[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.
Copyright © 2024 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 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
Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 4 |
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 | 5% | % | % | ||||||||||||||||||
FY2030 | 8% | 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 | ||||||||||||||||||||||
Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 5 |
Ⅰ . Financial Highlights and Business Progress
Main Updates and Outlook on Priority Items
FY2023 result | FY2024 outlook | |||||||||||||
【Japan】 | 【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】 | 【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】 | 【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) | |||||||||||||
CN | 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 | ||||||||||||
Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 6 |
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" | ||||||||||
Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 7 |
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 | ||||||||||||
0.6 | 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)
Copyright © 2024 Japan Petroleum Exploration Co., Ltd. (JAPEX) All Rights Reserved. | 9 |
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.