Japan Petroleum Exploration : Summary of Q&A Session in Briefing on Results for

Q6: What are the composition ratios of the E&P business, the I/U business, and the CN business to total assets of approximately ¥570.0 billion?

A6: The total amount of business assets amounts to approximately ¥200.0 billion by subtracting the amount of cross-shareholdings and others from the balance sheet (BS) amount of non-current assets of ¥286.0 billion. This ¥200.0 billion includes approximately ¥60.0 billion of assets, including Soma LNG Terminal and pipelines, attributable to the I/U business; approximately ¥20.0 billion of assets attributable to the domestic E&P business; and the remaining attributable to the overseas E&P business. While there are hardly any assets relating to the CN business at this point, the outstanding balance of renewable energy-related investments, including investment in silent business partnerships and that in funds, stood at around ¥11.0 billion as of March 31, 2023.

Q7: I agree with what you said that there is no immediate remedy for the current PBR of below 1x from the perspective of the target of 1x, but I would like you to elaborate on whether management has intention to manage the BS and how much interest outside directors have in this issue.

A7: They have high interest in BS management, and we of course think we should not leave our BS as it is. However, our highest-priority management issue is to restructure our business portfolio, and we therefore are focusing on the left-hand side of the BS first. And then we will tackle issues in the right-hand side of the BS, such as a required level of equity capital, adequate level of leverage, and optimal capital structure, taking into account the types and quantities of risks to which our business assets are exposed.

Q8: As for the TSE’s requirements for improvement of the current PBR of below 1x, please share your timeline of responsive measures you will take during this fiscal year. I also request you to disclose your improvement plan, including target performance indicators, when you announce the financial results for the first half of this fiscal year.

A8: Our executive officers and outside directors are all fully aware of the requirements imposed by the TSE. Although we have intention to discuss this issue at the Bord of Directors and other meetings, we have not yet decided a concrete timeline at the moment. With regard to current state analysis, which is one of the TSE’s requirements, we believe that the previous explanation about our analysis on the market’s perception of the Company, whose business is centered on oil and gas, covers that requirement in essence. We will consider how and when to make a disclosure of this issue, including indicators and other information, in light of the requirements from the TSE.

Q9: Please tell us about the current status of acquiring new projects for the tight oil development project in the United States.

A9: We are working hard to maintain production and profit level. Although the WTI price has recently fallen to $70/barrel, it is still not easy to acquire new assets as their prices remain high. We will continue to pursue our policy to acquire new assets at reasonable prices.