Japan Petroleum Exploration Co., Ltd.
1662・Prime Market・Mining
Business
Japan Petroleum Exploration Co., Ltd. (JAPEX) is one of Japan's largest independent E&P companies, founded in 1955. Domestically, it conducts exploration, development, and production of crude oil and natural gas mainly in Akita, Niigata, and Hokkaido, and provides a stable supply of natural gas and electricity to customers along its pipeline network, which exceeds 800km in total length, and LNG bases. Overseas, the company operates E&P businesses in North America (tight oil and gas in the US), Europe (offshore Norway), and the Middle East (the Garraf oil field in Iraq). The group, comprising 32 subsidiaries and 19 affiliated companies, generated total sales of ¥340,336 million in FY2026 (ending March 2026).
Business Model
The E&P business—acquiring exploration and mining rights and conducting exploration, development, production, and sales in an integrated manner—forms the foundation of earnings. Domestically, natural gas and electricity sales utilizing the company's own pipeline network and LNG terminals (Infrastructure and Utility business) supplement stable revenue. Overseas E&P diversifies risk through investments spread across multiple locations in North America, Europe, and the Middle East. Other businesses, such as drilling contracting and petroleum product sales, are structured to capture demand from within the group.
Company Strengths
The Company owns and operates a gas pipeline network exceeding 800km in total length, in addition to the Soma LNG terminal (Fukushima Prefecture), Nihonkai LNG Niigata terminal, and Yufutsu LNG receiving terminal (Hokkaido). Trust relationships with customers and local communities, underpinned by a long track record of supply, make short-term imitation by competitors difficult, forming a stable earnings base for the infrastructure and utility business.
In February 2026, the Company acquired all equity interests in Verdad Resources Intermediate Holdings LLC (VRIH), which holds tight oil and gas assets in Colorado and Wyoming, USA, for an acquisition price of USD 1,040 million. As a result, consolidated proved reserves (crude oil plus gas combined) expanded significantly compared to the previous fiscal year, with crude oil increasing from 65,108 thousand bbl to 157,132 thousand bbl and natural gas increasing from 279,151 million cf to 526,655 million cf.
The Company is advancing efforts toward the early commercialization of CCS/CCUS by leveraging its E&P technologies, accumulating track record and expertise as a domestic frontrunner. Centered on Japan Petroleum Exploration Co., Ltd.'s Geoscience Research Laboratory, it continues to invest in advancing exploration, geophysical survey, and reservoir technologies, including AI-based enhancement of seismic survey data analysis accuracy and research into full waveform inversion technology, and has positioned CCUS as one of the pillars of growth in the JAPEX Management Plan 2026-2035.
ENVALITH's Perspective
Performance Trend
Revenue declined 12.5% year-on-year from ¥389,082 million in FY2025 (ended March 2025) to ¥340,336 million. Operating profit fell sharply by 37.2%, from ¥62,012 million to ¥38,915 million. The main causes were the deterioration in the sales balance of the E&P and infrastructure businesses due to the decline in crude oil CIF prices (actual: $71.89/barrel) and yen appreciation (actual: ¥149.85/dollar), as well as a substantial decrease in LNG sales volume (from 422,278t to 231,386t). On the other hand, comprehensive income increased significantly to ¥114,794 million (from ¥51,939 million in the previous period), as the rise in the market value of investment securities (valuation difference on available-for-sale securities: +¥57,712 million) boosted net assets. Looking at the five-year performance trend, profit peaks were formed in FY2023 (ended March 2023) and FY2025 (ended March 2025), and FY2026 (ending March 2026) results came in below the FY2024 (ended March 2024) level.
Growth Strategy
Enhancement of corporate value through the VRIH-driven expansion in North America, optimization of the domestic portfolio, and the JAPEX Management Plan 2026-2035.
Acquired 100% equity interest in VRIH, which holds tight oil and gas assets in Colorado and Wyoming, USA, for US$1,040 million (completed February 2026). North American segment assets have expanded sharply to ¥301,277 million, with a substantial increase in crude oil and natural gas sales volumes expected from FY2027 (ending March 2027) onward. An in-house development framework via Peoria Resources LLC has also been established.
Plans to transfer the gas manufacturing, sales, and pipeline businesses in Hokkaido to Hokkaido Electric Power for ¥31.0 billion (in FY2027, ending March 2027). While aiming to strengthen profitability through portfolio realignment, the company will continue E&P operations at the Yufutsu oil and gas field and continue supplying natural gas to Hokkaido Electric Power, maintaining a stable earnings base.
Under the new management plan "Building Core Assets toward 2035," announced in April 2026, the company is promoting capital cost-conscious management and building a resilient portfolio. The shareholder return policy—targeting a consolidated payout ratio of around 30% and maintaining an annual dividend of ¥40 per share—remains unchanged. The annual dividend for FY2027 (ending March 2027) is planned at ¥45 per share.
The Garraf oil field in southern Iraq remains suspended in production and shipment due to a force majeure declaration by the Iraqi government amid heightened tensions in the Middle East. The FY2027 (ending March 2027) earnings forecast records zero Middle East sales, with no visibility yet on resumption. A resumption of operations would be a potential catalyst for upside to earnings.
Last updated: July 19, 2026