Inpex : Consolidated Financial Results for the Nine Months ended September 30, 2023

Consolidated Financial Results for the Nine Months ended September 30, 2023 [Japanese GAAP]

		November 9, 2023
Note: The following report is an English translation of the Japanese-language original.
Company name	: INPEX CORPORATION	Stock Exchange on which the Company is listed : Tokyo Stock Exchange
Code number	: 1605	URL https://www.inpex.co.jp
Representative	: Takayuki Ueda, President
Contact person	: Yoshihiro Wakita, General Manager, Corporate Communications Unit
	TEL[phone]
Scheduled date of filing Quarterly Financial Report	: November 10, 2023
Scheduled date of payment of cash dividends	: -
Preparation of supplementary explanatory materials	: Yes
Meeting of quarterly financial results presentation	: None
		(Amounts less than one million yen are rounded off)

1. Consolidated Financial Results for the Nine Months ended September 30, 2023 (January 1, 2023 - September 30, 2023)

1. Consolidated operating results

(Figures in % represent the changes from the corresponding period of the previous fiscal year)

	Net sales		Operating income	Ordinary income	Net income attributable
		to owners of parent
For the nine months ended	Millions of Yen		%	Millions of Yen		%	Millions of Yen		%	Millions of Yen	%
September 30, 2023	1,601,835		(5.7)	839,372		(8.4)	995,652		(3.1)	280,392	5.1
September 30, 2022	1,698,743		-	915,892		-	1,027,783		-	266,661	-
(Note): Consolidated comprehensive income: for the nine months ended September 30, 2023, ¥678,891 million; [(28.9)%]
	for the nine months ended September 30, 2022, ¥954,629 million; [-%]
	Net income per	Net income per
	share-basic	share-diluted
For the nine months ended			Yen			Yen
September 30, 2023			215.15			-
September 30, 2022			193.10			-

(Note): The figures for the nine months ended September 30, 2022 were adjusted retrospectively according to the changes in accounting policies, and the figures after retrospective application are presented. The changes from the corresponding period of the previous fiscal year are not shown.

(2) Consolidated financial position

	Total assets	Net assets	Net assets excluding non-controlling
	interests as a percentage of total assets
	Millions of Yen	Millions of Yen	%
As of September 30, 2023	6,971,337	4,584,078	61.9
As of December 31, 2022	6,259,853	4,022,370	60.1

(Reference): Net assets excluding non-controlling interests: as of September 30, 2023, ¥4,317,881 million as of December 31, 2022, ¥3,760,852 million

(Note): The figures as of December 31, 2022 were adjusted retrospectively according to the changes in accounting policies, and the figures after retrospective application are presented.

2. Dividends

		Cash dividends per share
	At 1st quarter end	At 2nd quarter end	At 3rd quarter end	At fiscal year end	Total
	Yen	Yen	Yen	Yen	Yen
For the year ended	-	30.00	-	32.00	62.00
December 31, 2022
For the year ending	-	37.00	-
December 31, 2023
For the year ending
December 31, 2023				37.00	74.00
(forecast)

(Notes): 1. Changes in projected dividends for the year ending December 31, 2023 from the previous forecast: None

2. "Dividends" as stated above refer to common stock. For information regarding Class A stock (not listed), please refer to Exhibit "Dividends of Class A stock."

3. Forecasts for Consolidated Financial Results for the year ending December 31, 2023 (January 1, 2023 - December 31, 2023)

(Figures in % represent the changes from the previous fiscal year)

								Net income	Net income
	Net sales		Operating income	Ordinary income	attributable to
		per share
								owners of parent
	Millions of Yen		%	Millions of Yen	%	Millions of Yen	%	Millions of Yen	%	Yen
For the year ending	2,155,000		(7.3)	1,107,000	(11.2)	1,291,000	(10.5)	340,000	(26.3)	262.51
December 31, 2023

(Notes): 1. Changes in forecasts for consolidated financial results for the year ending December 31, 2023 from the previous forecast: Yes

2. The changes from the previous fiscal year were adjusted retrospectively according to the changes in accounting policies, and the changes presented are for the comparison with the figures for the previous fiscal year after retrospective application.

Notes
(1)	Significant changes in scope of consolidation	: None
		(Changes in the specified subsidiaries during the period due to change in scope of consolidation)
(2)	Adoption of accounting treatments which are exceptional for quarterly consolidated financial statements	: None
(3)	Changes in accounting policies, accounting estimates and restatement of corrections
1.	Changes in accounting policies resulting from the revision of the accounting standards and other regulations	: Yes
2.	Other changes in accounting policies	: None
3.	Changes in accounting estimates	: None
4.	Restatement of corrections	: None

(Note): Please refer to "2. Consolidated Financial Statements and Principal Notes (3) Notes to Consolidated Financial Statements (Changes in Accounting Policies)" on page 8 for further information.

(4)	Number of shares issued (Common stock)
1.	Number of shares issued at the end of the period	1,386,667,167 shares as of September 30, 2023
	(including treasury stock):	1,386,667,167 shares as of December 31, 2022
2.	Number of treasury stock at the end of the period:	98,471,173 shares as of September 30, 2023
		80,672,863 shares as of December 31, 2022
3.	Average number of shares:	1,303,261,977 shares for the nine months ended September 30, 2023
		1,380,953,337 shares for the nine months ended September 30, 2022

(Note): The shares held by "the Board Incentive Plan Trust" are included in number of treasury stock at end of period. (As of September 30, 2023: 892,173 shares As of December 31, 2022: 910,363 shares)

*This quarterly earnings report is not subject to audit by certified public accountants or audit firms.

*Explanation regarding the appropriate use of estimated consolidated financial results

The aforementioned forecasts are based on the currently available information and contain many uncertainties. The final results might be significantly different from the aforementioned forecasts due to changes in business conditions including oil and natural gas price levels, production and sales plans, project development schedules, government regulations and financial and tax schemes. Regarding the forecasts, please refer to "1. Qualitative Information / Financial Statements (3) Explanation regarding future forecast information such as Forecasts for Consolidated Financial Results" on page 3.

Exhibit:

Dividends of Class A stock

		Cash dividends per share
	At 1st quarter end	At 2nd quarter end	At 3rd quarter end	At fiscal year end	Total
				Yen
	Yen	Yen	Yen	Yen
For the year ended	-	12,000.00	-	12,800.00	24,800.00
December 31, 2022
For the year ending	-	14,800.00	-
December 31, 2023
For the year ending
December 31, 2023				14,800.00	29,600.00
(forecast)

(Note): The Company conducted a stock split at a ratio of 1:400 of common stock effective October 1, 2013. However, for Class A stock (not listed), no stock split was implemented. The article specifying that dividends of Class A stock are equivalent to dividends of common stock prior to the stock split is included in the Articles of Incorporation.

Index of the Attachments
1. Qualitative Information ∕ Financial Statements	2
(1)	Explanation on Consolidated Financial Results	2
(2)	Explanation on Consolidated Financial Position	3
(3)	Explanation Regarding Future Forecast Information Such as Forecasts for Consolidated Financial Results	3
2. Consolidated Financial Statements and Principal Notes	4
(1)	Consolidated Balance Sheet	4
(2)	Consolidated Statement of Income and Consolidated Statement of Comprehensive Income	6
Consolidated Statement of Income	6
Consolidated Statement of Comprehensive Income	7
(3)	Notes to Consolidated Financial Statements	8
(Conditions or events that indicate there could be substantial doubt about the Company's ability to continue as a going concern).8
(Note on significant changes in shareholders' equity)	8
(Changes in Accounting Policies)	8
(Additional Information)	8
(Segment Information and Others)	9
(Significant Subsequent Events)	11
3. Supplementary Information	12
(1)	Production, Orders Received and Sales Performance	12

- 1 -

1. Qualitative Information ∕ Financial Statements

The changes in accounting policies have been made from the first quarter ended March 31, 2023, and the figures after retrospective application are used in the comparative analysis with the nine months ended September 30, 2022 and the year ended December 31, 2022. Please refer to "2. Consolidated Financial Statements and Principal Notes (3) Notes to Consolidated Financial Statements (Changes in Accounting Policies)" for further information.

In addition, the change in reportable segments has been made from the first quarter ended March 31, 2023, and the figures reflect the revision of the method of calculation for a portion of the sales volume and average sales price in the comparative analysis with the nine months ended September 30, 2022.

1. Explanation on Consolidated Financial Results
   Net sales for the nine months ended September 30, 2023 decreased by ¥96.9 billion, or 5.7%, to ¥1,601.8 billion from the corresponding period of the previous fiscal year due to a decrease in sales price of crude oil. Net sales of crude oil decreased by ¥150.9 billion, or 11.4%, to ¥1,167.4 billion, and net sales of natural gas increased by ¥54.1 billion, or 14.8%, to ¥419.2 billion. Sales volume of crude oil increased by 1,807 thousand barrels, or 1.8%, to 104,728 thousand barrels, and sales volume of natural gas increased by 40,423 million cf, or 12.5%, to 362,722 million cf. Sales volume of overseas natural gas increased by 39,918 million cf, or 15.9%, to 290,811 million cf, and sales volume of domestic natural gas increased by 14 million m3, or 0.7%, to 1,920 million m3 (71,654 million cf). The average sales price of overseas crude oil decreased by US$19.16, or 19.2%, to US$80.67 per barrel. The average sales price of overseas natural gas decreased by US$0.99, or 14.7%, to US$5.76 per thousand cf, and the average sales price of domestic natural gas increased by ¥18.81, or 25.0%, to ¥93.96 per m3. The average exchange rate of the Japanese yen against the U.S. dollar on consolidated net sales depreciated by ¥9.79, or 7.6%, to ¥138.12 per U.S. dollar.
   The decrease of ¥96.9 billion in net sales was mainly derived from the following factors: regarding net sales of crude oil and natural gas, an increase in sales volume contributing ¥63.0 billion to the increase, a decrease in unit sales price pushing sales down of ¥262.5 billion, the depreciation in the average exchange rate of the Japanese yen against the U.S. dollar contributing ¥102.7 billion to the increase, and a decrease in net sales excluding crude oil and natural gas of ¥0.1 billion.
   Meanwhile, cost of sales decreased by ¥26.8 billion, or 3.9%, to ¥654.5 billion. Exploration expenses increased by ¥0.8 billion, or 3.5%, to ¥23.9 billion. Selling, general and administrative expenses increased by ¥5.6 billion, or 7.2%, to ¥83.9 billion. As a result, operating income decreased by ¥76.5 billion, or 8.4%, to ¥839.3 billion.
   Other income decreased by ¥3.2 billion, or 1.4%, to ¥221.7 billion. Other expenses decreased by ¥47.6 billion, or 42.1%, to ¥65.4 billion mainly due to the absence of the modification loss on financial assets and others. As a result, ordinary income decreased by ¥32.1 billion, or 3.1%, to ¥995.6 billion.
   Extraordinary loss was ¥75.6 billion as a result of posting impairment loss for a certain project due to changes in the external environment, including a tightening of environmental regulations in Australia, and others. Income taxes decreased by ¥106.3 billion, or 14.1%, to ¥645.3 billion, and net loss attributable to non-controlling interests was ¥5.8 billion. As a result of the above effects, net income attributable to owners of parent increased by ¥13.7 billion, or 5.1%, to ¥280.3 billion.

Financial results by segment are as follows:

The changes in segment income and reportable segments have been made from the first quarter ended March 31, 2023, and the figures based on the changed segment income and reportable segments are used in the comparative analysis with the nine months ended September 30, 2022. Please refer to "2. Consolidated Financial Statements and Principal Notes (3) Notes to Consolidated Financial Statements (Segment Information and Others)" for further information.

1. Oil & Gas Japan
   Net sales increased by ¥34.6 billion, or 22.3%, to ¥189.5 billion due to an increase in sales price of natural gas. Net income attributable to owners of parent increased by ¥17.7 billion, or 109.0%, to ¥34.0 billion.
2. Oil & Gas Overseas - Ichthys Project
   Net sales increased by ¥20.3 billion, or 8.0%, to ¥273.6 billion due to an increase in sales volume. Net income attributable to owners of parent increased by ¥72.8 billion, or 46.5%, to ¥229.6 billion mainly due to the absence of modification loss on financial assets and others.
3. Oil & Gas Overseas - Other Projects
   Net sales decreased by ¥158.0 billion, or 12.4%, to ¥1,119.1 billion due to a decrease in sales price of crude oil. Net income attributable to owners of parent decreased by ¥75.4 billion, or 72.2%, to ¥28.9 billion mainly due to an increase in impairment loss.
4. • 2 -

1. Explanation on Consolidated Financial Position
   Total assets as of September 30, 2023 increased by ¥711.4 billion to ¥6,971.3 billion from ¥6,259.8 billion as of December 31, 2022. Current assets increased by ¥237.4 billion to ¥966.8 billion due to an increase in securities and others. Fixed assets increased by ¥474.0 billion to ¥6,004.5 billion due to increases in tangible fixed assets, investments and other assets, and others. Meanwhile, total liabilities increased by ¥149.7 billion to ¥2,387.2 billion from ¥2,237.4 billion as of December 31, 2022. Current liabilities increased by ¥297.3 billion to ¥824.1 billion, and long-term liabilities decreased by ¥147.5 billion to ¥1,563.1 billion. Net assets increased by ¥561.7 billion to ¥4,584.0 billion. Total shareholders' equity increased by ¥161.8 billion to ¥3,070.1 billion. Total accumulated other comprehensive income increased by ¥395.1 billion to ¥1,247.7 billion and non-controlling interests in net assets increased by ¥4.6 billion to ¥266.1 billion.
2. Explanation Regarding Future Forecast Information Such as Forecasts for Consolidated Financial Results
   The Company revised the consolidated financial forecasts for the year ending December 31, 2023 as follows from the forecasts that were announced on August 9, 2023 as a result of revising the assumed conditions for crude oil prices and exchange rate to adjust for the trend of rising crude oil prices and weakening yen, and other factors.

Forecasts for consolidated financial results for the year ending December 31, 2023

				(Millions of yen)
	Net sales	Operating income	Ordinary income	Net income attributable
	to owners of parent
Previous Forecasts: A	2,031,000	1,009,000	1,151,000	320,000
Revised Forecasts: B	2,155,000	1,107,000	1,291,000	340,000
Increase (Decrease): B-A	124,000	98,000	140,000	20,000
Percentage change (%)	6.1	9.7	12.2	6.3

The above forecasts are calculated based on the following assumptions:

	Previous Forecasts	Revised Forecasts
	First Half average (actual):	US$79.9/bbl	First Half average (actual):	US$79.9/bbl
Crude oil price	Second Half average:	US$80.1/bbl	Second Half average:	US$85.5/bbl
- 3rd quarter average:	US$80.0/bbl	- 3rd quarter average (actual):	US$85.9/bbl
(Brent)
- 4th quarter average:	US$80.2/bbl	- 4th quarter average:	US$85.0/bbl
	Full Year average:	US$80.0/bbl	Full Year average:	US$82.7/bbl
	First Half average (actual):	¥135.0/US$	First Half average (actual):	¥135.0/US$
Exchange rate	Second Half average:	¥135.0/US$	Second Half average:	¥142.3/US$
	Full Year average:	¥135.0/US$	Full Year average:	¥138.6/US$

Note: Crude oil prices at which the Company sells products vary depending on crude oil type and differ from Brent crude oil prices. Crude oil price differences are determined by the quality of each crude oil type, etc., and are also affected by market conditions.

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2. Consolidated Financial Statements and Principal Notes

(1) Consolidated Balance Sheet

		(Millions of yen)
Accounts	As of December 31, 2022	As of September 30, 2023
(Assets)
Current assets
Cash and deposits	227,829	177,993
Accounts receivable-trade and contract assets	252,938	219,762
Securities	58,152	290,663
Inventories	68,154	75,160
Other	135,346	217,900
Less allowance for doubtful accounts	(13,020)	(14,677)
Total current assets	729,401	966,803
Fixed assets
Tangible fixed assets
Buildings and structures, net	157,137	155,312
Wells, net	340,259	314,455
Machinery, equipment and vehicles, net	1,583,141	1,612,861
Land	18,178	18,438
Construction in progress	339,787	438,097
Other, net	34,615	29,455
Total tangible fixed assets	2,473,118	2,568,619
Intangible assets
Goodwill	40,332	34,295
Other	442,371	428,595
Total intangible assets	482,704	462,890
Investments and other assets
Investment securities	742,914	954,936
Long-term loans receivable	1,279,383	1,441,967
Recoverable accounts under production sharing	521,541	493,057
Other	87,205	142,022
Less allowance for doubtful accounts	(690)	(771)
Less allowance for recoverable accounts under	(53,873)	(55,787)
production sharing
Less allowance for investments in exploration	(1,852)	(2,401)
Total investments and other assets	2,574,629	2,973,023
Total fixed assets	5,530,452	6,004,533
Total assets	6,259,853	6,971,337

- 4 -

		(Millions of yen)
Accounts	As of December 31, 2022	As of September 30, 2023
(Liabilities)
Current liabilities
Accounts payable-trade	47,183	28,933
Short-term loans	75,878	189,151
Commercial papers	-	172,000
Income taxes payable	126,675	141,167
Provision for bonuses	1,458	-
Provision for bonuses to officers	130	90
Provision for loss on business	8,631	11,783
Provision for exploration projects	3,391	7,418
Asset retirement obligations	15,504	15,644
Other	247,887	257,913
Total current liabilities	526,740	824,102
Long-term liabilities
Bonds payable	30,000	30,000
Long-term debt	1,164,369	934,512
Provision for stocks payment	245	394
Provision for special repair and maintenance	705	716
Liability for retirement benefits	689	2,171
Asset retirement obligations	303,159	314,936
Other	211,572	280,425
Total long-term liabilities	1,710,742	1,563,156
Total liabilities	2,237,483	2,387,258
(Net assets)
Shareholders' equity
Common stock	290,809	290,809
Capital surplus	683,382	684,043
Retained earnings	2,055,459	2,253,868
Treasury stock	(121,358)	(158,587)
Total shareholders' equity	2,908,293	3,070,134
Accumulated other comprehensive income
Unrealized holding gain (loss) on securities	4,147	3,355
Deferred gain (loss) on hedges	32,421	37,078
Translation adjustments	815,989	1,207,312
Total accumulated other comprehensive income	852,558	1,247,746
Non-controlling interests	261,517	266,197
Total net assets	4,022,370	4,584,078
Total liabilities and net assets	6,259,853	6,971,337

- 5 -

1. Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Consolidated Statement of Income

		(Millions of yen)
Accounts	For the nine months ended	For the nine months ended
September 30, 2022	September 30, 2023
Net sales	1,698,743	1,601,835
Cost of sales	681,384	654,554
Gross profit	1,017,358	947,281
Exploration expenses	23,153	23,962
Selling, general and administrative expenses	78,312	83,947
Operating income	915,892	839,372
Other income
Interest income	36,389	67,850
Dividend income	8,591	4,199
Equity in earnings of affiliates	119,920	29,359
Gain on reversal of allowance for recoverable accounts	7,688	-
under production sharing
Foreign exchange gain	9,047	14,031
Modification gain on financial assets and others	-	95,017
Other	43,305	11,251
Total other income	224,941	221,710
Other expenses
Interest expense	19,525	42,027
Provision for allowance for recoverable accounts under	-	1,914
production sharing
Modification loss on financial assets and others	83,314	-
Other	10,210	21,487
Total other expenses	113,049	65,430
Ordinary income	1,027,783	995,652
Extraordinary loss
Impairment loss	18,274	75,689
Total extraordinary loss	18,274	75,689
Income before income taxes	1,009,509	919,962
Income taxes	751,704	645,383
Net income	257,804	274,578
Net loss attributable to non-controlling interests	(8,856)	(5,813)
Net income attributable to owners of parent	266,661	280,392

- 6 -

Consolidated Statement of Comprehensive Income

		(Millions of yen)
Accounts	For the nine months ended	For the nine months ended
September 30, 2022	September 30, 2023
Net income	257,804	274,578
Other comprehensive income
Unrealized holding gain (loss) on securities	3,316	(792)
Deferred gain (loss) on hedges	2,466	(2,358)
Translation adjustments	621,051	385,039
Share of other comprehensive income of affiliates	69,990	22,424
accounted for by the equity-method
Total other comprehensive income	696,824	404,312
Comprehensive income	954,629	678,891
Total comprehensive income attributable to
Owners of parent	951,184	675,580
Non-controlling interests	3,444	3,310

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