Consolidated Financial Results for the Three Months Ended June 30, 2008
August 8, 2008
Note: The following report is an English transration of the Japanease-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 and Investor Relations Department
TEL: (03)6268-7110
Scheduled date to file Quarterly Report: August 13, 2008

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

1.
(1)Consolidated financial results for the three months ended June 30, 2008 (April 1, 2008 - June 30, 2008)
Consolidated operating results (cumulative)(Percentages indicate year-on-year changes.)
Net sales

For the three months ended

Operating income

Millions of yen

Ordinary income% Millions of yen% Millions of yen% Millions of yen%-5,520-4,181-

5,297 (23.1)

9,026

2.6

7,253

22.7

June 30, 2008

59,123-June 30, 2007

43,11720.1

Net income per share

4,607

Diluted net
income per share

For the three months endedYenYen

June 30, 2008

73.17

-

June 30, 2007

126.91-(2)

Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of June 30, 2008

684,246487,70770.1

8,395.55

As of March 31, 2008

620,946448,22670.8

7,696.00

Reference: Equity

2.

Net income

As of June 30, 2008: 479,833 million yen

As of March 31, 2008:

439,852 million yen

Cash dividends
Cash dividends per share
Record dateFiscal year ended
March 31, 2008
Fiscal year ending
March 31, 2009
Fiscal year ending
March 31, 2009
(Forecast)First quarter

Second quarter

Third quarter

Fiscal year-end

AnnualYenYenYenYenYen–

20.00

–

20.00

40.00

–––––

20.00

–

20.00

40.00

Note: Revision of the forecast in the three months ended June 30, 2008: None–1–3.

Consolidated financial forecasts for the fiscal year ending March 31, 2009 (April 1, 2008 - March 31, 2009)(Percentages indicate year-on-year changes.)
Net sales

Operating income

Ordinary income

Net income pershare

Net income

Millions ofyen%Millions ofyen%Millions ofyen%Millions ofyen%

YenFor the six months ending
September 30, 2008

113,404–

11,094–

12,597–

8,239–

144.15For the Fiscal year ending
March 31, 2009

258,054 24.3

27,33939.3

35,352

29.7

26,38331.3

461.62

Note: Revision of the forecasts in the three months ended June 30, 2008: 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 as well as specific accounting for preparing the quarterly consolidated
financial statements: Yes
Note:

(3)

Changes in accounting policies, procedures, and methods of presentation for preparing the quarterlyconsolidated 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: Yes
b. Changes due to other reasons: Yes
Note:

(4)

For more details, please refer to the section of “4. Others of [Qualitative Information and Financial Statements]”
on page 5.

For more details, please refer to the section of “4. Others of [Qualitative Information and Financial Statements]”
on page 5.

Number of issued shares (common stock)a. Total number of issued shares at the end of the period (including treasury stock)
As of June 30, 2008
57,154,776 shares
As of March 31, 2008
57,154,776 sharesb. Number of treasury stock at the end of the period
As of June 30, 2008
1,494 shares
As of March 31, 2008
1,407 sharesc. Average number of shares during the period (cumulative from the beginning of the fiscal year)
For the three months of the fiscal year ending March 31, 2009
57,153,339 shares
For the three months of the fiscal year ended March 31, 2008
57,153,534 shares* Proper use of financial forecasts, and other special directions
Concerning the financial forecasts for the fiscal year ending March 31, 2009, refer to “Notice of Financial
Forecast Revision for Fiscal Year Ending March 31, 2009” released today.
The forecast statements shown in this document are based on information that was available at the time ofpreparation. 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 three months ended June 30, 2008, net sales was ¥59,123 million, an increase of ¥16,006 million(+37.1%) year on year.
Gross profit was ¥18,654 million, an increase of ¥3,631 million (+24.2%) year on year reflecting a rise in
crude oil and bitumen prices. However, a ¥3,245 million (+111.2%) increase year on year to ¥6,162 million in
exploration expenses incurred due to exploratory drilling activity in offshore of Niigata and the Philippines anda 15.8% year-on-year rise in selling, general and administrative expenses resulted in a ¥689 million (-13.0%)
decrease in operating income year on year to ¥4,607 million.
Ordinary income was ¥5,520 million, a decrease of ¥3,506 million (-38.8%) year on year due to lower
dividend income and the posting of a foreign exchange loss.
Income before income taxes and minority interests dropped ¥3,520 million (-39.0%) to ¥5,504 million with
net income standing at ¥4,181 million, a decrease of ¥3,071 million (-42.3%) year on year.
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 threemonths ended June 30, 2008, this Division posted net sales of ¥54,957 million, up ¥15,574 million(+39.5%) year on year primarily on the back of soaring crude oil and bitumen prices.

(ii) Contract Services Division
The Contract Services Division is primarily involved in drilling and geophysical surveys. During thethree months ended June 30, 2008, it recorded net sales of ¥504 million, up ¥188 million (+59.9%) yearon 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 three months ended June 30, 2008, this Division posted net
sales of ¥3,661 million, up ¥242 million (+7.1%) year on year.

2.

Qualitative information regarding consolidated financial position
At the end of the first three months, as compared to the end of the previous fiscal year, total assets increasedby ¥63,300 million to ¥684,246 million. The main reasons for this were an increase in investments insecurities due to the rise in the stock price of INPEX Holdings Inc.
Total liabilities, on the other hand, had also increased by ¥23,818 million to ¥196,538 million due to anincrease in deferred tax liabilities as a result of a greater difference on valuation of investment securities, andan increase in long-term debt. Net assets increased ¥39,481 million to ¥487,707 million.

3.

Qualitative information regarding consolidated financial forecasts
The full-year forecast released on May 15, 2008 has been revised. Please refer to the “Notice of Financial
Forecast Revision for Fiscal Year Ending March 31, 2009” released on the same day of this report, August 8,
2008.

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 as well as specific 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 liabilities (othercurrent liabilities) because such variance is expected to be almost completely eliminated by the end of thecost accounting period.

–3–

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 first three months under review, and next bymultiplying the quarterly net income before income taxes and minority interests by such estimated effective
tax rate. Note that deferred income taxes is included in income taxes.
(3)

Changes in accounting policies, procedures, and methods of presentation for preparing the quarterly
consolidated financial statementsa. Commencing with the fiscal year, the “Accounting Standard for Quarterly Financial Reporting” (ASBJ
Statement No. 12, March 14, 2007) and the “Guidance on Accounting Standard for Quarterly Financial
Reporting” (ASBJ Guidance No. 14, March 14, 2007) are applied. Also, quarterly consolidated financial
statements are prepared in accordance with the “Regulation for Quarterly Consolidated Financial
Statements.”
b. Commencing with the first three months, the “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF Practical Solution No. 18,ASBJ, May 17, 2006) is applied. This change has no impact on operating income, ordinary income andincome before income taxes and minority interests.
c. Before the change, the accounting treatment for finance lease transactions not involving the transfer ofownership followed the method similar to that applicable to ordinary operating lease transactions, but the“Accounting Standard for Lease Transactions” (ASBJ Statement No. 13, revised March 30, 2007) and the“Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, revised March 30,2007) are allowed to be applied from the quarterly consolidated financial statements for the fiscal year
beginning April 1, 2008 or later, the Company applies these standard and guidance to all lease transactions
beginning on and after aforementioned date, and the accounting treatment for such transactions follows themethod similar to that applicable to ordinary purchase and sales transactions.
Meanwhile, depreciation of leased assets pertaining to finance lease transactions not involving the transferof ownership is computed on a straight-line method over the lease period as durable period without residual
value.
Also, the accounting treatment for finance lease transactions not involving the transfer of ownership whosetransaction commenced before the first fiscal year in which the accounting standard is applied,
continuously follows the method similar to that applicable to ordinary operating lease transactions.
The impact of this change on operating income, ordinary income and income before income taxes andminority interests is minimal.

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

As of June 30, 2008

As of March 31, 2008
(Summary)

Cash and deposits

24,235

27,794

Notes and accounts receivable

25,31325,865Marketable securities

23,31917,724Merchandise and finished products

4,155

3,921

Work in process

1,278

271

Raw materials and supplies

5,628

6,299

Other current assets

9,845

7,141(10)(10)

93,76689,008141,292

141,162

Goodwill1,835

2,092

Others

3,985

4,086

Total intangible fixed assets

5,820

6,179

Investments in securities

432,712376,137

Others

18,692

16,177(97)(97)

AssetsCurrent assets

Less: Allowance for doubtful receivables
Total current assets
Fixed assets
Property, plant and equipment
Intangible fixed assets

Investments and others

Less: Allowance for doubtful receivables
Less: Allowance for losses on overseas
investments
Total investments and others(7,940)(7,621)

443,367

384,595

Total fixed assets

590,480

531,937

684,246

620,946

Total assets–5–

(Millions of yen)

As of June 30, 2008

As of March 31, 2008
(Summary)

17,652

13,469

Short-term bank loans

50–

Income taxes payable

1,053

1,414

445

590

Other current liabilities

19,242

23,382

Total current liabilities

38,44438,857Long-term debt

23,722

21,922

Deferred tax liabilities

123,892

101,477

Provision

10,343

10,349Other long-term liabilities

136

113

Total long-term liabilities

158,094

133,862

Total liabilities

196,538

172,720

Capital14,28814,288Retained earnings

248,263245,225(7)(7)

262,544259,506

219,353

179,629(7)(0)

Liabilities
Current liabilities
Notes and accounts payable

Provision

Long-term liabilities

Net assets
Shareholders’ equity

Treasury stock
Total shareholders’ equity
Difference on valuation and conversion,etc.
Difference on valuation of othermarketable securities
Deferred gains (loss) on hedging
Translation adjustments
Total difference on valuation andconversion, etc.
Minority interests(2,057)716

217,288

180,346

7,874

8,373

Total net assets

487,707448,226

Total liabilities and net assets

684,246

620,946–6–

(2) Consolidated statement of income(Millions of yen)Three months ended June 30, 2008
(April 1, 2008 - June 30, 2008)
Net sales

59,123

Costs of sales

40,469Gross profit

18,654

Exploration expenses
Exploration expenses

7,083

Exploration subsidies(920)

Total exploration expenses
Selling, general and administrative
expenses
Operating income

6,162
7,883
4,607

Non-operating income
Dividend income
Equity in profit of non-consolidated
subsidiaries and affiliates
Other non-operating income

1,433

Total non-operating income

2,725

637654Non-operating expenses
Exchange loss

1,021

Other non-operating expenses

791

Total non-operating expenses

1,812

Ordinary income

5,520

Extraordinary income
Reversal of allowance for doubtfulreceivables
Total extraordinary income

55

Extraordinary losses
Loss on disposal of fixed assets

20

Total extraordinary losses
Income before income taxes and minority
interests
Income taxes

20
5,504
1,275

Minority interests

47

Net income

4,181

–7–

Commencing with the current fiscal year, the “Accounting Standard for Quarterly Financial Reporting” (ASBJ
Statement No. 12) and the “Guidance on Accounting Standard for Quarterly Financial Reporting” (ASBJ GuidanceNo. 14) are applied. Also, quarterly consolidated financial statements are prepared in accordance with the“Regulation for Quarterly Consolidated Financial Statements.”(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
Status of production and salesa. Production
Division

E&P

Product

Three months ended
June 30, 2007
(April 1, 2007 - June 30, 2007)

Three months ended
June 30, 2008(April 1, 2008 - June 30, 2008)(Reference)
Fiscal year ended March 31, 2008
(April 1, 2007 - March 31, 2007)

Crude oil (kl)

186,543(46,546)

182,381(41,565)

761,636(147,397)

Natural gas(thousand m3)

291,858(13,800)

285,962(13,350)

1,288,606(58,946)

5,332

7,873

33,610107,916(107,916)

106,430(106,430)

410,363(410,363)

LNG (t)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 heavy crude oil extracted from oil sands.

b. SalesDivision

E&P

Product

Three months ended
June 30, 2007
(April 1, 2007 - June 30, 2007)
VolumeAmountThree months ended
June 30, 2008
(April 1, 2008 - June 30, 2008)
VolumeAmount(Reference)
Fiscal year ended March 31, 2008
(April 1, 2007 - March 31, 2007)
VolumeAmountCrude oil (kl)502,816

24,404499,41436,8572,041,192

117,923Natural gas(thousand m3)

320,728

10,284

325,699

11,505

1,486,910

48,982

LNG (t)38,7272,31240,787

2,771

170,453

10,285

Bitumen (kl)108,056

2,381

106,748

3,822

409,743

10,468Subtotal

39,382

54,957

187,660

Contract services

315

504

5,395

Other businesses

3,419

3,661

14,582

43,117

59,123

207,638

Total

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

–8–Reference:
Consolidated financial statements for the three months ended June 30, 2007(Summary) Consolidated statement of income(Millions of yen)Three months ended June 30, 2007
(April 1, 2007 - June 30, 2007)
Description
I.

AmountNet sales

43,117

II. Cost of sales

28,095Gross profit

15,022

III. Exploration expenses

2,917

IV. Selling, general and administrative expenses

6,807

Operating income

5,297

V. Non-operating income
1. Interest income

430

2. Dividend income

2,268

3. Equity in profit of non-consolidated
subsidiaries and affiliates
4. Reversal of allowance for losses on overseas
investments

3122405. Reversal of accrual for losses on projects

74

6. Other non-operating income

685

Total non-operating income

4,012

VI. Non-operating expenses
1. Interest expense
2. Provision for accrued estimated cost ofabandonment of wells
3. Other non-operating expenses

47
147
88

Total non-operating expenses

283

Ordinary income

9,026

VII. Extraordinary income
1. Reversal of allowance for doubtfulreceivables

6

Total extraordinary income

6

VIII. Extraordinary losses
1. Loss on disposal of fixed assets

8

Total extraordinary losses

8

Income before income taxes and minority
interests

9,024

Income taxes

1,591

Minority interests

179

Net income

7,253–9–