Japan Petroleum Exploration Co., Ltd.

Equities

1662

JP3421100003

Oil & Gas Exploration and Production

Market Closed - Japan Exchange Other stock markets 02:00:00 2024-05-28 am EDT			5-day change	1st Jan Change
6,590 ^JPY	+0.92%		-4.63%	+25.76%

May. 01	EXECUTIVE CHANGES: New chairs for CVS Group, LSL Property and Videndum	AN
May. 01	Longboat Energy CEO Resigns; Successor Named	MT

Japan Petroleum Exploration : Financial Results for the Fiscal Year Ended March 31, 2024 (1.4 MB)

May 14, 2024 at 01:15 am EDT

[Explanatory Material]

Financial Results

for the Fiscal Year Ended March 31, 2024

May 14, 2024

Japan Petroleum Exploration Co., Ltd.

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Contents

Ⅰ . Financial Highlights and Business Progress

Ⅱ. Initiatives for Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value

Ⅲ. Financial Results for the Fiscal Year Ended March 31, 2024 Ⅳ. Financial Forecasts for the Fiscal Year Ending March 31, 2025

Note: This material also serves as the presentation material for the financial results briefing for the institutional investors and analysts to be held on May 15, 2024.

Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved.	2

Ⅰ . Financial Highlights and Business Progress

Ⅱ. Initiatives for Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value

Ⅲ. Financial Results for the Fiscal Year Ended March 31, 2024 Ⅳ. Financial Forecasts for the Fiscal Year Ending March 31, 2025

Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved.	3

Ⅰ . Financial Highlights and Business Progress

Financial Highlights

FY3/24 Results（Year-on-Year）

(Billion Yen)	FY3/23 (a)		FY3/24 (a)		Change
Operating profit		62.0		55.2	(6.8)
Ordinary profit		83.1		68.8	(14.3)
Profit attributable to owners of parent		67.3		53.6	(13.7)

Operating profit： Decreased due to lower sales prices of crude oil, natural gas, and LNG, etc. (-)
Ordinary profit ： Decreased in equity method profit, etc. (-)

FY3/25 Forecasts（Year-on-Year）

(Billion Yen)	FY3/24 (a)		FY3/25 (f)		Change
Operating profit		55.2		52.4	(2.8)
Ordinary profit		68.8		55.5	(13.3)
Profit attributable to owners of parent		53.6		42.8	(10.8)

Operating profit： Expect to decline in sales prices of crude oil, natural gas, etc. (-)
Ordinary profit ： Expect to decrease in foreign exchange gains, etc. (-)

Shareholders Return

FY3/24 annual dividend per share (result)：300 yen per share (interim 125 yen + year-end 175 yen)
FY3/25 dividend per share (forecast)：125 yen for interim and 25 yen for year-end*

*A 5-for-1 stock split of common stock, effective October 1, 2024, was resolved at the Board of Directors' meeting held on May 14, 2024. The year-end dividend per share for FY2024 (forecast) without considering the stock split is 125 yen

Ⅰ . Financial Highlights and Business Progress

Management Goal and Fund Allocation

Management target (quantitative target)

Item

Target

FY2023

FY2024 forecast

Assumptions

Oil Price（JCC）50USD/bbl

Oil Price（JCC） 86.28USD/bbl

Oil Price（JCC）85USD/bbl

Exchange Rate 110yen/USD

Exchange Rate 143.28yen/USD

Exchange Rate

140yen/USD

Business profit*1

FY2026 30 billion Yen

55.8 billion Yen

52.6 billion Yen

FY2030 50 billion Yen

ROE

FY2026

FY2030

11.5

8.4

Profit composition

FY2026

6：4

7：3

8：2

(E&P：non-E&P)

FY2030

5：5

Fund allocation

Item

Assumed allocation*2

FY2023

FY2024 forecast

Growth investment

Cumulative total for

73.3 billion Yen

77 billion Yen＋α

FY2026

275 billion Yen

(cumulative total 194.5billion

FY2030

450 billion Yen

Yen+α)

Shareholders

Cumulative total for

26.6

（Breakdown）

11.9 billion Yen

（Breakdown）

FY2026

25 billion Yen

9.2 billion Yen

Year-end dividend of previous FY

27.7 billion Yen Year-end dividend of previous FY

return

FY2030

50 billion Yen

billion Yen

Interim dividend

6.7 billion Yen

(cumulative total

Interim dividend 6.4 billion Yen

Share repurchases 7.9 billion Yen

68.1 billion Yen）

Share repurchases 12.0 billion Yen

*1: Operating profit and equity method profit (Including profits to be distributed under limited liability investment partnership and silent partnership agreements)

*2: Five-years cumulative total from FY2022 through FY2026 and nine-years from FY2022 through FY2030

Ⅰ . Financial Highlights and Business Progress

Main Updates and Outlook on Priority Items

FY2023 result

FY2024 outlook

【Japan】

Additional development of Katakai gas field in Niigata：Started production of the

⮚

Additional development of Katakai gas field in Niigata：Start production of the

⮚ first well（Dec）/Drilling the second well

second well（second half of the year）

【Overseas】

⮚

Capital participation in a subsidiary of U.K.-based Longboat Energy PLC

⮚

All well development work complete at the Seagull project in U.K. North Sea,

(Longboat JAPEX Norge AS : LBJ) which promotes exploration and development

⮚

expanding production.（second half of the year）

E&P

⮚

in offshore Norway (May)

Production to begin step by step from additional interests acquired in the U.S. tight

Acquisition of additional well interests in tight oil development project in U.S.

oil development.

⮚

(May＆Dec)

＋ Focus on acquisition of new overseas oil and gas interests

Started production of crude oil and natural gas at the Seagull project in U.K.

North Sea（Nov）

On-

● Considering low-carbon measures for domestic operations

●

Ongoing overseas development project Garraf project : Continue additional development to 230,000 barrels per day.

going

Exploration and Development of Norwegian Offshore blocks through LBJ.

【Development of domestic renewable energy】

⮚ Established PJ Asset Management Co., Ltd., to develop, manage and operate of

⮚

Ozu Biomass Power Plant in Ehime begins commercial operation（Aug）

solar power generation projects（Jun）

⮚ Started operation of Mitsuke PV Power Plant, Niigata（Aug）

⮚ Chofu Biomass Power Plant in Yamaguchi begins commercial operation（Jan）

I/U

⮚ Invested in Storage battery-related company PowerX, Inc（Aug）

＋ Focus on participation in

【LNG transport and supply】

new renewable energy projects in Japan and overseas

⮚

Conducts Feasibility Study of Energy Service Utilizing LNG to the Industrial Park

in Northern Vietnam（Aug）

On-

●

Development of domestic renewable energy (Under construction) Tahara Biomass Power Plant in Aichi (FY2025)

going

●

Overseas LNG midstream and downstream business development

Continue to consider new business opportunities.

⮚ CCS Studies in Tomakomai Area and East-Niigata Area were commissioned as

the "Business Feasibility Study on Japanese Advanced CCS Project" by JOGMEC

＋Continue to consider participation in new CN projects

⮚

in FY2023 (Jul＆Aug)

Launched our first concrete CCS commercialization study in advanced overseas

in Japan and overseas

⮚

country by capital participation in Blue Spruce Operating LLC of the U.S. (Oct)

CO2 injection field test at Sukowati oil field in Indonesia（Dec）

⮚

Commenced joint study to establish ammonia supply base in Soma area,

⮚

Fukushima（Jan）

Signed a storage site agreement with PETROS to develop the CCS project in

Malaysia（Feb）

On-

●

Feasibility study of domestic CN business： Promoting commercialization studies in the Tomakomai and Higashi-Niigata areas

going

●

Overseas CCS/CCUS feasibility study：Indonesia CO2 EOR with Pertamina Group / Malaysia CCS with PETRONAS / America CCS with BSO

Ⅰ . Financial Highlights and Business Progress

Main Updates on Shareholders return and ESG items

			FY2023 result			FY2024 outlook

		●	Commenced share repurchases (Nov)		● Completion of share repurchase(Aug) /Cancel repurchased shares
		● Actual dividends：300 yen per year (interim 125 yen + year-end		●	(Sep)
Shareholders		175 yen, Dividend payout ratio 30.2%)		Annual dividends forecast：interim 125 yen + year-end 25 yen,
				Dividend payout ratio 30.1%
	return					※A 5-for-1 stock split of common stock, effective October 1, 2024,
						was resolved. The year-end dividend per share for FY2024
						(forecast) without considering the stock split is 125 yen

		● Participation in GX League and goal setting（Apr＆Sep）
				＋Enhance the climate change-related disclosures
		● Commitment to decarbonized society
			⮚ Offsetting Scope 2 GHG emissions by purchasing non-fossil fuel
					＋Strengthen activities to realize CN society,
	E		certificates（Year-round）
		⮚ Reduction of GHG emissions Scope 2 by starting operation of a			including GX-related activities

			solar power generation facility on idle land in Mitsuke（Aug）
		● Launch of TNFD (biodiversity) framework initiatives（Oct）

		●	Developed and disclosed multi-stakeholder policies（May）		●	Officially starts the free dress code in office hours（Apr）
Ｅ		● Started trial of office environment reform (Nov)		●	Reform of the personnel system（Jul）
	● Conducted human rights due diligence on domestic group
Ｓ				＋Enhance the investment
		companies (Nov)
Ｇ	S	●	Selected as the health & productivity stock selection and White			in human capital and related disclosures
		500 company in health & productivity management outstanding
				＋Promote optimization of organization and
			organizations recognition program (Mar)
		● Implementation of the free dress code trial in office hours（Year-			operations by utilizing DX and other measures
			round）


		● Publication of "Action to Implement Management that is Conscious
				＋ Continue addressing with "Action to Implement
	G		of Cost of Capital and Stock Price"（Nov）			Management that is Conscious of Cost of Capital
						and Stock Price"

Ⅰ . Financial Highlights and Business Progress

Ⅱ. Initiatives for Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value

Ⅲ. Financial Results for the Fiscal Year Ended March 31, 2024 Ⅳ. Financial Forecasts for the Fiscal Year Ending March 31, 2025

Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved.	8

Ⅱ. Initiatives for Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value

Initiatives for Sustainable Growth and

Medium- to Long-term Enhancement of Corporate Value

Market Evaluation Status

TSE prime average

Changes in PBR

Item

FY2023

FY2022

1.0

0.7

PBR*

x0.7

x1.2

0.8

0.6

0.3

0.4

ROE

11.5%

8.5%

0.4

0.2

PER*

x6.9

x15.0

0.0

FY2020

FY2021

FY2022

FY2023

* Share price of March 29, 2024 (6,860 yen) is used

Policies aimed at Enhancing Corporate Value

Already announced in the financial results for the second quarter of the fiscal year ending March 31, 2024.

Analyzed that the main reason of less than 1x P/B ratio is due to below-average PER, while ROE has been above the TSE Prime average
Recognized that the low PER is partly due to the lack of understanding and confidence in our efforts to enhance corporate value, in addition to structural factors such as the sustainability of the oil and natural gas business toward decarbonized society and the volatility of oil and natural gas prices
Future policies to enhance corporate value have been summarized as "Investments focused on capital efficiency," "Enhancement of shareholder returns," and "Continuous dialogue with stakeholder"

Progress of Policies

【Investments focused on capital efficiency】

Organize policies to build core assets that are expected to contribute to profits in the medium to long term (next page)

【Enhancement of shareholder returns 】

Ongoing share repurchases (Nov 2023 - Aug 2024)

【Continuous dialogue with stakeholder】

Stock split to increase the liquidity of the Company's shares and expand the investor base (Oct 2024)

Ⅱ. Initiatives for Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value

Toward Building Core Assets ①

Pivot from strengthening profitability to building a business foundation for the late 2020s, 30s and beyond

Current

Awareness

Recognize that oil and natural gas will remain significant energy sources. Reaffirmed the importance of stable energy supply amid rising geopolitical risks
Recognize that CCS/CCUS business, necessary for the sustainable use of oil and natural gas have the potential to become a multi-trillion yen domestic market in the future
In E&P field, investment in the U.S. business has improved profitability in the short term. In I/U field, FGP, Soma LNG terminal, and LNG procurement margins contributed to earnings, and investments were also made in the biomass power generation business in Japan. In CN field, continued to study commercialization of CCS/CCUS in Japan and overseas
Forecast to secure the management plan targets for FY2026 (business profit of 30 billion yen and ROE of 5%) even with only the assets already acquired by the end of FY2023

Investment

Policy

●

Focus the improved cash flow on building competitive and sustainable assets (core assets) for the late 2020s, 30s and beyond, which is the issue for the future Position E&P field and CCS/CCUS, which are expected to contribute to profits in the future, as immediate core assets

In the I/U field, make investments with profitability in mind, considering environmental changes, such as excessive competition in offshore wind power

- Progress in cash flow >
Operating CF reached about 1.5 times of the FY2026 cumulative value two years ahead of the schedule
Growth investments generally progressed as planned
Progress in shareholder returns will be approximately 2.5 times of the FY2026 cumulative value by FY2024

	Cash-in	Cash out
Management plan*			Forecast	Management plan*		Forecast
	FY2022-2026			FY2022-2024	FY2022-2026		FY2022-2024


	Cash on hand +
	bank loans
	100 billion yen					Growth				Growth

				Operating CF					Investments
					Investments
								194.5 billion
	Operating CF			318.4 billion yen		275 billion yen				yen + α

	200 billion yen

										Shareholder
										Returns 68.1
						Shareholder Returns
									billion yen
						25 billion yen

* Assuming oil price (JCC) 50USD/bbl and exchange rate 110 yen/USD

- Progress in Business Profit >
Forecast to secure the business profit of the management plan target for FY2026, even with only the assets already acquired by the end of FY2023
Aim to further increase business profit by investing in growth from FY2024 onward

(Billion yen)	16.9%				Business Profit			ROE	(%)
100													15
80									Aiming to add on
			11.5%			through additional
						investment
60					8.4%						10
40		69.0								5%		5
20			55.8	52.6
						30.0


0													0
	FY2022	FY2023		FY2024			FY2026

	JCC	102.26		86.28		85.00			70.00

	Exchange	132.86		143.28		140.00			140.00
	rate

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JAPEX - Japan Petroleum Exploration Co. Ltd. published this content on 14 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 05:14:32 UTC.

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Company Profile

Japan Petroleum Exploration Co., Ltd. is a company principally involved in crude oil and natural gas related business. The Company operates in four geological segments. The Japan segment involves in the exploration, development, production, purchase, sale, transportation of crude oil and natural gas, the production, purchase, sale, transportation of petroleum products, as well as contracting work of mining wells. The North America segment involves in exploration, development, production, purchase and sale of crude oil, natural gas, as well as bitumen which is super heavy oil collected from the oil sand layer in North America. The Europe segment involves in the exploration of crude oil and natural gas in Europe. The Middle East segment involves in the exploration, development and production of crude oil and natural gas in Middle East.

Sector

Oil & Gas Exploration and Production

Calendar

2024-08-05 - Q1 2025 Earnings Release (Projected)

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Income Statement Evolution

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Ratings for Japan Petroleum Exploration Co., Ltd.

Trading Rating

Investor Rating

ESG Refinitiv

B+

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Analysts' Consensus

Sell

Buy

Mean consensus

HOLD

Number of Analysts

Last Close Price

6,590 JPY

Average target price

5,905 JPY

Spread / Average Target

-10.39%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

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