
With regard to the shares of subsidiaries and associates (balance sheet amounts are ¥68,690 million and ¥14,142
million, respectively), the Company does not disclose their fair value because of the lack of quoted market prices andthe inability to estimate fair value.

- 134 -(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Deferred tax assets
Allowance for overseas investment loss
Net tax loss carried forward
Provision for retirement benefits

2,680

1,829

–

10,398

671

587

5,998

5,156

12,883758

Asset retirement obligations

4,301

4,290

Impairment losses on non-current assets

2,023

2,021

Allowance for doubtful accounts

6,427

4

Provision for loss on guarantees

6,387

–

Tax credit carried forward

3,899

3,940

Other

2,586

3,927

Depreciation on non-current asset
Investment securities and shares of subsidiaries andassociates

Subtotal deferred tax assets

47,85832,915

Valuation allowance for net tax loss carried forward–(7,280)

Valuation allowance for total of deductible temporary
differences(28,964)(12,813)

Total valuation allowance(28,964)(20,094)

Total deferred tax assets

18,894

12,821

Deferred tax liabilities
Reserve for mine prospecting(5,503)(6,819)Reserve for overseas investment loss
Reserve for tax purpose reduction entry of non-current
assets

(588)

(324)

(211)

(201)

Reserve for special depreciation

(28)

–

(16,770)(18,585)

(424)

(204)

Total deferred tax liabilities(23,526)(26,136)

Deferred tax liabilities, net(4,631)(13,315)

Valuation difference on available-for-sale securities
Other

2. Reconciliation of the effective tax rates reflected in the consolidated statement of income and the effective statutory tax
rates
Fiscal year ended March 31, 2021
This information is not presented as the Company recognized loss before income taxes.
Fiscal year ended March 31, 2022
This information is not presented as the Company recognized loss before income taxes.
(Revenue recognition)
Information that provides the basis for understanding revenue from contracts with clients is as presented in “Notes(Significant accounting policies), 4. Accounting standards for revenues and expenses” in the financial statements.
(Significant subsequent events)
Not applicable.

- 135 -

4) Annexed Detailed Schedules
Schedule of total property, plant and equipment(Millions of yen)

Category

Balance atBalance at

Accumulatedend of period

depreciation

510

9,352

13,846

3

3,209

26,884

122,344

84

–

113

85

64,53824,613

487

29

4,383

20,68894,601

Vessels

1

–

–

0

0

23

Vehicles

3

–

–

1

1

15

Tools, furniture and fixtures

1,902

438

0

464

1,875

9,928

Land

10,315

–

848

–

9,466

–

Leased assets

52

28

3

23

53

3,616

Construction in progress

427

4,538

4,467

–

499

–

Wells in progress

–

687

–

–

687

–

Total

74,634

9,107

5,437

8,708

69,596308,915

Leasehold interests in land

151

–

–

–

151

–

Software

766

245

0

308

702

953

Other

157

253

245

14

150

76

1,075

499

246

322

1,005

1,029

Type of assets

beginning of
periodAdditions

Deductions

Depreciation

Buildings

9,488

459

84

Structures

27,715

2,381

113

Wells

Property, plant and equipment

Machinery and equipment

Intangible assets

Total

Note: Major components of increase during period are as follows:
Construction in progress: Construction work of calorific value adjustment facility ¥2,786 million
Schedule of allowances and provisions
Account title

Balance at beginning
Increase during period Decrease during periodof period(Millions of yen)
Balance at end of
periodAllowance for doubtful
accounts

22,956–22,938

17

Allowance for overseas
investment loss

9,572

196

3,235

6,533

Provision for bonuses for
directors (and other officers)

40

18

40

18

Provision for loss on disaster

913

1,302

374

1,841

Provision for share awards

23

30

5

47

22,811–

22,811–

Provision for loss on
guarantees- 136 -

(2) Components of major assets and liabilities
This information is not presented as the Company prepares the consolidated financial statements.
(3) Other
Not applicable.

- 137 -

Item 6. Outline of Share-related Administration of Reporting Company
Fiscal year

From April 1 to March 31

Ordinary General Meeting of Shareholders

June

Record date

March 31

Record date of dividends of surplus

September 30
March 31

Number of shares constituting one unit

100 shares

Purchase of shares of less than one unit

Handling office(Special account)
Stock Transfer Agency Department, Head Office, Mizuho Trust & Banking
Co., Ltd.
1-3-3 Marunouchi, Chiyoda-ku, Tokyo, Japan

Transfer agent(Special account)
Mizuho Trust & Banking Co., Ltd.
1-3-3 Marunouchi, Chiyoda-ku, Tokyo, Japan

Forwarding office

Purchase fee――――――
Amounts equivalent to fees determined by the share handling regulationsof the Company in relation to entrustment of the purchase and sale ofsecurities

Method of public notice

Publication in The Nihon Keizai Shimbun published in Tokyo

Special benefits for shareholders

Not applicable.

Notes: 1. Provisions regarding rights pertaining to shares of less than one unit
The Articles of Incorporation of JAPEX has the following provisions regarding rights pertaining to shares of less than one
unit:
Article 9 (Rights Pertaining to Shares of Less than One Unit (tangen)
Any Company shareholder holding less than one unit (tangen) shall be unable to exercise any rights other than those set out
below:
1. Rights stipulated in Article 189-2 of the Companies Act
2. Rights of pre-emption in respect of issues of shares or grants of share options, in proportion to their shareholdings.
2. The Articles of Incorporation were amended by the resolution of the Ordinary General Meeting of the Shareholders held on
June 28, 2022. Accordingly, the method of public notice of the Company has changed as follows:
Public notice of the Company shall be given electronically; provided, however, that in the event that the Company is unable t ogive electronic public notice due to an accident or other unavoidable reason, public notice shall be given by publication in The
Nikkei published in Tokyo. The Company will give public notice on the following URL:
https://www.japex.co.jp/- 138 -

Item 7. Reference Information of Reporting Company
1. Information about Parent of Reporting Company
The Company does not have any company or entity as its parent.

2. Other Reference Information
From the beginning of the fiscal year under review until the filing date of this Annual Securities Report, the Company has filed
the following documents:(1) Annual Securities Report, attached document thereof and Confirmation Letter
Filed for the 51st term ended March 31, 2021 (from April 1, 2020 to March 31, 2021) with the Director-General of the Kanto
Local Finance Bureau on June 28, 2021.
(2) Internal Control Report and attached document thereof
Filed with the Director-General of the Kanto Local Finance Bureau on June 28, 2021.
(3) Quarterly Securities Reports and Confirmation Letter
Filed for the first quarter (from April 1 to June 30, 2021) of the 52nd term ended March 31, 2022 with the Director-General of
the Kanto Local Finance Bureau on August 11, 2021.
Filed for the second quarter (from July 1 to September 30, 2021) of the 52nd term ended March 31, 2022 with the DirectorGeneral of the Kanto Local Finance Bureau on November 10, 2021.
Filed for the third quarter (from October 1 to December 31, 2021) of the 52nd term ended March 31, 2022 with the DirectorGeneral of the Kanto Local Finance Bureau on February 10, 2022.
(4) Extraordinary Reports
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 9-2 (Result of exercise of voting rights at a general
meeting of shareholders) of the Cabinet Office Ordinance on Disclosure of Corporate Affairs with the Director-General of the
Kanto Local Finance Bureau on July 5, 2021.
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 3 (Changed to a specified subsidiary company) anditem 12 and item 19 (Event which may have serious effects on the financial position, operating results and cash flow statusesof the Company and its consolidated companies) of the Cabinet Office Ordinance on Disclosure of Corporate Affairs with the
Director-General of the Kanto Local Finance Bureau on August 3, 2021.
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 12 and item 19 (Event which may have serious
effects on the financial position, operating results and cash flow statuses of the Company and consolidated companies) of the
Cabinet Office Ordinance on Disclosure of Corporate Affairs with the Director-General of the Kanto Local Finance Bureau
on November 12, 2021.
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 19 (Event which may have serious effects on thefinancial position, operating results and cash flow status of consolidated companies) of the Cabinet Office Ordinance on
Disclosure of Corporate Affairs with the Director-General of the Kanto Local Finance Bureau on December 23, 2021.
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 12 (Event which may have serious effects on thefinancial position, operating results and cash flow status of the Company) of the Cabinet Office Ordinance on Disclosure of
Corporate Affairs with the Director-General of the Kanto Local Finance Bureau on March 28, 2022.
Filed the Extraordinary Report pursuant to Article 19, paragraph 2, item 3 (Changed to a specified subsidiary company) of the
Cabinet Office Ordinance on Disclosure of Corporate Affairs with the Director-General of the Kanto Local Finance Bureau
on March 28, 2022.
(5) Share Buyback Reports
Filed for the reporting period from November 1 to November 30, 2021 with the Director-General of the Kanto Local Finance
Bureau on December 14, 2021.
Filed for the reporting period from December 1 to December 31, 2021 with the Director-General of the Kanto Local Finance
Bureau on January 13, 2022.
Filed for the reporting period from January 1 to January 31, 2022 with the Director-General of the Kanto Local Finance
Bureau on February 10, 2022.
Filed for the reporting period from February 1 to February 28, 2022 with the Director-General of the Kanto Local Finance
Bureau on March 14, 2022.
Filed for the reporting period from March 1 to March 31, 2022 with the Director-General of the Kanto Local Finance Bureau
on April 14, 2022.
Filed for the reporting period April 1 to April 30, 2022 with the Director-General of the Kanto Local Finance Bureau on May- 139 -

13, 2022.
Filed for the reporting period May 1 to May 31, 2022 with the Director-General of the Kanto Local Finance Bureau on June
14, 2022.
(6) Amendment Report of the Annual Securities Report and Confirmation Letter
Filed for the 51st term ended March 31, 2021 (from April 1, 2020 to March 31, 2021) with the Director-General of the Kanto
Local Finance Bureau on June 10, 2022.

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Section 2 Information about Reporting Company’s Guarantor, etc.
Not applicable.

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Independent Auditor’s Report and Internal Control Audit Report

June 28, 2022

The Board of Directors
Japan Petroleum Exploration Co., Ltd.

Ernst & Young ShinNihon LLC
Tokyo Office
YUKAWA Yoshio
Designated and Engagement Partner
Certified Public Accountant

YAMAZAKI Kazuhiko
Designated and Engagement Partner
Certified Public Accountant

YOSHIDA Takeshi
Designated and Engagement Partner
Certified Public Accountant<Audit of Financial Statements>
OpinionPursuant to the provisions of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, we have audited the consolidated
financial statements of Japan Petroleum Exploration Co., Ltd. (the “Company”) provided in the Financial Information section in the
Company’s Annual Securities Report, namely, the consolidated balance sheet as of March 31, 2022, and the consolidated statement ofincome, consolidated statement of comprehensive income, consolidated statement of changes in equity, and consolidated statement ofcash flows for the fiscal year from April 1, 2021 to March 31, 2022, and the notes to significant accounting policies for preparation of
consolidated financial statements and other notes and the annexed consolidated detailed schedules.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of theCompany and its consolidated subsidiaries (collectively, the “Group”) as of March 31, 2022, and its consolidated financial performanceand cash flows for the fiscal year then ended in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Recoverability of Deferred Tax Assets
Key Audit Matters and the Reasoning

Auditor’s Response

As described in “Notes to consolidated financial statements,(Significant accounting estimates),” the Group recorded deferred
tax assets before offsetting deferred tax liabilities of ¥20,837
million as of March 31, 2022. Of the item above, the Company

For the purpose of considering the recoverability of deferred tax
assets of the Company, we examined the appropriateness of thecorporate judgments and reasonably estimable periods of futuretaxable income relating to corporate classifications based on therecorded deferred tax assets of ¥12,821 million including ¥3,118
million for some part of net tax loss carried forward.
As a result of performing the scheduling of deductible temporary
differences based on the estimated taxable income before

Implementation Guidance on Recoverability of Deferred Tax
Assets (ASBJ Guidance No.26). In particular, we discussed withmanagement the reasons for having incurred significant net tax
loss and the management environment surrounding theadding/deducting temporary differences over the reasonably
estimable period as of the end of the current fiscal year, theGroup recorded its deferred tax assets for the recoverable
deductible temporary differences and net tax loss carriedCompany, and compared the medium- to long-term plans
formulated in the past with actual results.
Furthermore, to consider the appropriateness of the estimation of
future taxable income, we discussed with management theforward.
The recoverability of deferred tax assets largely depends on theestimation of future taxable income. Selling prices and volumes
are used as primary assumptions for estimating the timing andamount of future taxable income.
E&P Business and Infrastructure/Utility Business are primarybusinesses of the Company. These primary assumptions are
significantly affected by irreversible structural changes andmanagement environment and underlying business plans,
including the decarbonization trends and the effect of economic
sanctions adopted against Russia. We mainly performed theprocedures below:– We compared the actual sales volumes with the estimatesformulated in the past to assess the effectiveness of theestimation processes determined by management.
– We considered the consistency between the estimates of futuredecarbonization trends in various areas such as energy demandand environmental issues. These estimates largely depend on
business plans and entail uncertainties under which management
has difficulty making decisions and providing evidence,
including determining reasonably estimable periods forevaluating the recoverability of deferred tax assets. In addition,deferred tax assets have significance in terms of amount. Taking
these matters into consideration, we determined thattaxable income with the business plans approved bymanagement.
– We compared crude oil and natural gas prices, the basis ofselling prices, with estimated prices announced by external
research firms.
– We compared sales volumes with past results and considered
the consistency between production amounts and the results ofreserve assessment.

recoverability of deferred tax assets of the Company is a key
audit matter.
Other Information
The other information consists of the information included in the annual securities report, other than the consolidated financial
statements, the non-consolidated financial statements, and our auditor’s reports thereon. Management is responsible for the preparationand disclosure of the other information. The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ execution of duties relating to the design and operations of the reporting process about the other information.
Our opinion on the consolidated financial statements does not cover the other information, and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtainedin the audit or otherwise appears to be materially misstated.
If we conclude that there is a material misstatement of this other information based on the work we have performed, we are required toreport that fact.
We have nothing to report in this regard.

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Responsibilities of Management, the Audit & Supervisory Board Members and the Audit & Supervisory Board for the Consolidated
Financial Statements
Management is responsible for preparing and fairly presenting these consolidated financial statements in accordance with accounting
principles for consolidated financial statements generally accepted in Japan, and for designing and operating such internal control as
management determines necessary to enable the preparation and fair presentation of the consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern and disclosing, as required by accounting principles generally accepted in Japan, matters related to going concern.
The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the Directors’ executionof duties relating to the design and operations of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion on the consolidated
financial statements based on our audit from an independent standpoint. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:・Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, anddesign and perform audit procedures responsive to those risks. The procedures selected or applied depend on the auditor’s judgement.
In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances for our risk
assessments, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on the effectivenessof the Group’s internal control.
・Evaluate the appropriateness of accounting policies used by the management and their method of application, as well as thereasonableness of accounting estimates made by the management and related notes thereto.
・Conclude on the appropriateness of management’s use of the going concern basis for preparing the consolidated financial statements.
And, based on the audit evidence obtained, determine whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related notes to the consolidated financial statements or, if such notes are
inadequate, to express a qualified opinion with exceptions on the consolidated financial statements. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
・Evaluate whether the overall presentation of the consolidated financial statements and the notes thereto are in accordance withaccounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the consolidated
financial statements, including the notes thereto, and whether the consolidated financial statements represent the underlying
transactions and accounting events in a manner that achieves fair presentation.
・Obtain sufficient appropriate audit evidence regarding the financial information of the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of the audit of consolidated financial
statements. We remain solely responsible for our audit opinion.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit, and other matters required by auditing standards.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards in order to eliminate or reduce obstruction factors.
Of the matters communicated with the Audit & Supervisory Board Members and the Audit & Supervisory Board, we determine thosematters that were of most significance in the audit of the consolidated financial statements of the current period as key audit matters in
our auditor’s report and describe the matters in our auditor’s report. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.

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(TRANSLATION ONLY)<Audit of Internal Control>
OpinionTo make an audit certification pursuant to Article 193-2, paragraph 2 of the Financial Instruments and Exchange Act, we have audited
the Internal Control Report of Japan Petroleum Exploration Co., Ltd. as of March 31, 2022.
In our opinion, the accompanying Internal Control Report, in which Japan Petroleum Exploration Co., Ltd. states that internal control
over financial reporting was effective as of March 31, 2022, presents fairly, in all material respects, the assessment of int ernal control
over financial reporting, in accordance with assessment standards for internal control over financial reporting generally accepted inJapan.
Basis for Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting generally
accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Internal
Control Audit section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant toour audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management, the Audit & Supervisory Board Members and the Audit & Supervisory Board for the Internal Control
ReportManagement is responsible for designing and operating effective internal control over financial reporting, and for preparing and fairly
presenting its report on internal control in accordance with standards for assessment of internal control over financial reporting generally
accepted in Japan.
The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing and verifying the designand operating effectiveness of internal control over financial reporting.
Internal control over financial reporting may not fully prevent or detect misstatements in financial reporting.
Auditor’s Responsibilities for the Internal Control Audit
Our responsibilities are to obtain reasonable assurance about whether the Internal Control Report is free from material misstatement andto issue an internal control audit report that includes our opinion on the Internal Control Report based on our internal control audit froman independent standpoint.
In accordance with auditing standards for internal control over financial reporting generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:・Perform audit procedures to obtain audit evidence for the assessment results for internal control over financial reporting in the internal
control report. Internal control audit procedures selected and applied depend on the auditor’s judgment, taking into account thesignificance of effects on the reliability of financial reporting.
・Evaluate the overall presentation of the Internal Control Report, including the appropriateness of the scope, procedures and results ofmanagement’s assessments of internal control over financial reporting.
・Obtain sufficient appropriate audit evidence about the results of the assessments of internal control over financial reporting in theInternal Control Report. We are responsible for the direction, supervision and performance of the audit of the Internal Control Report.
We remain solely responsible for our audit opinion.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the scope and timing of
the planned internal control audit, results thereof, significant deficiencies in internal control to be disclosed that we identify during our
audit and those that were remediated, and other matters required by auditing standards for internal control.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards in order to eliminate or reduce obstruction factors.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisionsof the Certified Public Accountants Act of Japan.

Notes:1. The above report is the electronic version of the original Independent Auditor’s Report. The original report is kept separatelyby the Company (the reporting company of the Annual Securities Report).
2. The associated XBRL data are not included in the scope of the audit.

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Independent Auditor’s Report

June 28, 2022

The Board of Directors
Japan Petroleum Exploration Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo Office
YUKAWA Yoshio
Designated and Engagement Partner
Certified Public Accountant
YAMAZAKI Kazuhiko
Designated and Engagement Partner
Certified Public Accountant
YOSHIDA Takeshi
Designated and Engagement Partner
Certified Public Accountant

OpinionPursuant to Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act, we have audited the non-consolidated financial
statements of Japan Petroleum Exploration Co., Ltd. (the “Company”) provided in the “Financial Information” section in the Company’s
Annual Securities Report, namely, the non-consolidated balance sheet as of March 31, 2022, and the non-consolidated statement ofincome and non-consolidated statement of changes in equity and the notes to significant accounting policies for the 52nd fiscal year
from April 1, 2021 to March 31, 2022, and the related notes and the annexed detailed schedules.
In our opinion, the accompanying non-consolidated financial statements present fairly, in all material respects, the financial position of
the Company as of March 31, 2022, and its financial performance for the fiscal year then ended in accordance with accounting principles
generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the non-consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the non-consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the non-consolidated financial
statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.
Recoverability of Deferred Tax Assets
As described in “Notes to non-consolidated financial statements, (Significant accounting estimates),” the Company recorded deferred
tax assets before offsetting deferred tax liabilities of ¥12,821 million as of March 31, 2022. Of the item above, the Company recorded
deferred tax assets of ¥3,118 million for some part of net tax loss carried forward. The statement is omitted because the details are thesame as those of the key audit matters described in the auditor’s report for the consolidated financial statements.
Other Information- 146 -

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The other information consists of the information included in the annual securities report, other than the consolidated financial
statements, the non-consolidated financial statements, and our auditor’s reports thereon. Management is responsible for the preparationand disclosure of the other information. The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ execution of duties relating to the design and operations of the reporting process about the other information.
Our opinion on the non-consolidated financial statements does not cover the other information, and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the non-consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the non-consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If we conclude that there is a material misstatement of this other information based on the work we have performed, we are required toreport that fact.
We have nothing to report in this regard.
Responsibilities of Management, the Audit & Supervisory Board Members and the Audit & Supervisory Board for the Non-Consolidated
Financial Statements
Management is responsible for preparing and fairly presenting non-consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for designing and operating such internal control as management determines necessary toenable the preparation and fair presentation of the non-consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the non-consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare thenon-consolidated financial statements with the assumption of the Company’s ability to continue as a going concern, and disclosing, as
required by accounting principles generally accepted in Japan, matters related to going concern.
The Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the Directors’ executionof duties relating to the design and operations of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the non-consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion on the non-consolidated
financial statements based on our audit from an independent standpoint. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these non-consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:・Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, anddesign and perform audit procedures responsive to those risks. The procedures selected or applied depend on the auditor’s judgement.
In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・When performing risk assessment procedures, obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of auditing the non-consolidated financial statements toexpress an opinion on the effectiveness of the Company’s internal control.
・Evaluate the appropriateness of accounting policies used by the management and their method of application, as well as thereasonableness of accounting estimates made by the management and related notes thereto.
・Conclude on the appropriateness of management’s use of the going concern basis for preparing the non-consolidated financial
statements. And, based on the audit evidence obtained, determine whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related notes to the non-consolidated financial statements or, if
such notes are inadequate, to express a qualified opinion with exceptions on the non-consolidated financial statements. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
・Evaluate whether the overall presentation of the non-consolidated financial statements and the notes thereto are in accordance withaccounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the non-consolidated
financial statements, including the notes thereto, and whether the non-consolidated financial statements represent the underlying
transactions and accounting events in a manner that achieves fair presentation.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the planned scope and- 147 -

(TRANSLATION ONLY)
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit, and other matters required by auditing standards.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of the financial statements in Japan, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards in order to eliminate or reduce obstruction factors.
Of the matters communicated with the Audit & Supervisory Board Members and the Audit & Supervisory Board, we determine thosematters that were of most significance in the audit of the non-consolidated financial statements for the current fiscal year as key audit
matters in our auditor’s report and describe the matters in our auditor’s report. We describe these matters in our auditor’s report unlesslaw or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Company which is required to be disclosed pursuant to the provisionsof the Certified Public Accountants Act of Japan.

Notes 1. The above report is the electronic version of the original Independent Auditor’s Report. The original report is kept separatelyby the Company (the reporting company of the Annual Securities Report).
2. The associated XBRL data are not included in the scope of the audit.

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