Note: The following report is an English translation of the Japanese-language original.

Presentation Meeting ofConsolidated Financial Results
for the Six Months Ended September 30, 2017
November 13 , 2017

Japan Petroleum Exploration Co .,Ltd.

Cautionary Statement
Any information contained herein with respect to JAPEX’s plans, forecasts, strategies
and other statements that are not historical facts are forward-looking statements about
the future performance of JAPEX. Readers should be aware that the actual results andevents may be different from these projections because of various factors that could
occur in the future.
The provision of this document should not be construed as a solicitation for investment.
Copyright : All information contained herein is protected by copyright, and may not be
copied or reproduced without prior consent of JAPEX.
Note: Abbreviations used herein are as follows:(a) = Actual results(f) = Forecasts
FY = Fiscal Year (FY3/18, for instance, means 12 months ending March 31, 2018)
Any inquiries about the information contained herein or other Investor Relations questions arerequested to be directed to:Investor Relations Group, Media & Investor Relations Dept.
Japan Petroleum Exploration Co., Ltd.
Tokyo, JAPANTEL: +81-3-6268-7111

2

Contents

Ⅰ. Business Overview
President Hideichi Okada

Ⅱ. Consolidated Financial Results for the Six
Months Ended September 30, 2017Managing Executive Officer Michiro Yamashita

Ⅲ. Revised Full Year Forecasts for FY3/18
Managing Executive Officer Michiro Yamashita

3

Ⅰ. Business Overview
President
Hideichi Okada

4

2014-09
2014-10
2014-11
2014-12
2015-01
2015-022015-032015-04
2015-05
2015-06
2015-072015-08
2015-09
2015-10
2015-11
2015-12
2016-01
2016-02
2016-03
2016-04
2016-05
2016-06
2016-072016-08
2016-09
2016-10
2016-11
2016-122017-012017-022017-032017-04
2017-05
2017-06
2017-072017-082017-09［Crude Oil Price US$/bbl]
$120

$110

$90
¥160

Crude Oil Price US$/bbl (Left axis)$100

Exchange Rate JP¥/US$ (Right axis)

5

¥150

¥140

¥130

$80
¥120

$70
¥110

$60
¥100

$50
¥90

$40
¥80

$30
¥70

［Foreign Exchange Rate JP¥/US$］

Trends in Crude Oil Price and Foreign Exchange Rate

Japan Crude Cocktail (JCC) Price in the first 10 days of October
2017 on a prompt report basis: US$ 53.83/bbl JP¥ 112.07/US$

Actual Results for 2Q and Forecasts for FY3/18＜Highlight＞
FY3/17[Billion JP¥]

2Q (a)①

FY3/18Full (a)②

2Q (a)③

ChangeFull (f)Previous
forecasts(August 8,
2017)④

Full (f)Revisedforecasts(November
10, 2017)
⑤*

2Q
（③-①）

Full
（⑤-②）

Full
（⑤-④）

Net sales

91.4

207.1

112.3

211.0

213.8

+20.8

+6.6

+2.7

Operating income(loss)

-3.2

0.6

3.4

4.4

4.3

+6.6

+3.6

-0.1

Ordinary income(loss)

-2.2

2.2

8.8

-0.9

0.6

+11.1

-1.5

+1.5

Profit (loss)
attributable toowners of parent

-1.2

3.4

7.7

1.2

1.7

+9.0

-1.7

+0.5

41.64

45.60

52.44

51.27

51.25

+10.80

+5.65

-0.02

107.67108.53111.79110.62110.94

+4.12

+2.41

+0.32

Assumptions
JCC price(US$/bbl)
Exchange rate
(JP¥/US$)*JAPEX announced the latest forecasts in “Notice of Financial Forecasts Revision” on November 10, 2017, regarding theconsolidated financial forecasts of the fiscal year ending March 31,2018.

6

Long-Term Business Vision and Medium-Term Business Plan
(2015-)“Transformation to an Integrated Energy Company with a Focus on Oil and Gas E&P”
 Regarding our business as the tree, E&P will be “root” and “trunk” and the JAPEX group ispursuing to become a well-balanced integrated company like “the well-proportioned wood”
Power generation
business

1.2 million kW＋αPower generation business
FID

Domestic gas supply
business
Completion of the Soma
LNG Terminal

Domestic gas supply
business

Environment and innovativetechnology businessStable execution of ongoing projects
Pursuing additional E&P potentials

E&P business

Improverevenue,
profit, andreturn toshareholders

E&P business

Establishment of re-Investment cycle
through the expansion of profits
CSR management

FY3/12- FY3/15
Previous Mid-TermBusiness Plan

Transaction volumeof natural gas
2.5 million ton(in LNG equivalent)

Environment andinnovative technology
business

RRR＞1

Production: 100,000 boe/dProved reserves: 550 million boe

Substantial
return toshareholders

Business prospect
Geothermal generation,
Methane hydrate, andCCS

E&P business

Reinvestment Cycle
CSR Management

FY3/16 – FY3/20
7

CSR Management

FY3/26

Outlook of Business Environment
Assumptions of Oil Price and Exchange Rate
Although assuming a gentle recovery in the market, range of higher oil price is assumed to belimited(US$/bbl)
120

WTI

JCC

Assumptions as of 2015
Mid-Term Business Plan

100
80
60
40

Assumptions asof May 2017

20
0
2014

2015

2016

2017

2018

2017

2018

2019-

Oil Price (US$/bbl)

51.25*

55

60

Exchange Rate(JP¥/US$)

110.94*

110
8

2019

2020

*Assumptions as of November
10, 2017

FY3/18 Overview of Key Projects in Progress＜Highlights＞
 E&P business Domestic Natural Gas Supply BusinessHokkaido: Yufutsu Oil and Gas Field

The Soma LNG Terminal

Investment decision on commencement of oil development of ashallow reservoir in June 2017

Under construction toward the commercial commencement inMarch 2018
Commencement of operation on the Soma-Iwanuma Gas Pipeline
in November 2017Canada: Shale Gas Development and Production ProjectSoma Natural Gas-Fired Power Generation Project
Upstream: Ongoing gas production and sales. revision of thedevelopment plan focusing on higher economic area
Midstream: Decided not to proceed PNWL project in July 2017Canada: Oil Sands Project in Hangingstone Leases

Not to re-start production by SAGD process in the Hangingstone
Demonstration area
Commencement of production in the Hangingstone Joint Venturearea in August 2017; expected to reach 20,000 bbl/d in second
half of 2018







Ongoing stable crude oil production of approximately 100,000
bbl/d
Under discussion with the government for stage development
towards 230,000 bbl/d production

Proceeding of CO2 injection in large-scale CCS demonstration
project from April 2016

Methane HydrateIndonesia: Kangean Project

Environment and Innovative Technology Business

CCS

Iraq : Garraf ProjectMade decision of the commercialization in October 2016
Signed a contract of the syndicated loan by project finance in March2017
Commencement of construction in October 2017

Finished the second offshore production test in June 2017

Geothermal Power

Ongoing stable gas production from the Terang Gas Field
Under development of the Sirasun and Batur Gas Fields from2019 2Q



9

Ongoing study and evaluation work in the projectCommencement of Oil Development of a Shallow
Reservoir of Yufutsu Oil and Gas Field
Investment decision of commencement of oil
development of a shallow reservoir (June 2017)•

Decision to commence oil development of a shallow reservoir
named the Takinoue Formation (Shallow reservoir aroundvertical depth of approximately 1,400m) of the Yufutsu Oiland Gas Field in June 2017•

Although crude oil properties are heavier than the currently
produced crude oil (assumed to be used for heavy oil), it isexpected to exist widely in the shallow reservoir•

Reduction of the investment amount to several billions ofyen by repairing existing wells and practical use of the idle
Yufutsu Plant production facilities

Crude oil tanks at Yufutsu Plant

Expectation by the decision of development•

As one of the efforts for maintaining and increasing domestic crude oil production, expecting to commencecommercial production at approximately 200kl per day (approximately 1,260 bbl/d) in the second half of2019•

Continuing evaluation for reserves in shallow reservoir and pursue the possibility of additional development

10

E&P BusinessCurrent status of Canada Shale Gas Development and Production Project【Pacific NorthWest LNG Project】
Decided not to proceed【Shale Gas Development and Production Project】

Production & sales• Ongoing shale gas production and sales
approximately 400 mmcf/d (approximately
75,000 boe/d) as of September 2017

• In July 2017, decided not to proceed with the project due tochanges in the circumstances surrounding LNG industry• Planning to post the extraordinary loss (C$60MM*) of
termination of approximately 900km pipeline construction
plan and the non-operating expense as the equity method
investment loss (C$36MM*) in 3Q financial results• Exploring the development plan to maximize
the value of the Upstream Project• Planning to review asset valuation related to
the Upstream Project during this fiscal year

• Recognizing that multiple alternative sources of supply areavailable for the present procurement of LNG to the Soma
LNG Terminal*Revised as follows from July 2017 announcement
Extraordinary loss: C$65MM→C$60MM
Equity method investment loss：C$37MM→C$36MM

Schematic of Shale Gas Development in the Project

Shale gas development, Suppression of investment in 201711

Canada Oil Sands Project ①
Operator Skills and Experiences for Overseas Business
JACOS （Japan Canada Oil Sands Limited）•

Long experience to the oil sands businessin Canada since 1970`s
Pioneer of producing bitumen using SAGD (steam
heating to reduce oil viscosity) process•

Building a good relationship with local
communities

Formed “Aboriginal Review Group” with local
communities for continuous environmental monitoring•

Acquiring skills and experiences asoverseas operator project

Diversity management to employees with a variety ofraces, cultural backgrounds and others (approximately
170 employees are working)Central processing facility in the Hangingstone Joint Venture area thatstarted production from August 2017

SAGD (Steam Assisted Gravity Drainage) process

Approximately 80 staffs involved in the production operations site

12

Canada Oil Sands Project ②
Overview of Business【the Hangingstone Demonstration area】
Decision not to re-start production using SAGD process•

1999: Commencement of test production by SAGD
process•

2003: Commencement of commercial production•

August 2017: Decision not to re-start SAGD
production①Adverse business environment including low oil prices②Technical risks (Declining reservoir temperature and pressure)•Planned to amortize US$69 million in 3Q financial
results•

Shifted employees in the Demonstration area to
the Joint Venture area【the Hangingstone Joint Venture area】

Commencement of production operations using SAGD process• August 2017: Commencement of production• September 2017: First sale of diluted bitumen• Currently producing approximately 10,000 bbl/d asof November 2017
• Planned to reach peak rate (20,000 bbl/d, for
JACOS 15,000 bbl/d, 75% of total production) in
the second half of 2018
• Expected to continuous production for over 30
years

Central processing facility in the Hangingstone Joint Venture areathat commenced production in August 2017

Central processing facility in the Hangingstone Demonstration area

13

Canada Oil Sands Project ③
Commencement of Production
 Diluted to heavy oil equivalency andtransported via pipeline for sales

Commencement of production in August 2017
December 2012

Final Investment Decision

February 2015

Completion of drilling of horizontal well-pairs

October 2016

Completion of field facility

February 2017

Completion of central processing facility

April 2017

Commencement of steam injection into
horizontal well-pairs

August 2017

Commencement of production using SAGD
process Sufficient to ensure positive operating
cash flow in current oil price level Enhance profitability by stableproduction of 20,000 bbl/d andimproved business plan

Second half-2018
Peak rate (20,000 bbl/d)- Expected to continue production for over 30 years -【Improved Business Plan】

Step1: Cost Reduction (currently being implemented)①Reduction of future capital expenditure such aswells and field facilities②Reduction of general and administrative expenseand operating expense③Pursue possibility to reduce transportation cost
pursuing sharing facilities with third party
Step2: Adoption of a New Technology
Considering to realize “the solvent based SAGD
process” that is injecting extra-light oil along with thesteam① Reduction of operating costs by reducing fuel gas
consumption② Early recovery of investment by acceleratingproduction pace

Rachel Notley, Premier of Alberta (third from the left) celebrating the opening
ceremony of production startup

14

Progress of Soma Project

Soma LNG Terminal, Fukushima Natural Gas Power Plant
Progress of Soma Project
July 2017

Started work at the Soma District Office Building

October 2017

Commencement of construction on the Fukushima Natural Gas
Power Plant

November 2017

Commencement of operation on the Soma-Iwanuma Gas Pipeline
Completion of construction on the Soma LNG Terminal (planned)

December 2017

Arrival of the first LNG tanker in the Soma Port (planned)

March 2018

Commencement of commercial operation on the Soma LNG
Terminal (planned)

Spring of 2020

Commencement of commercial operation on the Fukushima
Natural Gas Power Plant (planned)

Ceremony for safety of construction work at the
Fukushima Natural Gas Power Plant

LNG tank and berth at the Soma
LNG Terminal

15

Started work at the Soma District Office Building

The Iwanuma Valve Station connecting with theSoma-Iwanuma Gas Pipeline

Ⅱ. Consolidated Financial Results
for the Six Months Ended September 30, 2017Managing Executive Officer
Michiro Yamashita

16Actual results

Actual Sales of Natural Gas in 2Q FY3/18 ( year-on-year )Sales volume : Million M3
Net sales : Million JP¥

FY3/17

FY3/182Q (a)

2Q (a)

ChangeSales volume

845

833

-11

Net sales

23,184

26,839+3,654

Domestic gas

Sales volume

531

569

+37

(Domestically produced
gas)

Sales volume

(324)

（344）

（+19）

Overseas gas

Sales volume

313

264

-49

Natural gas

Rising selling price

Breakdown

Million M3

900

600

300

-

313

531

Sales volume ofoverseas gas

Decrease in sales volume of
Shale Gas Project in Canada

Sales volume ofdomestic gas

Increase in demand for local
distribution companies andindustrial users

264

569
Sales volume of “Overseas gas” stated herein are amounts of Japex(U.S.) Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries

2Q FY3/17(a)2Q FY3/18(a)17Actual results

Actual Sales of Crude Oil in 2Q FY3/18 ( year-on-year )FY3/17

FY3/18

2Q(a)

2Q(a)

Sales volume

1,715

1,548

-167

Net sales

43,79253,086+9,294

Domestic crude oil(*)

Sales volume

149

146

-3

Net sales

4,645

5,713

+1,068Overseas crude oil(**)

Sales volume

986

809

-176

Net sales

23,11225,604+2,492

Sales volume

91

－

-91

Net sales

589

－

-589

JCC price

US$/bbl

41.64

52.44

+10.80

Bitumen price (***)

US$/bbl

9.94

－

-9.94

Exchange rate

JP¥/US$107.67111.79+4.12

Sales volume : Thousand KL
Net sales : Million JP¥
Crude Oil

ChangeRising selling price

Breakdown

Bitumen (***)
Assumptions

Decrease in oil sales volume from
Garraf Oil Field in Iraq
Bitumen production in the
Demonstration area has beensuspended from May 2016, decided not
to re-start production operations inAugust 2017(*) Sales volume and net sales of “Domestic crude oil” stated herein do not include purchased crude oil(**) Sales volume and net sales of “Overseas crude oil” stated herein are amounts of 3 overseas subsidiaries (Japex (U.S.) Corp., JAPEX Montney Ltd.
and Japex Garraf Ltd.)(***) Royalty is excluded in the net sales and price of Bitumen

18Actual Results for 2Q FY3/18 ( year-on-year )[ Million JP¥]Net sales

FY3/17

FY3/182Q (a)

2Q (a)

91,494112,382

Change17,884+6,209

645

643

-1

SG&A expenses

14,243

13,788-455

Operating income (loss)-3,213

3,452+6,666

Non-operating income(expenses)

975

5,435

+4,460Ordinary income (loss)-2,238

8,888+11,126

Exploration expenses

Extraordinary income (loss)

-270

-12

+258

414

1,108

+693

Profit (loss) attributable tonon-controlling interests-1,657

10+1,668

Profit (loss) attributable toowners of parent-1,267

7,756+9,023

Income taxes

Main factors for change
Increase factor (+) / Decrease factor (-)+20,887

11,675Gross profit

Actual results

19

Gross profit
Domestic crude oil and natural gas+ ¥2.0 billion
Overseas consolidated subsidiaries+ ¥3.7 billion

Non-operating income (expenses)
Equity in earnings of affiliates+ ¥3.2 billion
Foreign currency translation adjustments on debt,
foreign currency exchange gains and losses(FY3/17)Losses ¥0.4 billion→ (FY3/18)Gains ¥0.9 billion+ ¥ 1.4 billion

Ⅲ. Revised Full Year Forecasts
for FY3/18
Managing Executive Officer
Michiro Yamashita

20Revised forecasts

Revised Forecasts for FY3/18
2017
2018
Full year
Jan.-Mar. Apr.-Jun. Jul.-Sep. Oct.-Dec. Jan.-Mar.

[Assumptions]
JCC price

US$/bblExchange rate JP\/US$

2.
3.

Previous forecasts
Revised forecasts

US$/bblPrevious forecasts

JACOS

US$/bblPrevious forecasts

C$/mcfPrevious forecasts

JML
Gas

54.63
50.00
50.00
50.00
51.27
54.63 49.88 50.00 50.00 51.25
112.12 110.00 110.00 110.00 110.62
112.12 111.38 110.00 110.00 110.94

Revised forecasts

JACOS
Bitumen
Diluted bitumen

1.

Previous forecasts

Revised forecasts
Revised forecasts
Revised forecasts

2.71
2.71

2.62
2.67

32.89
37.46
2.23
1.29

32.83
32.83
2.23
1.94

32.84
33.15
2.45
2.21

“JACOS Bitumen” stated herein bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction of Royalty). Decided not to re-start
operation at the Demonstration area in August 2017 and not estimated FY3/18 sales.
“JACOS Diluted bitumen” stated herein diluted bitumen selling price of Japan Canada Oil Sands Ltd. (Deduction of Royalty). Started
production operation in the Hangingstone Joint Venture area in August 2017, and started sales thereafter.
“JML Gas” stated herein gas selling price of JAPEX Montney Ltd. (Deduction of Royalty)

21

Revised forecasts

Revised Forecasts Natural Gas Sales for FY3/18(vs Previous Forecasts)

FY3/18

FY3/18ChangePrevious forecasts Full (f)August 8, 2017

Revised forecasts Full (f)November 10, 2017

Full

Sales volume

1,797

1,757

-40

Net sales

59,12858,333-796

Domestic gas

Sales volume

1,245

1,251

+5

(Domestically
produced gas)

Sales volume

(722)

(723)

(+2)

Overseas gas

Sales volume

552

506

-46

Sales volume : Million M3
Net sales : Million JP¥

Natural gas

Decrease of sales volume,
decline in selling price

Breakdown

Million M3

2,000
1,600

552

506

1,200
800
400

1,245

Sales volume ofoverseas gas

Decrease in shale gas sales volume
in Canada

Sales volume ofdomestic gas

Increase in demand for local
distribution companies andindustrial users

1,251
Sales volume of “Overseas gas” stated herein are amounts of Japex (U.S.)
Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries.

Previous forecasts(f)Revised forecasts(f)22Revised Forecasts Crude Oil Sales for FY3/18

Revised forecasts(vs Previous Forecasts)

FY3/18

FY3/18ChangePrevious forecasts
Full (f) August 8,
2017

Revised forecasts
Full (f) November 10,
2017

Full

Sales volume

2,654

2,603

-51

Net sales

86,556

87,104+548

Sales volume

285

285

―

Net sales

10,792

10,831+39

Sales volume

1,160

1,154

-6

Net sales

35,65436,790+1,137

Sales volume

―

―

―

Net sales―――

Sales volume

254

210

-44

Net sales

5,768

4,814

-953

JCC price

US$/bbl

51.27

51.25

-0.02

Bitumen price (***)

US$/bbl―――Diluted bitumen(****)

US$/bbl

32.84

33.15

+0.31

Exchange rate

JP¥/US$110.62110.94+0.32

Sales volume : Thousand KL
Net sales : Million JP¥

Crude Oil

Increase in sales volume

Breakdown
Domestic crude oil (*)
Overseas crude oil(**)
Bitumen (***)
Diluted bitumen(****)
Assumptions

23

Rising selling price from Garraf Oil
Field in Iraq
Decision not to re-start SAGD
operation in the Demonstration
area
Reduction of sales volume due torevision for the operation plan of
the Hangingstone Joint Venturearea(*) Sales volume and net sales of “Domestic
crude oil” stated herein do not include
purchased crude oil.
(**) Sales volume and net sales of “Overseas
crude oil” stated herein are amounts of 3
overseas subsidiaries (Japex (U.S.) Corp.,
JAPEX Montney Ltd. and Japex Garraf Ltd.).
(***) ,(****) Royalty is excluded in the net
sales and price of both Bitumen and Diluted
bitumen.

Revised forecasts

Revised Forecasts for FY3/18 (vs Previous Forecasts)
Previous forecasts
Full(f)August 8, 2017

Revised forecasts
Full(f)November 10, 2017

Net sales

211,025

213,802+2,777Gross profit

35,80435,391-414

Exploration expenses

1,329

1,362

+34

SG&A expenses

29,987

29,714-273

Operating income (loss)

4,489

4,314

-175

Non-operating income-5,399-3,661+1,738

Ordinary income (loss)

-910

654

+1,564Extraordinary income-5,564-5,579-15

Million JP¥

ChangeIncome taxes-1,361-720+640

Profit (loss) attributable tonon-controlling interests-6,333-5,941+391

Profit (loss) attributable toowners of parent

1,219

1,737

+518

24

Main factors for change
Increase factor (+) / Decrease factor (-)

Gross profit
Domestic crude oil and natural gas- ¥0.2billion
Overseas consolidated subsidiaries- ¥0.7billion
Other+ ¥0.2billion

Non-operating income (loss)
Foreign currency translation
adjustments on debt, foreignexchange gains and losses(Previous) Gains ¥0.9billion→(Current) Gains ¥ 2.0billion+ ¥1.1billion

Revised forecasts

Revised Forecasts Natural Gas Sales for FY3/18(year-on-year)
Sales volume : Million M3
Net sales : Million JP¥

FY3/17

FY3/18ChangeFull (a)Revised forecasts Full (f)November 10, 2017

Full

Sales volume

1,864

1,757

-108

Net sales

55,32958,333+3,003

Domestic gas

Sales volume

1,265

1,251

-15

(Domestically
produced gas)

Sales volume

(744)

(723)

(-22)

Overseas gas

Sales volume

599

506

-94

Natural gas

Rising selling price

Breakdown

Million M3

2,000
1,600

599

506

1,200
800

1,265

1,251

FY3/17(a)FY3/18(f)400-

Sales volume ofoverseas gas

Decrease in shale gas sales volume
in Canada

Sales volume ofdomestic gas

Decrease in sales volume

Sales volume of “Overseas gas” stated herein are amounts of Japex (U.S.)
Corp. and JAPEX Montney Ltd., overseas consolidated subsidiaries.

25

Revised forecasts

Revised Forecasts Crude Oil Sales for FY3/18(year-on-year)
Sales volume : Thousand KL
Net sales : Million JP¥

FY3/17

FY3/18ChangeFull (a)Revised forecasts
Full (f) November 10,
2017

Full

Sales volume

2,762

2,603

-159

Net sales

82,098

87,104+5,006

Sales volume

301

285

-17

Net sales

10,273

10,831+558

Sales volume

1,181

1,154

-28

Net sales

28,65336,790+8,137

Sales volume

91

―

-91

Net sales

669

―

-669

Sales volume

―

210

+210

Net sales

―

4,814

+4,814JCC price

US$/bbl

45.60

51.25

+5.65

Bitumen price (***)

US$/bbl

9.94

―

-9.94

Diluted bitumen(****)

US$/bbl―33.15+33.15

Exchange rate

JP¥/US$108.53110.94+2.41

Crude Oil

Rising selling price

Breakdown
Domestic crude oil(*)
Overseas crude oil(**)
Bitumen (***)
Diluted bitumen(****)
Assumptions

26

Rising selling price from Garraf
Oil Field in Iraq
Decision not to re-start
operation of the Demonstrationarea
Commencement of production
operation of the Hangingstone
Joint Venture area(*) Sales volume and net sales of“Domestic crude oil” stated herein do notinclude purchased crude oil.
(**) Sales volume and net sales of“Overseas crude oil” stated herein areamounts of 3 overseas subsidiaries (Japex(U.S.) Corp., JAPEX Montney Ltd. andJapex Garraf Ltd.).
(***) ,(****) Royalty is excluded in the
net sales and price of both Bitumen and
Diluted bitumen.

Revised Forecasts for FY3/18 (year-on-year)[Million JP¥]FY3/17

FY3/18Full (a)Revised forecasts
Full (f)November 10,
2017

Change207,130

213,802+6,671Gross profit

32,17235,391+3,218

1,512

1,362

-150

29,97529,714-261

Operating income (loss)

685

4,314

+3,629Non-operating income(expenses)

1,537-3,661-5,198

Ordinary income (loss)

2,222

654

-1,569Extraordinary income(loss)

970-5,579-6,549

Income taxes

1,642

-720

-2,363

Profit (loss) attributable
to non-controllinginterests-1,892-5,941-4,049Profit (loss) attributableto owners of parent

3,443

SG&A expenses

1,737
27

Main factors for change
Increase factor(+) / Decrease factor (-)
Gross profit

Net sales

Exploration expenses

Revised forecasts-1,707

Domestic crude oil and natural gas + ¥0.3 billion
Overseas consolidated subsidiaries + ¥3.5 billion
Other- ¥1.0 billion

Non-operating income (expenses)

Equity in earnings of affiliates+ ¥4.3 billion(Breakdown: Not proceeding LNG project inCanada- ¥3.2 billion)
Foreign currency translation adjustments on debt,
foreign currency exchange gains and losses(FY3/17)Gains ¥3.4 billion→(FY3/18)Gains ¥2.0 billion- ¥1.3 billion
Not to re-start production operation in the
Demonstration area
- ¥7.7 billion

Extraordinary income (loss)

Not proceeding LNG Project in Canada- ¥5.3 billion
Decrease in FY3/17 gains on sales of real estate- ¥1.2 billion

Income taxes adjustments
Tax effect accounting regarding the Demonstrationarea+ ¥1.9 billion

Assumptions and Impact on Profits [3Q-4Q]
FY3/17Full(a)

Revised forecasts

FY3/18
1Q(a)

2Q(a)

3Q(f)

4Q(f)

Full(f)

JCC price

US$/bbl

45.60

54.63

49.88

50.00

50.00

51.25

Exchange rate

JP¥/US$108.53112.12111.38110.00110.00110.94

Canadian gas

C$/mcf

1.95

2.71

2.67

1.29

1.94

2.21

Assumptions

JCC price(3Q-4Q)

Exchange rate
(3Q-4Q)

US$ 50.00/bbl

110.00 JP¥/US$

Canadian gas(4Q)
C$ 2.21/mcf
JP¥ 88/C$

Impact on Profit

US$ 1/bbl increase in JCC
prices would push profits
up by...

A weakening in JP¥ 1/US$
exchange rates would pushprofits up by…

C$ 1/mcf increase in
Canadian gas prices would
push profits up by…

Operating incomeJP¥ 190millionJP¥ 60millionJP¥ 410million

Profit (loss) attributableto owners of parentJP¥ 130million-JP¥ 20millionJP¥ 160million

Note: In addition to the impact of exchange rate fluctuations shown on the above, translation adjustments of foreign-currencydenominated receivables and payables also occur.
Actual profits are influenced by a variety of other factors besides crude oil prices and exchange rates.

28

＜Appendix＞
E&P Business (1) Projects in Japan and Overseas
Oil Sands Project(Production)

U.K. North Sea Offshore Block(Planned to Development)

Sakhalin-1 Project(Production & Development)

Shale Gas
Development andProduction Project(Production)

Domestic Oil and Gas Fields
Iraq Garraf Project(Production)(Production & Development)

Shale Oil
Development Project(Production)

Indonesia Kangean Project(Production & Development)

Blocks owned by our consolidated subsidiaries or equity-method affiliates

29＜Appendix＞
E&P Business (2) Domestic Activities
Domestic exploration• Domestic exploration (Geophysics,
Exploration well) is not planned in
FY3/18• Pursuing additional domestic E&P
potential including utilizing
government basic surveys

Operating 10 domestic oil and gas fields

Yurihara
Oil and Gas Field

Yufutsu
Oil and Gas Field

Domestic development• Investment decision of oil
development of a shallow
reservoir of the Yufutsu Oil and
Gas Field in June 2017
Katakai Gas Field

Pursuing compensation ofdomestic reserves andmaintenance of the
production volume

Iwafune-oki
Oil and Gas Field

Yoshii Gas Field

30

＜Appendix＞
E&P Business (3) Canada Shale Gas Development and Production Project
Upstream: Shale gas project

Midstream: LNG projectCalgary
Block /
Proposed site

North Montney Area,
British Columbia, Canada

Lelu Island,
The Port of Prince Rupert,
British Columbia, Canada

Interest

10% Interest

10% Equity

Operator

PETRONAS(Including subsidiaries)

PETRONAS(Including subsidiaries)

・Ongoing shale gas
production and sales ofapproximately 400 mmcf/d
Current status
・Exploring development plan
to maximize the value of theUpstream Project

The North Montney Region(Production & Development)

Decided not to proceed with
the LNG project on July
25,2017.

Vancouver Calgary■Project Schedule
April 2013

Signed a contract

September 2016 Approved Environmental Assessment by CEAA
July 2017

Decided not to proceed with the LNG projectCurrent status

Ongoing revision of the development and production plan

31

Shale gas drilling site＜Appendix＞
E&P Business (4) Canada Oil Sands Project
Project

Canada Oil Sands Co., Ltd. (CANOS)

Company

Operator ： Japan Canada Oil Sands Ltd. (JACOS)

The Hangingstone Demonstration area

100% interests
approximately 5,000 bbl/d(Suspended from May 2016)

Calgary

Not to re-start operation of
SAGD production(Cumulative production：35.23M
bbl as of end of May 2016)

The Hangingstone Joint Venture area
Block

75% interests

Producing

FORT McMURRAY Area
The Hangingstone
Demonstration area

The Hangingstone
Joint Venture area

Gradual increase from 20,000 bbl/dCorner JV Lease

12% interests

Undergoing appraisal

Other bitumen leases(includes Corner, Chard & Thornbury)

Considering future
activities

Corner JV Lease■Schedule of Hangingstone ProjectFebruary 2013

Commenced development works (early civil work)

February 2017

Completed construction of facilities

April 2017

Commenced steam injection to horizontal well pairs

August 2017

Commenced production

Second half of 2018 (planned)

Reaching production rate (20,000 bbl/d)

32

Central processing facility in the Hangingstone
Joint Venture area

＜Appendix＞
E&P Business (5) Iraq : Garraf Project
Project
company

Japex Garraf Ltd.

Interest

30％ (cost share 40%)
Operator ： PETRONAS

Baghdad

Field

Garraf Oil Field

In Production

Garraf Oil Field
Samawah2013

Expected Cumulative Production

2030

Nasiriyah
Basrahapproximately 1.1 billion bbl■ Time Schedule
2013

First oil production on August 31
average daily production : approximately 64,000 bbl/d2014 -

Average daily production
2014: approximately 84,000 bbl/d2017 September: approximately 100,000 bbl/d<Upcoming plan>
Gradual increase from 100,000 bbl/d to 230,000 bbl/d subject totechnical and commercial viability

33

Garraf crude
oil hasoil
beensmoothly fromshippedfrom Oil
BasrahSteadyproduction
GarrafField

＜Appendix＞

E&P Business (6) Indonesia: Kangean Project
West Kangean Gas Field(Exploration)

Pagerungan Utara Oil Field（Production suspended）

Jakarta
Pagerungan Gas Field (Production)
West Java Pipeline

Java Island
Bali Island
to Surabaya

Project
Company

Interest

Kangean Energy
Indonesia Ltd. (KEI)

Sepanｊang Island Oil Field(Production suspended)

TSB Gas Field（Production-partly）
Sirasun Gas Field

Terang Gas Field

Batur Gas Field+ 2 others, Equity-method affiliate

25％ (Operator : KEI)

Production volume : approximately 40,000 boe/d□ the TSB Gas Field(Phase1: Terang): Production started in end of May 2012
Production rate 0.22 billion cf/d
(approximately 38,000 boe/d)(Phase2: Sirasun, Batur): Targeting the start of production in 2Q 201934

FPU (Floating production unit) in the Terang Gas Field

＜Appendix＞

E&P Business (7) Sakhalin-1 Project
Sakhalin Oil and Gas Development
Co., Ltd. (SODECO)
Equity-method affiliate

Project
Company

OdoptuInterest
Sakhalin 1 Consortium

Exxon Neftegas Ltd.
30%
Others40%

SODECO
30%

SODECO
Arkutun-Dagi

JAPEX
METI 15.29%

50.00%

Others
34.71%

ChayvoIn Production at each fields

Block

Chayvo,*The Arkutun-Dagi Oil and Gas Field commenced oil production in
January 2015

Odoptu,*In 2015, the Chayvo Oil and Gas Field achieved a new world-recordof extended reach drilling, at a measured depth of 13,500m

ArkutunDagi

Production volume of crude oil：approximately 180,000 bbl/d*Average production volume per day on 2017, based on JAPEX’s
estimates

35

The Arkutun-Dagi Offshore Field

＜Appendix＞ Domestic Natural Gas Supply Business (1)Construction of the Soma LNG Terminal■Soma LNG Terminal
Site

Shinchi-Town, Fukushima Pref. (No.4 wharf area ofSoma Port)

Capacity

One LNG Tank of Aboveground Style/PC typecontaining 230,000kl

Receiving
Capacity

LNG ocean-going vessel ：Full set (maximum
210,000m3 class)
LPG domestic vessel ：Full set (maximum 2,500m3
class)

Vaporizers

Sending power ： 7.0MPa 75t/h x2

Shipping
Facilities

LNG domestic vessel ：maximum 4,800 m3 class
Tanker truck ：5 lanes, 30t/h

Commencementof Operation

March 2018 (Planned)*In addition to the above, construction for another LNG vaporization equipment
and LNG tank (230,000kl) is ongoing■the Soma-Iwanuma Gas Pipeline
Starting / End point

Starting point ：the Soma LNG terminal
End point ：the Iwanuma Valve station

Caliber

20B

Pressure

7Mpa

LengthApproximately 40km

Commencement of Operationfrom the Soma LNG Terminal

March 2018 (Planned)

Rendering of the Soma LNG Terminal and the Fukushima
Natural Gas Power Plant

36

＜Appendix＞ Domestic Natural Gas Supply Business (2)Natural Gas-Fired Power Generation Project■The overview of Fukushima Natural Gas Power Plant
Head Office

Fukushima Gas Power Co., Ltd.* (Founded April 2015)

MethodGas Turbine and Steam Power (Combined Cycle)

Capacity

1.18 million kW (2 units of 0.59 million kW)

FuelNatural Gas (Vaporized LNG)
Amount 700,000-1,000,000t/y (Utilization Ratio 60%-90%)

Thermal Efficiency

Sending End 60.64% (LHV, Temperature 15°C)

Gas Turbine

1,500°C Class

Steam Turbine

Steam Condition (High-pressure/ Medium-pressure/ Lowpressure)
600/600/284°C 15.6/3.34/0.5MPa

Heat Recovery Boiler

Steam Flow 370/85/50t/h
NOx Emission concentration Less than 5ppm

■Schedule
October 2016

FID

June 2017

Approved Environmental Assessment

October 2017

Commencement of construction

2020 Spring

Commencement of commercial operations (planned)*Investment ratio: JAPEX 33%, Mitsui & Co., Ltd. 29%, Osaka Gas Co., Ltd. 20%,
Mitsubishi Gas Chemical Co., Inc. 9%, Hokkaido Electric Power Co., Inc. 9%37

Rendering of the Fukushima Natural Gas
Power Plant

Targeting commencement of electricity
supply to Tokyo metropolitan area in
2020
Revitalization of local area
e.g. Job creation, Enterpriseattractions

＜Appendix＞ Environment and Innovative Technology Business
Geothermal Power, Methane Hydrate, CCS, Solar Power
Geothermal Power

CCS

Mt. Musa area
（Shibetsu Town）

Tomakomai City

●
●

●
●
Mt. Furebetsu
south area
（Kushiro City)*Ongoing local negotiation

Photo provided by Japan CCS Co., Ltd

Ground facilities of CCS
demonstration project in Tomakomai
Testing at Mt. Musa area

Solar Power

Methane Hydrate● Bandai area

Solar panels at Hokkaido District
Office●Offshore Atsumi and
Shima peninsulas

38

Photo provided by MH21

The second offshore production tests

Abbreviation
BOE(/D)

Barrels of Oil Equivalent (per Day)

CCS

Carbon dioxide Capture and Storage

CIF

Cost, Insurance and Freight

COP

Conference Of the Parties

CSR

Corporate Social Responsibility



E&P

Exploration and Production



FID

Final Investment Decision



GHG

Greenhouse Gas

HE

Hangingstone Expansion



HSE

Health, Safety and EnvironmentIOR (EOR)

Improved (Enhanced) Oil Recovery



JCC

Japan Crude Cocktail



JOGMECJapan Oil, Gas and Minerals National Corporation



LNG

Liquefied Natural Gas

MH

Methane HydrateP/L

Pipeline

PNWL

Pacific North West LNGROE

Return on Equity

RRR

Reserves Replacement Ratio

SODECO

Sakhalin Oil & Gas Development Co., Ltd.

TSB

Terang, Sirasun, Batur



WTI

West Texas Intermediate39