May 14, 2007 Note: The following report is a summary of the Japanese-language original. Stock Listing: Tokyo Stock Exchange Company Name: Japan Petroleum Exploration Co., Ltd. Company Code: 1662 (URL: http://www.japex.co.jp/ ) President: Yuji Tanahashi Inquiries: Shigeyoshi Hasegawa, Manager, Media Relations, Media and Investor Relations Department TEL: (03) 6268-7110 Scheduled date for ordinary general shareholders' meeting: June 25, 2007 Scheduled date for commencement of dividend payment: June 26, 2007 Scheduled date for filing Securities Report: June 26, 2007 (*In this report, amounts less than one million yen have been omitted.) 1. Consolidated Results for Fiscal 2006 (April 1, 2006 – March 31, 2007)
(2) Consolidated Financial Position
1 4. Others (1) Change to significant subsidiaries during the term (those changes accompanying change in scope of consolidation): No (2) Change to accounting policy, procedure, and method of presentation for preparing consolidated financial statements (those to be described in the section of the Change of Significant Accounting Policies on the Preparation of Consolidated Financial Statements ) i.  Change due to amendment of accounting standard: Yes ii. Change due to other reasons: No (3) Outstanding shares (common shares) i. Shares outstanding at term-end (including treasury stock) FY2007 57,154,776 shares    FY2006 FY2007 1,224 shares    FY2006 ii. Treasury stock

Reference: Summary of Non-Consolidated Results
1. Financial Highlights (April 1, 2006 - March 31, 2007)
2. Forecasts for Fiscal 2008 (April, 1, 2007 - March, 31, 2008)
* Disclaimer Regarding Forecasts Statements The forecasts statements in this document have been made based on information available as of the date of this release. Actual results may differ from those estimates due to a variety of factors.
I . Business Results
(1) Analysis of Business Performance
Overview of the fiscal year ended March 31, 2007
In the fiscal year ended March 31, 2007, despite a weakening of consumer spending, the Japanese economy continued its moderate recovery thanks to the steady growth of capital investments propelled by favorable corporate earnings. The price of crude oil (including cost, insurance and freight) rose from the $60 per/barrel range in the beginning of the fiscal year to more than $70 per barrel in August and September as demand for oil increased, particularly in the US and Asian region, as did the geo-political risk in the Middle East. After then, however, the price began to decline due to mild winter weather, an easing of geo-political risk, and other factors. By year end the oil price was below $60 per barrel. In addition, a trend of moderate devaluation of the yen against the dollar has been occurring since the summer and because of the aforementioned reasons, the crude oil price for the Group rose compared with the previous fiscal year. Meanwhile, due to acceleration in the pace of deregulation, domestic natural gas prices still remained weak amid escalating competition among energy sectors. Under these conditions, the JAPEX Group worked to maintain production operations with the aim of ensuring stable supplies of affordable and safe energy over the long term. In addition, the Group focused its collective efforts on efficient E&P both in Japan and overseas. Net sales in the fiscal year were strong at ¥170,018 million, an increase of ¥31,222 million (+22.5%) year on year. The increase in net sales can be explained by the rise in price of crude oil and bitumen, and also, from the third quarter of the fiscal year, the purchase and sale of Sakhalin crude oil (SOKOL crude) from Sakhalin Oil Gas Development Co., Ltd. (SODECO), in which the company has a 14.5% holding. Although the aforementioned sale of crude oil purchased from Sakhalin Oil Gas Development Co., Ltd. (SODECO) also contributed to an increase in cost of sales, gross profit increased year on year by ¥4,481 million (+7.3%) because of the high price of oil. Operating income increased by ¥2,701 million (+10.0%) from the preceding fiscal year. Factors influencing operating income were a year-on-year decrease of ¥1,499 million (-15.5%) in exploration expenses and an increase of ¥3,279 million (+13.3%) in selling, general and administrative expenses. The decrease in exploration expenses was due to a decrease in drilling exploration wells, while the increase in selling, general and administrative expenses was due in part to an increase in the costs related to technical cooperation with the Ministry of Oil, Iraq. Ordinary income was ¥34,705 million, an increase of ¥3,514 million (+11.3%) year on year, which was due to improved investment returns based on the equity method, and net income was ¥20,982 million, an increase of ¥765 million (÷3.8%) year on year. The performance of each of the sectors of our business was as follows:
(A) E&P Division
The E&P Division sells crude oil, natural gas, liquefied natural gas (LNG) and bitumen. This division recorded net sales of ¥150,538 million, an increase of ¥33,033 million (+28.1%) from the previous fiscal year, due to increases in net sales as a result of the rise in crude oil and bitumen prices and the commencement of the purchase and sale of the previously mentioned SOKOL crude. (B) Contract Services Division The Contract Services Division is primarily involved in drilling and geophysical surveys, and recorded net sales of ¥5,383 million in the fiscal year, a decrease of ¥1,764 million (−24.7%) from the previous fiscal year, due to decreases in geophysical survey contracts from the government. (C) Other Businesses Our Other Businesses Division is primarily involved in the sale of oil products, including liquefied petroleum gas (LPG) and fuel oil, as well as transportation of natural gas and oil products on consignment. Net sales in the fiscal year were ¥14,096 million, a decrease of ¥46 million (-0.3%) from the preceding fiscal year.
Outlook for the fiscal year ending March 31, 2008
Our forecast is based on price of $55 per barrel for imported crude oil, and an exchange rate of ¥115/$. Actual results for the fiscal year under review came to $63.21 per barrel and ¥116.89/$. Net sales is expected to decrease by ¥14,258 million from the previous fiscal year to ¥155,760 million. Although sales of natural gas are expected to increase because of increases from the commencement of the Shiroishi-Koriyama pipeline and the increase in sales of town gas in Hokkaido and Niigata Prefecture, sales of crude oil are expected to decrease as the price of oil drops and production decreases that will be necessary because of the regular maintenance schedule. Ordinary income is expected to decrease year on year by ¥17,755 million to ¥11,964 million due to an increase of exploration expenses. In Japan drilling operations are planned for three exploration wells (one on land and two at offshore) in Niigata Prefecture, while overseas, seismic survey is planned for Libya and also in Canada seismic survey and drilling appraisal wells are planned to evaluate oil sands reserves.  Also planned for overseas, will be drilling of an exploration well in the offshore block of the Philippines. Through domestic and overseas projects such as these, we plan to aggressively conduct our exploration operations. Ordinary income and net income are forecast to decrease by ¥17,046 million and ¥7,689 million from the previous fiscal year to ¥17,658 million and ¥13,293 million, respectively.
Overview
i. Balance sheet Total assets at the end of this fiscal year stood at ¥578,059 million, an increase of ¥45,542 million (+8.6%), from the previous fiscal year end. Of this, current assets increased ¥26,830 million (34.3%) to ¥105,152 million, and fixed assets grew ¥18,712 million (+4.1%) to ¥472,907 million. The primary change in current assets is the ¥16,747 million increase in marketable securities due to an increase in investment in commercial paper, etc. In fixed assets, property, plant and equipment increased ¥14,395 million, or 14.2%. This increase was mainly due to the completion of the construction of the Shiroishi-Koriyama pipeline. Intangible fixed assets grew ¥1,252 million, or 19.8%. This increase was due to a decline from amortization of goodwill and the posting of exploration rights by JAPEX Block A Ltd., a consolidated subsidiary. Investments and others increased by ¥3,063 million, or 0.9%, due to progress in the recovery of loans collection and indemnity claims by JJI S&N B.V., an affiliate, and an increase in investment in marketable securities in connection with the rise in the stock price of INPEX Holdings, Inc. Total liabilities rose ¥20,598 million, or 14.9%, to ¥159,130 million, due to the posting of payables associated with the construction costs for the Shiroishi-Koriyama pipeline completed in March 2007 as well as new borrowings. Total net assets increased ¥24,943 million, or 6.3%, to ¥418,929 million, mainly as a result of an increase in retained earnings and a rise in unrealized holding gains on securities. (This increase includes the addition of minority interests in consolidated subsidiaries to Shareholders' Equity at the end of the previous fiscal year.) As a result, the equity ratio as of March 31, 2007 was 71.0%.
ii. Cash flows
As of March 31, 2007, cash and cash equivalents totaled ¥60,199 million, up ¥17,117 million, compared to the end of the previous fiscal year. Below is a summary of cash flows of each activity. Net cash provided by operating activities was ¥34,256 million, an increase of 4.3%, from the previous fiscal year. This is mainly attributable to ¥34,660 million in income before income taxes and ¥14,938 million in depreciation and amortization, ¥11,868 million in payment of income taxes, and an increase of ¥5,733 million in notes and accounts receivable. Net cash used in investing activities amounted to ¥18,140 million, a decrease of 9.6%, from the previous fiscal year. The main uses were ¥23,485 million by acquiring property, plant and equipment and others. Net cash provided by financing activities amounted to ¥917 million (use of ¥6,088 million in the previous fiscal year). This was mainly due to subtracting ¥2,571 million of dividend payments from the increase in funds resulting from ¥5,000 million in proceeds from long-term debt.
Equity ratio: Equity/total assets ("Shareholders' equity ratio" for the fiscal year ended March 2003 through the fiscal year ended March 2006 is noted under "equity ratio.") Equity ratio on mark-to-market basis: Total market capitalization/total assets Debt repayment period: Interest-bearing debt/net cash provided by operating activities Interest coverage ratio: Net cash provided by operating activities/interest paid * JAPEX listed on the Tokyo Stock Exchange on December 10, 2003. * The above indicators are calculated based on consolidated financial figures. * Total market capitalization is calculated using the closing stock price at the end of the term multiplied by the number of shares outstanding at the end of the term (excluding treasury stock). * Net cash flow from operating activities is that shown on the statement of consolidated cash flows. Interest-bearing debt is all debt subject to interest payments within liabilities shown on the consolidated balance sheets. Interest paid is that shown on the consolidated statement of cash flows.
(3) Fundamental Policy on Allocation of Profits and Dividends for This Year and Next Year
The Company's basic policy is to sustain stable dividends over the long term. Taking into account the medium and long-term outlook for the business, dividend payments are set based on respect for the return of profits to shareholders. While considering the need to acquire new reserves as an energy company that plays a role in providing stable supplies of oil and natural gas, indispensable resources for society, the policy also takes into account the need for retained earnings to finance the acquisition of new reserves and to upgrade and improve transportation systems, primarily pipelines. Based on the above reasoning, an annual dividend of ¥40 per share (¥20 yen per share interim dividend and ¥20 yen per share year-end dividend) is planned for the current year. The same dividend of ¥40 yen per share is planned for the following year as well.
(4) Risk Factors
The following are a few of the range of different factors that could potentially impact the operating results of the JAPEX Group. Please be aware that factors with the potential to affect business performance are not limited to those discussed below.
i. Risks associated with business operations
The exploration stage of business operations is inherently highly risky. These operations require substantial investments and extended timeframes to conduct activities beginning with initial surveys and including exploration work to the discovery of resources. Furthermore, there are no assurances that oil or gas will be found. Substantial investments are also required to commercialize newly found reserves, as JAPEX must drill development wells and construct production and transmission facilities. Due to these factors, long lead times are typically required from the start of a particular project until an investment can be recovered and earnings generated. During this period, the operating environment can undergo changes that may make it difficult to achieve the original investment goals of the project. Such changes may include an increased investment costs, demand reduction, unit price declines, increased operating expenses, currency fluctuations, etc. Moreover, these investments are subject to various technical risks unique to the oil mining industry, including unexpected declines in oil deposit volume and/or production volume, as well as the mixing of impurities.
ii. Factors causing volatility in crude oil sales
JAPEX sells crude oil in the domestic market at international prices. Consequently, the price at which the Company sells crude oil is affected by market trends, such as the level of output set by OPEC and trends in the international balance of supply and demand, as well as fluctuations in exchange rates. To reduce associated risks, the Company engages in crude oil swap transactions, although this approach does not entirely eliminate all associated risks.
iii. Factors causing volatility in natural gas sales
Prices for natural gas sold in the domestic market are, in most cases, set based on fixed contracts with customers and denominated in yen. As such, prices are not affected by short-term fluctuations in prices for internationally traded natural gas or exchange rates. However, volumes of gas sales to local distribution companies (LDCs) do exhibit seasonality, that is, lower demand in the summer and higher demand in the winter. In addition, sales volume declines during warm winters. Furthermore, over the longer term, the deregulation of Japan's energy markets and other factors carries the risk of lower unit selling prices and lower sales volumes of natural gas.
II. Business Policies
(1) Fundamental Business Policies
Since its establishment in 1955, Japan Petroleum Exploration Co., Ltd. (JAPEX) has pursued its mission of contributing to Japan's energy supplies by securing reserves and expanding production centered on the exploration, development, and sale of oil and natural gas. Guided by this mission, the Company has steadily discovered oil and natural gas reserves to result in the business base of today. In light of its expanding role as a supplier and, consequently, related increases in its responsibility to society with regard to a stable supply, the JAPEX Group is actively focused on constructing a new business model that not only relies on expanding reserves but also upgrading and expanding transportation systems for natural gas and other initiatives. As such, the Group aims to move forward as a company with the competitive capabilities required to respond to changes in its operating environment. The section below outlines the Group's business philosophy in this respect. Taking on the challenge of new energy value creation and increasing corporate value • Contribute to the supply of energy through global exploration and production (E&P) activities. • Contribute to coexistence between the planet and humankind by developing and promoting the use of environment-friendly natural gas. • Pursue sustainable growth and maximize shareholder value by placing top priority on winning and maintaining the trust of society, customers, shareholders and employees.
(2) Medium and Long Term Business Strategy and Critical Issues
Japan's energy industry is entering an era of full-scale competition, ushered in by deregulation, beginning with revisions to the Gas Business Law and the Electric Utility Law. As such, competition is intensifying almost on a daily basis with the entry of new players into each energy sector. Specifically, the Gas Business Law was revised in April 2004, thereby further expanding the scope of deregulation. In addition, the Japanese government has introduced the "common carrier" concept in gas transportation. Under this concept, companies, including JAPEX, that possess gas pipelines above a certain capacity are obligated to open their pipelines for third-party access. As a result of these and other developments, the Company's gas business is facing a major turning point. In the current environment, natural gas, a major earnings base for the JAPEX Group, is drawing significant attention for its clean energy characteristics. Government efforts to bolster environmental measures to achieve the greenhouse reduction target defined in the Kyoto Protocols, coupled with activities to tackle global warming on the corporate and individual level, are likely to continue to drive demand for natural gas. This presents opportunities for JAPEX to further develop its natural gas business. Moreover, the mounting concerns over recent escalation in global fuel prices and supply stability, has underscored the importance of exploration and development operations. Based on recognition that oil will continue to play a critical part and the central role as a primary energy source in Japan, JAPEX Group, for its part, will continue to position these activities as key elements of its business base. Accordingly, expanding natural gas sales and maintaining and enlarging reserves of oil and natural gas are critical issues for the Company. Expanding sales of natural gas and upgrading and expanding the supply system To cope with the intensifying competitive environment as well as expand sales of environment-friendly natural gas, the Group is working to construct a natural gas business that seamlessly integrates services and facilities, from upstream (E&P) through mid-stream (transportation and storage) to downstream (supply to large users and local distribution companies, or LDCs). For this reason, while striving to expand sales along the route of existing pipelines, from March, 2007, we commenced the new operation of the Shiraishi-Koriyama gas pipeline branching from the Niigata-Sendai gas pipeline, as well as conducting full-scale studies for the construction of a subsea gas pipeline between Sendai and Iwaki to further enhance our natural gas transportation network. JAPEX's LNG Satellite System is designed to serve customers in geographic areas not reached by its pipeline network. LNG is loaded onto tanker trucks and railway tank containers and shipped to the Tohoku, Hokuriku, and Kyushu regions to supply natural gas to a broader base of customers. To expand supply to users within Hokkaido by LNG tank containers from its LNG plant in Yufutsu, which is located in the region, JAPEX is taking steps to augment a liquefaction plant scheduled for completion in fiscal 2008. Through the ongoing development of its gas operations, JAPEX was targeting natural gas sales volume of 1.7 billion m³ in fiscal 2009. However, because of the increase in demand that has already occurred, we practically reached this target in fiscal 2007 and are now in the process working to achieve a further increase in sales volume. Moreover, in addition to leveraging the Group's upstream division uniqueness, to upgrade and expand its natural gas transportation and underground storage network that organically links a range of facilities and services, JAPEX also recognizes that it is important to aggressively pursue capital investment such as increasing existing production facilities and drilling additional production wells to support its current policy of increasing demand in natural gas.
Conducting efficient E&P and securing new reserves
With its business centered on E&P, the JAPEX Group continually works to maintain and expand its reserves, and strives to further expand and upgrade its system for providing stable supplies of oil and natural gas over the long term. Specifically, to significantly expand cost-competitive domestic reserves, a key source of earnings, the Company is conducting exploration, mainly in Niigata, Akita, and Hokkaido prefectures with the aim of adding substantial new gas reserves. It is also conducting exploration aimed at tapping reserves in areas surrounding existing oil and gas fields. In this way, the Company is able to conduct interlocking, tactical exploration that affords greater efficiencies. Furthermore, recognizing the importance of establishing a stable overseas business base from a long-term viewpoint, the Company will work to increase operating efficiency and carry out exploration in focus areas. Specifically, the Company aims to increase the efficiency of operations and development at fields where it currently carries out oil and gas production. Moreover, when developing new business, the Company seeks to acquire the rights to oil and gas fields that already on stream, and fields that have been discovered but remain undeveloped, both of which offer low risk and early returns. At the same time, the Company works for the balanced preservation of exploration assets over long-term operating periods with anticipated relatively high returns. As part of this policy, with Iraq the Company is undertaking technical cooperation with the Ministry of Oil to strengthen relations with the Ministry, and with Libya, where the Company has succeeded in obtaining interests, the Company is promoting exploration activities. Furthermore, the Company is promoting development activities in the Kangean block in Indonesia as well as actively continuing to develop other projects.
Addressing environmental issues
JAPEX, as a company that supplies environment-friendly natural gas, feels an obligation to contribute to environmental protection. The Company therefore works to increase internal environmental awareness through ongoing use of internal environment management systems (all company sites have acquired ISO 14001 certification), and to reduce the environmental impact of its business activities. At the same time, JAPEX is contributing to environmental activities on the societal level by, among other actions, participating in and funding afforestation programs in Japan and overseas. In Japan, emissions rights trading and other new environmental businesses are being steadily generated in an effort to help reduce the nation's greenhouse gas levels. For its part, JAPEX will continue pushing ahead with efforts to promote natural gas use from a variety of angles, and appropriately apply the Group technologies in the environment business field. To this end, the Company is proactively taking on R&D themes in new fields such as gas-to-liquids technology, which can be used to extract liquid fuel from methane, the main component of natural gas, and technologies for storing carbon dioxide underground. The JAPEX Group aims to utilize these activities to further strengthen its operating base and enhance its competitiveness as well as bolster operating efficiency. The ultimate goal is to achieve sustainable development and maximize shareholder value.

III.  Consolidated Financial Statements

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

IV. Others
(1) Status of Production and Sales
1. Production

1. The figures in parentheses in E&P represent overseas production and are included in the total. 2. Part of the oil production volume is used as a feedstock for LPG, fuel oil and others. 3. Part of the natural gas production volume is used as a feedstock for LNG, LPG and others. 4. Bitumen is heavy oil extracted from oil sands.
2. Sales

commissions. 2. Monetary amounts in the table do not include consumption tax.