JAPAN PETROLEUM EXPLORATION CO., LTD. [Explanatory Material]
Financial Results
for the Six Months Ended September 30, 2023
November 10, 2023
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.
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved.
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 Six Months Ended September 30, 2023
Ⅳ. Revised Financial Forecasts for the fiscal year ending March 31, 2024
Note: This material also serves as the presentation material for the financial results briefing for the institutional investors and analysts to be held on November 13, 2023.
Copyright © 2023 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 Six Months Ended September 30, 2023
Ⅳ. Revised Financial Forecasts for the fiscal year ending March 31, 2024
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 3 |
Ⅰ . Financial Highlights and Business Progress
Financial Highlights
2Q FY3/24 Results （Year-on-Year）
(Billion Yen) | 1-2Q FY3/23 (a) | 1-2Q FY3/24 (a) | Change |
Operating profit | 19.3 | 28.5 | +9.1 |
Ordinary profit | 43.0 | 39.1 | (3.9) |
Profit attributable to owners of parent | 31.4 | 27.7 | (3.6) |
- Operating profit ： Increased due to growth of sales volume for U.S. tight oil development and increased sales prices of domestic natural gas
- Ordinary profit ： Decreased due to decline in equity method profit and foreign exchange gains
FY3/24Forecasts Revision （vs Aug.9 Forecasts）
(Billion Yen) | Previous (f) Aug. 9, 2023 | Revised (f) Nov. 10, 2023 | Change |
Operating profit | 38.9 | 48.8 | +9.9 |
Ordinary profit | 44.8 | 57.0 | +12.2 |
Profit attributable to owners of parent | 34.0 | 45.0 | +11.0 |
- Operating profit ： Expect to increase due to anticipated increase in sales prices of domestic crude oil, domestic natural
a | gas, LNG, etc. |
- Ordinary profit ： Expect to increase due to increased foreign exchange gains
Shareholder Returns
- Revised annual dividend forecast to 250 yen per share (interim 125 yen + year-end forecast 125 yen) ※ Revision based on consolidated dividend payout ratio of 30％
- Decided to repurchase own shares up to 3 million shares or 20.0 billion yen
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Ⅰ . Financial Highlights and Business Progress
Major Business Progress in the First Half of FY3/24
E&P Field
【Domestic】
- Additional development of Katakai gas field in Niigata：Completion of the first well (May) / Start drilling of the second well (Aug)
【Overseas】
- Capital participation in a subsidiary of U.K.-based Longboat Energy PLC (Longboat JAPEX Norge AS : LBJ) which promotes exploration and development in offshore Norway (May)
- Acquisition of additional well interests in tight oil development project in U.S. (May)
- Started production of crude oil and natural gas at the Seagull project in U.K. North Sea（Nov）
I/U Field
【Development of domestic renewable energy】
- Established PJ Asset Management Co., Ltd., to develop, manage and operate of solar power generation projects（Jun）
- Started operation of Mitsuke PV Power Plant, Niigata（Aug）
- Invested in Storage battery-related company PowerX, Inc（Aug）
【LNG transport and supply】
- Conducts Feasibility Study of Energy Service Utilizing LNG to the Industrial Park in Northern Vietnam（Aug）
CN Field
- Agreed on Joint Evaluation with JFE Steel Corporation to Establish CCS Value Chain Originated from Japan Aligned with CCS Study in Malaysia（Jun）
- Presented a carbon recycling scenario utilizing inter-industry collaboration in Tomakomai（Jul）
- Signed Joint Study Agreement Towards CO2 Injection Field Test at Sukowati Oil Field in Indonesia（Jul）
- CCS Studies in Tomakomai Area and East-Niigata Area were commissioned as the "Business Feasibility Study on Japanese Advanced CCS Project" by JOGMEC in FY2023 (Jul and Aug)
- Signed MOU with SKK Migas for cooperation in realizing CCS/CCUS Hub & Clusters in Indonesia（Sep）
- Launched our first concrete CCS commercialization study in advanced overseas country by capital participation in Blue Spruce Operating LLC of the U.S. (Oct)
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 5 |
Ⅰ . Financial Highlights and Business Progress
Progress on Targets and Fund Allocation for FY3/24
Quantitative Targets and Fund Allocation Policies in JAPEX Management Plan 2022-2030
- Set the quantitative targets, including long-termto be achieved by FY2030and interim by FY2026.
- To allocate 450 billion yento investment in growth and 50 billion yen to shareholderreturns, from 500 billion yen accumulating cash inflows until FY2030
Quantitative target
Medium-toLong-term Targets | 2Q FY3/24 | FY3/24Forecasts | |||||
Items | |||||||
Business Profit*1 | FY2026 | 30 billion yen | 29.7 billion yen | 49.3 billion yen | |||
FY2030 | 50 billion yen | ||||||
ROE | FY2026 | 5% | N/A | 9.9％*2 | |||
FY2030 | 8% | ||||||
Profit Composition | FY2026 | 6:4 | 7：3 | 7：3 | |||
(E&P：non-E&Ps) | FY2030 | 5：5 | |||||
Fund Allocation
Assumed allocation*3 | 2Q FY3/24 | FY3/24Forecasts | ||||||||||
Items | ||||||||||||
Growth Investments | FY2026 | 275 billion yen | 35.7 billion yen | 87.4 billion yen＋α | ||||||||
FY2030 | 450 billion yen | (Cumulative total 131.5 billion | ||||||||||
yen＋α) | ||||||||||||
Shareholder Returns | FY2030 | 25 billion yen | 11.9 billion yen*4 | 28.7 billion yen*5 | ||||||||
FY2030 | 50 billion yen | (Cumulative total 42.5 billion | ||||||||||
yen) | ||||||||||||
*1 | Operating income and equity in earnings of affiliates (including profits distributed under limited partnership agreements and silent partnership agreements) | |||||||||||
*2 | Figures assume 454.1 billion yen in average equity at the beginning and end of the period | |||||||||||
*3 | Five-year cumulative total from FY2022 through FY2026 and nine-year cumulative total through FY2030, *4 FY 3/23 dividend, *5 FY3/23 dividend + FY3/24 interim dividend + share buyback | |||||||||||
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 6 |
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 Six Months Ended September 30, 2023
Ⅳ. Revised Financial Forecasts for the fiscal year ending March 31, 2024
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 7 |
Ⅱ. Initiatives for Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value
Sustainable Growth and Medium- to Long-Term Enhancement of Corporate Value - Current Status Analysis
Market's evaluation (PBR etc.)
PBR is improving, but has not yet reached 1x |
ROE of 16.9% in FY03/2023 and 9.9% in |
FY03/2024 forecast are above the TSE prime |
average, but lower-than-average PER is also |
an issue as a reason for remaining at a low |
PBR ratio. |
In addition to standard industry issues such |
as the sustainability of oil- and natural gas- |
related businesses toward a decarbonized |
society and the high volatility of oil and |
Changes in PBR | Changes in Equity Ratio | |||||||||||||||
Owner's Equity | Long-term debt | Other capital | Equity Ratio | |||||||||||||
JAPEX | TSE Prime Average | Withdrawal from | ||||||||||||||
(Times） | （¥ billion） | Canada 2 business | ||||||||||||||
1.6 | 1.4 | 1.3 | 12,000 | 78.7 | 74.9 （％） | |||||||||||
1.4 | 1.2 | |||||||||||||||
10,000 | 63.7 | 62.5 | 59.5 | 58.6 | 60.8 | 63.6 | 64.2 | 64.0 | 80.0 | |||||||
1.2 | 1.0 | |||||||||||||||
PBR x1.0 | 8,000 | 60.0 | ||||||||||||||
1.0 | ||||||||||||||||
Withdrawal from | 6,000 | |||||||||||||||
40.0 | ||||||||||||||||
0.8 | Canada 2 business | 0.6 | 207 | 1,300 1,419 1,360 1,277 1,188 | ||||||||||||
216 | ||||||||||||||||
0.6 | 0.4 | 4,000 | 502 | 5 | 3 | |||||||||||
0.3 | 0.3 | 2,000 | 20.0 | |||||||||||||
0.4 | ||||||||||||||||
0.2 | 80 | 0.0 | ||||||||||||||
0.0 | ||||||||||||||||
2020/3 | 2021/3 | 2022/3 | 2023/3 |
natural gas prices, we recognize that the lack |
of understanding and confidence in our |
efforts to enhance corporate value is one of |
the factors behind the low PBR. |
Cost of equity is approximately 8%. |
Equity ratio is high after termination of two |
projects in Canada. |
Changes in ROE
JAPEX | TSE Prime Average |
（％）16.9
15.0 | 7.2 | 9.5 | 9.2 | 9.9 * | |
10.0 | 6.6 | ||||
5.0 | Withdrawal from | ||||
0.0 | 6.5 | Canada 2 business | |||
(5.0)
(0.7)
(10.0)(8.0)
(15.0)
2020/3 2021/3 2022/3 2023/3 2024/3 （Forecast）
Changes in PER
JAPEX | TSE Prime Average | ||
(Times） | 26.2 | ||
30.0 | 19.7 | 15.0 | |
20.0 | 13.3 | ||
Withdrawal from | |||
10.0 | |||
3.7 | Canada 2 business | ||
0.0 | |||
(10.0) | 3.6 |
(4.7) | |
(20.0) | |
(30.0)
(40.0) | (43.1) | ||
(50.0) | |||
2020/3 | 2021/3 | 2022/3 | 2023/3 |
* Figures assume 454.1 billion yen in average equity at the beginning and end of the period
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 8 |
Ⅱ. Initiatives for Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value
Sustainable Growth and Medium- to Long-term Enhancement of Corporate Value - Policies in the Future
Investments focused on capital efficiency
- Continue to invest in growth aligned with the management plan and expand the business asset portfolio that will be the source of future earnings
- Consideration of optimal capital structure in parallel with business portfolio construction（The equity ratio, which has temporarily increased, is expected to decline due to the utilization of interest-bearing debt in conjunction with the steady execution of growth investments）
Enhancement of Shareholder Returns
- We repurchased up to 3 million shares (5.5% of outstanding shares) for up to ¥20.0 billion, using temporary upside cash from the recent rise in oil and gas prices
- Continuous verification of the rationality of strategic shareholdings
Continuous dialogue with stakeholder
- The Board of Directors will continue to regularly analyze and consider the management plan's progress, and dialogue with the market to improve ROE and PER.
- The management plan sets ROE targets based on the assumption of an oil price of $50 per barrel, but assuming that the current oil price level ($80 per barrel) continues, the ROE level is expected to be around 10% in FY2026 and 13% in FY2030.
ROE Oil Price Sensitivities
ROE（USD 50/bbl） | ROE（USD 80/bbl） |
14.0 | Approx. 13% | |||
12.0 | ||||
Approx. 10% | +5% | |||
10.0 | ||||
9.9% | +5% | |||
8.0 | ||||
6.0 | 8% | |||
4.0 | ||||
5% | ||||
2.0 | ||||
0.0 | ||||
FY2023 | FY2026 | FY2030 | ||
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 9 |
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 Six Months Ended September 30, 2023
Ⅳ. Revised Financial Forecasts for the fiscal year ending March 31, 2024
Copyright © 2023 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 10 |
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JAPEX - Japan Petroleum Exploration Co. Ltd. published this content on 10 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2023 13:56:44 UTC.
