Repsol-YPF has put out to tender to several Investment Banks the divestment management for the sale of its assets in the United Kingdom and Indonesia.

This sale will include the company�s upstream and downstream assets in the aforementioned countries, and forms part of the programme to finance the acquisition of YPF.

Apart from the foregoing, and if current negotiations have not progressed satisfactorily, next January the bank or banks winning this tender will be awarded the sale of the Argentine companies Eg3 and Edenor, and the Crescendo field in the USA.

The goal of this financing programme is to obtain funds of not less than 2.5 billion dollars between this year and next, thus reducing the level of corporate debt to below 40% by 2002.

• Repsol YPF obtained 96,861 million pesetas of accumulated net income for the first nine months of 1999 after 27 billion pesetas in write-offs on the YPF acquisition.

• Third quarter income (the first full quarter consolidating YPF) was 59% higher than a year earlier at nearly 50 billion pesetas.

• The contribution from YPF to overall income was decisive. Net profit was boosted by 14 billion pesetas more than Repsol alone would have obtained.

• the integration of both companies is very advanced and progressing with normality.
  

Results

Repsol YPF net income for January to September 1999, after 27 billion pesetas of write-offs of expenses associated with the acquisition of YPF, was 8% lower than in the same period a year earlier, at 96,861 million pesetas.

Operating income for the first nine months of the year was 35.6% up, at 272,797 million pesetas, and cash flow rose 35.8% to 345,290 million pesetas.

Third quarter income, the first in which YPF was fully integrated, was nearly 50 billion pesetas, and this represented a year-on-year increase of almost 60%. Exploration and production performed well this third quarter, with high oil prices, an increase in daily production of oil and gas, lower operating costs, and a successful replacement of reserves. However, international refining and chemical margins were low.

The contribution from YPF to overall income was decisive. The acquisition of YPF brought in 14 billion pesetas of net profit, after subtracting the financial expenses and goodwill amortisation associated with the deal.

Highlights of the period

An important aspect of the third quarter was the great progress achieved in the integration of the new company. A recent communication weighing the achievements of the first 100 days following the acquisition of YPF summarised the steps taken over this period and the goals already fulfilled in cost reduction.

There was also an important discovery in Bolivia which will boost Repsol YPF�s proved reserves by an amount which may vary between 100 and 200 million barrels of oil equivalent.

Net financial debt was also substantially reduced this quarter. At the close of the second quarter, the debt to capitalisation ratio was 72.7%, and this was cut to 54.5% following the capital increase at the beginning of July. This figure has been further reduced by an additional 54.3% at the close of the third quarter, showing unequivocally the company�s determination to place this ratio below 40% by 2002.

Results by activities

By areas of activity, these are the highlights for the quarter:

In Exploration and Production, accumulated operating income was 91,130 million pesetas, and was equivalent to over six times that obtained for the same period a year earlier. The main reasons for this improvement were the full incorporation in this quarter of YPF, from which 80% of E&P income was obtained; an increase in daily production of oil and gas, and higher oil prices. It should be noted that, through the extension of fields and discoveries, 387 million barrels of oil equivalent (boe) had been replaced at September 30^th last. This was 99 million boe more than production, and implies an increase of that amount in Repsol YPF reserves.

Accumulated Refining and Marketing results at September 30th were 10.7% down on year earlier levels, at 101,881 million pesetas. This lower performance was almost entirely due to narrow international refining margins, which fell to a level of $0.2 per barrel in comparison to $1.3 per barrel for the first nine months of 1998. Another negative factor was the company�s reluctance to pass on to the consumer in selling prices the full rise in international oil and oil product prices.

Cumulative operating income from Chemicals to September 30th was 14,129 million pesetas, and this was 38% lower than for the first three quarters of 1998. This fall was due to low international margins on base and derivative chemicals. The foregoing situation was partially counterbalanced by the sale, for 4,275 million pesetas, of rubber producing technology linked to the creation of a joint venture company to produce and market solution synthetic rubber.

Three-quarter accumulated income from Gas and Electricity rose by 41% in comparison with the same period a year earlier to reach 72,359 million pesetas. This improved performance was mainly due to a growth in the customer list in natural gas, favourable economic conditions in Spain which led to a higher energy consumption, and the expansion of gas distribution in Latin America.