Inpex Stock

We'd like to start the FY 2026 first half of the Financial Results Investor Meeting. Thank you very much for gathering despite the busy schedule today. My name is Shohei Yoshida, General Manager of the Corporate Communications Unit, and I'll be serving as the moderator for this session. Please allow me to introduce the attendees from INPEX. We have Mr. Takayuki Ueda, Representative Director, President and CEO; Mr. Toshiaki Takimoto, Director and Senior Executive Vice President; Mr. Daisuke Yamada, Director and Executive Vice President.

For the program today, we will spend about 35 minutes for the explanation and about 25 minutes for Q&A, a total of 60 minutes. And today's session will be a hybrid session with online participation as well, and the session will be interpreted simultaneously. For those people participating through Zoom, please choose the language of your choice. And for the presentation material, please select your language in the button at the top of the slide of the page. Mr. Ueda will first explain the business overview, and Mr. Yamada then will talk about the consolidated financial results for the 6 months ended June 30, 2026, and then talk about the consolidated financial forecast for the full year. So Mr. Ueda, please.

This is Ueda, CEO. Thank you very much for coming despite your busy schedule and also despite the very hot weather. And I would like to explain the overview in regards to the business situation as well as the first half of the year. So please refer to the document. So to begin with, the impact of the Middle East conflict, what type of impact does this have on our company? And what is our view? And what is our expectation going forward? So please allow me to explain about that. The closure of the Strait of Hormuz has continued for some time. And so sales volume from the Abu Dhabi has been a constraint to a certain extent. But so we feel that there is a significant positioning in regards to our Middle East business, and we'll continue to undertake our business there. So Abu Dhabi business, what's the current situation as described here.

Well, the production volume has not fallen very much in Abu Dhabi, but the sales volume and in comparison to the same period last year, our sales volume has come down by around 30%. Why? And so Abu Dhabi has a port called Fujairah, which is outside the Strait of Hormuz. And so majority of the oil has been exported from Fujairah for onshore production. But for the offshore, we need to go through the Strait of Hormuz. And so we are impacted to an extent. But with the effort of ADNOC and they have been preparing the ships. So we have been able to maintain production volume, but the sales volume has come down by around 30%, particularly for Asia. And if we look at this from a long-term perspective, from May last year, we have expected around 30% reduction. Now the assumption is that the Hormuz Strait will actually normalize around October. And that was the basis upon which we have made the assumption of about 30% reduction in sales volume for the full year.

And from the revenue, well, we have been able to generate the revenue to offset the reduction from Abu Dhabi and I call this the victory of our portfolio and our portfolio, certainly, Abu Dhabi accounts for a large portion, but we also have Australia, Asia or Europe and also domestic. And so because of the diversified portfolio, the impact of the closure of Strait of Hormuz has not been all that significant. In fact, Ichthys the project is operating very well and the oil price has been at a higher level on a relative basis due to the Middle East situation right now. So overall, then the loss from the Abu Dhabi has been made up for elsewhere.

And so the profit for the first half of the year, highest on record, and we're expecting also to achieve the record profit for the full year. So what will be the situation with the world going forward due to the Middle East. Previously, energy system has focused on efficiency. And efficiency will remain to be very important, but energy security or resilience, those will be emphasized more. So the system is going to shift a little bit with a greater focus on them. So as you can see on the right, dependence on the Strait of Hormuz that's been considered more highly. So amongst the Middle East countries, UAE has the Fujairah port, we have one pipeline, but they intend to increase that to 3 pipeline to Fujairah in several years. And so if they achieve that, they are able to export majority of their oil from outside the Strait of Hormuz. And so dependence on the Strait of Hormuz will be reduced. Saudi Arabia, they have Yanbu, which is a port that they have on the Red Sea side.

So that's one movement. And also the other is diversification of procurement. So the crude oil from U.S. crude oil from Mexico. So many entities are trying to import from those areas and exporting from those countries, of course, the cost will increase. And the oil from crude oil, they can use the LCC very large ship and it can actually reach in 20 days. But from Africa, and then they have to go around the Cape of Good Hope, which will require a much longer period. and EV is attracting attention again, so not just gasoline. And so whether it be EVs or whether it be non-gasoline, so the ammonia or something like that, non-heavy oil fuel for the vessels and renewable energy as well, but clean energy has been -- have received renewed attention from the perspective of security. So in totality for energy overall, we are moving slightly towards more emphasis on security. But at the same time, there are also challenges as well.

So for example, if a pipeline to be installed elsewhere, they will all increase cost. So security doesn't come for free. And so to achieve security and resilience, some costs will be required. So over the medium to long term, overall energy cost could potentially increase. And so users they want energy with high security, but they want the price to remain at the current level. So many people are still saying that, but that would be the challenge overall for the medium- to long-term perspective in regards to energy. So how is the impact responding for crude oil? And the competitiveness of Abu Dhabi will remain and Abu Dhabi's competence will remain. And so we'll continue to invest proactively in Abu Dhabi. Gas, we have already achieved diversification Ichthys and we're now working in Abadi. And so we are not going through a chokepoint, the Strait of Hormuz. So our gas won't go through the chokepoint. And so we want to expand our portfolio with high security. So that's the direction that we want to proceed towards. So that's the recent overall situation.

So these are the highlights from the first half of the year. Mr. Yamada will talk about the detailed numbers. But for the first half of the year, highest profit on record at JPY 263.1 billion for full year. So we didn't use a range, and we have come up with a number. But for the net profit, we are expecting JPY 510 billion of profit record level. Operating cash flow, about JPY 1 trillion. And Abadi, so we want to reach FID next year. And so we have been building up on the cash reserve for the development. And we expect to accumulate about JPY 770 billion by the end of fiscal year. Investment cash flow for the full year, we are expecting JPY 859 billion. And there are various investment for growth. Abadi and Ichthys I'll talk about that later on. But even prior to Abadi, the production, there are things that will contribute to production. So the interest acquisition in Malaysia.

So [ SJP ] and so this is the Caspian or Indonesia. So we have been working to acquire the interest, those that are already producing or about to start producing soon. So we intend to pick up on those assets. For these assets, we are expecting several billion yens of profit contribution per annum. And so through these, even prior to Abadi and even after Abadi, we intend to continue to realize the growth. And shareholder return, I will come back to this later on, but we are going to be paying JPY 112 per share for the full year, which is JPY 12 higher than last year and about JPY 140 billion of share buyback. And total payout ratio is expected to be about 53% and so on next page, so I wanted to kind of describe INPEX as a company. So what we have worked on for the past 10 years have been described in this graph on the left, these are the operating cash flow and the net production volume CAGR converted into USD. And these are the numbers from 2015 to 2025, operating cash flow on the vertical axis and the production volume on the horizontal axis and the major and the independent E&Ps. And so you can see INPEX is located here.

And so operating cash flow, the average the growth rate over the last 10 years is higher than the majors and independent E&Ps. The horizontal axis production volume, we're not at the top, but we're in the middle, but we are at quite a high level in terms of growth rate against the majors as well. So last 10 years, INPEX has continued to achieve a steady growth. Going forward, it is shown on the right, and this is showing the production value and 730,000 BOE/d. And after Abadi production start, we expect to reach 800,000 BOE/d and operating cash flow will grow from JPY 1 trillion to JPY 1.5 trillion. And so last 10 years until 2035, we intend to continue to achieve steady growth. This is the assumption that we have made.

Next page, please. So the progress of each project, Abadi Ichthys, I would like to explain more in detail. First, regarding Abadi, we have a steady progress, a very steady progress today. The fee FEED has been continued for last year, and we have seen a steady progress and mostly 80% of progress is what we have achieved. In fall, we'll be completing. And in fact, already, simultaneously, we have the OTC, which is on the actual tender of the construction, which is starting from July this year. The tendering in the end will go. As you know, for the FEED there is a dual FEED where the 2 consortiums are competing, and we are doing the FEED together. So from these 2 consortiums in the end, we will have consortium that will be selected. And that consortium will be in charge of the construction. And that selection is the EPC FEED. For the EPC, we will have the tender. And that has already started.

For the marketing, we also are seeing good progress. As we announced at the end of May this year, for the Abadi project, the total production of LNG is 9.5 million tonnes of expectation. Out of that, we would like to have buffer. So it's not based on long-term contract. But out of that, the long-term contract is around 8 million tonnes or so. And out of that 8 million tonnes of long-term contract, we already have a certain amount, which is where we have signed the key term sheet agreement, which is where we signed the price and the volume as a basic contract. This is what we have signed with the buyers in May. in particular, BP, Shell, the super major and also the Indonesian national company, gas company, we have had this basic key term sheet agreement, which is the base of the long-term contract. And for the Japanese, it's going to happen going forward and also others because of the Middle East conflict, there is a lot of free interest in the Asian market, and that is where there is a high interest, and there's a good reputation today. So for the marketing, we think it will go well.

In fact, for the actual work, we started the -- we have to start the actual work from this year. For the case of Indonesia, the.

Abadi LNG is on the Cempedak a very rural area. That's where the LNG facility will be constructed. And the LNG plant in the surrounding area, we have the fencing and also divergent road, which is you need to have the road to diverge. So those construction have to start. And then we need to have the local agreement. So we have contacted the Indonesian government, and we had the groundbreaking ceremony to have the local cooperations. For about 1 month ago, on the Cempedak Island, we visited. And it's actually with a charter, it's a 4-hour flight one way and 8 hours runways. So this is a picture taken at that time. It was a really wonderful ceremony. And from Indonesia, we have the Energy Minister and 3, 4 other ministers visited as well. And also President Prabowo also wanted to participate. So in the end, as shown on the right, it was very far. So in an online manner, he participated in the ceremony.

And from the start to the end, Mr. President Prabowo also participated. So this is where he was doing a speech, and that was a picture. But there was a huge interest and also support from the Indonesian government. And today, we are in the feed work and marketing is going well. and also the strong interest and also support from Indonesian government. And after the FID, what happens with the economics, that is still the question. However, from my perspective, Abadi from the -- sometime in the middle of next year, we will come to FID, the final investment decision, and we think that is quite a higher possibility at this moment. And perhaps that is also the market recognition. And then that is for one. And then next is Ichthys.

For the cargoes for this year, we have seen a very steady progress. Operation is doing very well. And we had the strike and a lot of concerns were around the strike, but this actually happens once every 4 years. We have the enterprise agreement where we have a reval of the labor contract. And based on the labor party, we had a lot of strong labor party position in the past, and we have this revision under that environment. So it's been a very strong environment, and we had some strike, but it was not really a big impact. It was a minimal impact to the cargo arrangement. So that was the case, and that is where we are able to sign a 4-year contract for the labor -- with the labor union.

And with this, so far, the operation is doing relatively well at this moment. For Ichthys, one of the big thing is in this year, in summer -- in spring, the Beetaloo Basin sub-basin is where a huge shale gas reserve is expected and that interest, we bought in 3 blocks from Daly Waters. And as you can see in the picture, this is a huge area in jungle, and there's a pilot production, which is underway today. From June, we have the pilot project, which commenced and we would like to partly sell to the Northern Territory. And then how much reserve are there is something we'd like to understand. So the exploration work is continuing at this moment. But there's a huge expectation from the Australian government as well. It's a huge expectation as a project. And going forward, this will be a new Train 3 gas. It will be a base for the new Train 3 gas for Ichthys. So that is also doing very well at this moment.

Outside of that, we have Abu Dhabi. We have a good production, but the sales are not going well. However, Abu Dhabi is still important country. So the Upper Zakum investment is what we'd like to continue. And the other day, the onshore cap gas -- gas cap development, where the gas layer, which is on the top -- on the top -- which is called a gas cap. So those development is what we have come to an agreement just the other day. And also, we have the Azerbaijan's ACG oil field, which part of the interest we bought from the government. In Malaysia, we have the Sarawak Block 2E interest that we bought and also Indonesia. So before and after, but we also have these projects, we would like to conduct these projects, which will lead to profits.

And then next, we have the CCS, blue hydrogen and Power Resources. For CCS, the CCS plant has started operation last year. And in a full scale, we are going into the execution. The methanation plant has already started and the green methane has already been serving the pipeline. And also the metropolitan area CCS is to be done in Shiba to bring the CO2 in the Tokyo area and to have that captured storage. And we have this exit. On the right-hand side, you can see the drilling rig picture taken as a picture from the onshore. And all the people in the beach might have a look at this and then wonder what this is. But it's about 2,000 meters of rig is being explored, and we have the CCS projectability, which is confirmed through these projects. And as we don't have time, we also have power resources, but I would like to go on to the next page.

And next is the shareholder returns. Of course, we are thinking about the return, I'd like to mention one thing. As mentioned, we have the JPY 112 of DPS, which is record high in the share buyback of JPY 140 billion and 53%, approximately 53% of total payout ratio. And for 24 years, 5x or less is how much we have increased the dividend. For the dividend, there are times when it's high or low, but this is an all-time high record today. And when we discuss internally, when we look at the stock price today, there are a lot of discussions. And as a result, I would like to explain, but today, we believe that our growth potential is not evaluated. We have some discounted value.

So for this fiscal year, we would like to have a share buyback. And of course, there are people who expect dividends. But for the dividend, JPY 112 is the dividend. And for this time, the -- considering the stock price today, we have decided to focus more on the share buyback. So that is the shareholder policy, return policy. And as you can see why in this graph, at the bottom, this is the oil price. The top is the stock price. And as you can see, until the Iranian war, it's -- our price used to be told it's linked to oil. But before the Iranian war, it was because of the growth strategy. So there were higher stock price than the oil price. But after the Iranian war started, it was getting close to the oil price and with the stock price increase or if the oil price increase, there was an increase in stock price and also vice versa. So there was a lot of volatility.

What happened in the end is when the oil price and share price were about the same or before the war end of February, the oil price was $73 and the oil price -- the stock price was JPY 3,800. At the end of June, with the same oil price with $73, it was JPY 32.65 per share. And if you look at today, it's slightly above. So $83 is the oil price. And so compared to $73; today, $83 per barrel, and there's a $10 of increase, but JPY 3,500 is today's stock price. So we wonder why. And in the meantime, our company's growth strategy, if that did not work well, then we understand. However, as mentioned, we have steadily executed the growth strategy and Abadi is one example, but also for Ichthys, we have been doing steady progress against the growth. And the oil price increased by $10 per barrel, but the stock price maybe is JPY 3,500 today. So it's a drop, and it's not really a welcoming situation.

And there's nothing we can say for what happens in the market. But for our company, although we're not trying to give dreams, we are doing this business steadily and returning to our shareholders steadily as well. That is the policy. So the JPY 3,500 and $83 per barrel of oil is something that we think is kind of a mismatch or there's a discount. Therefore, as we are going to execute the growth strategy, even compared with the pre-war, we think the price should be higher. From that standpoint, we think internally, we think we are undervalued and that is, as a company, the understanding we have today. Therefore, when the stock price is low, we should do a buyback. So that's why we have focused a lot on the share buyback this time for the shareholder return, and that's the policy. So that was a long explanation. That's all for me.

So Mr. Yamada will continue.

So please allow me to explain about the results of the first half of the year and the forecast for the full year. So as our CEO, Mr. Ueda has explained, and so we ended up with JPY 226.3 billion (sic) [ JPY 226.33 per share ] for the half year period, highest. And for the full year, JPY 510 billion is the forecast we have, which is highest on record and shareholder returns highest on the level. So the triple victories, if you like. And so that's the kind of the numbers that we are referring to. So the highlight for the first half of the year, oil price was between $70 to $87. The FX, the yen has weakened. As a consequence, revenue has come down slightly, but the net profit or profit attributable to owner parent reached the highest level, JPY 263.1 billion. So the impact of the Middle East was quite evident. As you can see, the sales volume did come down significantly, but the oil price has come up.

And the FX, the yen has weakened due to the Middle East situation when the oil price goes up and the LNG price also increased. And so towards the end of the year, particularly with the strong performance of the excess production. And so the production volume and cash flow of the Ichthys has increased and so the recycling revenue also increased as for Abu Dhabi and taxable income come down. And so we also see a significant decrease in the income tax. And so because of that, there were both negative and positive from the Middle East sector, but a stronger impact was a positive factor. And when we talked about the May -- full year forecast in May, we said that the Middle East is likely to act positive for us, and that was reflected in the numbers on this occasion.

And this is revenue by major product, crude oil on top and natural gas on the bottom. And so the crude oil revenue, JPY 780 billion last fiscal year, it came down to JPY 694.9 billion, came down by about JPY 85 billion, but this is Abu Dhabi reduction because we weren't able to sell all of the embody. And so there was this decrease. But in terms of the average unit price, it came up, the FX, the weaker yen. And for the natural gas, JPY 251.4 billion to JPY 271.9 billion, increasing by about JPY 20.5 billion. The sales volume because of strong performance exists and it increased by about JPY 8.5 billion. For the unit price, it has come down unit price, but it's essentially flat. So average unit price of the overseas for domestic and the FX impact, so we ended up with JPY 271.9 billion.

And this is the waterfall chart. So on the left is JPY 223.5 billion. And this is the second quarter of FY '25. On the right is first half for 2026, an increase of about JPY 40 billion. So the revenue and because of the significant decrease in the crude oil, we ended up with JPY 48.3 billion negative. And the share profit and investment accounted for using equity method and the other income is essentially Ichthys related, which have performed well and towards the end of the year, and the oil price will also increase and so about JPY 10 billion pickup in downstream and also TA recycling and the cash flow of Ichthys has increased and so we were able to achieve significant the paid-in capital reduction of Ichthys. And on the right, we have the income tax, the benefit because of a lower tax. And so the revenue came down by about JPY 50 billion, by about JPY 50 billion positive from Ichthys and the tax JPY 50 billion and hence JPY 40 billion. So Abu Dhabi or the Middle East situation had both positive and negative, but the positive factor were larger. So that was essentially the result.

So the full year, the Brent oil price and about $80 for the quarter 3 and about $70 for quarter 4. That is the assumption. So we expect the oil price to come down slightly, $2 or so of a decrease for FX for quarter 3 and quarter 4, we are expecting JPY 160 and so slight decrease in yen. And similar type of trend to the first half of the year, but -- so the revenue came down, but the profit came up. And so that's JPY 510 billion. So JPY 500 billion is like a dream number for us, but we will finally exceed that level and ROE too, more than 10% on this occasion. The net PE ratio has come up slightly. But like Mr. Ueda was saying, so we have the cash reserve for bodies. So it is not to be netted. But if you actually net this, there was 0.2% impact. So there is no issue from the financial position perspective. That's the result. So this is the waterfall chart.

So this JPY 450 billion, this is the upside case. So in this case, around July is when Abu Dhabi will normalize. That's the time when we had assumed. And this time, we have JPY 550 billion. But this time, Abu Dhabi's normalization will be around October, and that is the revised timing. So that's how we came up with this number. The left-hand side is the external factors. And mostly the Middle East conflict and the impact from that is reflected. And for the foreign exchange because of the Middle East, there is some yen depreciation. On the oil price, this is the only different area. In the past, in the full year forecast, so when we announced the results, we talked about the sensitivity, oil price sensitivity. But this time, compared to the May forecast, oil prices dropped, but the oil impact is positive. That's because of premium LPG and those -- there was a lot of premium. So that's why it's a reverse situation.

But that's also coming from Middle East conflict. And then minus JPY 17.5 billion is a project factor. But as mentioned before, Abu Dhabi cash is included. And also, we have profit booster. But these TA recycling is included, it's about JPY 100 billion of TA recycling included this time. So the investment incentive and combined together, a total of JPY 100 billion or so with 3 included in total, those are the external factors. We thought it will be positive in the May forecast. But this time, it was slightly negative, but more there were positive factors than negative. So that's why there's about JPY 10 billion of improvement. And then with the Middle East, it's a positive thing, and it's not really a good news, but that was the actual result. And then for the others, we have the Ichthys where the sales volume increased. There's 10 cargo per month and the sales are doing well.

And then we have JPY 16.9 billion. And then on the right-hand side, we have one-off. There is some impairment in ARO as well as others. So it's about JPY 20 billion plus and in the end, JPY 510 billion. And we are starting from October, we think it will be normalized in October, and it's hard to say for the Strait of Hormuz. But let's say it will be normalized by end of the year, what happens. And we also have that calculation. Let's say, it will not normalize in the year-end. If it happens still until -- if it's still not normalized until next year, I think it's not JPY 10 billion, but maybe JPY 0.7 billion to JPY 0.8 billion of decline. But the oil price will not change, and that's the assumption. So if this production will not change, then maybe less than JPY 10 billion will be the impact if it will not normalize by end of the year.

Then next is the cash flow. The very top, you can see the operating cash flow, which is more than JPY 1 trillion. And the investment cash flow, JPY 859 billion. And from May forecast, about JPY 60 billion of increase. However, as you can see in the bottom, the growth investment is declined. The reason is because in Abu Dhabi was not so much of a change for Abu Dhabi, but there's a slight decline, plus the other interest investment we had, that was about JPY 100 billion, which went over the fiscal year. So the growth investment is mostly no problem. And the reason why there is an increase in investment cash flow is the others. it says JPY 183 billion, and that is Abadi, the cash reserves for the development of Abadi, about JPY 100 billion or JPY 200 billion is what we have set aside.

And in May, there's some increase in decrease. So that's why we thought it will not be so much of normal. We could not make these cash reserves. But this time, we had additional JPY 100 billion. So this is how we ended up. And the next is the investment cash flow. As you can see on the left-hand side, as mentioned, JPY 800 billion is -- JPY 859 billion today. The content is mostly the same, but just one thing is the cash reserves for Abadi. We did not factor this in the May forecast, but now we have this included, and we have JPY 859 billion in total. JPY 859 billion and also the JPY 200 billion for Abadi, how to look at this? In '26, end of December, we will have an increase of JPY 770 billion. So this will be a cash to be used for the upstream. So JPY 770 billion will be used.

And then in the midterm plan, we had about JPY 600 billion to JPY 800 billion. But in 1 year prior timing, we're able to achieve that. And the JPY 1.9 trillion is on track to what we stated in the midterm plan. And on the right-hand side, as mentioned, these are the disclosed projects we have and also the profit contribution. So Abadi, before the Abadi production start-up will happen, we have these investments. And then this is the ROIC by segment. So as you can see, this is the details. So that's all for me.

So we would now like to receive questions. We receive questions from the venue first then after that from online participants. [Operator Instructions]

Now I have 2 questions. And I was somewhat held back because of the strong message, but I will ask a question. Now 2 questions from me. The first question is regarding the body. On Page 7, you have shared with us the schedule and the progress on different parts, and this was very easy to follow. I think the situation has been clarified a lot through this information. And as indicated in the text on this slide, this project and equity IRR, so we are going to aim for the mid-teens percentage for IRR -- equity IRR. And this is something you have been explaining from the past, and I understand that things are progressing quite steadily.

But in regards to marketing, and it seems that you have been able to kind of come to a kind of a consensus in terms of the terms at an early stage, which is quite a strong progress. But in order to secure equity IRR mid-teens, in order to secure that, what would be the biggest hurdle? And what's the progress against that hurdle, if you like, at this point in time? So that's the first question.

And I think it's really up to the negotiation with the Indonesian government, in my view, based on the presentation material. So the taxation or the conditions with the Indonesian government is likely to be the key. But equity IRR in order to achieve this number, what will be the biggest hurdle? So if you could kind of give some explanation about that? That's the first question. And together with that, you said JPY 770 billion of the cash reserve, which is a year ahead of your original schedule. So with that, for the upstream portion, the expected amount of the fund, have you already secured the amount required? If you could also refer to that as well, that would be helpful. So that's the first question.

And the second question is on your slide, Page 21. Together with the investment, the project, you've also provided information in regards to the timing of profit contribution. This is very helpful, although it may be difficult for you to respond, but I want to ask anyway. And so Abu Dhabi related where you are investing a lot in recent times. And so the profit contribution as well as the production increase, the contribution. Can you give some more color and it may be aligned with the government initiative, but you said that there will be contribution prior to Abadi start. But if there is anything more that you're able to think about, so prior to Abadi production start, Abu Dhabi is an important profit and the growth driver. And so could you give some more color in terms of the timing of profit contribution and so forth? So these are my 2 questions.

Thank you. First of all, in regards to Abadi, equity IRR more than 10%. What is the biggest hurdle? Well, for me, I feel that there are 2 major factors. First is Indonesian government. And so negotiation for incentive where this will go well or not. But more important is to what extent can we achieve a reduction in cost of the project. And we are currently undergoing a fee process right now. But so cost is not something that comes up as a lump sum and that's it. So we can talk with the contractors. Can we reduce cost here? Can we actually change the schedule here and so forth. There are a lot of the negotiations. So if we are able to reduce local content a little bit, then the cost will come down this much.

So there are various ways we can work on reduction. And so for us to achieve success of the project, the economics is important. But prior to incentive, we have to work on achieving cost reduction through various means. So in that regard, cost is not something that you can actually address in one go. I won't say it's a living thing, but it's like that. And so we need to continue to thoroughly and continuously work on achieving reduction in cost. This is one significant hurdle for us in my view. But even after that, if the economics is not sufficient, then we need to engage in negotiation with Indonesian government for incentives. So these would be the 2 hurdles.

And your second question, Abadi, so we have cash reserve of JPY 770 billion. Is it sufficient for the investment for upstream? Well, so it really depends on the CapEx, so the project cost. So it's difficult to say. But if we think about the past, the Abadi CapEx in 2018 when we did a POD, it was said that was about JPY 20 billion -- sorry, $20 billion. And so we're going to add CCS so there is a 5% increase in terms of cost. This was the number back in 2018. But after that, and we need to change that to 2026 numbers. And of course, the cost has increased quite significantly due to inflation in the meantime. So if we take all that into consideration, then that becomes the total CapEx of the project. Now how much this will be? Well, we need to think about the cost reduction initiatives that we are working on that will have a significant impact. So we don't know at this point in time.

So FEED or EPC tenders, we need to go through those processes. And the number will become more clear. But -- so from the numbers in 2018, even if the cost increases by 30% or 40%, it's not going to be a significant surprise. Now that's -- that is the CapEx for the entire project upstream and downstream. We have 56% so that's the equity portion and upstream, downstream, the LNG plant. So we need to actually allocate funds for that. The downstream, it will be TB -- trustee borrowing scheme. So we will be borrowing the money where we will provide the credit guarantee, that guarantee. So the cash is required for the upstream. And so JPY 770 billion is what we have built up as a cash reserve. We don't know at this point in time whether this is sufficient or not. And I don't think this has reached 100%, and so we probably need additional effort.

And your second question, the increase in production impact from the Abu Dhabi, and we have the confidentiality agreement. So we can't talk about the production volume very much, and I hope you'll forgive me for that. But on that basis, and on Page 21, there are 2 projects related to Abu Dhabi. And so one is the Upper Zakum, further development. Now in '26 or '27, so we will reach about 5 million barrels per day from 4 million or so right now. So that is where there is going to be a large production increase in the Upper Zakum oil field. And so we will be spending several hundred billion yen of investment over these years, and we expect a large contribution from that in several times.

And so Bab Gas Cap Development, and this is to develop the gas which is on top of the oil, and we are currently doing the FEED for this right now. And hopefully, during 2026, we want to make the FID. And so the production start is likely to be 2028, 2029. And so that will be the kind of timing where we can potentially expect a profit contribution. And so we are spending -- well, we are expecting several billion yen of profit contribution from each of the projects described on this slide.

Two questions. First, Abadi. My question is, as you explained, the long-term contract of 8 out of 8 million, 5.9 million is the base contract that you completed and you have a good inquiry today. So over the mid- to long-term profit to have a stabilized profit, the long-term contract, as you can see or as you mentioned, there are a lot of inquiries, you'll be increasing more of these long-term contracts. Is that a possibility? So the long-term stable contract or fixed volume contract is something that you're planning to increase? Is that what you're thinking? So that's number one.

And second is regarding the shareholder return. There is a strong message today. And -- of course, that strong message in this fiscal year is where you have more weight on share buyback. I think that's one point. On the other hand, the total payout will be 53%, so within the range, but it's actually just a part of the JPY 50 billion and above -- 50% and above of the total payout that you mentioned. So just per se, if we have a strong will or intention, maybe we can try to increase the percentage more. And also for the cash reserves, as you are going to have a 1-year achievement 1 year in advance. So thinking about the cash, is there maybe a stronger message that you can communicate? I just wanted to purely think whether that is possible or not. Not thinking that you would increase the shareholder itself. But once again, I just want to ask your opinion or what your views are.

Thank you very much. So the first question was Abadi and the fixed contract or the long-term contract, I think the question is whether we should increase that or not. And basically, we think it is possible completely. However, we're not trying to do that as a company. That's the answer because as mentioned, by the LNG, we have 9.5 million tonnes of LNG plus 150 mm gas pipeline. So that's the business. And then out of that 9.5 million of LNG between Ichthys; for Ichthys is 90-some percent of long-term contract. So it was a good finance situation. But just because of Ichthys, when we had a lot of troubles, if we have too much tighter contract, then we may not have any room. So for Abadi, we wanted to have some buffer. That was the policy. So as mentioned, 9.5 million tonnes out of that, 1.5 million tonnes is something we'd like to have a buffer. So that means the 8-point-some million tonnes will be the long-term contract. So we thought 8-points million tonnes can be the long-term contract, as mentioned.

And so far from the overseas buyers, we have a strong inquiry today. So we can assign this right away or we can increase further. But as mentioned, because of the reason, we are not trying to increase more of the long-term contract than what we have today. And then the second is regarding the shareholder return. Why don't we do a more stronger message of increasing this reward? I think that was the strong request, but I would like to use that as a good reference. In our company's policy, however, instead of doing a forceful reward, we are a growing company. And while growing, we would like to reward our shareholders along the way. Therefore, the total payout this time is 53% as a forecast. But by maintaining that level, we would like to make sure we have a growth and then a good return to our shareholders, and that's the policy that we want to implement. And if that happens, then it will be around 53%. So as you mentioned, the feedback, we would like to take back your feedback going forward.

I would like to ask 2 questions. Before asking my question and your share price or ROE and also profitability improvement, and in comparison to 5 years ago, there's been significant improvement. And personally, I'm very happy, and I hope that you will continue with this momentum. And going forward, so to what extent can we trust the profitability of Abadi. That's not going to be easy, but I hope that you will continue to engage in proactive disclosure like this and outside the stock market and so the inflation, the investment may potentially go up or there could potentially be delay. These are inevitable in one sense, but I hope that we'll continue to disclose and work on improving profitability in a much shorter-term basis as well.

Now -- two questions and more than 10% Abadi. I don't know whether you can talk about this at this point in time, but what would be your kind of assumption for the crude oil price? I understand you may not be able to refer to a price. But if you could give some idea there, that would be helpful. And I ask maybe too much, but at $50 Brent, can you still target mid-teens IRR? If you are able to make a comment like that, that will help in terms of discussion. You may not be able to talk about it right now, it's okay. But if you could potentially refer to this when you make the FID, that would be helpful.

And the second question is regarding ROE. The midterm management plan, one graph that I like, the ROE and the growth rate graph and the graph that you showed today, the growth rate is also a great graph. So I would like for you to continue to use that, but ROE 10% and the shareholders' equity was JPY 5 trillion. And so JPY 500 billion of net profit for this fiscal year. This is a very encouraging number, which I'm happy to see. But what I want to say is that in the midterm, the material, ROE and the growth, ROE was slightly lower than the majors from U.S. or Europe. And you mentioned that and I thought it was great that you've recognized that in trying to work on that. But ROE and more than 10% is a target for 2035 onwards. I think that's the kind of level that you're working with, but making investment for Abadi and crude oil price remaining where we are right now and the profit boost the second stage and third stage, can we expect that? And so that's the kind of my second question.

So I will respond to the first question. In regards to Abadi, equity IRR at 10% and what's the oil price assumption? Well, this will be up to the discussion with the Indonesian government going forward. So I can't say anything too clear. But when we discussed in 2018, we were thinking $65 per barrel. And that was kind of the number we had in mind when we engaged in discussions. But back then, and so it was $65, and we had placed $65 to remain flat perpetually, but that's not really aligned with the real situation. So I think it's up to discussion. So ROE, the second your question. So let me talk about the ROE. ROE 10% and slightly lower than the majors, which you are fully aware of, of course. But for us, if you look at our portfolio and the core is Australia, Abu Dhabi and Japan. And these are countries of very low country risk where we have our portfolio. In that regard, Chevron and Exxon, they have similar portfolio and yes, but the European majors, they do have assets in countries where country risk is higher.

So when we make a comparison against them, the risk-adjusted ROE, if there is such a concept, then our ROE in comparison to that is not inferior. And so the portfolio rating is higher. In other words, we have assets in a low-risk area. And it's not a bad level. So this fiscal year, more than JPY 500 billion and more than 10%, but we don't intend to stop at that. We want to continue to work on it. And the profit booster. And so now that the recycling can be done now. And so 7, 8, 10 years, this level can be maintained, providing that FX, we can continue. But we have the second stage. It's not going to be easy. But what we are looking at always is -- so our balance sheet is more than JPY 8 trillion in size. And we set for our numbers based on IFRS. And so the difference to balance sheet is recognized as a profit or loss. And so when the balance sheet is so large, small movement in the FX, small movement in the oil price, small movement in interest rate. And so we end up with a significant fluctuation in the unrealized gains or loss.

And so -- and the balance sheet, the previous year to this fiscal year, the difference is registered in PL, that's the IFRS. And so with that and also tax included and when you look at the financial, well, not everything will work out as a profit boost, but depending on how we look at it, whether it be related to tax, whether it be profit to profit, we may be able to have improved contribution to profit. We're always looking at it. I'm unfortunate that I can't say this concretely, but there are some possibilities because it's JPY 8 trillion. And we have a portfolio globally and the oil price and FX moves quite significantly. And so the unrealized gains or loss on the balance sheet is quite significant. And so that could potentially contribute to the profit. So we will certainly look at the finance tax situation from that perspective.

Two questions. Number one is about Ichthys. In Australia, the country risk of Australia, what is your view on that? And if you can give us the color. Just looking at recently, there is an in-house or domestic supply responsibility. And I don't know if the strike example would be appropriate. But is it something that we don't have to be so concerned? Or because of the nationalism, do we have to keep that in mind as a country risk as well? That's number one.

And the second is the shareholder return. Today, we're still at the second quarter results. So the oil price movement will make a difference of that JPY 510 billion of net profit on the full year. But different from [ Yamazaki-san, ] the total payout ratio at this time, mentioning about going above, is it because even though the oil price may move, you already have confidence in the net price and net profit for this fiscal year? Is that the reason? Or the net profit might move or fluctuate. However, against the stock price because it's discounted, you are thinking that the dividend payout can still be achieved. So including the oil price fluctuations, how much confidence do you have in the forecast? That's the second question.

So I'd like to answer the first question. So regarding Ichthys or the Australian country risk, how to look at that as a company and the domestic supply responsibility, nationalism. So we do have concern, and that is honestly what we feel. About 1 month ago, I went to Candela, Australia and there is some financial minister and various some people in it. And the challenge in Australia, there are a couple of folds. Like you mentioned, there is a domestic gas reservation policy in Australia, and that is a direction that there is a discussion at this moment to introduce that. So what this is, is to the LNG export, 20% of the export should be used for internal supply to internal market. So that is the new discussion and whether that will be executed or not. The reason why this is happening is because there's a lack of gas in the East Coast of Australia. And for that, they want not to be used for export, but for internal use. And that's why the internal or the domestic supply responsibility is the discussion.

And from our standpoint, if that happens, then if 20% of the export will be used domestically, the domestic market will have oversupply situation. So the gas price domestically will go down for plummet. And in the end, Australian energy business, domestic energy business will have difficulty. So if 20% of export will be used for domestic use, depends on what type of contract, but we think there's a lot of challenge, and that's the concern we have. So from our standpoint, it's not the export that's an issue, but it's underinvestment. There are so many gas in Australia, so they should make more investments and they should produce them. But without doing that, they're just saying the export should be diverted to domestic market. But that business environment is actually there, but they're missing opportunity, and they're just discouraging the investor mindset. And in the future course, it might be underinvestment.

So rather than that, I believe that they should make investments in a good way, and then they should solve the issue. but those are discussions we are having with Australian government. Within the government, they're still having a lot of discussions. There are still domestic issues. And the cost of living is the biggest challenge where the inflation is happening. So how -- if that's the case, why don't we get more money from the overseas company and then those are discussions. And when we talk with the government, they say gas is important, and they want to make sure they will be able to secure those. On the other hand, there also there's various reasons that has to be discussed for domestic reasons. And so domestic gas reservation policy outside of that, there are also other discussions saying the foreign company should have more tax -- paying more tax and the various discussions of such. So that kind of business environment deterioration is something that we honestly have in Australia, and we have communicated that honestly to the government as well.

So the second question, I'd like to answer that question. For these numbers, there are a lot of discussions internally. And as Mr. Ueda explained today, this time, we have more focus on the share buyback as a shareholder return. So 53% of total payout is what we have announced as of Q2. And by end of the year, what happens if there's a fluctuation in the market? I think that was your question. But as you know, -- and as you know and understand, for Ichthys, the net profit of that 70% of the profit is coming from Ichthys, then that LNG price is 5 or 6 months beforehand. The oil price is used 5 or 6 months before, and that's how it's calculated. So by end of July, the oil price is already set. Therefore, the fixed price in the long-term contract is how we sell.

So by end of December, a certain amount of profit is already how much visibility we have today. And then if we have extra cargo, we can sell this on spot. So that's also another upshooting possibility. And as Yamada-san explained today, the Strait of Hormuz will be normalized. But if that will be delayed, then there will be a negative impact. So there is a range of that difference, but the pillar of the growth is Ichthys LNG, the selling price. And to some extent, at the point of August, we have a certain visibility. So at this point, 53% of total payout ratio is something that we can commit and we don't think that's a forceful thing as a company.

Please allow me to ask 2 questions. It's related to the Australia issue. So Ichthys Train 3, as of now, how much volume have you have visibility? And you said that Beetaloo has quite a large potential. But unfortunately, you couldn't invest in the [indiscernible]. And so how much kind of visibility do you have? Second question, it may be a little bit early, but for next fiscal year, this fiscal year, so Abu Dhabi tax burden has been reduced and there was the benefit from the premium. And so the impact from the Middle East has functioned somewhat positively. But next fiscal year, you have a kind of a rebound, a negative, but is there a potential increase in volume? Or if some of the negative factors, if you don't need to consider that, if you could also refer to that.

So I will respond to your first question then for Ichthys Train 3, how much visibility do we have? Well, and it's not the case that we have a lot of visibility in terms of volume regarding Train 3. So Cash-Maple and various gas field is developed right now near Ichthys that is to extend the plateau of Ichthys. So we do have certain visibility in that regard. But for Train 3, we need to identify sizable gas source. And so -- and we need to secure gas source of certain size. Beetaloo -- and some people say that it has gas reserve equivalent to Permian in U.S. Some people say no. We can kind of expect a large reserve there, but it's only likely at this point in time, so we don't know for sure.

So over the next couple of years, we are going to do exploration and to identify the amount of the reserve. So that's the kind of thing that we want to do and that's kind of situation. And if there is that much reserve, then from Beetaloo to Ichthys, we want to install a pipeline and potentially build a Train 3. So we are studying that. But in terms of visibility, it's really up to the result of Abadi exploration and the activities that we will undertake.

And next year, well, at this point in time, I can't say anything certain. And what will happen to oil price, what will happen to the exchange rate, that will have a significant impact. But if the oil price or the FX remains at around the level that we have right now, JPY 160, for example, then Ichthys, so there could potentially be a bit of shutdown, but we're not expecting much reduction from the Ichthys. But we don't know what will happen in the future. But still, so we may be able to target similar level. So we expect the earnings level to kind of pick up. So if we are able to achieve JPY 500 billion, and we have been able to control the shareholders' equity, we may be able to maintain 10% ROE if nothing really happens. So that's the kind of situation.

So we're over time, but this is the end for today's event. And for the questions that we cannot answer today, please contact our IR group today. So thank you very much for all your participation out of your busy schedule. Thank you very much.

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. I'm from the Corporate Communications and IR unit, and I'll be serving as the MC for the meeting today.

So please allow me to introduce the speakers today. We have Mr. Takayuki Ueda, Representative Director, President and CEO; we have Mr. Takimoto Toshiaki, a Director, Senior Executive Vice President, Corporate Strategy Planning; we have Daisuke Yamada, Director, Senior Managing Executive Officer, Senior Vice President in Financial Accounting. So we'll spend about 35 minutes for the presentation, and we'll spend about 25 minutes for the Q&A session, 60 minute in total. Today's meeting is going to be a hybrid meeting with online participants as well with simultaneous interpretation between Japanese and English. [Operator Instructions] 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 our forecast for the year ending December 2026. And Mr. Takimoto will give a progress for the sustainable growth of the corporate value.

So Mr. Ueda will start now.

Thank you, everyone, for gathering despite the business schedule today. And for those people participating online as well. Thank you very much. And today, I would like to explain about the financial results as well as the forecast for this fiscal year.

So to begin with, in the results for fiscal year 2025. As you are well aware, our result for 2025 was a net profit of JPY 393.8 billion. But if we adjust for the oil price and foreign exchange rate, what is the number? So that is what we have announced. So on an absolute basis to JPY 393.8 billion, which is the third highest on record. But in 2025, $68 an average the oil price, JPY 149 was the exchange rate on average. And so if we actually do the calculation, and in terms of an 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 the 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 area.

But we are often asked about our share price. Now for myself, and 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. But the PBR is now nearing 1x as well. But if we compare ourselves against many companies in Japan, for example, [ the Prime ] in the Tokyo Stock Exchange, so there are some 86 companies. And so, PBR, on average of 3.8x. Exxon or Shell, the peers on a global basis, the [ DPV ] ratio is around 2x. It's at 2.10x, which I think is the average.

So the oil and gas companies in Japan, if you look at the [ PB ] ratio, 1.3x to 1.4x, 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 our financial basis, our growth strategy, our shareholder return, if you look at the details, I think we certainly are not second to others. And 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.

So this is the highlight for this year. So if we just pick up on the numbers, as I said, for the dividend, JPY 100 for the year. So the total shareholder return ratio is 55.4%. And so -- and we have made somewhat of a conservative outlook for the oil price and for the foreign exchange rate, but we're expecting about JPY 330 billion [ remain ] of 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 JPY 108 per share and total share return ratio of more than 50%, which is our commitment. So we will make sure that we will stick to that. And so based on our forecast at this point in time, we are expecting to pay JPY 108 per share for the dividend.

But let me just talk about the external environment a little and I'll go to the next page. In this page is the one-page description of the changes in an external environment even before the Ukraine war, the oil and gas related external environment for us has changed. And I think we're going through three different stages. So before the Ukraine war, many companies were really focusing on energy transition. So a rapid transition towards clean energy including renewable energy, and they were growing concerns over stranded assets associated fossil fuels. And so 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? But we are saying that oil and gas will not disappear immediately and renewable energy or clean energy, we will make challenges to all those areas as well, but we're still very much focused on doing the oil and gas business as well. So that was the year 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. So great emphasis on security and affordability that the [ product ] volume at appropriate pricing was what people had wanted. So not just all decarbonization, but the balance needs to be struck with energy security and that was the new , I suppose, the viewpoint on a global basis after the start of the war.

But what is the situation more recently. Energy addition is the recent -- the popular word so 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 a greater demand for energy. In fact, the energy consumption will increase going forward. So on a global basis, will increase. So in that regard, clean energy centered around renewal energy continues to be important. We want to work on that, but that will not be enough.

And so how are we going to address the energy addition? How are we going to accommodate that from the supply side? And this is probably the global energy the transition that we've seen over the past year to 1.5 years. So from energy transition to striking the balance between energy security and now energy addition, and so that was 4 or 5 years with the Ukraine war, the recognition regarding energy around the world has changed significantly. So that was a point that I wanted to mention. So that being the case, and if we look at the various forecast right now, and this is IEA and also [ IEJ ] so how would that 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, you can see the demand here. So it will continue to increase towards 2040, 2050. Coal will come down, renewable energy will increase. I think this is the expected situation.

So natural gas are main products. So let's focus on this a little bit more. So right now, the LNG demand on a global basis, and was about 400 million tonnes per year, so right now and what is going to -- this is going to reach 600 million tonnes in 2030. There's 700 million tonnes in 2035 and even up to 800 million tonnes in the future. So more than double the current level.

So where would the demand come from? And please look at the map on the right, and it's quite evident. It's quite clear. It's Asia, we will see a significant growth in demand with a shortage of the supply. This is what is expected in 2035. In the United States, Europe, India and the Pacific Ocean. We will see increases in demand, but we'll see greater growth in the supply. So if we look at the energy balance around the world, where we will see shortage is Asia. So LNG demand until 2040, 2050 will continue to increase in a straight manner and what -- we will see shortage in Asia. So how we go to supply natural gas in Asia? This is the main issue for the energy industry. So this is the basis of our strategy at Inpex. This is the key point. So going to the next page.

So I've been talking about the total picture. But talking about this year for Ichthys, this year, we have 112 cargo shipments [ in ] the production. We had a shutdown in 2025, and there was some delay in the restart up. But overall, compared to the initial plan, it was close to the initial plan at 112 cargo. And the profit contribution was about JPY 270 billion. And for 2026, what are the views and it's kind of hard to understand. But because of the BCM start-up, so talking about this product, 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 a booster compressor where the compressor will be used for -- to connect to the CPF, the offshore CPF. And that went well. But in 2026, we don't have a shutdown maintenance, but this booster compressor will have commissioning. And in that process, there will be some stop of the facility. So the production will not be fully recovered. Therefore, it's not like we will have a large recovery in production. More compared to this year, there will be increase, but there are about 10 cargoes in a year. And then for the future backfill and the Train 3 expansion for the new asset acquisition, we are working various activities today. And 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. And 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. So the Asia-produced LNG will not have any [ homes straight ] issue and the distance of the ship transportation is short. Therefore, there are a lot of popularity and when it comes to the final binding agreement, we're not able to sign those contracts yet. Wherever there's a lot of needs and we're able to have a good marketing activities. So going forward, as we go into the FID, I would like to go into a more detailed condition negotiations.

And 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.

And for the permits, we are going to receive shortly, the permits.

And for Abadi today, various challenges are still what we are facing, but we are having a steady progress in those activities.

And then for Abu Dhabi, unfortunately, UAE actually a president passed away, and we cannot really communicate well. But the production increase in Abu Dhabi is what we are 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 planed, and we are going to make investments. 2026 investment is large and the biggest reason is Abu Dhabi increasing the capacity. So these are the reasons where we will be increasing production and profit will also be increased. And then outside of that, we have Norway, Indonesia and Malaysia, various activities are in place today. Next page, please.

And then the so-called clean energy, the blue hydrogen area. As you know, 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. And the natural gas -- domestic natural gas will be used for the blue hydrogen production and also the CO2, which is the byproduct in that process. The gas field in the Higashi-Nagasaki area is using the CCS technology will be storing those gas and then that is the CCS activities we are planning. And then we have methanation, the e-methane facility together with Osaka Gas, we have the construction in place in Nagaoka today, and we also started the commissioning.

For the renewable energy, as a whole Japan is still in a difficult situation. However, we have the potential energy which is the European company called NL, and it's a subsidiary of NL, but we have a 50-50 joint venture in Australia and through this we have this renewable energy investment in Australia. And this is 838 megawatts of production energy generation based on our stake in the project. And then for Indonesia, we have the Muara Laboh geothermal project. And for the expansion, we have the FID. And 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.

And then for the electricity side, we have the collaboration with the Hokuriku electricity that we signed the comprehensive contract last year, and we are working on those projects as well.

And for 2026, for the profit, as mentioned, we are JPY 330 billion targeting that amount for this fiscal year. And then the rent is $63 and JPY 151 to a dollar. And both for the oil and the forest, there are a lot of discussions. But today, the oil price is at -- just [ less ] than $70 on the brands. And compared to that, it's quite conservative. But many consultants are saying that today or this year, there will be some supply -- oversupply situation. So considering all of the situation, it's $63 in the assumption, I think it might be slightly conservative, and that's my view. And if you look at the ForEx, it's JPY 151, so it's also difficult to explain. But it's JPY 330 billion per year. But if we are to make adjustments on ForEx in the oil price, JPY 151 and $63 of oil price. If we make adjustment based on next year, and then the one-off, if you exclude the one-offs, and then making adjustments on the oil price in ForEx. If we exclude this one-off profit, the core profit is, let's say, JPY 330 million is JPY 315 million for this year. And then the oil price may go down. So it will be JPY 312.3 billion. So it's mostly the same level as 2025. And the forecast of JPY 330 billion is not so high. So 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 JPY 108. And also with the profit going down to JPY 330 billion, why we are still increasing dividend? That might be another question. But 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 are going to -- we have a lot of investment amount, I think you have seen this year for 2025, overall, they were about JPY 400 billion in total. Next fiscal year, we are good to have double to JPY 850 billion or so of investment. And part of that is pushed out from last year to this year. But these investments will be long term for 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 JPY 850 billion.

And then for these investments, we have a high accuracy in these investments. So we think that with this investment, we can have a growth in Inpex. So for the dividend, we are having the same view as before, so we are going to have a growth, and then we will be returning -- rewarding our shareholders.

And for the profit, because of the oil price, we have JPY 330 billion of profit forecast. But in the mid- to long-term perspective, for the growth of our company. From that direction, there is no change in our views. Therefore, based on that, we will have cash flow and profit also depends on the external environment, but the mid- to long-term growth is still going to happen and we have that confidence. And for the market, the JPY 330 billion is the forecast we have for this year. But just like I mentioned, we have confidence, and we would like to reward our shareholders the outcome of those growth. So that's why we have JPY 108 of dividend for this fiscal year as a forecast.

So that's all for me. Thank you.

So next, Mr. Yamada will provide the explanation.

So last fiscal year, for the year ended December 25, I'm supposed to operate the slide myself. So as the CEO has explained, net profit for last fiscal year was at JPY 392.8 billion or so. So it's a decrease but the oil price has come down, then we had the Ichthys shutdown maintenance. And so there were significant factors to push down in profit level. but we have the profit booster or the balance sheet control or we had a significant return of the income tax. And so we ended up with this number of JPY 390 billion to JPY 3.8 billion. So how are we going to assess this? Were at the oil price in the $60 level and almost JPY 400 billion of profit. And so we have -- this is a proof that we are now able to generate earnings. And as the CEO has explained, if we adjust for oil price and foreign exchange rate, this would be the highest record in history. So 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. The crude oil sales volume increase, mainly due to Abadi and so in terms of unit price, it came down significantly because of the rate coming down. And so the operating -- the profit did actually come down. But for natural gas, the sales volume come down. This was due to the Ichthys shutdown. And for the unit price is linked to Brent down. And so in -- so we saw a decrease here for the natural gas as well. They are more than JPY 4,000. So last year was JPY 393.8 billion. If this is the previous year, it was JPY 427.3 billion, a decrease of JPY 33.5 billion because this is the decrease in the revenue that was due to the oil price and exploration expenses last year, we did not have a successful exploration in Australia last year. 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. And so these are kind of the comparison against the previous fiscal year. And for this fiscal year, the revenue come down and also exist downstream. And this also links to the oil price, and so this came down in terms of the [ Shell ] profit investment account of an equity method but we saw the JPY 153.8 billion positive impact in terms of income tax expenses.

And so here -- and that is actually included in the others as well, but the profit booster. And so this is the recycling or the investment the benefit in Europe and the Middle East growth, JPY 80 billion in delta, it was about JPY 60 billion. And so this is essentially balance sheet control. So about JPY 80 billion of these earnings are accounted for by that, which is one of the key earning pillars for us.

So the forecast for this fiscal year, JPY 330 billion is what we have placed and so $63 for the Brent price and JPY 151 to dollar. So I may think this is somewhat conservative. Some of you may be aware, but last year, too, so we started with the forecast for the fiscal year at JPY 330 billion. And so the oil price was $75 that we have assumed. But if we look at the end, it was $68. So it was $7 less in terms of the oil price, but we still ended up with where we were. And so about JPY 40 billion to decrease against the start of the last fiscal year and essentially came up with this number of JPY 393.8 billion last fiscal year. So it's not going to be in parallel to what we did last year, but we have a greater ability to generate earnings right now. And as you know, if you look at our balance sheet, we have quite a large amount of fixed asset and we have the financial -- the unrealized gains or losses included. So things that we can do now and can do now, we have those, the profit, 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 JPY 330 billion is kind of a kind of starting point in that regard.

And these are the factors analysis, and the biggest is the oil price. But in the middle, you have the Ichthys, please have a look at this. So Ichthys, JPY 4.9 billion of increase and there is some up and down in this number. So last year, shutdown impact occurred. So we had about drop of JPY 60 billion or so in the sales volume, but that has recovered. So that is an increase of JPY 60 billion. But on the other hand, as explained by our CEO, we have the booster compression module connection. And by having this, there will be some drop in the utilization.

And then we also have the oil tax. Last year, it was only a 6-month effect but this year, it will be a full year impact. So about JPY 16 billion of decline in profits, and including that, it's plus JPY 4.9 billion.

And then for the profit booster next year -- for this year, CEO [ recycling ] about JPY 90 billion. And in Delta, these are the numbers. So that profit, in total, will be JPY 330 billion. So I might be repeating myself, but these are just a kind of a number we have for this interim.

And then for the sensitivity of the oil and ForEx so it's JPY 5.5 billion for the oil price and the JPY 3 billion for the ForEx.

And then next is the investment. So the cash flow before investment or exploration is shown. But this year, for the growth investment, JPY 850 billion is a large investment we're expecting this year. Last year was JPY 386 million but we have about JPY 463 billion of increase, which is for the pillar number 1, which is mainly around oil and gas for the investment.

And as you know, 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 questions. But having these investments from the late 20s to early 30s, we'll have the outcome from these investments. So we'll be focusing on investment this year. However, this JPY 850 billion is a large amount. But if you look at the bottom left, in the midterm, we had the plan -- interim plan in '25 was JPY 380 billion, but this year is this amount. So it might be a large amount, but it's a 25% over the 2-year period. So it's a run rate -- based on the run rate.

And as you can see, this is the overall breakdown of the JPY 850 billion. So the blue, the dark blue is the Abadi investments. And then the exploration as well as the increase in capacity. So for the Abadi -- Abu Dhabi is an investment. And then the new investment, we cannot mention the detail here yet, but the acquisition of interest and the core area, mainly in Australia, Indonesia, Asia, Norway, Japan will be investment -- making these investments overall.

And then ROIC, unfortunately, will be some decline this year. It was 7.3% last year, but it's going to go down to 6% or so. And ROE, although it's not stated here, we have about 7% this year. And I'm sure there are [indiscernible]. But in terms of the total equity being so large. So 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 are not thinking of that at this moment, but we have a trustee borrowing, the corporate finance and depending on the credibility of our company, we have to do financing. And considering that, we have to have a [indiscernible] amount of equity and there might be different views from the creditors compared to the investors. But from the creditor standpoint, we should have a certain amount of equity or else it will be difficult to finance. So we have to maintain a certain amount for the financing standpoint.

So that's all for me. Thank you very much.

So please allow me to explain about sustainable growth of our corporate value. And 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. So we were working on that and so I'd like to talk about the -- what we've done last year as well what we will be doing this fiscal year. So next slide, please.

So 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. And at the end of 2022, our share price was JPY 1,396, and that 0.4x was the PB ratio by at the end of last fiscal year. Our share price was JPY 3,127 and PB ratio of 0.77x. And -- so based on the share price, we were at JPY 3,998, so 0.98x, it was where we were at as of today. So 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.

So first of all, so we have been strengthening shareholder returns and 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 and our core business, the natural gas LNG business, the importance thereof has laid the share price to increase, which has led to improvement in the PB ratio. Next slide, please.

So here, we are talking about enhancement of capital efficiency as well as building confidence in our future growth. And 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 but from August last year, as you can see on the slide, we have entered into the FEED phase for Abadi. So 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 the story can we be paying. And that is the more immediate issue for us. And when we speak with investors, then -- of course, performance is not bad. Shareholder returns is not bad as well. And that is a comment that we received from investors and for IR meeting and 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? And that may be the only maybe the issue that we need to address. And so acquiring new assets by working on these in a concrete manner, we want to be able to build that competence in the market in regards to our future growth. And we need to also enhance the earnings base. So we will continue -- we are continuing steady production increases in regards to our project in Europe and Middle East and also enhancing our profit base through a profit boost [ 500 ]. We intend to lift our ROE by some 1% over the next decade. I think we have the ability to do that. And if you look at the graph on the right, and Abadi investment is likely to increase only from 2028 into the early 2030s. But even in that period, we still are able to invest for growth as well as make returns to the shareholders. And of course, debt will increase somewhat. The net debt-to-equity ratio should be controlled within 0.3x to 0.8x and are able to do both the investment for growth as well as making returns to the shareholders. So that is what the graph on the right show.

So the growth investment, we talked earlier for a single year of investment from Yamada-san, but the midterm vision that we announced last year, and we have a 3-year investment plan, which is JPY 1.9 trillion. And growth pillar #1, we have the natural gas and LNG investment, especially and there will be, over 3 years, the amount to JPY 855 billion over 3 period and then we have the Abadi exploration expansion, new asset acquisition, JPY 938 billion for gross pillar #1 as well. And then for growth pillar #1 investment, a JPY 1.9 billion and then [ 2 and 3 ] are shown. These are the amount for investment for growth pillar #2, #3. So in the vision, as we set the target, the operating cash flow, a 60% increase or the increase of the business is what we like to achieve going forward. Next slide, please.

And on the left-hand side, you 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. In the gray [indiscernible] is the Brent oil price trend over the 5, 5 or 6 years. As you can see, in 2024 from the latter half of that year to the early 2025, and since then, just like an increase in the allocator space, the oil price is going down, but the stock price is going up. So one of the factors is in 2022 onwards, we have started to do a shareholder return of more than JPY 200 billion. And 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 the -- 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. And of course, we don't think that's the only factor. But for the retail investors as well compared to 2019, there is an increase by 17x. So we think that it might be a difference in our credibility and also the fact that we are able to have a frequent dialogue with our investors and explain about the business versus the expectation from the market. We think there is more deepened understanding towards our business and operations. With PBR onetime, we cannot be satisfied and that was explained from our President and CEO. But with that in mind, we would like to have awareness of these capital costs 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 in [indiscernible] as you can see on the bottom right, the various initiatives as an example, from our dialogue, there are about [ 6, 7 ] items. So these are the initiatives that we have also been evaluated for our investors. And as explained we have 3,900 or so share price today. So with this, we have been evaluated, and we think that our understanding of our business as well as the support to our business has increased. So I'd like to have these initiatives continued, so that the stock price and also the capital cost will be in our mind through our operation.

So 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. [Operator Instructions] So I'd like to invite questions from the floor.

Okay. So I have two questions. The first question is to do with the core earnings, JPY 330 billion. the analysis that you have explained. This was something that we've learned for the very first time. So based on JPY 330 billion. And on Page 16 today, and based on JPY 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 tend 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 sales equity cost, the 8% and 6%, respectively. So based on the core earnings, the shareholders' capital, the [indiscernible] this is lower. And so for ROIC as well, unfortunately and 6% -- WACC 6%, and the conclusion is that you have not generated corporate value. And so based on core earnings, ROE to be more than 8%. So we are right through the midterm data plan right now. Now can that be realized before Abadi starts generating earnings? So that's the first question.

And 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, free cash flow was more or less neutral or -- and this fiscal year, the free cash flow because we are going to be increasing investment, so likely to be slightly positive or even negative. But -- so if we define the investment cash flow has been the free cash flow last year to this year, what are the changes? So that's my second question.

So I will start. So 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. So the core earnings is something that we have shared with you for the very first time and JPY 330 billion for this fiscal year, we wanted to say that this is not a bad number. So we ended up with JPY 393.8 billion last year, but the oil price and the exchange rate for this fiscal year, $63 and JPY 151. So if we actually modify to that. And if we exclude for the one-off earnings last year. So if we exclude that, then we end up with [ JPY 312.3 billion ], the JPY 330 billion this fiscal year. And so the oil price and exchange as I say, if you exclude for the one-off number, we end up JPY 315.2 billion. So you may 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 ROIC. Now we are not using the core winnings as a basis. So we are using net profit for that. And of course, one-off earnings, so that it would be positive or negative from year-to-year and the ROE, the ROIC is calculated based on that. And as we have indicated, and the JPY 330 billion for this fiscal year, ROE is 7%-- what we are calculating, so 8% for the equity costs will fall short of that. [ ROIC 2 ], we now disclose this number. For this fiscal year, based on JPY 330 billion, we will be at 6% which is more or less the WACC level. So based on these numbers, we are not responding to your expectations.

But the JPY 330 billion is budgeted at the fiscal year. So that's the performance at the start of the year. But like with last fiscal year, throughout the fiscal year, and 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 JPY 350 billion. we'll give a full year forecast in May or [indiscernible] later in the year as well, and we hope to be able to increase that for our 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 this number for the free cash flow, maybe we should go to the investment page, which was this page. So the December 2025, this is cash flow before acceleration and investment cash flow, if there is a difference. This is more than JPY 130 billion, so positive. So we had that much of free cash flow, which was quite a steady number, but we were actually making profit. So based on this budget, investment is JPY 850 billion. So that's the investment. And so free cash flow will be negative. In other words, so 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. So have been making returns to shareholders based on our own cash. But this year, we are going to make a large investment. And so 50% of return. That means that we need to do JPY 156 billion, so we need to raise some money. So free cash flow becoming negative as to whether this is going to be a major issue for our management, not really. And so we will raise funds for the investment. So we raised debt, and I think that's quite healthy. But the key is the financial discipline in doing. So I didn't touch this before, we want to invest this year even if we actually raise some debt. The net ratio will still be at 0.39x. And we are saying that the financial discipline is between 0.3x and 0.5x. So we are going to raise debt to the investor. And we feel that this is not going to be a financial, I suppose, issue. So I'm looking forward to the additions to the core earnings.

So I'd like to ask two questions. So number one, this time, the investment plan compared to last year, there will be an increase -- significant increase compared to last year. So as shown on Page 20, looking at these investments, the existing project investment 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. So I think for these existing projects, investment. You can -- if you can talk about the time frame as well as the maybe not so much in size, it might be difficult, equity IRR, in the mid-10% range, whether that is still the case. And in terms of the time line and also what kind of content of investment and how much contribution from the profit side will be made in the time frame. So it's a Middle East project. So I'm sure it's difficult, but if you can maybe give us more details on that. That's number one.

And then the second question is regarding the 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? So in 2017, that is the target year. But in '26 -- between the year '26 with the information 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? So in 2026, is there any milestone related to Abadi? If you can explain what is the expected milestone for this fiscal year.

So I'd like to explain first. For that investment question, JPY 850 billion of investments. So these are quite a significant number in the past several years. But Abadi exploration and increase capacity as well as the new investment. So 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. And then when it comes to new asset acquisition, these are acquiring new interests or M&A might also be included but these are the type of investments. So for the increase or expansion of the existing assets, we have JPY 282 billion and the new asset acquisition, JPY 106 billion. So in terms of the area, we have the Australia or Perth or Ichthys, the connection or tie-in investment. And then the growth area, which is Asia, in Abu Dhabi or Japan. The oil and gas mainly where we have quite a diversified investments. And 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. And for these investments. Cash flow actually tends to go up and down. But in 2030, early 2030s with JPY 850 billion times 10%, they'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. And then as our CEO mentioned earlier, until we go to Abadi, we have the bridge, and that is the imminent challenge we are faced today. So 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'd like to try to make these investments for the future outcome.

So the milestone for Abadi, I'd like to answer that question. So basically, this year, we will do FEED. So 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 one of the biggest milestone. And from the nation government, if we can obtain that from the government, various activities can start. So that's one milestone we're expecting. And then AMDAL. After receiving AMDAL permit, this project is in the rural area of Indonesia. So we have to have engagement with the community and increase that engagement. So those are the milestones we're expecting. More than that, we have been marketing activities for [ LOY ] 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. And with the Indonesian government, the negotiation on the conditions should come after the FEED outcome, and we cannot go without the outcome, but we also have preliminary activities. What kind of project cost and how much we have to pay, that can bring storming activities already started. So this year, these are the negotiations that will -- or discussions that will go in a more full scale. And as for the investment, as Yamada-san said, in the short term to midterm profit, we have to secure those profit and those are important as well.

And there are still many things or some things we cannot mention today. But when we say exploration, we have 6 blocks of exploration in Malaysia that we have already acquired. And we will have about 9 drilling this year. But if there's a lot of pipelines in Malaysia. So if we are able to have a success, we can have a mid- to long-term increase. And we also have Norway -- Pandion with the company called Pandion. We were able to acquire the stakes or interest. And those are things that will increase the profit over the short term to midterm to increase the production as well as profit.

And then we also have the assets, and we have very some considerations of these assets. So once these become more specific, then we have this midterm profit securing until Abadi. So this year, we have a certain amount of assets or budgets, but Abu Dhabi is one of the largest, but we have these various investments in plan.

So I also would like to ask you a question. The first question is related to investment. And I talk about the interest acquisition. So in terms of interest acquisition, you said the environment is favorable right now. But at the same time, buyers -- sorry, the sellers, if my memory serves me correct, there are always, I suppose, taking quite an aggressive stance. So there is always the fear of buying -- end up buying something that is not too profitable. So in regards to the new investment, could you give more description in regards to the environment?

And 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 JPY 80 billion. Is that correct? And for December 2026. So you said the profit boost JPY 500 [ billion ]. So the basis is, I think -- you were saying kind of a starting point. The base is JPY 50 billion. And so the JPY 50 billion is already included 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? So that's my second question.

So first question in regards to investment, as to whether the environment is favorable, not biased 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 the natural gas as the [ cause ]. So there are many, I suppose -- the players wanting to sell or buying to -- wanting to buy the natural gas assets. So you're probably right, the timing to consider right now. Of course, we set a hurdle rate for the oil and gas business. So the country list does differ from country to country. So we look at the details. But generally speaking, we are looking at the mid -- team as a hurdle rate. So for this fiscal year, that would be the time of project that we seek to invest in. So this is an issue of investment discipline so we are very much mindful of that.

So please allow me to respond to your second question. Profit boost of [ JPY 500 billion ]. And we've discussed this with you for the first time last year. And one is TA recycling. And so what is included as a part of the foreign exchange translation adjustment, this is put through [ PL ]. And the other is the investment incentive effect. And so last year, I've mentioned two numbers, JPY 80 billion and JPY 60 billion. Now what they are is that from the accounting -- these two have contributed to profit by JPY 80 billion. But when we speak with you, we need to kind of define them. So this is something we started from 2025. Now in 2024, we did have those -- the investment -- investment incentive effect. When we speak about the profit boost, on a gross basis, it's JPY 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 JPY 20 billion. So that's the reason we end up with JPY 60 billion. So we actually shared with you two numbers. So from the settlement of account perspective, you've been hearing JPY 80 billion, but the number that we have, speaking with you, we've removed the delta portion so it's JPY 60 billion. And so against the profit-based [ JPY 500 billion ] last year, we were able to do JPY 60 billion. So that was the accurate situation. And that number is JPY 90 billion this fiscal year. And so JPY 10 billion more than last year in terms of material recycling.

Now -- so throughout the year to generate additional earnings, of course, many things. It's not just based on the balance sheet control, but the reduction or other factors generating earnings. But one thing that we can think about is that, in our case, the tax expenses. As you know, JPY 800 billion or JPY 900 billion, and that's the kind of level of tax that we are paying. So to generate great -- the tax benefit. Of course, we need to pay tax properly. But we shouldn't pay tax that we shouldn't be paying and so paying tax properly means that they're generating proper tax benefit. So we need to target for that. So in that regard, we have a significant balance sheet. Our balance sheet is in excess of JPY 7 trillion. And so for example, our currency translation, all fixed assets. And so given the fact that the oil price and FX are changing on a daily basis, so the financial, our profit and loss, the taxation, profit or loss or taxation based unrealized gains and losses. We have all of these generating at [ order ] times. How can we combine them? So we need to control the balance sheet to generate earnings. And this is something that we intend to do, of course. And so 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 also [indiscernible] we have the PL, the profit and loss. And so our balance sheet is so correct. And so we need to come up with a P&L, which is accurately reflecting the difference. So what's realized on the balance sheet unrealized profit and [ look ] and the financial profit and losses and taxation profit and loss, we need to combine them well. That is one way of putting a financial position and starting point and the expectations to see additions to that. So inclusive of all of that, we are hopeful generating earnings in that way. I hope I answered your question.

So I'd like to ask two questions. Number one is about Ichthys. The low pressure BCM with the connection, there will [ be not ] an increase in profit. But maybe I didn't recognize this before, but I think we never heard this, so we haven't heard this before. So 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? And whether that will be fully recognized next year or whether there'll be some shutdown in maintenance at some point. So if you can give some update about the production profile of Ichthys.

And then the second question is on Page 17 about the forecast for this year, the impact of oil price. JPY 556 billion of minus impact based on the oil price assumption and the past assumptions. I think there are a lot of a large impact. So maybe the timing issue, maybe it's a timing issue or -- as you mentioned, the JPY 330 billion is the number you have. But whether there will be some conservatism in this number as well. So you'd like to ask whether that's the case or not.

So the production profile of [ Ichthys ] over the BCM connection. Of course, this is something that we have been expected as a company. And talking about the low pressure module. So even though the pressure in the well will go down over the future, we will still have a production secured. So for that, we have a booster compressor which is [indiscernible] to the CPF, the offshore facility, and we have this installed. So at the beginning of last year, we started that installation. And then this year, we have started decommissioning and after installation, we have to collect the lines. So there are huge lines and pipelines in a huge amount of workload. So to do the commissioning, that was the plan before. And 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. And so we have not mentioned those details in the past. But those work is something that we have been expecting from the past. And then this is 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. And then for 2027, we are going to start planning for this, however, but some sort of maintenance will be required. So how those will be unfolded is something we have to discuss and decide and we have to put that together.

And the second question. The initial budget with the oil price of JPY 52 billion impact. So this is including the natural gas, LNG, the lagging factories included. So if you look in detail, there are about JPY 30 billion on the oil price. And then the -- based on the dropped oil price, there are 4 months delay. So that's the LNG marketing or sales. And the spread is also being adjusted. So that's about a JPY 20 billion of impact. So in that sense, JPY 50 billion breakdown is the breakdown as mentioned. And then from the beginning of this year, if you look at from the beginning of this year, the sensitivity multiplied by these 6.8x to 6.3x the sensitivity, that's not the case. But initially, we have the oil price and then looking at the lagging factor. So in total, we have the oil price sensitivity and JPY 52 billion or so. And then this is different from the earlier factors. But just plainly looking at the oil price, that is the number we have. So thank you very much for the answer.

I also have two questions. And 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. Because I wanted to understand the scheduling aspect.

And the second question is in regards to cost. Production cost forecast is 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. So could you explain the background to the extent possible?

And 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. So 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 the line up, you start the operation again. And so it's not the case that you kind of shut down for a period, we will connect and restart. So 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. So in terms of our cargo number, we are expecting about 10 cargo [ 3 months ] that is the 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.

In terms of the production cost per barrel, and $5.3 was expectation last year and the production volume in the Europe and the Middle East, liquids production volume and OpEx related to [indiscernible] the balance that will have the impact on this number. And so those, including royalty or not, the royalty will have more impact in terms of the European than the Middle East. How much contribution from that business will have that impact. So -- and last year, those that include royalty coming down and those increasing that does not include royalty that the Australian or the associated production volume, that is having the impact. So the cost increase overall is not what you're expecting. It's just a change in balance where the increase from -- the production of acquired cost is higher, that -- yes, for cost reduction, the excess project that we are the operators, we are working on further cost reduction. And so the excess portion, we will aim for further the cost reduction. But we have already made a significant progress on this, and we are currently nearing the lowest level so to what extent can we still do. And also overall, their production volume. So it's the balance of these two, that is reflected in these numbers.

So one question. So 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 JPY 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 [ compensative ] discussion. But in the past, 30% of payout ratio was the typical case. But this time, from that, it will be 40% or less of increase in payout ratio. So what kind of discussions were in place? And then how did you come to the JPY 180? 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?

Well, there are a lot of discussions. And one thing is the EPS already profit -- against the profit this year, how we're going to return to our shareholders. And this time, JPY 330 billion, let's say. With that, it will be 50% total payout and then [ 156 ] or so. But if it's JPY 108 per share of dividend, it's JPY 120 billion of cash required, and there is a difference between those numbers. Therefore, of course, the JPY 330 billion is just an outlook so we don't know whether that will be the exact number. But with the certain visibility, if we have JPY 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 room in the dividend. That's one number. One idea.

And the other side is, as we're not increasing so much profit, so we can set the same level of dividend as this year. But because of the inflation or in the past, there was a deflation. So the dividend yield in the deflation, let's say, [ Fx ] was 3%, that would lead to returning to our shareholders. But then with the inflationary environment, there will be a decline in [ Rio ]. So it's not a situation -- welcomed situation. So that's why we came up with a number of JPY 180 of share this time.

So we'd like to conclude the [ session business ], we have reached the scheduled time. And 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.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]