We'd now like to start the analyst meeting of INPEX Corporation. Thank you very much for gathering today despite your busy schedule.

My name is Yoshida from the Corporate Communications and IR Unit, and I'll be serving as the MC for the meeting today. Please allow me to introduce the speakers today.

We have Mr. Takayuki Ueda, Representative Director, President & CEO.

We have Mr. Yoshiaki Takimoto, Director, Senior Executive Vice President, Corporate Strategy & Planning.

We have Daisuke Yamada, Director, Senior Managing Executive Officer, Senior Vice President, Financial & Accounting. We'll spend about 35 minutes for the presentation, and we'll spend about 25 minutes for the Q&A session, 60 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.

For the presentation 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. Yamada will describe the consolidated financial results for the fiscal year ended December 2025 and the forecast for the year ending December 2026, and Mr.

Takimoto will give a progress update for the sustainable growth of the corporate value. Mr.

Ueda will start now.

Thank you everyone for gathering despite your busy schedule today. For those people participating online as well, thank you very much.

Today, we'd like to explain about our financial results as well as the forecast for this fiscal year. To begin with, the results for fiscal year 2025.

As you are well aware, our results for 2025 was a net profit of ¥393.8 billion. If we adjust for the oil price and foreign exchange rate, what is the number?

That is what we have announced. On an absolute basis, ¥393.8 billion, which is the third highest on record.

In 2025, $68 average the oil price, ¥149 was the exchange rate on average. If we actually do the calculation, 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 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 expert area. We are often asked about our share price.

For myself, 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. PBR is now nearing 1 as well.

If we compare ourselves against many companies in Japan, say for example the Prime in the Tokyo Stock Exchange, there are some 86 companies, and so PBR on average 3.8. Exxon, Shell, the peers on a global basis, the PB ratio is around 2, 2.10, which I think is the average.

The oil and gas companies in Japan, if we look at the PB ratio, 1.3 to 1.4, I think is the general level. If we take that into consideration, for myself, the share price has increased quite significantly, I'm very appreciative of that, but financial basis, our growth strategy, our shareholder returns, if we look at the details, I think we certainly are not second to others.

Despite the high level of increase, it's still not a very high level. We feel that we are kind of, I suppose, discounted to, I suppose, peers in that regard.

This is the highlight for this year. If we just pick up on the numbers, as I said, for the dividend, ¥100 for the year, the total shareholder return ratio is 55.4%.

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 net 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 per share and total share return ratio of more than 50%, which is a commitment.

We'll make sure that we'll stick to that, and so based on our forecast at this point in time, we're expecting to pay ¥108 per share for the dividend. Let me just talk about the external environment a little, and I'll go to the next page.

This page is a one-page description of the changes in 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.

Before the Ukraine War, many companies were really focusing on energy transition, a rapid transition towards clean energy, including renewable energy, and there were growing concerns over stranded assets associated with fossil fuels. When we were speaking with investors, they were saying, when are we going to leave from fossil fuel, what will happen if they become a stranded asset?

We're saying that oil and gas will not disappear immediately, and renewable energy or clean energy, we will make challenges for those areas as well, but we were still very much focused on doing the oil and 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. Greater emphasis on security and affordability, the appropriate volume at appropriate pricing was what people had wanted.

Not just decarbonization, but the balance need to be struck with energy security. That was the new, I suppose, viewpoint on a global basis after the start of the war.

What is the situation more recently? Energy addition is the recent popular word.

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. On a global basis, will increase.

In that regard, clean energy, centered around renewable energy, continue to be important, willing to work on that, but that will not be enough. How are we going to address the energy addition?

How are we going to accommodate that from the supply side? This is probably the global energy transition that we've seen over the past year to year and a half.

From energy transition to striking the balance between energy security and now energy addition. The past four or five years, with the Ukraine War, the recognition regarding energy around the world has changed significantly.

That was a point that I wanted to mention. That being the case, and if we look at the various forecasts right now, and this is from IEA and also IEEJ, how would things change towards 2050 in regards to the energy?

Oil may reach a peak somewhere, but the plateau situation is likely to continue for some time. Natural gas, that'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.

Natural gas, our main product, let's focus on this a little bit more. Right now, the LNG demand on a global basis and was about 400 million tons per year so right now.

This is going to reach 600 million ton in 2030, 700 million tons in 2035, and even up to 800 million tons in the future, more than double the current level. Where would the demand come from?

Please look at the map on the right, and it's quite evident, it's quite clear, it's Asia. We'll see a significant growth in demand with a shortage of the supply.

This is what is expected in 2035. In United States or Europe, Indian, the Pacific Ocean, we will see increases in demand, but we'll see greater growth in the supply.

If we look at the energy balance around the world, where we will see shortage is Asia. LNG demand until 2040, 2050 will continue to increase in a steady manner.

We will see shortage in Asia, how are we to supply natural gas in Asia? This is the main issue for the energy industry, this is the basis of our strategy at INPEX, this is the key point.

Going to next page. I've been talking about the total picture, but talking about this year, for Ichthys, 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.

Overall, compared to the initial plan, the initial plan had at 112 cargo, and the profit contribution was about ¥270 billion. For 2026, what are the views?

It's kind of hard to understand, but because of the BCM start-up, talking about this product, in Ichthys, 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. 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.

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 increase, but they're about 10 cargoes in a year. Then for the future backfill and the Train 3 expansion, for the new asset acquisitions, we are working various activities today.

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.

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, we already 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. The Asia-bound or Asia-produced LNG will not have any Hormuz Strait issue, and the distant of the ship transportation is short.

Therefore, they are a lot of popularity. 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 a good marketing activities. Going forward, as we go into the FID, we like to go into a more detailed condition negotiations.

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. For the permits, we are going to receive shortly the permits.

For Abadi today, various challenges are still what we're facing, but we are having a steady progress in those activities. Then for Abu Dhabi, unfortunately, UAE actually President passed away and we cannot really communicate well, but the production increase in Abu Dhabi is what we're 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.

These are the reasons where we'll be increasing production and profit will also be increased. Then outside of that, we have Norway, Indonesia, Malaysia, various activities are in place today.

Next page, please. Then the so-called clean energy, the blue hydrogen area.

As in Niigata last year in November, we had the demonstration project for the blue hydrogen in Niigata, Kashiwazaki. We had an opening ceremony in November last year.

The natural gas, domestic natural gas, will be used for the blue hydrogen production, and also the CO2, which is the by-product in that process, the gas field in the Higashi-Niigata area is using the CCS technology will be storing those gas, and then that is the CCS activities we're planning. Then we have methanation, the e-methane.

That facility, together with Osaka Gas, we have the construction in place in Nagaoka today, and we also started commissioning. For the renewable energy, as whole Japan is still in the 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 joint venture in Australia, and through this, we have this renewable energy investment in Australia. This is 838 megawatts of energy generation based on our stake in the project.

Then for Indonesia, we have the Muara Laboh geothermal project, and for the expansion, we have the FID. 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.

Then for the electricity side, we have the collaboration with the Hokuriku Electric that we signed the comprehensive contract last year, and we are working on those projects as well. For 2026, for the profit, as mentioned, we are ¥330 billion targeting that amount for this fiscal year.

Then the Brent is $63 and ¥151 per dollar. Both for the oil and the forex, there are a lot of discussions, but today the oil price is just slightly less than $70 on the Brent, and compared to that, it's quite conservative.

Many consultants are saying that today, or this year, there'll be some oversupply situation. Considering all of the situation, it's $63 in assumption.

I think it might be slightly conservative, and that's my view. If you look at the forex, it's 151, it's also difficult to explain.

It's ¥330 billion per year, but if we are to make adjustments on forex and the oil price, ¥151 and $63 of oil price, if we make adjustment based on next year, and then if you exclude the one-offs, and then making adjustments on the oil price and forex, if we exclude this one-off profit, the core profit is, let's say 330 is ¥315 [billion?] for this year.

Then the oil price may go down, it will be ¥312.3 billion, it's mostly the same level as 2025. The forecast of ¥230 billion is not so high, 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.

Also with the profit going down to ¥330 billion, why we are still increasing dividend, that might be another question. My view, or our view, is INPEX 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 Abadi. However, this year we have a lot of investment.

Investment amount, I think you have seen, but this year, for 2025 overall, there were about ¥400 billion in total. Next fiscal year, we're going to have double to ¥850 billion or so of investment.

Part of that is a pushed out from last year to this year. These investments will be long-term before Abadi, but before Abadi, in the mid- to short-term, we have the existing assets or the acquisition of assets, production assets, and there will be for the meantime, growth for the meantime, and that's why we have ¥850 billion.

Then for these investments, we have a high accuracy in these investments. We think that with this investment, we can have a growth in INPEX.

For the dividend, we are having the same view as before, we're going to have a growth, and then we will be rewarding our shareholders. For the profit, because of the oil price, we have ¥230 billion of profit forecast, but in the mid- to long-term perspective for the growth of our company, from that direction, there's no change in our views.

Therefore, based on that, we will have cash flow and profit, also depends on the foreign external environment, but the mid- to long-term growth is still going to happen, and we have that confidence. For the market, the ¥330 billion is the forecast we have for this year.

Just like mentioned, we have confidence, and we would like to reward our shareholders, the outcome of those growth. That's why we have ¥108 of dividend for this fiscal year as a forecast.

That's all for me. Thank you.

Next, Mr. Yamada will provide the explanation.

Daisuke Yamada (Director, Senior Managing Executive Officer, Senior Vice President, Financial & Accounting):

Last fiscal year, for the year ended December 2025, oh, I'm supposed to operate the slide myself. As the CEO has explained, net profit for last fiscal year was ¥393.8 billion or so.

It's a decrease, but the oil price has come down, we had the Ichthys shutdown maintenance, and so there were significant factors to push down the profit level. 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 ¥393.8 billion.

How are we going to assess this? At the oil price in the $60 level and almost ¥400 billion of profit, and so we have, this is a proof that we are now able to generate earnings.

As the CEO has explained, if we adjust for oil price and foreign exchange rate, this would be the highest record on history. 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 the natural gas below. Crude oil sales volume increased mainly due to Abu Dhabi, and so in terms of unit price, it came down significantly because of Brent coming down.

The operating the the the profit did actually come down, but for natural gas, the sales volume came down, this was due to the Ichthys shutdown. For the unit price, these linked to Brent, and so in terms of, we saw a decrease here for the natural gas as well, more than ¥4,000.

Last year was ¥393.8 billion versus the previous year was ¥427.3 billion, a decrease of ¥33.5 billion. Biggest is the decrease in the revenue, that was due to the oil price, and exploration expenses last year where we did not have a success for exploration in Australia last year, and so that kind of came back, and the divestment on the far right, now last year in Southeast Asia, we had earnings from the divestiture.

These are kind of the the comparison against the previous fiscal year, and for this fiscal year, the revenue come down, and also Ichthys downstream, this also links to the oil price, and so this came down in terms of the share profit investments accounted for in equity method. We saw the ¥153.8 billion positive impact in terms of income tax expenses.

Here, and it's actually included in the others as well, but the profit booster. This is TA recycling or the in the the investment benefit in Europe and the Middle East, and gross ¥80 billion, and delta is about ¥60 billion.

This is essentially balance sheet control, about ¥80 billion of these earnings accounted for by that, which is one of the key earnings pillars for us. The forecast for this fiscal year, ¥330 billion is what we have placed, and so $63 for the Brent price and ¥151 to a dollar.

Many think this is somewhat conservative, but some of you may be aware, but last year, too, we started with the forecast for the fiscal year at ¥330 billion. The oil price was 75 that we have assumed, but if we look at the end, was $68, was $7 less in terms of the oil price, but we still ended up with where we were.

About ¥40 billion, the decrease against the start of the the last fiscal year, and essentially came up with this number of ¥393.8 billion last fiscal year. It's not going to be in parallel to what we did last year, but we have greater ability to generate earnings right now.

As if you look at our balance sheet, we have quite a large amount of fixed assets, and we have the financial, the unrealized gains or losses included. 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 a kind of starting point in that regard. These are the factors analysis, and the biggest is the oil price, but in the middle you have Ichthys, please have a look at this.

Ichthys, ¥4.9 billion of increase, and there are some up and down in this number. Last year, shutdown impact occurred, we had about drop of ¥60 billion or so in the sales volume, but that has recovered, so that is a increase of ¥60 billion.

On the other hand, as explained by the RCEO, we have the booster compress compressor module connection, and by having this, there'll be some drop in the utilization. Then we also have the oil tax.

Last year it was only a six-month effect, but this year it will be a full-year impact, about ¥16 billion of decline in profits, and including that, it's plus ¥4.9 billion. Then for the profit booster, next year, for this year, TA recycling, about ¥90 billion, and in delta, these are the numbers, so that profit in total will be ¥330 billion.

I might be repeating myself, but these are just kind of a number we have for this interim. Then for the sensitivity of the of the oil and forex, it's ¥5.5 billion for the oil price, and then ¥3 billion for the forex.

Then next is the investment. The cash flow before investment or exploration is as shown, but this year for the growth investment, ¥850 billion is a large investment we're expecting this year.

Last year was 386, but we have about ¥463 billion of increase, which is for the pillar number one, which is mainly around oil and gas for the investment. As Abadi, before going to Abadi, how much we're going to, how we're going to generate profit is the question.

I think there were some some questions, but having these investments from the late '20s to early '30s, we'll have the outcome from these investments, we'll be focusing on investment this year. However, this ¥850 billion is a large amount, but if you look at the bottom left, in the mid-term, we had the plan in the mid-term plan, and '25 was 380, but this year is this amount, it might be a large amount, but it's a 25% over the three-year period, it's a run rate based on the run rate.

As you can see, this is the overall breakdown of the ¥850 billion. The blue, the dark blue, is the Abadi investments, and then the exploration as well as the increase in capacity.

For the Abadi is Abu Dhabi is an investment. Then the new investment, we cannot mention the detail here yet, but the acquisition of interests and the core core area mainly, Australia, Indonesia, Asia, Norway, Japan, will be investment, making these investments overall.

Then ROIC, unfortunately, will be some decline this year. It was 7.3% last year, but going to go down to 6% or so.

ROE, although it's not stated here, we have about 7% this year. I'm sure there are first views, but in terms of the total equity being so large, if you work on that, it might increase the ROE, but we are not going to lower the equity by lowering the total amount by buyback.

We're not thinking of that at this moment, but we have a trusty borrowing, the corporate finance, and depending on the creditability of our company, we have to do financing, and considering that, we have to have a certain amount of equity. There might be different views from the creditors compared to the investors, but from the creditors' standpoint, we should have a certain amount of equity or else it will be difficult to finance.

We have to maintain a certain amount for the financing standpoint. That's all for me.

Thank you very much. Yoshiaki Takimoto (Director, Senior Executive Vice President, Corporate Strategy & Planning):

Please allow me to explain about sustainable growth of our corporate value. In March 2023, the Tokyo Stock Exchange has made a request that we need to work on realizing the management of the company in view of the share price as well as the efficiency.

We've been working on that, and so I'd like to talk about what we've done last year as well as what we will be doing this fiscal year. Next slide, please.

What you can see on this slide is looking at the transition in the share price and the PB ratio. Dark blue is the PB ratio, green is the share price.

At the end of 2022, our share price was ¥1,396, and 0.48 was the PB ratio. At the end of last fiscal year, our share price was at ¥3,127 and a PB ratio of 0.77.

Based on the share price, we were at ¥3,998, 0.98 was where we were at as of today. As you can see here, and the reason behind why PB ratio increased, and so we have some ongoing initiatives as well as changes in external environment.

We have been strengthening shareholder returns and a dialogue with investors. We have also worked on enhancing capital efficiency, but above all, there's been significant change in external environment.

Particularly, the natural gas and LNG importance has been revisited, and that has now been recognized by the market. Our core business, the natural gas LNG business and the importance thereof, has led the share price to increase, which has led to improvement in the PB ratio.

Next slide, please. Here, we're talking about enhancement of capital efficiency as well as building confidence in our future growth.

As we have been explaining so far, in the early 2030s, the start of Abadi, and that is the significant expectation for our next large growth. From August last year, as you can see on the slide, we have entered into the FEED phase for Abadi.

Now we are nearing the start of development for Abadi. I think the market has recognized that, and in the early 2030s, when we start the Abadi production, in the meantime, what type of growth story can we paint?

That is the more immediate issue for us. When we speak with investors, and of course performance is not bad, and shareholder returns is not bad as well, and that is a comment that we receive from investors and for IR meeting.

The investors have expressed their satisfaction, but the growth story until we start production from Abadi, how are we going to come up with that? That may be the only, maybe, the issue that we need to address.

Acquiring new assets, by working on this in a concrete manner, we want to be able to build that confidence in the market in regards to our future growth. We need to also enhance the earnings base.

We will continue, or are continuing, steady production increases in regards to our project in Europe and the Middle East, and also enhancing the profit base through profit booster 500. We intend to lift our ROE by some 1% over the next decade.

I think we have the ability to do that. If you look at the graph on the right, and Abadi investment is likely to increase honestly from 2028 into the early 2030s, but even in that time period, are we still able to invest for growth as well as make returns to the shareholders?

Of course, debt will increase somewhat, but the net debt-to-equity ratio should be controlled within 0.3 to 0.8, and are able to do both, the investment for growth as well as making returns to the shareholders. That is what the graph on the right shows.

The growth investment, we talked earlier for a single year of investment from Yamada-san, but the mid-term vision that we announced last year, we have a three-year investment plan, which is ¥1.9 trillion. Growth number one, growth pillar number one, we have the natural gas and LNG investment especially, and that will be over three years the amount ¥855 billion over three-year period.

Then we have the Abadi exploration, expansion, new asset acquisition, ¥938 billion for growth pillar number one as well. Then for growth pillar one investment, ¥1.9 trillion, and then two and three are shown.

These are the amount for investment for growth pillar number two and number three. In the vision, as we set the target, the operating cash flow, a 60% increase or the increase of the business, is what we'd like to achieve going forward.

Next slide, please. On the left-hand side, we have the shareholder return and also increase in our dialogue with our shareholders.

On the left-hand side, the blue line is the share price trend from 2020 and onwards, and the gray line is the Brent oil price trend over the five five five or six years. As you can see, in 2024, from latter half of that year to the early 2025, and since then, just like an increase in the alligator's face, the oil price is going down, but the stock price is going up.

One of the factor is in 2022 onwards, we have started to do a shareholder return of more than ¥200 billion. As mentioned before about the business environment change, practically reducing GHG, and furthermore having energy security as well as affordability of energy, and those are coming from natural gas and LNG, and there's more importance of these resources.

Therefore, that's the main reason why we have been accepted, we believe. Of course, we don't think that's the only factor, but for the retail investors as well, compared to 2019, there's an increase by 17 times.

We think that it might be a difference in credibility and also the fact that we are able to have frequent dialogue with our investors and explain about the business versus the expectation from the market. We think there's more deepened understanding towards our business and operations.

With PBR one time, we cannot be satisfied, and that was explained from our President, CEO. With that in mind, we'd like to have awareness of this capital cost going forward.

The right-hand side, the increase in the dialogue with our investors. Last year, we had 495 dialogues or interviews with our investors and analysts.

By this, as you can see on the bottom right, the various initiatives, as an example, from our dialogue, there are about seven six seven items. These are the initiatives that we have also been evaluated by investors.

As explained, we have a ¥3,900 or so share price today. With this, we have been evaluated and we think that our understanding of our business as well as the support for our business has increased.

Like to have this initiative continued so that the stock price and also the capital cost will be in our mind through our operation. That's all for my presentation.

We will now like to receive questions. We will receive questions from this venue first, then after that we will receive questions from Zoom.

For those participating in the Zoom, please use the raise hand function. If one is designated, please state your name and affiliation before asking your questions.

If I could ask that you only ask two questions at a time. Like to invite questions from the floor.

Okay. I have two questions.

The first question is to do with the core earnings, ¥330 billion. The analysis that you have explained, this was something that we've learned for the very first time.

Based on ¥330 billion, and on page 16 today, and based on ¥330 billion, ROE 7%, the ROIC of 6.0%. Now, your ROE medium-term target, I don't think you have the quantitative number, but to be more than the equity cost and to be in excess of WACC, I think that is how we have explained.

Now on page 16, you actually did show WACC and the shareholders' equity cost, the 8% and 6% respectively. Based on the core earnings, the shareholders' capital, the cost, this is lower, and so for ROIC as well, unfortunately, and 6%, the WACC 6%, then the conclusion is that you have not generated corporate value.

Based on core earnings, ROE to be more than 8%. You are right through the mid-term plan right now.

Now, can that be realized before Abadi starts generating earnings? That's the first question.

The second question is in regards to the free cash flow. Now last fiscal year, you explained about the investment amount, but in terms of investment cash flow, the free cash flow was more or less neutral, and this fiscal year, the free cash flow, because you're going to be increase in investment, likely to be slightly positive or even negative.

If we define the investment cash flow as being the free cash flow last year to this year, what are the changes? That's my second question.

Daisuke Yamada (Director, Senior Managing Executive Officer, Senior Vice President, Financial & Accounting):

The CEO has explained about the core earnings, and let me explain the logic behind that, and I think that was described on page 10. The core earnings is something that we have shared with you for the very first time, and ¥330 billion for this fiscal year, we want to say that this is not a bad number.

We ended up with ¥393.8 billion last year, but the oil price and the exchange rate for this fiscal year, $65, sorry, $63 and ¥151. If we actually modify to that, and if we exclude for the one-off earnings last year, if we exclude that, then we end up with ¥312.3 billion.

The ¥330 billion this fiscal year, and so the oil price and exchange is the same, if you exclude for the one-off number, we end up with ¥315.2 billion. It may look as though the earnings has come down, but the core earnings itself hasn't really changed, that is what we wanted to communicate through this number.

ROE and the ROIC, now, we are not using the core earnings as the basis, we are using net profit for that. Of course, one-off earnings, so that it would be positive or negative from year to year, and the ROE and the ROIC is calculated based on that.

As you have indicated, and the ¥330 billion for this fiscal year, ROE 7%. What we are calculating, 8% for the equity cost, we fall short of that.

ROIC, too, we now disclose this number for this fiscal year, based on ¥330 billion, we will be at 6%, which is more or less the WACC level. Based on these numbers, we are not responding to your expectations.

But ¥330 billion is the budget at the fiscal year, so that's the performance at the start of the year. Like with last fiscal year, throughout the fiscal year, there are a number of things we have in mind, but not something that we can share with you at this point in time, but we started with ¥350 billion, but we'll give a full-year forecast in May or August and later in the year as well, and we hope to be able to increase that for ROE and ROIC.

At those stages, we're hopeful of those numbers increasing. We need to give it a go, but that's the reasoning behind these numbers.

For the free cash flow, maybe we should go to the investment page, which was this page. The December 2025, this is cash flow before exploration, and investment cash flow, if there is a difference, this is more than ¥130 billion, positive.

We had that much of a free cash flow, which was quite a steady number, but we were making profit. Based on this budget, investment is ¥850 billion, so that's the investment, and so free cash flow will be negative.

In other words, we are investing more than the operating cash flow, and so unless we raise money, we will not be able to fund investment. Free cash flow is negative for the first time since March 2019.

We have been making returns to shareholders based on our own cash, but this year we're going to make a large investment, and so 50% of return, that means that we need to do ¥156 billion, we need to raise some money. Free cash flow becoming negative, as to whether this is going to be a major issue for our management, not really.

We will raise funds for the investment. Raise debt, and I think that's quite healthy.

The key is the financial discipline in doing so. I didn't touch this before, but we want to invest this year.

Even if we actually raise some debt, the net D/E ratio will still be at 0.39, and we are saying that the financial discipline is between 0.3 and 0.5, we are going to raise debt to invest, and we feel that this is not going to be a financial, I suppose, issue. Looking forward to the additions to the core earnings.

I'd like to ask two questions. Number one is this time the investment plan compared to last year, there'll be a significant increase compared to last year.

As shown on page 20, looking at this investment, existing project investments to increase capacity, Abu Dhabi and the Middle East, you mentioned about the increase in the production capacity, but if you can talk more in detail about the content of those investments, and also the profit contribution. I think this is for the growth before Abadi.

I think for this existing projects investments, if you can talk about the time frame as well as the maybe not so much in size, it might be difficult, equity IRR 10% in the mid-10% range, whether that is still the case, and in terms of the timeline and also what kind of contents of investment and how much contribution from the profit side will be made in the timeframe. It's a Middle East project, I'm sure it's difficult, but if you can maybe give us more details on that, that's number one.

Then the second question is regarding that Abadi project. The FEED started from summer last year in a full scale, and by end of this year, is there any expected milestone for this project in this fiscal year?

In '27, that is the target year, but in '26, between the year '26, with the Indonesian government, is there any timing for negotiations or any milestone of such, or with the lender, if there's any agreement or any timing for agreement? In 2026, is there any milestone related to Abadi, if you can explain what is the expected milestone for this fiscal year?

I'd like to explain first for that investment question. ¥850 billion of investments, these are quite a significant number in the past fiscal years.

Abadi, exploration, and increase in capacity as well as the new investment. Abadi is the investment for Abadi, and then exploration is as you can see, but expansion of existing assets, these are the investment for the increase in capacity of existing assets.

For example, Abu Dhabi, increase in the production, we have investment there. Then when it comes to new asset acquisitions, these are acquiring new interests, or M&A might also be included, but these are the type of investments.

For the increase or expansion of the existing assets, we have 282, and the new asset acquisition, ¥106 billion. In terms of the area, we have the Australia or Perth, Perth or Ichthys, the connection or tie-in investment.

Then the growth area, which is Asia and Abu Dhabi or Japan, the oil and gas mainly, where we have quite a diversified investments. Then when it comes to exploration, it will take some time for these investments, and we cannot give details around the number of projects, but quite a quick area of investment we also are expecting this year and next year where we can generate profit quickly from such investments, those are expected as well.

For these investments, cash flow actually tends to go up and down, but in 2030s, early 2030s, with ¥850 billion times 10%, there'll be up and down of course, but that's the amount that we can expect of profit or cash flow contribution, and that's the expectation. Of course, depends on the project, there might be investment upfront, and that might be the case, but basically we have the operating cash flow.

Then as RCEO mentioned earlier, Abadi, until we go to Abadi, we have the bridge, and that is the imminent challenge we're facing today. Last year to this year, we have accelerated activities.

The environment is not bad, $60 or above with oil price, and the acquisition of interest and those new investments are a certain amount we can expect to make investments in, and those are the target. Free cash flow will be negative, and with the financing, even we have to finance, we like to try to make these investments for the future outcome.

The milestone for Abadi, I'd like to answer that question. Basically this year we will do FEED.

Whether we can call it milestone, we don't know, but the biggest is the environmental permits, AMDAL is what we call, but that's the one of the biggest milestone. From the Indonesian government, if we can obtain that from the government, various activities can start.

That's one milestone we're expecting. Then AMDAL, after receiving AMDAL permits, this project is in the rural area of Indonesia, we have to have a engagement with the community and increase that engagement, those are the milestones we're expecting.

More than that, we have the marketing activities where LOI, we have already received many agreements, but having that in detail agreements, so that kind of interim activities, the key term sheet is how we call it, but the kind of a term sheet is something we have to work in a more detailed manner, and those are things we are expecting as one of the milestones. With the Indonesian government, the negotiation on the conditions should come after the FEED outcome, and we cannot go without the outcome.

We also have preliminary activities, what kind of project cost and how much do we have to pay, that kind of brainstorming activities are already started. This year, these are the negotiations that will, or discussions that will, go in a more full scale.

As for the investment, as Yamada-san said, in the short-term to mid-term profit, we have to secure those profit, and those are important as well. There's still many things or some things we cannot mention today, but maybe say exploration, we have six blocks of exploration in Malaysia that we have already acquired, and there we will have about nine drilling this year.

If there's a lot of pipelines in Malaysia, if we are able to have a success, we can have a mid- to long-term increase. We also have Norway, Pandion, with a company called Pandion, we are able to acquire these stakes or interests, and those are things that will increase the profit over the short-term to mid-term to increase the production as well as profit.

Then we also have the assets, and we have various considerations of these assets, once these become more specific, then we have this mid-term profit securing until Abadi. This year we have a certain amount of assets or budget, but Abu Dhabi is one of the largest, but we have this various investments in plan.

I also would like to ask two questions. The first question is related to investment, and I talk about the interest acquisition.

In terms of interest acquisition, you said the environment is favorable right now, but at the same time, buyers, oh sorry, sellers, if my memory serves me correct, they are always, I suppose, taking quite an aggressive stance, there is always the fear of ending buying end up buying something that is not too profitable. In regards to the new investment, could you give more description in regards to the environment?

The second question is regards to the profit booster. I wanted to confirm for this fiscal year, sorry, for December 2025, I think the level was about ¥80 billion, is that correct?

For December 2026, you said the profit booster 500, the basis is, I think you were saying kind of a starting point, the base is ¥50 billion, and so the 50 is already included, and there may be others that you may be able to add on top, I don't know how much, but you expect for further addition to that. Is that the kind of thinking that you have?

That's my second question.

First question in regards to investment. As to whether the environment is favorable or not, the buyers may be quite aggressive, but as to whether the environment right now is favorable for buying things or not, I don't know for sure, but as I said before, we need to place natural gas as a core, there are many, I suppose, the players wanting to buy the natural gas assets, probably right the timing to consider right now.

Of course, we set hurdle rate for the oil and gas business, the country risk does differ from country to country, we look at the details, but generally speaking, we are looking at the mid-10s as a hurdle rate. For this fiscal year, that would be the time of project that we seek to investing.

This is an issue of investment discipline, we are very much mindful of that.

Please allow me to respond to your second question, profit booster 500, and we've discussed this with you for the first time last year, and one is TA recycling, and so what is included as part of the foreign exchange translation adjustments, that this is put through P&L, and the other is the investment incentive effect. Last year, I've mentioned two numbers, ¥80 billion and ¥60 billion.

Now what they are is that from the accounting, these two have contributed the profit by ¥80 billion, but when we speak with you, we need to kind of define them. This is something we started from 2025.

Now in 2024, we did have the investment incentive effect, and when we speak about the profit booster on a gross basis, it's ¥80 billion or so, but in terms of the delta, we need to subtract for the number from the previous fiscal year, which was about ¥20 billion. That's the reason we end up with ¥60 billion, and so we actually shared with you two numbers.

From the settlement of account perspective, you've been hearing ¥80 billion, but the number that we have speaking with you, we've removed the delta portion, it's ¥60 billion. Against the profit booster 500 last year, we were able to do ¥60 billion, so that was the accurate situation, and that number is ¥90 billion this fiscal year.

So ¥10 billion more than last year in terms of TA recycling. Now, throughout the year to generate additional earnings, of course many things, it's not just based on a balance sheet control, but the reduction in OPEX or other factors generating earnings.

One thing that we can think about is that in our case, the tax expenses. As ¥800 billion or ¥900 billion, and that's the kind of level of tax that we are paying.

To generate greater the tax benefits, of course we need to pay tax properly, but we shouldn't pay tax that we shouldn't be paying. Paying tax properly means that generating proper tax benefits, we need to target for that.

In that regard, we have significant balance sheet, our balance sheet is in excess of ¥7 trillion, and so for example, currency translation or fixed assets, and so given the fact that the oil price and FX are changing on a daily basis, the financial profit and loss, taxation, a profit and loss or taxation based unrealized gains and losses, we have all of these generating at all the times. How can we combine them?

We need to control the balance sheet to generate earnings, and this is something that we intend to do of course. We report based on the IFRS, and so our balance sheet is accurate, and so we do have the balance sheet to reflect the actual situation, and so emphasis and so we have the P&L, the profit and loss, and so balance sheet is so correct, and so we need to come up with a P&L which is accurately reflecting the difference of what's realized on the balance sheet, unrealized profit and loss, and the financial profit and losses and taxation profit and loss, we need to combine them well, and that is one way of operating a financial position and starting point and expectations to see additions to that.

Inclusive of all of that, we are hopeful of generating earnings in that way. I hope I answered your question.

I'd like to ask two questions. Number one is about Ichthys, the low pressure BCM with the connection, there'll be not a increase in profit, but maybe I didn't recognize this before, but I think we never heard this, or we haven't heard this before.

This BCM with this utilization, we won't have so much production this year. Was that planned from the past, or started from '26, or something that you have started to look at this year or recently?

Whether that will be fully recognized next year, or whether there'll be some shutdown and maintenance at some point? If you can give some update about the production profile of Ichthys.

Then the second question is on page 17 about the forecast for this year, the impact of oil price, ¥56 billion of minus impact based on the oil price assumption and the past assumptions, I think there are a large impact. Maybe it's a timing issue, or as you mentioned, the ¥330 billion is the number you have, but whether there'll be some conservatism in this number as well?

I'd like to ask whether that's the case or not. Thank you.

The production profile of Ichthys with the BCM connection, of course this is something that we have been expected as a company. Talking about the low pressure module, even though the pressure in the well will go down over the future, we will still have our production secured.

For that, we have a booster compressor, which is to be CPF, the offshore facility, and we have this installed. At the beginning of last year, we started that installation, and then this year we have started the commissioning, and after installation, we have to connect the lines.

There are huge lines and pipe lines and a huge amount of work load. To do the commissioning, that was the plan before.

Then with the actual commissioning, how much time will require and how much drop in production we will have, those forecast is something that we were able to come up recently. We have not mentioned those details in the past, but those work is something that we have been expecting from the past.

Then this is a sort of a one-off factor, and of course the production amount or the if the commissioning will be delayed, then that would also impact the schedule, but that is a one-off. Then for 2027, we are going to start planning for this.

However, but some sort of a maintenance will be required, how those will be unfolded is something we have to discuss and decide, and we have to put that together. The second question, the initial budget with the oil price, ¥52 billion impact.

This is including the natural gas, LNG, the lagging factors included. If you look in detail, they're about ¥30 billion on the oil price, and then the based on the dropped oil price, there are four months delay, so that's the LNG marketing or sales, and then spread is also being adjusted, so that's about a ¥20 billion of impact.

In that sense, ¥50 billion breakdown is the breakdown as mentioned. Then from the beginning of this year, if you look at from the beginning of this year, the sensitivity multiplied by these $6.8 to $6.3 times the sensitivity, that's not the case.

Initially we have the oil price, and then looking at the lagging factor, in total we have the oil price sensitivity and ¥52 billion or so. Then this is different from the earlier factors, but just plainly looking at the oil price, that is the number we have.

Thank you very much for the answer. Thank you.

I also have two questions. I wanted to ask a little more about the low-pressure production facility, and the impact of this is likely to come in the first half of the year?

I wanted to understand the scheduling aspect. The second question is in regards to cost.

Production cost forecast as shown on page 31, if you could give some background information to that, not including royalty, we expect some increase, but if you include royalty, it will come down slightly. Could you explain the background to that to the extent possible?

In regards to the low-pressure production facility or the booster compressor module, BCM, it's not like a shutdown maintenance, stopping everything to link the equipment. We are actually doing a link-up while being in operation.

When you are linking pipeline, we need to stop the related facilities, and once done, they are linked up, you start the operation again. It's not the case that you kind of shut down for a period, we'll connect and restart.

It's a little bit different from that type of shutdown maintenance. In that regard, where we're going to do this, rather than it being a first half of the year or the second half of the year, we are going to do this work gradually throughout the year.

In terms of our cargo number, we are expecting about 10 cargoes per month, that is assumption that we have for this fiscal year, and so reflective of this impact, that's the kind of level of production we're expecting for the year. Oh,

in terms of the production cost per barrel, and $5.3 was expectation last year, and the production volume in the European and the Middle East, Ichthys production volume and OPEX, and relate to that's the balance that will have impact on this number. Those including royalty or not, the royalty will have more impact in terms of the European and Middle East impact, how much contribution from that business will have that impact.

Last year, although that include royalty coming down, and those increasing that does not include royalty, that's the Australian or the Ichthys as a production volume, that is having the impact. The cost increase overall is not what you're expecting, it's just a change in balance where the increase are from production of where the cost is higher.

Yes, for cost reduction, Ichthys project that we are the operators, we are working on further cost reduction. The Ichthys portion, we will aim for further the cost reduction, but we have already made a significant progress on this, and we're kind of nearing the lowest level.

To what extent can we still do, and also overall their production volume, it's a balance of these two that is reflective in these numbers.

Thank you. Got

one question. This time about the increase of dividend against the growth in the business and the cash flow is returned, and I think that's really welcomed.

But ¥108, the level of this dividend, what kind of discussion was made and how did you come to this decision? I think it was overall comprehensive discussion, but in the past, 30% of payout ratio was a typical case.

This time from that, it will be 40% or less of increase in payout ratio. What kind of discussions were in place, and then how did you come to that ¥108?

It's not really a clear number, it's not so clear, maybe it's kind of a halfway, but how did you come up with that number?

There are a lot of discussions. One thing is the EPS or the profit against the profit this year, how are we going to return to our shareholders?

This time, ¥330 billion, let's say with that, it will be 50% total payout, and then 156 or so, but if it's ¥108 per share of dividend, it's ¥120 billion of cash required, and then there's a difference between those numbers. Therefore, of course, ¥330 billion is just an outlook, we don't know whether that will be the exact number.

With the certain visibility, if we have ¥108 per share of dividend, then in order to achieve that 50% total payout in the interim, we may have an increase in dividend or have a change, but we wanted to have that kind of a room in the dividend, that's one number, one idea. The other side is, as we're not increasing so much profit, we can set the same level of dividend as this year, but because of the inflation, or in the past it was a deflation, dividend yield in the deflation, let's say if it was a 3%, that would lead to returning to our shareholders, but then with the inflationary environment, there'll be a decline in real, it's not a welcomed situation.

That's why we came up with the number ¥108 of share this time.

We'd like to conclude the session as we have reached the scheduled time. For those that we were unable to respond to, please contact our IR group.

Thank you very much for your participation despite your busy schedule today.