9-Year Financial Information
INPEX CORPORATION and Consolidated Subsidiaries

The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a mat ter ofarithmetic computation only, at ¥120.27=US$1.00, the approximate exchange rate in effect as of March 31, 2015.
Millions of yen

2007/3

2008/3

2009/3

2010/3

2011/3

2012/3

Net sales¥   969,713¥ 1,202,965¥ 1,076,165¥   840,427¥   943,080¥ 1,186,732

Cost of sales    343,795    390, 554    319,038    298,168    334,833    395,443

Gross profit    625,918    812,411    757,127    542,259    608,247    791,289

Operating income    559,077    714,211    663,267    461,668    529,743    709,358

Income before income taxes andminority interests    586,263    685,800    616,167    442,027    508,587    767,039

Net income¥   165,092¥   173,246¥   145,063¥   107,210¥   128,699¥   194,001

Current assets¥   474,124¥   565,111¥   411,110¥   492,855¥   492,932¥    908,702

Tangible fixed assets    219,227    254,481    297,636    358,094    379,862    383,698

Intangible assets    265,822    265,481    253,681    239,205    249,111    233,318

Investments and other assets    648,934    722,828    805,618    923,624  1,558,475  1,540,680

Total assets  1,608,107  1,807,901  1,768,045  2,013,778  2,680,380  3,066,398

Current liabilities    266,248    325,286    206,059    227,905    254,729    367,844

Long-term liabilities    261,843    243,802    199,925    295,270    328,268    384,361

Net assets¥ 1,080,016¥ 1,238,813¥ 1,362,061¥ 1,490,603¥ 2,097,383¥ 2,314,193¥   231,982¥   363,995¥   230,352¥   241,373¥   274,094¥   320,692(209,243)(261,767)(240,168)(251,812)(844,511)(280,864)

13,794(45,228)(46,090)

68,937    548,057     29,294¥   189,417¥   222,270¥   162,845¥   216,395¥   182,025¥   249,233¥1,091.17*¥1,227.92*¥1,350.25*¥1,473.87*¥1,367.40*¥1,492.27*

Cash dividends per share (Yen)

17.50*

18.75*

20.00*    13.75*    15.00*    17.50*

Earnings per share (EPS) (Yen)¥  176.06*¥  183.78*¥  154.00*¥  113.88*¥  102.08*¥  132.84*(Results of operations)(Financial position)(Cash flows)
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalents at endof the period(Per share data)
Net assets per share (Yen)* Retroactively adjusted for a stock split at a ratio of 1:400 of common stock on October 1, 2013.

(Financial indicators)

050

Net debt / Net total capital
employed (%)(18.6)%(36.1)%(31.2)%(30.6)%(48.9)%(60.7)%

Equity ratio (%)

64.0

64.0

71.9

68.9

74.5

71.1

D/E ratio (%)

24.2%

16.8%

12.9%

17.3%

13.7%

14.6%

INPEX CORPORATION Annual Report 2015

Thousands of
U.S. dollars

Millions of yen

2014/3

2015/3

2015/3¥ 1,216,533¥ 1,334,626¥ 1,171,227$ 9,738,314    426,326    490,417    525,444  4,368,870    790,207    844,209    645,783  5,369,444    693,448    733,610    534,886  4,447,377    718,146    750,078    540,023  4,490,089¥   182,962¥   183,691¥    77,820$   647,044¥ 1,106,504¥ 1,140,204¥ 1,342,410$11,161,636    584,541    951,779  1,497,622

12,452,166    380,156    439,179    458,770  3,814,501  1,544,958  1,506,977  1,200,352  9,980,477  3,616,159  4,038,139  4,499,154

37,408,780    414,977    375,670    365,212  3,036,601    530,198    666,432    845,238  7,027,837¥ 2,670,984¥ 2,996,037¥ 3,288,704$27,344,342¥   252,347¥   213,514¥   216,749$ 1,802,187(489,870)(395,555)(81,087)(674,208)    137,069     48,961(4,178)(34,739)¥   199,859¥   117,531¥   260,978$ 2,169,934¥1,699.10*¥1,911.25*¥  2,099.95$     17.46    17.50*    18.00*

      18.00

       0.15¥  125.29*¥  125.78*¥     53.29$      0.44

(43.9)%(31.9)%(16.8)%(16.8)%

68.6

69.1

68.2

68.2

19.2%

20.9%

22.1%

22.1%

Notes
*	EBIDAX = Net income + Minority interests + Deferred tax + (1– Tax rate) × (Interest expense – Interest income) + Foreignexchange gain and loss + Depreciation and amortization +Amortization of goodwill + Recovery of recoverable accounts under
production sharing (capital expenditures) + Exploration expenses +Provision for exploration projects + Provision for allowance forrecoverable accounts under production sharing + Impairment loss*	Net assets excluding minority interests = Net assets – Minority
interests*	Equity ratio = Net assets excluding minority interests / Total assets
Net debt = Interest-bearing debt – Cash and cash equivalents*	– Time deposits – Certificate of deposits – Public bonds and cor­porate bonds and other debt securities with determinable value– Long-term time deposits*	Net debt / Net total capital employed = Net debt / (Net assets +Net debt)*	D/E ratio = Interest-bearing debt / (Net assets – Minority interests)
ROE = Net income / Average of net assets excluding minority*	interests at the beginning and end of the year*	
Net ROACE = (Net income + Minority interests + (Interest
expense – Interest income) × (1 – Tax rate)) / Average of sum of
net assets and net debt at the beginning and end of the year*	The reserves cover most of INPEX group projects including theequity-method affiliates. The reserves from March 31, 2007 to
March 31 2010 were evaluated by DeGolyer & MacNaughton, andfrom March 31, 2011, the reserves of projects which are expected
to be invested a large amount and affect the Group’s future resultmaterially are evaluated by DeGolyer & MacNaughton, and theothers are done internally.
	The proved reserves are evaluated in accordance with SEC
regulations.
	The probable reserves are sum of proved reserves and probablereserves evaluated in accordance with SPE/WPC/AAPG/SPEE
guideline Petroleum Resources Management System 2007(PRMS)
approved in March 2007 after deduction of proved reserves evalu­
ated in accordance with SEC regulations. Probable reserves as ofMarch 31, 2007 are evaluated in accordance with the guideline
established by SPE and WPC (1997 SPE/WPC).
	Possible reserves are evaluated in accordance with PRMS.
*	Production volumes are calculated in accordance with SEC regu­
lations and include the equity-method affiliates. The production
	volume of crude oil and natural gas under the production sharing
contracts entered into by the Group corresponds to the net eco­nomic take of the Group.
	Calculation of the conversion factor from gas to oil equivalent wasaltered from the year ended March 31, 2012.

6

Notes: In consolidated financial statements, amounts are basicallyrounded to the nearest million.

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

2013/3051

Message from the Senior Vice President,
Finance & Accounting

I would like to take this opportunity to provide
an overview of the Group’s business results highlights
as well as details of its investment plans and funding.
billion, up¥292.7 billion compared with the balance asof March 31, 2014. This included an increase in translation adjustments of ¥241.3 billion attributable to theweak yen. Accounting for each of these factors, theequity ratio stood at 68.2% as of March 31, 2015, withnet debt to net total capital employed coming in atnegative 16.8%. Looking ahead, the Group will undertake essential investments while working to maintain arobust ﬁnancial position.

Investment Plans and Funding

Masahiro Murayama

Director, Senior Vice President, Finance & Accounting

Business Results Highlights for
the Year Ended March 31, 2015

Consolidated net sales for the year ended March 31,
2015, amounted to ¥1,171.2 billion, a decrease of
12.2% compared with the previous period. From a
proﬁt perspective, consolidated net income fell 57.6%
year on year to ¥77.8 billion. Despite the positive
ﬂow-on effect attributable to the weak yen (year-onyear depreciation of 9.6%), revenue declined owing
mainly to the drop in crude oil prices (year-on-year
decrease of 19.5%), which substantially drove down
sales by ¥227.5 billion. While this downturn in revenue
contributed to a lower tax burden, the Group reported
a decline in earnings after posting a one-off impairment loss.
Turning to the Group ’s financial position, consolidated total assets as of March 31, 2015, stood at¥4,499.2 billion, up ¥461.0 billion compared withthe previous period-end. This largely reflected theincrease in tangible ﬁxed assets of ¥545.8 billion. Total
off-balance-sheet assets on a 100% basis of the Ichthys
LNG Project downstream operating company, in which
the Group holds a 62.245% equity share, amounted
to ¥2,256.6 billion as of March 31, 2015. The balanceof net assets as of March 31, 2015 came in at ¥3,288.7

052

INPEX CORPORATION Annual Report 2015

The Group will continue to undertake exploration anddevelopment investments aimed at future growth inline with its investment plan covering the ﬁve-year
period from the year ended March 31, 2013 to theyear ending March 31, 2017, put in place in May 2012.
In procuring the necessary funds to undertake theseinvestments, the Group will look to procure U.S. dollar
funds through external loans including project ﬁnance,
operating cash ﬂows also in U.S. dollars, and available
cash on hand. The vast majority of cash on hand available for use totaling ¥1,263.2 billion as of March 31,
2015 was denominated in U.S. dollars. Accordingly, theGroup does not expect its funding burden to increase
as a result of a decline in the value of the yen.

Investment Plan (Results / Forecasts)(¥ billion)■Development* ■Exploration ■Other Capital Expenditures**

961.2

938.1

903.0

• Cash available
on hand787.7（¥1,263.2 billion）

568.0
853.2

846.4

824.0

489.0

70.9

66.2

37.1

2013

2014

25.5

2015

(Pre-exploration
investment)• External loans

695.4

65.0
27.3

•Yearly operating
cash flow

47.0
32.0

64.0
15.0

2016

2017

(Project ﬁnance, etc.,
signed in December
2012 for the Ichthys
LNG Project)*Ichthys downstream business included in development expenditures**Investments mainly in the Naoetsu LNG Terminal and pipeline-related facilities in Japan

Background Information
Oil and Gas Accounting Policies and Treatment
ACCOUNTING METHODS FOR TYPES OF AGREEMENTS
The oil and gas business generates the bulk of consolidated net

after the first two portions have been allocated. It is allocatedsales revenues for INPEX CORPORATION and its consolidated

between the host country’s government and the contractors

subsidiaries (the “Group”). Two types of agreements govern

based on agreed percentages.

the Group’s oil and gas operations. One is production sharing
contracts (the “PSCs”) and the other is concession agreements.

The calculation of items in the income statement basedon the above PSC-related considerations is as follows:

The latter category also includes domestic mining rights, as well
as overseas permits, licenses and lease agreements.

• The Group records as net sales its share of total sales
relating to the oil and gas production that is allocated to

1. Production sharing contracts

contractors under the PSCs.
• The Group books as cost of sales the portion of “Recoverable

Production sharing contract is an agreement by which one

accounts under produc tion sharing” that is recoveredor sever al oil and gas development companies ser ve as

through the allocation of its share of the “cost recovery

contractors that undertake at their own expense exploration andportion.”development work on behalf of the governments of oil-producing
countries or national oil companies and receive production fromthe projects as cost recovery and compensation.

Cost recovery and production sharing
The PSCs determine the allocation of oil and gas production
among the host country’s government (or related entity) and thecontractors such as the Group. The allocation formula generally
dif fers according to the terms of the individual PSC. The
overview below is specific to one type of PSC typical of many oil
and gas projects in Indonesia, a country with which the Grouphas concluded numerous PSCs.
Under this type of arrangement, the total production in any
given year or other accounting period is allocated at the end of
the period between three portions.

(1) “First tranche petroleum”: This is a prescribed portionof total production allocated between the host country’s
g ove r n m e nt a n d t he co nt r ac to r s i n li ne w i t h ag re e dpercentages.

(3) “Equity portion”: This is any residual production that is left

Exploration costs
The share of recoverable exploration costs incurred by theGroup under the terms of the relevant PSC is capitalized within“Recoverable accounts under production sharing.”
Development costs
The share of all development costs incurred by the Group thatis recoverable under the terms of the relevant PSC is recorded
within “Recoverable accounts under production sharing.”
Production costs
Any operating costs incurred during the production phase thatare recoverable under the relevant PSC are initially recorded
within “Recoverable accounts under production sharing.”
Administrative expenses
Any administrative expenses that are recoverable under the
relevant PSC are recorded within “Recoverable accounts under
production sharing.”
As discussed above, in “Cost recover y and produc tion
sharing,” these costs are recovered either as capital or operating
expenditures.

Non-recoverable costs under the PSCs
Acquisition costs
Costs relating to the acquisition of rights (recorded as intangible
assets under “Exploration and development rights”) for any
projects governed by the PSCs that are entirely in the exploration
phase are expensed as incurred and amortized. Expenditures
or costs relating to the acquisition of rights to projects alreadyin the development or production phase are capitalized within“Exploration and development rights” and amortized based on
the unit-of-production method. These amortization costs arerecorded within “Depreciation and amortization.” Cost recovery
provisions in the PSCs do not generally cover these expenditures.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information(2) “Cost recovery portion”: This is the oil and gas equivalentof a) non-capital production-related expenditures incurred inthat period, plus b) the scheduled depreciation expenses inthat period for capital expenditures, as calculated under the
PSC. The equivalents are determined based on the current
unit prices of crude oil and natural gas and allocated between
the contractors alone. The quantity of oil and gas in the “costrecovery portion” decreases as unit prices increase, whereasthat of the “equity portion” (explained below) rises.
If the actual production for the period is insufficient tocover the quantity of oil and gas equivalent calculated forthe cost recover y por tion, the latter is capped at actual
production and any surplus amount is carried forward to thefollowing period, as stipulated in the PSC.

Recoverable costs under the PSCs

053

2. Concession agreements

Exploration costs
The Group’s share of exploration costs is expensed as incurred.

Conces sion agreement is an agreement or authorization

Development costs
The Group’s s hare of any develop ment cos t s related tomining facilities is capitalized within tangible fixed assets. The
depreciation of tangible fixed assets that are governed byconcession agreements is computed primarily using the unitof-production method for mining assets located outside Japanand the straight-line method for domestic facilities. These
depreciation expenses are recorded within the cost of sales.

(including mining rights awarded in Japan, as well as overseas
permits, licenses and lease agreements) by which a government
entity or a national oil company of the country directly awards
mining rights to an oil company. The oil company makes its own
investment in exploration and development and has the right ofdisposition of the oil and gas it extracts. Revenues are returnedto the host country in the form of royalties, taxes, etc., on sales.

Acquisition costs
Costs relating to the acquisition of rights (recorded as intangible
as s et s under “Mining r ight s”) for projec t s gover ne d byconcession agreements are treated in the same way as projects
governed by the PSCs, as described above.

Production sharing contracts
Costs

Exploration
costs

Production costs(Operating costs)

Concession agreements
Statement of
IncomeCosts

Assets on
Balance Sheet

Statement of
IncomeProject under
exploration phase

Provision for allowance
for recoverable
accounts under
production sharing

Explorationcosts

All exploration costs
are expensed
as incurred

Exploration
expenses

Project underdevelopment andproduction phase
Recoverable
accounts under
production sharing
Project underdevelopment andproduction phase

Acquisition
costs

Administrative expenses
The Group’s share of administrative expenses is expensed as
incurred.

Assets on
Balance Sheet

Recoverable
accounts under
production sharing
Development
costs

Production costs
The Group’s share of operating costs that are incurred during the
production phase is recorded within the cost of sales.

Exploration anddevelopment
rightsCost of sales(Recovery of recoverable
accounts under
production sharing(capital expenditures))

Tangible fixed

Production costs(Operating costs)

All production costs
are expensed
as incurred

Cost of sales(Operating expenses)

Acquisition
costs

Mining rights

Cost of sales(Depreciation andamortization)

Cost of sales(Recovery of recoverable
accounts under
production sharing(operating expenditures))

Selling, general andadministrative expenses(Depreciation andamortization)

Cost of sales(Depreciation andamortization)

Development
costs

assetsCRITICAL ACCOUNTING POLICIES AND ESTIMATESThe Group’s consolidated financial statements are preparedrational changes to such estimates could exert a material impact

in conformity with Japanese GAAP. The preparation of theseon the financial condition or operating results. Critical accounting

financial statements requires the application of estimates,

policies and estimates relating to the financial presentation are

judgments and assumptions that affect the reported values ofoutlined below.

assets and liabilities at the date of the financial statements, asreporting period. Actual results may differ from the previously— Allowance for recoverable accounts under
production sharing

estimated or assumed values.

Any expenditures made during the exploration, development

well as the reported amounts of revenues and expenses for the054

Accounting estimates pursuant to the preparation of theand production phases of projects governed by the PSCs areconsolidated financial statements are deemed critical if thecapitalized within “Recoverable accounts under production

degree of uncertainty associated with such estimates is high, or if

sharing” if they are recoverable under the relevant PSC. A

INPEX CORPORATION Annual Report 2015

reserve equal to exploration costs is recorded within “Allowance

expenditures of consolidated subsidiaries at the exploration

for recoverable accounts under production sharing” to provide

stage based on a schedule of investments in exploration.

for potential losses from unsuccessful exploration. This reserve

Although the Group believes that assessments relating to thetypically remains unchanged on the balance sheet until it exceeds

schedule of investments are reasonable, changes to the schedulethe residual balance of exploration costs that previously had

could significantly affect future operating results.

been capitalized within “Recoverable accounts under production
sharing” during the exploration phase. Reflecting the uncertainty— Provision for loss on businessassociated with oil and gas projects, a reserve is recorded within

A provision for loss on business is provided for future potential“Allowance for recoverable accounts under production sharing”

loss on crude oil and natural gas development, production andto provide for probable losses on development activities, assales business individually estimated for each project. Although

individually estimated for each project. Although assessments

assessments and accounting estimates are made on a reasonable

and accounting estimates are made on a reasonable basis, actual

basis, actual operating results can change depending on theoperating results can change depending on the project status.

business status.

— Unit-of-production method— Deferred tax assets

Overseas mining facilities, mining rights and exploration andDeferred tax assets reflect temporary differences (including net

development rights that are acquired during the development

operating loss carry-forwards) arising mainly from the write-

and production phase are mainly depreciated or amor tized

down of exploration expenditures, foreign taxes payable andbased on the unit-of-production method. This approach requires

excess of tax allowable depreciation. Valuation allowances are

the estimation of reserves. Although the Group believes thatprovided once it is judged that the non-realization of deferred

the assessment of reserves is done in an appropriate manner,

tax assets has become the more probable outcome. The effectany changes in these estimates could significantly affect futureof foreign tax credits is taken into account in the calculation ofoperating results.

such valuation allowances. The realization of deferred tax assets— Asset retirement obligations

income, based on the available information. Adjustments tois principally dependent on the generation of sufficient taxable
Asset retirement obligations are recorded by a reasonable

deferred tax assets could be required if future taxable income

estimate of the present value of  retirement costs incurred upon

was lower than expected due to market conditions, foreign

termination of the operation and production with respect to oil

exchange rate fluctuations or poor operating performance.

and gas production facilities, based on the oil and gas contracts
or laws and regulations within the countries in which the Group— Retirement benefits to employees

operates or has working interests. Although the Group believes

Retirement benefit obligation to employees are recognized atthat such estimates of the present value of retirement costs

the net present value of future obligations as of the end of theare reasonable, changes to estimates of the present value ofaccounting period, taking into account any periodic benefit costs

retirement costs, which caused by the factors such as changes

that have arisen during the period. The calculation of retirement

to retirement plans, escalating prices of drilling equipment andbenefit obligations and retirement benefit expenses is basedmaterials and others, could significantly affect future operating

on various actuarial assumptions, including the discount rate,

results.

employee turnover and retirement rates, remuneration growth
rates, and the long-term expected return on plan assets. Future— Allowance for investments in exploration companies

operating results could be significantly affected by deviation

A reser ve is recorded to provide for probable los ses on

between the base assumptions and actual results or the revision

investments made by the Group in entities engaged in oil andof such assumptions which were to generate actuarial gains or

gas activities, as estimated based on the net assets of suchlosses.

entities. Although the Group believes that the assessments and— Goodwillin actual production volumes, prices or foreign exchange rates

The excess cost over underlying net assets excluding minority

could significantly affect future operating results.

interests as fair value as of their dates of acquisition is accounted— Provision for exploration projects

method.

for as goodwill and amortized over 20 years on a straight-line
A provision for exploration projec ts is provided for future

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

estimates relating to such investments are reasonable, changes

055

Management’s Discussion and Analysis of Financial
Condition and Results of Operations
BUSINESS ENVIRONMENT
During the year ended March 31, 2015, the Japanese economy
continued on a path of gradual recovery, owing to improvements
in corporate earnings and the employment rate as a result of
economic policies implemented by the Japanese government
and monetary easing by the Bank of Japan. However, certain
aspects of the recovery in consumer spending remained weakfollowing the consumption tax hike.
Under such business environment, Brent crude oil price,a common benchmark of international crude oil prices whichsignificantly influence the Group's per formance, star ted at
US$105.62 per barrel on April 1, 2014, and reached a high of
US$115.06 per barrel in mid-June due to factors including thedecrease of crude oil production in Libya.
However, Brent crude oil fell thereafter as a result of adownward revision in crude oil demand forecasts for 2015 by
IEA and OPEC, and, spurred by OPEC's deferment of crude
oil production cutbacks announced on November 27 amid
intensifying awareness of a crude oil oversupply, ultimatelyplunged about 60% in a period of six months, having dropped
to a low of US$46.59 per barrel in January for the first time in five
years and nine months.
Brent crude oil then bounced back and finished at US$55.11
per barrel on March 31, 2015, owing to a perceived slowdown
in U.S. shale oil production growth combined with instability in
Libya.
Meanwhile, in the Japanese domestic market, crude oil andpetroleum product prices shifted in correlation with international
oil prices. The Group's average sales price for crude oil forthe year ended March 31, 2015 reflected this shift, recording
US$84.00 per barrel, down US$23.78 from the year ended March

31, 2014.
The foreign exchange market, another important factor
that affects the business of the Group, began to trade at the¥103 level to the U.S. dollar. From April to July, the exchange
rate remained at a narrow range of ¥101 to ¥103 level to the
U.S. dollar without significant changes on the Japanese and U.S.
monetary policies. However, the suggestion by the FRB (Federal
Reser ve Board) in late-August, which showed a possibility
to move the rise in interest-rate for ward, brought the yen
depreciation against the U.S. dollar to the ¥110 level.
Afterward, the yen depreciated sharply against the U.S.
dollar when the Bank of Japan's unexpected additional monetaryeasing and the change of the operating asset allocation targetof GPIF (Government Pension Investment Fund) were announced
in late-October. Furthermore, the yen depreciated against the
U.S. dollar to the late ¥121 level while the U.S. employment rate
which announced in early-December went beyond the market
expectations.
Although the yen temporarily appreciated to the U.S.
dollar following to the probable movement to reduce short yen
positions against the U.S. dollar, the appreciation of the U.S.
dollar against many other currencies weakened the movement ofyen buying from the beginning of 2015, owing to the monetaryeasing policies in countries except the U.S. and TTM closed at¥120.27 to the U.S. dollar which turned out to be ¥17.35 lower
than that on March 31, 2014.
Reflecting these situations, the average sales exchange rate
for the Group for the year ended March 31, 2015, was ¥107.93 to
the U.S. dollar, which is ¥7.73 lower than that for the year ended
March 31, 2014.

PERFORMANCE OVERVIEW
Net sales
Consolidated net sales for the year ended March 31, 2015,
decreased by ¥163.4 billion, or 12.2%, to ¥1,171.2 billion from
¥1,334.6 billion for the year ended March 31, 2014, due to adecrease in sales price of crude oil and overseas natural gas.
Compared with the year ended March 31, 2014, net sales ofcrude oil decreased by ¥128.3 billion, or 14.9%, to ¥730.4 billion
from ¥858.8 billion, and net sales of natural gas decreased by¥33.6 billion, or 7.4%, to ¥421.9 billion from ¥455.4 billion.
Crude oil sales volume increased by 1,387 thousand barrels,
or 1.8%, to 80,558 thousand barrels compared with the year ended
March 31, 2014. The sales volume of natural gas decreased by
18 billion cubic feet (Bcf), or 5.4%, to 309 Bcf compared with theyear ended March 31, 2014. Of this, the sales volume of overseas
natural gas decreased by 17 Bcf, or 6.6%, to 243 Bcf comparedwith the year ended March 31, 2014. The sales volume of domestic
natural gas decreased by 11 million m3, or 0.6%, to 1,787 million

056

INPEX CORPORATION Annual Report 2015

m3 (equivalent to 67 Bcf) compared with the year ended March 31,
2014. The average sales price of overseas crude oil was US$84.00
per barrel, a decrease of US$23.78, or 22.1%, compared with theyear ended March 31, 2014. The average sales price of overseas
natural gas was US$11.36 per thousand cubic feet (Mcf), a decreaseof US$1.73, or 13.2%, compared with the year ended March 31,
2014. The average sales price of domestic natural gas was ¥57.56
per m3, an increase of ¥7.25 per m3, or 14.4%, compared with theyear ended March 31, 2014.
The decrease of ¥163.4 billion in net sales was mainly derived
from the following factors: regarding net sales of crude oil andnatural gas, decreases in sales volume and unit sales price pushingsales down of ¥8.9 billion and ¥227.5 billion, respectively, andthe depreciation of the Japanese yen against the U.S. dollar
contributing ¥74.6 billion to the increase, in addition, a decrease in
net sales excluding crude oil and natural gas of ¥1.5 billion.

(Millions of yen, %)

2014

2015

ChangeRatio¥1,334,626
858,754455,414
20,458490,417844,20928,20657,34525,048733,61050,735
17,462
9,228
10,320798—
12,92734,267
2,335
5,054
8,028
1,165
4,280
72
—
13,333750,078
563,137
186,941
3,250¥  183,691¥1,171,227
730,422421,860
18,945525,444645,783
23,23963,13924,519534,886
101,764
11,227
6,670
18,14627,52019,562
18,63996,627
2,947
13,444
19,449835—
6,258
35,132
18,562
540,023
464,426
75,597(2,223)¥    77,820¥(163,399)(128,332)(33,554)(1,513)35,027(198,426)(4,967)
5,794(529)(198,724)
51,029(6,235)(2,558)
7,826
26,722
19,562
5,712
62,360612
8,390
11,421(330)(4,280)6,186
35,132
5,229(210,055)(98,711)(111,344)(5,473)¥(105,871)(12.2)%(14.9)
(7.4)
(7.4)
7.1
(23.5)(17.6)
10.1(2.1)(27.1)
100.6(35.7)(27.7)
75.8
—
—
44.2
182.0
26.2
166.0
142.3
(28.3)(100.0)——39.2(28.0)(17.5)(59.6)—(57.6)%

Years ended March 31,

Net sales
Crude oil
Natural gas
Other
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Depreciation and amortization
Operating income
Other income
Interest income
Dividend income
Gain on sales of marketable securities
Gain on transfer of mining rights
Foreign exchange gain
Other
Other expenses
Interest expense
Equity in losses of affiliates
Provision for allowance for recoverable accounts under production sharing
Provision for exploration projects
Foreign exchange loss
Loss on disposal of fixed assets
Impairment loss
Other
Income before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests
Net income

Cost of sales

Other income

Cost of sales for the year ended March 31, 2015, increased by¥35.0 billion, or 7.1%, to ¥525.4 billion from ¥490.4 billion forthe year ended March 31, 2014. This was mainly due to thedepreciation of the Japanese yen against the U.S. dollar.

Other income for the year ended March 31, 2015, increased by¥51.0 billion, or 100.6%, to ¥101.8 billion from ¥50.7 billion forthe year ended March 31, 2014. This was mainly due to increases
in gain on transfer of mining rights and foreign exchange gain.

Exploration expenses

Other expenses

Exploration expenses for the year ended March 31, 2015,
decreased by ¥5.0 billion, or 17.6%, to ¥23.2 billion from ¥28.2
billion for the year ended March 31, 2014. This was mainly due toa decrease in exploration activities in the Middle East and Africa
region.

Selling, general and administrative expenses

Selling, general and administrative expenses for the year ended
March 31, 2015, increased by ¥5.8 billion, or 10.1%, to ¥63.1
billion from ¥57.3 billion for the year ended March 31, 2014. Thiswas mainly due to an increase in personnel expenses.

Depreciation and amortization

Operating income

As a result of the above, operating income for the year ended
March 31, 2015, decreased by ¥198.7 billion, or 27.1%, to ¥534.9
billion from ¥733.6 billion for the year ended March 31, 2014.

Income taxes

Total current income taxes and deferred income taxes for theyear ended March 31, 2015, decreased by ¥98.7 billion, or 17.5%,
to ¥464.4 billion from ¥563.1 billion for the year ended March 31,
2014. The Group pays the majority of its taxes outside Japan. In
addition to the high corporate tax rates imposed in a numberof regions, the Group is generally unable to deduct expenses
incurred in Japan for such taxes. Despite the positive effects
attributable to the application of the foreign tax credit system,
this situation resulted in a high effective income tax rate of 86.0%
for the year ended March 31, 2015.

6

Minority interests

Minority interests for the year ended March 31, 2015, decreasedby ¥5.5 billion to ¥(2.2) billion from ¥3.3 billion for the year ended
March 31, 2014.

Net income

As a result of the above, net income for the year ended March 31,
2015, decreased by ¥105.9 billion, or 57.6%, to ¥77.8 billion from
¥183.7 billion for the year ended March 31, 2014.

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

Depreciation and amortization for the year ended March 31,
2015, decreased by ¥0.5 billion, or 2.1%, to ¥24.5 billion from¥25.0 billion for the year ended March 31, 2014. This was
mainly due to a decrease in the depreciation of exploration anddevelopment rights for the ACG Oil Fields. The Group records
depreciation costs for production facilities that are covered byconcession agreements as cost of sales. In addition, under its
accounting treatment of the PSCs, the Group records capital
expenditures as “Recoverable accounts under produc tion
sharing” instead of capitalizing these costs within tangible fixed
assets and depreciating them. Costs that are recovered in any
given year based on the terms of the PSCs are included in thecost of sales.

Other expenses for the year ended March 31, 2015, increased by¥62.4 billion, or 182.0%, to ¥96.6 billion from ¥34.3 billion for theyear ended March 31, 2014. This was mainly due to the following
factors: posting impairment loss for certain projects due to adrop in oil prices and increases in provision for allowance forrecoverable accounts under production sharing and equity inlosses of affiliates.

057

FINANCIAL POSITION
Total assets as of March 31, 2015, increased by ¥461.0 billion,or 11.4%, to ¥4,499.2 billion from ¥4,038.1 billion as of March
31, 2014. Current assets increased by ¥202.2 billion, or 17.7%,
to ¥1,342.4 billion from ¥1,140.2 billion due to an increase in
cash and cash equivalents and others. Fixed assets increased by¥258.8 billion, or 8.9%, to ¥3,156.7 billion from ¥2,897.9 billion asof March 31, 2014, due to an increase in construction in progressand others.
Meanwhile, total liabilities increased by ¥168.3 billion, or
16.2%, to ¥1,210.5 billion from ¥1,042.1 billion as of March 31,
2014. Current liabilities decreased by ¥10.5 billion, or 2.8%,
to ¥365.2 billion from ¥375.7 billion as of March 31, 2014, due

to a decrease in income taxes payable and others. Long-term
liabilities increased by ¥178.8 billion, or 26.8%, to ¥845.2 billion
from ¥666.4 billion as of March 31, 2014, due to an increase inlong-term debt and others.
Net as s et s inc reas e d by ¥292.7 billio n, or 9.8%, to¥3,288.7 billion from ¥2,996.0 billion as of March 31, 2014. Total
shareholders’ equity increased by ¥51.8 billion, or 2.1%, to¥2,549.5 billion from ¥2,497.7 billion as of March 31, 2014. Total
accumulated other comprehensive income increased by ¥223.8
billion, or 76.3%, to ¥517.2 billion from ¥293.4 billion as of March
31, 2014, and minority interests increased by ¥17.1 billion, or 8.3%,
to ¥222.0 billion from ¥204.9 billion as of March 31, 2014.

INVESTMENT AND FUNDING— Investments in upstream oil and gas projects
Continuous exploration for new reserves of crude oil and natural
gas is essential for stable earnings of the Group. The informationin this section on upstream oil and gas investments is based on
the data reported by project operators relating to exploration
ex penditures, development ex penditures and oper ating
expenses. The Group’s expenditure categories are defined asfollows:• Exploration expenditures include the costs of exploratory
drilling and any geological or geophysical studies. The
costs of local personnel and office operations and related
administrative expenses are also included in this category if
a project (or contract area) is in the exploration phase.
• Development expenditures include the costs ofdevelopment drilling and any production facilities.
• Operating expenses include the costs of well operations,maintenance and the supervision of production activities.
This category also includes the administrative expenses forthe project (or contract area) if it contains a field in active
production and/or development.
• Discrepancies exist between the standards stipulated in

U.S. FASB Accounting Standards Codification Topic 932,
“Extractive Industries—Oil and Gas (Topic 932),” and boththe Group’s definitions of exploration and development
expenditures and the standards used in preparing thefollowing tables. The following is a par tial list of thediscrepancies between the Group’s accounting policies andTopic 932.
- Group expenditures relating to the PSC-governed joint
ventures where the Group is not the operator are disclosed
on a cash basis rather than an accrual basis as required by
Topic 932.
- The tables below have been prepared based on the costdefinitions used by operators in their reporting, which may
not be consistent with Topic 932.
- Topic 932 requires that administrative costs not directly
related to exploration and development ac tivities be
excluded from exploration and development expenditures,
whereas such administrative costs are not necessarily
excluded from those expenditures under the Group’s
accounting policies.

The table below shows the Group’s exploration and development costs and other expenditures (excluding capitalized interest costs
and asset retirement costs corresponding to asset retirement obligations capitalized under fixed assets) by segment for the years
ended March 31, 2014 and 2015.
(Millions of yen)

Year ended March 31, 2014

Japan

INPEX CORPORATION and Consolidated Subsidiaries
Exploration¥ 3,384
Development
1,071
Subtotal* 1
4,455
Equity-method Affiliates
Exploration—
Development—
Subtotal—
Other capital expenditures* 2
37,036¥41,491
Total* 3

Asia & Oceania

Eurasia(Europe & NIS)

Middle East &AfricaAmericasTotal¥ 36,689
338,123
374,812¥    107
58,80458,911¥16,590
50,041
66,631¥14,232
18,601
32,833¥ 71,002
466,640
537,642

—
1,517
1,517
388,271¥764,600

194
—
194
—
¥59,105

105
11,791
11,896—¥78,527

—
1,198
1,198
—
¥34,031299
14,506
14,805425,307¥977,754*1 Figures include an equity-method affiliate of Japan Oil Development Co., Ltd. (JODCO).
*2 Other capital expenditures include the construction costs of domestic gas infrastructure and the Groupʼs share of investment in the Ichthys downstream entity(Ichthys LNG Pty Ltd, an equity-method affiliate).
*3 The amount capitalized for the asset retirement costs corresponding to asset retirement obligations for the year ended March 31, 2014, was ¥10,651 million.

058

INPEX CORPORATION Annual Report 2015

(Millions of yen)

Year ended March 31, 2015

Japan

INPEX CORPORATION and Consolidated Subsidiaries
Exploration¥    519
Development
2,851
Subtotal* 1
3,370
Equity-method Affiliates
Exploration—
Development—
Subtotal—
Other capital expenditures* 2
27,016¥30,386
Total* 3

Asia & Oceania

Eurasia(Europe & NIS)

Middle East &AfricaAmericasTotal¥ 47,681
436,119
483,800¥ 2,839
45,65748,496¥ 1,982
74,38676,368¥19,628
22,912
42,540¥    72,649
581,925
654,574—963
963
348,112¥832,875

445
—
445
—
¥48,941

7
13,094
13,101—¥89,469

—
835
835
—
¥43,375

452
14,892
15,344375,128¥1,045,046*1 Figures include an equity-method affiliate of Japan Oil Development Co., Ltd. (JODCO).
*2 Other capital expenditures include the construction costs of domestic gas infrastructure, the Groupʼs share of investment in the Ichthys downstream entity(Ichthys LNG Pty Ltd, an equity-method affiliate) and others.
*3 The amount capitalized for the asset retirement costs corresponding to asset retirement obligations for the year ended March 31, 2015, was ¥60,888 million.

Total investments for the year ended March 31, 2015, increased by ¥67.3 billion, or 6.9%, to ¥1,045.0 billion (including ¥15.3 billion for
exploration and development by equity-method affiliates) from ¥977.8 billion for the year ended March 31, 2014. This was mainly due to anincrease in development expenditures for the Ichthys Project (including the downstream business) in the Asia & Oceania region.
The table below shows the Group’s operating expenses by segment for the years ended March 31, 2014 and 2015.
(Millions of yen, %)Years ended March 31,

2015

2014

INPEX CORPORATION and Consolidated SubsidiariesJapan¥ 10,286
Asia & Oceania
82,719
9,521
Eurasia (Europe & NIS)
Middle East & Africa
31,921
Americas
1,916   Subtotal
136,363
Equity-method Affiliates
Asia & Oceania
1,224—
Eurasia (Europe & NIS)
Middle East & Africa
7,156
Americas2,199
   Subtotal
10,579Total¥146,942

7.5%
60.7
7.0
23.4
1.4
100.0

¥ 11,075
104,938
13,38439,927
3,229
172,553

6.4%
60.8
7.8
23.1
1.9
100.0

11.6
—
67.6
20.8
100.0
—%

1,034
—
8,290
2,321
11,645¥184,198

8.9
—
71.2
19.9
100.0
—%

— Expenditures for acquisitions of upstream oil and gas projects

The table below shows the Group’s expenditures for acquisitions of upstream oil and gas projects by segment for the years ended
March 31, 2014 and 2015. Expenditures in this category include the costs of acquiring mining rights, exploration and development
rights, signing bonuses and any tangible fixed assets or recoverable accounts under production sharing gained through the acquisitionof interest in upstream oil and gas projects.
(Millions of yen, %)Years ended March 31,

2015
36.9%
2.1
—
61.0
100.0
—
—
—
—
—
—%

¥

—
—
—
18,424
18,424

—%
—
—
100.0
100.0

—
—
—
—
—
¥18,424

—
—
—
—
—
—%

Total expenditures on acquisitions of upstream oil and gas projects for the year ended March 31, 2015, decreased by ¥25.2 billion to¥18.4 billion from ¥43.6 billion for the year ended March 31, 2014, mainly due to decreases in the Asia & Oceania and Americas regions.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

INPEX CORPORATION and Consolidated Subsidiaries
Asia & Oceania¥16,091
913
Eurasia (Europe & NIS)
Middle East & Africa—
Americas26,643
   Subtotal
43,647
Equity-method Affiliates
Asia & Oceania—
Eurasia (Europe & NIS)—
Middle East & Africa—
Americas—   Subtotal—
Total¥43,647

2014059

— Analysis of recoverable accounts under production sharing
For upstream projects governed by the PSCs, the Group’s share of costs arising during the exploration, development and production
phases is capitalized under “Recoverable accounts under production sharing.” The following table shows the changes in the balance of“Recoverable accounts under production sharing” during the years ended March 31, 2014 and 2015.
(Millions of yen)

Years ended March 31,

Balance at beginning of the year
Add: Exploration costs
Development costs
Operating expenses
Other
Less: Cost recovery—capital expenditures
Cost recovery—operating expenditures
Other
Balance at end of the year
Allowance for recoverable accounts under production sharing at end of the year2014
¥ 590,566
42,086172,234
73,1799,386(67,073)(129,671)(4,717)685,990¥(123,484)

2015¥ 685,990
41,237
131,985
98,2507,332(75,586)(146,930)(38,987)
703,291¥(121,707)

The amount posted as “Cost recovery—operating expenditures”

increased compared with the year ended March 31, 2014. Thisin recoverable accounts under production sharing is greater

was mainly due to an increase in operating expenses in thethan that posted as operating expenses. Along with operating

Offshore Mahakam Block and the South Natuna Sea Block B.

expenses, this is because a por tion of the exploration andCost recovery for the year ended March 31, 2015, increased

development cos t s, which are incur red and recover ablecompared with the year ended March 31, 2014. This was mainly

within the year, is included in the “Cost recovery—operating

due to an increase in cost recovery in the Offshore Mahakam

expenditures” account.

Block and the ACG Oil Fields.

E xploration cos t s for the year ended March 31, 2015,

In addition, other deduction was mainly due to the decrease

decreased compared with the year ended March 31, 2014. Thisin recoverable accounts under production sharing related to thewas mainly due to a decrease in exploration expenditures in thebusiness withdrawal from certain exploration blocks.

Asia & Oceania region.

The allowance for recoverable accounts under production

Development costs for the year ended March 31, 2015,

sharing as of March 31, 2015, decreased compared with Marchdecreased compared with the year ended March 31, 2014. This31, 2014. This was mainly due to the business withdrawal fromwas mainly due to a decrease in development expenditures incer tain exploration blocks, despite additional provision for

the South Natuna Sea Block B.

allowance in connection with exploration expenditures.

Operating expenses for the year ended March 31, 2015,— Funding sources and liquidity
Oil and gas exploration and development projects, as well as the

The Ichthys downstream entity (Ichthys LNG Pty Ltd, anconstruction of gas infrastructure, require significant funding.

equity-method affiliate), as the borrower, has utilized external

The Group relies on cash flow derived from internal reserves,loans from export credit agencies and commercial banks for

together with external sources, to procure funds. The Group’s

project financing throughout the year ended March 31, 2015.

basic policy is to utilize internal cash flow and external equity

The Group’s basic liquidity policy is to maintain sufficientfinancing to fund exploration projects and to utilize internal cash

cash on hand at all times to fund expenditures for existing andflow and external loans to fund development projects and thenew oil and gas projects in a timely manner, while also keeping a

construction of gas infrastructure. The Group currently receives

cushion of liquidity to provide for steep falls in oil and gas prices.

loans from the Japan Bank for International Cooperation,

In line with this policy, excess cash reserves are invested in low-

Japanese commercial banks and others. The Japan Oil, Gas

risk, highly liquid financial instruments. The Group’s strategy is toand Metals National Corporation (JOGMEC) guarantee system

improve capital efficiency over the long term through businesscovers these loans. In addition, the Development Bank of Japan

expansion while continuing to maintain a sound financial positionand various Japanese commercial banks provide loans for thewith sufficient liquidity.

construction of domestic gas infrastructure.

060

INPEX CORPORATION Annual Report 2015

— Maturities of long-term debt
The aggregate annual maturities of long-term debt subsequent to March 31, 2015, are summarized as follows:(Millions of U.S. dollars and Millions of yen)
Long-term debt denominated inYears ending March 31,

U.S. dollars

Yen

Total yen equivalent

2016
2017
2018
2019
2020
2021 and thereafter
Total$   154.6
258.6
258.6
458.6
658.6
2,940.5$4,729.5¥   7,847
34,11910,245
9,818
25,46914,069¥101,567¥ 26,443
65,222
41,34964,976
104,681
367,723¥670,394— Cash flows
Cash flows for the years ended March 31, 2014 and 2015, are summarized as follows:(Millions of yen)

Years ended March 31,

Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents at end of the year2014
¥213,514(395,555)
48,961¥117,531

2015¥216,749(81,087)(4,178)¥260,978Net cash provided by operating activities

Net cash provided by (used in) financing activities

Net cash provided by operating activities for the year ended
March 31, 2015, was ¥216.7 billion, an increase of ¥3.2 billion
from ¥213.5 billion for the year ended March 31, 2014. This was
mainly due to decreases in income taxes paid and accounts
receivable-other, despite a decrease in income before income
taxes and minority interests.

Net cash used in financing activities for the year ended March
31, 2015, was ¥4.2 billion. This was mainly due to a decrease inproceeds from long-term debt. Meanwhile, net cash provided byfinancing activities for the year ended March 31, 2014, was ¥49.0
billion.

Net cash used in investing activities
Net cash used in investing activities for the year ended March 31,
2015, was ¥81.1 billion, a decrease of ¥314.5 billion from ¥395.6
billion for the year ended March 31, 2014. This was mainly due
to an increase in proceeds from time deposits and a decreasein payments for long-term time deposits, despite an increase inpayments for purchases of tangible fixed assets.

CONSOLIDATED FINANCIAL FORECAST FOR THE YEAR ENDING
MARCH 31, 2016 (Announced on August 7, 2015)
and net income attributable to owners of parent for the year
ending March 31, 2016 are expected to decrease, while thenegative effect of decline of oil prices on the existing projects
is forecasted to exceed the positive contribution from the newly
acquired project to these incomes.
The aforementioned forecasts are based on an average oil
price of US$60.9 per barrel for Brent crude oil and an averageexchange rate of ¥120.4 to the U.S. dollar for the year ending
March 31, 2016.
*Effective from the beginning of the year ending March 31, 2016,
the Company will apply the “Revised Accounting Standard forBusiness Combinations” and other standards (see p. 68) andrename “Income before income taxes and minority interests”
to “Income before income taxes”, and “Net income” to “Net
income attributable to owners of parent”, respectively.
INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Consolidated net sales for the year ending March 31, 2016, areexpected to increase by ¥9.8 billion, or 0.8%, to ¥1,181.0 billion
compared with the year ended March 31, 2015. Operating
income for the year ending March 31, 2016, is expected todecrease by ¥63.9 billion, or 11.9%, to ¥471.0 billion comparedwith the year ended March 31, 2015. Income before income
taxes* is expected to decrease by ¥61.0 billion, or 11.3%, to¥479.0 billion compared with the year ended March 31, 2015.
Net income attributable to owners of parent* is expected todecrease by ¥7.8 billion, or 10.0%, to ¥70.0 billion compared withthe year ended March 31, 2015.
Net sales for the year ending March 31, 2016 are expected
to increase due to the forecasted increase in sales volumeof crude oil and others contributed from the newly acquired
project, despite a decrease in the forecasted decline in the
crude oil price compared with the year ended March 31, 2015.
Meanwhile, operating income, income before income taxes,

061

Consolidated Balance Sheet
INPEX CORPORATION and Consolidated Subsidiaries
March 31, 2015

Thousands of
U.S. dollars(Note 3)

Millions of yen

ASSETS
Current assets
Cash and cash equivalents
Time deposits (Note 13)
Accounts receivable—trade (Note 4)
Marketable securities (Notes 4 and 5)
Inventories
Deferred tax assets (Note 7)
Accounts receivable—other (Note 4)
OtherLess allowance for doubtful accounts
Total current assets
Tangible fixed assets
Buildings and structures (Note 6)
Wells (Note 6)
Machinery, equipment and vehicles (Note 6)Land
Construction in progress
Other
Less accumulated depreciation and amortization
Total tangible fixed assets
Intangible assets
Goodwill (Note 18)
Exploration and development rights
Mining rights
Other
Total intangible assets
Investments and other assets
Recoverable accounts under production sharing
Less allowance for recoverable accounts
under production sharing
Investment securities (Notes 4, 5 and 6)
Long-term loans receivable
Long-term time deposits (Note 13)
Deferred tax assets (Note 7)
Other investments (Note 6)
Less allowance for doubtful accounts
Less allowance for investments in exploration
Total investments and other assets
Total fixed assets
Total assets
See accompanying notes to consolidated financial statements.

062

INPEX CORPORATION Annual Report 2015

2014

2015

2015

¥ 117,531¥ 260,978$ 2,169,934

555,948661,706

5,501,838

110,396

77,209641,964

177,709

162,289

1,349,372

25,48531,652

263,175

7,745

4,956

41,207

121,121110,315917,228

41,913

46,211

384,227(17,644)(12,906)(107,309)

1,140,204

1,342,410

11,161,636

294,621300,484

2,498,412

264,439

291,524

2,423,913

356,157

366,4223,046,662

19,737

19,870165,211626,520

1,173,409

9,756,456

29,05029,143242,313

1,590,524

2,180,852

18,132,967(638,745)(683,230)(5,680,801)

951,779

1,497,622

12,452,166

81,08074,319617,935

125,622

134,810

1,120,895

221,411238,316

1,981,508

11,066

11,325

94,163439,179

458,770

3,814,501

685,990

703,291

5,847,601(123,484)(121,707)(1,011,948)

562,506

581,584

4,835,653

476,407284,090

2,362,102

33,092

126,517

1,051,941

364,103120,270

1,000,000

13,822

22,849189,981

61,15976,168633,308(885)(8,399)(69,834)(3,227)(2,727)(22,674)

1,506,977

1,200,352

9,980,477

2,897,935

3,156,744

26,247,144¥4,038,139¥4,499,154$37,408,780

Thousands of
U.S. dollars(Note 3)

Millions of yen

LIABILITIES AND NET ASSETS

2014

2015

¥

¥

2015

Current liabilities
Accounts payable—trade
Short-term borrowings and current portion of
long-term debt (Notes 4, 6 and 13)
Income taxes payable (Note 7)

46,811
21,95453,474$444,616

33,206

276,096

91,19860,185500,416

Accounts payable—other (Note 6)

131,905

113,568

944,275

Provision for exploration projects

9,817

9,492

78,922

111

70

582

Accrued bonuses to officers
Asset retirement obligations (Note 17)

2,353

1,094

9,096

Other (Note 7)

71,521

94,123

782,598

375,670

365,2123,036,601

Long-term debt (Notes 4, 6, 12 and 13)

561,674

643,951

5,354,211

Deferred tax liabilities (Note 7)

54,96077,918647,859

Provision for loss on business

6,978

9,080

75,497

Total current liabilities

Long-term liabilities

Accrued special repair and maintenance

234

228

1,896

Liability for retirement benefits (Note 16)

7,793

6,700

55,708Asset retirement obligations (Note 17)25,954105,234

874,981

Other (Note 6)

8,839

2,127

17,685

Total long-term liabilities

666,432

845,238

7,027,837

1,042,102

1,210,450

10,064,438

Common stock
Authorized: 2014 — 3,600,000,001 shares2015 — 3,600,000,001 shares
Issued:2014 — 1,462,323,601 shares2015 — 1,462,323,601 shares
Capital surplus

290,810

290,8102,417,976

679,288679,288

5,648,025

Retained earnings
Less: Treasury stock 2014 — 1,966,400 shares2015 — 1,966,400 shares
Total shareholders’ equity

1,532,876

1,584,645

13,175,730(5,248)(5,248)(43,635)

2,497,726

2,549,495

21,198,096

44,73746,049382,880

Total liabilities

Net assets (Note 10)

Unrealized holding gain on securities(17,579)(36,423)(302,843)

Translation adjustments

266,225

507,560

4,220,171

Total accumulated other comprehensive income

293,383

517,186

4,300,208

Minority interests

204,928

222,023

1,846,038

2,996,037

3,288,704

27,344,342¥4,038,139¥4,499,154$37,408,780

Total net assets
Contingent liabilities (Note 20)
Total liabilities and net assets

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Unrealized gain (loss) from hedging instruments (Note 12)063

Consolidated Statement of Income and Consolidated Statement ofComprehensive Income
Consolidated Statement of Income
INPEX CORPORATION and Consolidated Subsidiaries
For the year ended March 31, 2015

Thousands of
U.S. dollars(Note 3)

Millions of yen

Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses (Notes 14, 16 and 18)
Depreciation and amortization
Operating income
Other income
Interest income
Dividend income
Gain on sales of marketable securities
Gain on transfer of mining rights
Foreign exchange gain
Other
Total other income
Other expenses
Interest expense
Equity in losses of affiliates
Provision for allowance for recoverable
accounts under production sharing
Provision for exploration projects
Foreign exchange loss
Loss on disposal of fixed assets
Impairment loss (Note 15)
Other
Total other expenses
Income before income taxes and minority interests
Income taxes (Note 7)
Current
Deferred
Total income taxes
Income before minority interests
Minority interests
Net income

2014

2015

2015

¥1,334,626
490,417844,20928,20657,34525,048733,610¥1,171,227
525,444645,783
23,23963,13924,519534,886$9,738,314
4,368,870
5,369,444
193,224
524,977
203,866
4,447,377

17,462
9,228
10,320798—
12,92750,735

11,227
6,670
18,14627,52019,562
18,639101,764

93,34855,459150,877
228,818
162,651
154,976
846,129

2,335
5,054

2,947
13,44424,503
111,782

8,028

19,449161,711

1,165
4,280
72
—
13,33334,267750,078

835
—
6,258
35,132
18,562
96,627
540,023

6,943—
52,033292,109154,336
803,417
4,490,089

514,016
49,121
563,137
186,941
3,250¥  183,691

448,659
15,767464,426
75,597(2,223)¥    77,820

3,730,431
131,097
3,861,528
628,561(18,483)$  647,044

Consolidated Statement of Comprehensive Income
INPEX CORPORATION and Consolidated Subsidiaries
For the year ended March 31, 2015
Thousands of
U.S. dollars(Note 3)

Millions of yen

Income before minority interests
Other comprehensive income
Unrealized holding gain on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Share of other comprehensive income of affiliates accounted for by
the equity-method
Total other comprehensive income (Note 8)
Comprehensive income (Note 8)
Total comprehensive income attributable to:Shareholders of INPEX CORPORATION
Minority interests
See accompanying notes to consolidated financial statements.

064

INPEX CORPORATION Annual Report 2015

2014

2015

2015

¥186,941¥ 75,597$  628,561

9,982(20,888)
176,3111,315—
244,018

10,933—
2,028,918(6,674)(13,951)(115,997)

158,731345,672

231,382306,979

1,923,854
2,552,415

335,737¥   9,935

301,622¥   5,357

2,507,874$    44,541

Consolidated Statement of Changes in Net Assets
INPEX CORPORATION and Consolidated Subsidiaries

For the year ended March 31, 2014
Balance as of April 1, 2013
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2014

For the year ended March 31, 2014
Balance as of April 1, 2013
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2014

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

Treasury stock¥(5,248)

Total shareholders’ equity¥2,339,957

Common stock¥290,810

Capital surplus¥679,288

290,810679,288

1,375,107(25,922)
183,691(5,248)2,339,957(25,922)
183,691—¥290,810—¥679,288

157,769¥1,532,876—¥(5,248)

157,769¥2,497,726——

Millions of yen
Accumulated other comprehensive income
Unrealized holding Unrealized gain (loss) fromTranslation
Total accumulated other
Minority interests
gain on securities
hedging instruments
adjustments
comprehensive income¥34,742¥ 16,244¥ 90,350¥141,336¥189,691

Total net assets¥2,670,984—

34,742

16,24490,350141,336

189,691

2,670,984(25,922)
183,691

9,995(33,823)

175,875

152,047

15,237167,284

9,995¥44,737(33,823)¥(17,579)

175,875¥266,225

152,047¥293,383

15,237¥204,928

325,053¥2,996,037

Millions of yen
Shareholders’ equity
Retained earnings¥1,532,876

Treasury stock¥(5,248)

Total shareholders’ equity¥2,497,726

Common stock¥290,810

Capital surplus¥679,288

290,810679,288

1,533,112(26,287)
77,820(5,248)2,497,962(26,287)
77,820—¥290,810—¥679,288

51,533¥1,584,645—¥(5,248)

51,533¥2,549,495

236

236

Millions of yen
Accumulated other comprehensive income
Unrealized holding Unrealized gain (loss) fromTranslation
Total accumulated other
Minority interests
gain on securities
hedging instruments
adjustments
comprehensive income¥44,737¥(17,579)¥266,225¥293,383¥204,928

Total net assets¥2,996,037
236

44,737(17,579)

266,225

293,383

204,928

2,996,273(26,287)
77,8201,312(18,844)

241,335

223,803

17,095

240,898

1,312¥46,049(18,844)¥(36,423)

241,335¥507,560

223,803¥517,186

17,095¥222,023

292,431¥3,288,704

Common stock$2,417,976

Thousands of U.S. dollars (Note 3)
Shareholders’ equity
Capital surplus
Retained earnings
Treasury stock$5,648,025$12,745,290$(43,635)

Total shareholders’ equity$20,767,656

1,962

1,962

2,417,976

5,648,025

12,747,252(218,566)
647,044(43,635)

20,769,618(218,566)
647,044—$2,417,976—$5,648,025

428,478$13,175,730—$(43,635)

428,478$21,198,096

Thousands of U.S. dollars (Note 3)
Accumulated other comprehensive income
Unrealized holding Unrealized gain (loss) fromTranslation
Total accumulated other
Minority interests
gain on securities
hedging instruments
adjustments
comprehensive income$371,971$(146,162)$2,213,561$2,439,370$1,703,899

6

Total net assets$24,910,925
1,962

371,971(146,162)

2,213,561

2,439,370

1,703,899

24,912,887(218,566)
647,044

10,909(156,681)

2,006,610

1,860,838

142,139

2,002,977

10,909$382,880(156,681)$(302,843)

2,006,610$4,220,171

1,860,838$4,300,208

142,139$1,846,038

2,431,455$27,344,342

Financial &Corporate Information

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

Millions of yen
Shareholders’ equity
Retained earnings¥1,375,107

See accompanying notes to consolidated financial statements.

INPEX CORPORATION Annual Report 2015065

Consolidated Statement of Cash Flows
INPEX CORPORATION and Consolidated Subsidiaries
For the year ended March 31, 2015

Millions of yen

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of goodwill
Provision for allowance for recoverable accounts under
production sharing
Provision for exploration projects
Other provisions
Liability for retirement benefits
Interest and dividend income
Interest expense
Foreign exchange loss (gain)
Equity in (earnings) losses of affiliates
Gain on transfer of mining rights
Loss (Gain) on sales of marketable securities
Recovery of recoverable accounts under production sharing(capital expenditures)
Recoverable accounts under production sharing(operating expenditures)
Accounts receivable—trade
Inventories
Accounts payable—trade
Accounts receivable—otherAccounts payable—other
Advances received
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for time deposits
Proceeds from time deposits
Payments for long-term time deposits
Proceeds from long-term time deposits
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for purchases of intangible assets
Proceeds from sales and redemptions of marketable securities
Payments for purchases of investment securities
Proceeds from sales and redemptions of investment securities
Investment in recoverable accounts under production sharing(capital expenditures)
Decrease (increase) in short-term loans receivable
Long-term loans madeCollection of long-term loans receivable
Payments for purchase of mining rights
Proceeds from transfer of mining rights
Other
Net cash used in investing activities
Cash flows from financing activities
Increase in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from minority interests for additional shares
Cash dividends paid
Dividends paid to minority shareholders
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
See accompanying notes to consolidated financial statements.

066

INPEX CORPORATION Annual Report 2015

Thousands of
U.S. dollars(Note 3)

2014

2015

2015

¥ 750,078
50,917—6,761¥ 540,023
52,52035,132
6,761$ 4,490,089
436,684
292,10956,215

14,883

20,307

168,845(17,318)
5,024
(777)
(26,691)
2,335
14,105
5,053(798)(10,335)

(600)
3,419
(873)
(17,896)
2,947
3,973
13,444(27,520)(18,146)(4,989)28,428(7,259)(148,798)
24,50333,034
111,782(228,818)(150,877)

67,07375,586

628,469(60,491)(60,764)(505,230)

6,277(10,014)
5,413(35,288)(18,142)
2,168
5,886
756,119
26,932(2,381)(567,156)
213,514

25,202(797)
6,310(1,440)(11,247)(126)
23,580669,795
28,194(2,376)(478,864)
216,749

209,545(6,627)52,465(11,973)(93,514)(1,047)
196,059
5,569,095
234,423(19,756)(3,981,575)
1,802,187(211,332)
276,248(484,081)
130,757(323,651)
677(6,171)
285,452(24,637)
62,433(326,026)
698,139(112,181)—(448,381)
245(15,446)
214,527(26,767)
68,938(2,710,784)
5,804,764(932,743)—(3,728,120)
2,037(128,428)
1,783,712(222,558)
573,194(104,073)(70,430)(585,599)(4,187)(37,158)
75,464(42,734)
797
10,641(395,555)(3,825)(111,388)260(18,424)
59,406
10,266(81,087)(31,804)(926,149)
2,162(153,189)
493,939
85,358(674,208)

2,691
74,742(7,760)10,289(25,935)(4,992)(74)
48,96150,752(82,328)
199,859¥ 117,531

1,490
27,713(18,684)
16,730(26,288)(4,992)(147)(4,178)
11,963
143,447
117,531¥ 260,97812,389230,423(155,351)
139,104(218,575)(41,507)(1,222)(34,739)
99,468
1,192,708
977,226$ 2,169,934

Notes to Consolidated Financial Statements
INPEX CORPORATION and Consolidated Subsidiaries

1. BASIS OF PRESENTATIONINPEX CORPORATION (the “Company“) is primarily engaged in the
research, exploration, development and production of crude oil andnatural gas.
The Company and its domestic subsidiaries maintain theiraccounting records and prepare their financial statements inaccordance with accounting principles generally accepted in Japan.
The accompanying consolidated financial statements have been
prepared by using the accounts of foreign consolidated subsidiaries
prepared in accordance with International Financial ReportingStandards, or IFRS or the accounting principles generally accepted in

the United States, or U.S. GAAP as adjusted for certain items.
The accompanying consolidated financial statements havebeen prepared in accordance with accounting principles generally
accepted in Japan, which may differ in certain material respects fromIFRS or U.S. GAAP, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan.
The Company has made certain reclassifications of the previous
years' consolidated financial statements to conform to thepresentation used for the year ended March 31, 2015.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of consolidation and accounting forinvestments in affiliates

The accompanying consolidated financial statements include theaccounts of the Company and companies controlled directly or
indirectly by the Company. Companies over which the Company
exercises significant influence in terms of their operating and financial
policies are included in the consolidated financial statements on an
equity basis. All significant intercompany balances and transactions
are eliminated in consolidation. Further, certain companies that do
not have significant impact on the consolidated financial statements,
are not consolidated or accounted for by the equity-method.
For the 49 companies for which the closing date differed from theconsolidated closing date, including but not limited to, INPEX Sahul,Ltd. and INPEX Masela, Ltd., the financial statements for the year
ended December 31 were used. However, the necessary adjustments
have been made to the financial statements of those companies toreflect any significant transactions made between the Company's
closing date and that of the consolidated subsidiaries. For the 10companies, including but not limited to, Japan Oil Development,
Co., Ltd., INPEX Southwest Caspian Sea, Ltd., INPEX North CaspianSea, Ltd., INPEX Holdings Australia Pty Ltd, and INPEX Ichthys Pty
Ltd, the financial statements for the year ended on the consolidated
closing date were used, even though their closing date is December
31.
The excess of cost over underlying net assets excluding minority
interests at fair value as of the date of acquisition is accounted for as
goodwill and amortized over 20 years on a straight-line method.

(b) Cash equivalents

All highly liquid investments with a maturity of three months or lesswhen purchased are considered cash equivalents, including shortterm time deposits with original maturities of three months or less.

(c) Foreign currency translation(d) Securities

In general, securities are classified into three categories: trading,held-to-maturity or other securities. Securities held by the Company
and its subsidiaries are all classified as other securities. Other
securities with a determinable market value are mainly stated at fair(e) Derivatives

Derivatives are stated at fair value.

(f) Inventories

Overseas inventories are carried mainly at cost, determined by theaverage cost method (balance sheet value is carried at the lowerof cost or market). Domestic inventories are carried mainly at cost,
determined by the moving-average method (balance sheet value iscarried at the lower of cost or market).

(g) Allowance for doubtful accounts

The allowance for doubtful accounts is provided at an amountdetermined based on the historical experience of bad debt withrespect to ordinary receivables, plus an estimate of uncollectible
amounts determined by reference to specific doubtful receivablesfrom customers experiencing financial difficulties.

(h) Recoverable accounts under production
sharing and related allowance

Cash investments made by the Company during an exploration,
development and production project under a production sharing
contract are recorded as “Recoverable accounts under production
sharing“ so long as they are recoverable under the terms of therelevant contract. When the Company receives crude oil andnatural gas in accordance with the relevant contract, an amountcorresponding to the purchase costs of the products (i.e., a cost
recovery portion of the investments) is released from this account.
Because these investments are recoverable only where commercial
oil or gas is discovered, an allowance for recoverable accounts
under production sharing is provided for probable losses oninvestments made during the exploration stage under production
sharing contracts arising from the failure to discover commercial oil
and gas. In light of this uncertainty, an allowance for recoverable
accounts under production sharing is provided for probable losses ondevelopment investment individually estimated for each project.

(i) Allowance for investments in exploration

The allowance for investments in exploration is provided for future
potential losses on investments in exploration companies at an
estimated amount based on the net assets of the investees.

(j) Tangible fixed assets (except leased assets)

Depreciation of overseas mining facilities is mainly computed by theunit-of-production method.
For other tangible fixed assets, the straight-line method ofdepreciation is applied. The useful lives of fixed assets are based on
the estimated useful lives of the respective assets.

(k) Intangible assets (except leased assets)

Exploration and development rights at the exploration stage are

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the exchange rates prevailing at the balance
sheet date. All revenues and expenses associated with foreign
currencies are translated at the rates of exchange prevailing whensuch transactions were made. The resulting exchange gain or loss iscredited or charged to income.
The assets and liability accounts of overseas subsidiaries aretranslated into yen at the exchange rates prevailing at the balance
sheet date. The revenue and expense accounts of the overseas
subsidiaries are translated into yen at the average rates of exchange
during the period. The components of net assets excluding minority
interests are translated at their historical exchange rates. The
differences arising from the translation are presented as translation
adjustments and minority interests in the accompanying consolidated
financial statements.

value with any changes in unrealized holding gain or loss, net ofthe applicable income taxes, included directly in net assets. Other
securities without a determinable market value are stated at cost.
Cost of securities sold is determined by the moving average method.

067

fully amortized in the year such rights are acquired, and those at the
production stage are amortized by the unit-of-production method.
Mining rights are amortized mainly by the unit-of-production
method.
Other intangible assets are amortized by the straight-line method.
Capitalized computer software costs are amortized by the straightline method over a period of 5 years.

(l) Leased assets

Leased assets are amortized by the straight-line method over thelease period assuming no residual value.

(m) Provision for exploration projects

Provision for exploration projects is provided for future expendituresof consolidated subsidiaries at the exploration stage based on aschedule of investments in exploration.

(n) Accrued bonuses to officers

Accrued bonuses to officers are provided at the expected payment
amount for the fiscal year.

(o) Provision for loss on business

Provision for loss on business is provided for future potential
losses on oil and gas development, production and sales businessindividually estimated for each project.

(p) Accrued special repair and maintenanceAccrued special repair and maintenance are provided for planned
major repair and maintenance activities on tanks in certain
subsidiaries at amounts accumulated through the next activity.

(q) Accounting for retirement benefits(Method of attributing expected retirement benefits to proper
periods)
When calculating retirement benefit obligations, the benefit formula
method is used for attributing expected retirement benefits toperiods through March 31, 2015. Because certain subsidiaries areclassified as small enterprises, a simplified method (the amountwhich would be required to be paid if all active employees voluntarily
terminated their employment as of the balance sheet date) is applied
for the calculation of the retirement benefit obligation for thosesubsidiaries.
(Method of recognizing for actuarial differences)
Actuarial gains and losses are charged or credited to income as
incurred.

(r) Asset retirement obligations

Asset retirement obligations are recorded by a reasonable estimateof the present value of retirement costs incurred upon termination of
the operation and production with respect to oil and gas production
facilities, based on the oil and gas contracts or laws and regulations
within the countries in which the Company operates or has working
interests.

(s) Hedge accounting

The special treatment is applied to the interest rate swaps that meetcertain criteria. For certain equity-method affiliates, the deferredhedge accounting method is adopted.
In addition, derivative transactions are limited to the scope of
actual demand, and the Company does not engage in speculative
derivative transactions.

(t) Research and development expenses

Research and development expenses are charged to income as
incurred.

(u) Income taxes

Deferred tax assets and liabilities are determined based on the

differences between financial reporting and the tax bases of theassets and liabilities and are measured using the enacted tax rates
and laws which will be in effect when the differences are expected toreverse.

(v) Adoption of new accounting standard

Effective the year ended March 31, 2015, the Company has
applied provisions described in the main clause of Section 35 of
the “Accounting Standard for Retirement Benefits“ (AccountingStandards Board of Japan Statement No.26, issued on May 17, 2012)
and the main clause of Section 67 of the “Guidance on AccountingStandard for Retirement Benefits“ (ASBJ Guidance No.25, issued
on March 26, 2015) and has changed the calculation methods for
retirement benefit obligations and service costs. The method of
attributing expected retirement benefits to periods has been revised
from the straight-line method to the benefit formula method, andthe method of determining the discount rate has been revised froma method based on an approximation of the employees' averageremaining service period to a method of using a single weighted
average discount rate reflecting the estimated payment period andthe amount for each estimated payment period of the retirement
benefit.
In accordance with transitional accounting treatments as stated in
Section 37 of the Accounting Standard, the impact of the changes
in calculation methods for retirement benefit obligations and service
costs has been recognized as an adjustment to retained earnings at
the beginning of the year ended March 31, 2015.
As a result, liability for retirement benefits decreased by ¥246
million ($2,045 thousand) while retained earnings increased by¥236 million ($1,962 thousand) as of April 1, 2014. The impact on
operating income and income before income taxes and minority
interests for the year ended March 31, 2015 was immaterial.
The impact on amounts per share was immaterial.

(w) Standards issued but not effective• “Revised Accounting Standard for Business Combinations“ (ASBJ
Statement No.21, issued on September 13, 2013)• “Revised Accounting Standard for Consolidated Financial
Statements“ (ASBJ Statement No.22, issued on September 13,
2013)• “Revised Accounting Standard for Business Divestitures“ (ASBJ
Statement No.7, issued on September 13, 2013)• “Revised Accounting Standard for Earnings Per Share“ (ASBJ
Statement No.2, issued on September 13, 2013)• “Revised Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business Divestitures“(ASBJ Guidance No.10, issued on September 13, 2013)• “Revised Guidance on Accounting Standard for Earnings Per Share“(ASBJ Guidance No.4, issued on September 13, 2013)(Overview)
Revisions of these accounting standards mainly apply to (i) the
accounting treatment of any changes in a parent’s ownership interestin a subsidiary when the parent retains control over the subsidiary, (ii)the accounting for acquisition-related costs, (iii) the presentation of
net income, the change of name from “minority interests“ to “noncontrolling interests“ and (iv) the transitional treatments for theseaccounting standards.
(Scheduled Effective Date)
The revised accounting standards and guidance are scheduled totake effect from the beginning of the year ending March 31, 2016.
The transitional treatment will be applied to business combinations
executed at or after the beginning of the year ending March 31,
2016.
(The impact of the adoption of the revised accounting standards andguidance)
The impact of the adoption of revised accounting standards andguidance on consolidated financial statements are now underevaluation.

3. U.S. DOLLAR AMOUNTS
The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only, at¥120.27=US$1.00, the approximate exchange rate in effect as of March 31, 2015. This translation should not be construed as a representationthat yen have been, could have been, or could in the future be, converted into U.S. dollars at the above or any other rate.

068

INPEX CORPORATION Annual Report 2015

4. STATUS OF FINANCIAL INSTRUMENTS(a) Policy regarding financial instruments

The Company raises funds for oil and gas development andproduction, construction or expansion of gas infrastructure
primarily from cash flow on hand and from bank loans. Oil and gas
development projects are primarily funded from long-term loansthat the Company has secured from the Japan Bank for International
Cooperation, Japanese commercial banks and others. Japan Oil,Gas and Metals National Corporation has provided guarantees forthe principal on certain outstanding amounts of the Company's
long-term loans. The Development Bank of Japan and Japanesecommercial banks have provided long-term loans for the construction
or expansion of domestic gas infrastructure. The Company generally
borrows loans with variable interest rates, while some loans are with afixed interest rate depending on the nature of each project.
Regarding the financing policy, the Company manages funds
mainly from deposits and government bonds, which are considered
to be of low-risk and high-liquidity. The Company limits the use ofderivative transactions for managing risks of forecasted transactions
and portfolio assets, and does not engage in speculative derivativetransactions.

(b) Details of financial instruments,
associated risks and risk management(Credit risk related to trade receivables)

Trade receivables such as accounts receivable-trade and accounts
receivable-other are comprised mainly from sales of crude oil andnatural gas. Main trading partners are national oil companies, major
oil companies and others. In line with the criteria for trading andcredit exposure management, the Company properly analyzes thestatus of trading partners for early detection and reduction of default
risks.

(Market price fluctuation risk related to securities)

For marketable securities and investment securities exposed tomarket price fluctuation risk, analysis of market values is regularly
reported to the Executive Committee. For shares of stock, theCompany mainly holds shares of trading partners and others
to establish close and smooth relationships for the purpose ofmaintaining a medium- to long-term stable business. A part ofthese shares are held for the purpose of investment. As for bonds,
the Company mainly holds bonds with short-term maturities byconsidering medium- to long-term cash outflow forecast and market
price fluctuation risk.

(Interest rate fluctuation risk related to short-term loans andlong-term debt)

Loans are mainly used to fund oil and natural gas development
projects and construction or expansion of domestic gas infrastructure
and others. The borrowing period is determined considering thefinancial prospects of the project and useful lives of the facilities.
Loans with variable interest rates are exposed to interest rate
fluctuation risk, however, the Company analyzes the impact of interest
rate fluctuation at the time of borrowing and on an annual basis, andleverages fixed-rate-loans or interest rate swaps as necessary.

(Exchange rates fluctuation risk related to assets and liabilities
in foreign currencies)

As most of the Company’s business is conducted overseas, theCompany is exposed to exchange rate fluctuation risk due to a large
portion of monetary assets and liabilities held in foreign currencies
such as cash and deposits, accounts receivables and loans requiredin overseas projects. As a result of fiscal year-end conversion,
yen appreciation causes a foreign exchange loss on assets and aforeign exchange gain on liabilities while yen depreciation causes
a foreign exchange gain on assets and a foreign exchange loss
on liabilities. For this reason, the Company endeavors to reduce
exchange rate fluctuation risk by maintaining the position between
assets and liabilities in foreign currencies. In addition to planned
expenditures in foreign currencies on the Ichthys Project and others,
the Company manages exchange rate fluctuation risk throughderivative transactions such as foreign exchange forwards and others
as necessary.

(Management of derivative transactions)

For the above derivative transactions, the Company follows
its derivative transactions management outline. For derivativetransactions exposed to market price fluctuation, market values ofthese derivatives are regularly reported to the Executive Committee,
and the Company only transacts with financial institutions with highcredit ratings to reduce counterparty risks for the use of derivatives.

(Management of liquidity risk related to financing)

The finance and accounting division controls cash management
based on a monthly financing plan prepared by each project divisionand secures sufficient liquidity on hand to prepare for liquidity risk.

5. SECURITIES(a) Information regarding other securities as of March 31, 2014 and 2015 is as follows:
Millions of yen
March 31, 2014

Acquisition cost

Carrying value

Securities with carrying values exceeding their acquisition costs¥ 16,699¥ 29,652
Stock
Bonds:
166,875
167,554
Public bonds
70,31670,353
Corporate bonds
25,09931,444
Other debt securities
139,524
169,346
Other
418,513468,349
Subtotal
Securities with acquisition costs exceeding their carrying values
35,69032,324Stock
Bonds:
2,025
2,025
Public bonds
37,71534,349Subtotal¥456,228¥502,698
Total

Unrealized gain
(loss)¥12,953
679
37
6,345
29,822
49,836(3,366)(0)(3,366)¥46,470

6
Financial &Corporate Information

INPEX CORPORATION Annual Report 2015069

Millions of yen
March 31, 2015

Acquisition cost

Carrying value

Thousands of U.S. dollars
Unrealized gain
Carrying value(loss)

Unrealized gain
(loss)

Acquisition cost

¥17,458$  287,886$  433,042$145,156

65
13
5,694
33,24256,472259,233
326,765
104,340
611,092
1,589,316

259,774
326,873
151,684
887,486
2,058,859

541
108
47,344
276,394
469,543(2,390)147,709

127,837(19,872)(2)(2,392)¥54,080

146,338
294,047$1,883,363

146,321274,158$2,333,017(17)(19,889)$449,654

Securities with carrying values exceeding their acquisition costs¥ 34,624¥ 52,082
Stock
Bonds:
31,17831,243Public bonds
39,30039,313
Corporate bonds
12,54918,243
Other debt securities
73,496
106,738
Other
191,147
247,619
Subtotal
Securities with acquisition costs exceeding their carrying values
17,765
15,375Stock
Bonds:
17,60017,598
Corporate bonds
35,36532,973
Subtotal¥226,512¥280,592
Total(b) Information regarding sales of securities classified as other securities for the years ended March 31, 2014 and 2015 is as follows:Year ended March 31, 2014

Proceeds
from sales

Millions of yen
Gain on
sales

Bonds
Public bonds
Other
Total

¥ 72,563
76,307¥148,870¥   182
10,307¥10,489

Year ended March 31, 2015

Proceeds
from sales

Millions of yen
Gain on
sales

Bonds
Public bonds
Other
Total

¥ 91,741
84,072¥175,813¥   358
18,053¥18,411

Loss on
sales

¥—
—
¥—

Proceeds
from sales

Thousands of U.S. dollars
Gain onsales$  762,792
699,027$1,461,819$   2,977
150,104$153,081

Loss on
sales

¥9
—
¥9

Loss on
sales

$75
—
$75

(c) Components of securities for which it is extremely difficult to determine fair value as of March 31, 2014 and 2015 are summarized as follows:
Millions of yen
March 31,

Other securities
Unlisted securities
Preferred securities
Stocks of subsidiaries and affiliates
Total

Thousands of U.S. dollars

2014

2015

2015

¥ 33,842
5,000
112,576¥151,418¥ 33,410—
132,377¥165,787$  277,792—
1,100,665$1,378,457

These securities are not included in (a) as they have no quoted market prices and it is extremely difficult to determine their fair value. For sharesof exploration companies among unlisted securities and stocks of subsidiaries and affiliates, an allowance for investments in exploration isprovided at an estimated amount based on the financial position of the investees.
(d) Redemption schedule for securities with maturity dates classified as other securities as of March 31, 2015 is as follows:
Millions of yen
March 31, 2015

Bonds
Public bonds
Corporate bonds
Other debt securities
Other
Total

070

1 year or lessMore than 1
year but lessthan 5 years¥ 17,000
35,80018,04166,096¥136,937¥14,000
21,100——¥35,100

INPEX CORPORATION Annual Report 2015

Thousands of U.S. dollars

More than 5More than 10
years but less
1 year or lessyears
than 10 years

¥—
—
—
—
¥—

¥—
—
—
—
¥—

$  141,349
297,664
150,004
549,563$1,138,580

More than 1
year but lessthan 5 years$116,405
175,438——$291,843

More than 5More than 10
years but lessyears
than 10 years

$—
—
—
—
$—

$—
—
—
—
$—

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT(a) Short-term borrowings as of March 31, 2014 and 2015 are as follows:
Millions of yen
March 31,

Short-term borrowings from banks and others(Interest rates ranging from 0.839% to 1.963% and from0.600% to 19.000% at March 31, 2014 and 2015)

Thousands of U.S. dollars

2014

2015

2015

¥4,327¥6,763$56,232(b) Long-term debt as of March 31, 2014 and 2015 is as follows:
Millions of yen
March 31,

Loans from banks and others, due through 2028
(Interest rates ranging from 0.366% to 2.500% and from
0.362% to 2.500% at March 31, 2014 and 2015)
Less: Current portion

Thousands of U.S. dollars

2014

2015

2015

¥579,301¥670,394$5,574,075

17,627¥561,674

26,443¥643,951

219,864$5,354,211(c) Assets pledged as of March 31, 2014 and 2015 are as follows:
Millions of yen
March 31,

Buildings and structures
Wells
Machinery, equipment and vehicles
Other (tangible fixed assets)
Investment securities
Other (investments and other assets)
Total

Thousands of U.S. dollars

2015

2014

¥ 1,975
49
6,969
12
1,020
217
¥10,242¥ 2,082
181
8,027
—
790
222
¥11,3022015$16,421407
57,945
100
8,481
1,804
$85,158(d) The above assets were pledged against the following liabilities:
Millions of yen
March 31,

Short-term borrowings
Accounts payable—other
Long-term debt
Other
Total

Thousands of U.S. dollars

2015

2014

¥  491509
117¥1,018¥  946385
492
17¥1,8402015$4,0834,232
8
141$8,464(e) In addition, assets pledged as collateral for the Ichthys LNG Project Finance and the BTC Pipeline Project Finance are as follows:(Ichthys LNG Project Finance)
Millions of yen
March 31,

Cash and cash equivalents
Inventories
Other (Current assets)
Land
Construction in progress
Long-term loans receivable
Total

2014

¥   7,835
—
5,430
146
382,224
27,309¥422,944

Thousands of U.S. dollars

2015¥   3,875
4,729
2,462
161
752,019
9,681¥772,927

2015$    32,219
39,32020,4701,339
6,252,756
80,494$6,426,598(BTC Pipeline Project Finance)
Millions of yen
March 31,

Investment securities

Thousands of U.S. dollars

2015

2014

¥7,294¥6,378

2015$60,647(f) The aggregate annual maturities of long-term debt subsequent to March 31, 2015 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2016
2017
2018
2019
2020
2021 and thereafter
Total¥ 26,443
65,222
41,34964,976
104,681
367,723¥670,394$  219,864
542,297
343,801
540,251
870,383
3,057,479$5,574,075

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Years ending March 31,

071

7. INCOME TAXESThe Company and its domestic consolidated subsidiaries are subject to income taxes which, in the aggregate, resulted in a statutory tax rate of
approximately 33.3% and 30.8% for the years ended March 31, 2014 and 2015, respectively.
(a) ‌The effective tax rates reflected in the consolidated statement of income for the years ended March 31, 2014 and 2015 differ from thestatutory tax rate for the following reasons:Years ended March 31,

Statutory tax rate
Effect of:Permanently non-taxable expenses such as entertainment expenses
Permanently non-taxable income such as dividends income
Valuation allowance
Foreign taxes
Foreign tax credits
Adjustment of deducted amounts of foreign taxes
Amortization of goodwill
Differences of effective tax rates applied to tax effect accounting
Other
Effective tax rates

2014

2015

33.3%

30.8%

0.6
(0.7)
0.6
73.5
(15.1)(15.7)
0.3
(2.0)
0.3
75.1%

0.2
(0.3)
11.0
79.1
(17.2)(18.4)
0.4
1.0
(0.6)
86.0%

(b) The significant components of deferred tax assets and liabilities as of March 31, 2014 and 2015 are as follows:
Thousands of U.S.
dollars

Millions of yen
March 31,

Deferred tax assets
Exploration expenditures
Loss on valuation of investment securities
Recoverable accounts under production sharing (foreign taxes)
Allowance for investments in exploration
Foreign taxes payable
Net operating loss carry forward
Accumulated depreciation
Liability for retirement benefits
Provision for loss on businessTranslation differences of assets and liabilities denominated in foreign
currencies
Asset retirement obligations
Allowance for doubtful accounts
Impairment loss
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Foreign taxes
Translation differences of assets and liabilities denominated in foreign
currencies
Reserve for overseas investment loss
Translation differences due to an application of purchase accounting
methodReserve for exploration
Unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

072

INPEX CORPORATION Annual Report 2015

2014

2015

2015

¥  94,419
3,196
10,0401,054
32,221
62,175
11,6492,369
2,148¥  86,644
3,640
10,432783
39,929106,328
16,443
1,857
2,619$   720,413
30,26586,7386,510
331,995
884,078
136,717
15,44021,776

8,385

27,467228,378

10,8293,901—
18,788261,174(188,518)
72,65622,8584,150
10,814
23,625357,589(276,397)
81,192

190,056
34,506
89,914
196,433
2,973,219(2,298,138)
675,081(84,960)(112,046)(931,621)

(955)

(329)

(2,735)(4,671)(4,099)(34,082)(1,795)(2,382)(19,805)(11,218)(1,807)(4,821)(110,227)¥ (37,571)(8,415)(2,541)(8,464)(138,276)¥ (57,084)(69,968)(21,127)(70,375)(1,149,713)$   (474,632)

8. COMPREHENSIVE INCOME
Amount of reclassification adjustments and income tax effects allocated to each component of other comprehensive income for the years ended
March 31, 2014 and 2015 are as follows:

2014

Years ended March 31,

Unrealized holding gain on securities
Amount recognized during the period
Amount of reclassification adjustments
Before income tax effect adjustment
Amount of income tax effectUnrealized gain (loss) from hedging instruments
Amount recognized during the period
Amount of income tax effectTranslation adjustments
Amount recognized during the period
Share of other comprehensive income of affiliates accounted for by the equity-method
Amount recognized during the period
Amount of reclassification adjustments
Adjustment for acquisition cost of assets
Total other comprehensive income

Millions of yen

Thousands of
U.S. dollars

2015

2015

¥ 20,843(10,473)
10,370(388)
9,982¥ 26,405(24,356)
2,049
(734)
1,315

$  219,547(202,511)
17,036(6,103)
10,933(31,329)
10,441(20,888)

—
—
—

—
—
—

176,311

244,018

2,028,918(14,316)—
7,642(6,674)¥158,731(28,436)
2,238
12,247(13,951)¥231,382(236,434)
18,608101,829(115,997)$1,923,854

9. SIGNIFICANT NON-CASH TRANSACTIONS
Significant non-cash transactions for the years ended March 31, 2014 and 2015 are as follows:
For the year ended March 31, 2014
None
For the year ended March 31, 2015
Significant asset retirement obligations newly recorded were ¥69,254 million ($575,821 thousand).

10. NET ASSETS
The total number of the Company's shares issued consisted of
1,462,323,600 shares of common stock and 1 Class A stock as ofMarch 31, 2015.
Class A stock has no voting rights at the common shareholders'meeting, but the ownership of Class A stock gives its holder a rightof veto over certain important matters described below. However,requirements stipulated in the Articles of Incorporation need to be
met in cases involving the exercise of the veto over the appointment
or removal of directors, the disposition of material assets or businessintegration;• Appointment and removal of directors• Disposition of material assets• Amendments to the Article of Incorporation with respect to (i) the
purpose of the Company's business and (ii) the granting of voting
rights to the Company's shares other than common stock• Business integration• Capital reduction• Dissolution
Class A stock shareholder may request the Company to acquireClass A stock. Besides, the Company may also acquire Class A stockby a resolution of the meeting of the Board of Directors in case where
Class A stock is transferred to a non-public entity.
The Company conducted a stock split at a ratio of 1:400 ofcommon stock with October 1, 2013 as the effective date, but
for Class A stock, no stock split was conducted. The Articles ofIncorporation specifies that dividends of Class A stock are equivalent
to dividends of a common stock prior to the stock split. The cash
dividends of Class A stock for the year ended March 31, 2015
amounted to ¥7,200.
Under the Companies Act of Japan, 10% of the amount to be
distributed as dividends from capital surplus (other than capitalreserve) and retained earnings (other than legal reserve) should betransferred to capital reserve and legal reserve, respectively, up to
the point where total amount of capital reserve and legal reserve
equals 25% of the common stock account.
Distributions can be made at any time by a resolution of themeeting of shareholders, or the Board of Directors if certain
conditions are met, but neither capital reserve nor legal reserve isavailable for distributions.

11. AMOUNTS PER SHARE
Amounts per share as of March 31, 2014 and 2015 are as follows:
Years ended March 31,¥1,911.25
18.00¥  125.78

Yen

2015

¥2,099.95
18.00¥    53.29

U.S. dollars

2015$17.460.15$ 0.44

Diluted net income per share is not presented because there are no dilutive potential of shares of common stock.
Net assets per share are computed based on the net assets excluding minority interests and the number of common stock outstanding at theyear end.
Cash dividends per share represent the cash dividends proposed by the Board of Directors together with the interim cash dividends paid.
Net income per share is computed based on the net income available for distribution to shareholders of common stock and the average
number of shares of common stock outstanding during the year.
The Company conducted a stock split at a ratio of 1:400 of common stock with October 1, 2013 as the effective date. Net assets per share,
cash dividends per share and net income per share are calculated based on the assumption that the stock split was conducted on April 1, 2013.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Net assets per share
Cash dividends per share
Net income per share

2014

073

12. DERIVATIVE TRANSACTIONS(a) Derivatives not subject to hedge accounting

There is no derivative not subject to hedge accounting as of March 31, 2014.
Contract amounts, fair value and valuation gain (loss) regarding derivatives subject to hedge accounting as of March 31, 2015 is as follows:
Millions of yen
March 31, 2015

Foreign exchange forwards*
Sell (CAD)
Buy (USD)

Contract amounts

Due after one year

¥35,264

Fair value¥—

Valuation gain (loss)

¥180

¥180

Thousands of U.S. dollars
March 31, 2015

Foreign exchange forwards*
Sell (CAD)
Buy (USD)

Contract amounts

Due after one year

$293,207

Fair value$—

Valuation gain (loss)$1,497$1,497* Fair value is the price obtained from the counterpar ty financial institutions.

(b) Derivatives subject to hedge accounting

Contract amounts, fair value and valuation gain (loss) regarding derivatives subject to hedge accounting as of March 31, 2014 and 2015 are as
follows:
Millions of yen
March 31, 2014

Interest rate swaps
Payment fixed, receipt fluctuated (Special treatment)

Principal items hedged

Contract amounts

Long-term debt

Due after one year

¥4,760Fair value¥4,760*Millions of yen
March 31, 2015

Interest rate swaps
Payment fixed, receipt fluctuated (Special treatment)

Principal items hedged

Contract amounts

Due after one year

¥4,760Long-term debt

Fair value¥4,760*Thousands of U.S. dollars
March 31, 2015

Interest rate swaps
Payment fixed, receipt fluctuated (Special treatment)

Principal items hedged

Contract amounts

Due after one year

Long-term debt

$39,578$39,578

Fair value** ‌Fair value of derivatives for which special treatment of interest rate swaps is applied is included in the estimated fair value of the longterm debt as disclosed in Note 13. (a) since the interest rate swap is treated together with long-term debt subject to hedging.

13. OTHER FINANCIAL INSTRUMENTS(a) The carrying value and estimated fair value of financial instruments excluding marketable securities and investment securities which aredisclosed in Note 5.(a) and derivatives which are disclosed in Note 12 as of March 31, 2014 and 2015 are as shown below. The following
summary also excludes cash and cash equivalents, and accounts receivable-trade for which fair values approximate their carrying amounts.
Millions of yen
March 31, 2014

Carrying value

Estimated fair value

Time deposits¥555,948¥560,455

Long-term time deposits

364,103367,841

Short-term borrowings and current portion of long-term debt
Long-term debt

21,954

21,744¥561,674¥551,721

Millions of yen

Thousands of U.S. dollars

March 31, 2015

Carrying value

Estimated fair value

Carrying value

Estimated fair value

Time deposits¥661,706¥667,326$5,501,838$5,548,566

33,20632,938276,096

273,867¥643,951¥633,604$5,354,211$5,268,180

Short-term borrowings andcurrent portion of long-term debt
Long-term debt(b) For other financial instruments, computation methods of estimated fair value are as shown below.

(Time deposits)

The fair value of current portion of long-term time deposits included in time deposits is calculated by the same method as long-term time
deposits. For the other time deposits, the relevant carrying value is used since the item is settled in a short period of time and its market
value is almost the same as the carrying value.

(Long-term time deposits)

The fair value of long-term time deposits is calculated by applying a discount rate to the total of principal and interest. The discount rate isbased on the assumed interest rate if a similar new deposit is entered into.

074

INPEX CORPORATION Annual Report 2015

(Short-term borrowings and current portion of long-term debt)

The estimated fair value of current portion of long-term debt is calculated by the same method as long-term debt. For short-termborrowings, the relevant carrying value is used since these items are settled in a short periods of time and its fair value is almost the same as
the carrying value.

(Long-term debt)

The estimated fair value of long-term debt is calculated by applying a discount rate to the total of principal and interest. The discount rate isbased on the assumed interest rate if a similar new loan is entered into.

14. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses included in general and administrative expenses and cost of sales amounted to ¥40 million and ¥86
million ($715 thousand) for the years ended March 31, 2014 and 2015, respectively.

15. IMPAIRMENT LOSSThe Company groups mining area and other assets as a basic unit that generates cash inflows independently of other groups of assets. Due toimpact from deteriorating business environments based on such factors as the drop in oil prices, the Company reduced the respective carrying
amounts of the assets listed below to recoverable amounts, posting the reductions as impairment loss.
For the year ended March 31, 2015
Use

Assets related to Joslyn
Oil Sands Lease Block

Assets related to
JPDA06-105
Block (Kitan Oil Field)

Location

Alberta, Canada

Timor Sea Joint Petroleum
Development Area (JPDA),
the Commonwealth ofAustralia / the Democratic
Republic of Timor-Leste

Impairment loss

Classification

Millions of yen

Thousands of U.S. dollars

Other (Tangible fixed assets)¥13,359$111,075

Mining rights

14,232

118,334

Subtotal

27,591

229,409Wells    348    2,893

Machinery, equipment and vehicles    630    5,238

Construction in progress   6,111   50,811

Other (Investments and other assets)    452    3,758

Subtotal   7,541   62,700¥35,132$292,109

Total

The recoverable amount of the assets related to JPDA06-105 Block (Kitan Oil Field) is reasonably estimated by discounting the future cash flows
at a rate of 7%.
The recoverable amount of the assets related to Joslyn Oil Sands Lease Block is estimated at zero.

16. RETIREMENT BENEFITS
Retirement benefits for the years ended March 31, 2014 and 2015 are as follows:(a) Defined benefit plans (excluding plans included in (b))(Reconciliation of beginning and ending balances of the retirement benefit obligations)
Millions of yen

Balance at beginning of the period
Cumulative effects of changes in accounting policies
Restated balance
Service cost
Interest cost
Actuarial loss (gain)
Retirement benefits paid
Balance at end of the period

Thousands of U.S. dollars

2014

2015

2015

¥18,743—
18,743
948
185
25
(456)
¥19,445¥19,445(246)
19,199
1,014
198
176
(608)
¥19,979$161,678(2,045)
159,633
8,431
1,646
1,463
(5,055)$166,118

6(Reconciliation of beginning and ending balances of plan assets at fair value)

Balance at beginning of the period
Expected return on plan assets
Actuarial gain (loss)
Contributions to the plans
Retirement benefits paid
Balance at end of the period

Thousands of U.S. dollars

2014

2015

2015

¥10,611
265
1,024
541
(320)
¥12,121¥12,121
303
1,305
544
(333)
¥13,940$100,782
2,519
10,851
4,523(2,769)$115,906

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

Millions of yen

075

(Reconciliation between retirement benefit obligations and plan assets at fair value and liability for retirement benefits and asset for retirement
benefits on the consolidated balance sheet)
Millions of yen

Thousands of U.S. dollars

2014

2015

2015

Retirement benefit obligations (funded plans)
Plan assets at fair value
Net liability (asset) on consolidated balance sheet¥19,445(12,121)7,324¥19,979(13,940)
6,039$166,118(115,906)
50,212

Liability for retirement benefits
Net liability (asset) on consolidated balance sheet

7,324¥ 7,324

6,039¥ 6,039

50,212$ 50,212(Details of retirement benefit expenses)
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain or loss
Retirement benefit expenses for defined benefit plans

Thousands of U.S. dollars

2015

2014
¥ 948
185
(265)
(999)
¥(131)¥1,014
197(303)(1,128)¥ (220)2015$ 8,431
1,638(2,519)(9,379)$(1,829)(Plan assets)
Components of plan assets

2014

2015

Stock
General accounts
Bonds
Other
Total

40%
44%
15%
   1%
100%

43%
40%
17%
   0%
100%

(Basis of measurement for long-term expected return rate on plan assets)
The expected long-term return rate on plan assets is determined based on the current and expected future distribution of plan assets and thecurrent and expected future long-tern return rate on various assets of which plan assets are composed.
(Basis of the actuarial assumptions)

Discount rateLong-term expected return rate on plan assets

2014

2015

1.0%
2.5%

1.0%
2.5%

(b) Defined benefit plans applying simplified methods(Reconciliation of beginning and ending balances of liability for retirement benefits)
Millions of yen

Balance at beginning of the period
Retirement benefit expenses
Retirement benefits paid
Contributions to the plans
Other
Balance at end of the period

Thousands of U.S. dollars

2015

2014
¥448
100
(57)
(35)
13
¥469

¥469
257
(71)
(20)
26
¥661

2015
$3,899
2,137
(590)
(166)
216
$5,496(Reconciliation between retirement benefit obligations and plan assets at fair value and liability for retirement benefits and asset for retirement
benefits on the consolidated balance sheet)
Millions of yen

Thousands of U.S. dollars

2015

2014

2015

Retirement benefit obligations (unfunded plans)
Net liability (asset) on consolidated balance sheet

¥278
(216)
62
407
469

¥297
(234)
63
598
661

$2,470(1,946)
524
4,972
5,496

Liability for retirement benefits
Net liability (asset) on consolidated balance sheet

469
¥469

661
¥661

5,496
$5,496Retirement benefit obligations (funded plans)
Plan assets at fair value(Retirement benefit expenses)
Millions of yen

2014
Retirement benefit expenses under simplified methods

076

INPEX CORPORATION Annual Report 2015

¥100

Thousands of U.S. dollars

2015
¥257

2015
$2,137

(c) Defined contribution plans
The Group’s contributions for defined contribution plans amounted to ¥957 million and ¥1,442 million ($11,990 thousand) for the years ended
March 31, 2014 and 2015, respectively.

17. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

2014

2015

2015

Balance at beginning of the period¥17,395
6,209
782¥ 28,307
58,342
1,329$235,362
485,092
11,050New obligations
Accretion expenses
Obligations settled
Change in estimates *1
Other *2
Balance at end of the period

(198)

(389)

(3,235)

2,275
1,844
¥28,307

14,9193,820¥106,328

124,046
31,762$884,077*1 “Change in estimates“ for the year ended March 31, 2015 mainly reflects increasing site restoration and decommissioning costs whichbecame evident and revised rate of discount of certain subsidiaries in the year ended March 31, 2015.
*2 “Other“ mainly includes the change due to foreign exchange rates fluctuation.

18. GOODWILL
The changes in the carrying amount of goodwill for the years ended March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

2014

2015

2015

Balance at beginning of the period
Goodwill acquired during the period
Amortization of goodwill
Balance at end of the period¥87,841—(6,761)¥81,080¥81,080—(6,761)¥74,319$674,150—(56,215)$617,935

19. LEASES
Future minimum lease payments subsequent to March 31, 2015 for operating lease transactions are summarized as follows:(a) As lessee
20162017 and thereafter
Total

Millions of yen

Thousands of U.S. dollars¥ 6,688
11,663¥18,351$ 55,608
96,974$152,582

Millions of yen

Thousands of U.S dollars(b) As lessor
20162017 and thereafter
Total

¥112
204
¥316

$  931
1,696$2,627

6
Financial &Corporate Information

INPEX CORPORATION Annual Report 2015077

20. CONTINGENT LIABILITIESAs of March 31, 2015, the Company and its consolidated subsidiaries were contingently liable as guarantors of indebtedness of affiliates in theaggregate amount of ¥25,969 million ($215,923 thousand).
In addition, the Company guarantees for derivative transactions utilized to hedge exchange rate fluctuation risk regarding payments ofdevelopment costs for the Ichthys LNG Project. The relevant loss on valuation as of March 31, 2015 was ¥36,433 million ($302,927 thousand).
In connection with the Ichthys LNG Project Finance, the Company and other project participants provide lenders with a guarantee of liabilities
during the construction phase based on each participating interest. The portion guaranteed by the Company as of March 31, 2015, was¥958,503 million ($7,969,593 thousand).

21. SEGMENT INFORMATION
Segment information for the years ended March 31, 2014 and 2015(a) Overview of reportable segments
The reportable segments for the Group’s oil and gas development activities are composed of individual mining area and others for which
separate financial information is available in order for the Board of Directors to make Group management decisions. Since the Group operates
oil and gas businesses globally, the Group’s reportable segments are the mining areas and others by geographical region, categorized in “Japan“,“Asia & Oceania“ (mainly Indonesia, Australia and East Timor), “Eurasia (Europe & NIS)“ (mainly Azerbaijan), “Middle East & Africa“ (mainly
UAE) and “Americas.“
The Company produces oil and gas in each segment. In addition, the Company conducts marketing activities for petroleum products andothers in “Japan“ segment.

(b) Basis of measurement for sales, income (loss), assets and other items by reportable segment
Accounting policies for the reportable segments are substantially the same as those described in “Note 2. SUMMARY OF SIGNIFICANTACCOUNTING POLICIES“.

(c) Information on sales and income (loss), assets and other items by reportable segment
Millions of yen
Year ended March 31, 2014
Sales to third parties
Total sales
Segment income (loss)
Segment assets
Other items
Depreciation andamortization
Amortization of goodwill
Investment to affiliates
accounted for by theequity-method
Increase of tangible fixed
assets and intangible
assetsEurasia
Middle East &Asia & Oceania(Europe & NIS)
AfricaAmericas¥120,268
120,268
22,771
286,414¥  485,069
485,069
264,849
1,038,265¥ 96,341
96,34142,601
535,046¥621,513
621,513421,184
288,601¥ 11,435 ¥1,334,626
11,435
1,334,626(7,646)
743,759
265,348
2,413,674

18,838

8,822

10,417

6,772

4,672

49,521

1,396

50,917

—

—

—

—

(192)

(192)

6,953

6,761

2,000

39,124—65,184

2,015

108,323—

108,323¥ 42,404¥  285,903¥   4,073¥ 35,195¥ 51,583¥  419,158¥      417¥  419,575

Japan

Asia & Oceania¥129,522
129,522
16,693292,961¥  409,776
409,776
178,225
1,677,806¥ 94,050
94,05032,228557,564¥524,528
524,528
333,213
253,120

20,651

6,367

9,900

9,901

4,335

51,154

1,366

52,520

—

—

—

—

(192)

(192)

6,953

6,761

1,597

61,160—54,096

1,197

118,050—

118,050¥ 26,986¥  405,231¥ 12,412¥ 46,378¥ 46,491¥  537,498¥      419¥  537,917

Japan

Total

Adjustments *1 Consolidated *2¥       — ¥1,334,626—
1,334,626(10,149)
733,610
1,624,465
4,038,139

Millions of yen
Year ended March 31, 2015
Sales to third parties
Total sales
Segment income (loss)
Segment assets
Other items
Depreciation andamortization
Amortization of goodwill
Investment to affiliates
accounted for by theequity-method
Increase of tangible fixed
assets and intangible
assets078

INPEX CORPORATION Annual Report 2015

Eurasia
Middle East &(Europe & NIS)
AfricaAmericasTotal¥ 13,351 ¥1,171,227
13,351
1,171,227(15,303)545,056
305,996
3,087,447

Adjustments *1 Consolidated *2¥        — ¥1,171,227        —1,171,227(10,170)
534,886
1,411,707
4,499,154

Thousands of U.S. dollars
Year ended March 31, 2015
Sales to third parties
Total sales
Segment income (loss)
Segment assets
Other items
Depreciation andamortization
Amortization of goodwill
Investment to affiliates
accounted for by theequity-method
Increase of tangible fixed
assets and intangible
assetsEurasia
Middle East &Asia & Oceania(Europe & NIS)
AfricaAmericas$1,076,927
1,076,927
138,796
2,435,861$ 3,407,134
3,407,134
1,481,874
13,950,328$  781,990
781,990
267,964
4,635,936$4,361,254
4,361,254
2,770,541
2,104,598$  111,009 $ 9,738,314
111,0099,738,314(127,239)
4,531,936
2,544,242
25,670,965

171,705

52,93982,31582,32336,044425,326

11,358436,684

—

—

—

—

(1,596)(1,596)57,811

56,215

13,278508,523—

449,788

9,953

981,542—

981,542$  224,378$ 3,369,344$  103,201$  385,616$  386,555$ 4,469,094$      3,484$ 4,472,578

Japan

Total

Adjustments *1 Consolidated *2$         — $ 9,738,314—
9,738,314(84,559)
4,447,377
11,737,815
37,408,780*1 Adjustments include elimination of inter-segment transactions and corporate incomes, expenses and assets that are not allocated to areportable segment.
*2 Segment income is reconciled with operating income on the consolidated statement of income.

(d) Products and service information(Sales to third parties)

Millions of yen

Crude oil
Natural gas (excluding LPG)
LPG
Other
Total

Thousands of U.S. dollars

2014

2015

2015

¥  858,754
431,187
24,227
20,458¥1,334,626¥  730,422
401,338
20,522
18,945¥1,171,227$6,073,185
3,336,975
170,633
157,521$9,738,314

Years ended March 31,(e) Geographical information(Sales)Millions of yen

Japan
Asia & Oceania
Other
Total

Thousands of U.S. dollars

2014

2015

2015

¥  682,353
620,339
31,934¥1,334,626¥  627,068
514,864
29,295¥1,171,227$5,213,836
4,280,901
243,577$9,738,314

Years ended March 31,(Tangible fixed assets)

Millions of yen

March 31,

2014

Japan
Australia
Other
Total

¥248,247
520,976
182,556¥951,779

Thousands of U.S. dollars

2015

2015

¥  252,747
985,771259,104¥1,497,622$ 2,101,497
8,196,316
2,154,353$12,452,166(f) Information by major customer(Sales to major customers)

Millions of yen

Thousands of U.S. dollars

Years ended March 31,

2014

2015

2015

PERTAMINA
Idemitsu Kosan Co., Ltd.

¥217,519¥156,151¥160,370¥135,590$1,333,416$1,127,380

Segment
Asia & Oceania
Middle East & Africa

6
Financial &Corporate Information

INPEX CORPORATION Annual Report 2015079

22. RELATED PARTY TRANSACTIONSThere are the following related party transactions for the years ended March 31, 2014 and 2015.

(a) Affiliated company
Year ended March 31, 2014
Location

Ichthys
LNG Pty
Ltd

Transportation,
Serve theliquefaction andofficersales of oil andWestern$482,700
Indirectly
concurrently,
natural gas throughAustralia,
66.07%
thousandcapitalpipeline in WA-50-L
Australia
subscription
block in offshore
Western Australia

Capitalinvestment

Nature ofoperations

Votinginterest

Amounts

Descriptionof thebusinessrelationship

Name ofrelatedparty

Transaction
detailMillions of yen

Amounts
Title of accountMillions of yen

Current assets:other (accrued¥   7,976 revenue)
Long-term loans
receivable

Interest
income*Debt guarantee¥ 2,133
27,309—¥600,030—¥

Year ended March 31, 2015
Descriptionof thebusinessrelationshipAmounts

Name ofrelatedparty

Location

Ichthys
LNG Pty
Ltd

Transportation,
Loans ofliquefaction andServe the funds
sales of oil andofficer Collection
Western$482,700
Indirectly
natural gas throughconcurrently, of loans*
Australia,
62.25%
thousandpipeline in WA-50-L
capitalAustralia
block in offshore
subscription Debt
Western Australia
guarantee

Capitalinvestment

Nature ofoperations

Votinginterest

Transaction
detailAmounts
Title of
Millions of Thousands of account Millions of Thousands ofyen
U.S. dollars
yen
U.S. dollars¥110,363

Long$  917,627 term loans
receivable¥120,042$998,104¥958,503$7,969,593

¥

$

—

—

—

* The Company determines the interest rate on loans of funds based on market interest rates in a reasonable and appropriate manner.

(b) Note related to the parent company or significant affiliated companies
The significant affiliated company for the years ended March 31, 2014 and 2015 is Ichthys LNG Pty Ltd. The summary of its financial information
is as follows:
Millions of yen

2014

2015

2015

Total current assets¥    47,238¥    42,670$   354,785

Total fixed assets

1,262,541

2,213,893

18,407,691

Total current liabilities

57,265110,247

916,662

Total long-term liabilities

1,229,360

2,137,499

17,772,504

23,154

8,817

73,310———Total net assets
Net sales
Net loss before income taxes
Net income (loss)

080

Thousands of U.S. dollars

Years ended March 31,

INPEX CORPORATION Annual Report 2015

(3,367)(2,902)(24,129)¥    (2,018)¥      873$      7,259

Independent Auditor’s Report

Independent Auditor’s Report
The Board of Directors
INPEX CORPORATION
We have audited the accompanying consolidated financial statements of INPEX CORPORATION and its
consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2015, and theconsolidated statements of income, comprehensive income, changes in net assets, and cash flows for theyear then ended and a summary of significant accounting policies and other explanatory information, allexpressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for designing andoperating such internal control as management determines is necessary to enable the preparation and fairpresentation of the consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. The purpose of an audit of the consolidated financial statements is not to
express an opinion on the effectiveness of the entity’s internal control, but in making these risk
assessments the auditor considers internal controls relevant to the entity’s preparation and fairpresentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of INPEX CORPORATION and its consolidated subsidiaries
as at March 31, 2015, and their consolidated financial performance and cash flows for the year thenended in conformity with accounting principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented
for the convenience of readers, and, in our opinion, the accompanying consolidated financial statements
have been properly translated on the basis described in Note 3.

6
Financial &Corporate Information

June 24, 2015
Tokyo, JapanINPEX CORPORATION Annual Report 2015081

Subsidiaries and Afﬁliates
As of March 31, 2015

Consolidated Subsidiaries
Company name

Voting rights
held by us (%)

Main business

INPEX Natuna, Ltd.

5,000

100.00%Exploration, development, production and sales ofoil and natural gas in the South Natuna Sea Block B,
Indonesia

INPEX Sahul, Ltd.

4,600

100.00%Exploration, development, production and sales ofoil and natural gas in the JPDA03-12 Block and BayuUndan Gas-Condensate Field in the Timor Sea JPDA,
Australia and East Timor

INPEX Alpha, Ltd.

8,014

100.00%Exploration, development, production and sales ofoil and natural gas in the WA-35-L Block and others,
Australia

INPEX Tengah, Ltd.

1,020

100.00%Exploration, development, production and sales of oil
and natural gas in the Tengah Block in Offshore East
Kalimantan, Indonesia

INPEX Browse, Ltd.

421,690

100.00%Financing for oil and natur al gas explor ation anddevelopment in the WA-285-P Block and others, Australia

INPEX Ichthys Pty Ltd(Thousands of
U.S. dollars)

100.00%Exploration and development of oil and natural gas in
the Ichthys Gas-Condensate Field (WA-50-L), Australia

INPEX Browse E&P Pty Ltd(Thousands of
U.S. dollars)

100.00%Exploration of oil and natural gas in the WA-494-P
Block and others, Australia

INPEX Masela, Ltd.

43,43651.93%

Exploration and development of oil and natural gas in
the Masela Block in the Arafura Sea, Indonesia

INPEX South Makassar, Ltd.

1,097

100.00%Exploration, development, production and sales of oil
and natural gas in the Sebuku Block in the Makassar
Strait, Indonesia

INPEX Timor Sea, Ltd.

6,712

100.00%Exploration, development, production and sales of oil
and natural gas in the JPDA06-105 Block in the Timor
Sea JPDA, Australia and East Timor(Thousands of
U.S. dollars)

100.00%Exploration and development of oil and natural gas in
the Prelude Gas Field (WA-44-L) and others, Australia

INPEX Babar Selaru, Ltd.

1,426

51.01%

Exploration of oil and natural gas in the Babar Selaru
Block, Offshore Indonesia

INPEX Offshore North West Sabah, Ltd.

2,647

77.24%

Exploration of oil and natural gas in the deepwater
Block S located offshore Sabah, Malaysia

INPEX Southwest Caspian Sea, Ltd.

53,59451.00%

Exploration, development, production and sales of oilin the ACG Oil Fields, Azerbaijan

INPEX North Caspian Sea, Ltd.

50,68045.00%

Exploration and development of oil in the Offshore
North Caspian Sea Block, Kazakhstan

Japan Oil Development Co., Ltd.

18,800100.00%Exploration, development, production and sales ofoil in the ADMA Block in Offshore Abu Dhabi, United
Arab Emirates

INPEX ABK, Ltd.

2,500

100.00%Exploration, development, production and sales of oilin the Abu Al Bukhoosh Block in Offshore Abu Dhabi,
United Arab Emirates

10100.00%Exploration, development, production and sales of oilin the Offshore D.R. Congo Block100.00%Inves t ment in oil ex plor ation, develop ment,
production and sales in Block 14, Offshore Angola

100.00%Investment in exploration, development, production
and sale of natural gas in the Copa Macoya Block andexploration, development, production and sale of oil in the
Guarico Oriental Block, Bolivarian Republic of Venezuela

INPEX Oil & Gas Australia Pty Ltd

Teikoku Oil (D.R. Congo) Co., Ltd.
INPEX Angola Block 14 Ltd.

082

Issued capital*(Millions of yen)

802,688
331,186

400,000

475,600(Thousands of
U.S. dollars)

1,620

Teikoku Oil and Gas Venezuela, C.A.

(Thousands ofbolivars)

Teikoku Oil (North America) Co., Ltd.

(Thousands of
U.S. dollars)

100.00%Exploration, development, production and sales of oil
and natural gas in the Lucius Oil Field and others, inthe U.S. Gulf of Mexico

INPEX Canada, Ltd.

21,325100.00%Exploration and development of oil including oil sandsin the Joslyn project, Canada

Teikoku Oil (Suriname) Co., Ltd.

7,257

56.78%

Exploration of oil in the Offshore Block 31, Suriname

INPEX CORPORATION Annual Report 2015

19,793

Company name

INPEX Gas British Columbia Ltd.

Issued capital*(Millions of yen)

1,043,488(Thousands ofCanadian dollars)

Teiseki Pipeline Co., Ltd.

100
86,135INPEX DLNGPL Pty Ltd(Thousands of
AUS dollars)

INPEX BTC Pipeline, Ltd.

(Thousands of
U.S. dollars)

63,800

Voting rights
held by us (%)

Main business45.09%

Exploration, development, production and sales ofnatural gas in the shale gas blocks of the Horn River,
Cordova and Liard basins in British Columbia, Canada

100.00%Natural gas transportation, pipeline operation,
maintenance and management

100.00%Investment in Darwin LNG Pty Ltd, which constructs
and operates the undersea pipeline and LNG plantconnecting the Bayu Undan Gas-Condensate Field
and Darwin (Australia)

100.00%Investment in the pipeline construction andmanagement business that connects Baku (Azerbaijan),
Tbilisi (Georgia) and Ceyhan (Turkey)

INPEX Trading, Ltd.

50

100.00%

Sales, agency and brokerage of crude oil and market
research and sales planning in connection with oil andnatural gas sales

Saitama Gas Co., Ltd.

60

62.67%

City gas sales

36 other subsidiaries

Equity-Method Affiliates
Voting rights
held by us (%)

Main business44.00%

Exploration, development, production and sales ofnatural gas in the Berau Block and the Tangguh LNG
Project, West Papua province, Indonesia(Thousands of
U.S. dollars)

62.25%Engaged in laying the undersea pipeline from theIchthys Gas-Condensate Field to the Darwin Onshore
LNG Plant and building the LNG plant, Australia

Angola Japan Oil Co., Ltd.

8,000

19.60%

Exploration, development, production and sales of oilin the Offshore 3/05 Block, Angola

INPEX Offshore North Campos, Ltd.

6,852

37.50%

Financing for oil and natural gas exploration,
development, production and sales in the Frade Blockin Offshore North Campos, Brazil

49.99%

Exploration, development, production and sales of oilin Block 14, Offshore Angola

Company name

MI Berau B.V.
Ichthys LNG Pty Ltd

Angola Block 14 B.V.

Issued capital*(Millions of yen)

888,601(Thousands of
U.S. dollars)

482,700

18(Thousands ofeuros)

14 other equity-method affiliates

Subsidiaries of Equity-Method Affiliates
Issued capital*

Frade Japão Petróleo Limitada(Thousands ofreais)

103,051

Main business

0.00%

Exploration, development, production and sales of oil
and natural gas in the Frade Block in Offshore North
Campos, Brazil

2 other subsidiaries of equity-method affiliates*Rounding off fractions less than the unit.

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

Company name6

Voting rights
held by us (%)

083

Business Risks

The following is a discussion on key items that can be considered potential risk factors relating to the business of INPEXCORPORATION, its subsidiaries and affiliates (the “Group”). From the standpoint of information disclosure to investors andshareholders, we proactively disclose matters that are not necessarily the business risks but that can be considered to have important
effects on the investment decisions of investors. The following discussion does not completely cover all business risks relating to theGroup’s businesses.
Unless stated otherwise, forward-looking statements in the discussion are the judgment of the Group as of June 25, 2015 and are
subject to change after such date due to various factors, including changes in social and economic circumstances.

1. CHARACTERISTICS OF AND RISKS ASSOCIATED WITH THE
OIL AND NATURAL GAS DEVELOPMENT BUSINESS(1) Risk of failure in exploration, development or
production
Payment of compensation is ordinarily necessary to acquireparticipating interests. Also, surveying and exploratory drilling
expenses (exploration expenses) become necessar y at thetime of exploration activities for the purpose of discoveringresources. When resources are discovered, it is necessary tofurther invest in substantial development expenses according tovarious conditions, including the size of the recoverable reserves,development costs and details of agreements with oil-producing
countries (including gas-producing countries; hereinafter thesame shall apply).
There is, however, no guarantee of discovering resources
on a scale that makes development and production feasible.
The probability of such discoveries is considerably low despite
various technological advances in recent years, and even whenresources are discovered the scale of the reserves does notnecessarily make commercial produc tion feasible. For thisreason, the Group conservatively recognizes expenses related to
exploration investment in our consolidated financial statements.
The Group maintains financial soundness by booking 100% as
expenses in the case of concession agreements (including mining
rights awarded in Japan as well as permits, licenses and leases
awarded overseas) and by booking 100% of exploration project
investment as allowances in the case of production sharing
agreements. In addition, if there are impossibilities of recovery
of investment in a development project, we also book thecorresponding amount of investment in the development projectas allowances while considering the recovery possibility of eachproject.
To increase recoverable reserve and production volumes,
the Group plans to always t ake an interes t in promisingproperties and plans to continue exploration investment. At thesame time, we plan to invest in development projects, including
the acquisition of interests in discovered undeveloped fields andproducing fields, so as to maintain an overall balance between
assets at the exploration, development, and production stages.
A l t h o u g h e x p l o r a t i o n a n d d e ve l o p m e n t ( i n c l u d i n g
the acquisition of interes t s) are neces sar y to secure thereserves essential to the Group’s future sustainable businessdevelopment, each type of investment involves technologicaland economic risks, and failed exploration or development could
have an adverse effect on the results of the Group’s operations.

(2) Crude oil, condensate, LPG and natural gas reserves
1) Proved reserves
INPE X CO R P O R AT I O N (t h e “C o m p a ny ”) c o m mi s s io n e d

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DeGolyer and MacNaughton, an independent petroleum
engineering consultant in the United States, to assess the main
proved reserves of the Group of which projects with a significant
amount of future development investment might materiallyaffect future performance. An assessment of other projects wasundertaken by the Company. The definition of proved reserves isbased on the U.S. Securities and Exchange Commission’s (SEC)
Regulation S-X, Rule 4-10(a), which is widely known among U.S.
investors. Regardless of whether the deterministic approachor probabilistic approach is used in evaluation, proved oil
and gas reserves are estimated quantities that geological andengineering data demonstrate with reasonable certainty to be
recoverable from known reservoirs under existing economic
and operating conditions, from the date of evaluation throughto the expiration date of the agreement granting operatingrights (or in the event of evidence with a reasonable certainty ofagreement, extension through to the expiration of the projected
extension period). For definition as “proved reserves,” operators
must have a reasonable degree of certainty that the recovery ofhydrocarbons has commenced or that the project will commence
within an acceptable period of time. This definition is widely
regarded as being conservative. Nevertheless, the strictness ofthe definition does not imply any guarantee of the production of
total reserves during a future production period. In this context,
when probabilistic methods are employed, there should be atleast a 90% probability that the quantities actually recovered will
equal or exceed the sum of estimated proved reserves.
For f ur ther det ails on proved reser ves of cr ude oil,condensate, LPG and natural gas held by the Group, including
affiliates accounted for under the equity method, please see
the section “Oil and Gas Reserves and Production Volume” on
P. 92.
2) Probable reserves and possible reserves
In addition to the assessment of proved reserves based on
the SEC standards, the Company commissioned DeGolyer
and MacNaughton to assess its probable reser ves and thepossible reserves of which projects with a significant amountof future development investment might materially affect the
future performance, similar to proved reserves. An assessmentof other projects was undertaken by the Company, based on
the Petroleum Resources Management System 2007 (PRMS)
published by four organizations: the Society of Petroleum
Engineers (SPE), the World Petroleum Congress (WPC), theAmerican Association of Petroleum Geologists (AAPG), andthe Society of Petroleum Evaluation Engineers (SPEE). Probablereserves, as defined by PRMS guidelines established by thefour organizations, are reserves of oil and gas volumes outside
proved reserves that are less likely to be recovered than proved
reserves but more certain to be recovered than possible reserves
based on analyses of geological and engineering data. In thiscontext, when probabilistic methods are employed, there
should be at least a 50% probability that the quantities actually
recovered will equal or exceed the sum of estimated proved
and probable reserves. In addition, possible reserves are also
defined in accordance with PRMS guidelines as reserves of oil
and gas volumes which are not categorized as proved reserves
or probable reserves and which are less likely to be recovered
than probable reserves based on analyses of geological andengineering data. In this case, it is unlikely that the actual
quantity of oil and gas recovered will exceed the sum of proved
reserves, probable reserves and possible reserves. Furthermore,when probabilistic methods are employed to calculate possible
reserves, there should be at least a 10% probability that thequantities recovered will equal or exceed the sum of proved
reserves, probable reserves and possible reserves. Probablereserves and possible reserves can be upgraded to proved
reser ves af ter the addition of new technical data or when
uncertainty has been reduced due to clarification of economic
conditions or operational conditions. Nevertheless, probablereserves and possible reserves do not offer a guarantee of the
production of total reserves during a future production periodwith the same certainty as proved reserves.
For fur ther details on probable reser ves and possible
reserves of crude oil, condensate, LPG and natural gas held by
the Group, including affiliates accounted for under the equity
method, please see the section “Oil and Gas Reserves andProduction Volume” on P. 92.
3) Possibility of changes in reserves
A reserve evaluation depends on the available geological andengineering data from oil and gas reservoirs, the maturity ofdevelopment plans and a considerable number of assumptions,factors and variables including economic conditions as of thedate such an estimate is made. Reserves may be revised in the
future on the basis of geological and engineering data as well
as development plans and information relating to changes in
economic and other conditions made newly available throughprogress in production and operations. As a result, there is apossibility that reserves will be restated upwards or downwards.
As to the reserves under a PSC, not only production, but also
oil and gas prices, investments, recovery of investments due
to contractual conditions and remuneration fees may affectthe economic entitlement. This may cause reserves to increaseor decrease. In this way, the assessed value of reserves could
fluctuate because of various data, assumptions and changes ofdefinition.

Considerable time and expense is required for explorationac tivities. Even when promising resources are discovered
through exploration, substantial expenses including production
facility construction costs, and an extended period of time, arenecessary at the development stage leading up to production.

(4) Operatorship
In the oil and natural gas development business, companies
frequently form business partnerships for the purpose of thedispersion of risk and financial burden. In such partnerships,
one of the companies becomes the operator, which performs
the actual work and bears the responsibility for operations onbehalf of the partners. The companies other than the operator,
as non-operators, participate in the business by providing apredetermined amount of funds and either carefully examining
the exploration and development plan devised and implemented
by the operator, or participating in some operations.
The integration of INPEX CORPORATION and Teikoku OilCo., Ltd., was completed on October 1, 2008. The resultant
company possesses abundant operational capabilities thanks
to the integration of the former two companies’ know-how basedon extensive operation experience in exploration, development
and production both within Japan and overseas as well as theirhigh level proprietary technologies.
The Group intends to actively pursue operator projects
focusing on the two large-scale LNG Ichthys and Abadi projects
taking into consideration the effective application of businessresources as well as the balance between operator and nonoperator projects, based on the Group’s technical capability,
which has been considerably enhanced by the above-statedbusiness integration. Although the Company lacks operator
experience in LNG development projects, it has significant
expertise as an operator in the development and productionof crude oil and natural gas both in Japan and overseas as well
as a wealth of know-how and knowledge accumulated overmany years as a participant in LNG and other projects in suchcountries as Indonesia and Australia. In addition, we believe thatby utilizing the services of specialized subcontractors and highly
experienced external consultants, a practice similar to foreign
oil companies including the majors, it will be possible to executebusiness appropriately as an operator including LNG projects.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information(3) In the oil and natural gas development business theperiod from exploration to sales is highly capital intensive
and funds cannot be recovered for a long time

For this reason, a long period of 10 years or more is required
from the time of exploration and development investment until
the recovery of funds through production and sales. In particular,
the development of the Ichthys and the Abadi, large-scale
LNG projects, being pursued by the Company requires a verylarge amount of investment, and the financing of these projects
could be impacted by changes in the economic and financial
environment. Following the discovery of resources, a delay inthe development schedule or the loss of the economic viabilityof the properties during the development process leading up
to production and the commencement of sales could have an
adverse effect on the Group’s operational results. Such delays
or losses may occur due to changes in the business environment
including a delay in the acquisition or modification of government
approvals, the occurrence of unanticipated problems related
to geological conditions, fluctuations in the price of oil or gas,fluctuations in foreign exchange rates, or escalating prices ofequipment and materials. In the case of LNG projects, suchdelays or losses may occur due to an inability to complete suchprocedural requirements as FID owing to the lack of any longterm contractual agreement with prospective purchasers withrespect to production.

085

Engaging in projec t coordination as an operator willcontribute to the expansion of oppor tunities of block anda c r eag e a c q ui s i t io n t h r o u g h e n ha n c e m e nt of te c h nic alcapabilities and greater presence in oil-producing countries
and the industry. At the same time, there exist risks such as
constraints on the recruitment of personnel who have specialized
operational skills and an increase in financial burden. Inability toadequately cope with such risks could have an adverse effect on
the Group’s results of operations.

(5) Project partners
In the oil and natural gas development business, as previously
mentioned, several companies often engage in joint businessfor the purpose of dispersion of risk and financial burden. In
such cases, the partners generally enter into a joint operating
agreement among themselves to decide on the decision-making
procedure for execution of the joint business, or to decide on
an operator that conducts business on their behalf. A company
that is a partner in one property in which the Group is engaged
in joint business may become a competitor in the acquisition ofother participating interests, even though the relationship withthe partner may be good.
In undertaking the joint business, participants in principle
bear a financial burden in proportion to their interest share. Any
inability by a joint business partner to fulfill this financial burden
may adversely affect the project.

(6) Disaster and accident risks
Oil and natural gas development entails the risk that operational
accidents and disasters may occur in the process of exploration,
development, production and transportation. Should such an
accident, disaster or other such incident occur, there is the riskthat costs will be incurred, excluding compensation covered byinsurance, due to facility damage, as well as the risk of a major
accident or disaster involving loss of life. In addition, a costburden for recovery or opportunity loss from the interruption ofoperations could occur. For the domestic natural gas business,
the Company has continued to procure as source gas natural gas
regasified from imported LNG since January 2010. Furthermore,
the Company has procured impor ted LNG as source gas inconnection with its Naoetsu LNG Terminal from August 2013. An
inability to procure natural gas regasified from imported LNG
and other imported gas as source gas due to troubles concerning
suppliers or the Company’s Naoetsu LNG Terminal may interferewith the Company’s ability to supply to its customers. This couldin turn have an adverse effect on the Company’s domestic
natural gas business.
W i t h re g ar d to e nv iro n m e nt al p ro b l e m s, t he re is apossibility of soil contamination, air pollution, and freshwaterand seawater pollution. The Group has established a “Health,
Safety and Environment Policy,” and as a matter of course
abides by the environmental laws, regulations, and standards ofthe countries in which we operate and give due consideration
to the environment in the conduct of business, based on our
independent guidelines. In the event of an operating accident ordisaster which impacts the environment, there is the possibilityof incurring a response or cost burden for recovery from thatincident, of incurring obligation of payment for procedural

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INPEX CORPORATION Annual Report 2015

costs, compensation or other cost related to the start of civil,
criminal or government procedures, or of incurring loss from theinterruption of operations. Furthermore, in the event of changes
to or the strengthening of the environmental laws, regulations,and standards (including support measures for the promotion ofnew, renewable energies) of the countries in which we operate, it
may be necessary for the Group to devise additional measures,
and an associated cost burden could occur.
Although the Group maintains accident insurance in thenatural conduct of its operations, should such an accident ordisaster be attributable to willful misconduct or negligence on
the part of the Group, the occurrence of a cost burden could
have an adverse effect on financial results. Also, such accident
or trouble would result in receiving administrative punishment or
result in damage to the Group’s credibility and reputation as anoil and natural gas development company, and could therefore
have an adverse effect on future business activities.
In 2011 and 2012, an oil seep emanated in the vicinity of the
Frade oil field, in which an approximate 18.3% interest is held bya subsidiary of one of INPEX CORPORATION’s equity method
affiliated companies. The Federal Prosecution Service of Brazil
filed lawsuits against Chevron Brasil Upstream Frade Ltda., theFrade oil field operator, and others, and these lawsuits have beensubsequently concluded.
In September 2013, crude oil production was commenced
at the Kashagan oil field within the Offshore North CaspianSea Block in the Republic of Kazakhstan, in which INPE X
CORPORATION’s 45% owned consolidated subsidiary, INPEXNor th Caspian Sea, Ltd., holds a 7.56% interest. However,shor tly af ter crude oil produc tion had begun, a leak fromthe gas pipeline was discovered and the produc tion has
been suspended. In response to the gas leak, North CaspianO p e r at i n g C o m p a ny, t h e o p e r ato r, a n d Ag i p KCO, t h ecompany responsible for operations management (together,
the “Operators”), flared the gas remaining in the gas pipelineat the production facilities and emitted it. In relation to thisactivity, the Ministry of Environmental Protection of the Republicof Kazakhstan issued to the Operators a notice for a monetaryclaim, on the alleged grounds that the Operators had violated
environmental laws. Subsequently, these disputes in relation to
the Kashagan oil field have been concluded through settlement
among the related parties.

(7) Risk in Relation to Mine Abandonment
The Group books in it s account s, as an asset retirement
obligation, the estimated present value of costs related tomine abandonment that will become necessary after finishing
operation and production in oil and gas production facilities andthe like in accordance with agreements with the authorities ofoil-producing countries, applicable laws and regulations and thelike. If it is later found that the estimated present value of thosecosts falls short due to a change in the procedures used formine abandonment, a rise in expenses for procuring drillingmaterials and equipment or any other reason, the Group will
be required to increase the amount of that asset retirement
obligation, which could adversely affect the financial condition
and results of operations of the Group.

2. EFFECTS OF FLUCTUATIONS IN CRUDE OIL PRICES, NATURALGAS PRICES, FOREIGN EXCHANGE AND INTEREST RATES ON
FINANCIAL RESULTS(1) Effects of fluctuations in crude oil prices and natural
gas prices on financial results(2) The effect of fluctuations in exchange rates on
financial results

A large percentage of crude oil prices and natural gas prices
in overseas businesses are determined by international market
conditions. In addition, those prices fluctuate significantly inresponse to the influence of a variety of factors including global
or local supply and demand as well as trends and conditionsin the global economy and financial markets. The vast majorityof these factors are beyond the control of the Company. In
this regard, INPEX is not in a position to accurately predict
movements in future crude oil and natural gas prices. The
Group’s sales and profits are subject to the effects of such pricefluctuations. Such effects are highly complex and are caused by
the following factors.
1) Although a majority of natural gas selling prices in overseas
businesses are linked to crude oil prices, they are not in direct
proportion to crude oil prices.
2) Because sales and profits are determined on the basis of
crude oil prices and natural gas prices at the time sales arebooked, actual crude oil transaction prices and the averageoil price during the accounting period do not necessarily
correspond.
For the domestic natural gas businesses, the Company
has continued to purchase as source gas natural gas regasified
from imported LNG as a raw material in addition to natural
gas produced in Japan since January 2010. The price of theCompany’s natural gas sold in Japan is comprised of a fixed priceportion as well as a portion that reflects fluctuations in the priceof imported LNG. In addition to the direct impact of trends inthe market prices of LNG and competing energy sources on that
portion that reflects fluctuations in the price of imported LNG,
contract negotiations held each fiscal year with end purchasers
could have an indirect effect on the fixed price portion.

As most of the Group’s business consists of E&P conducted
overseas, associated revenues (sales) and expenditures (costs) aredenominated in foreign currencies (primarily in U.S. dollars), andprofit and loss is subject to the effects of the foreign exchange
market. In the event of appreciation in the value of the yen, yendenominated sales and profits decrease. Conversely, in the eventof depreciation in the value of the yen, yen-denominated sales
and profits increase.
On the other hand, when borrowing necessar y funds,
the Company borrows in foreign currencies. In the event ofappreciation in the value of the yen, a foreign exchange gain on
foreign-currency denominated borrowings is recorded as a resultof fiscal year-end conversion; in the event of depreciation in thevalue of the yen, a foreign exchange loss is incurred. For thisreason, the exchange risk associated with the above businessis diminished and the impact of fluctuations in exchange rates
on profit and loss tends to be mitigated. Moreover, although
the Company is taking measures to reduce a portion of the risks
associated with movements in foreign currency exchange rates,
these measures by no means cover all possible risks. As a result,the impact of fluctuations in foreign currency exchange rates
cannot be completely eliminated.

(3) The effect of fluctuations in interest rates on
financial results
The Group raises some of the funds necessary for explorationand development operations through borrowing. Much ofthese borrowings are with variable-rates, long term borrowings
based on the U.S. dollar six-month LIBOR rate. Accordingly, theCompany’s profits are subject to the influence of fluctuations
in U.S. dollar interest rates. Furthermore, although the Grouphas devised methods to reduce a portion of interest rate risk,these methods do not cover all risks of interest rate fluctuation
incurred by our Group and do not entirely remove the effect offluctuations in interest rates.

3. OVERSEAS BUSINESS ACTIVITIES AND COUNTRY RISKof OPEC production ceilings in OPEC member countries andchanges in the legal system and taxation system of thosecountries (including the establishment or abolition of laws or
regulations and changes in their interpretation or enforcement)
could have a significant impact on the Group’s business or results
unless the impact is compensated by insurance.
Additionally, against the background of rising development
costs and other changes in the business environment, theprogress of oil and gas projects, and the need to addressenvironment al is sues, the gover nment s of oil- producing
countries may seek to renegotiate the fiscal conditions including
conditions of existing oil contracts related to par ticipatinginterests. In the event that the fiscal conditions of contracts were
to be renegotiated, this could have an adverse effect on theGroup’s business performance.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

The Group engages in a large number of oil and natural gas
development projects overseas. Because the Group’s businessactivities, including the acquisition of participating interests,
are conducted on the basis of contracts with the governmentsof oil-producing countries and other entities, steps taken byoil-producing countries to further tighten controls applicable
to home country natural resources, suspension of operation
due to conflicts and other factors, and other such changes
in the political, economic, and social circumstances in such
oil-producing countries or neighboring countries (including
government involvement, stage of economic development,
economic growth rate, capital reinvestment, resource allocation,
res tr ic tion of economic ac tivities by global communit y,government control of foreign exchange or foreign remittances,and the balance of international payments), the application

087

4. DEPENDENCE ON SPECIFIC GEOGRAPHICAL AREAS OR
PROPERTIES(1) Production volume
The Group engages in stable production of crude oil and natural
gas in the Offshore Mahakam Block (Indonesia), the ADMA
Block (United Arab Emirates), the Minami Nagaoka Gas Field(Japan) and so on. Through a process of business integration,
the Group had established a wide ranging, diversified yetbalanced portfolio that encompassed the Asia-Oceania regions(particularly Japan, Indonesia, and Australia), the Middle East
and Africa, Eurasia including Caspian Sea area and the Americas.
For the year ended March 31, 2015 however, the Middle East
and Africa regions accounted for about 41% and the Asiaand Oceania regions accounted for about 41% of the Group’s
production volume, making up the vast majority of the Group’s
operations.
Looking ahead, the Group will endeavor to further enhance
the balance of its asset portfolio on a regional basis. However,the Group currently relies heavily on specific geographical areasand properties for its production volume, and the occurrence inthese properties of an operational problem or difficulty could
have an adverse effect on the Group’s operational results.

(2) Contract expiration dates in principal business areas
Expiration dates are customarily stipulated in the agreements
related to participating interests, which are prerequisites for theGroup’s overseas business activities. Although March 30, 1997
was the initial contract expiration date in the production sharing
contract for the Offshore Mahakam Block of Indonesia, theGroup’s principal geographical business area, an extension wasapproved in 1991, and the current expiration date is December
31, 2017. On the basis of the concession agreement for the
ADMA Block, the concession expiration date is March 8, 2018.
(However, the expiration date for the Upper Zakum Oil Field
has been extended to December 31, 2041.) Although the Groupplans to make efforts together with partners to further extend
these agreements, inability to re-extend the agreements or
unfavorable contract terms and conditions at the time of reextension could have an adverse effect on the Group’s results.

Even should the agreements be re-extended, we anticipate
that remaining recoverable reserves may decrease at the timeof re-extension. Although the Group is striving to acquireinterests that can substitute these properties, failure to acquireparticipating interests in oil and gas fields to fully substitute forthese properties could have an adverse effect on the Group’s
results. In addition, the period for exploration in oil and gas fields
currently under exploration is fixed by contracts, and in the caseof fields where oil and/or gas reserves are found that are deemed
to be commercialized, and the Company is unable to decideon the transition to the development stage by the expiration of
the current contract, efforts will be made through negotiations
with the government of the oil- or gas-producing country inquestion to have the periods extended. However, there remains
the possibility that such negotiations may not be successfully
concluded, in which event the Company would be forced towithdraw from operations in the oil or gas field concerned. Also,
as a rule, when there has been a major breach of contract on
the part of one party, it is customary for the other party to havethe right to cancel the agreement before the expiration date.
The agreements for properties in these principal geographicalbusiness areas contain similar provisions. The Group has neverexperienced early cancellation of an agreement due to breachof contract, and we do not anticipate such an occurrence in the
future. Nevertheless, a major breach of contract on the partof a party to an agreement could result in cancellation of anagreement before the expiration date.
A n d i n t h e ove r s e a s n a t u r a l g a s d eve l o p m e n t a n d
production activities, in many cases we are selling and supplying
gas based on long-term sales and supply contracts in which
expiration dates are stipulated. We plan to make efforts withpartners to extend or re-extend the expiration date before thedeadline stipulated in these contracts. Nevertheless, inability
to extend the contracts, or the occurrence of cases in which
extension is made but sales and supply volumes are reduced,
could have an adverse effect on the Group’s business or results.

5. PRODUCTION SHARING contracts(1) Details of production sharing contracts
The Group has entered into produc tion sharing contrac ts
with countries including Indonesia and Caspian Sea area, andtherefore holds numerous par ticipating interests in thoseregions.
Production sharing contracts are agreements by which one
or several oil and natural gas development companies serve ascontractors that undertake at their own expense explorationand development work on behalf of the governments of oilproducing countries or national oil companies and receive
production from the projects as cost recovery and compensation.
That is to say, when exploration and development work results inthe production of oil or natural gas, the contractors recover the
exploration and development costs they incurred by means ofa share in the production. The remaining production (crude oiland gas) is shared among the oil-producing country or nationaloil company and the contractors according to fixed allocation
ratios. (The contactors’ share of production after cost recovery
is called “profit oil and gas.” In the case of natural gas, sales
are conducted by Indonesia and the contractors receive cost
recovery and profit gas in the form of cash.) On the other hand,in cases when exploration fails and expected production is not

088

INPEX CORPORATION Annual Report 2015

realized, the contractors are not to recover their invested funds.

(2) Accounting treatment of production sharing
contracts
When a company in the Group owns participating interests under
production sharing contracts, as mentioned above, in the role ofcontractor it invests technology and funds in the exploration anddevelopment of the property, recovers the invested costs fromthe production produced, and receives a share of the remaining
production after recovery of invested costs as compensation.
Costs invested on the basis of production sharing contracts
are recorded on the balance sheet as assets for which future
recovery is anticipated under the item “Recoverable accounts
under produc tion sharing.” Af ter the star t of produc tion,
recovered costs on the basis of those agreements are deductedfrom this balance sheet item.
As production received under production sharing contracts
is divided into the cost recovery portion and the compensationp or tion, t he met ho d of c alc ulating cos t of s ales is als odistinctive. That is to say, the full amount of production received
is temporarily charged to cost of sales as the cost of received
production, and subsequently the amount of the compensation
portion is calculated and this amount is booked as an adjustment

item to cost of sales (“Free of charge production allocated”).
Consequently, only the cost recovery portion of production after

deduction of the compensation portion is booked as cost of
sales.

6. RELATIONSHIP WITH THE JAPANESE GOVERNMENT(1) The Company’s relationship with the Japanese
government
Although the government of Japan (the Minister of Economy,
Trade and Industry) holds 18.94% of the Company’s commonshares issued and a Class A Stock as of June 25, 2015, theCompany autonomously exercises business judgment as a
private corporation. There is no relationship of control, such as
through the dispatch of officers or other means between the
Company and the Japanese government. Moreover, we believethat no such relationship will develop in the future. Furthermore,
there is no concurrent posting or secondment to the Company ofofficers or employees from the Japanese government.

(2) Ownership and sale of the Company’s shares by theJapanese government (the Minister of Economy, Tradeand Industry)
The Ministry of Economy, Trade and Industry (METI) holds 18.94%
of the Company’s common shares issued. METI succeeded tothe shares that had been held by Japan National Oil Corporation(JNOC) following the dissolution of JNOC on April 1, 2005.
With regard to the liquidation and disposition of the oil andgas upstream assets owned by JNOC, the Policy Regarding
the Disposal of Oil and Gas Development-Related Assets Heldby Japan National Oil Corporation (hereinafter, the “Report”)
was announced on March 18, 2003 by the Japan National Oil
Corporation Asset Evaluation and Liquidation Deliberation
Subcommit tee of the Advisor y Commit tee on Energy andNatural Resources, an advisory body of the Ministry of Economy,
Trade and Industry. The Report describes the importance ofappropriate timing in selling the shares on the market, taking into
consideration enterprise value growth. In addition, METI may, in
accordance with the Supplementary Provision Article 13 (1) 2 of
the “Special Measures Act for Reconstruction Finance Keeping
After the Great East Japan Earthquake” (“the Reconstruction
Finance Keeping Act“ (provisional translation, the same shallapply hereinaf ter)) enacted December 2, 2011, sell of f theCompany’s shares in Japan or overseas after examining thepossibility of disposal of the said shares based on a review of theholdings from the perspective of energy policy. This could havean impact on the market price of the Company’s shares.
METI also holds one share of the Company’s Class A Stock.
As the holder of a Class A Stock, METI possesses veto rights
over certain resolutions of the Company’s general shareholders’meetings and meetings of the Board of Directors. For details on
the Class A Stock, please refer to “8. CLASS A STOCK” below.

7. TREATMENT OF SHARES OF THE GROUP’S PROJECT COMPANYOWNED BY JAPANESE GOVERNMENT AND JOGMEC(1) Treatment of shares of the Group’s projectcompany previously owned by Japan National Oil
Corporation (JNOC)

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

In the aforementioned Report, INPEX CORPORATION (prior to
the integration with Teikoku Oil; reorganized on October 1, 2008)
was identified as a company that should comprise part of a corecompany, and is expected to play a role in efficient realizationof a stable supply of energy for Japan through the involvement
by a national flagship company. In response to the Report, theCompany (also, the Group since our acquirement of Teikoku Oil
on October 1, 2008) has sought to promote efficient realizationof a stable supply of energy for Japan while taking advantage
of synergy with the efforts of active resource diplomacy on thepart of the Japanese government, and has aimed to maximize
shareholder value by engaging in highly transparent and efficientbusiness operations.
As a result, with regard to the integration by means oftransfer of shares held by JNOC proposed in the Report, INPEXCORPORATION and JNOC concluded the Basic Agreement
Concerning the Integration of Assets Held by JNOC into INPEXCORPORATION of February 5, 2004 (hereinafter the “Basic
Agreement”) and a memorandum of understanding related
to Basic Agreement (hereinafter “MOU”). On March 29, 2004,
INPEX CORPORATION and JNOC entered into related contracts
including the Basic Contract Concerning the Integration ofAssets Held by JNOC into INPEX CORPORATION (hereinafter
the “Basic Contract”), achieving the agreement on the details
including the treatment of the project companies subject to theintegration and shareholding ratios.
I n 2 0 0 4 I N P E X C O R P O R AT I O N a c c o m p l i s h e d t h e

integration of Japan Oil Development Co., Ltd. (JODCO), INPEXJava Ltd. (disposal was completed on September 30, 2010) and
INPEX ABK, Ltd. which are three of four companies covered by
the Basic Agreement. Although INPEX Southwest Caspian Sea
Ltd. (hereinafter “INPEX Southwest Caspian”) would become awholly owned subsidiary of INPEX CORPORATION by means of ashare exchange and the procedures were undertaken, the shareexchange contract was invalidated owing to failure to accomplish
the terms and conditions of the share exchange contract and theplanned share exchange was cancelled. Following the dissolutionof JNOC on April 1, 2005, the Minister of Economy, Trade andIndustry succeeded to the INPEX Southwest Caspian shares
held by JNOC. The Company continues to study the possibility
to acquire the shares. However, the METI’s future treatmentof these shares is undecided and, depending on the result ofreview in accordance with the Reconstruction Finance Keeping
Act, acquisition of INPEX Southwest Caspian shares could be
unavailable.
The treatment of Sakhalin Oil and Gas Development Co.,
Ltd. (hereinafter “SODECO”), INPEX Offshore North Campos,
Ltd., INPEX Nor th Makassar, Ltd. (liquidation proceedings
completed on December 19, 2008), INPEX Masela, Ltd., and
INPEX North Caspian Sea, Ltd. was agreed between INPEXCORPORATION and JNOC in the MOU of February 5, 2004.
Regarding the treatment of shares of SODECO, refer to thesection “(2) Treatment of the shares of Sakhalin Oil and Gas
Development (SODECO) owned by the Japanese government”
below. With regard to the transfer to INPEX CORPORATION of
the shares in the above project companies other than SODECO,
it was decided that the shares are to be transferred for cash089

compensation as soon as prerequisites such as the consent of
the oil-producing country and joint venture partners and thepossibility of appropriate asset evaluations are in place. However,
the transfer of shares held by JNOC in the above companies has
not been decided and the shares in the above project companies
were succeeded to by the Japan Oil Gas and Metals National
Corporation (hereinafter “JOGMEC”) on the dissolution of JNOC
on April 1, 2005, except shares related to INPEX North Makassar,
Ltd., to which the Minister of Economy, Trade and Industr y
succeeded. JOGMEC states in its “medium-term objective” and“medium-term plan” that the shares succeeded to from JNOC
will be disposed of at an appropriate time and in an appropriatemanner, but the timing and manner of the disposal for the shares
held by JOGMEC have not been decided, and it is possible that
the Company will be unable to acquire the shares.

(2) Treatment of the shares of Sakhalin Oil and Gas
Development (SODECO) owned by the Japanese
government
The Japanese government (the Minister of Economy, Tradeand Industry) owns 50% of the shares of SODECO. SODECO
was established in 1995 to engage in an oil and natural gas
exploration and development project located on the northeast
continental shelf off Sakhalin Island. SODECO owns a 30.0%
interest in the Sakhalin-1 Project, of which ExxonMobil of theUnited States is the operator. In October 2005, Phase 1 ofthis project started with the goal of advanced production ofoil and natural gas. Furthermore, there is a plan for additional
development operations (Phase 2) for the purpose of the fullscale production of natural gas. The Company holds 6.08% of
SODECO shares issued and outstanding.
In the previously mentioned Report, SODECO, along withINPEX CORPORATION and JODCO, has been identified as acompany that should comprise part of a core company in Japan’s
oil and natural gas upstream industry in the future.
In accordance with the Report, it is assumed that privatesec tor shareholders, including INPEX CORPOR ATION, will
acquire shares of SODECO issued and outstanding to which the
Minister of Economy, Trade and Industry succeeded and thatwere previously held by JNOC (50.0%). The Company plans tohold a maximum of 33% of the SODECO shares to become its
largest shareholder. In the event that the consent of SODECO’s
joint-venture par tner s, the relevant Rus sian gover nment
entity, or other parties is necessary for the acquisition of theshares, obtaining the consent is a prerequisite for acquisition.
In addition, it will be necessary to reach agreement on theshareholder composition for SODECO, the share transfer price,and other matters.
In the event that the additional acquisition of the SODECO
shares is realized, the Group will hold a substantial ownershipinterest in oil and natural gas assets in Russia, as well as in Asiaand Oceania, the Middle East, Caspian Sea area, and otherregions, and we expect the acquisition to contribute to theachievement of a more balanced overseas asset portfolio for theGroup.
However, at this time it is undecided whether agreement
concerning acquisition of the shares with the Minister of
Economy, Trade and Industry will be reached as anticipated andwill be realized. Also, even in the event that the acquisition isrealized, the conditions and time of acquisition are undecided
and, depending on the result of review in accordance with theReconstruction Finance Keeping Act, the acquisition by theCompany could be unavailable.

8. CLASS A STOCK(1) Overview of the classified share

1) Reason for the introduction
The Company was established as the holding company througha stock transfer between INPEX CORPORATION and Teikoku
Oil Co., Ltd. on April 3, 2006. Along with this, a classified shareoriginally issued by INPEX CORPORATION (prior to the merger)
was transferred and at the same time the Company issued aclassified share with the same effect (hereinafter the “Class A
Stock”) to the Minister of Economy, Trade and Industry. The
classified share originally issued by INPEX CORPORATION
was the minimally required and a highly transparent measure
to eliminate the possibility of management control by foreign
capital while not unreasonably impeding the efficiency andflexibility of management based on the concept in the Reportdiscussed in the above section 7. “TREATMENT OF SHARES OF
THE GROUP’S PROJECT COMPANY OWNED BY JAPANESEGOVERNMENT AND JOGMEC.” INPEX CORPOR ATION is
identified as a company that should comprise part of a corecompany for Japan’s oil and gas upstream industr y and is
expected to play a role in efficient realization of a stable supplyof energy for Japan as a national flagship company. On thebasis of the concept of the Repor t, following a speculativeacquisition or an attempt at management controlled by foreign
capital, Class A Stock is designed and issued to be highly
transparent while not unreasonably impeding the efficiency andflexibility of management and to keep the effects of any such
speculative acquisition to the necessary minimum. At the same

090

INPEX CORPORATION Annual Report 2015

time, Class A Stock maintains the Company’s role in the efficient
implementation of a stable supply of energy for Japan as acore business, so that management is not conducted in a way
contradictory to that role and no negative impact is felt.
2) Shareholders’ meeting resolutions, dividends, distributionof residual assets, and redemption
Unless otherwise provided by laws or ordinances, the Class A
Stock does not have any voting rights at the Company’s generalshareholders’ meetings. With regard to cash dividends paid
and the distribution of residual assets, the Company concluded
a stock split at a ratio of 1:400 of common stock with October
1, 2013, as the effective date. For Class A Stock (unlisted) nostock split was conducted. The Articles of Incorporation specify
that dividends of Class A Stock are equivalent to dividends ofa common stock prior to the stock split. The Class A Stock will
be redeemed by resolution of the Board of Directors of theCompany if the holder of the Class A Stock requests redemption
or if the Class A Stock is transferred to a party other than thegovernment of Japan or an independent administrative bodythat is fully funded by the government of Japan.
3) Veto rights in the Articles of Incorporation
The Articles of Incorporation of the Company provide that an
approval resolution of the meeting of the holder of the Class A
Stock is necessary in addition to resolutions of the Company’s
general shareholders’ meetings and resolutions of meetings ofthe Board of Directors for the decisions on certain important
mat ters such as the appointment or removal of Direc tors,

disposition of material asset s, changes to the Ar ticles ofIncorporation, business integration, capital reduction or company
dissolution in connection with the business of the Company.
Accordingly, the Minister of Economy, Trade and Industry, as theholder of the Class A Stock, has veto rights over these importantmatters.
4) Criteria for the exercise of veto rights provided in the criteria
for the exercise of the Class A Stock holder’s voting rights
Criteria concerning the exercise of the veto rights have been
established in a Ministry of Economy, Trade and Industry Notice(No. 220, 2008) (hereinafter the “Notice”). The criteria stipulate
the exercise of veto rights only in the following specific cases.
• When resolutions pertaining to appointment or removal of
Directors and integration are not voted down and it is judgedthat the probability is high that the Company will engage inmanagement inconsistent with the role that a core company
should perform for efficient realization of a stable supply ofenergy to Japan.
• With regard to decisions related to the disposal of all or partof significant assets, when resolutions pertaining to dispositionof material assets are not voted down and the objects ofdisposition are oil and natural gas exploration or production
rights or rights similar thereto or shares or ownership interestin the Company’s subsidiary whose principal assets are said
rights and it is judged that the probability is high that theCompany will engage in management inconsistent withthe role that a core company should perform for efficient
realization of a stable supply of energy to Japan.
• When resolutions pertaining to amendments to the Company’s
Articles of Incorporation relating to changes in the Company’sbusiness objectives, reduction in the amount of capital, or
dissolution are not voted down and it is judged that theprobability is high that the Company will engage in managementinconsistent with the role that a core company should perform
for efficient realization of a stable supply of energy to Japan.
• When resolutions pertaining to amendments to the Articles ofIncorporation granting voting rights to any shares other than thecommon shares of the Company are not voted down and could
have an effect on the exercise of the voting rights of the Class A
Stock.
It is provided that the above criteria shall not be limited in theevent that the Notice is changed in the light of energy policy.

(2) Risk in connection with the Class A Stock
Following a speculative acquisition or an attempt at management
controlled by foreign capital, Class A Stock is designed andissued to be highly transparent while not unreasonably impeding
the efficiency and flexibility of management and to keep theeffects of any such speculative acquisition to the necessary
minimum. At the same time, Class A Stock maintains theCompany’s role in the efficient implementation of a stable supplyof energy for Japan as a core business, so that management
is not conducted in a way contradictory to that role and no
negative impact is felt. Nevertheless, the anticipated risks inconnection with the Class A Stock include the following.
1) Possibility of conflict of interest between national policy
and the Company and its common shareholders
It is conceivable that the Minister of Economy, Trade andIndustry could exercise the veto rights in accordance with theabove criteria provided in the Notice. As the said criteria havebeen provided from the standpoint of efficient realization of astable supply of energy to Japan, it is possible that the exerciseof the veto rights by the Minister of Economy, Trade and Industry
could conflict with the interest of other shareholders who holdthe Company’s common shares. Also, it is possible that the said
criteria could be changed in the light of energy policy.
2) Impact of the exercise of veto rights on the price ofshares of common stock
As mentioned above, as the holder of the Class A Stock has theveto rights over certain important matters in connection with thebusiness of the Company, the actual exercise of the veto rights
over a certain matter could have an impact on the price of theCompany’s shares of common stock.
3) Impact on the Company’s degree of freedom in businessand business judgment
As the Minister of Economy, Trade and Industry holds the Class
A Stock with the previously mentioned veto rights, the Company
needs a resolution of the meeting of the holder of the Class
A Stock concerning the above matters. For this reason, theCompany’s degree of freedom in management in those matters
could be restricted by the judgment of the Minister of Economy,
Trade and Industry. Also, attendant on the need for a resolutionof the meeting of the holder of the Class A Stock concerning theabove matters, a certain period of time is required for procedures
such as the convening and holding of meetings and resolutions
and for the processing of formal objections, if necessary.

9. CONCURRENTLY SERVING OUTSIDE DIRECTORSAt the same time, however, the shareholder corporations are
involved in businesses that overlap with those of the Company.
The Company therefore recognizes that it must pay particularattention to corporate governance to avoid conflicts of interest inconnection with competition and other matters.
To this end, all Company direc tors, including the four
outside directors described above, are required to sign a written
undertaking to carry out their duties as officers of the Company
appropriately and with the highest regard for the importance ofsuch matters as their obligations in connection with noncompetitive
practices under the Japanese Companies Act, the proper mannerfor dealing with conflict of interest, and confidentiality.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

The Board of Directors of the Company is composed of 15
members, five of whom are outside directors.
The four outside directors have many years of management
experience in the Company’s business and are able to offer
objective, professional advice regarding operations. For thisreason, they were asked to join the Board of Direc tors tocontribute to the development of the Company’s business.
The four outside directors concurrently serve as director
or advisors of Japan Petroleum Exploration Co., Ltd., Mitsubishi
Corporation, Mitsui Oil Exploration Co., Ltd. and JX Holdings,
Inc. (hereinafter “shareholder corporations”), respectively.

091

Oil and Gas Reserves and Production Volume
1. Oil and Gas Reserves
Proved reserves
The following tables list the proved reser ves of crude oil,condensate, LPG and natural gas of INPEX CORPORATION,
its consolidated subsidiaries and equity-method affiliates (the“Group”) on main projects. Disclosure contents for proved
reser ves are determined in accordance with the rules andregulations of the U.S. Financial Accounting Standards Board (theJapan
Crude oil(MMbbl)Gas(Bcf)

Proved developed and undeveloped reserves
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 2013
15
609
Extensions and discoveries
7261
Acquisitions and sales——
Revisions of previous estimates(0)(8)
Interim production(1)(46)
As of March 31, 201421816
Equity-method affiliates
As of March 31, 2013——
Extensions and discoveries——
Acquisitions and sales——
Revisions of previous estimates——Interim production——
As of March 31, 2014——
Proved developed and undeveloped reserves
As of March 31, 2014
21816
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 2014
21
816
Extensions and discoveries——
Acquisitions and sales——
Revisions of previous estimates(0)(9)
Interim production(1)(42)
As of March 31, 201519765
Equity-method affiliates
As of March 31, 2014——
Extensions and discoveries——
Acquisitions and sales——
Revisions of previous estimates——Interim production——
As of March 31, 2015——
Proved developed and undeveloped reserves
As of March 31, 2015
19
765
Proved developed reserves
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 201513513
Equity-method affiliates——
As of March 31, 2015
Proved undeveloped reserves
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 20156
252
Equity-method affiliates
As of March 31, 2015——

Asia & Oceania“FASB”), and are presented in accordance with the AccountingStandards Codification Topic 932 “Extractive Activities —Oiland Gas” (“Topic 932”). The Group’s proved reserves as of March
31, 2015 were 1,213.27 million barrels for crude oil, condensate
and LPG, and 6,560.6 billion cubic feet for natural gas, for a totalof 2,434.37 million boe.
Eurasia(Europe & NIS)

Middle East &AfricaAmericas

Total

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)

Gas
(Bcf)

208
—
—
8
(17)
199

5,507
3
—
12
(217)
5,306

183
—
—
13
(10)
186

42
—
—
(15)
—
27

363
408
—
2
(31)
742

—
—
—
—
—
—

9
—
—
(0)
(0)
9

296
22
—
7
(37)
288

779
414
—
23
(59)
1,157

6,454
286
—
(4)
(300)
6,437

3
—
—
(1)
(0)
2

314
—
—
(1)
(15)
298

—
—
—
—
—
—

—
—
—
—
—
—

142
—
—
3
(30)
115

—
—
—
—
—
—

6
—
—
(1)
(0)
5

0
—
—
0
(0)
1

151
—
—
1
(31)
121

315
—
—
(1)
(15)
298

201

5,603

186

27

857

—

13

289

1,278

6,735

199
18
(9)
12
(15)
204

5,306
182
(269)
121
(217)
5,123

186
13
—
3
(10)
192

27
—
—
0
—
27

742
—
—
(16)
(31)
695

—
—
—
—
—
—

9
3
1
(0)
(0)
13

288
63
1
29
(38)
343

1,157
34
(8)
(2)
(58)
1,123

6,437
245
(268)
140
(296)
6,258

2
0
—
(0)
(0)
2

298
20
—
9
(24)
302

—
—
—
—
—
—

—
—
—
—
—
—

115
5
—
(1)
(31)
87

—
—
—
—
—
—

5
—
—
(3)
(1)
1

1
—
—
(0)
(0)
0

121
5
—
(4)
(31)
90

298
20
—
8
(24)
302

206

5,425

192

27

783

—

13

343

1,213

6,561

22

442

46

—

520

—

10

192

611

1,146

1

166

—

—

73

—

1

0

75

167

182

4,681

146

27

175

—

3

151

512

5,112

1

136

—

—

15

—

—

—

15

136

Notes: 1. Based on SEC disclosure standards, the Group discloses proved reserves in each country containing 15% or more of its proved reserves. As of March 31, 2015, the Group held proved
reserves in Australia of approximately 181.07 million barrels for crude oil and approximately 4,554.9 billion cubic feet for natural gas, for a total of 1,032.08 million boe.
2. Proved reserves (as of March 31, 2015) of the following blocks and fields include the portion attributable to minority interests.
		 Eurasia (Europe & NIS): ACG (49%), Kashagan (55%), Americas: Copa Macoya (30%), Horn River Area (54.91%)
3. MMbbl: Million barrels
4. Bcf: Billion cubic feet
5. Crude oil includes condensate and LPG

Standardized measure of discounted future net cash flows and their changes relating to proved oil and gas reserves
for the year ended March 31, 2015
Disclosure contents for the standardized measure of discounted
future net cash flows and their changes relating to proved
reserves for the year ended March 31, 2015 are determined inaccordance with the rules and regulations of the FASB, and arepresented in accordance with Topic 932.
In calculating the standardized measure of discounted
future cash inflows, the arithmetic average of oil and gas prices
at the first day of each month during the current fiscal year

092

INPEX CORPORATION Annual Report 2015

is applied to the estimated annual future production fromproved reserves. Future development and production costs are
estimated based upon the assumptions of constant oil and gas
prices and the continuation of existing economic, operating andregulatory conditions. Future income tax expenses are calculated
by applying the year-end statutory tax rates to estimated future
pretax cash flows less the tax basis of the properties involved
based upon laws and regulations already legislated at year-end.

The discount is computed by applying a prescribed discount rateof 10% to the estimated future net cash flows.
The translation of U.S. dollar amounts into yen amounts iscomputed by applying the year-end exchange rates (TTM) of¥102.92 and ¥120.27 to the U.S. dollar as of March 31, 2014 and2015, respectively.
Since these figures are calculated in accordance with therules set forth by the FASB, which have the following aspects,
March 31, 2014
INPEX CORPORATION and Consolidated Subsidiaries
Future cash inflows
Future production and development costs
Future income tax expenses
Future net cash flows
10% annual discount for estimated timing of cash flows
Standardized measure of discounted future net cash flows

they do not represent the fair market value nor the Group’s
estimation for the present value of the cash flows of reserves ofcrude oil, condensate, LPG and natural gas.
• No economic value is attributed to potential reserves.
• A prescribed discount rate of 10% is applied.
• Oil and gas prices are subject to constant fluctuations despite
the assumptions of constant oil and gas prices of Topic 932.

Total

¥17,341,495(5,214,355)(7,756,030)
4,371,111(2,724,139)
1,646,972

Equity-method affiliates
Future cash inflows
Future production and development costs
Future income tax expenses
Future net cash flows
10% annual discount for estimated timing of cash flows
Share of equity-method investees’ standardized measure of
discounted future net cash flows
Total consolidated and equity-method affiliates in standardized
measure of discounted future net cash flows

Millions of yen
Asia &
Eurasia
Middle East &Oceania(Europe & NIS)
AfricaJapan¥1,216,700 ¥ 6,010,999(232,106)(2,022,074)(390,578)(1,791,151)
594,016
2,197,774(353,477)(1,399,641)
240,539
798,133¥1,830,647 ¥ 8,114,992(475,798)(2,430,435)(294,204)(5,270,507)
1,060,645
414,050(638,328)(301,903)
422,316
112,146

Americas¥168,157(53,942)(9,589)104,627(30,790)
73,837

1,502,675(559,626)(807,541)
135,508(34,528)

—
—
—
—
—

172,531(100,520)(37,642)
34,369(18,128)

—
—
—
—
—

1,283,450(422,426)(768,867)
92,158(13,834)

46,694(36,681)(1,032)8,981(2,566)

100,980—

16,242—78,324

6,414¥ 1,747,952¥  240,539¥   814,375¥  422,316¥   190,471¥ 80,252

Millions of yen
Asia &
Eurasia
Middle East &Oceania(Europe & NIS)
AfricaAmericasNote: Reserves of the following blocks and fields include the portion attributable to minority interests.
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)/Americas: Copa Macoya (30%), Horn River Area (54.91%)

March 31, 2015
INPEX CORPORATION and Consolidated Subsidiaries
Future cash inflows
Future production and development costs
Future income tax expenses
Future net cash flows
10% annual discount for estimated timing of cash flows
Standardized measure of discounted future net cash flows
Equity-method affiliates
Future cash inflows
Future production and development costs
Future income tax expenses
Future net cash flows
10% annual discount for estimated timing of cash flows
Share of equity-method investees’ standardized measure of
discounted future net cash flows
Total consolidated and equity-method affiliates in standardized
measure of discounted future net cash flows

Total

Japan

¥16,826,527(5,420,750)(6,619,499)
4,786,278(2,740,756)
2,045,522¥1,373,830(279,282)(379,336)
715,212(414,963)
300,249¥6,518,619(2,143,400)(1,792,785)
2,582,434(1,445,090)
1,137,344¥1,787,325(563,719)(235,731)
987,875(552,389)
435,486¥6,935,269(2,373,944)(4,200,930)
360,395(288,615)
71,780¥211,485(60,405)(10,718)
140,363(39,699)
100,663

1,283,858(578,892)(538,253)
166,713(82,534)

—
—
—
—
—

384,759(117,127)(128,356)
139,276(78,062)

—
—
—
—
—

890,520(453,308)(409,898)
27,315(4,453)8,579(8,457)—122(19)84,179—61,214—

22,862103¥ 2,129,701¥  300,249¥1,198,557¥  435,486¥    94,643¥100,766

Millions of yen
Eurasia
Middle East &(Europe & NIS)
AfricaAmericas

Equity-method
affiliates

Note: Reserves of the following blocks and fields include the portion attributable to minority interests.
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)/Americas: Copa Macoya (30%), Horn River Area (54.91%)

Japan¥1,747,952¥240,539¥  798,133¥422,316¥112,146¥ 73,837¥100,980(933,684)(46,427)(265,325)(70,193)(267,861)(17,081)(266,797)(1,289,599)

12,487(409,334)(170,468)(591,895)(25,668)(104,722)

431,664(198,468)
210,367
213,577
1,503,911
153,338
290,644

1,822(7,012)(4,584)25,35437,521—
40,550318,607
20,083
94,716
112,742
179,852
153,338
134,532

24,570(38,914)
109,456
47,88039,546—
71,29253,866(54,786)(58,664)
13,732
850,306—
14,935

12,129(9,473)43,889
8,624
2,092
—
12,313

20,670(108,367)
25,554
5,245
394,593—
17,023¥2,129,701¥300,249¥1,137,344¥435,486¥ 71,780¥100,663¥ 84,179

Note: Reserves of the following blocks and fields include the portion attributable to minority interests.
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)/Americas: Copa Macoya (30%), Horn River Area (54.91%)

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

INPEX CORPORATION and Consolidated
Subsidiaries
Standardized measure at beginning of the period
As of April 1, 2014
Changes resulting from:
Sales and transfers of oil and gas produced, netof production costs
Net changes in oil and gas prices and production
costs
Development costs incurred
Changes in estimated future development costs
Revisions of previous quantity estimates
Accretion of discountNet change in income taxes
Extensions, discoveries and improved recoveries
OtherStandardized measure at end of the period
As of March 31, 2015

Total

Asia &
Oceania

093

Probable reserves and possible reserves
The following tables list the probable and possible reserves of crude oil, condensate, LPG and natural gas of the Group on main
projects. Our probable reserves as of March 31, 2015 were 714.62 million barrels for crude oil, condensate and LPG, and 4,986.6 billion
cubic feet for natural gas, for a total of 1,609.67 million boe. In addition, the Group’s possible reserves as of March 31, 2015 were 104.53
million barrels for crude oil, condensate and LPG, and 2,493.1 billion cubic feet for natural gas, for a total of 575.66 million boe.

March 31, 2015
Probable reserves
Crude oil, condensate and LPG(MMbbl)Natural gas (Bcf)

March 31, 2015
Possible reserves
Crude oil, condensate and LPG(MMbbl)Natural gas (Bcf)

Asia &
OceaniaJapan

Eurasia
Middle East &(Europe & NIS)
AfricaAmericas

SubtotalInterest inreserves heldby equitymethod
affiliates

Total

2

138

351

198

2

691

24

715

74

4,724

91

—

63

4,952

35

4,987

Asia &
OceaniaJapan

Eurasia
Middle East &(Europe & NIS)
AfricaAmericas

SubtotalInterest inreserves heldby equitymethod
affiliates

Total

2

82

2

0

6

93

12

105

65

2,229

—

—

86

2,380

113

2,493

Notes: 1. MMbbl: Million barrels
2. Bcf: Billion cubic feet

2. Oil and Gas Production
The following tables list average daily production for crude oil, natural gas, and the total of crude oil and natural gas by region. The
proportional interests in production by the equity-method affiliates are not broken down by geographical regions.
The Group’s production for the year ended March 31, 2015 was 242.7 thousand barrels per day for crude oil, condensate and LPG,
and 880.0 million cubic feet per day for natural gas, for a total of 408.1 thousand boed. Our method for calculating the conversion ofnatural gas volumes to barrels of oil equivalent (boe) was changed effective the year ended March 31, 2012.

094

Years ended March 31,

2010

2011

2012

2013

2014

2015

Crude oil, condensate and LPG (Mbbld):Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interests in production by equity-method affiliates
Total
Annual production (MMbbl)

4.5
47.7
26.9
73.3
5.5
158.0
60.4
218.3
79.7

3.9
65.1
27.9
73.0
2.3
172.2
67.4
239.6
87.5

3.8
62.5
25.0
84.3
0.1
175.7
75.4
251.2
91.9

3.9
58.0
25.1
84.4
0.1
171.5
74.4
245.9
89.8

3.6
45.8
26.1
84.4
0.1
160.0
84.9
244.9
89.4

3.2
40.6
27.0
84.8
0.5
156.1
86.6
242.7
88.6

Natural gas (MMcf/d):
Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interests in production by equity-method affiliates
Total
Annual production (Billions of cubic feet)

155.1
880.5
—
—
86.9
1,122.6—
1,122.6
409.7

128.7
836.0
—
—
81.1
1,045.9
56.6
1,102.5
402.4

127.6
665.0
—
—
72.4
865.0
62.7
927.7
339.5

133.7
586.4
—
—
90.9
811.0
52.4
863.4
315.1

125.5
602.8
—
—
107.4
835.7
40.7
876.4
319.9

113.9
596.5
—
—
103.2
813.7
66.4
880.0
321.2

Crude oil and natural gas (Mboed):Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interests in production by equity-method affiliates
Total
Annual production (MMboe)

30.4
194.5
26.9
73.3
20.0
345.1
60.4
405.4
148.0

25.3
204.4
27.9
73.0
15.8
346.5
76.8
423.3
154.5

27.7
189.5
25.0
84.3
13.1
339.7
86.5
426.2
156.0

29.0
169.4
25.1
84.4
16.2
324.0
83.8
407.8
148.8

27.2
159.9
26.1
84.4
19.0
316.7
92.1
408.8
149.2

24.6
154.3
27.0
84.8
19.0
309.7
98.4
408.1
148.9

INPEX CORPORATION Annual Report 2015

Corporate Information(As of March 31, 2015)

Corporate Data
Company Name
INPEX CORPORATION
Established
April 3, 2006
Capital¥290,809,835,000
Company Headquarters
Akasaka Biz Tower, 5-3-1 Akasaka, Minato-ku,
Tokyo 107-6332, Japan

Number of Employees (Consolidated) 3,178
Main BusinessResearch, exploration, development, production and sales of oil, natural gas and othermineral resources, other related businesses
and investment and lending to the companies engaged in these activities, etc.

Organization Chart (As of July 1, 2015)
General Meeting of
Shareholders

Board of Directors

Audit & Supervisory
Board (Member)
Secretariat of Audit &Supervisory Board Member

Compliance Committee

President

CSR Committee

Executive
Committee

Audit Unit

Technical Division

Masela Project Division

HSE Unit

Oil & Gas Business Division 1

Ichthys Project Division

General Administration
Division

Oil & Gas Business Division 2

Domestic Project DivisionCorporate Strategy &Planning Division

Asia, Oceania & Offshore
Japan Project Division

Gas Supply &Infrastructure Division

INPEX Advisory
Committee

Corporate HSE
Committee
Information Security
Committee

New Ventures Division

America & Africa
Project Division

INPEX Value Assurance
System Committee

Finance & Accounting Division

Eurasia & Middle East
Project Division

Logistics & IMT Division

Stock Data

Total Number of Shares Authorized to be Issued:
3,600,000,000 common stocks
1 Class A Stock

Type and Total Number of Issued shares
Common Stocks:
40,190 shareholders / 1,462,323,600 sharesClass A Stock*:1 shareholder (Minister of Economy,
Trade and Industry) / 1 share* The Company’ s Articles of Incorporation stipulate that certain major corporate decisions
require a resolution by the holder of the Class A Stock in addition to the approval of theshareholders’ meetings or Board of Directors.

Major Shareholders (Common Stocks)
Name

Percentage of
Number of total commonsharesshares* (%)

Minister of Economy, Trade and Industry

276,922,800

18.94

Japan Petroleum Exploration Co., Ltd.

106,893,200

7.31

Mitsui Oil Exploration Co., Ltd.

50,554,000

3.46Japan Trustee Services Bank, Ltd. (Trust Account) 46,364,200

3.17

JX Holdings, Inc.

43,810,800

3.00

The Master Trust Bank of Japan, Ltd.
(Trust Account)

40,454,300

2.77

CBNY-GOVERNMENT OF NORWAY

37,415,475

2.56

State Street Bank and Trust Company 505223

29,793,001

2.04

JP Morgan Chase Bank 385632

27,875,580

1.91

The Bank of New York Mellon SA/NV 10

20,992,737

1.44

Shareholding by Shareholder Type
Shareholder type

Number of Number ofshareholders
sharesPercentage of
total commonshares*1 (%)

Financial Institutions(Including Trust Accounts)

100

222,549,308

15.22

Securities Companies

59

13,438,854

0.92

Other Domestic Corporations

341

240,904,224

16.47

1

276,922,800

18.94

708

669,088,685

45.76

38,98037,453,329

2.56

1

1,966,400

0.13

Minister of Economy,
Trade and Industry*2
Foreign Corporations and Other
Individuals and Other
Treasury Shares*1 Percentage of total common shares are for total number of issued common shares.
*2 Excludes one Class A Stock* Percentage of total common shares are for total number of issued common shares.

Home Page

The Company’s Web site provides investors with the most up-todate IR information, including ﬁnancial statements.
} www.inpex.co.jp/english

Inquiries

For IR inquiries, as well as to offer comments and opinions about
this report, please contact below.
Corporate Strategy & Planning DivisionCorporate Communications Unit
Investor Relations Group
Phone: +81-3-5572-0234, Fax: +81-3-5572-0235
Web site: www.inpex.co.jp/en/ir/inquiries.html

This Report was printed using environmentally conscious
methods, vegetable oil-based ink.
Printed in Japan