Consolidated Financial Results for the First Quarter Ended June 30, 2007
August 10, 2007
Note: The following report is a translation of the Japanese-language original.

Company Name: Japan Petroleum Exploration Co., Ltd.
Stock Listing: Tokyo Stock Exchange
Company Code: 1662
(URL: http://www.japex.co.jp/)
President: Yuji Tanahashi
Inquiries: Shigeyoshi Hasegawa, Manager, Media Relations, Media and Investor Relations Department TEL: (03) 6268-7110(Amounts less than one million yen have been omitted)

1. Consolidated Results for the First Quarter of Fiscal 2008 (April 1, 2007 – June 30, 2007)(Percentages indicate changes over the First Quarter in the previous fiscal year.)(1) Consolidated Operating Results
Net Sales

Operating Income

Ordinary Income

Net Income

Million Yen%

Million Yen%

Million Yen%

43,117

20.1

5,297

(23.1)

9,026

2.6

7,253

22.7
48.7
–

FY2008 First Quarter

Million Yen

FY2007 First Quarter

35,890

38.2

6,886

118.2

8,799

51.7

5,909

FY2007 Full Year

170,018–

29,719–34,705–20,982Net Income per
Share-Basic%Net Income per
Share-Diluted

Yen

Yen

FY2008 First Quarter

126.91–

FY2007 First Quarter

103.39–FY2007 Full Year367.12–(2) Consolidated Financial Position
Total Assets

Net Assets

Equity Ratio

Net Assets per Share

Million Yen

Million Yen%

Yen

June 30, 2007

609,791

446,598

71.9

7,672.47

June 30, 2006

532,631399,26773.6

6,862.96

March 31, 2007

578,059

418,92971.0

7,185.80(3) Consolidated Cash Flows
Cash Flows from

Cash Flows from

Cash Flows fromOperating Activities

Investing Activities

Financing Activities

Cash and Cash
Equivalents
at Period-End

Million Yen

Million Yen

Million Yen

Million Yen

FY2008 First Quarter

3,908(29,807)(2,642)31,756

FY2007 First Quarter

2,325(4,890)(406)

40,037

FY2007 Full Year34,256(18,140)

917

60,1991

2. Cash Dividends
Cash Dividends per Share
Record-Date

June 30
Yen

FY2008 First Quarter–

FY2007 First Quarter–3. Consolidated Forecast for Fiscal Year 2008 (April 1, 2007 – March 31, 2008)(Percentages indicate changes over the same period in the previous fiscal year.)
Net Sales

Operating Income

Ordinary Income

Net Income per

Net Income

Share

FY2008Million Yen%

Million Yen%

Million Yen%

Million Yen%

Yen

Interim89,241

32.9

7,758

(38.1)

12,501(20.6)

9,158(14,0)

160.24

Full Year

182,343

7.2

14,127(52.5)

22,177(36.1)

17,006 （18.9）

297.55

4. Others(1) Changes in significant subsidiaries during the period (changes in specified subsidiary affecting the scope of consolidation):No(2) Use of simplified accounting procedures:

Yes(3) Changes in accounting treatment from the latest consolidated fiscal year: No
Note: For details, please refer to 4. Others, Qualitative Information & Financial Statements, etc. on page 4.

*Disclaimer regarding appropriate use of forecasts and related points of note
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 & Financial Statements, etc.
1. Qualitative Information Concerning Consolidated Business Performance
For the first three months of FY 2008, as compared to the same period of the previous fiscal year, consolidated net
sales increased 20.1% to ¥43,117 million, operating income decreased 23.1% to ¥5,927 million, ordinary income
increased 2.6% to ¥9,026 million and net income increased 22.7% to ¥7,253 million. Below is a summary of net
sales by business division.
(a) E&P Division
The E&P Division sells crude oil, natural gas, liquefied natural gas (LNG) and bitumen. This division posted net
sales in the first quarter reporting period of ¥39,382 million, up 22.9% from the same period of the previous fiscal
year, on the back of soaring crude oil prices and the higher sales volumes of trading oil such as Sakhalin crude oil(SOKOL crude).
(b) Contract Services Division
The Contract Services Division is primarily involved in drilling and geophysical surveys, and recorded net sales in
the first quarter reporting period of ¥315 million, down 43.3% from the same period of the previous year due to adecrease in drilling in the first quarter.
(c) Other Businesses Division
Our Other Business Division is primarily involved in the sale of petroleum products, including liquefied petroleumgas (LPG) and fuel oil, as well as transportation of natural gas and petroleum products on consignment. Thisdivision posted net sales in the first quarter reporting period of ¥3,419 million, up 3.7% from the previous year.
2. Qualitative Information Concerning Consolidated Financial Position
For the first three months of FY 2008, as compared to the same period of the previous fiscal year, investment andother assets increased due to an increase in the difference on valuation of investment securities and an increase ininvestment securities due to the acquisition of Energi Mega Pratama Inc. (EMPI), mentioned below in Cash Flows
from Investing Activities. Also plant, property and equipment increased as a result of progress in drilling a
production well in Niigata. As a result, fixed assets increased ¥59,676 million to ¥532,583 million.
Current assets however decreased by ¥27,944 million to ¥77,207 million. Total assets increased by ¥31,732 million
to ¥609,791 million.
With respect to liabilities, current liabilities decreased ¥7,065 million to ¥29,799 due to the payment of accounts
payable for the Shiroishi-Koriyama gas pipeline completed in March 2007 and the payment of income tax liabilities
etc. Long-term liabilities, however, increased by ¥11,128 million for reasons including an increase of ¥12,340
million in deferred tax liabilities due to an increase in the difference on valuation of investment securities. As aresult, total liabilities increased ¥4,062 million to ¥163,192 million. Net assets increased ¥27,669 million to¥446,598 million.
For status of consolidated cash flow, cash and cash equivalents (“funds”) at the end of the first quarter decreased by¥28,443 million compared to the end of previous fiscal year to ¥31,756 million.
(Cash Flows from Operating Activities)
Funds provided by operating activities was ¥3,908 million. This is mainly attributable to the result of subtracting thedecreases such as ¥3,863 million payment of income taxes from the increases in funds such as from ¥9,024 millionof income before income taxes and minority interests.
(Cash Flows from Investing Activities)
Funds used in investing activities was ¥29,807 million. This was mainly due to the payment of ¥19,761
million—arising from the acquisition of investments in securities including the purchase of 25% of the shares of
EMPI, who holds interests in the Kangean block in East Java, Indonesia—and the payment of ¥10,960 million for
acquisition of property, plant and equipment.
(Cash Flows from Financing Activities)
Funds used in financing activities was ¥2,642 million. This was primarily due to a payment of cash dividends of¥1,130 million and the repayment of long-term debt of ¥1,139 million.

33. Qualitative Information Concerning Consolidated Forecast
The forecast for the interim and full-year period released on May 14, 2007 has been revised. Please refer to theseparate “Notice of Financial ForecastRevision for the Year Ending March 31, 2008” released on the same day ofthis report, August 10, 2007.
4. Others(1) Changes in significant subsidiaries during the period (change in specified subsidiary affecting the scope of consolidation):No(2) Use of simplified accounting procedures
The simplified accounting method is adopted in part, for applications such as recording the tax expenses—obtainedby multiplying the estimated effective tax rate by the income before income taxes and minority interests for the firstquarter reporting period—as the income taxes and minority interests.
The simplified accounting method is applied in part to other procedures where the impact on the amount is slight.
(3) Changes in accounting treatment from the latest consolidated fiscal year: No

4

5. Consolidated Quarterly Financial Statements(1) Consolidated Balance Sheets for the First Quarter of FY2008

Description

As of June 30, 2006

As of June 30, 2007

As of March 31, 2007

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)(Assets)
I.

Current assets
1. Cash and deposits

22,051

22,732

27,1692. Notes and accounts receivable

12,287

18,61624,4513. Marketable securities

19,792

12,862

32,714

4. Inventories

11,542

12,061

8,683

5. Other current assets

6,014

10,945

12,145

Less: Allowance for doubtful receivables
Total current assets

(13)

(10)

(12)

71,674

77,207105,152

II. Fixed assets
1. Property, plant and equipment(1) Buildings and structures

41,71953,63754,892(2) Machinery and equipment

28,23028,33829,258(3) Land13,132

13,164

13,164(4) Other property, plant and equipment

21,892

23,647

18,192

Total property, plant and equipment

104,975

118,787

115,508

6,262

7,052

7,585

(1) Investments in securities

339,231

396,176

341,162(2) Others

18,081

2. Intangible fixed assets
3. Investments and others

19,69519,758Less: Allowance for doubtful receivables

(97)

(95)

(95)

Allowance for losses on overseas investments(9,110)(9,095)(9,335)

349,718

406,743

349,812

Total Investments and others
Total fixed assets
Total assets

5

460,957

532,583

472,907532,631609,791

578,059

Description

As of June 30, 2006

As of June 30, 2007

As of March 31, 2007

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)（Liabilities）
I.

Current liabilities
1.

Notes and accounts payable

4,257

8,668

9,395

2.

Current portion of long-term debt

972

2,278

2,278

3.

Reserve for directors’ bonus

23

26

96

4.

Other current liabilities

13,217

18,82625,094

Total current liabilities

18,47029,79936,864

II. Long-term liabilities
1.

Long-term debt

16,028

16,583

17,722

2.

Deferred tax liabilities

89,538106,607

94,2673.

Accrued retirement benefits for employees

4,875

5,512

5,434

4.
5.

472

389

608

3,073

3,597

3,459

6.

Accrued retirement benefits for directors
Accrued estimated cost of abandonment ofwells
Accrual for losses on projects

798

527

601

7.

Other reserves

93

112

108

8.

Other long-term liabilities

12

62

62

Total long-term liabilities

114,893

133,393

122,265

133,363

163,192

159,130

Total liabilities（Net Assets）
I.

Shareholders’ equity
1.

Capital14,28814,28814,2882.

Capital reserves

213,483

233,523

227,413

3.

Treasury stock
Total shareholders’ equity

II. Difference on valuation and conversion, etc.
1. Difference on valuation of other marketablesecurities
2. Deferred gain (loss) on hedging
3.

Translation adjustments
Total difference on valuation and conversion,
etc.

III. Minority interests

(4)

(5)

(5)

227,767

247,806

241,696

163,669

190,187

168,234

5

19

55

801

496

707

164,476

190,702

168,997

7,023

8,090

8,234

Total net assets

399,267

446,598

418,929

Total liabilities and net assets

532,631609,791

578,0596

(2) Consolidated Statements of Income for the First Quarter of FY2008

Description

FY2007 First Quarter(Apr. 1, 2006 - Jun. 30,
2006)

FY2008 First Quarter(Apr. 1, 2007 - Jun. 30,
2007)

FY2007(Apr. 1, 2006 - Mar. 31,
2007)

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)I.

Net sales

35,89043,117

170,018

II.

Cost of sales

20,92628,095

104,174

Gross profit

14,96415,022

65,844

1. Exploration expenses

1,807

2,917

8,987

2. Exploration subsidies

(10)

-

(809)

1,797

2,917

8,178

6,280

6,807

27,946

6,886

5,297

29,719III. Exploration expenses

Total exploration expenses
IV. Selling, general and administrative expenses
Operating income
V.

Non-operating income

1.

Interest income

299

430

1,355

2.

Dividend income

1,793

2,268

2,805

3.

Equity in profit of non-consolidated
subsidiaries and affiliates

1

312

690

4.

Reversal of allowance for losses on overseas
investments

-

240

-

5.

Reversal of accrual for losses on projects

72

74

270

6.

Other non-operating income

241

685

1,527

2,409

4,012

6,649

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

Interest expense

8

47

120

2.

Provision for accrued estimated cost ofabandonment of wells

136

147

569

3.

Exchange loss

246

-

-

Other non-operating expenses

104

88

973

Total non-operating expenses

495

283

1,663

8,799

9,026

34,705

4.

Ordinary income
VII. Extraordinary income
1.

Reversal of allowance for doubtful receivables

7

6

0

2.

Other extraordinary income

-

-

966

Total extraordinary income

7

6

967

VIII. Extraordinary losses
1.

Loss on disposal of fixed assets

4

8

387

2.

Other extraordinary losses

-

-

624

Total extraordinary losses

4

8

1,012

Income before income taxes and minority
interests

8,803

9,024

34,660

Income taxes

2,549

1,591

11,909

344

179

1,768

5,909

7,253

20,982

Minority interests
Net income7(3) Consolidated Statements of Cash Flows for the First Quarter of FY2008

Description

FY2007 First Quarter FY2008 First Quarter(Apr. 1, 2007 - Jun.
(Apr. 1, 2006 - Jun.
30, 2007)
30, 2006)

FY2007(Apr. 1, 2006 - Mar.
31, 2007)

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)

I. Operating activities
1.

Income before income taxes and minority interests

8,803

9,024

34,6602.

Depreciation and amortization

3,508

3,792

14,938

3.

Amortization of goodwill

237

257

1,006

4.

Decrease in allowance for doubtful receivables

(29)

(1)

(32)

5.

Increase in provision for accrued retirement benefits for
employees
Decrease in provision for accrued retirement benefits for
directors
Increase in provision for accrued estimated cost ofabandonment of wells
Decrease in provision for allowance for losses on overseas
investments and accrual for losses on projects

140

78

699

(288)

(219)

(153)

132

142

510

(57)

(314)

(29)

(2,093)(2,699)(4,161)

8

47

120

(1)

(150)

(119)

(1)

(312)

(690)

5,819

(5,733)

6.
7.
8.
9.

Interest and dividend income

10.

Interest expense

11.

Gain on redemption and sales of marketable securities andinvestments in securities
12. Equity in losses (gains) of unconsolidated subsidiaries andaffiliates
13.

Decrease (increase) in notes and accounts receivable

6,424

14.

Decrease (increase) in inventories(2,747)(3,378)111

15.

Increase (decrease) in notes and accounts payable(6,126)(2,576)

3,757

16.

Increase (decrease) in consumption tax payable

(165)

222

(550)

17.

Other, net

1,526(2,414)

(851)

9,269

7,318

43,481

-

453

2,643

(6,943)(3,863)(11,868)

2,325

3,908

34,256

Subtotal
18. Collection of claim for indemnity of guaranteed debt
implementation
19. Income taxes (paid) and recovered
Net cash provided by operating activities

8

FY2007 First Quarter FY2008 First Quarter
FY2007(Apr. 1, 2006 - Jun. 30, (Apr. 1, 2007 - Jun. 30, (Apr. 1, 2006 - Mar.
2006)
2007)
31, 2007)
DescriptionII.

1. Proceeds from time deposits
2. Proceeds from redemption and sale of marketable securities
3. Additions to property, plant and equipment
4. Proceeds from sales of property, plant and equipment
5. Additions to intangible fixed assets
6. Payments for acquisition of investments in securities
7. Proceeds from redemption and sale of investments insecurities
8. Increase in loans receivable
9. Decrease in loans receivable
10. Interest and dividends received
11. Other, net
Net cash used in investing activities
III.

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)

910

545

948

Investing activities
600

400

1,300

(6,483)(10,960)(23,485)

0

-

28

(335)

(168)

(1,388)(2,479)(19,761)(4,950)

765

1,264

7,643

(118)

(4,285)

(165)

323

92

1,241

2,115

2,777

4,283

(188)

288

(3,596)(4,890)(29,807)(18,140)
5,000

Financing activities
1. Proceeds from long-term debt

2,000

-

2. Repayment of long-term debt-

(1,139)-

3. Purchase of treasury stock

-

(0)

(0)

4. Cash dividends paid

(1,404)(1,130)(2,571)

5. Dividends paid to minority shareholders(1,015)(306)(1,015)

13

(66)

(495)

(406)

(2,642)

917

73

98

84

6. Other, net
Net cash used in financing activities
IV.

Effect of exchange rate changes on cash and cash equivalents

V.

Increase (decrease) in cash and cash equivalents(3,045)(28,443)

17,117VI.

Cash and cash equivalents at beginning of the period

43,08260,19943,08240,03731,75660,199VII. Cash and cash equivalents at the period-end

9(4) Status of Production and Sales① Production
E＆P Division
Division

Product

FY2007 First Quarter(Apr. 1, 2006 - Jun. 30, 2006)

FY2008 First Quarter(Apr. 1, 2007 - Jun. 30, 2007)

FY2007(Apr. 1, 2006 - Mar. 31, 2007)

188,758(48,494)

186,543(46,546)

791,517(186,759)(thousand m3)

286,418(14,591)

291,858(13,800)

1,247,087(62,705)

LNG (t)

5,807

5,332

25,584

Bitumen117,702(117,702)

107,916(107,916)

447,430(447,430)

Crude oil(kl)Natural gas
E&P

(kl)

(Notes)1. The figures in parentheses represent overseas production and are included in the total.
2. Part of the natural gas production volume is used as a feedstock for LNG.
3. Bitumen is heavy crude oil extracted from oil sands.

② Sales
E&P Division

Division

Product

FY2007 First Quarter(Apr. 1, 2006 - Jun. 30, 2006)
AmountVolume(¥ million)

FY2008 First Quarter(Apr. 1, 2007 - Jun. 30, 2007)
AmountVolume(¥ million)

FY2007(Apr. 1, 2006 - Mar. 31, 2007)
AmountVolume(¥ million)

Crude Oil (kl)

407,608

19,325502,816

24,404

1,821,618

84,931Natural Gas

308,455

9,570

320,728

10,284

1,411,309

44,949LNG (t)33,213

1,747

38,7272,312

208,384

10,879Bitumen (kl)

117,243

1,394

108,056

2,381

444,985

9,777－

32,038－39,382－

150,538

－

556

－

315

－

5,383

－

556

－

315

－

5,383

－

3,296

－

3,419

－

14,096

Subtotal

－

3,296

－

3,419

－

14,096

Total－

35,890－43,117－

170,018(thousand m3)

E&P

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

10