Japan’s Japex to Expand Oil and Gas Production, Including in the U.S.

Tokyo-based Japan Petroleum Exploration Co., Ltd. (JAPEX) today unveiled its ambitious “JAPEX Management Plan 2026-2035,” a decade-long strategy designed to quadruple its oil and gas production and position the company as a more resilient global energy player. The plan places heavy emphasis on U.S. expansion, building on the company’s recent $1.26 billion acquisition of operated tight oil and gas assets in the Denver-Julesburg (DJ) Basin.

Under the new roadmap, JAPEX aims to boost its net production from approximately 45,000 barrels of oil equivalent per day (boe/d) in FY2025 to 180,000 boe/d by FY2035. The company will invest a total of 1.5 trillion yen (about $9.5 billion) in growth areas, with 1.16 trillion yen earmarked specifically for exploration and production (E&P). More than half of the overseas E&P budget—roughly 1.1 trillion yen—will flow to the United States, including about 200 billion yen to develop and expand the newly acquired Verdad assets plus additional acquisitions.

A Landmark U.S. Entry and Operator Ambitions

The cornerstone of the U.S. push is JAPEX’s February 2026 acquisition of Verdad Resources Intermediate Holdings LLC (VRIH). Completed on February 26, 2026, for a $1.26 billion enterprise value (financed partly through $360 million in reserve-based lending), the deal marks JAPEX’s largest-ever transaction and its first operated position in the United States.

The assets lie in the Niobrara and Codell formations across northeastern Colorado and southeastern Wyoming. They include more than 1,000 producing wells and over 1,000 planned wells on approximately 101,000 net acres. Current net production stands at roughly 35,000 boe/d (with a liquids-heavy mix of ~49% light oil, 24% NGLs, and 27% natural gas), and JAPEX targets ramping this to approximately 50,000 boe/d by around 2030 through aggressive development.

Operations are led by Peoria Resources, LLC, JAPEX’s consolidated U.S. subsidiary. The company will staff the operation with about 50 personnel, including retained employees from the seller and new hires, while leveraging partners’ technical expertise to achieve returns on invested capital comparable to leading U.S. shale operators.

JAPEX already held non-operated tight oil interests in Texas (Eagle Ford and Woodford formations) and a 3.855% effective stake in the Freeport LNG export terminal in Texas (acquired in 2024 via Gulf Coast LNG Holdings). The newly acquired assets complement these holdings and open opportunities to supply gas to Freeport LNG for export—potentially feeding Asian markets, including Japan.

President Michiro Yamashita emphasized the strategic pivot: “We expect more than half of the investment to go to the U.S., including about 200 billion yen to develop Verdad’s assets, while also considering new acquisitions.” He cited reaffirmed global emphasis on fossil-fuel security amid recent Middle East tensions as validation for prioritizing E&P over renewables.

The plan also integrates carbon capture, utilization, and storage (CCUS), with targets of 1.5–2 million metric tons of CO₂ stored annually by FY2031 (cumulative 8 million tons by FY2035). In the U.S., JAPEX is advancing the Dry Piney project in Wyoming (adjacent to an ExxonMobil site) for natural gas and helium production paired with CO₂ injection.

What This Means for Investors

For shareholders, the plan signals a clear path to higher returns. JAPEX targets net profit attributable to owners rising from 45 billion yen in FY2025 to 100 billion yen by FY2035, with ROE climbing to 12% (from 6.7%) and ROIC to 10%. The Verdad deal alone is expected to roughly double net production and triple proved reserves, providing immediate cash-flow uplift and scale.

The strategy reduces reliance on volatile domestic Japanese E&P (which is declining) and diversifies geographically. Debt/EBITDA is projected to stay below 3x under conservative price assumptions (USD 50–70/bbl oil, JPY 110–140/USD). Shareholder returns are forecasted at a cumulative 190 billion yen+ over the decade, with a 30% payout ratio and minimum 40 yen/share dividend.

Analysts and market observers view the move positively, noting it aligns with broader Japanese energy firms’ (Mitsubishi, Jera, Tokyo Gas) increased U.S. upstream and LNG-related investments for supply-chain security.

Implications for U.S. and Japanese Consumers

U.S. Consumers: The ramp-up in DJ Basin production adds a meaningful tight oil and gas supply to the domestic market. This bolsters U.S. energy independence, supports local economies in Colorado and Wyoming through jobs, royalties, and tax revenue, and could exert downward pressure on regional (and potentially national) energy prices over time. With more than 2,000 wells in play, the project enhances supply resilience without relying on new frontier exploration.

Japanese Consumers: Japan imports nearly all its oil and natural gas. JAPEX’s expanded production and LNG infrastructure participation (Freeport LNG) promise more stable and potentially cost-effective supply chains. U.S.-sourced gas could flow through Freeport to Japan, reducing exposure to geopolitically risky routes like the Strait of Hormuz. Lower or more predictable energy input costs could ease pressure on electricity and heating bills while supporting industrial competitiveness—critical for an import-dependent economy.

Potential Companies and Future Moves

The plan explicitly names Verdad Resources (now fully integrated) and its operator, Peoria Resources, LLC, as central to U.S. growth. JAPEX is also partnering with technical experts (including Treadstone leadership) and exploring adjacent blocks or new operator acquisitions in the U.S. No additional specific targets are disclosed, but the company has signaled openness to further M&A to build scale. Other mentioned collaborators include ExxonMobil (Dry Piney CCUS proximity) and domestic Japanese partners such as Idemitsu Kosan and Hokkaido Electric Power for the Tomakomai CCS project.

JAPEX will continue non-operated U.S. tight-oil holdings in Texas while prioritizing operator-led assets for higher value capture.

Outlook

By betting big on U.S. shale and operator expertise while layering in CCUS, JAPEX is positioning itself for sustainable profitability in a world that still demands reliable hydrocarbons alongside decarbonization. The next decade will test execution—commodity prices, regulatory hurdles in the DJ Basin, and acquisition opportunities will all play roles—but today’s announcement marks a decisive step toward energy security for both Japan and the global markets it serves.