According to the company’s website press release on November 8, 2022,
Qualitative Information ∕ Financial Statements
(1) Explanation on Consolidated Financial Results
Net sales for the nine months ended September 30, 2022 increased by ¥849.5 billion, or 100.0%, to ¥1,698.7 billion from the corresponding period of the previous fiscal year due to an increase in sales price of crude oil and natural gas. Net sales of crude oil increased by ¥697.0 billion, or 112.2%, to ¥1,318.3 billion, and net sales of natural gas increased by ¥149.0 billion, or 69.0%, to ¥365.1 billion. Sales volume of crude oil increased by 15,773 thousand barrels, or 18.1%, to 102,921 thousand barrels, and sales volume of natural gas decreased by 16,605 million cf, or 4.9%, to 322,299 million cf. Sales volume of overseas natural gas decreased by 12,831 million cf, or 4.7%, to 260,035 million cf, and sales volume of domestic natural gas decreased by 101 million m3, or 5.7%, to 1,668 million m3 (62,264 million cf). The average sales price of overseas crude oil increased by US$34.24, or 52.2%, to US$99.83 per barrel. The average sales price of overseas natural gas increased by US$2.59, or 56.9%, to US$7.14 per thousand cf, and the average sales price of domestic natural gas increased by ¥32.48, or 76.3%, to ¥75.04 per m3. The average exchange rate of the Japanese yen against the U.S. dollar on consolidated net sales depreciated by ¥19.65, or 18.1%, to ¥128.33 per U.S. dollar.
The increase of ¥849.5 billion in net sales was mainly derived from the following factors: regarding net sales of crude oil and natural gas, an increase in sales volume contributing ¥96.5 billion to the increase, an increase in unit sales price contributing ¥511.6 billion to the increase, the depreciation of the Japanese yen against the U.S. dollar contributing ¥237.8 billion to the increase, and an increase in net sales excluding crude oil and natural gas of ¥3.4 billion. Meanwhile, cost of sales increased by ¥295.8 billion, or 76.7%, to ¥681.3 billion. Exploration expenses increased by ¥19.1 billion, or 473.3%, to ¥23.1 billion. Selling, general and administrative expenses increased by ¥21.0 billion, or 36.8%, to ¥78.3 billion. As a result, operating income increased by ¥513.5 billion, or 127.6%, to ¥915.8 billion. Other income increased by ¥160.8 billion, or 251.3%, to ¥224.8 billion due to an increase in equity in earnings of affiliates and others. Other expenses increased by ¥73.9 billion, or 189.1%, to ¥113.0 billion due to posting modification loss on financial assets and others. As a result, ordinary income increased by ¥600.3 billion, or 140.5%, to ¥1,027.6 billion. Extraordinary loss was ¥18.2 billion as a result of posting impairment loss for a certain project due to the downward revision in forecasted production volume and others. Total amount of current income taxes and deferred income taxes increased by ¥451.3 billion, or 150.7%, to ¥750.8 billion, and net loss attributable to non-controlling interests was ¥8.8 billion. As a result of the above effects, net income attributable to owners of parent increased by ¥129.7 billion, or 94.2%, to ¥267.4 billion.
Financial results by segment are as follows:
1) Japan
Net sales increased by ¥53.1 billion, or 59.0%, to ¥143.2 billion due to an increase in sales price of crude oil and natural gas. Operating loss was ¥16.9 billion compared with ¥8.9 billion of operating income for the corresponding period of the previous fiscal year due to an increase in cost of sales.
2) Asia & Oceania
Net sales increased by ¥127.7 billion, or 54.0%, to ¥364.6 billion due to an increase in sales price of crude oil and natural gas. Operating income increased by ¥81.9 billion, or 73.5%, to ¥193.3 billion.
3) Eurasia (Europe & NIS)
Net sales increased by ¥160.6 billion, or 193.8%, to ¥243.5 billion due to increases in sales volume and sales price of crude oil. Operating income increased by ¥117.7 billion, or 593.0%, to ¥137.5 billion.
4) Middle East & Africa
Net sales increased by ¥497.9 billion, or 118.2%, to ¥919.2 billion due to increases in sales volume and sales price of crude oil. Operating income increased by ¥331.9 billion, or 125.0%, to ¥597.6 billion.
5) Americas
Net sales increased by ¥9.9 billion, or 55.4%, to ¥28.0 billion due to an increase in sales price of crude oil. Operating income increased by ¥7.0 billion, or 85.0%, to ¥15.3 billion.
(2) Explanation on Consolidated Financial Position
Total assets as of September 30, 2022 increased by ¥1,682.3 billion to ¥6,840.5 billion from ¥5,158.1 billion as of December 31, 2021. Current assets increased by ¥316.0 billion to ¥834.8 billion due to an increase in accounts receivable-trade and contract assets, posting of securities, and others. Fixed assets increased by ¥1,366.3 billion to ¥6,005.6 billion due to increases in tangible fixed assets, investments and other assets, and others. Meanwhile, total liabilities increased by ¥838.2 billion to ¥2,649.9 billion from ¥1,811.7 billion as of December 31, 2021. Current liabilities increased by ¥362.4 billion to ¥711.3 billion and long-term liabilities increased by ¥475.7 billion to ¥1,938.6 billion. Net assets increased by ¥844.1 billion to ¥4,190.5 billion. Total shareholders’ equity increased by ¥130.3 billion to ¥2,811.0 billion. Total accumulated other comprehensive income increased by ¥693.3 billion to ¥1,136.8 billion and non-controlling interests in net assets increased by ¥20.3 billion to ¥242.7 billion.
(3) Explanation regarding future forecast information such as Forecasts for Consolidated Financial Results Crude oil and natural gas production operations largely progressed steadily, and the Company revised its forecasts for consolidated financial results for the year ending December 31, 2022 due to factors including the upturn in crude oil prices and the depreciation of the Japanese yen against the U.S. dollar in the nine months ended September 30, 2022 and the revision of its crude oil price and exchange rate assumptions for the year.
(3) Notes to Consolidated Financial Statements
(Conditions or events that indicate there could be substantial doubt about the Company’s ability to continue as a going concern)
For the nine months ended September 30, 2022 (January 1, 2022 through September 30, 2022):
None
(Note on significant changes in shareholders’ equity)
For the nine months ended September 30, 2022 (January 1, 2022 through September 30, 2022):
None
(Changes in Accounting Policies)
(Application of Accounting Standard for Revenue Recognition and others)
Effective from the beginning of the first quarter ended March 31, 2022, the Group applied “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29, March 31, 2020, hereinafter referred to as “Revenue Recognition Accounting Standard”) and others. Under the Revenue Recognition Accounting Standard and others, revenue is recognized when the control of the promised goods or services is transferred to the customer at the amount expected to be received in exchange for the goods or services.
The main changes resulting from the application of the Revenue Recognition Accounting Standard and others are as follows:
1. Exchange transactions
For exchange transactions involving petroleum products of the same nature and value between entities in the same line of business, the Group has changed the practice to recognize revenue based on a net amount.
2. Light oil delivery taxes
For light oil delivery taxes which fall under the amount collected for third parties, the Group changed the practice to recognize revenue at an amount excluding light oil delivery taxes from consideration for transactions.
In accordance with the transitional treatment provided in the provisory clause of paragraph 84 of the Revenue Recognition Accounting Standard, the cumulative effect at the end of the previous fiscal year from retrospective application of the Revenue Recognition Accounting Standard is treated as adjustment to retained earnings at the beginning of the first quarter ended March 31, 2022, and the new accounting policy is applied from the adjusted beginning balance of retained earnings. As a result, consolidated net sales and cost of sales for the nine months ended September 30, 2022 decreased by ¥1,227 million, respectively, and there was no effect on operating income, ordinary income, and income before income taxes. In addition, there was also no effect on the beginning balance of retained earnings for the nine months ended September 30, 2022.
Due to the application of Revenue Recognition Accounting Standard and others, “Accounts receivable-trade” under current assets of the consolidated balance sheet as of December 31, 2021 has been included in “Accounts receivable-trade and contract assets”
under current assets from the consolidated balance sheet as of March 31, 2022. In accordance with the transitional treatment provided for in paragraph 89-2 of the Revenue Recognition Accounting Standard, figures for the fiscal year ended December 31, 2021 have not been restated in accordance with the new presentation method.
(Application of Accounting Standard for Fair Value Measurement and others)
Effective from the beginning of the first quarter ended March 31, 2022, the Group applied “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019, hereinafter referred to as “Fair Value Measurement Accounting Standard”) and others. In accordance with the transitional treatment provided for in paragraph 19 of the Fair Value Measurement Accounting Standard and paragraph 44-2 of “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the Group applied prospectively a new accounting policy prescribed by the Fair Value Measurement Accounting Standard and others.
This application has no effect on the consolidated financial statements.
(Changes in Accounting Estimates)
(Change in estimates for asset retirement obligation)
Regarding domestic oil and gas production facilities and gas supply and marketing facilities in Japan, the Group has obligations to prevent mine pollution at abandoned well sites after the completion of the production under Japanese Mine Safety Act and restore sites to their original condition at the time of business termination in accordance with lease contracts.
Among these facilities, certain domestic oil and gas production facilities are operated complementarily and holistically in connection with the LNG terminal and it had been difficult to formulate reasonable long-term production plan considering the balance between the production and the inflow of LNG. The Group had planned to operate domestic gas supply and marketing facilities permanently as highly public infrastructures for energy supply and it had been impossible to determine the timing of
decommission. For this reason, the Group had not recognized asset retirement obligation since the Group had not been able to
estimate it reasonably until the end of the previous fiscal year.
For the first quarter ended March 31, 2022, the Group reviewed the production and development plan considering the formulation and publication of “Long-term Strategy and Medium-term Business Plan (INPEX Vision@2022)” in February 2022. As a result, it has been possible to determine reasonably the timing of decommission of domestic oil and gas production facilities and certain gas supply and marketing facilities that the Group had not recognized asset retirement obligation since it had been impossible to determine the timing of decommission, and the asset retirement obligation of ¥12,149 million has been recorded. Due to this change, consolidated operating income, ordinary income and income before income taxes for the nine months ended September
30, 2022 decreased by ¥11,366 million respectively.
(Additional Information)
(Modification loss on financial assets)
In accordance with International Financial Reporting Standards (IFRS) 9 “Financial Instruments” implemented to foreign consolidated subsidiaries, the loss was recognized due to modification of financial assets that do not result in derecognition.
