Consolidated Financial Results for the First Three Quarters Ended December 31, 2006
February 9, 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
Location of Head Office: Tokyo(URL: http://www.japex.co.jp/)
President: Yuji Tanahashi
Inquiries: Shigeyoshi Hasegawa, Manager, Media Relations, Media and Investor Relations Department TEL: (03) 5461-7413

1. Notes Relating to Preparation of Quarterly Financial Statements(1) Use of simplified accounting procedures: Yes
Income taxes are calculated using an estimated annual income tax rate based on the statutory tax rate.
(2) Changes in accounting treatment from the most recent consolidated fiscal year: No(3) Changes in scope of consolidation and application of equity method: Yes
Consolidated (Added): 3 companies

2. Consolidated Results for the First Nine Months of Fiscal 2007 (April 1, 2006 – December 31, 2006)(1) Consolidated Operating Results(Amounts less than one million yen have been omitted)
Net Sales

Operating Income

Ordinary Income

Net Income(¥ million)%(¥ million)%(¥ million)%(¥ million)%

FY2007 First 3Qs

109,870

18.0

21,22621.5

25,172

11.1

18,63327.3

FY2006 First 3Qs

93,12926.917,476128.4

22,648

83.7

14,632

68.0(Ref.) FY2006 Full Year138,796

27,01831,190Net Income per Share

Diluted Net Income
per Share

(¥)

(¥)

FY2007 First 3Qs

326.02-

FY2006 First 3Qs

256.01-

20,216(Ref.) FY2006 Full Year352.11(Notes)
1. Percentage figures for net sales, operating income and other items represent changes compared with the corresponding period of the previous
fiscal year.
2. Diluted net income per share is not shown because there are no shares with a dilutive effect.
Qualitative Information Concerning Consolidated Business Performance
For the first nine months of FY 2007, as compared to the same period of the previous fiscal year ended December 31, 2006, consolidated net sales
increased ¥16,741 million, up 18.0%, operating income increased ¥3,749 million, up 21.5%, ordinary income increased ¥2,523 million, up 11.1%,
and net income rose ¥4,001 million, up 27.3%.
Below is a summary of operating performance by business division.
Oil and Natural Gas Segment(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 ¥97,387 million, up 22.8% from the same period of the previous fiscal year, on the back of soaring crude oil prices and higher
sales volumes of crude oil.
(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 ¥2,245 million, down 44.8% from the same period of the previous year, due to decrease in government orders for seismic dataacquisition and processing.
(c) Other Businesses Division
Our 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.
Net sales in the first three quarters reporting period totaled ¥10,237 million, an increase of 4.9% from the same period of the previous year.

(2) Consolidated Financial Position
Total Assets

Net Assets

Net Assets
per Share

Equity Ratio(¥ million)(¥ million)%(¥)

Dec. 31, 2006

541,603

408,46474.0

7,008.13

Dec.31, 2005

538,584

389,666

72.4

6,817.87(Ref.) Mar. 31, 2006

532,516
386,22272.5
6,756.00(Note) “Net Assets,” “Equity Ratio” and “Net Assets per Share” in the first three quarters and full year of FY2006 are the figures of previous“Shareholders’ Equity,” “Shareholders’ Equity Ratio,” and “Shareholders’ Equity per Share.”(3) Consolidated Cash Flows
Operating Activities

Investing Activities

Financing Activities

Cash and Cash Equivalents
at Period-End(¥ million)(¥ million)(¥ million)(¥ million)

FY2007 First 3Qs

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

FY2006 First 3Qs

20,396(17,481)(2,628)35,564(Ref.) FY2006 Full Year32,850(20,063)(6,088)43,082

Qualitative Information Concerning Consolidated Financial Position
For the consolidated balance sheet for the 3rd quarter of FY2007, as compared to the balance sheet as of March 31, 2006, current assets increased¥6,969 million due to increase in marketable securities. With respect to fixed assets, while property, plant and equipment increased as a results ofprogress in construction of the Shiroishi-Koriyama gas pipeline as well as drilling works of production wells, etc., investments in securities
decreased due to decrease in difference on valuation of holding securities and decrease in collection of accounts receivable as well. As a result,
total assets as of December 31, 2006 were an increase of ¥9,086 million.
With respect to liabilities, current liabilities decreased ¥4,167 million due to decrease in accounts payable. Fixed liabilities declined by ¥1,244
million because of decrease in deferred tax liabilities reflecting decrease in difference on valuation of holding securities. As a result, total
liabilities decreased ¥5,392 million. Net assets as of December 31, 2006 stood at ¥408,464 million.

For status of cash flow during the first 3rd quarters reporting period, cash and cash equivalents (“funds”) increased by ¥7,759 million year on
year to ¥50,842 million.
(Cash Flows from Operating Activities)
Funds provided by operating activities was ¥22,578 million. The main components were ¥26,023 million in income before income taxes andminority interests, ¥10,925 million in depreciation and amortization, and ¥11,134 million in income taxes.
(Cash Flows from Investing Activities)
Funds used in investing activities was ¥12,880 million. This was primarily due to reflecting the balance that deducts outlays of ¥18,169 for
acquisition of property, plant and equipment from interest and dividend income of ¥3,356 million.
(Cash Flows from Financing Activities)
Funds used in financing activities was ¥2,034 million. This was primarily due to payment of cash dividends of ¥2,549 million.

3. Consolidated Forecast for Fiscal Year 2007 (April 1, 2006 – March 31, 2007)
Net Sales

Ordinary Income

Net Income(¥ million)(¥ million)(¥ million)

FY2007 Full Year

157,685
28,83019,541(Reference) Estimated net income per share is ¥341.90.
Note: The above estimates have been made based on information available as of the date of this release. Actual results may differ from theseestimates due to a variety of factors.
Qualitative Information Concerning Consolidated Forecast
There is no change to the forecasts for FY2007 released on November 14, 2006.

(Reference) Non-consolidated Forecast for Fiscal Year 2007 (April 1, 2006 – March 31, 2007)
Net Sales(¥ million)

Ordinary Income

Net Income(¥ million)(¥ million)

FY2007 Full Year
118,370
19,51015,095(Reference) Estimated net income per share is ¥264.12
Note: The above estimates have been made based on information available as of the date of this release. Actual results may differ from theseestimates due to a variety of factors.

(Attached material)
Ⅰ. Consolidated Quarterly Balance Sheet for the 3rd Quarter of FY2007
Ⅱ. Consolidated Statements of Income for the First 3Qs of FY2007
Ⅲ. Consolidated Statements of Cash Flows for the First 3Qs of FY2007
Ⅳ Consolidated Statement of Changes in Shareholders’ Equity etc. for the First 3Qs Period
Ⅴ. Status of Production and Sales

4. Consolidated Quarterly Financial Statements(1) Consolidated Balance Sheet for the 3rd Quarter of FY2007
Description

As of Dec. 31, 2005
Amount (¥ million)

As of Dec. 31, 2006
Amount (¥ million)

As of March 31, 2006
Amount (¥ million)(Assets)
I.

Current assets
1.

Cash and deposits

2.

Notes and accounts receivable

3.

Marketable securities

4.

Inventories

5.

Other current assets
Less: Allowance for doubtful receivables
Total current assets

II.

33,677
14,366
3,238
9,391
11,755(14)
72,41425,138
13,69529,162
11,1876,115(9)85,291

29,63918,713
15,966
8,794
5,226
(19)
78,32143,73028,97913,087
16,766
102,564
6,075

41,03428,437
13,19228,491
111,156
5,867

42,89928,28613,131
16,794
101,1126,333

353,167
12,618(243)

332,288
16,001(97)

335,345
20,620(120)

Fixed assets
1.

Property, plant and equipment(1) Buildings and structures(2) Machinery and equipment(3) Land(4) Other property, plant and equipment
Total property, plant and equipment

2.
3.

Intangible fixed assets
Investments and others(1) Investments in securities(2) Others
Less: Allowance for doubtful receivables
Allowance for losses on overseas
investments
Total Investments and others
Total fixed assets

Total assets(8,012)(8,903)(9,095)357,529
466,170
538,584

339,288456,312541,603346,749
454,195
532,516

Description

As of Dec. 31, 2005
Amount (¥ million)

As of Dec. 31, 2006
Amount (¥ million)

As of March 31, 2006
Amount (¥ million)（Liabilities）
I.

Current liabilities
1.

Notes and accounts payable

2.
3.
4.
5.

Short-term bank loans
Current portion of long-term debt
Reserve for directors’ bonus
Other current liabilities
Total current liabilities

II.

3,084
2,932
414
17,64524,076

5,709
1,944
70
13,66821,393

8,195
17,36625,561

15,00093,393
4,521
731

15,056
86,721
5,237
615

15,00088,556
4,735
761

2,827

3,334

2,943

945
83
12
117,516
141,593664
103
12
111,744
133,138871
88
12
112,969
138,531

7,324

-

7,762

14,288203,510
171,464407(4)389,666-

14,288209,095
161,949894(4)386,222538,584-

532,516-

14,288225,064(4)
239,348--

160,072

-

-

9
1,109

-

-

161,192

-

-

7,924
408,464541,603-

Long-term liabilities
1.

Long-term debt

2.

Deferred tax liabilities

3.

Accrued retirement benefits for employees

4.
5.
6.

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

7.

Other reserves

8.

Other long-term liabilities
Total long-term liabilities

Total liabilities（Minority interests）
Minority interests in consolidated subsidiaries（Shareholders’ equity）
I.

Common stock

II. Retained earnings
III. Unrealized holding gain on securities
IV. Translation adjustments
V.

Treasury stock

Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity（Net Assets）
I.
1.
2.
3.

Shareholders’ equity
CapitalCapital reserves
Treasury stock
Total shareholders’ equity

II.

Difference on valuation and conversion, etc.
Difference on valuation of othermarketable securities
2. Deferred gain (loss) on hedging
3. Translation adjustments
Total difference on valuation and conversion,
etc.
III. Minority interests
Total net assets
Total liabilities and net assets1.

(2) Consolidated Statements of Income for the First 3Qs of FY2007

Description

FY06 First 3Qs
Apr. – Dec. 2005

FY07 First 3Qs
Apr. – Dec. 2006

FY06
Apr. 05 – Mar. 06

Amount (¥ million)

Amount (¥ million)

Amount (¥ million)I.

Net sales

93,129109,870

138,796

II.

Cost of sales

51,30364,02577,433

41,82645,84561,362

1. Exploration expenses

7,511

4,403

10,8002. Exploration subsidies(1,082)(337)(1,122)

6,428

4,066

9,677

17,921

20,552

24,666

17,476

21,22627,018Gross profit
III. Exploration expenses

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

Non-operating income
1.

Interest income

1,003

1,009

1,367

2.

Dividend income

1,605

2,598

2,548

3.

Equity in profit of non-consolidated
subsidiaries and affiliates

594

308

-

4.

Reversal of allowance for losses onoverseas investments

299

190

-

5.

Reversal of accrual for losses on projects

740

207

814

6.

Gain on foreign exchange conversion

697

-

847

7.

Other non-operating income

1,079

734

1,648

6,020

5,049

7,226

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

Interest expense

110

101

144

2.

Loss on sale of securities

20

141

93

3.

Provision for accrued estimated cost ofabandonment of wells

370

419

522

4.

Other non-operating expenses

347

440

2,293

848

1,103

3,054

22,64825,172

31,190

Reversal of allowance for doubtfulreceivables

2

4

77

Gain on distribution of residual property

-

966

-

2

971

77

68

120

101

68

120

101

Income before income taxes and minority
interests

22,582

26,02331,166

Income taxes

6,798

5,942

9,294

Minority interests

1,151

1,447

1,655

14,632

18,633

20,216

Total non-operating expenses
Ordinary income
VII. Extraordinary income
1.
2.

Total extraordinary income
VIII. Extraordinary losses
1.

Loss on disposal of fixed assets
Total extraordinary losses

Net income

(3) Consolidated Statements of Cash Flows for the First 3Qs of FY2007

Description
I. Operating activities
1. Income before income taxes and minority interests
2. Depreciation and amortization
3. Amortization of consolidation difference
4. Amortization of goodwill
5. Loss on devaluation of marketable securities andinvestments in securities
6. Increase (decrease) in allowance for doubtful receivables
7. Increase in provision for accrued retirement benefits for
employees
8. Decrease in provision for accrued retirement benefits forofficers
9. Increase in provision for accrued estimated cost ofabandonment of wells
10. Decrease in provision for allowance for losses on overseas
investments and accrual for losses on projects
11. Interest and dividend income
12. Interest expense
13. Gain on redemption and sales of marketable securities andinvestments in securities
14. Loss on redemption and sales of marketable securities andinvestments in securities
15. Equity in losses (gains) of unconsolidated subsidiaries andaffiliates
16. Decrease (increase) in notes and accounts receivable
17. Decrease (increase) in inventories
18. Increase (decrease) in notes and accounts payable
19. Decrease in consumption tax payable
20. Gain on distribution of residual property
21. Other, net
Subtotal
22. Payment of debt guarantee
23. Income from recovery of rights to exercise guaranteed debt
24. Income taxes (paid) and recovered
Net cash provided by operating activities

FY06 First 3Qs
Apr. – Dec. 2005
Amount(¥ million)

FY07 First 3Qs
FY06
Apr. – Dec. 2006 Apr. 05 – Mar. 06
AmountAmount(¥ million)(¥ million)

22,582
10,344752-

26,023
10,925749

31,166
13,951
946
-

1

6

1

28

(33)

(89)

690

502

903

(41)

(146)

(11)

88

372

97

(1,039)

(399)

(30)

(2,608)110(3,608)101(3,916)
144

(399)

(7)

(428)

20

141

94

(594)

(308)

587

(442)
(233)
300
(480)
(5,181)
23,896(1,984)(1,515)
20,396

5,035(2,393)(4,313)
(250)
(966)
63
31,492
2,220(11,134)
22,578(4,766)
363
6,260
(322)
(2,151)42,799(7,515)(2,432)32,850Description
Investing activities
1. Investments in time deposits
2. Proceeds from time deposits
3. Payments for purchase of marketable securities
4. Proceeds from redemption and sale of marketable securities
5. Additions to property, plant and equipment
6. Proceeds from sales of property, plant and equipment
7. Additions to intangible fixed assets
8. Payments for purchase of investments in securities
9. Proceeds from redemption and sale of investments insecurities
10. Increase in loans receivable
11. Decrease in loans receivable
12. Interest and dividends received
13. Income from distribution of residual property
14. Other, net
Net cash used in investing activities
III. Financing activities
1. Increase (decrease) in short-term bank loans
2. Proceeds from long-term debt
3. Repayment of long-term debt
4. Purchase of treasury stock
5. Cash dividends paid
6. Dividends paid to minority shareholders
7. Interest paid
8. Payment of capital reduction for minority interests
Net cash used in financing activities
IV. Effect of exchange rate changes on cash and cash equivalents
V. Increase in cash and cash equivalents
VI. Cash and cash equivalents at beginning of the period
VII. Increase in cash and cash equivalents due to merger
VIII. Decrease in cash and cash equivalents due to exclusion ofsubsidiaries from consolidation
IX. Cash and cash equivalents at the period-end

FY06 First 3Qs
FY07 First 3Qs
FY06
Apr. – Dec. 2005 Apr. – Dec. 2006 Apr. 05 – Mar. 06
AmountAmountAmount (¥ million)(¥ million)(¥ million)

II.

(105)
455
(5,998)10,451(17,134)8(486)(8,277)(2,439)979
1,000(18,169)
5(985)(4,684)(1,302)561(5,998)
10,536(21,042)79(743)(11,819)

2,076

4,772

5,792

(3,119)
2,064
2,547
35
(17,481)

(146)
981
3,356
1,047
1,402
(12,880)(3,128)
2,353
4,124
523
(20,063)

2,774
8,000
(8,559)(0)(2,129)(609)(74)(2,029)(2,628)786
1,072
34,568
-

(47)
2,000
(2,549)(1,015)(80)(342)(2,034)96
7,759
43,082
-

(158)
8,000
(8,973)(0)(2,142)(609)(174)(2,029)(6,088)1,020
7,720
34,568
870

(76)

-

(76)

35,56450,84243,082

(4) Consolidated Statement of Changes in Shareholders’ Equity etc.
The First 3Qs Period (from April 1 to December 31, 2006)(unit: ¥ million)

Balance as ofMarch 31,2006
Changesduring thefirst 3Qs
periodDistributions
from capitalreserve (note)
Directors’
bonuses (note)
Net income
Changesduring thefirst 3Qs
period otherthanshareholders’equity items(net)
Total changes
during thefirst 3Qs
periodBalance as ofDecember 31,
2006

CapitalShareholders’ Equity
CapitalTreasury
reserves stock

14,288209,095(4)(2,571)

Total
shareholders’equity223,379

Difference on valuation and conversion etc.
Difference
Deferred Translation
Total
on
gain
adjustments
difference
valuation of(loss) on
on valuationotherhedgingandmarketable
conversion,
securities
etc.
161,949-894

162,843

Minority
interests

7,762(2,571)

Total
net
assets393,985(2,571)

(92)

(92)

(92)

18,633

18,633

18,633(1,876)9215(1,651)162(1,489)-15,969-15,969(1,876)9215(1,651)

162

14,47914,288225,064(4)

239,348

160,072

9

1,109

161,192

7,924

408,464(5) Status of Production and Sales
1. Production
Oil and Natural Gas Segment
Division

Product

Fiscal 2006 first 3Qs(Apr.1 - Dec.31, 2005)

Fiscal 2007 first 3Qs(Apr.1 - Dec.31, 2006)

Fiscal 2006
(Apr.1 - Mar.31, 2006)

586,415(123,449)

568,664(138,945)

805,612(164,842)(thousand m3)

902,777(47,769)

874,186(45,870)

1,279,066(62,335)

LNG (t)18,72917,01525,901

Bitumen(kl)

339,317(339,317)

345,142(345,142)

449,785(449,785)

LPG (t)

7,911

7,133

10,737

Fuel oil, etc. (kl)

40,71338,47855,719Crude oil(kl)Natural gas
Oil and Natural Gas

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

2. SalesOil and Natural Gas Segment

Product

Fiscal 2006 first 3Qs(Apr.1 - Dec.31, 2005)
AmountVolume(¥ million)

Fiscal 2007 first 3Qs(Apr.1 - Dec.31, 2006)
AmountVolume(¥ million)

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

Crude Oil (kl)

1,021,993

41,0471,140,012

53,423

1,485,849

61,185Natural Gas

974,245

29,284

979,906

30,293

1,413,717

43,539LNG (t)82,308

4,098

104,370

5,728

124,736

6,252

Bitumen (kl)

338,181

4,868

345,234

7,942

448,951

6,526－

79,298－97,387－

117,504

－

4,070

－

2,245

－

7,148

Subtotal

－

4,070

－

2,245

－

7,148

LPG (t)18,964

1,175

16,667

1,230

26,234

1,755

Fuel oil, etc. (kl)

76,388

4,117

69,4954,500

102,125

5,934

Others

－

4,467

－

4,507

－

6,453

Subtotal

－

9,760

－

10,237－

14,143

Total－

93,129－109,870－

138,796

Division(thousand m3)

Subtotal
Contract Services(Notes)1. Others in Other Businesses include revenue from the transportation of third-party gas through JAPEX’s pipeline network and salescommissions.
2. Monetary amounts in the table do not include consumption tax.