We have therefore focused on comprehensively reevaluating domestic E&P potential in recent years, conducting a systematic E&P program that effectively combines expansion of reserves in areas surrounding existing oil and gas fields (field growth), with exploration aimed at discovering new large-scale reserves.

Production operations in Hokkaido are centered on the Yufutsu oil and gas field. JAPEX discovered this field in 1989. Since starting production in 1996, we have expanded production capacity every year in line with strong demand. During fiscal 2006, JAPEX completed drilling of two offshore and two onshore exploration wells. With the Numanohata (T1) East SK-1D exploration well, drilled to the east of the Yufutsu oil and gas field, we succeeded in producing new crude oil from a horizon shallower than that at which commercial production is currently being conducted. We also drilled one production well to maintain and increase production capacity in the Yufutsu oil and gas field. During fiscal 2007, we conducted seismic surveys in areas surrounding the Yufutsu oil and gas field and the central-south area of Hokkaido. We also drilled one production well in the Yufutsu oil and gas field. To support future exploration in the Hokkaido and Sanriku Coast area, JAPEX will continue to acquire new geological data from geophysical surveys, as well as identify then drill exploratory wells in structures that are expected to yield large reserves. Field Name Yufutsu Oil & Gas Field Location Tomakomai City (Hokkaido) Discovered in 1989 Commenced Production in 1996

JAPEX produces crude oil and natural gas from the Sarukawa oil field?first discovered in 1958?as well as the Yurihara oil and gas field, the Ayukawa oil and gas field, and other fields in the Akita area. In fiscal 2006, we drilled one exploration well. In fiscal 2007 we completed drilling one exploration well in June, and are currently conducting seismic surveys. JAPEX have completed the expansion of production and processing facilities to raise production of crude oil from the Yurihara and Ayukawa oil and gas fields, and since the end of November 2004, have increased production capacity to a level of 330kl/d (2,000 bopd). In terms of future exploration in the Akita area, we will collect new geological data from geophysical surveys on land and at sea, and conduct E&P oriented toward increasing reserves, targeting structures near existing oil and gas fields in the Sarukawa, Yurihara, and Ayukawa regions. Field Name Sarukawa Oil Field Location Oga City (Akita Prefecture) Discovered in 1958 Commenced Production in 1958 Field Name Yurihara Oil & Gas Field Location Yurihonjo City (Akita Prefecture) Discovered in 1976 Commenced Production in 1984 Field Name Ayukawa Oil & Gas Field Location Yurihonjo City (Akita Prefecture) Discovered in 1989 Commenced Production in 1995

JAPEX produces crude oil and natural gas from the Mitsuke oil field?first discovered in 1958?as well as the Higashi-Niigata gas field, the Katakai gas field, the Yoshii gas field, the Iwafuneoki oil and gas field, and other fields in the Niigata area. In fiscal 2006, JAPEX completed drilling of one exploration well and two extension wells. The Higashi-Niigata MS-45 and Higashi-Niigata MS-46 extension wells were drilled to search for extended oil and gas formations in the Higashi-Niigata gas field, while the Iwafuneoki-Nishi MS-1 exploration well was drilled to the west of the Iwafuneoki oil and gas field, which is located 30 km offshore to the northeast of the city of Niigata. Production tests of both these wells have proved successful. During fiscal 2007, we plan to conduct seismic surveys and drill two exploration wells, at the offshore Iwafuneoki X location to the southwest of the Iwafuneoki oil and gas field offshore Niigata, and at the inland Nozumi a1 location. We also intend to drill one production well at the Katakai gas field. JAPEX will continue to conduct geophysical surveys on and offshore in the Niigata area, while at the same time conducting an active program of E&P combining the objectives of increasing reserves through exploration in existing oil and gas fields and exploratory drilling in new structures. Field Name Higashi-Niigata Gas Field Location Niigata City (Niigata Prefecture) Discovered in 1959 Commenced Production in 1959 Field Name Katakai Gas Field Location Ojiya City (Niigata Prefecture) Discovered in 1960 Commenced Production in 1961 Field Name Yoshii Gas Field Location Kashiwazaki City (Niigata Prefecture) Discovered in 1968 Commenced Production in 1969 Field Name Iwafuneoki Oil & Gas Field Location 30km offshore to the N.E. of Niigata City (Niigata Prefecture) Discovered in 1983 Commenced Production in 1990