Consolidated Financial Results for the Six Months Ended September 30, 2009
November 6, 2009
Note: The following report is a summary of the Japanese-language original.

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

Japan Petroleum Exploration Co., Ltd.
Tokyo Stock Exchange, First Section1662
http://www.japex.co.jp/
Osamu Watanabe
Shigeyoshi Hasegawa, Manager, Media Relations, Media & Investor Relations Department
TEL: (03) 6268-7110
Scheduled date to file Quarterly Report:
November 12, 2009
Scheduled date to commence dividend payments: November 27, 2009

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

1.
(1)Consolidated financial results for the six months ended September 30, 2009
(April 1, 2009 – September 30, 2009)
Consolidated operating results (cumulative)(Percentages indicate year-on-year changes.)
Net sales

Six months ended

Operating income

Millions of yen% Millions of yen

Ordinary income% Millions of yen

Net income% Millions of yen%

September 30, 2009

70,567(36.4)

2,864(77.2)

5,184(61.1)

3,498(62.7)

September 30, 2008

110,912–

12,546–

13,321

–

9,371

–

Net income per share

Diluted net
income per share

Six months ended

Yen

Yen

September 30, 2009

61.22

–

September 30, 2008

163.96–(2)

Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of September 30,
2009

521,534

397,29774.8

6,826.65

As of March 31, 2009

500,444378,22774.1

6,486.85

Reference: Equity

2.

As of September 30, 2009: 390,162 million yen

As of March 31, 2009: 370,743 million yen

Cash dividends
Cash dividends per share
Record dateFiscal year ended
March 31, 2009
Fiscal year ending
March 31, 2010
Fiscal year ending
March 31, 2010
(Forecast)First quarter

Second quarter

Third quarter

Fiscal year-end

Annual

Yen

Yen

Yen

Yen

Yen

–

20.00

–

20.00

40.00

–

20.00
–

20.00

40.00

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

–1–

3.

Consolidated financial forecasts for the fiscal year ending March 31, 2010 (April 1, 2009 – March 31, 2010)(Percentages indicate year-on-year changes.)
Net sales
Millions ofyen

Fiscal year ending
March 31, 2010%

173,148 (14.3)

Operating income

Ordinary income

Millions ofyenMillions ofyen%

7,994 (60.2)%

12,534 (43.9)

Net income pershare

Net income
Millions of
yen

%

Yen

9,135 (27.3)

159.83

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

4.
(1)

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

(2)

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

(3)

Changes in accounting policies, procedures, and methods of presentation for preparing the quarterly
consolidated financial statements (changes described in the section of “Changes in significant matters forming
the basis of preparing the quarterly consolidated financial statements”)
a. Changes due to revisions to accounting standards and other regulations: Yes
b. Changes due to other reasons: None
Note:

(4)

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

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

Number of issued shares (common stock)a. Total number of issued shares at the end of the period (including treasury stock)
As of September 30, 2009
57,154,776 shares
As of March 31, 2009
57,154,776 sharesb. Number of treasury shares at the end of the period
As of September 30, 2009
1,850 shares
As of March 31, 2009
1,783 sharesc. Average number of shares during the period (cumulative from the beginning of the fiscal year)
Six months ended September 30, 2009
57,152,951 shares
Six months ended September 30, 2008
57,153,292 shares* Proper use of financial forecasts, and other special matters
Concerning the financial forecasts for the fiscal year ending March 31, 2010, refer to “Notice of Financial
Forecast Revision” released today.
The forecast statements shown in this document are based on information that was available at the time of
preparation. Actual performance may differ materially from these forecasts due to various factors.

–2–

[Qualitative Information and Financial Statements]
1.

Qualitative information regarding consolidated operating results
During the six months ended September 30, 2009 (from April 1, 2009 to September 30, 2009), net sales was¥70,567 million, a decrease of ¥40,345 million (-36.4%) year on year, as gross profit decreased by ¥15,598
million (-40.3%) year on year to ¥23,106 million. The main factors behind the year-on-year falls in both net
sales and gross profit include not only the high yen and a drop in crude oil prices, but also decreased income
as a result of the expiry of the commercial production period of a consolidated subsidiary Japex New NanhaiLtd., which had been produced crude oil in China.
Exploration expenses decreased both domestic and overseas by ¥4,719 million (-46.7%) year on year, despite
exploratory drilling activities in Libya, to ¥5,386 million. Selling, general and administrative expenses
declined by ¥1,196 million (-7.5%) year on year to ¥14,855 million as a result of a fall in special petroleum
gain levy in China following the expiry of the commercial production period of Japex New Nanhai Ltd. As aresult of the above, operating income dropped by ¥9,681 million (-77.2%) year on year to ¥2,864 million.
Ordinary income was ¥5,184 million, a decrease of ¥8,136 million (-61.1%) year on year due to an increase inother of non-operating income, a decrease in loss on valuation of securities and other factors. The main reason
for the above increase in other of non-operating income was the receipt of compensation related to indemnity
rights and delinquency rights from JJI S&N B.V., an equity-method affiliate. This delinquency charge wasreceived because JAPEX acted as debt guarantor for the aforementioned company in fiscal 2006.
Please note that, because of the increase in the importance of Diamond Gas Netherlands B.V., an affiliate of
JAPEX, it is included in the scope of equity-method applicable companies from the three month ended June30, 2009.
Income before income taxes and minority interests was ¥4,980 million, a decrease of ¥8,274 million (-62.4%)
year on year, and net income was ¥3,498 million, a decrease of ¥5,872 million (-62.7%) year on year as aresult of lower income taxes.
Below is a summary of earnings by business division.
(i) E&P Division
The E&P Division sells crude oil, natural gas, liquefied natural gas (LNG) and bitumen. During the six
months ended September 30, 2009, this Division posted net sales of ¥63,244 million, down ¥38,944
million (-38.1%) year on year, due to drops in crude oil and bitumen prices and the expiry of thecommercial production period of Japex New Nanhai Ltd.
(ii) Contract Services Division
The Contract Services Division is primarily involved in drilling and geophysical surveys. During the six
months ended September 30, 2009, it recorded net sales of ¥1,382 million, up ¥26 million (+1.9%) year
on year.
(iii) Other Businesses Division
The Other Businesses Division is primarily involved in the sale of oil products, including liquefied
petroleum gas (LPG) and fuel oil, the transportation of natural gas and oil products on consignment aswell as other subcontracted tasks. During the six months ended September 30, 2009, this Division posted
net sales of ¥5,939 million, down ¥1,426 million (-19.4%) year on year.

–3–

2.

Qualitative information regarding consolidated financial position
Total assets as of September 30, 2009, stood at ¥521,534 million, an increase of ¥21,089 million, from theprevious fiscal year end. This is mainly due to an increase in investment securities due to the rise in the stock
price of INPEX CORPORATION and other companies.
Regarding liabilities and net assets, total liabilities was up ¥2,020 million from the previous fiscal year end to¥124,236 million, with total net assets also up ¥19,069 million to ¥397,297 million, mainly due to the increasein deferred tax liabilities and a greater valuation difference on available-for-sale securities brought upon by
the aforementioned increase in investment securities.

3.

Qualitative information regarding consolidated financial forecasts
The full-year forecast released on August 7, 2009, has been revised. Please refer to the “Notice of Financial
Forecast Revision” released on the same day of this report, November 6, 2009.

4.

Others(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in
the change in scope of consolidation)
No items to report(2) Application of simplified accounting and special accounting for preparing the quarterly consolidated
financial statements
a. Deferral accounting of cost variance
Cost variance arising from seasonal changes in production level is deferred as current assets (other) andcurrent liabilities (other) because such variance is expected to be almost completely eliminated by the endof the cost accounting period.
b. Calculation of taxes
For the taxes, the Company and some of its consolidated subsidiaries compute first by reasonably
estimating the effective tax rate after applying tax effect accounting against income before income taxes
and minority interests for the fiscal year including the second quarter under review, and next bymultiplying the quarterly income before income taxes and minority interests by such estimated effective tax
rate. Note that income taxes–deferred is included in income taxes.

(3) Changes in accounting policies, procedures, and methods of presentation for preparing the quarterly
consolidated financial statements•

Changes in accounting standards
Before the change, revenue from construction contracts was recognized on the percent of completion
method for long-term, large-scale projects (lasting one year or more and revenue of ¥3.0 billion or more).
Other projects were treated on the completed contract method. However, from the first quarter ended June30, 2009, the “Accounting Standard for Construction Contracts” (ASBJ Statement No. 15, December 27,2007) and the “Guidance on Accounting Standard for Construction Contracts” (ASBJ Guidance No. 18,
December 27, 2007), are adopted and, concerning the completed portion by the end of the second quarter(September 30, 2009) of construction contracts started during the first quarter, construction projects forwhich the portion of progress is recognized with a certainty are recorded on the percent of completion
method (rate of progress estimated by the cost-ratio method), and all other projects on the completed
contract method.
The effect on net sales, operating income, ordinary income and income before income taxes and minority
interests as a result of the above is immaterial.

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

As of September 30, 2009

As of March 31, 2009
(Summary)

AssetsCurrent assets
Cash and deposits

21,98427,702

Notes and accounts receivable-trade

11,02017,050

Short-term investment securities

12,724

11,510

Merchandise and finished goods

4,693

4,255

713

553

Raw materials and supplies

6,321

6,200

Other

33,23729,859(13)(12)

90,681

97,120144,474

142,767

Other

4,107

4,392

Total intangible assets

4,107

4,392

Investment securities

268,204

241,945

Other

20,24820,091(58)(68)

Allowance for overseas investment loss

(6,122)(5,803)

Total investments and other assets

282,271

256,164

Total noncurrent assets

430,853

403,324

Total assets

521,534

500,444

Work in process

Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Intangible assets

Investments and other assets

Allowance for doubtful accounts–5–

(Millions of yen)

As of September 30, 2009

As of March 31, 2009
(Summary)

Liabilities
Current liabilities
Notes and accounts payable-trade

2,452

6,508

284

282

Other

16,237

17,302

Total current liabilities

18,97424,093Long-term loans payable

23,941

25,325

Deferred tax liabilities

67,83060,108Provision for retirement benefits

6,113

5,732

Provision for cost of abandonment

6,049

5,725

Other provision

718

694

Other

608

535

Total noncurrent liabilities

105,262

98,123

Total liabilities

124,236

122,216

Capital stock

14,28814,288Retained earnings

258,561

255,499(9)(9)

Total shareholders’ equity

272,840

269,778

Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges

120,187

105,430(59)(0)

Foreign currency translation adjustment(2,805)(4,465)

Total valuation and translation
adjustments

117,322

100,964

Minority interests

7,134

7,484

Total net assets

397,297378,227

Total liabilities and net assets

521,534

500,444

Provision

Noncurrent liabilities

Net assets
Shareholders’ equity

Treasury stock–6–

(2) Consolidated statements of income(Millions of yen)Six months ended
September 30, 2008
(April 1, 2008 –September 30, 2008)
110,912Six months ended
September 30, 2009
(April 1, 2009 –September 30, 2009)
70,567

Cost of sales

72,20847,461Gross profit

38,704

23,106

Exploration expenses

11,026

5,655

Exploration subsidies

(920)

(268)

Total exploration expenses

10,106

5,386

Selling, general and administrative expenses

16,051

14,855

Operating income

12,5462,864Interest income

723

390

Dividends income

1,447

1,528

Other

1,224

1,914

Total non-operating income

3,396

3,833

975

79

Provision for overseas investment loss–

320

Provision for cost of abandonment

–

341

639

501

Other

1,005

270

Total non-operating expenses

2,621

1,513

Ordinary income

13,321

5,184

Extraordinary income
Reversal of allowance for doubtful
accounts
Gain on prior period adjustment

5

2

–

147

Other

–

0

Total extraordinary income

5

149

70

122

–

231

70

353

13,255

4,980

3,351

1,231

532

250

9,371

3,498

Net sales

Exploration expenses

Non-operating income

Non-operating expenses
Loss on valuation of securities

Foreign exchange losses

Extraordinary loss
Loss on retirement of noncurrent assets
Retirement benefit expenses for priorperiods
Total extraordinary losses
Income before income taxes and minority
interests
Income taxes
Minority interests in income
Net income–7–(3) Notes on premise of going concern
No items to report(4) Notes on significant changes in the amount of shareholders’ equity
No items to report

6.

Other information(1) Changes in presentation method(Quarterly consolidated balance sheets)
The “provision for retirement benefits” and “provision for cost of abandonment,” which were included in“provision” of noncurrent liabilities as of September 30, 2008, are presented separately in the second quarter
ended September 30, 2009, because they exceeded 1% of the total of liabilities and net assets. The “provision
for retirement benefits” and “provision for cost of abandonment” included in “provision” of noncurrent
liabilities as of September 30, 2008, amounted to ¥5,578 million and ¥4,337 million, respectively.
(Quarterly consolidated statements of income)The “provision for overseas investment loss” and “provision for cost of abandonment,” which were included
in “other” of non-operating expenses for the six months ended September 30, 2008, are presented separately
in the six months ended September 30, 2009, because they exceeded 20% of total non-operating expenses.
The “provision for overseas investment loss” and “provision for cost of abandonment” included in “other” of
non-operating expenses for the six months ended September 30, 2008, amounted to ¥72 million and ¥292
million, respectively.

–8–

(2) Status of production and salesa. Production
Oil and natural gas segment
Division

Product

Six months ended
September 30, 2008
(April 1, 2008 –September 30, 2008)(Reference)
Fiscal year ended
March 31, 2009
(April 1, 2008 – March 31, 2009)

352,974

282,082748,022(76,354)(19,067)(136,632)

Natural gas(thousand m3)

569,652

546,644

1,286,621(29,209)(26,847)(57,843)

LNG (t)15,921

22,36046,796204,322

188,781

416,369(204,322)(188,781)(416,369)

Crude oil (kl)E&P

Six months ended
September 30, 2009
(April 1, 2009 –September 30, 2009)

Bitumen (kl)Notes: 1. The figures in parentheses represent overseas production and are included in the total.
2. Part of the natural gas production volume is used as a feedstock for LNG.
3. Bitumen is a type of extra-heavy oil extracted from oil sands.
4. The reason for the year-on-year decline in the production volume of overseas crude oil was the expiry in February
2009 of the commercial production period of consolidated subsidiary Japex New Nanhai Ltd.

b.

Sales
Oil and natural gas segment

Division

Product

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

E&P

Six months ended
September 30, 2009
(April 1, 2009 –September 30, 2009)
AmountVolume(Millions of yen)

(Reference)
Fiscal year ended
March 31, 2009
(April 1, 2008 – March 31, 2009)
AmountVolume(Millions of yen)

Crude oil (kl)822,535

64,167

778,978

28,8681,919,959

102,845Natural gas(thousand m3)

647,121

22,906

643,558

24,924

1,485,961

54,126

LNG (t)79,895

5,615

73,202

5,311

177,401

13,412

Bitumen (kl)

205,685

9,500

188,3314,140

417,423

13,087

Subtotal

102,189

63,244

183,471

Contract services

1,356

1,382

4,739

Other businesses

7,366

5,939

13,916110,91270,567202,127

Total

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

–9–