Note: The following press release is an English translation of the Japanese-language originalDecember 17, 2021
Company Name:Japan Petroleum Exploration Co., Ltd. (JAPEX)Securities Code:

1662 (First Section of the Tokyo Stock Exchange)

Representative:

FUJITA Masahiro, Representative Director and President

Inquiries:

Corporate Communication OfficeTEL:+81-3-6268-7110

Notice Regarding Dissolution of a Subsidiary, Waiver of Claims,
and Posting of Extraordinary Income (gain on forgiveness of debts)
Japan Petroleum Exploration Co., Ltd. (JAPEX) announced that its Board of Directors has resolved at ameeting held today to dissolve its overseas subsidiary, JAPEX Montney Ltd. (JML), and waive its claims
against JML as follows.

1. Reason for dissolution and waiver of claims
In 2013, JML participated in the project to develop and produce shale gas in the North Montney region,
located in the northeastern part of British Columbia, Canada. However, after recording an impairment loss
in 2017 due to the cancellation of the LNG project feasibility study, JML became insolvent and its performance
had been sluggish.
We judged that it would be difficult for JML to improve its business performance in the short term, therefore
decided to fulfill the guarantee obligation for a part of JML's borrowings from financial institutions in March2021, and to transfer JML's interests in the Project in May 2021.
Since the procedures for the transfer of the interests were completed in July 2021, JAPEX has decided todissolve and liquidate JML by February 2022 this time, subject to the consent of the related parties. In
addition, as JML is still insolvent and it is difficult to collect all claims against JML, JAPEX has decided towaive its claims.
2. Outline of the subsidiary to be dissolved
(1)

Name

JAPEX Montney Ltd. (JML)(2)

Location

4500 Bankers Hall East, 855 2nd Street SW, Calgary AB, T2P 4K7(3)

Title and Name ofITO Hajime, President

Representative(4)

Description ofExploration, development and production of shale gas in CanadaBusiness(5)

Share Capital

C$918,583 thousand(6)

Date of Incorporation

March 7, 2013
1/3

(7)

Major Shareholder

Japan Petroleum Exploration Co., Ltd. (JAPEX)

55%and Shareholding

Japan Oil, Gas and Metals National Corporation (JOGMEC)

45%Ratio(8)

Relationship with theCapital

JML is a consolidated subsidiary in which JAPEX holds

CompanyRelationship

55% of the voting rights.

Personnel

JAPEX has dispatched two directors to JML.

Relationship
Business

There are transactions related to the dispatch of officers

Relationshipand employees from JAPEX to JML. In addition,
JAPEX has loans and other receivables from JML.

Related parties JML is a consolidated subsidiary of JAPEX and is astatus(9)

related party.

Business results of this company for the past three years (thousand CAD)
Fiscal year

December 2018

December 2019

December 2020

Net assets△254,295△276,569△307,604

Total assets

609,766

632,846

676,973

Net assets per share△27.683△30.108△33.486

42,18636,24650,112

Operating profit△43,189△26,052△22,362

Ordinary profit△128,990△22,141△31,030

Net profit△129,308△22,274△31,035

Net profit per share△14.076△2.424△3.378－－－(CAD)Net sales(CAD)
Dividend per share

3. Schedule of dissolution
December 17, 2021

Resolution by the Board of Directors to dissolve JML

Feburuary 2022 (Planned)

Resolution by the shareholder meeting of JML to dissolve JML

Feburuary 2022 (Planned)

Completion of liquidation

4. Details of the waiver of claims by JAPEXType of claim(i) Loans(ii) Right to reimbursement for fulfillment of guarantee obligations, and latechargeAmount of claim(i) 259,446 thousand CAD（Approx ¥ 22.3. billion, converted based on the2/3

FX rate of ¥86 /CAD）(ii) 240,612 thousand USD（Approx ¥25.9 billion, converted based on theFX rate of ¥108 /USD）
Date of execution

December 21, 2021 (Planned)

5. Extraordinary gains recognition
The gain on forgiveness of debts due to the waiver of JAPEX's claims will be offset and eliminated as aninternal transaction, and therefore will have no impact on the consolidated financial results. Also, in the
non-consolidated financial results, the impact will be negligible, as we have already recorded allowance for
doubtful accounts and allowance for loss on guarantees for the claims to be waived in previous fiscal year.
In the consolidated financial results for the fourth quarter of the fiscal year ending March 31, 2022, wewill record an extraordinary gain of approximately ¥27.1 billion from the forgiveness of debts due to debt
waiver by the creditor of JML other than JAPEX. The consolidated financial forecast for the fiscal year
ending March 31, 2022, including this matter, will be disclosed at the time of the announcement of the third
quarter financial results scheduled on February 9, 2022, after furher examination.

< Previous Announcement Link>
・“Notice Regarding Recording of Provision of Allowance for Doubtful Accounts in Extraordinary Loss in Nonconsolidated Financial Results” on March 10, 2021
・“Sale of Shale Gas Project Interest in Canada and Recording of Extraordinary Loss Related to the Project”
on May 13, 2021###3/3