Consolidated Financial Results for the First Three Quarters Ended December 31, 2007
February 15, 2008
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 Three Quarters of Fiscal 2008 (April 1, 2007 – December 31, 2007)(Percentages indicate changes over the First Three Quarters in the previous fiscal year.)(1) Consolidated Operating Results
Net Sales

Operating Income

Ordinary Income

Net Income

Million Yen%

Million Yen%

Million Yen%

Million Yen%

FY2008 First 3Qs

141,33928.6

15,479(27.1)

22,468(10.7)

17,381(6.7)

FY2007 First 3Qs

109,870

18.0

21,22621.5

25,172

11.1

18,63327.3

FY2007 Full Year

170,018–

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

Yen

Yen

FY2008 First 3Qs

304.12–

FY2007 First 3Qs

326.02–

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

Net Assets

Equity Ratio

Net Assets per Share

Million Yen%

Yen

December 31, 2007

641,905

464,503

71.0

7,975.41

December 31, 2006

541,603

408,46474.0

7,008.13

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 3Qs

18,775(41,889)487

37,522

FY2007 First 3Qs

22,578(12,880)(2,034)50,842

FY2007 Full Year34,256(18,140)

917

60,1991

2. Cash Dividends
Cash Dividends per Share
Record-Date

The Third Quarter-End
Yen

FY2008 3Q–

FY2007 3Q–

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

FY2008 Full Year

Operating Income

Ordinary Income

Net Income per

Net Income

Share

Million Yen%

Million Yen%

Million Yen%

Million Yen%

Yen

206,667

21.6

19,101(35.7)

28,461(18.0)

21,5032.5

376.24

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: Yes
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 notes
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 quarters of FY 2008, as compared to the same period of the previous fiscal year, consolidated net
sales increased 28.6% to ¥141,339 million, operating income decreased 27.1% to ¥15,479 million, ordinary income
decreased 10.7% to ¥22,468 million and net income decreased 6.7% to ¥17,381 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 three quarters reporting period of ¥128,595 million, up 32.0% from the same period of the previous
fiscal year, on the back of soaring crude oil prices and the higher volumes of natural gas sales and trading oilpurchases 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 three quarters reporting period of ¥2,062 million, down 8.1% from the same period of the previous year due
to a decrease in drilling.
(c) Other Businesses Division
The Other Businesses Division is primarily involved in the sale of petroleum products, including liquefied
petroleum gas (LPG) and fuel oil, as well as transportation of natural gas and petroleum products on consignment.
This division posted net sales in the first three quarters reporting period of ¥10,680 million, up 4.3% from theprevious year.
2. Qualitative Information Concerning Consolidated Financial Position
At the end of the third quarter, as compared to the end of the previous fiscal year, total assets had increased by¥63,846 million to ¥641,905 million. The main reasons for this were: an increase in plant, property and equipmentthat resulted from progress in drilling a production well and an expansion of production facilities for the Yufutsu oil
and gas field in Hokkaido; and an increase in investment securities resulting from the acquisition of shares in Energy
Mega Pratama Inc. (EMPI) and the appreciation of held shares such as those of Inpex Holdings Inc.
Total liabilities, on the other hand, had also increased up ¥18,271 million to ¥177,401 million. The reasons for thisincluded an increase in deferred tax liabilities due to an increase in the difference on valuation of investment
securities, and an increase in long-term debt due to the procurement of funds to invest in EMPI. Net assets increased¥45,574 million to ¥464,503 million.
For status of consolidated cash flow, cash and cash equivalents (“funds”) at the end of the third quarter decreased by¥22,677 million compared to the end of previous fiscal year to ¥37,522 million.
(Cash Flows from Operating Activities)
Funds provided by operating activities was ¥18,775 million. This is mainly due to funds provided by income before
income taxes and minority interests of ¥21,681 million and depreciation and amortization of ¥11,882 million, andfunds used in income taxes paid of ¥7,929 million.
(Cash Flows from Investing Activities)
Funds used in investing activities was ¥41,889 million. This was mainly due to funds used in additions to property,
plant and equipment in Japan and Canada of ¥29,879 million, and funds used in payments for acquisition of
investments in securities of ¥21,138 million, including the purchase of 25% of the shares of EMPI, who holds
interests in the Kangean block in the east of Java island, Indonesia.
(Cash Flows from Financing Activities)
Funds provided by financing activities was ¥487 million. This was mainly due to proceeds from long-term debt of¥5,454 million for the procurement of the investment funds for EMPI, which exceeded the funds used, such as cash
dividends paid and repayment of long-term debt.

3

3. Qualitative Information Concerning Consolidated Forecast
The forecast for the full-year period released on November 15, 2007 has been revised. Please refer to the separate“Notice of Financial Forecast Revision for Fiscal Year Ending March 31, 2008” released on the same day of thisreport, February 15, 2008.
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
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.
(3) Changes in accounting treatment from the most recent consolidated fiscal year:
Changes have been made to the method of depreciation in accordance with revisions made to the Corporation Tax
Law. These changes apply to property, plant and equipment acquired by the Company and its Japaneseconsolidated subsidiaries after April 1, 2007.
The impact of these changes on operating income, ordinary income and income before income taxes and minority
interests was slight.

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

Description

As of Dec. 31, 2006

As of Dec. 31, 2007

As of March 31, 2007

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)(Assets)
I.

Current assets
1. Cash and deposits

25,13826,835

27,1692. Notes and accounts receivable

13,69523,80524,4513. Marketable securities

29,162

12,57332,714

4. Inventories

11,187

14,6588,683

5. Other current assets

6,115

8,807

12,145

Less: Allowance for doubtful receivables
Total current assets

(9)

(9)

(12)

85,291

86,671

105,152

41,03454,69354,892

II. Fixed assets
1. Property, plant and equipment(1) Buildings and structures(2) Machinery and equipment

28,43733,42329,258(3) Land

13,192

15,292

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

28,49130,29818,192

Total property, plant and equipment

111,156

133,706

115,508

5,867

6,365

7,585

(1) Investments in securities

332,288403,914341,162(2) Others

16,001

19,40818,081

(97)

(97)

(95)

2. Intangible fixed assets
3. Investments and others

Less: Allowance for doubtful receivables
Allowance for losses onoverseas investments
Total Investments and others
Total fixed assets
Total assets

5(8,903)(8,063)(9,335)339,288415,161

349,812456,312555,234

472,907541,603641,905

578,059

Description

As of Dec. 31, 2006

As of Dec. 31, 2007

As of March 31, 2007

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)（Liabilities）
I.

Current liabilities
1.

Notes and accounts payable

5,709

14,117

9,395

2.

Current portion of long-term debt

1,944

2,278

2,278

3.

Reserve for directors’ bonus

70

83

96

4.

Accrual for losses on disasters

–

531

–

5.

Other current liabilities

13,66818,91625,094

Total current liabilities

21,39335,92636,864

II. Long-term liabilities
1.

Long-term debt

15,056

20,891

17,722

2.

Deferred tax liabilities

86,721

110,512

94,2673.

Accrued retirement benefits for employees

5,237

5,167

5,434

4.
5.

615

475

608

3,334

3,855

3,459

6.

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

664

381

601

7.

Other reserves

103

122

108

8.

Other long-term liabilities

12

68

62

Total long-term liabilities

111,744

141,475

122,265

133,138

177,401

159,130

Total liabilities（Net Assets）
I.

Shareholders’ equity
1.

Capital14,28814,28814,2882.

Retained earnings

225,064

242,508

227,413

3.

Treasury stock

(4)

(7)

(5)

239,348

256,790

241,696160,072

198,414168,234

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

9

108

55

1,109

508

707

161,192

199,031

168,997

7,924

8,682

8,234

Total net assets

408,464

464,503418,929

Total liabilities and net assets

541,603641,905

578,0596

(2) Consolidated Statements of Income for the First Three Quarters of FY2008

Description

FY2007 First 3Qs(Apr. 1, 2006 - Dec. 31,
2006)

FY2008 First 3Qs(Apr. 1, 2007 - Dec. 31,
2007)

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

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)I.

Net sales

109,870

141,339

170,018

II.

Cost of sales
Gross profit

64,02596,278104,174

45,84545,06065,844

4,403

7,822

8,987

III. Exploration expenses
1. Exploration expenses
2. Exploration subsidies
Total exploration expenses
IV. Selling, general and administrative expenses
Operating income
V.

(337)

(62)

(809)

4,066

7,760

8,178

20,552

21,82027,946

21,226

15,47929,719Non-operating income

1.

Interest income

1,009

1,149

1,355

2.

Dividend income

2,598

3,419

2,805

3.

Equity in profit of non-consolidated
subsidiaries and affiliates

308

1,495

690

4.

Reversal of allowance for losses on overseas
investments

190

1,271

–

5.

Reversal of accrual for losses on projects

207

220

270

6.

Other non-operating income
Total non-operating income

734

800

1,527

5,049

8,355

6,649

VI. Non-operating expenses
1.

Interest expense

101

196

120

2.

Loss on sales of securities

141

174

241

3.

Provision for accrued estimated cost ofabandonment of wells

419

429

569

4.

Exchange loss

28

315

–

5.

Other non-operating expenses

412

252

731

Total non-operating expenses

1,103

1,367

1,663

Ordinary income

25,172

22,46834,705

VII. Extraordinary income
1.

Reversal of allowance for doubtful receivables

4

4

0

2.

Gain on sales of fixed assets

–

1

–

3.

Gain on distribution of residual property

966

–

966

Total extraordinary income

971

5

967

120

116

387

–

675

–

VIII. Extraordinary losses
1.

Loss on disposal of fixed assets

2.

Earthquake disaster recovery expenses

3.

Other extraordinary losses

–

0

624

Total extraordinary losses

120

792

1,012

Income before income taxes and minority
interests

26,023

21,681

34,660

Income taxes

5,942

3,648

11,909Minority interests

1,447

650

1,768

18,633

17,381

20,982

Net income7(3) Consolidated Statements of Cash Flows for the First Three Quarters of FY2008

Description

FY2007 First 3Qs(Apr. 1, 2006 - Dec.
31, 2006)

FY2008 First 3Qs(Apr. 1, 2007 - Dec.
31, 2007)

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

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)

I. Operating activities
1. Income before income taxes and minority interests

26,023

21,681

34,6602. Depreciation and amortization

10,925

11,882

14,938

749

772

1,006

6

17

54

(33)

(0)

(32)

502

(266)

699

(146)

(132)

(153)

372

335

510

(399)

(1,493)(29)(3,608)(4,568)(4,161)

101

196

120

(7)

(206)

(119)

141

193

241

(308)

(1,495)(690)(5,733)

3. Amortization of goodwill
4. Loss on devaluation of marketable securities andinvestments in securities
5. Decrease in allowance for doubtful receivables
6. Increase (decrease) in provision for accrued retirement
benefits for employees
7. Decrease in provision for accrued retirement benefits for
directors
8. Increase in provision for accrued estimated cost ofabandonment of wells
9. Decrease in provision for allowance for losses on overseas
investments and accrual for losses on projects
10. Interest and dividend income
11. Interest expense
12. Gain on redemption and sales of marketable securities andinvestments in securities
13. Loss on redemption and sales of marketable securities andinvestments in securities
14. Equity in gains (losses) of non-consolidated subsidiaries
and affiliates
15. Decrease (increase) in notes and accounts receivable

5,035

879

16. Decrease (increase) in inventories(2,393)(5,974)111

17. Increase (decrease) in notes and accounts payable(4,313)

3,233

3,757

18. Increase (decrease) in consumption tax payable

(250)

91

(550)

19. Gain on distribution of residual property

(966)

–

(966)

63

340

(180)

31,492

25,484

43,481

2,220

1,219

2,643

(11,134)(7,929)(11,868)

22,57818,77534,256

20. Other, net
Subtotal
21. Collection of claim for indemnity of guaranteed debt
implementation
22. Income taxes paid
Net cash provided by operating activities

8Description
II.

FY2008 First 3Qs(Apr. 1, 2007 - Dec.
31, 2007)

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

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)(2,439)(2,681)(3,334)

Investing activities
1. Investments in time deposits
2. Proceeds from time deposits
3. Proceeds from redemption and sale of marketable securities
4. Additions to property, plant and equipment
5. Proceeds from sales of property, plant and equipment
6. Additions to intangible fixed assets
7. Payments for acquisition of investments in securities
8. Proceeds from redemption and sale of investments insecurities
9. Increase in loans receivable

979

4,523

948

1,000

621

1,300

(18,169)(29,879)(23,485)

5

7

28

(985)

(431)

(1,388)(4,684)(21,138)(4,950)

4,772

7,013

7,643

(146)

(6,370)(165)

10. Decrease in loans receivable

981

263

1,241

11. Interest and dividends received

3,356

4,757

4,283

12. Income from distribution of residual property

1,047

–

1,047

13. Other, net

1,402

1,425

(1,309)(12,880)(41,889)(18,140)

Net cash used in investing activities
III.

FY2007 First 3Qs(Apr. 1, 2006 - Dec.
31, 2006)

Financing activities
1. Increase (decrease) in short-term bank loans

(47)

–

(47)

2,000

5,454

5,000

3. Repayment of long-term debt–

(2,278)–

4. Purchase of treasury stock

–

(1)

(0)

5. Cash dividends paid

(2,549)(2,168)(2,571)

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

7. Interest paid

(80)

(212)

(105)

8. Payment of capital reduction for minority interests

(342)

–

(342)

(2,034)487

917

2. Proceeds from long-term debt

Net cash provided by (used in) financing activities
IV.

Effect of exchange rate changes on cash and cash equivalents

96

(51)

84

V.

Increase (decrease) in cash and cash equivalents

7,759(22,677)

17,117VI.

Cash and cash equivalents at beginning of the period

43,08260,19943,08250,842

37,52260,199VII. Cash and cash equivalents at the period-end

9(4) Status of Production and Sales
1. Production
E&P Division
Division

Product

FY2007 First 3Qs(Apr. 1, 2006 - Dec. 31, 2006)

FY2008 First 3Qs(Apr. 1, 2007 - Dec. 31, 2007)

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

568,664(138,945)

536,652(105,466)

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

874,186(45,870)

901,681(44,756)

1,247,087(62,705)

LNG (t)17,015

20,69825,584

Bitumen345,142(345,142)

307,107(307,107)

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. SalesE&P Division

Division

Product

FY2007 First 3Qs(Apr. 1, 2006 - Dec. 31, 2006)
VolumeAmount(¥ million)

FY2008 First 3Qs(Apr. 1, 2007 - Dec. 31, 2007)
VolumeAmount(¥ million)

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

Crude Oil (kl)

1,140,012

53,423

1,457,589

81,024

1,821,618

84,931Natural Gas

979,906

30,293

1,020,591

32,726

1,411,309

44,949LNG (t)104,370

5,728

118,959

7,086

208,384

10,879Bitumen (kl)345,234

7,942

307,5297,757

444,985

9,777(thousand m3)

E&P

Subtotal

97,387

128,595

150,538

2,245

2,062

5,383

2,245

2,062

5,383

10,237

10,68014,096

Subtotal

10,237

10,68014,096

Total

109,870

141,339

170,018

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

10