Inpex : Financial Results for the Six Months ended June 30, 2020 Presentation Material (Appendix) (PDF 1.65MB)

August 07, 2020 at 02:09 am EDT

Financial results for the six months ended June 30, 2020

Appendix

INPEX CORPORATION

August 7, 2020

Subsidiaries and Affiliates

65 Consolidated Subsidiaries

Major Subsidiaries	Country / Region	Ownership	Phase	Accounting Term
Japan Oil Development Co., Ltd.	UAE	100%	Production	December
JODCO Onshore Limited	UAE	51 %	Production	December
JODCO Lower Zakum Limited	UAE	100%	Production	December
INPEX Sahul, Ltd.	Timor‐Leste	100%	Production	December
INPEX Ichthys Pty Ltd	Australia	100%	Production	December
INPEX Southwest Caspian Sea, Ltd.	Azerbaijan	51%	Production	December
INPEX North Caspian Sea, Ltd.	Kazakhstan	51%	Production	December
INPEX Oil & Gas Australia Pty Ltd	Australia	100%	Production	December
INPEX Eagle Ford, LLC	United States	100%	Production	December

20 Equity Method Affiliates

Major Affiliates	Country / Region	Ownership	Phase	Accounting Term
MI Berau B.V.	Indonesia	44%	Production	December
Angola Block 14 B.V.	Angola	49.99%	Production	December
Ichthys LNG Pty Ltd	Australia	66.245%	Production	December

Segment Information

For the six months ended June 30, 2020 (January 1, 2020 to June 30, 2020)

									(Millions of yen)

				Reportable segments

		Japan	Asia &	Eurasia	Middle East	Americas	Total	Adjustments *1	Consolidated *2
		(Europe &
			Oceania	NIS)	& Africa

Net sales	63,147	119,527	29,541	175,029	7,943	395,190	(3,507)	391,683

Segment income	12,565	31,937	(1,580)	89,621	(2,431)	130,111	(6,312)	123,799
(loss)

*1 Adjustments of segment income of ¥(6,312) million are corporate expenses. Corporate expenses are mainly amortization of goodwill that are not allocated to a reportable segment and general administrative expenses.

*2 Segment income is reconciled with operating income on the consolidated statement of income.

LPG Sales

	(Reference)	2Q FY2020	Change	% Change
	Same Period Last Year
	(Jan ‐ June '20)
	(Jan ‐ June '19)


Net sales (Billions of yen)	1.3	1.4	0.0	6.2%


Sales volume (thousand bbl)	152	160	9	5.6%

Average unit price of overseas production	44.86	35.13	(9.73)	(21.7%)
($/bbl)

Average unit price of domestic production	69.79	61.35	(8.44)	(12.1%)
(¥/kg)

Average exchange rate (¥/$)	110.14	108.03	2.11yen	1.9%
appreciation	appreciation


Sales volume by region	(Reference)	2Q FY2020
	Same Period Last Year	Change	% Change
(thousand bbl)	(Jan ‐ June '20)
(Jan ‐ June '19)


Japan	2	1	(0)	(25.5%)
(0.2 thousand ton)	(0.1 thousand ton)	(‐0.0 thousand ton)

Asia & Oceania	150	159	9	6.0%

Eurasia (Europe & NIS)	‐	‐	‐	‐

Middle East & Africa	‐	‐	‐	‐

Americas	‐	‐	‐	‐

Total	152	160	9	5.6%

Other Income and Expenses

	(Reference)	2Q FY2020
	Same Period Last Year	Change	% Change
	(Jan ‐ June '20)
(Billions of Yen)	(Jan ‐ June '19)


Other income	23.2	45.3	22.1	95.2%
Interest income	1.7	0.5	(1.2)	(67.1%)

Dividend income	6.4	5.9	(0.4)	(7.6%)

Equity in earnings of affiliates	9.5	30.7	21.1	222.8%

Foreign exchange gain	‐	3.7	3.7	‐

Other	5.5	4.4	(1.0)	(19.4%)

Other expenses	21.6	19.9	(1.7)	(8.1%)
Interest expense	13.4	11.5	(1.9)	(14.4%)

Provision for allowance for recoverable accounts	‐	2.2	2.2	‐
under production sharing

Provision for exploration projects	0.2	‐	(0.2)	(100.0%)

Foreign exchange loss	5.6	‐	(5.6)	(100.0%)

Other	2.3	6.1	3.7	158.4%

Copyright © 2020 INPEX CORPORATION. All rights reserved.			4

EBIDAX
		2Q FY2020	(Reference)	Note
	(Millions of yen)	(Jan ‐ June '20)	Apr ‐ Sep '19


	Net income attributable to owners of parent	(120,799)	69,487	P/L
	Net income (loss) attributable to non‐controlling	(655)	1,911	P/L
	interests

	Depreciation equivalent amount	107,120	105,770
	Depreciation and amortization	88,848	83,047	C/F Depreciation under concession agreements and G&A
	Amortization of goodwill	3,380	3,380	C/F
	Recovery of recoverable accounts under	14,892	19,343	C/F Depreciation under PS contracts
	production sharing (capital expenditures)

	Exploration cost equivalent amount	6,925	13,551
	Exploration expenses	4,692	11,642	P/L Exploration expense under concession agreements
	Provision for allowance for recoverable	2,233	1,909	P/L Exploration expense under PS contracts
	accounts under production sharing

	Material non‐cash items	175,982	496
	Income taxes‐deferred	(13,147)	(1,156)	P/L
	Foreign exchange loss (gain)	(3,320)	1,652	C/F
	Impairment loss	192,449	‐	C/F
	Net interest expense after tax	7,877	9,070	P/L After‐tax interest expense minus interest income

	EBIDAX	176,450	200,285

Analysis of Recoverable Accounts under Production Sharing

		2Q FY2020	(Reference)	Note
(Millions of yen)		(Jan ‐ June '20)	Apr ‐ Sep '19


Balance at beginning of the period	568,377	568,059

Add:	Exploration costs	2,248	1,950	Mainly Iraq Block10

	Development costs	14,744	15,893	Mainly ACG, Kashagan and Con Son

	Operating expenses	7,650	9,138	Mainly ACG and Kashagan

	Other	3,997	5,396

Less:	Cost recovery (CAPEX)	14,892	19,343	Mainly ACG and Kashagan

	Cost recovery (non‐CAPEX)	8,669	7,853	Mainly ACG and Kashagan

	Other	‐	2,177

Balance at end of the period	573,456	571,063	Mainly Kashagan

Less allowance for recoverable accounts under	69,108	69,765
production sharing at end of the period

Oil Price and Foreign Exchange Sensitivities

Sensitivities of crude oil price and foreign exchange fluctuation on consolidated net income attributable to owners of parent for the year ending December 31, 2020*1

	(Billions of yen)

	At the Beginning of the 1Q : +6.5 (‐6.5)
Brent Crude Oil Price;	The impact on net income will change in FY2020 as below;
$1/bbl increase (decrease)*2	At the beginning of the 2Q : +4.5 (‐4.5)
At the beginning of the 3Q : +2.5 (‐2.5)

	At the beginning of the 4Q : +1.0 (‐1.0)

Exchange Rate; ¥1 depreciation	+2.2 (‐2.2)
(appreciation) against the U.S. dollar*3

*1 The sensitivities represent the impact on net income for the year ending December 31, 2020 against a $1 /bbl increase (decrease) in the Brent crude oil price on average and a ¥ 1 depreciation (appreciation) against the U.S. dollar. These are based on the financial situation mainly of existing production projects at the beginning of the fiscal year. These are for reference purposes only and the actual impact may change due to fluctuations in production volumes, capital expenditures and cost recoveries, and may not be constant, depending on crude oil prices and exchange rates.

*2 This is a sensitivity on net income determined by fluctuations in the oil price and is subject to the average price of crude oil (Brent). As part of the sales price has been finalized at the beginning of each quarter, the sensitivity breakdown for each quarter is estimated taking into account the percentage of the finalized sales price as follows;

At the beginning of the 1Q : +6.5 billions of yen (1Q : +1.0 billions of yen, 2Q : +1.5 billions of yen, 3Q : +2.0 billions of yen , 4Q : +2.0 billions of yen)

At the beginning of the 2Q : +4.5 billions of yen (1Q : －－－－－－－－ , 2Q : +1.0 billions of yen, 3Q : +1.5 billions of yen , 4Q : +2.0 billions of yen)

At the beginning of the 3Q : +2.5 billions of yen (1Q : －－－－－－－－ , 2Q : －－－－－－－－ , 3Q : +1.0 billions of yen , 4Q : +1.5 billions of yen)

At the beginning of the 4Q : +1.0 billions of yen (1Q : －－－－－－－－ , 2Q : －－－－－－－－ , 3Q : －－－－－－－－ , 4Q : +1.0 billions of yen)

*3 This is a sensitivity on net income determined by fluctuation of the yen against the U.S. dollar and is subject to the average exchange rate. On the other hand, a
sensitivity related to valuation for assets and liabilities denominated in the U.S. dollar on net income incurred by foreign exchange differences between the
exchange rate at the end of the fiscal year and the end of the previous fiscal year is almost neutralized.
Copyright © 2020 INPEX CORPORATION. All rights reserved.	7

Sales and Investment Forecasts

for the Year ending December 31, 2020


Forecasts for the year ending
Dec 31, 2020					As of Feb 12, 2020		As of Aug 6, 2020	Change

		Crude oil (thousand bbl) *1			128,712			115,196	(13,516)

Sales	Natural gas (million cf) *2			493,815			467,000	(26,815)

	Overseas			410,601			390,288	(20,313)
Volume
					(2,229 million m3)		(2,055 million m3)	((174 million m3))
				Japan			83,214			76,712	(6,502)


		LPG (thousand bbl)*3			570			296	(274)

（Billions of yen）

Development expenditure*4			268.0			177.0	(91.0)

Exploration expenditure					30.0			13.0	(17.0)

Other capital expenditure					3.0			2.0	(1.0)

							Exploration			Exploration
Exploration expenses and				expenses 25.5	30.1		expenses 11.2	15.1	(15.0)
Provision for explorations*5				Provision for		Provision for

							explorations 4.5			explorations 3.8

(Non‐controlling interest						7.9			7.2	(0.7)
portion)*6

*1	CF for domestic crude oil sales and petroleum products : 1kl=6.29bbl
*2	CF for domestic natural gas sales : 1m3=37.32cf
*3	CF for domestic LPG sales : 1t=10.5bbl
*4	Development expenditure includes investment in Ichthys downstream and acquisition costs
*5	"Provision for allowance for recoverable accounts under production sharing" + "Provision for exploration projects", related to exploration activities
*6	Capital increase from Non‐controlling interests, etc.

Reference

2nd half (Actual Result)

60,894

222,856

183,030

39,826

(1,067 million m3)

160

81.3

5.2

0.3

Exploration expenses 4.6

Provision for 6.9 explorations 2.2

0.3

Net Production (January to June 2020)


Oil, Condensate and LPG		Oil and Gas Total

353 thousand BOE/day

582 thousand BOE/day

	2%	1%	12%
	9	3	41					3%
									4%
				56	16%			Japan	19	25

244							Asia/Oceania


						Eurasia


69%								Middle East/Africa

							Americas
								244


			Natural Gas
2%	4%	10%		1,195 million cf/day	42%
	60
27	53 116		(229 thousand BOE/day)

11%

			Japan

	999		Asia/Oceania

		Eurasia

84%			Americas

The production volume under the production sharing contracts corresponds to the net economic take of the INPEX Group.
Copyright © 2020 INPEX CORPORATION. All rights reserved.

234

40%

Japan

Asia/Oceania

Eurasia

Middle East/Africa

Americas

Project Summary

Major Assets in Production & Development

North Caspian Sea Block (Kashagan Oil Field, etc.)

ACG Oil Fields

Abu Dhabi Offshore Oil

Fields

Abu Dhabi Onshore

Sakhalin 1

Tight Oil Project in US (Eagle Ford shale play)

Minami‐Nagaoka

Gas Field

Lucius Field

in the U.S. Gulf of Mexico

Offshore D.R. Congo Block

Concession

Offshore Angola Block 14

WA‐35‐L

(Van Gogh Oil Field)

WA‐35‐L/WA‐55‐L

(Coniston Oil Field)

WA‐43‐L

(Ravensworth Oil Field)

05‐1b/05‐1c
Sebuku Block (Ruby Gas Field)
Berau Block (Tangguh Unit)

Abadi LNG Project

TL‐SO‐T 19‐12	Copa Macoya &
(Bayu‐Undan Oil & Gas Field)
Guarico Oriental Blocks


Prelude FLNG Project

Ichthys LNG Project

In Production

Under Development

Preparation for Development

Natural Gas Business in Japan

Naoetsu LNG Terminal		Niigata

	Shin Oumi Line		Minami Nagaoka
		Gas Field

Toyama			Gunma		Tochigi
	Shin Tokyo Line
	Toyama Line
				Ryomo Line
	Tokyo Line

	Matsumoto Line	Iruma Line	Saitama

	Nagano	Yamanashi
		Kofu Line	Tokyo

				Shizuoka Line
Second Suruga Trunk Pipeline					Chiba
MinamifuziLine
(Shizuoka Gas)
				(INPEX, Shizuoka Gas, Tokyo Gas)
		Sodeshi LNG Terminal
		Shizuoka
0	50km	Pipeline

Production Volume*1
- Natural gas: approx. 3.1 million m3/d (117 million scf/d)
- Crude oil and condensate: approx. 3,000 bbl/d
Natural Gas Sales*2
- FY 2019/12 (9 months): approx. 1.51 billion m3
- FY 2020/12 first half: approx. 1.07 billion m3
- Distribution outlook: 2.50 billion m3 per year in the first half of the 2020s, 3.00 billion m3 per year in the long‐term
Global Gas Value Chain
- Started commercial operations at Naoetsu LNG Terminal in December 2013
- Toyama Line completed in June 2016
- First Ichthys LNG cargo arrived at Naoetsu LNG Terminal in October 2018

*1 Average daily production volume for January to June 2020 *2 1m3 =41.8605MJ

Sebuku Block (Ruby Gas Field)

INPEX South Makassar, Ltd.

			Makassar Strait
	Jawa	West Papua

				Sulawesi
Kalimantan		Sebuku Block

		Gas Field	Ruby Gas Field

		Block

0	100km

Participating Interest: 15%
(Operator : PEARLOIL (Mubadala))
PSC: Until September 21, 2027
Production Volume*1
- Natural Gas*2: Approximately 91 million cf/
Milestones
- Farmed‐in in September 2010
- Made FID in June 2011
- Production commenced in October 2013

*1 Average daily production volume for June 2020 on the basis of all fields. *2 Gas volume sold to buyers.

Berau Block (Tangguh LNG Project) MI Berau B.V. / MI Berau Japan Ltd.

Kalimantan		West Papua	Province

	Sulawesi	(Indonesia)

Jawa

Berau Block

Gas Field

Block

0	50km	Kaimana

Participating Interest: 7.79% (INPEX Net)
(Tangguh Unit) (Operator: BP)
PSC: Until December 31, 2035
Production Volume*1
- Condensate: Approximately 6,000 bbl/d
- Natural Gas*2: Approximately 1,146 million cf/d
LNG Production Volume: 7.6 Mtpa
Milestones
- LNG sales started in July 2009
- Made FID for an expansion project to add a third LNG train with a 3.8 million t/y production capacity in July 2016, currently under construction

*1 Average daily production volume for June 2020 on the basis of all fields. *2 Gas volume sold to buyers.

Blocks 05‐1b and 05‐1c (Sao Vang and Dai Nguyet Gas Field) Teikoku Oil (Con Son) Co., Ltd.

Cambodia

Thailand

Vietnam

Participating Interest：36.92%

(Operator: Idemitsu Gas Production (Vietnam))

	PSC: Until November 17, 2034
	Milestones

	Sao Vang and Dai
Malaysia	Nguyet Gas Field

Gas Field

 February 2011: Successful exploration well
 June 2013: Discovery of gas and condensate
	August 2014: Discovery of gas and condensate
	February 2018: Final Investment Decision

Block

Blocks 05‐1b & 05‐1c

 Development work in progress to commence

production in late 2020

0 10km

TL‐SO‐T 19‐12 Block (Bayu‐Undan Gas and Condensate Field) INPEX Sahul, Ltd.

Oil Field

Gas Field	Indonesia

Block	Australia

Pipeline

Australia

Kitan Oil Field

TL‐SO‐T 19‐12Block

TL‐SO‐T 19‐13Block

Bayu‐Undan Gas and

 Participating Interest: 11.378120%
(Operator: Santos)
 PSC: Until February 6, 2022
 Production volume*1
	Condensate: Approximately 9,000 bbl/d
	LPG: Approximately 4,000 bbl/d
	Natural Gas *2 : Approximately 339 million cf/d
 Milestones
 In February 2004, commenced sales of
	condensate and LPG
 In August 2005, entered into an LNG Sales
	Contract with JERA (former TEPCO) and Tokyo
	Gas

Condensate Field

0 50km

Darwin

	In February 2006, commenced LNG shipments
	In August 2019, in light of the delimitation of the
	maritime boundaries between Australia and

The map includes provisional maritime boundaries

*1 Average daily production volume for June 2020 on the basis of all fields. *2 Gas volume sold to buyers.

Timor‐Leste, INPEX entered into a new PSC

with the government of Timor‐Leste. The project

will continue to be operated under terms

equivalent to the previous arrangements.

Van Gogh, Coniston and Ravensworth Oil Fields INPEX Alpha, Ltd.

WA‐55‐L
	Block		Coniston Oil Field			Australia
WA‐35‐L


	Block

WA‐43‐L			Van Gogh Oil Field

	Block

					Ravensworth Oil Field	Onslow


		Oil Field	Exmouth	Australia

		Gas Field
		50km
		Block	0

Van Gogh Oil Field (WA‐35‐L) and Coniston Oil Field (WA‐35‐L / WA‐55‐L)

 Participating Interest: 47.499% (Operator: Santos)

 Concession Agreement: Valid until end of production  Milestones

 In February 2010, oil production commenced at the Van Gogh Oil Field

 In May 2015, oil production commenced at the Coniston Oil Fields

 In July 2016, oil production commenced at the Novara Structure (Coniston Oil Field)

 In January 2019, production commenced from the infill wells at the Van Gogh Oil Field

 In March 2020, production temporarily halted for FPSO drydock repairs.

Ravensworth Oil Field (WA‐43‐L)

 Participating Interest: 28.5% (Operator: BHP)

 Concession Agreement: Valid until end of production

 Production volume*: Approximately 3,000bbl/d of crude oil

 Milestones

 Production commenced in August 2010

* Average daily production volume for June 2020 on the basis of all fields.

Prelude FLNG Project

INPEX Oil & Gas Australia Pty Ltd

Easttimor

Prelude Oil Field

				Concerto Oil Field
		Australia		WA‐44‐L Block

	Gas Field



	Block		Ichthys

0	40km

Participating Interest: 17.5%
(Operator: Shell)
Concession Agreement: Valid until end of production
Production Capacity
- LNG*: 3.6 million t/y
- LPG: 0.4 million t/y at peak
- Condensate: Approx. 1.3 million t/y at peak
Milestones
- Made FID in May 2011
- Wells opened and initial phase of production commenced in December 2018
- 1st Condensate cargo shipped from FLNG in March 2019
- 1st LNG cargo shipped in June 2019
- 1st LPG cargo shipped in July 2019

LNG sales and purchase agreements in place with JERA (approx. 0.56 MTPA) and Shizuoka Gas (approx. 0.07 MTPA) respectively covering INPEX's equity portion of the project's LNG output (approx. 0.63MTPA)

Ichthys LNG Project Overview

 Participating Interest : 66.245% (Operator)  Production volume*1

 Upstream natural gas*2: Approximately 1,316 million cf/d

 Upstream condensate: Approximately 53 thousand b/d

 Shipped cargoes from production start‐up to June 2020  LNG: 171 (56 from Jan to June 2020)

 Onshore condensate (LNG plant): 29 (9 from Jan to June 2020)

 Offshore condensate (FPSO): 49 (16 from Jan to June 2020)

 LPG: 45 (16 from Jan to June 2020)

 Production overview

 Project Life: Approximately 40 years

 Approximately 8.9 million t/y of LNG(Production Capacity)  Approximately 1.65 million t/y of LPG(Production Capacity)  Approximately 100,000 bbl/d of condensate (at peak)

 Proved reserves

 Approximately 1,011 million BOE (based on INPEX's participating interest of 66.245%)

 Participating interests in multiple exploration blocks nearby providing future development potential

 Marketing

 Secured LNG SPAs covering 8.4 million t/y of LNG  Approx. 70% of the LNG delivered to Japanese buyers  Secured LPG SPA covering INPEX share

*1 Average daily production for June 2020

*2 Gas volume sold to the downstream entity (Gas provided from upstream to the LNG plant as a raw material to make products such as LNG, LPG and plant condensate)

			JERA (former Tokyo
			Electric Power
	Tokyo Gas		portion) 1.05 mtpa

	1.05 mtpa
	INPEX 0.90 mtpa		CPC Corporation,

	Kansai Electric		Taiwan 1.75 mtpa

	0.80 mtpa
Osaka Gas 0.80 mtpa			TOTAL 0.90
		mtpa

JERA (former Chubu			Toho Gas 0.28 mtpa
Electric Power	Kyushu		Electric Power 0.30 mtpa
portion) 0.49 mtpa

 Project Financing

 US$ 20 billion project financing agreements with ECAs and major commercial banks completed in December 2012

Major EPC contracts

Upstream
- CPF: Samsung Heavy Industries
- FPSO: Daewoo Shipbuilding & Marine Engineering
- Subsea Production System (SPS): GE Oil & Gas
- Umbilical, Riser and Flowline (URF): McDermott
Downstream
- Onshore LNG Plant: JGC, Chiyoda and KBR
- Gas Export Pipeline: Saipem, Mitsui Corporation, Sumitomo Corp oration and Metal One Corporation
- Dredging in Darwin Harbour: Van Oord
- Instrumentation & Control System: Yokogawa Electric

Ichthys LNG Project Production Facilities

Condensate			LNG, LPG, Condensate
Offtake Tanker	FPSO	Central Processing Facility	Onshore LNG Plant (Darwin)


		Flexible Riser
		Upstream Downstream	Gas Export Pipeline
		Flowlines

Subsea Production System

Ichthys LNG Project

Timeline from FID until Commencement of Production

 Timeline since Final Investment Decision (FID)


	Key Milestone	2012	2013	2014	2015	2016	2017	2018
	FID	●
	(Offshore facilities / Production wells)
	•Steel cutting ceremony for CPF and FPSO		●
	•Start‐up of CPF and FPSO assembly work			●
	•FPSO hull launch			●
	•Completion of gas export pipelay				●
	•Commencement of drilling of production wells				●
	•Completion of installation of subsea flowlines					●
	•Completion of CPF and FPSO sail away, mooring and hook‐up						●
	•Start‐up of CPF and FPSO commissioning						●
	•Completion of commissioning of all key offshore facilities							●
	(Onshore facilities)
	•Groundbreaking ceremony of LNG plant in Darwin	●
	•Commencement of construction on modules, jetties and tanks		●
	•Completion of dredging in Darwin Harbour			●
	•Completion of production loading jetty					●
	•Completion of construction and delivery of LNG plant modules					●
	•Completion of hydrostatic testing on all product tanks						●
	•Start‐up of power generation facilities						●
	•Completion of commissioning of all key onshore facilities							●
	(Overall project)
	•Acquisition of production license / project financing agreements	●
	•Arrangement of insurance for facilities during construction period		●
	•Contracts signed for construction, ownership and time charter of LNG tankers		●
	•50% project completion			●
	•LNG production capacity increased from 8.4 to 8.9 million t/y				●
	•Agreement in principle with Astomos Energy Corporation on sales of LPG						●
	•Naming ceremonies for LNG tanker to supply Naoetsu LNG Terminal and CPC Corporation						●
	Commencement of gas production from the wellhead							●
	Commencement of shipment of condensate, LNG and LPG							●
Copyright © 2020 INPEX CORPORATION. All rights reserved.	21

Ichthys LNG Project

Central Processing Facility (CPF)

Ichthys LNG Project

Floating Production Storage and Offloading (FPSO)

Ichthys LNG Project

Onshore Gas Liquefaction Plant

Abadi LNG Project

 Participating Interest: 65% (Operator)



PSC: Until 15 November, 2055

（Signed extension in October 2019)



Production Capacity



Total output of natural gas 10.5 million tons per

year (LNG equivalent) including；

Tanimbar Islands

Saumlaki

• Approximately 9.5 million tons of LNG per year

• Up to 150 million standard cubic feet of natural gas

Easttimor

Masela Block

Indonesia

per day supply via pipeline

 Up to approximately 35,000 barrels of

condensate per day



Milestones

Abadi

Gas Field



Between March and October 2018, conducted

Pre‐FEED works based on an onshore LNG

development concept with an annual LNG

production capacity of 9.5 million tons.

 In July 2019, revised development plan based on

an onshore LNG development scheme was

Australia

approved by the Indonesian authorities.

Gas Field

 Currently conducting preparation for

Darwin

commencement of FEED work that is expected to

Block

200km

take 1 to 2 years.

 Aiming for production start‐up in the latter half

Map includes provisional maritime boundaries

of 2020s.

 10% participating interest will be transferred to an Indonesian participant to be designated by the Indonesian government in accordance with PSC conditions.

ACG Oil Fields

INPEX Southwest Caspian Sea, Ltd.

Azerbaijan

Caspian Sea

Baku

ACG Oil Fields

Deepwater Gunashli Field

	Chirag Field
Kazakhstan	Azeri Field

Russia

	Uzbekistan		Oil Field


Azerbaijan			Block
	Turkmenistan
Iran		Pipeline


	0	50km

Participating Interest: 9.3072%*1
(Operator: BP)
PSC: Until 2049*2
Production volume *3 : Approximately 497,000 bbl/d
Milestones
- Started oil production in the Chirag Field in 1997
- Started oil production in the central section of the Azeri Field in February 2005
- Started oil production in the western section of the Azeri Field in December 2005
- Started oil production in the eastern section of the Azeri Field in October 2006
- Started oil production in the Deepwater Gunashli Field in April 2008
- Started oil production in the western section of the Chirag Field in January 2014
- Azeri Central East project FID was signed in April 2019.

*1 INPEX's participating interest has changed to 9.3072% as a result of the extension and amendment of the PSA effective January 1, 2018.

*2 The extension of the PSA until 2049 was agreed in 2017.

*3 Average daily production volume for January to June 2020 on the basis of all fields

Kashagan Oil Field and others INPEX North Caspian Sea, Ltd.

North Caspian Sea

Caspian Sea

Kazakhstan

Kairan Structure

 Participating Interest: 7.56% (Operator:
	NCOC (North Caspian Operating
	Company))
 PSC: Kashagan ‐ Until 2021*1
	Production volume*2
	 Crude Oil: Approximately 300,000 bbl/d
 Milestones
	 Oil shipments at Kashagan Oil Field commenced
	in October 2016
	 Reached target production volume of 370,000

	Kashagan Oil Field	Aktote Structure

		Russia
		Kazakhstan
Oil Field		Turkey
	Iran

Gas Field		India

Block

bbl/d. Production operations ongoing targeting

450,000 barrels per day

 Agreed with the Kazakhstan government on

extending the evaluation period of the

Aktote/Kairan structures by five years and

continuing development scenario studies.

*1 Current PSC provide options to extend the contract period by 10 years twice (until 2041)

*2 Average daily production volume for June 2020 on the basis of all fields

BTC (Baku‐Tbilisi‐Ceyhan) Pipeline Project INPEX BTC Pipeline, Ltd.

						Russia
				Russia
						Georgia			Caspian Sea
					Black	Tbilisi

					Sea
		Turkey

							Armenia		Baku
					BTC Pipeline	Azerbaijan

		Turkey
				Ceyhan			Iran

Mediterranean
Sea	Cyprus		Syria	Iraq
0	200km							Pipeline

Participating Interest: 2.5%
(Operator : BP)
Oil export volume*: Approximately 644,000 bbl/d
Milestones
- Acquired a 2.5% participating interest in the operating company (BTC Co.) through INPEX BTC Pipeline, Ltd. in October 2002
- Commenced crude oil export in June 2006 from Ceyhan terminal
- Completed 1.2 million bbl/d capacity expansion work in March 2009
- Cumulative export volume reached 1,000 million bbls on September 13, 2010
- Cumulative export volume reached 2,000 million bbls on August 11, 2014
- Cumulative export volume reached 3,000 million bbls on July 17, 2018

* Average transportation volume for 2019

Sakhalin‐1

Sakhalin Oil and Gas Development Co., Ltd.

Russia

Peopleʹs Republic

of China

Russia

Sakhalin Island

Peopleʹs Republic

of China

 Sakhalin Oil and Gas Development Co.,
Ltd. (SODECO)'s participating interest in
Sakhalin‐1: 30%
 INPEX's share in SODECO:
Approximately 6.08%
 Operator: Exxon Neftegas Limited (ENL)
 Milestones
	Commenced production from Chayvo in October
	2005; commenced crude oil export in October
	2006
 Commenced production from Odoptu in
	September 2010

0200km

Hokkaido

	Commenced production from Arkutun‐Dagi in
	January 2015
	Currently supplying natural gas to Russian
	market

INK Project, East Siberia

Japan South Sakha Oil Co. Limited

		Russia				Russia		Yakutsk

					Zapadno‐

		Peopleʹs Republic		Yaraktinskiy Block

		of China
			Taishet			Boloshetirskiy Block

						Skovorodino
							Lake Baikal

			Irkutsk
									Daqing
			Mongolia					Vladivostok

		Block			Peopleʹs Republic

0	500km			of China

Japan South Sakha Oil Co. Limited （JASSOC）'s shares in Joint Stock Company INK‐ZAPAD: 49%
INPEX's share in JASSOC: 24.998%
Operator : INK‐ZAPAD
License agreement: 25 years (Until 2031)
Production volume*: Approximately 23,000 bbl/d of crude oil
Milestones
- Commenced production from the Ichyodinskoye Oil Field in November 2014

* Average daily production volume for June 2020 on the basis of all fields

Block 10, Iraq (Eridu Oil Field)

INPEX South Iraq, Ltd.

Turkey		Iraq

	Iran
		Iran
Saudi Arabia		Baghdad

	Gharraf Oil Field*	West Qurna Oil Field*

Saudi Arabia	Nasiriyah Oil Field*

		Basra
Oil Field	Eridu Oil Field (Block 10)
Block

		Rumaila Oil Field*

0 100km

INPEX does not participate in these fields

Participating Interest: 40%
(Operator: LUKOIL)
Block acquired: December 2012 (Republic of Iraq 4th Licensing Round)
EDPSC*1
- Exploration Period: 9 years (Until December 2, 2021)*2
- Development and Production Period: 20years*3
Milestones
- Oil deposits were discovered through the first exploratory drilling conducted in February 2017. Thereafter, the extent of the deposits was confirmed by appraisal wells drilled in 2017.
- As the deposits most likely extend beyond the Contract Area, an extension application for the Contract Area was submitted and approved in November 2017.
- Exploration and evaluation work is underway to study the possibility of commercial development.

*1 Exploration, Development and Production Service Contract

*2 Exploration Period has been extended by 4 years for further exploration

and appraisal works to be conducted, in accordance with the EDPSC

*3 The current service contract provides the option to extend the Development and Production Periods by 5 years

Norwegian Continental Shelf Projects

INPEX Norge AS

0		70km
	Norwegian sea

		Awards in Predefined Areas (APA)

		Block

	Norwegian sea		Sweden
			Awards in
			Predefined		Norway	Finland
			Areas (APA)

			PL1016
			Predefined
				Awards in

Areas (APA)

NorwayPL1027

Norway

Sweden 0 70km

PL1016, Northern Norwegian Sea

 Participating Interest: 40%

(Operator: OMV Norge AS)

 Block Acquisition: March 1, 2019

 Concession Agreement

• Exploration and Appraisal Period: 7 years (to 2026)

• Development and Production Period: 25 years

 License awarded in January 2019

 PL1027, Western Barents Sea

 Participating Interest:20%

(Operator: Lundin Norway AS)

Block Acquisition: March 1, 2019
Concession Agreement
- Exploration and Appraisal Period: 8 years (to 2027)
- Development and Production Period: 25 years
License awarded in January 2019
Exploratory well 7221/4‐1 is planned to be drilled in 2020.

Abu Dhabi Offshore Oil Fields

Japan Oil Development Co., Ltd. (JODCO) / JODCO Lower Zakum Limited

		Das Island
				Upper / Lower Zakum Oil Fields
Satah Oil Field	Zirku Island
			Umm Al‐Dalkh Oil Field Abu Dhabi
Iran
Saudi Arabia			Oil Field	United Arab Emirates

			Pipeline

Upper Zakum Oil Field (JODCO)
- Participating Interest: 12%

(Operator: ADNOC Offshore)

- Concession agreement: Until 2051
Lower Zakum Oil Field (JODCO Lower Zakum Limited)
- Participating Interest: 10% (Operator: ADNOC Offshore)
- Concession agreement: Until 2058
Satah/Umm Al Dalkh oil fields

(JODCO)

Participating Interest: 40% (Operator: ADNOC Offshore)
Concession agreement: Until 2043

Abu Dhabi Onshore Concession JODCO Onshore Limited

				Abu Dhabi
		Al Dabb'iya Field
		Jumaylah Field	Shanayel Field
	Uwaisa Field	Rumaitha Field

Bida Al‐Qemzan			Bab Field	Arjan Field


Field				Sahil Field
	Bu Hasa Field				United Arab Emirates
		Huwailla Field	Asab Field

	Iran
					Qusahwira Field
				Shah Field
	Saudi Arabia			Oil Field

				Pipeline	Mender Field

Participating interest: 5%
(Operator: ADNOC Onshore*)
Concession agreement: Until 2054

Operating company owned by companies with participating interests. JODCO Onshore Limited has a 5% share in the operating company.

Abu Dhabi Onshore Block 4

JODCO Exploration Limited

		Iraq	Iran
		Saudi Arabia
			Oman
				Onshore Block 4
			Abu Dhabi City
	Saudi Arabia
		Block	United Arab Emirates	Oman

0		100km

 Participating interest: 100% (Operator: JODCO Exploration Limited)

Block surface area: Approximately 6,116 square kilometers

Offshore D.R. Congo Block Teikoku Oil (D.R. Congo) Co., Ltd.

D.R. Congo

Motoba

Lukami

Mibale

Mwanbe

Misato

Moko

Libwa

Lubi

Muanda

Tshiala

GCO

Banana

Participating Interest: 32.28%
(Operator: Perenco)
Concession Agreement: 1969‐2043
Production started in 1975
Production volume*: Approximately 14,000 bbl/d of crude oil

Offshore D.R. Congo Block

Oil Field		* Average daily production volume for June 2020 on the basis of all fields
Block	Atlantic Ocean	Soyo

Offshore Angola Block 14

INPEX Angola Block 14 Ltd.

Rep. of

Congo

D.R. Congo

Offshore Angola Block 14	Republic of

	Angola

	Oil Field	Atlantic Ocean

	Block


0	100km

Participating Interest: 9.998%
(Operator: Chevron)
PSC:
- Kuito DA: Until 2023
- BBLT DA: Until 2027
- TL DA: Until 2028
- Lianzi: Until 2031
Production volume*: Approximately 55,000 bbl/d of crude oil

* Average daily production volume for June 2020 on the basis of all fields

Copa Macoya and Guarico Oriental Blocks, Venezuela

Teikoku Oil & Gas Venezuela, C.A., other

 INPEX's share in joint ventures

 Gas JV (Copa Macoya): 70% (Operator)

 Oil JV (Guarico Oriental): 30%

			Brazil		Atlantic Ocean

				Caracas


				Copa Macoya and
				Guarico Oriental Blocks
					Venezuela
	Block			Columbia

0	200km
		Brazil

Joint Venture Agreement: 2006‐2026
Production volume*1:
- Natural Gas*2: Approximately 47 million cf/d

*1 Average daily production volume for June 2020 on the basis of all fields. *2 Gas volume sold to buyers.

Gulf of Mexico Projects

INPEX Americas, Inc. / INPEX E&P Mexico, S.A. de C.V., other

Texas Louisiana

Keathley Canyon Blocks

874/875/918/919

(Lucius Field and Hadrian North Field)

R1.4 Block 3 (Perdido)

 Lucius Oil Field & Hadrian North Field (INPEX Americas, Inc. )

 Lease Agreement

 Participating Interest: 7.75309%

(Operator : Occidental)  Production volume*1

• Crude Oil: Approximately 30,000bbl/d

• Natural Gas*2: Approximately 31 million cf/d  Milestones

• Production of crude oil and natural gas started in January 2015

• Revised Unit Participating Agreement (UPA) on unitization reached in September 2017 between project partners of Lucius Oil Field and Hadrian North Oil Field located south of Lucius

• Production from Hadrian North started in April 2019

• Buckskin tie‐in to Lucius SPAR started in June 2019

Mexico

Cuba

 Block 3, Perdido Fold Belt, Mexican Gulf of Mexico

R2.4 Block 22 (Salina)

0	1,000km

（INPEX E&P Mexico PB‐03, S.A. de C.V.）

 License Agreement

 Participating interest: 33.3333% (Operator: Chevron)

Block 22, Salina Basin, Mexican Gulf of Mexico （INPEX E&P Mexico, S.A. de C.V.）
- License Agreement
- Participating interest: 35% (Operator: Chevron)

*1 Average daily production volume for June 2020 on the basis of all fields. *2 Gas volume sold to buyers.

Tight Oil Project in Texas, US

INPEX Eagle Ford, LLC

	Dallas	San Antonio	Gonzales
	Houston
			Wilson
		Atascos	Karnes
		a

	La Salle		Block
0	40km
	Eagle Ford Shale play

Participating Interest: 100% (Operator*1)
Lease Agreement
Acreage: Approximately 9,800 net acres (Approximately 40 square kilometers)
Production volume*2:
- Crude Oil: Approximately 12,000bbl/d
- Natural Gas: Approximately 13 million cf/d
Milestones
- Reached an agreement with GulfTex Energy to acquire multiple development and production assets in the Eagle Ford play in the State of Texas, the United States in March 2019.

*1 INPEX is the Operator except for a portion of project assets

*2 INPEX Net production volume (Average daily production volume forDrilling Site June 2020)

Key Companies and Petroleum Contracts (1/2)

Key Companies and Petroleum Contracts*1

Company	Field / Project Name	Country	Contract Type	Ownership	Phase

Japan

INPEX CORPORATION	Minami‐Nagaoka Gas Field, etc.*2	Japan	Concession	‐	Producing

Asia and Oceania

INPEX South Makassar, Ltd.	Sebuku Block(Ruby Gas Field)	Indonesia	PS	100%	Producing

MI Berau B.V.	Berau Block (Tangguh LNG Project)	Indonesia	PS	44%	Producing / Development

INPEX Masela, Ltd.	Masela Block (Abadi LNG)*2	Indonesia	PS	51.9%	Preparation for Development

Teikoku Oil (Con Son) Co., Ltd.	05‐1b / 05‐1c Blocks	Vietnam	PS	100%	Development
	(Sao Vang and Dai Nguyet Gas Fields)

INPEX Sahul, Ltd.	Bayu‐Undan Gas Condensate Field	Timor‐Leste	PS	100%	Producing

INPEX Browse E&P Pty Ltd	WA‐285‐P*2and others	Australia	Concession	100%	Exploration

INPEX Ichthys Pty Ltd	WA‐50‐L and WA‐51‐L (Ichthys)*2	Australia	Concession	100%	Producing

Ichthys LNG Pty Ltd	Ichthys Downstream Business*2	Australia	‐	66.245%	Producing

INPEX Oil & Gas Australia Pty Ltd	Prelude FLNG Project	Australia	Concession	100%	Producing

INPEX Alpha, Ltd.	Van Gogh Oil Field/Coniston Oil Field	Australia	Concession	100%	Producing

INPEX Alpha, Ltd.	Ravensworth Oil Field	Australia	Concession	100%	Producing

*1 As of the end of June 2020

*2 INPEX operated projects

Key Companies and Petroleum Contracts (2/2)

Key Companies and Petroleum Contracts*1

Company	Field / Project Name	Country	Contract Type	Ownership	Phase

Eurasia (Europe ‐ NIS)

INPEX Southwest Caspian Sea, Ltd.	ACG Oil Fields	Azerbaijan	PS	51%	Producing

INPEX North Caspian Sea, Ltd.	Kashagan Oil Field	Kazakhstan	PS	51%	Producing

Middle East and Africa

JODCO	Upper Zakum Oil Field, etc.	UAE	Concession	100%	Producing

JODCO Lower Zakum Limited	Lower Zakum Oil Field	UAE	Concession	100%	Producing

JODCO Onshore Limited	Onshore Concession	UAE	Concession	51%	Producing

Teikoku Oil (D.R. Congo) Co., Ltd.	Offshore D.R.Congo	D.R.Congo	Concession	100%	Producing

INPEX Angola Block14	Offshore Angola Block 14	Angola	PS	100%	Producing

Americas

Teikoku Oil & Gas Venezuela	Copa Macoya*2 and Guarico Oriental	Venezuela	Concession	100%	Producing

INPEX Americas, Inc	Lucius Field and Hadrian North Field	USA	Concession	100%	Producing

INPEX Eagle Ford, LLC	Eagle Ford Tight Oil Project*3	USA	Concession	100%*3	Producing

*1 As of the end of June 2020

*2 INPEX operated projects

*3 INPEX operated projects except for a portion of project assets

Other data and information

Valuation Indices


			EV/Proved Reserves*1				PBR*2
20
				1

15					0.8

					0.6
10
					0.4
5					0.2

0					0
	INPEX	Median of	Median of Oil Majors	INPEX	Median of	Median of Oil Majors

			Independents					Independents

*1 EV (Enterprise Value) / Proved Reserves = (Total market value + Total debt ‐ Cash and cash equivalent + Non‐controlling interests) / Proved Reserves. Total market value as of June 30, 2020. Financial data as of March 31, 2020 (partly as of December 31, 2019). Proved Reserves as of December 31, 2019. Sources based on public data.

*2 PBR = Share price / Net asset per share. Total market value as of June 30, 2020. Financial data as of March 31, 2020 (partly as of December 31, 2019). Sources based on public data.

Vision 2040

エネルギーの未来に応えるThree Business Objectives

Sustainable Growth of Oil and	Development of Global Gas	Reinforcement of
Natural Gas E&P Activities	Value Chain Business	Renewable Energy Initiatives

A top 10	A key player	10%
international oil company	in natural gas development and	of project portfolio
	supply in Asia & Oceania

Growth in both volume and value
Volume: Aspire to achieve a production volume of 1 million BOED, continuously expand reserves
Value: Significantly increase net income and cash flow from operations, improve capital efficiency

Develop gas demand in Asia and other growing markets
Increase domestic gas supply volume over 3 billion m3
Maximize value of the upstream gas interests
Maintain / strengthen supply and demand management and trading functions

Proactively address climate change
Expand participation in wind power generation and other areas in addition to geothermal power, which draws on synergies with E&P activities
Conduct R&D in renewables to reduce greenhouse gas emissions

Develop a foundation by conducting CSR management,

particularly accelerating response to climate change and utilizing INPEX's strengths

Reduce carbon footprint, strengthen ESG initiatives and contribute to the realization of SDGs

Allocate cash generated from projects to shareholder returns and investments for growth

Continuously and sustainably increase corporate value

Note: Announced on May 11, 2018

Medium‐term Business Plan 2018‐2022

Cash Allocation during the 5‐Year Period*1

	Cash In	Cash Out
Cash flow	Investment
	from	for growth
operations
	before	¥1.7 trillion2
	exploration
	(70% for existing
	expenditure
	projects, 30% for

		new projects)
¥2.5 trillion	Shareholder

		returns
		Debt
	Others	reduction

*1 Assumes	price (Brent) of US$60/bbl and an exchange rate of ¥110/US$.

Includes Ichthys downstream JV.

*2 All expenditures for "Main Business Initiatives" as addressed from (1) to (3)

Main Business Initiatives

(1) Oil & Natural Gas

(2) Global Gas Value Chain

Upstream



Achieve annual gas supply volume of 2.5 billion m3

in Japan



Conduct LNG/gas marketing for Abadi, create gas demand in

Major assets & projects

Asia, etc.

Core business areas

(3) Renewable Energy

Kashagan Oil Field



Promote geothermal power generation business and enter wind

ACG Oil Fields

Priority exploration

power generation business

areas



Enhance R&D of renewable energy technologies

Eridu Oil Field (Block 10 in Iraq)

Minami‐Nagaoka Gas Field

Abu Dhabi Offshore and

Abadi LNG Project

Onshore Oil Fields

Prelude FLNG

Upstream Business Targets for FY2022

Ichthys LNG

Net production

700 KBOED

RRR

Maintain 100％ or higher

Production cost

Reduce to US$5/BOE

Note: BOE stands for barrels of oil equivalent.

RRR is the 3‐year average. RRR stands for Reserve Replacement Ratio (Proved reserves increase including acquisition / Production). Production cost is the production cost per barrel, excluding royalty.

Enhancing Shareholder Returns

In FY2018, plan to issue a commemorative dividend following the Ichthys LNG Project's start‐up and shipment of cargo
Shareholder return policy during FY2018‐2022
Maintain base dividends not falling below ¥18 per share plus the commemorative dividend as above
Enhance annual dividends in stages by increasing the dividend per share in accordance with the growth of the Company's financial results

Payout ratio : 30% or higher 

Commemorative

dividend

Annual

¥18 per share

FY2017	FY2018	FY2019	FY2020	FY2021	FY2022
		Period of the Medium‐term Business Plan

Financial Targets

	FY2022	FY2017 Results
Crude oil price/exchange rate assumptions	US$60 / ¥110	US$57.85 / ¥110.86
Net sales	Around ¥1,300 bn	¥933.7 bn
Net income attributable to owners of parent	Around ¥150 bn	¥40.3 bn
Cash flow from operations	Around ¥450 bn	¥278.5 bn
Return on equity (ROE)	5% or higher	1.4%

Maintain financial strength (expecting an equity ratio of 50% or higher)
Maintain financial and corporate resilience even if the crude oil prices drop to US$50/bbl

Note:

Crude oil price assumption is per one barrel of Brent crude oil; the exchange rate assumption is per U.S. dollar.

Targets are on a financial accounting basis.

Sensitivity of FY2022 net income attributable to owners of parent to the crude oil price and exchange rate is approximately +¥8.0 billion (‐¥8.0 billion) from a US$1/bbl increase (decrease) in the Brent crude oil price and approximately +¥2.0 billion (‐¥2.0 billion) from a ¥1/US$ depreciation (appreciation).

See page 5 of "Medium‐term Business Plan 2018‐2022" (URL: https://www.inpex.co.jp/english/company/pdf/business_plan.pdf) for other notes.

Note: Announced on May 11, 2018

Annual Dividends and Payout Ratio

36 yen

180%

30 yen

33 yen

157%

6 yen

160%

30 yen

24 yen

140%

27 yen

6 yen

24 yen

120%

24 yen

21 yen

100%

18 yen

80%

15 yen

12 yen

57%

65%

36%

35%

60%

9 yen

34%

40%

Payout Ratio

6 yen

14%

is N/A due to

20%

3 yen

net loss

0 yen

2014/3

2015/3

2016/3

2017/3

2018/3

2019/3

2019/12

2020/12

(Forecast)

Dividends Dividends (commemorative dividend) Dividends (increased dividend) Payout Ratio (right axis)

CSR Topics

INPEX engages in a variety of ESG activities focused on the following 6 material issues

		Strengthen governance structure
Governance 	Upgrade risk management system
		Prevent of major incidents
		Secure occupational health and safety
HSE		Conserve biodiversity, manage water resource
	appropriately

Promote renewable energy business
Develop natural gas as a cleaner source of energy Climate Change  Strengthen climate‐related risk management
Response



Compliance 



Local  Communities



Employees 

Respect human right

Comply with laws, prevent bribery and corruptions Conduct Environmental and Social Impact Assessment (ESIA) in supply chain

Assess and take measures to reduce impact on local and indigenous communities

Contribute to local economies

Develop personnel and enhance the motivation of the workforce Promote diversity

 Environment

 Social

 Governance

INPEX is included in major ESG indexes

		INPEX has been included in the FTSE4Good Global Index, FTSE4Good Japan Index, and in the FTSE Blossom Japan
	FTSE	Index. The FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong
	Environmental, Social and Governance (ESG) practices. The FTSE Blossom Japan Index was adopted as comprehensive
		indices incorporating ESG factors by the	Government Pension Investment Fund for Japan (GPIF), one of the world's
		largest pension funds.

		INPEX is constituent of the MSCI ESG Leaders Indexes, MSCI Japan ESG Select Leaders Index and MSCI Japan
	MSCI	Empowering Women Index (WIN) , a leading set of indexes in the selection of outstanding companies in ESG
	developed by Morgan Stanley Capital International (MSCI). MSCI Japan ESG Select Leaders Index and MSCI Japan
		Empowering Women Index (WIN) have been adopted by the Government Pension Investment Fund for Japan (GPIF)
		as indices incorporating ESG factors.

	S&P/JPX Carbon	INPEX has been included in the S&P/JPX Carbon Efficient Index, which has been adopted by the Government Pension
	Efficient Index	Investment Fund for Japan (GPIF) as environmental indices incorporating carbon efficiency and disclosure.

Copyright © 2020 INPEX CORPORATION. All rights reserved.	48

Production Sharing Contracts

Cost Recovery

Portion

Host Country Profit Oil	Contractor
Profit Oil

1. Cost Recovery Portion

 Non‐capital expenditures recovered during the current period

 capital expenditures recovered during the current period

 Recoverable costs that have not been recovered in the previous periods

2. Equity Portion (Profit Oil)

Host Country	Contractor
Share	Share

: Host Country Take
: Subject to Tax	Contractor Take
: Not Subject to Tax

Accounting on Production Sharing Contracts

Cash Out	Assets on Balance Sheet
		Project under
		exploration phase
Exploration		Recoverable accounts
Expenditures		under production sharing

		Project under development

		and production phase
Development

Expenditures
		Recoverable accounts
		under production sharing
Production Costs
(Operating expenses)

	Project under
	development and production phase

Acquisition Costs		Exploration and
		development rights

Income Statement

Provision for allowance for recoverable accounts under production sharing

Cost of sales

 Recovery of recoverable accounts under production sharing (Capital expenditures)

Cost of sales

 Recovery of recoverable accounts under production sharing (Non‐ Capital expenditures)

SG&A

 Depreciation and amortization

Other Expenses

 Amortization of exploration and development rights

Accounting on Concession Agreements

Cash Out

Assets on Balance Sheet

Income Statement

All exploration costs are

Explorationexpensed as incurredExploration expenses

Expenditures

Development				Cost of sales
	Tangible Fixed Assets		(Depreciation and
Expenditures
			amortization)


		All production costs are
Production Costs			Cost of sales
	expensed as incurred
(Operating expenses)				(Operating expenses)


Acquisition Costs		Mining Rights	Cost of sales
		(Depreciation and
				amortization)

Ichthys LNG Project Accounting Process Overview

Ichthys Upstream Permit

Holding entity (UJV)

Sales Revenue

Production Costs

(Operating Expenses)

Development Expenditures

(Depreciation and Amortization)

Ichthys Downstream entity

(IJV)

Sales Revenue

Raw Material Costs

(Purchase of Feed Gas from UJV)

Production Costs

(Operating Expenses)

Development Expenditures

(Depreciation and Amortization)

Interest Expense

Assets on Consolidated

Balance Sheet

All production costs are expensed as incurred

Tangible Fixed Assets

INPEX share of IJV's net income/loss are reflected as "equity in earnings/losses of affiliates". Depreciation is calculated on a straight line basis over the life of the project.

Consolidated Income

Statement

Net Sales

Cost of sales

(Operating expenses)

Cost of sales

(Depreciation and amortization)

Depreciation is calculated on an units of production basis over the life of the project

Other Income/Expenses (Equity in earnings/losses of affiliates)

Ichthys Downstream entity (IJV) is an equity‐method affiliate and its cash flow does not appear on the consolidated cash flow statement
Only major cost and expenditure items are shown.

Summary of Australian Taxation

	⇒(Oil & Gas sales price)×(Sales volume)	…………..(1)
Sales
	⇒OPEX incurred in relevant year (+Exploration cost)+CAPEX tax depreciation	…………..(2)

Operating expense

PRRT (Petroleum Resource Rent Tax)
= (Upstream Revenue ‐ Upstream CAPEX & OPEX ‐ Exploration Cost ‐ Abandonment Cost ‐
Undeducted PRRT expenditure carried forward) x 40%	…………..(3)

PRRT deductions are made in the following order: Upstream CAPEX, OPEX, Exploration Cost, Abandonment Cost.

Note: Exploration cost is subject to mandatory transfer between Projects/members of the same group of entities.

Corporate Tax (In Australia)

Undeducted PRRT Expenditure: non‐utilized deductible PRRT expenditure can be carried forward to the following year(s), subject to augmentation at the rates set out below;
o Development cost: LTBR+5% or LTBR or GDP deflator
o Exploration cost: LTBR+15% or LTBR+5% or GDP deflator

Note: The interest rate to be applied varies depending on the timing of application for a production license, the timing of exploration/development expenses and the number of years elapsed from the payment of expenses. LTBR = Long Term Bond Rate, GDP deflator = GDP deflator of Australia.

Corporate Tax = {(1) - (2) - (3) ‐ Interest paid) x 30%*

The legal tax rate of Australian corporate tax may differ from the accounting burden of corporate tax etc. on INPEX's subsidiaries in Australia. In addition, the amount of corporate tax etc. in accounting may differ from the amount of corporate tax paid in Australia.

Note: Content may change due to tax revisions

Historical Crude Oil Prices

(US$/bbl) 90

50 40 30 20 10 0

Brent WTI Dubai

2017

2018

2019

2020


		Jan to June 2019	FY2019/12				2020			Jan to June 2020
			(Apr to Dec 2019)
		Average		Average	Jan	Feb	Mar	Apr	May	Jun	Average
	Brent	66.11		64.27	63.67	55.48	33.73	26.63	32.41	40.77	42.12
	WTI	57.36		57.74	57.53	50.54	30.45	16.70	28.53	38.31	37.01
	Dubai	65.45		63.53	64.29	54.22	33.70	20.39	30.47	40.79	40.64
Copyright © 2020 INPEX CORPORATION. All rights reserved.						54

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Inpex Corporation published this content on 07 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2020 06:08:15 UTC

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