（１）Explanation on Consolidated Financial Results

Regarding the Company’s consolidated financial results for the six months ended June 30, 2024, revenue increased by ¥111.8 billion, or 10.4%, to ¥1,190.8 billion from the corresponding period of the previous fiscal year due to the depreciation in the average exchange rate of the Japanese yen against the U.S. dollar during the period. Revenue of crude oil increased by ¥125.6 billion, or 16.4%, to ¥892.1 billion, and revenue of natural gas (excluding LPG) decreased by ¥15.1 billion, or 5.1%, to ¥281.3 billion. Sales volume of crude oil increased by 934 thousand barrels, or 1.3%, to 70,635 thousand barrels, and sales volume of natural gas increased by 9,319 million cf, or 3.7%, to 258,874 million cf. Sales volume of overseas natural gas increased by 8,353 million cf, or 4.2%, to 209,398 million cf, and sales volume of domestic natural gas increased by 26 million m3, or 2.0%, to 1,321 million m3 (49,295 million cf). The average sales price of overseas crude oil increased by U.S.$1.48, or 1.8%, to U.S.$82.92 per barrel. The average sales price of overseas natural gas decreased by U.S.$0.41, or 6.8%, to U.S.$5.61 per thousand cf, and the average sales price of domestic natural gas decreased by ¥25.44, or 24.9%, to ¥76.74 per m3. The average exchange rate of the Japanese yen against the U.S. dollar on consolidated revenue depreciated by ¥17.41, or 12.9%, to ¥152.39 per U.S. dollar.

The increase of ¥111.8 billion in revenue was mainly derived from the following factors: regarding revenue of crude oil and natural gas, an increase in sales volume contributing ¥20.2 billion to the increase, a decrease in unit sales price contributing ¥33.5 billion to the decrease, the depreciation in the average exchange rate of the Japanese yen against the U.S. dollar contributing ¥123.7 billion to the increase, and an increase in revenue excluding crude oil and natural gas of ¥1.3 billion.

Meanwhile, cost of sales increased by ¥47.8 billion, or 11.2%, to ¥473.1 billion. Exploration expenses increased by ¥45.4 billion to ¥49.4 billion. Selling, general and administrative expenses increased by ¥9.5 billion, or 19.0%, to ¥59.8 billion. Other operating income increased by ¥5.6 billion, or 39.5%, to ¥19.7 billion. Other operating expenses decreased by ¥6.2 billion, or 51.4%, to ¥5.9 billion. Share of profit of investments accounted for using equity method increased by ¥71.9 billion to ¥77.7 billion. As a result, operating profit increased by ¥92.8 billion, or 15.3%, to ¥700.0 billion.

Finance income decreased by ¥58.6 billion, or 41.5%, to ¥82.8 billion. Finance costs increased by ¥30.4 billion, or 77.5%, to ¥69.6 billion. As a result, profit before tax increased by ¥3.7 billion, or 0.5%, to ¥713.2 billion.

Income tax expense increased by ¥47.7 billion, or 10.5%, to ¥502.2 billion. Loss attributable to non-controlling interests was ¥1.6 billion compared with ¥6.5 billion of profit attributable to non-controlling interests for the corresponding period of the previous fiscal year. As a result of the above effects, profit attributable to owners of parent decreased by ¥35.9 billion, or 14.5%, to ¥212.5 billion.

Operating results by segment are as follows:
　

1) Oil & Gas Japan
Revenue decreased by ¥31.3 billion, or 22.7%, to ¥107.1 billion due to a decrease in sales price of natural gas. Profit attributable to owners of parent decreased by ¥18.9 billion, or 66.9%, to ¥9.3 billion.

2) Oil & Gas Overseas - Ichthys Project
Although revenue increased by ¥29.1 billion, or 15.8%, to ¥213.0 billion due to the depreciation of the Japanese yen against the U.S. dollar and an increase in sales volume, profit attributable to owners of parent decreased by ¥3.5 billion, or 2.3%, to ¥150.0 billion due to factors including an increase in exploration expenses.

3) Oil & Gas Overseas - Other Projects
Although revenue increased by ¥110.9 billion, or 14.9%, to ¥853.4 billion due to the depreciation of the Japanese yen against the U.S. dollar and an increase in sales volume, profit attributable to owners of parent decreased by ¥8.5 billion, or 14.1%, to ¥52.0 billion due to factors including an increase in income tax expense.

（２）Explanation on Consolidated Financial Position

Total assets as of June 30, 2024 increased by ¥1,026.1 billion to ¥7,765.6 billion, compared to December 31, 2023. Current assets increased by ¥281.4 billion to ¥1,119.9 billion due to an increase in other financial assets, and others. Non-current assets increased by ¥744.6 billion to ¥6,645.7 billion due to an increase in oil and gas assets, and others.

Meanwhile, total liabilities increased by ¥281.5 billion to ¥2,521.9 billion. Current liabilities increased by ¥205.8 billion to ¥778.0 billion and non-current liabilities increased by ¥75.6 billion to ¥1,743.9 billion.

Total equity increased by ¥744.6 billion to ¥5,243.6 billion. Equity attributable to owners of parent increased by ¥718.0 billion to ¥4,927.1 billion. Non-controlling interests increased by ¥26.6 billion to ¥316.5 billion.

（３） Explanation on Cash Flows

The Group’s cash and cash equivalents as of June 30, 2024 totaled ¥233.1 billion, reflecting a net increase of ¥7.7 billion from ¥201.1 billion as of December 31, 2023, with the effect of exchange rate changes of ¥24.2 billion added to it.

The status of cash flows from operating, investing, and financing activities and their factors during the six months ended June 30, 2024 are as follows:

1) Cash flows from operating activities
Net cash provided by operating activities amounted to ¥368.9 billion, down ¥74.1 billion from the corresponding period of the previous fiscal year, mainly due to an increase in trade and other receivables and an increase in income taxes paid (despite a decrease in finance income, which is a non-cash item, and an increase in trade and other payables).

2) Cash flows from investing activities
Net cash used in investing activities amounted to ¥318.1 billion, down ¥52.4 billion from the corresponding period of the previous fiscal year, mainly due to a decrease in payments for purchases of investments and an increase in proceeds from sale and redemption of investments.

3) Cash flows from financing activities
Net cash used in financing activities amounted to ¥43.0 billion, down ¥88.4 billion from the corresponding period of the previous fiscal year, mainly due to a decrease in repayments of long-term borrowings and a net increase in commercial papers.

（4）Explanation Regarding Future Forecast Information Such as Forecasts for Consolidated Financial Results

The Company revised its consolidated financial forecasts other than profit attributable to owners of parent for the fiscal year ending December 31, 2024 due to factors including generally steady progress in production in the Ichthys Project and other key projects made during the six months ended June 30, 2024, as shown below. The revised forecasts also reflect the revision of a forecast of sales volume, and crude oil price and exchange rate assumptions for the third quarter onwards.

Forecasts for consolidated financial results for the year ending December 31, 2024 　

The above forecasts are calculated based on the following assumptions: 　

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.