Consolidated Financial Results for the Interim Period Ended September 30, 2006
November 14, 2006
Note: The following report is a summary 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
Date of the Board of Directors meeting to approve term-end consolidated accounts: November 14, 2006
U.S. GAAP not applied
1. Consolidated Results for the FY2007 Interim Period (April 1, 2006 – September 30, 2006)(1) Consolidated Operating Results(Amounts less than one million yen have been omitted)
Net Sales

Operating Income

Ordinary Income(¥ million)%(¥ million)%(¥ million)%

FY2007 Interim

67,13813.4

12,52848.1

15,75026.4

FY2006 Interim

59,221

27.7

8,461

169.5

12,45971.6

FY2006 Full Year138,796

27,018Net Income

31,190Net Income per Share

Diluted Net Income per Share(¥ million)

%

(¥)

(¥)

FY2007 Interim

10,654

18.6

186.42－

FY2006 Interim

8,983

60.9

157.17－－

FY2006 Full Year
20,216352.11(Notes)1.
Equity in net income (loss) of non-consolidated subsidiaries and affiliates
FY2007 Interim: ¥219 million FY2006 Interim: ¥392 million FY2006 Full Year: (¥587 million)
2.
Average number of outstanding shares during the period (Consolidated):
FY2007 Interim: 57,153,686 shares FY2006 Interim: 57,153,779 shares FY2006 Full Year: 57,153,733 shares
3.
Changes in accounting methods: No
4.
Percentage figures for net sales, operating income and other items represent changes compared with the previous interim.
5.
Diluted net income per share is not shown because there are no shares with a dilutive effect.
(2) Consolidated Financial Position
Total Assets

Net Assets

Net Assets
per Share

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

FY2007 Interim

523,442

392,83373.7

6,746.02

FY2006 Interim

474,697354,72974.7

6,206.58

FY2006 Full Year532,516
386,22272.5(Note) Number of shares issued and outstanding (consolidated) at period-end:
FY2007 Interim 57,153,686 shares FY2006 Interim 57,153,686 shares FY2006 Full Year 57,153,686 shares

6,756.00(3) Consolidated Cash Flows
Operating Activities

Investing Activities

Financing Activities

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

FY2007 Interim

13,203(6,423)(817)

48,996

FY2006 Interim

12,355(16,033)(9,444)

21,840FY2006 Full Year32,850(20,063)(6,088)43,082(4) Number of Consolidated Subsidiaries and Affiliates
Consolidated subsidiaries: 19
Non-consolidated subsidiaries accounted for by the equity method: 0
Equity-method affiliates: 7(5) Changes in Scope of Consolidation and Application of Equity Method
Consolidated subsidiaries (Added): 2 (Excluded): 0
Equity-method affiliates (Added): 0(Excluded): 0

1

2. Forecasts for FY2007 (April 1, 2006 – March 31, 2007)
Net Sales

Ordinary Income

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

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.

2

Management Policies
1. Fundamental Business Policies
Since its establishment in 1955, Japan Petroleum Exploration Co., Ltd. (JAPEX) has pursued its mission ofcontributing to Japan’s energy supplies by securing reserves and expanding production centered on the exploration,
development, and sale of oil and natural gas. Guided by this mission, the Company has steadily discovered oil andnatural gas reserves to result in the business base of today.
In light of its expanding role as a supplier and, consequently, related increases in its responsibility to society withregard to a stable supply, the JAPEX Group is actively focused on constructing a new business model that not only
relies on expanding reserves but also upgrading and expanding transmission systems for natural gas, and otherinitiatives. As such, the Group aims to move forward as a company with the competitive capabilities required torespond to changes in its operating environment. The section below outlines the Group’s business philosophy in thisrespect.

Taking on the challenge of new energy value creation and increasing corporate value・Contribute to the supply of energy through global exploration and production (E&P) activities.
・Contribute to coexistence between the planet and humankind by developing and promoting the use ofenvironment-friendly natural gas.
・Pursue sustainable growth and maximize shareholder value by placing top priority on winning andmaintaining the trust of society, customers, shareholders and employees.

2. Fundamental Policy on Dividends
The Company’s basic policy is to sustain stable dividends over the long term. Taking into account the medium andlong-term outlook for the business, dividend payments are determined based on respect for the return of profits toshareholders. While considering the need to acquire new reserves as an energy company that plays a role inproviding stable supplies of oil and natural gas, indispensable resources for society, the policy also takes into
account the need for retained earnings to finance the acquisition of new reserves and to upgrade and improvetransmission systems, primarily pipelines.

3. Concept and Policies on Lowering an Investment Unit
The Company recognizes that lowering an investment unit promotes the participation of a broader range of investors
in the stock market and is an effective measure to improve the liquidity of stocks. In detail, the Company decides
whether to lower its investment unit after considering such factors as stock prices, circulation and distribution, andafter carefully examining the expenses needed and the effectiveness of lowering its investment unit.

4. Medium-term Business Strategy and Critical Issues
Japan’s energy industry is entering an era of full-scale competition, ushered in by rapid deregulation, beginning withrevisions to the Gas Business Law and the Electric Utility Law. As such, competition is intensifying almost on adaily basis with the entry of new players into each energy sector.
Specifically, the Gas Business Law was revised in April 2004, thereby further expanding the scope of deregulation.
In addition, the Japanese government has introduced the “common carrier” concept in gas transmission. Under thisconcept, companies, including JAPEX, that possess gas pipelines above a certain capacity are obligated to open theirpipelines for third-party access. As a result of these developments, the Company’s gas business is facing a major
turning point.
In the current environment, natural gas, a major earnings base for the JAPEX Group, is drawing significant attention
for its clean energy characteristics. Government efforts to bolster environmental measures to achieve thegreenhouse reduction target defined in the Kyoto Protocols, coupled with activities to tackle global warmingon the corporate and individual level, are likely to continue to drive demand for natural gas. This presents
opportunities for JAPEX to further develop its natural gas business.
Moreover, the mounting concerns over recent escalation in global fuel prices and supply stability, has underscoredthe importance of exploration and development operations. Based on recognition that oil will continue to play a3critical part and the central role as a primary energy source in Japan, JAPEX Group, for its part, will continue toposition these activities as key elements of its business base. Accordingly, expanding natural gas sales andmaintaining and enlarging reserves of oil and natural gas are critical issues for the Company.

Expanding sales of natural gas and upgrading and expanding the supply system
To cope with the intensifying competitive environment as well as expand sales of environment-friendly natural gas,
the Group is working to construct a natural gas business that seamlessly integrates services and facilities, fromupstream (E&P) through mid-stream (transmission and storage) to downstream (supply to large users and local
distribution companies, or LDCs).
For this reason, we are strengthening efforts to expand sales along the route of existing pipelines by pursuing
preparatory construction work on a Shiroishi-Koriyama gas pipeline branching from the Niigata-Sendai gas pipeline(expected to be completed during fiscal 2006), as well as beginning full-scale studies for the construction of a subsea
gas pipeline between Sendai and Iwaki. Through projects such as these, the Company is committed to further
expansion of the natural gas network.
JAPEX’s LNG Satellite System is designed to serve customers in geographic areas not reached by its pipeline
network. LNG is loaded onto tanker trucks and railway tank containers and shipped to the Tohoku, Hokuriku, andKyushu regions to supply natural gas to a broader base of customers. To expand supply to users within Hokkaido by
LNG tank containers from its LNG plant in Yufutsu, which is located in the region, JAPEX is taking steps toaugment a liquefaction plant scheduled for completion in fiscal 2008.
Through the ongoing development of its gas operations, JAPEX is targeting natural gas sales volume of 1.7 billion
m3 in fiscal 2009. Moreover, leveraging the Group’s upstream division uniqueness, JAPEX is upgrading its natural
gas transmission and underground storage network organically linking a range of facilities and services in a drive to
put gas operations on a more solid footing.

Conducting efficient E&P and securing new reserves
With its business centered on E&P, the JAPEX Group continually works to maintain and expand its reserves, andstrives to further expand and upgrade its system for providing stable supplies of oil and natural gas over the longterm. Specifically, to significantly expand cost-competitive domestic reserves, a key source of earnings, theCompany is conducting exploration, mainly in Niigata, Akita, and Hokkaido prefectures with the aim of adding
substantial new gas reserves. It is also conducting exploration aimed at tapping reserves in areas surrounding
existing oil and gas fields. In this way, the Company is able to conduct interlocking, tactical exploration that affords
greater efficiencies.
Furthermore, recognizing the importance of establishing a stable overseas business base from a long-term viewpoint,
the Company will work to increase operating efficiency and carry out exploration in areas identified as key
geographies. Specifically, the Company aims to increase the efficiency of operations and development at fields
where it currently carries out oil and gas production. Moreover, when developing new business, the Company seeks
to acquire the rights to oil and gas fields that already onstream, and fields that have been discovered but remain
undeveloped, both of which offer low risk and early returns. At the same time, the Company works for the balanced
preservation of exploration assets over long-term operating periods with anticipated relatively high returns. As partof this policy, with Iraq the Company is undertaking technical cooperation with the Ministry of Oil to strengthen
relations with the Ministry, and with Libya, where the Company has succeeded in obtaining rights, the Company ispromoting exploration activities. Furthermore, the Company is actively continuing to seek other projects.

Addressing environmental issues
JAPEX, as a company that supplies environment-friendly natural gas, feels an obligation to contribute toenvironmental protection. The Company therefore works to increase internal environmental awareness throughongoing use of internal environment management systems (all company sites have acquired ISO 14001 certification),and to reduce the environmental impact of its business activities. At the same time, JAPEX is contributing toenvironmental activities on the societal level by participating in and funding afforestation programs in Japan andoverseas.

4

In Japan, emissions rights trading and other new environmental businesses are being steadily generated in an effort
to help reduce the nation’s greenhouse gas levels. For its part, JAPEX will continue pushing ahead with efforts topromote natural gas use from a variety of angles, and appropriately apply Group technologies in the environment
business field. To this end, the Company is proactively taking on R&D themes in new fields such as gas-to-liquids
technology, which can be used to extract liquid fuel from methane, the main component of natural gas, andtechnologies for storing carbon dioxide underground.
The JAPEX Group aims to utilize these activities to further strengthen its operating base and enhance its
competitiveness as well as bolster operating efficiency. The ultimate goal is to achieve sustainable development andmaximize shareholder value.

5. Relationships With Parent Company and Others
JAPEX has no parent company.

Business Results and Financial Position
1. Business Results
The recovery of the Japanese economy during the interim reporting period continued as improvement in the businesssector expanded into the household sector. On the other hand, in the oil industry, exchange rates remained stable
while international crude oil prices continued upward, resulting in substantial increase in domestic crude oil prices.
Meanwhile, due to acceleration in the pace of deregulation, domestic natural gas prices still remained weak amid
escalating competition among energy sectors.
Under these conditions, the JAPEX Group worked to maintain robust pipeline operations with the aim of ensuring
stable supplies of affordable and safe energy over the long term. In addition, the Group focused its collective efforts
on efficient E&P both in Japan and overseas.
Net sales in the interim reporting period were strong as a result of the increase in crude oil prices, at ¥67,138 million,
an increase of ¥7,917 million (+13.4%) year on year.
Operating income was ¥12,528 million, an increase of ¥4,066 million (+48.1%) from the same period of thepreceding year.
Ordinary income was ¥15,750 million, an increase of ¥3,291 million (+26.4%) year on year, and net income was¥10,654 million, an increase of ¥1,671 million (+18.6%) year on year.
The interim dividend for the current fiscal year is ¥20 per share. We anticipate that the annual dividend for thecurrent fiscal year, including the year-end dividend, will be ¥40 per share or the same level as the previous year.
The performance of each of the sectors of our business was as follows:(A) E&P Division
The E&P Division sells crude oil, natural gas, LNG and bitumen. This division recorded net sales of ¥59,659 million,
an increase of ¥9,799 million (+19.7%) from the same period of the previous year, due to increases in net sales ofcrude oil as a result of the rise in crude oil prices.
(B) Contract Services Division
The Contract Services Division is primarily involved in drilling and geophysical surveys, and recorded net sales of¥1,013 million in the interim reporting period, a decrease of ¥2,239 million (–68.9%) from the same period of theprevious year. This is primarily due to decreases in basic physical exploration contracts from the Japan Oil, Gas andMetals National Corporation (JOGMEC).
(C) Other Businesses
Our 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. Net sales in the interim
reporting period were ¥6,465 million, an increase of ¥357 million (+5.9%) from the same period of the preceding
year.

5

2. Financial Position
Status of cash flow during the interim reporting period
During the interim reporting period, cash and cash equivalents (“funds”) increased by ¥5,913 million year on year to¥48,996 million. Below is a summary of interim cash flows by business activity.

(Cash flow from operating activities)
Net cash provided by operating activities was ¥13,203 million, an increase of 6.9% from the same period of theprevious year. The main components were ¥15,690 million in income before income taxes and minority interests,¥7,080 million in depreciation and amortization, and ¥7,412 million in income taxes.
(Cash flow from investing activities)
Net cash used in investing activities was ¥6,423 million, a decrease of 59.9% from the same period of the previous
year. This was primarily due to outlays of ¥10,847 for additions to property, plant and equipment, and ¥3,232
million from the proceeds from redemption and sale of investments in securities.
(Cash flow from financing activities)
Net cash used in financing activities was ¥817 million, a decrease of 91.3% from the same period of the previous
year. This was primarily due to ¥2,000 million in proceeds for long-term debt, ¥1,428 million in payment of cash
dividends, and ¥1,015 million in payment of dividends to minority shareholders.

The trend of cash flow indicators for the Company is as follows.
FY ended March 2005

FY ended March 2006

InterimInterimYear-EndYear-EndFY ending March
2007
Interim

Equity ratio (%)
81.6
74.5
74.7
72.5
73.7
Equity ratio on
109.3
63.6
73.3
78.9
78.4
mark-to-market basis (%)
Debt repayment period (years)
—
0.7
—
0.5
—
Interest coverage ratio (times)
46.6
86.8
121.9
188.1
420.1
Notes:
Equity ratio: (Net assets – minority interest)/ Total assets(As for the numbers from FY ended March 2005 to FY ended March 2006, the conventional “shareholders’ equity
ratio,” which was calculated by dividing conventional shareholders’ equity by total assets, is shown in the “Equity
ratio” column.)
Equity ratio on mark-to-market basis: Total market capitalization/total assets
Debt repayment period: Interest-bearing debt/net cash provided by operating activities
Interest coverage ratio: Net cash provided by operating activities/interest paid
* The above indicators are calculated based on consolidated financial figures.
* Total market capitalization is calculated using the closing stock price at the end of the term multiplied by the number of shares
outstanding at the end of the term (excluding treasury stock).
* Net cash flow from operating activities is that shown on the statement of consolidated cash flows. Interest-bearing debt is all debt
subject to interest payments within liabilities shown on the consolidated balance sheets. Interest paid is that shown on the consolidated
statement of cash flows.

Forecasts for the Full Fiscal Year
The Company’s forecast dated May 15, 2006 for the full fiscal year has been revised in light of recent businessdevelopments. Increases are expected in net sales by 27.3%, ordinary income by 15.7%, and net income by 13.3%
from the previous forecast.
The previous forecast was based on prices of $60 per barrel for domestic imported crude oil, and an exchange rate of¥110/$, however, actual results for the interim reporting period came to $65.8 per barrel (weighted average) and¥115.42/$ (weighted average).
In the revised forecast we anticipate $65 per barrel during the third quarter and $55 per barrel during the fourth
quarter and an exchange rate of ¥115/$ for both the third and fourth quarters. We have also incorporated thepurchase and sale of crude oil from the Sakhalin 1 project, which will lead to an increase of net sales by ¥33,775
million from the previous forecast to ¥157,685 million. Ordinary income is expected to increase by ¥3,910 million

6to ¥28,830 million as a result of such factors as an increase in cost of sales for crude oil products, and net income isforecast to increase by ¥2,299 million to ¥19,541 million.
The differences from the forecast announced on May 15, 2006 are as follows.
Net Sales
Ordinary Income(¥ million)(¥ million)
Previously announced
123,91024,920forecast (A)Current revised forecast
157,685
28,830(B)
Increase/decrease (B-A)
33,775
3,910
Increase/decrease (%)
27.3
15.7

Net Income(¥ million)
17,242
19,541
2,299
13.3

Risk Factors
The following are a few of the range of different factors that could potentially impact the operating results of the
JAPEX Group. Please be aware that factors with the potential to affect business performance are not limited to those
discussed below.
c Risks associated with business operations
The exploration stage of business operations is inherently highly risky. These operations require substantial
investments and extended timeframes to conduct activities beginning with initial surveys and including exploration
work to the discovery of resources. Furthermore, there are no assurances that oil or gas will be found. Substantial
investments are also required to commercialize newly found reserves, as JAPEX must drill development wells andconstruct production and transmission facilities. Due to these factors, long lead times are typically required from thestart of a particular project until an investment can be recovered and earnings generated. During this period, theoperating environment can undergo any number of changes that may make it difficult to achieve the original
investment goals of the project.
d Factors causing volatility in crude oil sales
JAPEX markets crude oil at international prices. Consequently, the price at which the Company sells crude oil isaffected by market trends, such as the level of output set by OPEC and trends in the international balance of supply
and demand, as well as fluctuations in exchange rates. To reduce associated risks, the Company engages in crude oilswap transactions, although this approach does not entirely eliminate all associated risks.
e Factors causing volatility in natural gas sales
Selling prices for natural gas are normally determined based on fixed contracts with customers and denominated inyen. As such, prices are not affected by short-term fluctuations in prices for internationally traded natural gas or
exchange rates. However, volumes of gas sales to local distribution companies (LDCs) do exhibit seasonality, that is,lower demand in the summer and higher demand in the winter. In addition, sales volume declines during warm
winters. Furthermore, over the longer term, the deregulation of Japan’s energy markets and other factors carries therisk of lower unit selling prices and lower sales volumes of natural gas.

7

4. Consolidated Interim Financial Statements(1) Consolidated Interim Balance Sheet
Description

As of Sept. 30, 2005
Amount (¥ million)

As of Sept. 30, 2006
Amount (¥ million)

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

Current assets
1.

Cash and deposits

20,561

20,5592.

Notes and accounts receivable

12,632

13,89018,7133.

Marketable securities

6,141

29,961

15,966

4.

Inventories

9,216

12,4798,794

5.

Other current assets

10,566

5,481

5,226

Less: Allowance for doubtful receivables
Total current assets
II.

29,639

(15)

(9)

(19)

59,10282,36278,321

Fixed assets
1.

Property, plant and equipment(1) Buildings and structures(2) Machinery and equipment(3) Land

44,14728,307
13,001(4) Other property, plant and equipment

12,602

2.

Intangible fixed assets

3.

Investments and others

41,112
28,66813,181
98,05723,1806,446

42,89928,28613,131
106,143

16,794

6,077

6,333

(1) Investments in securities

306,717

320,668

335,345(2) Others

12,616

17,177

20,620

(231)

(97)

Less: Allowance for doubtful receivables
Allowance for losses on overseas
investments
Total fixed assets
Total assets(8,012)311,089(8,888)101,112(120)
328,859(9,095)

346,749

415,594

441,080

454,195

474,697

523,442

532,5168

Description

As of Sept. 30, 2005
Amount (¥ million)

As of Sept. 30, 2006
Amount (¥ million)

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

Current liabilities
1.

Notes and accounts payable

4,749

6,872

8,195

2.
3.
4.
5.

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

2,773
820
12,150972
47
14,864

17,366

20,49322,75525,561

Total current liabilities
II.

Long-term liabilities
1.

Long-term debt

7,000

16,02815,000

2.

Deferred tax liabilities

76,57082,18888,5563.

Accrued retirement benefits for employees

4,254

5,056

4,735

4.
5.

702

577

761

2,697

3,176

2,943

6.

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

945

716

871

7.

Other reserves

124

98

88

8.

Other long-term liabilities

12

12

12

92,307

107,853

112,969

112,801

130,608

138,531

7,166

-

7,762

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.

14,288-14,288

198,718
141,70916-

209,095
161,949
894

Treasury stock

Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity

(4)

-

(4)

354,729-

386,222474,697-

532,516-

14,288218,228(4)
232,512--152,150

-

-

10
885

-

-

153,047

-

-

7,274
392,833
523,442-（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 assets
1.

9(2) Consolidated Interim Statement of Income

Description

Fiscal 2007
1st half
Amount (¥ million)

Fiscal 2006
1st half
Amount (¥ million)

Fiscal 2006
Amount (¥ million)I.

Net sales

59,221

67,138

138,796

II.

Cost of sales

34,17037,64377,43325,05029,49561,362Gross profit
III. Exploration expenses
1. Exploration expenses

5,625

2. Exploration subsidies

(796)

3,021
4,829

(81)

10,8002,940(1,122)

9,677

IV. Ⅳ Selling, general and administrative expenses

11,75914,027

24,666

Operating income

8,461

12,52827,018V.

Non-operating income
1.

Interest income

641

634

1,367

2.

Dividend income

1,425

2,277

2,548

3.

Equity in profit of non-consolidated
subsidiaries and affiliates

392

219

-

4.

Reversal of allowance for losses on overseas
investments

299

205

-

5.

Reversal of accrual for losses on projects

740

155

814

6.

Other non-operating income

1,072

4,571

476

3,969

2,496

7,226

VI. Non-operating expenses
1.

Interest expense

73

37

144

2.

Devaluation loss on securities

-

141

93

3.

Provision for accrued estimated cost ofabandonment of wells

261

268

522

4.

Loss on foreign exchange conversion

-

136

-

5.

Other non-operating expenses

239

574

Ordinary income

163

12,459746

2,293

15,7503,054
31,190VII. Extraordinary income
1.

Reversal of allowance for doubtful receivables

2

2

5

5

77

77

34

34

65

65

101

101

VIII. Extraordinary losses
1.

Loss on disposal of fixed assets
Income before income taxes and minority
interests

12,427

Current income taxes

2,918

Deferred income taxes(36)

15,690
5,086

2,882

Minority interests
Net income

10

(886)

31,166
8,845

4,200

448

9,294

561

836

1,655

8,983

10,654

20,216

(3) Consolidated Interim Statements of Shareholders’ Equity and Interim Statement of Changes in Shareholders’Equity, etc.
Consolidated Interim Statements of Shareholders’ Equity

Description

Fiscal 2006
1st half

Fiscal 2006

Amount (¥ million)

Amount (¥ million)（Retained earnings）
I.

Balance at beginning of interim period

191,116

191,116

II. Addition
1. Net income

8,983

8,983

20,216

20,216

III. Deductions
1. Cash dividends paid

1,285

2,143

2. Bonuses to officers

95

95

(3)

(3)

（Incl. statutory auditors）
3. Deduction of consolidated subsidiaries

0

1,381

IV. Balance at end of interim period

0

2,238

198,718

209,095

Consolidated Interim Statement of Changes in Shareholders’ Equity etc.
Interim Period (from April 1 to September 30, 2006)(unit: ¥ million)

Balance as ofMarch 31,2006
Changesduring interim
periodDistributions
from capitalreserve (note)
Directors’
bonuses (note)
Net income
Changesduring interim
period otherthanshareholders’equity items(net)
Total changes
during interim
periodBalance as of
September 30,
2006

CapitalShareholders’ Equity
CapitalTreasury
reserves stock

14,288209,095(4)(1,428)

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

Minority
interests

162,843

7,762(1,428)Total
net
assets393,985(1,428)

(92)

(92)

(92)

10,654

10,654

10,654(9,798)10(8)(9,796)(488)(10,284)

-

9,133

-

9,133

(9,798)10(8)(9,796)(488)(1,151)

14,288218,228(4)

232,512152,15010885

153,047

7,274

392,833(Note) These items represent distribution of earnings resolved at the General Meeting of Shareholders in June 2006.

11

(4) Consolidated Interim Statements of Cash Flows

Description
I. Operating activities
1. Interim (current) income before income taxes and minority
interests
2. Depreciation and amortization
3. Amortization of goodwill
4. Loss on devaluation of marketable securities and investments
in securities
5. Increase (decrease) in allowance for doubtful receivables
6. Increase in provision for accrued retirement benefits for
employees
7. Decrease in provision for accrued retirement benefits forofficers
8. Increase (decrease) 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 losses (gains) of unconsolidated subsidiaries andaffiliates
15. Decrease (increase) in notes and accounts receivable
16. Decrease (increase) in inventories
17. Increase (decrease) in notes and accounts payable
18. Decrease in consumption tax payable
19. Other, net
Subtotal
20. Payment of debt guarantee
21. Income from recovery of rights to exercise guaranteed debt
22. Income taxes (paid) and recovered
Net cash provided by operating activities

12

Fiscal 2006
1st half
Amount(¥ million)

Fiscal 2007
1st half
Amount(¥ million)

12,427

15,69031,166

6,714
503

7,080
-

13,951
946

-

491

-

Fiscal 2006
Amount(¥ million)

17

(33)

(89)

422

320

903

(70)

(184)

(11)

(16)

227

97

(1,039)

(362)

(30)

(2,067)73(2,912)37(3,916)
144

(346)

(6)

(428)

16

141

94

(392)

(219)

587

1,285
(58)
2,218
(640)
(4,065)
14,982(1,984)(642)
12,355

4,830(3,684)(2,717)(293)
642
19,0481,567(7,412)
13,203(4,766)
363
6,260
(322)
(2,150)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. Other, net
Net cash used in investing activities
III. Financing activities
1. 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

Fiscal 2006
1st half
Amount(¥ million)

Fiscal 2007
1st half
Amount(¥ million)(5)409(5,998)
6,518(11,534)
5(302)(7,939)

(311)
933
800
(10,847)(632)(3,942)(1,302)561(5,998)
10,536(21,042)79(743)(11,819)

1,436

3,232

5,792

(3,107)
1,856
2,168
458
(16,033)

(133)
674
2,752
1,050
(6,423)(3,128)
2,353
4,124
523
(20,063)2,734(8,153)(0)(1,285)(609)(101)(2,029)(9,444)471(12,651)
34,568-2,000(1,428)(1,015)
(31)
(342)
(817)
(48)
5,913
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)

21,84048,99643,082

Fiscal 2006
Amount(¥ million)

II.

13

5. Status of Production and Sales
1. Production
Oil and Natural Gas Segment
Division

Product

Fiscal 2007
1st half

Fiscal 2006
1st half

Crude oilFiscal 2006

kl

kl

378,307(80,960)

361,314(87,356)kl

805,612（164,842）

thousand m3

thousand m3

thousand m3

Natural gas

577,172(32,186)

556,619(30,223)

1,279,066（62,335）

LNG

t

t

t

11,531

10,20025,901kl

kl

Bitumen

225,433(225,433)

229,832(229,832)

449,785(449,785)

LPG

t

t

t

5,153

4,541

10,737

Fuel oil, etc.

kl

kl

kl

26,23325,28055,719

Oil and Natural Gas

Other Businesseskl(Notes)1. The figures in parentheses in E&P 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 energies.
4. Bitumen is heavy oil extracted from oil sands.

2. SalesOil and Natural Gas Segment

Division

Product

VolumeCrude Oil

Fiscal 2007
1st half

Fiscal 2006
1st half
AmountNatural Gas
LNG
BitumenSubtotal
Contract services
Subtotal
LPG
Other Businesses

VolumeAmount(¥ million)kl(¥ million)kl(¥ million)

687,061

26,592700,771

32,815

1,485,849

61,185thousand m3

622,473

18,503t614,702

thousand m3

18,893

1,413,717

t

50,5872,532

kl

65,342

43,539t

3,540

124,736

6,252

kl

226,1392,231

229,9814,410

448,9516,526－

49,859－59,659－117,504

－

3,253

－

1,013

－

7,148

－

3,253

－

1,013

－

7,148

t

(¥ million)t(¥ million)t(¥ million)

12,403721

11,332825

26,2341,755

kl

Fuel oil, etc

Amountkl

thousand m3

E&P

VolumeFiscal 2006

kl

kl

38,3582,415

41,2692,648

102,125

5,934

Others

－

2,971

－

2,990

－

6,453

Subtotal

－

6,107

－

6,465

－

14,143

Total－

59,221－

67,138－

138,796(Notes)1. Others in Other Businesses includes revenue from the transmission of third-party gas through JAPEX’s pipeline network and salescommissions.
2. Monetary amounts in the table do not include consumption tax.

14