Notice Regarding Acquisition of Tight Oil and Gas Assets in the U.S. and Change in Status of Consolidated Subsidiary (Sub-Subsidiary)

Japan Petroleum Exploration Co., Ltd (JAPEX) announced that its Board of Directors resolved to enter into an agreement to acquire the entire equity interest in Fundare Resources Operating Company, LLC, Fundare Redtail, LLC, Rangeview Resources Operating Company, LLC, and Rangeview Green River, LLC (collectively "Fundare") which holds tight oil and gas assets in the U.S., through Peoria Resources Acquisition Company, LLC ("AcquCo") managed by Peoria Resources, LLC ("Peoria"), an overseas subsidiary, thereby upon closing of the transaction, making Fundare consolidated subsidiaries (sub-subsidiaries).

1. Acquisition of Tight Oil and Gas Assets through the Acquisition of Equity Interest in Fundare

1) Reasons and Purpose for the Acquisition

In April 2026, JAPEX formulated the "JAPEX Management Plan 2026-2035", in which the U.S. is positioned as the key strategic base for early earnings generation and capability enhancement.

JAPEX has now decided to acquire, through AcquCo, the entire interest in Fundare, which holds tight oil and gas assets in Colorado and Wyoming, U.S., from Fundare Resources Company HoldCo, LLC. The assets to be acquired include operated leases^（*）, and a major portion of these leases are located in close proximity to the Verdad assets. The acquisition of the equity interests of Fundare will enable us to conduct more efficient development by leveraging our proximity to the site, and we anticipate cost reductions as a result of the expansion of our business scale. The production volume of Fundare averaged approximately 9,500boed (net) in the first quarter of 2026 (January to March), and we will expand production through efficient development.

JAPEX, through Peoria, and AcquCo will continue to pursue further business expansion and improve profitability in the U.S.

2)    Acquisition Price

Approximately US$320million (Total for Fundare)
(Planned to be funded by Peoria's cash flows and Reserved Based Lending)

3)    Outline of the counterparty to the equity interest acquisition

*: LLC has no concept of share capital and does not recognize the amount of capital contributions as share capital 

4)    Outline of the equity interest acquisition 

*1: LLC has no concept of share capital and does not recognize the amount of capital contributions as share capital.
*2: Due to the organizational structure and contractual provisions (Operating Agreements) of the LLCs, there is no statutory obligation to prepare financial statements, therefore no financial statements in a disclosable format are available for the four acquired LLCs. With regard to "(8) Operating results and financial position for the past three years," we have cited the financial statements prepared for this transaction, which present combined figures for the four LLCs.
*3: Regarding (8) Operating results and financial position for the past three years, the figures for the financial year ended December 2023 are not available, as the current organizational structure was established in the financial year ended December 2024.

5)    Overview of the subsidiary acquiring the equity interest

*1: LLC has no concept of share capital and does not recognize the amount of capital contributions as share capital.
*2: Peoria Resources Acquisition Company, LLC is a consolidated subsidiary (sub-subsidiary) of JAPEX, wholly owned by Peoria Resources, LLC, which is also a consolidated subsidiary (sub-subsidiary) of JAPEX.

6)    Number of interests to be acquired 

7)    Schedule

2. Outlook for future performance

Upon completion of the agreed closing procedures, JAPEX, through Peoria, plans to close the acquisition of Fundare's equity interest in the third quarter of the fiscal year ending March 2027. As Fundare has fiscal years ending in December, they will contribute to JAPEX's consolidated results from the fourth quarter of the fiscal year ending March 2027. We expect this equity interest acquisition to contribute approximately 1 billion yen or more to operating profit for the current fiscal year, which is incorporated into the consolidated financial forecast for the fiscal year ending March 2027 released today.

Furthermore, an annual operating profit contribution of approximately 15 billion yen is expected for the financial year ending March 2028.