Inpex Corp Ord

Well, I'd like to start the analyst meeting of INPEX Corporation. Thank you very much for gathering today, despite your busy schedule. My name is Yoshida. I'm from the Corporate Communications and IA Unit, and I'll be serving as the MC for the meeting today. So please allow me to introduce the speakers today. We have Mr. Takayuki Ueda, Representative Director, President, CEO. We have Mr. Takimoto Yoshiaki, Director, Senior Executive, Vice President, Corporate Strategy Planning. We have Daisuke Yamada, Director, Senior Managing, Executive Officer, Senior Vice President, Financial Accounting. So we'll spend about 35 minutes for the presentation, and we'll spend about 25 minutes for the Q&A session, 16 minutes in total. Today's meeting is going to be a hybrid meeting with online participants as well, with simultaneous interpretation between Japanese and English. For those participating through Zoom, please choose the language of your choice. And for the presenting material, you can choose the preference using the button at the top of the screen. Mr. Ueda will talk about the business overview to start with, and Mr. Amada will describe the consolidated financial result for the fiscal year ended December 2025 and the forecast for the year ending December 2026. And Mr. Takemoto will give a progress update for the sustainable growth of the corporate value. So Mr. Ueda will start now. Thank you everyone for gathering despite the busy schedule today and for those people participating online as well. Thank you very much. And today I would like to explain about the financial results as well as the forecast for this fiscal year. So to begin with, the results for fiscal year 2025. As you are well aware, Result for 2025 was a net profit of 393.8 billion yen. But if we adjust for the oil price and for an exchange rate, what is the number? So that is what we have announced. So on an absolute basis, 393.8 billion yen, which is the third highest on record, but in 2025, $68 is the average of the oil price. 149 yen was the exchange rate on average. And so if we actually do the calculation... And in terms of absolute number, we were third highest on history, but if we adjust for oil price and foreign exchange rate, the number for 2025 is the best on record. Of course, we are affected by the external factors, and we don't intend to talk just based on those numbers, but I think we have... developed ability to generate earnings. And the share price has continued to increase recently as well, your area. But we are often asked about our share price. Now, for myself, and the fact that the share price has increased is probably the great understanding of investors in our company. And so I'm very appreciative of that to begin with. But the PVR is now nearing one as well. But if we compare ourselves against many companies in Japan, say, for example, the Prime and the Tokyo Stock Exchange, so there are 86 companies, and so PBR on average is 3.8. Exxon, Rochelle, the peers on a global basis, the PBR ratio is around 2. It's 2.10, which I think is the average. So... The oil and gas companies in Japan, if you look at the PV ratio, 1.3 to 1.4, I think, is the general level. So if we take that into consideration, for myself, the share price has increased quite significantly. I'm very appreciative of that. But our financial databases, our growth strategy, our shareholder return, if you look at their details, I think we certainly are not second to others. And despite the high level of increase, it's still not a very high level. We feel that, you know, we are kind of, I suppose, discounted to, I suppose, peers in that regard. So this is the highlight for this year. So if we just pick up on the numbers, as I said, for the dividend, 100 yen for the year, so the total shareholder return ratio is 55.4%. And so... We have made somewhat of a conservative outlook for the oil price and for the foreign exchange rate, but we're expecting about 330 billion in annual profit for this fiscal year. We'll talk about this in more detail later on. You may think that this is somewhat low, but I will come back to explain about that later. For dividend, what we are assuming for now, annual dividend of 108 yen per share and total share return ratio of more than 50%, which is a commitment. So we'll make sure that we will stick to that. And so based on our forecast at this point in time, we're expecting to pay 108 yen per share for the dividend. But let me just talk about the external environment a little, and I'll go to the next page. And this page is... one-page description of the changes in the external environment. Even before the Ukraine war, the oil, gas-related external environment for us has changed. And I think we've gone through three different stages. So before the Ukraine war, many companies were really focusing on energy transition. So So a rapid transition towards clean energy, including renewable energy. And there were growing concerns over stranded assets associated with fossil fuels. And so when we were speaking with investors, they were saying, when are we going to, you know, leave from fossil fuel? What will happen if they become a stranded asset? But we were saying that oil and gas will not disappear immediately, and renewable energy or clean energy, we will make challenges to all those areas as well. But we will still... very much focused on doing the online gas business as well. That was the era that we were in for a while. Then after the start of the Ukraine war, the energy security became more important. The stable supply became more important. So the great emphasis on security and affordability, the appropriate volume at appropriate pricing was what people had wanted. So not just all decarbonisation, but the balance needs to be struck with energy security. And that was the new, I suppose, the viewpoint on a global basis after the start of the war. But what is the situation more recently? Energy addition is the recent popular word. So the demand for primary energy is expected to increase by about 30% from the current level to 2050. This is mainly due to electricity. AI or data center has generated greater demand for energy. In fact, energy consumption will increase going forward. So on a global basis, it will increase. So in that regard, clean energy centered around renewable energy continues to be important. We will work on that, but that will not be enough. And so how are we going to address the energy addition? How are we going to accommodate that from the supply side? And this is probably the global energy issue. the transitions that we've seen over the past year to year and a half. So from energy transition to striking the balance between energy security and now energy addition. And so the last four or five years with the Ukraine war, the recognition regarding energy around the world has changed significantly. So that was the point that I wanted to mention. So that being the case, and if we look at the various forecasts right now, and this is IEA, And also, IEJ, so how would things change towards 2015 in regards to the energy? Oil may reach a peak somewhere, but the plateau situation is likely to continue for some time. Natural gas, there's no gas. You can see the demand here. It will continue to increase towards 2040, 2050. Coal will come down, renewable energy will increase. I think this is the expected situation. So, natural gas is our main product. So, let's focus on this a little bit more. So, right now, the LNG demand on a global basis, and... was about 400 million tonnes per year, so right now, and this is going to reach 600 million tonnes in 2030, 700 million tonnes in 2035, and even up to 800 million tonnes in the future, so more than double the current level. So where would the demand come from? And please look at the map on the right, and it's quite evident, it's quite clear, it's Asia, we will see a significant growth in demand with a shortage of the supply. This is what is expected in 2035. In the United States, the Europa, Indian, the Pacific Ocean, we will see increases in demand, but we'll see greater growth in the supply. So if we look at the energy balance around the world, where we will see shortage is Asia. So energy demand until 2040, 2050 will continue to increase in a straight manner. and what we will see shortage in Asia. So how we got to supply natural gas in Asia. This is the main, the issue for the energy industry. So this is the basis of our strategy at INPEX. This is the key point. So going to next page.

So I've been talking about the total picture, but talking about this year for XDSS, This year, we have 112 cargo shipment and the production. We had a shutdown in 2025, and there was some delay in the restart up. But overall, compared to the initial plan, it was close to the initial plan at 112 cargo, and the profit contribution was about 270 billion yen. And for 2026... what are the views, and it's kind of hard to understand, but because of the BCM startup, so talking about this product, in ACES, the more you produce, we will be extracting from the basement, and there will be less pressure under the ground, and with the lower pressure, in order to have a long-term stability in the production. There are about 5,000 tons or booster compressor where the compressor will be used to connect to the CPF, the offshore CPF. And that went well. But in 2026, we don't have a shutdown maintenance, but this booster compressor – We'll have a commissioning. And in that process, there'll be some stop of the facility. So the production will not be fully recovered. Therefore, it's not like we'll have a large recovery in production. Compared to this year, there'll be increased, but they're about 10 cargoes. And then for the future backfill and the Train 3 expansion, for the new asset acquisition, we are working various activities today. And at this moment, it's still hard to mention the details at this moment. However, at some point in time, we hope we can disclose. For Abadi, we had a large production in last year. In August of 2025, we had moved to feed, and today the feed work, which is a basic design, that is working steadily today at this moment. And by end of this year, some cost estimate will be clear, and marketing as well as financing is the activity we have started. For marketing, from many potential customers where they have discussions at this moment. As mentioned at the beginning, the Asian LNG is very precious. And many from America and from Qatar, there are many LNG. But from Asia, there's not so many LNG coming out of the region. So the Asia-produced LNG will not have any homes straight issue. and the distance of the ship transportation is short. Therefore, there are a lot of popularity. And when it comes to the final binding agreement, we're not able to sign those contracts yet. However, there's a lot of needs, and we're able to have good marketing activities. So going forward, as we go into the FID, I would like to go into a more detailed condition and negotiations. And then for the financing, Looking at the recent situation in the global market, for the natural gas, the bank and the finance situation is welcoming more than in the past. And that is working well at the same time. And for the permits. We are going to receive shortly the permits. And for Abadi today, various challenges are still what we are facing, but we are having steady progress in those activities. And then for Abu Dhabi, unfortunately, UAE... Actually, the president passed away, and we cannot really communicate well. But the production increase in Abu Dhabi is what we are working on today. Between us and Abu Dhabi, Abu Dhabi as a country, 4 million to 5 million BT, or in some cases 6 million BT is going to be planned, and we are going to make investments. 2026 investment is large, and the biggest reason is Abu Dhabi increase in the capacity. So these are the reasons. where we will be increasing production and profit will also be increased. And then outside of that, we have Norway, Indonesia, and Malaysia. Various activities are in place today. Next page, please. And then the so-called clean energy, the blue hydrogen area. As you know, in Niigata, last year in November, we had the demonstration project for the Blue Hydrogen in Niigata, Kashiwasaki. We had an opening ceremony in November last year. And the natural gas, domestic natural gas, will be used for the blue hydrogen production, and also the CO2, which is the byproduct in that process. The gas field in the Higashi-Nagasaki area is using the CCS technology. We'll be storing those gas, and then that is the CCS activities we are planning for. And then we have Mesa Nation, the Amesane facility, together with Osaka Gas. We have the construction in place in Nagaoka today, and we also started the commissioning. For the renewable energy, as whole Japan is still in a difficult situation, however, we have the Potentia Energy, which is the European company called Enel, and it's a subsidiary of Enel, but we have a 50-50 partnership. joint venture in Australia and through this we have this renewable energy investment in Australia and this is 838 megawatts of production energy generation based on our stake in the project. And then for Indonesia, we have the Mora Labo geothermal project. And for the expansion, we have the FID. And then also in the Goto, offshore Goto of Nagasaki Prefecture, we have the first in kind in Japan, the floating offshore wind farm. And we are also participating in that project. And then for the electricity side, we have the collaboration with the Hokuriku Electricity that we signed the comprehensive contract last year, and we are working on those projects as well. And for 2026, for the profit, as mentioned, we are at 330 billion yen, targeting that amount for this fiscal year. And then the rent is $63,000. and 151 yen to a dollar, and both for the oil and the forest. There are a lot of discussions. But today, the oil price is at just less than $70 on the brand. And compared to that, it's quite conservative. But many consultants are saying that today or this year, there will be some supply-oversupply situation. So considering all of the situation, it's $63 in the assumption. I think it might be slightly conservative, and that's my view. And if you look at the forex, it's 151, so it's also difficult to explain. But it's 330 billion per year. But if we are to make adjustments on forex and the oil price, 151 yen and $63 of oil price, if we make adjustments based on next year, And then the one-off, if we exclude the one-offs. And then making adjustments on the oil price and forage. If we exclude this one-off profit, the core profit. Let's say 330 is 315 for this year. And then the oil price may go down. So it will be 312.3 billion. So it's mostly the same level as 2025. And the forecast of 330 billion is not so high. So you might say it's too low. However, looking at the current oil price situation, we think we can have this level of profit, and that's the estimate today. For the dividend, we have 108 yen. and also with the profit going down to $330 billion, why we are still increasing dividend, that might be another question. But my view or our view is impacts growth basically is still high. We still have a high level of growth with a sound financial situation, and we have a good steady progress in the project, and we have a body. However, this year we are going to – we have a lot of investment. Investment amount, I think you have seen that this year for 2025 overall, there were about 400 billion yen in total. Next fiscal year, we are good to have double to 850 billion or so of investments. And part of that is pushed out from last year to this year. But these investments will be long-term for Abadi. But before Abadi, in the mid to short term, we have the existing assets or the acquisition of assets, production assets, and for the meantime, growth for the meantime, and that's why we have 850 billion yen. And then for these investments, we have a high accuracy in these investments. So we think that with this investment, we can have a growth in index. So for the dividend investment, We are having the same view as before, so we are going to have a growth, and then we will be returning, rewarding our shareholders. For the profits, because of the old price, we have $330 billion of profit forecast, but in the long-term perspective for the growth of our company, From that direction, there is no change in our views. Therefore, based on that, we will have cash flow and profit. Also, it depends on the external environment, but the mid- to long-term growth is still going to happen, and we have that confidence. And for the market, the $330 billion is the forecast we have for this year. But just like mentioned, we have confidence, and we would like to reward our shareholders the outcome of those growths. So that's why we have 108 yen of dividend for this fiscal year as a forecast. So that's all for me. Thank you.

So next, Mr. Mada will provide the explanation. So last fiscal year, for the end of December 2025, I'm supposed to operate the slide myself. So as the CEO has explained, net profit for last fiscal year was 392.8 billion yen or so. So it's the decrease. But the oil price has come down, and we had the interest shutdown maintenance, and so there were significant factors to push down at either profit level, but we have the profit booster or the balance sheet control. or we had significant return of the income tax, and so we ended up with this number of 390 to 3.8 billion yen. So how are we going to assess this? Well, at the oil price in the $60 level, and almost 100 billion yen of profit. And so... This is a proof that we are now able to generate earnings. And as the CEO has explained, if we adjust for oil price and foreign exchange rate, this would be the highest record on history. So we do consider this very positively. This is the analysis of the revenue and profit. And so you can see crude oil at the top and natural gas below. The crude oil sales volume increased mainly due to FW. And so in terms of unit price, it came down significantly because of the rate coming down. And so the operating, the profit did actually come down. But for natural gas, the sales volume came down. This was due to the excess shutdown. And for the unit price, it is linked to Brenttown. And so we saw a decrease here. For the natural gas as well, there are more than 4,000 – So last year was 393.8 billion yen versus the previous year was 127.3 billion yen, a decrease of 33.5 billion yen. The biggest is the decrease in the revenue. That was due to the oil price and exploration expenses. Last year, we did not have a successful exploration in Australia last year, so that kind of came back. and the divestment on the far right. Now, last year in Southeast Asia, we had earnings from a divestiture. And so these are kind of the comparison against the previous fiscal year. And for this fiscal year, the revenue come down and also exist downstream. And this also links to the oil price. And so this came down in terms of the Shell Profit Investments account of an equity method. But we saw the 153.8 billion yen positive impact in terms of income tax expenses. And so here, and it's actually included in the others as well, but the profit booster. And so this is the recycling or the investment, the benefit in Europe and the Middle East that grows 80 billion and Delta is about 60 billion. And so this is essentially balance sheet control. So about 80 billion yen of these earnings are counted for by that, which is one of the key earnings pillars for us. So the forecast for this fiscal year, 330 billion yen is what we have placed. And so $63 for the brand price and 151 yen to a dollar. So you may think this is somewhat conservative. Some of you may be aware, but last year, too, so we started with the forecast for the fiscal year at 330 billion yen and so the oil price was 75 that we have assumed but if we look at the end it was 68 the dollar so it was 7 dollars less in terms of the oil price but we still ended up with where we were and so about 40 billion yen So decrease against the start of the last fiscal year. And essentially came up with this number of 393.8 billion yen last fiscal year. So it's not going to be parallel to what we did last year, but we have a greater ability to generate earnings right now. And as you know, if you look at our balance sheet, we have quite a large amount of fixed assets, and we have the financial, the unrealized gains and losses included. So things that we can do now and can't do now, we have those, the profit, the booster thing, but we can't include all of that at the budget at the start of the fiscal year. And so you kind of go through the year to turn those into actual earnings. So $330 billion is a kind of starting point in that regard.