Inpex Aktie

Hello, everyone. Thank you very much for attending the INPEX Investor Day 2026. My name is Akiko Sugimoto a newscaster covering economy. And I will serve as MC for Investor Day 2026 today, and I will also serve as the moderator for each of the sessions and the program today. Thank you.

Now today's meeting will be a hybrid session with both physical attendance and those attending through online and simultaneous will be -- interpretation will be provided into English. For those participating through Zoom, please choose the language of your preference. And for the presentation material, please choose the language of the presentation material using the bottom at the top of the screen.

Now at today's Investor Day, we will introduce through dialogue with the management of INPEX in regards to the growth strategy of INPEX in view of the changes in the recent energy situation and business environment. We will also have a session with outside directors where they will talk about their contribution thus far as well as their expectations for further growth.

As for the program today, the first part will be held under the titles, the World Post Closure of Hormuz Strait as well as INPEX growth potential. And we will have a dialogue covering the growth strategy and investment as well as shareholder return in view of the changes in recent time regarding energy situation. Then we will have a Q&A session.

In the second part, we will invite Mr. Iio, Saiki, and Takaoka, outside directors, where we will have a panel discussion in regards to the initiatives towards corporate governance as well as enhancement of corporate value. We will also have a Q&A session after that as well.

And after the end of the program today, we are also scheduling to hold a reception. This will be a great opportunity for us to further deepen dialogue, which is the theme of the Investor Day. And so we encourage you to participate.

So without further ado, I would like to ask Mr. Ueda to come up on to the stage.

So I'd like to start the first part of the program. The first session is the Post-Hormuz Closure World, and we will have a dialogue with Mr. Takayuki, Representative Director, President and CEO. So let's get started.

At the end of February, there was a significant military confrontation between U.S.A and Iran and the closure of Hormuz Strait is continuing, and it seems to have prolonged more than expected. Now given the situation, how[ us ] and how will the energy supply structure on the world will change. So could you give a kind of review of what has happened so far as your views in regards to what might happen in the future?

So today, the war between U.S. and Iran, and this has kind of prolonged. And you have the midterm in U.S. coming up. And post the elections, that could potentially see the -- a restart of the confrontation. So market has embedded that to an extent. And on a Brent oil basis, the crude oil has increased $109 to $110, WTI $100. And so this is reflecting the forecast of the situation prolonging. But when -- what happens is really a political situation, so it's difficult for me to comment. But in terms of our business world, the economy world and the world is assuming.

Separate from what may happen to the Strait of Hormuz, but starting to move towards the world -- the new world after the Hormuz closure -- Post-Hormuz closure.

That means that we will not go back to a situation before the closure of Hormuz Strait.

Yes. If hypothetically, the Hormuz Strait situation stabilizes, the flow of energy or crude oil as we saw in the past or the business muscle, I don't expect those to go back to where we were before. That's my view.

And through the Hormuz Strait, the crude oil was arriving into Japan. But because of that the confrontation, the pipeline, the crude oil, I understand, has also increased. But right now, how has the flow of products changed?

Well, let me talk about the pipeline situation. So post Hormuz, one development, if you like, is pipeline construction in the Middle East. And you can see a map here.

And UAE is a country to which we make a lot of investment. But outside the Hormuz Strait, there is a port called Fujairah, and there is already one pipeline there. And so the oil produced in UAE on land goes to Fujairah through this pipeline, and this is from where the export is made. And within the Strait of Hormuz or within the Persian Gulf, for example, the business that we are conducting Zakum oilfield, for example. And Zakum oil field is located within the Strait of Hormuz. So even when we produce, we can actually sell the oil.

So given that kind of situation, what is UAE thinking right now?

Well, they are thinking of exporting their oil without going through the Strait of Hormuz. So first pipeline already exists. But in addition to that, they are currently constructing the second pipeline, more or less in the same route. And likely, they will also build a third pipeline. And the second pipeline, the construction has progressed very fast and likely to be completed next year, the third probably in 2029. And so very simply put, and oil produced in UAE, whether it be in the Persian Gulf or whether it's on land, almost 100% of the oil will not have to go through the Strait of Hormuz and can be sent to Fujairah port through the pipeline from where the export can be made. So that is the kind of discussion that is currently being held. And in fact, the construction is making progress. And we are welcoming this very much.

Even if the Strait of Hormuz stabilizes, we don't know whether they will remain stable perpetually. And so without having to go through the Strait of Hormuz, if we are able to export 100% of the oil from UAE, then that would certainly contribute to our resilience. And so we are in a position to provide proactive support towards this initiative.

The same thing is happening in Saudi Arabia. We don't have much interest in Saudi Arabia, so I can't talk very much, but there is a port called Yanbu, where there is already a pipeline. But if -- they have to go to Bab al-Mandab Strait: if they export through this port, that is also difficult. But in any case, establishing transportation route that do not have to go through the Strait of Hormuz and to try to enable 100% export without having to rely on the Strait of Hormuz. That's a significant development in the Middle East right now.

So I think there is a progress in the resilience, but recent news says that there's been drone attack in Saudi Arabia and They are also making attacks. And this is intensifying on a daily basis according to what the news reporting. So on that basis, energy out of the Middle East. Can Japan continue to procure as we have in the past in the future?

Well, we have export out of Fujairah that as I mentioned before. And for Saudi Arabia out of Yanbu, then they can't go through the Bab al-Mandab Strait, but they can go to the Mediterranean sea and go through the Cape of Good Hope. So 100% may be difficult. But even to a certain extent, the crude oil from Middle East is being delivered to around the world even today.

And right now, there is a movement to secure alternative source. So crude oil imported into Japan, as you can see here, over the last year or so has changed quite significantly.

Yes, that's true. As you can see on the slide, and this is the Post-Hormuz situation, so alternative sourcing. This is the case of Japan. But prior to the closure of Hormuz, and we depended on 93% of the oil, which went through the Strait of Hormuz. But right now, as you can see on the right, only 70% of the oil that we import into Japan from the Middle East. And between 93% and 70% is about 1/4. Where does this come from? In the case of Japan, we are importing from the United States. And so in the case of Japan, when we reduce the dependence on the Strait of Hormuz outside the Middle East, we have decided to choose the U.S. And this is the situation for Japan.

So those are the movements we're seeing today. And for those alternative source, U.S. is one or South Africa as well. And outside of the Middle East, we are trying to have these supply source diversification, and that's becoming the case today.

So for the case of Japan, temporarily, there is some difficulty or some risk of not being able to procure the crude oil, but the U.S. oil is now supplementing that situation. We're able to secure the amount that is needed.

Well, today, there are some stockpile oil, which is 220 days in Japan. So these alternative source included, we are procuring the crude oil and the price is high. However, so far today, we're able to have a stable supply of energy in Japan. And the Middle East itself to export outside of the -- outside of the Hormuz. And also, if you try to have a non-Middle East oil, those are the other initiatives we're seeing today. But after the stabilization, we think those are the trends that will continue to be in place.

So as you mentioned today, the cost is increasing. And I think that's one of the points people are focusing. In fact, when it comes to these alternative source, for example, from the United States, rather than sourcing from the Middle East, it will take longer days for transport or the insurance and also the transportation fees will be higher. So the cost will be quite more expensive. Is that the case?

Yes. So like you just mentioned, so let's say, why don't we stop importing from the Middle East? Why not from other markets? That is also one discussion. However, when it comes to these alternative source, I think that is important. But when it comes to the attractiveness of the Middle East, that is still a large attractiveness even today. And number one is the reserve amount of reserve. There are really reserve -- huge amount of reserves and the production is efficient in the Middle East.

And also the vessel is another important thing. So not only where we produce but also the entire supply chain is what we have to look at. So supply chain security is something we have to look at. And when it comes to securing these vessels, it's also very important. As you can see in the slide, how many days it will take for these, shipping time is shown. From the Middle East, it's about 20 days through the VLCC large tankers. And for other routes, as I mentioned earlier, for the Middle East, for example, or from the Mediterranean, for example, producing in Azerbaijan, trying to bring that to Japan, it will be going through the Cape of Good Hope, and it will take 55 days.

And then from the United States, if you go through the Suez Canal, it will be quite short but Suez Canal is small. You cannot have a large tanker passing the Suez Canal. So you have to go through the Cape of Good Hope, which will be a longer route and it will be, let's say, 20 days from Middle East, but compared to that 2x or 3x of longer shipping time in that case. Therefore, in the end, when it comes to Middle East, the importance of that market, I believe, is going to be unchanged.

And when it comes to the non-Hormuz security of these crude oils, we have to increase that security, plus, for example, UAE is one, but we have to have collaboration with those and have an increase in capacity production of those markets. Those are things we have to look at going forward. So Post-Hormuz, even in the Post-Hormuz Closure World, the Middle East is still important for INPEX.

And then moving on to LNG. There are many projects that is underway today. And at this moment, if you can explain what are the situation and also what are the supply/demand outlook for the Asian market going forward?

Yes. So crude oil is one, but also LNG. For LNG in Qatar, there are a lot of production in the Middle East of Qatar and then -- the Qatar Middle East. And then if you look at the resilience, this is also important. Where we have to produce is also another important thing. And then where the LNG will be consumed? Where is the demand? That is the question.

As you can see in this slide, this is the future LNG demand in the world and the supply as well. What kind of areas we have the supply and demand is very clear, as you can see. So Asia market is where we have a huge demand growth. And the Asia supply, on the other hand, including Australia, as you can see in this picture, is a very shortfall of supply compared to demand. Therefore, where we're going to bring that difference, whether it's Middle East or whether from the United States, those will be the answer. However, from what we are seeing today, the supply chain is very important. So as mentioned earlier, if you can show the vessel today, the Hormuz -- Strait of Hormuz and also Bab al-Mandab Strait are what we have today. But the other one is Malacca Strait -- Strait of Malacca.

And going back to the picture earlier, yes, it might be difficult to read. But to the Asian market, when they come to Japan, it's a small strait, which is Malacca. And there is no problem today. But in the future, we cannot say it's going to be safe forever. And then we also have the Taiwan Strait. And we don't have no problem today. But those choke points, those so called chokepoint, if you think of all these choke points, we have to be close to the demand area, close to the demand area. So if it's Asia demand, then we have to do in proximity of Asia when it comes to production. So considering the security and the cost, that's the large direction as a company.

So compared to the Western majors, it will be a different position as a company and that's the local production and local consumption in Asia. That's your role you can play.

Yes. So when it comes to Asia network, we have Australia, Indonesia. Various projects we are underway. And the production know-how, the supply know-how, the marketing know-how, we have a lot of those. And then in Asia, we produce and then consume in Asia. Those are the trends we'd like to pursue going forward, which is a different strategy than other super majors.

So like in this way, there are various environmental change. But within your company, you are doing the portfolio management so that you can put more funds and investment into more profit-generating projects. But in the mid- to long-term growth strategy of the company, what areas will be making investments in particular? And what areas are considered to be curbing for the investment standpoint?

For LNG, as mentioned earlier, Asia is mainly going to be the main driver of demand. And the LNG throughout the year is 400 million tons of trade. And then in 2030, about 7 or 8x of that is expected. So the Asian supply, if you consider the supply for Asia, that's not the total area, but local production, local consumption is one consideration.

And then Australia and Indonesia is where -- as you know, we have a large asset in Australia, for example, and then for Indonesia, but these are areas we'll be focusing. So these are also our past strategy. But with the Middle East situation, we are also thinking these are very effective strategy as a company going forward.

And where are we going to produce them? We have done a lot of selection and deselection. So we are not trying to stop any areas or deemphasize. But in the way of thinking, we have looked at where we can produce with more efficiency. But going forward, we have to look at the length of the shipment days and also the portfolio have to be considered from various perspectives.

So I'd like to ask Mr. Ueda. There is the Annual General Meeting of the shareholders in March, and there was some buzz on X because you mentioned that without buying -- because of war, we want you to buy the stock of INPEX because of growth, not because of war, but because of growth. So there was a lot of reaction and buzz around that.

Yes. Well, INPEX as a company, we have our profit linked to the oil price. And today, the oil price is high. And in that situation, there are many interest among many investors that when the oil price goes down, there are less interest, and that is usually the case. But what we're trying to aim at is not really that situation. But because of growth of the company, we want to increase the cash flow, increase our profit, and that is what we like to bring -- reward our shareholders more and have more dividend. So those are things we like to do.

And then in the AGM, for those people who have shares in our company, when they want to buy INPEX, instead of buying because of the war, we want you to look at the growth potential and the actual growth is something we hope you can make investments in our company because of that as a trigger.

So can still expect growth. So it is a growth stock. That's what you're saying, right?

But that is our view.

And also in August, when you announced the second quarter earnings, there were a number of positive surprise. So full year net income forecast was adjusted upwards and also dividend was revised upwards. And JPY 110 billion ceiling on the share buyback program. This is making progress towards the end of the year.

Now if you go to the highest level, then that -- sorry, if you go to the ceiling in terms of share buyback, this will be the largest in history for the company. And so you are also quite proactive towards the growth investment. And this, I think, is the message that the share price is discounted or too low.

Well, in terms of shareholder returns, the full year forecast, so we expect about JPY 510 billion of profit. And this is depending on the oil price as well, but cash flow is based out of many operations, including Australia, which are all going quite well.

And so the production volume in Australia this year is expected to reach the highest on record in my view. So if that's the case, so JPY 510 billion of profit for the year-end is not a dream. And I do feel that this can be realized at quite a high probability. Of course, we don't know what may happen in the future. But from the management perspective, we feel that we have issued a forecast with a high likelihood. And on that basis, the total payout ratio of more than 50%.

And that is what we have committed in terms of our midterm plan. And so increasing dividend and taking JPY 110 billion of share buyback, the highest record in the future. And the total returns will also be the highest on record. And so this is indicative of our confidence and what sits at the basis is the growth, stable and the growth of Ichthys. And if we grow, we are going to increase returns. And this is not just a verbal remarks, and we want to show this in practice, and we want to execute this. That's our thought.

And you are now about 60th in terms of market cap ranking and hopeful of expecting further upside.

Well, in terms of our share price being low, and we will introduce various numbers later in the session today. But based on various calculations, growth rate, the speed of growth that we are thinking of. But the growth expectation calculated from various market numbers, there are a significant gap between the two. Of course, the share price is the growth in the earnings per share or the expected growth. It's not all determined on these factors. But even then, the view towards our growth is not as significant by the market as to what we see, and that could be the reason as to why the share price has not increased.

If that's the case, it's important for us to send out a message. And when the share price is low, we undertake share buyback. That's the reason we are undertaking buyback of JPY 110 billion. And so we are communicating to the market through numbers of our view that our share price is low.

So from -- until here, we talked about the desire to continue investing to achieve further growth in the new normal in the Post-Hormuz Closure World.

Thank you very much, Ueda-san, for your dialogue.

Next, I would like to invite Mr. Takimoto and Mr. Yamada, both directors to prepare for the next part.

So I'd like to proceed to the next session. And the next session is titled INPEX's Growth Potential. And the session will be attended by Mr. Toshiaki Takimoto, Director, Senior Executive Vice President, Corporate Strategy and Planning; and Mr. Daisuke Yamada, Director, Executive Vice President, Finance and Accounting.

So Takimoto-san, Yamada-san, thank you for your contribution. So I'd like to start with a question to Mr. Takimoto, the title, the growth potential of INPEX. Now what sits behind the background to these comments? And where do you expect to see growth potential for INPEX going forward? And the growth potential, what is that?

7 or 8 years ago, the oil and natural gas was considered to see demand in -- and they were talked about stranded assets when it comes to these assets. Then after that, Russia invaded into the Ukraine and because of the Middle East crisis, our business environment has changed 180 degrees in one sense. And oil and natural gas into the future remains to be an important source of energy. It will continue to be required. So in that regard, the potential growth for INPEX, in other words, our story for growth. And that is what I like for the investors and the shareholders to understand.

And so from such a perspective, we wanted to share what we as INPEX is thinking of. And if you take a look at this slide, the graph on the left. And from 2018, when [indiscernible] started to produce and it's showing the growth in cash flow as well as investor returns and shareholder returns, I should say. But as you can see in terms of cash flow, from JPY 212.7 billion to JPY 1.055 trillion. And so the level has, in fact, increased fivefold in terms of shareholder returns from JPY 26.3 billion to JPY 273 billion, which has actually increased almost tenfold.

So I want you to understand this track record. And going forward, we will have the Abadi LNG business that we are going to develop. And so once the Abadi starts production, which is in the early part of 2030s, our cash flow from operating activities will reach JPY 1.5 trillion. In other words, the business size will expand by 60%.

And so INPEX Vision 2035 is what we have announced. And the target there is something we will head towards as a growing company. And we can't actually promise the shareholder returns in the early 2030s at this point in time but the current return level will be maintained and -- at least so that we can live up to the expectations of the investors.

The graphs on the right. On the bottom right is the production volume. In 2018, we were at 450,000 barrels of oil equivalent per day. So that was where we were back in 2018. But this fiscal year, 630,000 barrels of oil equivalent per day, and this is where we have grown to. And Abadi that I mentioned before, the start-up of Abadi will enable production to reach 800,000 barrels of oil equivalent per day.

So as indicated in this title, we are a company with still a significant growth potential, so -- on top right. And this is comparing ourselves against the majors -- major oil company and independent E&Ps. And if we consider the production volume at 100 and if we index this going forward, the majors or the independent E&Ps, they have production volume, which are 3 or 4x larger than us. But just maintaining that the production level, they need to invest JPY 1 trillion, JPY 2 trillion.

But even with that investment, their production volume are likely to remain relatively flat or just a slow increase. That is based on our analysis. But what's shown in the purple line, which is the INPEX production volume. And against our competitors, we are going to show a significant growth. And this is what we are thinking of from the long-term forecast perspective.

And over a long term, after the Abadi start-up, the INPEX has this type of the potential growth expectations. Now on that basis, our current midterm management plan from 2025 to 2027, the 3 years, what would be your focus investment areas as well as the regions. And these growth investment, how will they expect to contribute towards the profit generation going forward? If you could give some specific examples, please?

So this slide is showing the period from 2025 to 2027, how we intend to allocate our cash and also showing the net D/E ratio transition.

If you could look at the left. And here, this is showing the cash coming in. And over the 3 years, we're expecting JPY 3 trillion of operating cash flow, and we also have JPY 350 billion of borrowings. And so on a total basis, we will have JPY 3.35 trillion of cash that will come in.

And how are we going to use that? And in terms of the cash going out, we will first have a growth investment where we will spend JPY 1.95 trillion, which I'll come back to later.

And then for the shareholder returns, we have JPY 700 billion or more. As we have committed, we also have progressive annual dividend starting with JPY 90 per share, and we have committed that amount for the midterm plan and the total return ratio of 50% or more. On top of that, we have the cash reserves for Abadi LNG development, which is starting from next fiscal year, JPY 700 billion or more is the amount that we're expecting for the cash reserves. So these are the investment plans and the cash flow plans.

When it comes to net D/E ratio, it's shown on the right-hand side. So in terms of the financial discipline, we have net debt to equity at 0.3 to 0.5. From 0.3 to 0.5 is the range that we'd like to keep to have a good financial discipline, and that's how we like to do cash allocations going forward.

And then going to the next page. So before the Abadi production start-up, are we not going to make an investment? And that's the frequently asked questions from our investors. And that's actually not the case. For sustainable growth story of the company and to have other people understanding about that growth story. On the left-hand side, you can see in the Southeast Asia, in the current midterm plan, 3-year midterm plan period, the new investment plans we have in place. And then the red is the future investment. And for the green, this is the exploration project. And as you can see, over the long term, the pillar for the profit is the E&P development in the Malaysia and Indonesian market. So these are shown in green. And then when it comes to production, we have the Malaysia, we have acquired acquisition of the interest in Block 2E of the coast of Sarawak and those assets are acquired.

And then on the right-hand side, you have Abu Dhabi and NIS. In Abu Dhabi, you can see the red, which is also the producing assets, the upper Zakum, further development. Those are the plans we have today, and we are participating in that project. And for Abu Dhabi, for the first time, we have the gas development. And as you can see, the Bab Gas Cap Development, and these investments are already decided.

And then also from this fiscal year, we will have a P&L contribution as a growth investment, which is the Azerbaijan AGC -- ACG oil fields, where the acquisition of additional shares were made. So before the Abadi production start-up, we are trying to make these investments for the growth.

Next page, please. And then the earnings contribution from these investments. These are also frequently asked questions from our analysts and investors. But when those investments -- growth investments will start to contribute into our earnings? Those are the questions we here.

And then as mentioned, JPY 1.9 trillion is the midterm growth investments we're making. But if you can look at the gray at the bottom, the range, 663,000 barrels today to maintain that investment is JPY 950 million. That's the base, JPY 950 billion. And then on top of that, we're going to grow as a company. So with that intention, we are going to look at what are the earning contributions, which is on the top. So the Malaysia and production investment -- producing projects and then also the Azerbaijan increase in the stake.

And then Ichthys interest increase, additional acquisitions. So these are the short-term contribution. And in the midterm perspective, we have the Middle East and Southeast Asia investment as well as what we mentioned earlier which is Abu Dhabi, the gas development. These are about approximately JPY 400 billion of investments. And then furthermore, we have the long-term earning contributions, which has been mentioned before, Indonesia, Abadi LNG as well as in Australia, we have a new acquisition of the interest, which is in the location of Beetaloo, which is a shale gas project.

In the long term, we think if it works well, it will be connected to the onshore plant of Ichthys, and then that will contribute to the expansion of Ichthys production or it will be the exploration projects in Australia. So these are in total of JPY 950 billion of investment. And as you can see on the right-hand side, on top of the current earnings, we will have these investments. And these are the trajectory of our growth.

After Abadi production start-up, about 60% or so will be expansion in our business size and also production volume. So that is what we are thinking today.

Then in 2028 and beyond, I would like to ask a question. Around this time, the investment for Abadi project will be in full swing. So could you share once again your thoughts around cash allocation?

Yes. Thank you very much. So from a long-term perspective, what kind of cash allocation we're thinking as a company, this is shown on the graph. On the very left-hand side, this is 2025 to 2027, the current midterm plan period. And as mentioned earlier, this is the cash allocation. And then this is shown on annual average. And then the middle is the Abadi.

Once the Abadi investment goes into full swing, what kind of cash allocation we have? So we have the borrowing as well as the cash reserve of Abadi as a drawdown, and those are the source we are going to use for the investments. So with the drawdown of Abadi as well as the borrowings, these are how we're going to make the investments. And then in that case, when the Abadi growth investments will be maximized, even in that circumstance, we will have enough amount for the investment as well as shareholder returns. So that's the current assumption.

And then on top of that, from 2031 to 2033 on the right-hand side, the cash in, cash out are shown, but Abadi will have a production start-up. So on top of the growth investments, we have the repayment of the borrowings for Abadi. So we'll go into the harvest phase. So that is the mid- to long-term cash allocation of our company, and that's the view we have today.

So I'd like to move to Yamada-san. I'd like to ask questions. As Mr. Takimoto explained, how steady growth investments will be made for projects that potentially have profit contribution. I believe the level of external borrowings will increase to some degree when Abadi investment will go into full swing. So do you have any concerns around the investment discipline?

Thank you very much. So please go to Page 6. If you look at this graph, on the horizontal axis, you have the net debt to equity. And the vertical axis is the recruitment years for the debt. So on the top right, you can see Ichthys development peak in that circle. And at that time, there was a huge borrowings for the Ichthys project. And at the time, net debt to equity was close to 0.9 and the redemption period about 6 years. So it was quite a tough period.

And today, we're in the circle in the middle. So INPEX's '26 is where we are at today. But we're in net D/E is 0.3, 0.4. We have a good discipline -- financial discipline and also redemption of 2 years or below. So Abadi is a huge investment, what happens when that happens. At this current estimate, it's going to be slightly towards the right. So net debt will be -- debt to equity will be about 0.5. That's going to be the base. And then redemption period will be about 2 years.

So Ichthys is where we had a lot of cash generation. Therefore, the excess cash will be based and as a base. And then when Abadi will go into a maximum level of investment, we still can maintain the financial discipline. So we think there will be no problem around the financial discipline, and we can make these investments.

So based on what we have discussed so far, there is a large growth potential over the long-term, and you will make steady growth investments in the areas where profit contribution is expected, plus you have no concerns for financial discipline. On that flip side, was -- as Ueda-san mentioned, what is your view on the recent stock price? Today, JPY 3,800 and then JPY 4.8 trillion of market cap. PBR is unfortunately less than 1x. So in this situation where you have growth potential and whether that is reflected in the stock price today, what is your view at this moment?

So JPY 3,800 for the share price. Now when we approach JPY 4,000, it was kind of making -- made us some [ restless ]. But as the CEO or Mr. Takimoto has mentioned, despite the fact that we are growing this much, our medium-term growth rate seems not be reflected into the share price too much. And we want to target even higher level. And we've done an analysis by calculating back from the P/E ratio. And if you look at the graph on the left, you can see impact on the top.

And the red dotted line, what is this? Well, this is earnings per share, EPS. But between '25 and '26, so this is a 10-year moving average. And so P/E ratio is shown in blue, which is coming down gradually. So what does this mean? And the EPS. So the share price has not really kept up with the increase in the EPS. And you can see the O&G appears in the bottom, and there is a clear correlation there. So what does this mean?

Maybe our valuation is that we are expected to undergo negative growth. And if you look at the table on the right and what's shown at the top, P/E ratio is the share price per EPS. So 1 divided by expected return. And the expected return is cost of equity minus expected growth rate.

And the cost of equity, 10%, [ Kaganoi-san ] is not here, unfortunate, it's market consension. So we use 10% as instructed by [ Kaganoi-san. ] Now what does this mean? The expected growth -- so G equals R minus 1 divided by PER. So on that basis, on the right, the P/E ratio of INPEX, this is for 2025 December, which is 9.4x. The cost of equity, if you use 10%, then the expected growth, which is G, ends up being 0.59%. And so despite the fact that we are saying we are going to grow this much but it seems that the market will undergo negative growth. And this is what is indicated if we calculate back from P/E ratio. But as I said at the outset, the earnings per share has been increasing. So in the future, people still expect us to grow. So this is one issue that we have identified.

And so next page, now that being the case, so what would be the long-term growth rate for us? And what is our view in that regard?

So as you can see at the caption, we are expecting to grow at about 3%. And the pie chart on the left, and we have the actuals for 2025. That was about JPY 400 billion. And in 2035, this is after the start-up of Abadi. And as Takimoto-san was explaining, and we will undertake a number of growth investment. So we will wait for the start-up of Abadi, then we have backfill investments for the Ichthys and also in Europe and Middle East, we will invest for increase the production.

And so we should be able to generate net income of about JPY 600 billion in 2035. And so if that's the case, the CAGR over this period will be around 4%. And on the right, and if the INPEX vision is taken seriously, and if the growth strategy is understood by the shareholders or the investors, what will happen. And so we will generate expecting JPY 394 billion of profit increase to JPY 600 billion, then the market, the expected growth is 3.06% then caption 1 below until 35%, 40%. We are quite confident of achieving that kind of growth until 2035.

But after that, probably inflation level and we said 1% thereafter. And if you calculate back from there, 0.06% would be expected growth. That is what we can expect. So based on this, then the cost of equity is considered at 10%, then the P/E ratio would be 14.4x. That would mean that the share price should be around JPY 6,000.

Now -- so some of you may think that we are saying something bold, but that is not the case. The P/E ratio of 14.4x is not that high because major oil players are about 15x and 1.6x against the PER. And so our share price could be at this level. It's not too excessive.

And if we can go to the appendix section, yes, here. And I'm kind of reemphasizing this point, if you look at the graph on the left, and the top 500 companies listed on the prime market is compared against INPEX. And the horizontal axis is EPS growth rate, and we are using the moving average. And so it has been kind of smooth and the vertical axis is expected growth.

Now if you look at where INPEX is? So the EPS growth rate is at the top right -- top tier company, but expected growth for us is less than 0. Even when you look at this growth rate, expected growth has not been reflected into valuation. That is what this says. It's IR issue -- IR activities are not really penetrated into the investors. So we probably have to do more of this. And if we go back to the previous slide, and this is a message that I wanted to communicate today.

So we have calculated back from P/E ratio, but the market may be considering us as a mature company or a declining company. And -- so the growth implied by the market is minus 0.59% based on what we have calculated. But as said many times, we are going to grow. We have room for growth, potential growth. And so we are confident that we are a growth company. And based on the, INPEX vision, our long-term growth rate is implied at 3.1%.

So between what the market is looking at and our view, there is 4% gap. And our IR activity is being conducted so that we are able to close this 4% gap. So to the investors and to the analysts, we want to thoroughly look at our growth strategy and think about the valuation of our shares. We will continue to engage in Investor Relation activities more into the future.

So I'd like to seek your understanding in that regard. That is a very interesting calculation. So more than JPY 6,000 share price from a theoretical perspective. But the growth rate -- expected growth, the G, this has been negative. So internally, how the company react?

Well, everyone kind of stood up and we kind of looked down, which is, of course, a joke. But when we actually calculated back from P/E ratio and worked out the market expected growth. And so this was the first time we've realized this because this was the first time we did this exercise, but we are talking about growth so much. And when we actually calculated from P/E ratio and ended up simply negative growth. And so the share price has reached around JPY 4,000 level, we thought it has increased. But in practice, we are where we are, and that is what was implied when we calculated the background P/E ratio, and this is something that we need to pick up and continue to think about.

Do you feel that there is a misunderstanding, the image of the INPEX being a fossil fuel company or the fact that the government has a golden share. What do you think?

Well, first of all, the view regarding fossil fuel, maybe 5 or 6 years ago, and there were talk about the oil and gas sanction, but that has changed significantly. So that probably is not the case as Mr. Takimoto and the President explained. So the [indiscernible] sent to the LNG and oil demand. And so I don't know whether it will be a peak or not still remains to be unknown, but still the same, the oil and gas demand is expected to continue. So in that regard, we are not a declining company in that regard. It's quite clear.

And golden share and the share price relationship, it's difficult to analyze that. But if that is impacting? Well, I don't think it is impacting. The fact that we have a golden share means that we are protected from acquisition. And golden share having impact towards the share price is probably not what is happening, but I wanted to ask you, what do you think?

Okay. Thank you very much, Mr. Yamada. So to conclude the first part, Mr. Takimoto, can you tell us why we should invest in INPEX? Once again.

Thank you very much. So in the second part, from the corporate strategy and planning as well as finance and accounting section, these are what we want to communicate. Why it's valuable to make investment in INPEX, why there is a value in that investment is, as we explained today, the growth and the reward can be achieved both, and that is something that our investors and analysts, we hope you understand. And that is the most important topic that we wanted to convey in today's session.

As we do the IR activity and comparing to the peer companies, why is there a necessity making investment in INPEX? What is the difference of INPEX versus peer companies? Those are the frequently asked questions.

And on top of that, as we showed in the slides, PBR and the EPS are increasing trend. However, when it comes to the stock price, it's not catching up to those growth. And as Yamada-san explained earlier, that's what we are seeing today. So in a peer standpoint, we are low compared to peer companies. And that means the growth is not reflected on the -- INPEX's growth is not reflected on the stock price. We're not blaming the market entirely but we think these are things we have to appeal more to the market from our perspective.

And then as mentioned at the beginning, compared to peer companies, for example, production volume or the cash flow, there are more rooms to grow by several folds, and that is one of the major difference of INPEX versus peer companies. And then the biggest mission of Inpex is Japan and Southeast Asia, having a stable supply of energy. And especially in this Middle East crisis or situation, as a company, having LNG in the Asian market, and we are going to grow based on this foundation, we are trying to grow our business, and that is what we like you to understand.

And as our President mentioned at the beginning, the energy transition and energy in that situation and also as a destination fuel, the importance of natural gas and the crude oil is increasing. And also in the Asia Oceania region, which is the center of the demand, we would like to provide the LNG in Abadi -- Ichthys and Abadi energy going forward. And that's one thing we have to look at.

So when it comes to growth investment and on top of that, the short term, midterm, long-term contribution to profitability and good balance. These are how we like to strike as a company. And the target is in the mid- to long-term perspective. INPEX Vision 2035, as shown in that vision, in 2035, 60% of increasing the corporate value and 60% GHG reduction. And energy stable supply as well as low carbonization is something we'd like to work together simultaneously. So we hope you can understand.

So LNG as a foundation, we have the LNG power and CSC -- CCS, we would like to become one of the important company, and that is the message we'd like to communicate as a management. So these are the business we have today, and we hope the investors and analysts can understand and whether it's important to make investment in INPEX or not. So we hope you can think of this more carefully. And also what we have explained today, we hope you can understand the business that we're conducting. So that's the main comment we'd like to make today.

Thank you very much, Mr. Takimoto and Mr. Yamada.

So now we'd like to go into the Q&A session. Mr. Ueda, please come on stage again.

[Operator Instructions]

So first, today regarding the presentation, there was a clear message and a lot of detailed analysis. And half of the analyst job were also being explained. So once again, I had to review my presentation by listening -- through listening your presentation. So first, you talked about the golden share owned by the government. But as I'm dealing with investors, there's not so many discussions around that anymore. I've been in charge of following your company 15 years. In the old days, there were a lot of discussions around that, but not today. So today, as the main topic is the growth potential, and that's how much there's more certainties in the market. That's, I think, more important today.

And then on top of that, I would like to ask a question. So the large direction of growth and the story is clear. Well, before Abadi production, the growth before that is as Takimoto-san explained earlier, that's something where there's not a good understanding in the market yet, including myself.

And then on Page 4, as you explained, when it comes to detailed project and the profit contribution, before the Abadi production startup, you still have room to grow, and that's what you explained. So I think that was quite interesting. So for this, I would like to ask question. And I don't want to go into too much detail. But in the short term, you have mentioned about JPY 20 billion and then JPY 60 billion.

And on the right, you can see the project as well as cash allocation. But in each project, in our understanding in the past, that we think the large contribution will come from the Middle East. But because of the geopolitical risk, I think that's one thing you have to consider. So over the short term, having this project contribution, what kind of project will have a larger contribution? And what kind of risk are you looking at, at this moment? And then coming up with these figures, what are the embedded risks? And especially which projects do you have any confidence? Including that, can you please explain your message? That's all for me.

So Takimoto-san, please explain.

Yes. So as you asked the questions, Shinya-san, we'd like to try to explain more clearly and what is a short term, what is a midterm and what is the long-term contribution. And as mentioned, JPY 1.95 trillion is the investment and then how much -- when we're going to receive these contribution. That's why we prepared this slide. And today, there are some negotiations underway, so we cannot disclose everything. So there are some uncertainties in that sense.

But for example, one of the example we can give is on the left-hand side graph, the top -- second from the top, which is the share from the METI for the ACG oil fields. So the profitability will be doubled. So those are the short-term contributions. And then for the Southeast Asia, we have a producing project where we acquired the interest. And from next year, we think there will be profit contribution next year or so. So the short-term profit contribution is where we are making investments, and that is shown in this graph.

And then also not only working on this short-term thing, but also in the mid- to long term as well, before Abadi, during Abadi and post Abadi. The details we can give as far as today is shown on this slide. And on top of that, outside of this, we have some investment projects outside. So once we are able to disclose them, we'd like to give more details, what kind of growth curve we will have by 2035. But this time, relatively speaking, so it will be easier to understand for our investors. We have this growth investment and the earning contribution from these investments in the short, medium and the long-term perspective.

For CCS, we'd like to ask question. Today, there was a growth story explanation, and I was able to revisit that again, and I revisit that growth potential. But behind these projects, there are CCS, CCUS. And then for your company, we believe that's also one differentiating project for your company. But today, for CCUS, what are the progress because it's unclear. I think it's quite a future in the long-term perspective, but what is the current progress and your view INPEX?

They have the well and the technology -- exploration technologies, and you have -- going to be the platform potential. And for each of the companies in overseas, they're working on CCS. So most probably when you compare those with Japan, we believe that the question is which is better? But what do you think is going to be your advantage or the strength that we can expect for CCS? And what is your view at this moment?

And then on top of that, I would like to ask for each of the project, you're entering a phase for making these growth investments. But considering the CCS potential, having more leverage, balance sheet transition, I think that's something that might be possible in the future, if that's the case or not. Because just listening to what you just explained today, I think quite conservative balance sheet leverage is the consideration. But depending on this CCS, is the leverage going to change in the future or not?

So let me talk about CCS, CCUS. So I'll explain the status quo. So we currently have 3 major CCS projects. One is related to Ichthys, and this is the project in Australia called the Bonaparte CCS project. The second is a Metropolitan CCS project in Japan. This is near Tokyo, it's a CCS project. And the third is the Abadi CCS. So this is to process CO2 coming from the Abadi production. So these are essentially the 3 major CCS projects that we want to undertake. The situation differs between the 3.

And in regards to the Australian Bonaparte CCS, just recently, we have received the declaration of identified greenhouse gas storage formation. In other words, essentially, CCS or the CO2 can be stored at the site. So this was a declaration from the Australian government. And also based on the result of drilling thus far, the Bonaparte CCS will not be sufficient, not only to store CO2 from Ichthys, but has a capacity in excess of being able to accommodate CO2 from other projects. And this is becoming rather certain. So we want to realize this project.

And on that basis, we will start the FEED, the operation next year or nearby. So after we complete the FEED, we will make a CapEx and we'll proceed to establish the project. But right now, we are now moving to a phase of conducting the FEED towards the realization of projects. That's the Bonaparte CCS.

The second project is the Metropolitan CCS project. So gathering CO2 from the Tokyo Bay area, taking it to offshore Chiba, and to essentially store the CO2 under the ocean. So in the Boso offshore, we are actually doing the drilling work right now. We are amidst that work right now. We don't know the details of the result as yet, but it seems that we should be able to store a large amount of CO2. There is a kind of a sand layer that we have -- we are now confirming that we have that kind of area of the Coastal Chiba prefecture. And so we will proceed to the pre-FEED based on the results, and we'll proceed to designing of the CCS project.

Now, Abadi. And so in order to build the Abadi project, we will have a CCS project to store the CO2 from Abadi. So this is considered to be a part of the Abadi project. Abadi itself right now is going through the FEED process, the basic design essentially. And so FEED process was covering the onshore plant, the FPSO and also for the CCS, we have completed the FEED work. So going forward, so we will enter into the EPC of the FID, and we are looking at the timing for FID to be mid next year.

And with that in mind, we -- within the Abadi project itself, we intend to undertake the CCS project together with the Abadi project construction. And so -- and we are currently going the tendering process for the EPS (sic) [ EPC ] for the Abadi. CCS is part of them. So in that regard, whether it be the Bonaparte or the Metropolitan, Abadi, we have relatively large CCS project, the 3 projects that we are currently working on, and we feel that they have made a lot of progress.

As far as the challenges are concerned, what would be the economics of these projects? And we are still halfway through in this regard. Of course, if we conduct a CCS project, it will push up costs. So we're still considering this as a cost basis. But will this become a kind of an asset? So can we commercialize? Can we store CO2 at a price in excess of the cost? And at this point in time, it is still considered as a cost item. So that's the current situation.

How about the leverage on the balance sheet? Yamada-san, if you could respond to that question.

Yes. Thank you for that question. Now our leverage and the financial discipline is between 0.3 and 0.5. And so we are operating between that level. So we don't want to increase or decrease the leverage too much. And I think this is a good balance. When we say 0.5, one may think that the leverage level is quite low, but the equity is about JPY 5 trillion. And so JPY 0.5 trillion means that JPY 2.5 trillion. And we need to borrow this in USD. This is a U.S. dollar-based investment.

And so think about 3 mega banks and JBIC and JPY 2.5 trillion is quite a significant amount. And temporarily, if there is a significant investment, and there could be times when we may exceed 0.5, but we feel that we need to maintain healthy finance. And so we should keep it in between these ratios. And when we explained our investment before, and we are quite balanced to investment. And if we were to increase the leverage going forward, essentially, we are buying our shares at leverage and what to do? We may face that kind of situation in the future.

But as I have been explaining, we are now working on the trustee borrowing for the downstream Abadi. So we are needing to make significant funding for that going forward. So if I are to do FID next year, then we need to secure commitment at the start of next year. And as you know, the interest rate continues to increase in USD. So there is an availability challenges potentially. And so the earnings result, the equity ratio and the financial stability.

And this -- until we have secured the TB, trusted borrowing scheme, we need to maintain our discipline at a strong level. And from the creditor's perspective, they don't want leverage to be increased too excessively, which may be a little bit different for the investors. So if you think about the balance between the 2, we should think 0.5% has been the kind of ceiling for the time. And so we need to strike the right balance to invest as well as to borrow. And in that regard, I think we are at quite a well-balanced situation.

Having listened to your presentation today, I thought that your growth strategy was very clear. And you have analyzed your share price in a very thorough way. Now in terms of growth, Southeast Asia or -- sorry, Middle East, you have been investing in that area. I understand that. But Middle East, I think, is a key. Now, so the President has made a keynote message that the importance of the Middle East remains unchanged. I wanted to do a deep dive on that.

On Page 3, you explained about investment in Abu Dhabi, but other contribution towards the Middle East, if there is a pipeline issue, will potentially support the pipeline construction. And in providing that support, would there be opportunity for you to generate earnings? Or as the government is doing, but towards the Middle East, to support safe and secure transportation leading to potential earnings. Is that possible?

Allow me to respond to this. In terms of the Middle East, as I said before, despite the various situation, they will remain to be very important. And so from the INPEX perspective, we will continue to value Middle East, particularly UAE, where we will continue to invest. This fundamental thinking remains unchanged.

In regards to investment towards the pipeline, and we are going to collaborate proactively. Now right now, the ADNOC, the state-owned oil company in Abu Dhabi. So the pipeline construction cost and tariffs, various things will come up in the future. So how should that be operated going forward? And that kind of discussion has only started recently. And for us, and the pipeline itself as to whether it's going to contribute to our earnings or not remains uncertain at this point in time.

But still the same, constructing the pipeline basically would be a redundancy because within the Persian Gulf, in other words, within the Strait of Hormuz in the Persian Gulf, we already have a shipment facility. And normally, we can just ship from there using tankers. But despite that, establishing pipeline for the emergency so that we are able to actually ship from Fujairah. In other words, we are going to invest in redundancy.

So by this, rather than contribution to earnings, but rather, it's more to invest in order to enable security. That is the nature. But by doing this, we will be able to achieve long-term stability, delivering crude oil to customers. And so this is an investment that is essential. Therefore, in terms of Abu Dhabi investments, so we are talking about these investments, including the pipeline. But rather than generating profit from those, there are a couple of other discussions.

For example, having collaboration for the total production increase in Abu Dhabi or the Bab Gas Cap development is underway, but the natural gas development will be done in Abu Dhabi. So for those potential areas, we're going to make investments and then increase the gas and increase the oil production. So that's where we may try to do and expand profitability. So that is what we're looking at when it comes to security investments. Thank you very much.

My question is, as you explained today, the growth potential not being factored in the stock price as a possibility. So as I also discussed with investors, I think the growth potential is recognized well. However, when it comes to upstream and being an upstream company and in Ichthys, there are quite a lot of concentration of the profit. So the risk, diversification, risk is also one thing that is factored in the stock price, I believe, as a discount factor. That's my view.

And then the Abadi that you're working on today, by having that included, I think there'll be more diversification of the risk, and I think that's what we can look forward to. But in that interim, if you look at the midterm and short-term and midterm investments for the risk diversification, I think how you're looking at those short-term and midterm investments from that perspective.

And then also in the pre-Abadi start-up, rather than production, I think the marketing is something I would like to ask a question. If it's LNG, I think your sales are mostly oil-linked and the long-term contract basis. But in the spot price today is increasing. And in the LNG, if it's linked to the LNG price, I think those marketing -- if you have more of those marketing, it will be better from an outside view. So from that marketing standpoint, is there any way you can try to do a risk diversification as well and that might be factored in the stock price going forward? Is there any view of such?

Thank you very much for that question. So I would like to answer that question. So first is when it comes to diversification of the supply source, as you just mentioned, at this moment, 70% of the net profit is coming from Ichthys project. So as much as possible, we have to diversify that, and that's what we also believe is necessary. And Abadi, once that start-up happens, then in Oceania and Asia, there'll be quite a lot of diversification as well.

On top of that, in terms of production volume, Middle East is still #1. And when that happens, there will be 3 pillars of profitability. And we think if you asked the question whether that's enough for us, as you just mentioned, if some geopolitical risk happens and that may happen. So as much as possible, we have to diversify the source of supply. And then in the area where there's demand, that's what we like to do. So the producing assets and the E&P project we have in Southeast Asia is what we just explained before Abadi.

But compared to Ichthys, Abadi, relatively speaking, the investment we are doing today and the participating project we have today are not large scale. So on top of that, on top of the 3 pillars, I think the fourth and the fifth pillar, those growth investments project is something we have to consider in the current core area or in the other noncore areas as well. That's what we are thinking in the current position.

And then in terms of the marketing, for the case of Ichthys, 89,000 to 90-some thousand tons, long-term contract is 8 million tonnes secured. And then for Abadi, 9.5 million tons out of the production capacity, 8 million tons or so is a long-term contract secured. And for the remaining, as you just mentioned, is a spot market where we have flexibility selling, and we should have that kind of flexibility. I think that was the comment.

So with that, on top of the existing with the Abadi, the 3 pillars will be diversified. And then also the marketing flexibility like when we have an energy crisis like we have today to meet that situation, we have to have flexibility. And those are being discussed internally. And then we have to have this evaluated by the market going forward. So we think that is something we should do going in the future course.

There are so many questions today, and we really appreciate all your participation. So for those questions we're not able to entertain today, please come to the IR -- contact the IR department, and we would like to answer those questions. So now the last program of today, we'd like to go into the corporate governance dialogue with outside directors. In the first part of today's program, the INPEX management shared their views around the analysis of external environment, business progress, investment strategies and the cash allocation.

From this session, I would like to ask the views of outside directors from the context of how the Board of Directors would supervise those growth strategies and capital allocation as well as how they can funnel those efforts towards increasing corporate value. So we have the outside directors, Mr. Norinao Iio; Ms. Naoko Saiki; and Mr. Hidenori Takaoka. So the first half of this session, I will have a dialogue with each of you. And then in the latter part, we will have questions from the participants. It's a limited time, but we'd like to have the sessions going forward. Thank you.

So we'd like to start. The first question is based on your experiences, what roles would you like to play for the sustainable growth and the improvement of corporate value of INPEX? Please share some of your knowledge and expertise or your individual strengths as well. So first, I'd like to have Iio-san, please.

So this is Iio speaking as an Outside Director. So first, in INPEX, after joining INPEX, it's been 10 year or the 10th year. And the first is in the Board of Directors related to the governance of the directors, there has been a large change over the past 10 years. 10 years ago, I also come from the energy background. But in the same field, most of the people were in that position as an Outside Director. And then today, myself and then Mr. Takaoka were the only ones. But at that time, as people came from the same field, we tend to have a kind of a same agreement or come to the same conclusion.

But looking at today, there are a lot of lively discussions. And compared to 10 years ago, there's a large change in the Board structure today. And having that kind of diverse opinions in the Board means in a large sense, how would I put it? In the right direction, I think we will get closer and we will be able to bring the company closer to the right direction. I think that will be the direction. But when it comes to these lively dialogue, it's not something that will link directly to the company's performance.

Talking about INPEX, as mentioned from the past, these highly potential projects are what we have to secure and then piling up those projects, I think that is really the essence of the operation. So in that situation, the E&P for the development and investment of these development for oil and gas, there is some kind of a hole that you might fall into. And in the past 10 years I've been in the company, there were the investments that we made in certain projects before. And then there were some impairments we had to book from those projects.

And then for myself, when I was still in the Mitsui & Co. Energy department, I also fell in that hole of E&P, and I had a bitter experience, as I remember. So when I talk about these hole, I think there are various different types, but we have to avoid them and try to make sure those won't happen. So based on my past experience, if there is some project I feel uncertain, when the Board approves in the project and I'm the only one objecting, there were some cases of such in the past Board meetings.

But because of my past experience, kind of having that sense of project, it's not really in a positive way, but from that kind of negative type of projects is what we like to reduce and those are things we have to look at. We have many projects for investments, and those are things I would like to look at going forward.

Thank you. So even for those people who are not from the energy industry, the members are from the perspective of diversity. And you also have Mr. Miller, a non-Japanese national, being the Board member. Now, Mr. Iio, from -- in comparison to 10 years ago, has the discussion become much more active and more prolonged? And is it often that the opposing opinions are expressed?

Yes. How could I put this? So people come with various backgrounds, and Mr. Miller is an Australian and he has a rich experience. And Saiki-san is sitting next to me. And [ Nomotsu-san ] used to be the Parliamentary Minister in the Ministry of Environment, Mr. Morimoto. So we have people from various background, which makes the discussion very active and lively.

But INPEX, as a company, operates as an E&P company, basically. So I'm supportive of people of various background joining the Board, but it's also important to have a number of Board members who have experienced E&P. And so the experience of failing in the E&P projects in the past will certainly be of great value going forward.

Next, I wanted to ask Saiki-san. So Saiki-san, you have become a Board member this year. So your experience thus far.

Yes, my name is Naoko Saiki. And I became an Outside Director as of the AGM held in March this year. So sustainable growth and enhancement of our corporate value, if I'm able to contribute towards these goals, I feel I can contribute from 3 perspectives. One is expertise. Second, objectivity. And the third is what Iio-san was mentioning, diversity.

So first of all, in terms of expertise, I have been involved in the Ministry of Foreign Affairs for 40 years. I'm also adviser now. So I was at the forefront of negotiation in terms of diplomacy, so national laws, economy, security. So I have been involved in the establishment, implementation and so forth of various policies covering these areas. So I have expertise, experience, know-how, people contact that I have nurtured through my career, can be utilized to make advice and the proposal to the management of INPEX.

And in April this year, outside directors had a kind of roundtable meeting. And the facilitator back then was Mr. Takimoto, Senior Executive Vice President. And the dialogue is included in our integrated report. So Mr. Takimoto back then said, for example, the risk management for overseas business or resource, the diplomacy establishment of international relationships or international laws, and he had expectations for me to contribute in those areas. So from that kind of expertise and know-how, I want to certainly make contribution.

Now in the Ministry of Foreign Affairs, I was also involved in the people development for quite many years. So developing people, utilization of people, this also is an area where I am engaged in proactive advice. Second is regarding objectivity, and Iio-san also touched upon this. Now myself have not been deeply involved in the energy area in my experience. Apart from the management experience in the administrative area, I've not been involved as a part of the executive member in the corporate -- the management.

But because of that, there are fresh, I suppose, views that I may be able to share because of my, I suppose, background. So common sense within the company or the common sense within energy industry. I don't know them because of my background. So in that regard, I can provide an opinion from an independent and objective view and to be engaged in the, I suppose, the monitoring of the management and risk management compliance. And when it comes to these topics, external views are very important, and I feel that I can play a role in that regard.

And the third point is diversity. And in regards to the corporate policy of the corporate governance of the INPEX, so the cultural background, the international aspect and all those are very important. The female ratio. So by 2030, we want to target 30%. And this is something that we have announced externally. I myself, by chance, is a woman. And fortunately, I have not experienced discrimination because I was a woman, but I am a woman. And so from such a perspective, I am able to contribute to discussion when it comes to the diversity, and I want to certainly contribute in that area. And I have strength as a woman as well, and that would also be something that I want to utilize.

When it comes to diversity, what is important is, as Iio-san was explaining, and despite the lively discussion, despite the diversity being secured, it doesn't mean that the corporate earnings will increase. That is true. But at the same time -- but diversity at the same time, does enhance the resilience of an organization. It also improves the quality of discussion. I do feel that they are facts. And so that would be the kind of perspective from which I can contribute to enabling INPEX to establish much resilient corporate structure and to link to higher quality decisions.

So Saiki-san, you also serve as the Outside Director of another company. But any surprises having joined INPEX? Anything that you felt in the discussion at the Board?

I don't really find anything to be different. I think INPEX is a great company even from looking at the company from the outside, but now being a member of the Board, I feel that this is a great company. Added to that, I think the company continues to evolve and change. And say, for example, prior to the Board, there is a kind of a pre-Board explanation and various support is being provided.

So when I became the Outside Director in March, but even prior to that March, whether it be the various Board and so forth, I am able to look at the materials from those Board meetings, other meetings, even before I became the Board. So that is a learning experience. And there is significant support. There is non-Japanese person. There are 5 auditors. And so there are 15 people on the Board and inclusive of auditors, more than majority are outside. And so the outside auditor, there is another woman on the Board in addition to myself. So we are able to engage in active discussions under very good environment and atmosphere.

And Takaoka-san, I understand that you joined the Board this year as well. So until now, what has been your experience?

My name is Takaoka. So I'm from Mitsubishi Corporation, and I'm kind of adviser of the Mitsubishi Corporation right now. And Mitsubishi, the corporation had a low PBR until several years ago. And -- so we were making appeal of enhancing that, but it wasn't that easy. And within the company, whether it be LNG or oil, we did actually have that business but within the company. But the Mitsubishi, we have engaged in many business. And so for the top management or the stakeholders and how can we communicate the fact that LNG is great, but that was difficult to obtain understanding. And so I have struggled a lot in my career. So it's kind of reminds me of my experience.

And where I can contribute is, first, in the energy industry is where I've been involved for 40 years. I'm from the industry, I do have certain level of know-how. And Mitsubishi, the group association, there are -- I'm actually directors of 15 different organizations, including the industry associations. And there is a committee for assisting investment and so forth. And I was a member as well as the Chair for 4 years.

And Mitsubishi Energy Group, I was leading that. I was leading the North American operation. So I was involved in the management of the operating company for many years as well. So in that regard, I have been involved in many investment projects. I was also looking at management and operation of the company for quite how many years. So I am also contribute from such a perspective as well.

So I'd like to move on to the next question. In order for INPEX to gain higher reputation from the stock market, what should the company improve the most from your perspective as outside directors? You may talk from various points of view, including growth expectation, capital efficiency, shareholder returns, information disclosure, et cetera. So I'd like to start with Takaoka-san. Thank you.

So there were so many discussions earlier, and I think it's difficult. But first of all, INPEX, as an internal officer, maybe we should not be too close. But I think if there's a good area, we have to look at those more from objective perspective, and I think we can contribute from that standpoint. Having so much high profitability and also a stable cash flow, there's not so many companies. And although we say LNG, Mitsubishi also started from Alaska, and it's a wonderful industry. And as an LNG in Japan, the only company doing a major operator of a major project.

And then going forward, I think gas and LNG has more room to grow going forward. And then as the only company who can be in charge of operatorship from the upstream, midstream to downstream, I think the mission and the roles played by the company are still many folds in the future. So we'd like to do more PR activity in a more objective point of view and then showing that clearly to the market is something we can do, and that's how we can contribute.

The other thing is, as you know, a super fossil fuel company and then the 2 main pillar of business, are in that field. So I think from the market, oil price, foreign exchange and a lot of regulations, so there's a huge volatility. And there's -- that's the nature of the business and hard to understand from investors' perspective. But I think that's why we have the 2035 vision, Vision 2035. But after the midterm plan until 2035, what kind of trajectory, what kind of things are we going to do? We'd like to clearly show that going forward. And then I think that's one.

And also the Ichthys backfill expansion is what we're looking forward to and also Abadi. But of course, things we have to do are indispensable. We have to work on them. So the very detailed discussions and also while working with everyone, in some instance, maybe we have to come to a conclusion, we have to stop and discontinue. And for important projects, I think we have to have that kind of stance.

So a challenge or if there's any challenge or any request to the company, are there such? Well, there are so many challenges. When I was in the United States, there was the Biden administration that started. So it was a really huge difficulty I had to face because from the headquarter, I was given direction to stop the Sakhalin project. And then until yesterday, LNG was considered clean, but then suddenly, it became a dirty energy. And then -- so a huge difficulty we faced. But since then, it's only 4 or 5 years. And today, LNG is the third pillar. So those things happen in LNG or in the energy field.

And from the coal, you become oil and then gas and then renewable. And then from Mitsubishi Corporation or Tokyo Gas, we started with the cokes coal. And then from that, the oil, gas, naphtha gas, LPG, LNG and then up to today, that's how it evolved. And if you look at 2035, there's a large wave. But with that large wave, while grasping on that wave, the small vibration that may happen in the meantime, is something we have to manage, and that's very difficult.

And also, there is a long-term and the short-term challenge, but we have to identify them carefully and then allocate resources accordingly. So that's very difficult. And I don't have an answer clearly to the question. But as a whole team, INPEX, that's how we like to solve the issue and challenge going forward.

Thank you very much. Ms. Saiki, next, please. Thank you.

So if I were to mention one thing, I would like to limit to one. But for the organization, the most important challenge is the human resource development and utilization. So from that standpoint, I think in the company, we have a good recruitment development and also utilization of the human resource. But depending on the people, some people might say INPEX is a super white company. I might say that we are too relaxed.

But at any rate, when it comes to the human resource management, what kind of system, what kind of structure we have to put in place and how we're going to strengthen and how to operate that, we think is very important. But at the same time, I think what's more important as well is the improvement in the awareness of each employees. So what I'm always thinking is the corporate culture, which is important. And when it comes to corporate culture, of course, we have our management vision and sustainability and INPEX values are decided.

And then we also have the Vision 2035 and then brand message, brand statement. So the corporate culture is defined well and well put in words, and then we're trying to share those throughout the whole organization. So I highly evaluate that culture. And then having that in words is something we are trying to spread among all of the individual employees, and there are a lot of efforts made in that front.

But what I think is once the brand message is communicated, saying this is INPEX value, deciding on that value and then not being relaxed with the current status quo is important because the corporate value have to be brushed up each time. So we have to be -- our self-awareness is important. And from our proactive manner in a proactive way, we have to try to create a good culture, a better culture with each individuals. And then that's going to lead to more shared value by each employees, and then it will be a deeper understanding by each individuals.

So I think there are so many things that's been created, for example, brand message. With the global strength, we are trying to endeavor into the future. I think endeavoring into the future is very important and wonderful. And it's only been 6 months since I came to INPEX. So it's still early, but there are so many shared value and trying to increase the understanding. But when it comes to endeavoring into the future, we have this in the brand message. But I think INPEX has high-risk, high-return operation. And that's what we are doing.

And then each projects have a long-term period. So as a corporate culture, I think we have to increase awareness more, which is resilience and also challenge. I think in various statement and also integrated reports, I think that is what we are trying to achieve. But we have to be consciously polishing those in the culture. And from that standpoint, I think as a management, top of the management and also for the employees individually and also the overseas employees who are 40% of the total employee base, those are things we have to make sure that resilience and also challenge that should be understood by the employees going forward.

Thank you. Mr. Iio?

Yes, it's really hard to say. But talking about E&P, this is a niche market. So talking about the stock price, it's related to stock price discussion. But for example, the oil major, the upstream, downstream and also the ENEOS in Japan, for example, has both upstream and downstream. But in case of INPEX, we only have upstream. So in the -- to the market or the society, we do a lot of PR activities, IR activities. And also, we do a lot of advertisement or trying to have people understand more.

But when it comes to [ beer ] companies, automotive companies compared to those players, companies, I think the understanding of what INPEX does is something -- it's not really well understood. So I think that is the destiny, and then that's something we cannot do anything. But today, in the IR event and then the audience hearing all of these discussions and presentations, and then going to your customers saying, this is INPEX. I think it all depends on you, all of you.

And then through TV and those advertisement, it's really hard to explain about upstream company. It's hard to increase that awareness. And that is what I thought, having involved myself. But if I'm to add another point, like Saiki-san has mentioned, so development of people and INPEX in my view, have a lot of treasure, Ichthys. We are the first operator of an LNG project, almost 10 million tons of LNG operation that we are engaged in. It's INPEX -- sorry, the INPEX and the employees were involved in Ichthys. They will now be introduced into Abadi project going forward. And this is a great asset for us.

And the people create jobs and the jobs create people. And it's exactly this that we are seeing right now, and we are seeing this occurring within INPEX, and we are putting a lot of effort into developing people. And we talked about a lot of numbers today. But if people are convinced. And the very strong points of these customers of this company. And please communicate that to your customers.

Thank you. So we'd like to proceed to Q&A session. And we'll first take questions from the venue, people attending in person and then take questions from the Zoom. [Operator Instructions] But first of all, people in this room, anyone with a question?

And I wanted to ask about the Board structure and the monitoring of the management INPEX. So Mr. Ueda is the Chair of the Board. But recently, the Chair is often served by outside directors. And so how do you secure independence of the outside directors? And in other companies, sometimes non-directors are holding meetings only amongst the independent directors making their proposals to the management. So the fact that Mr. Ueda, you are the Chair of the Board, so how do you secure the independence of the outside directors?

So could I ask Iio-san to respond to this question?

Now our view that there is no issue at all in terms of independence. Despite the fact that Mr. Ueda is the Chair, he has facilitated the meeting in a very fair manner. And also the agenda of the meetings have been presented under the appropriate rules. And so thus far, we've never had any concerns of this matter. But outside our outside directors, we do have a meeting to exchange opinions. So it's not that we are gathering to oppose the management, but there are times when we want to confirm things. And we do actually gather amongst the outside directors from time to time.

You've been talking about the personal talent. And Ichthys as a Japanese company, for the first time, have engaged in operatorship of large project. And in that regard, people are very important. I fully agree with that. And if I see a virtuous cycle, then I think this will lead to the next leaps in your company.

Now you were talking about quantitative element in terms of growth thus far. But in nonfinancial area, and I think you could probably pick up on this more. And what Saiki-san was talking about, being persistent. And I think that is something that you probably had within Ichthys, which you can be leveraging Abadi. So of the keywords that you mentioned, I think you can use these keywords to appeal the company externally going forward. So this is just my impression.

Now on that basis, based on the experience thus far, and new outside directors, and between outside directors and the management side, were there cases where opinions were not aligned where you kind of opposed each other? Any kind of episode that you may have experienced? Maybe Iio-san. But how did you come to consensus having experienced something like that to move forward? Any episode or anecdotes that you may be able to share, that would be a great reference to understand the type of discussion being held at the Board.

There was one time when we did not agree at all. And this was in regards to acquisition of a certain company in Australia. And CEO was to be the local person, but I thought that we should send someone from Japan. And so I remembered that the management side, they decided not to proceed with their view.

There are little things, of course, from time to time. And the management side will provide a response at the following -- the Board meeting to have time to think over any issues. And we try to study up to try to understand and to be more convinced. There was one time when we did have that kind of the difference of opinion completely. But normally, it's not the case that we enter into quite a radical proposal. So it's not that case that we have to kind of oppose.

Now, the external environment continues to change. And as Takaoka-san was mentioning, there are sort of fluctuations and how to achieve that growth over the medium- to long-term growth. So the natural gas has been revalued in one sense in a positive way. That is true. But in Australia, there is an issue regarding the Scope 3 emission. And so sometimes the approvals are subject to question and the gas, the price could potentially increase as a result.

And the expected growth rate, you talked about 4% gap. Now the reason for the gap. So the -- is it that the realization of the vision is not fully understood? Or is it that the natural gas -- the market concerns regarding market risk or the price? So CCS positioning could also be a factor for you? And could I have your views in that regard?

So Takaoka-san, can you respond to that question?

Well, if I'm able to respond to that question, so how could I put this? So it's not going fully to the decarbonization. I don't consider natural gas to be perpetual asset either. But Japan lacks resource, and we have been struggling to come up with the best mix. And sometimes the green went too far a number of years ago. But though that wasn't right in one sense. We talked about affordability before. So just being clean and green is insufficient.

So price, economics, security, safety. And these are perspective that the world is assuming to look at energy more from the comprehensive perspective. Now benefits and the risks associated with natural gas business, we need to look at both of these aspects. And right now, we may be going a little bit to the right or to the left. If we have more, I suppose, financial capability, I may be able to address both, but there is also a limit to strength. So going to the right a little bit or the light (sic) [ left ], we probably have to go back and forth to try to identify the right direction. I may not have answered your question fully, but that is the situation.

So if there's anyone who have a clear answer to this question, I think you have -- you're able to win all the challenges. So that concludes today's Q&A session. We really appreciate all of your various questions today. And if you have any questions further, please contact our IR group. So we're at the hour. Therefore, we'd like to come to the end of INPEX Investor Day 2026. Thank you very much for gathering here out of your busy schedule today.

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

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.]