Repsol does not contemplate this acquisition as a financial investment, but rather as an opportunity to study an integration project to be developed in detail jointly with the YPF management, and which will be in the best interest of both companies� shareholders.

The Argentine Government will maintain its Golden Share in the company and has established in the purchase and sale  agreement that, during the next three years, it will authorise and vote in favour of a proposal to change the company By-Laws, which would allow Repsol to make in due time a public takeover bid on the rest of YPF equity capital. This operation could be paid for by a share swap. During this period, the Argentine Government will not be able to authorise any other takeover bid by a third party, unless the conditions of this third party be considered suitable, and it undertakes the same commitments as Repsol, and offers a premium of 25% over the price paid by Repsol in this transaction.

Alfonso Cortina, Chairman and CEO of Repsol, stated that, "Repsol�s success at this auction is largely due to its presence in Argentina, which has given the company a deep knowledge of that country�s energy sector." He also declared, "This deal is a key milestone for Repsol�s strategy, as the business mix of one company is complementary to that of the other."

This operation is in line with the ongoing business strategy announced by Repsol, and is a very important step forward in the following strategic policies, to:

• expand and consolidate international activity, mainly in Latin America;
• increase the weight of the oil exploration and production business;
• develop an integrated gas chain from production through distribution to power generation.

Financial Aspects of this Operation

This acquisition has been funded by Repsol with debt, causing no alteration to its investment programme.

Nor will the acquisition of this stake have a dilutive effect on Repsol�s profit or cash flow per share.

The industrial project that Repsol expects will be carried out jointly by both companies will make a precise evaluation of the economies of integration which may be achieved.

YPF is Latin America�s main privately-owned oil company and the largest Argentine company. It is engaged in the exploration and production of hydrocarbons, oil refining and the marketing of petroleum products.

YPF is quoted on the Buenos Aires and New York stock exchanges. In 1998, an average value of 29 million dollars was traded per day on both stock exchanges together. The company�s stock capitalisation at today�s closing price (99/01/20) on the NYSE was 10,922 million dollars.

Repsol is an integrated oil company with a leading position on the Spanish market. It operates in more than twelve countries, and is engaged in all business areas, from exploration and production through to the marketing of petroleum and petrochemical products, and gas.

Repsol is quoted on the Spanish and New York stock exchanges. In 1998, an average value of 75 million dollars was traded per day on both stock exchanges together. At today�s closing price (99/01/20) on the NYSE, stock capitalisation was 16,275 million dollars.

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Annex 1: Description of YPF

Annex 2: Description of Repsol

Annex 3: Comparative Operating Highlights

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YPF

YPF is the largest Argentine company. YPF�s business areas are oil and natural gas exploration and production, petroleum refining and the marketing of a wide range of petroleum and derivative products, petrochemical products and LPG.

YPF is quoted on the Buenos Aires and New York stock exchanges. In 1997, YPF obtained a net income of 877 million dollars. Income after tax as of September 1998 was 465 million US $.

The company has the following main assets per business area:

Exploration and production

At December 1997, YPF had 3,073 million BOE of proved reserves (47% oil and 53% gas). In 1997, YPF produced 498,000 barrels per day of crude oil, and 38 million cubic metres per day of gas. This is equivalent to approximately 52% of total estimated crude produced, and nearly 60% of all gas sold, in Argentina.

Besides its operations in Argentina, YPF conducts activities in other countries, such as Indonesia, USA, Ecuador, Bolivia and Venezuela, with proved reserves of oil and gas outside Argentina amounting to 430 million BOE at the end of 1997.

Downstream

YPF has a leading position in the domestic downstream business. This area of activity is conducted through five divisions: refining, marketing, logistics, LPG and petrochemicals and lubricants.

YPF owns and operates three strategically placed refineries on Argentine soil, with a refining capacity of 325,000 barrels per day. For marketing its oil products, YPF has an extensive network of 2,320 service stations in Argentina, with a 40% market share. The company also has service stations in Chile and Peru.

YPF is one of the largest producers of petrochemical products in Argentina through its operations at the La Plata Refinery (the largest in Argentina) and the petrochemical facilities in Ensenada and Bah�a Blanca.

YPF is also the largest domestic producer of LPG, with sales of 221,000 tonnes in 1997, and a 23% market share.

YPF

FINANCIAL HIGHLIGHTS (million US $)

OPERATING HIGHLIGHTS

(December 31^st, 1997)

REPSOL

Repsol is Spain�s largest industrial company. Its activities are organised into four business segments: Exploration and Production, Refining and Marketing, Chemicals and Gas.

Repsol is quoted on the Spanish and New York stock exchanges. In 1997, Repsol obtained 3,200 billion pesetas in operating revenues and a net profit of 126,098 million pesetas. Income after tax as of September 1998 was 105 billion pesetas (743 million US $).

The company�s main assets per business area are as follows:

Exploration and production

Repsol�s oil reserves are mainly located in North Africa, the Middle East and Latin America, with additional reserves in the North Sea (United Kingdom), Indonesia, West Africa and Spain. At the end of 1997, Repsol had proved reserves of 1,037 million BOE (65% oil and 35% gas), and produced 225,000 BOE per day of crude oil and natural gas.

Refining and marketing

Repsol�s refining activities in Spain are carried out through its five refineries, representing 59% of Spain�s installed refining capacity, or the equivalent of 740,000 barrels per day. Repsol holds a 60% stake in CLH, the largest logistics company distributing oil products in Spain, with 3,413 km of pipeline. Repsol also conducts refining activities in Latin America. In Peru, it operates the La Pampilla refinery, which is near to Lima and supplies 50% of the Peruvian market. The La Pampilla refinery, with a total capacity of 102,000 bpd, accounts for over 50% of the country�s refining capacity. In Argentina, through its affiliate Astra, Repsol operates the Bah�a Blanca refinery.

In marketing, Repsol has 3,501 sales outlets in Spain, with a 52% share of the domestic market, and is also present in two other European countries, namely the United Kingdom and Portugal. In Latin America, Repsol markets oil products at its service stations in Argentina, Peru and Ecuador. The refining, logistics and marketing division accounted for 47% of the company�s overall operating income in 1997.

Chemicals

Repsol�s chemical operations include the production and marketing of base and derivative petrochemical products. Repsol Qu�mica produces and markets polymers, intermediate products, chemical specialities and transformed plastics. Production capacity for base chemicals is 1.7 million tonnes per year, and for derivative chemicals, 1.69 million tonnes per year.

Gas

Gas activities include the distribution and marketing of LPG and natural gas. Repsol�s LPG marketing activities are carried out by Repsol Butano. Repsol Butano is currently the largest distributor of bottled LPG in Europe, and supplies the majority of the domestic bottled LPG market. Repsol�s natural gas business is conducted by Gas Natural SDG, in which it holds a 45.3% stake. The Repsol-Gas Natural Group is the largest distributor of natural gas in Latin America, where it distributes gas to four of the seven major Latin American cities: Monterrey (Mexico), Rio de Janeiro (Brazil), Santa Fe de Bogot� (Colombia) and Buenos Aires (Argentina).

REPSOL

1996 $1 = 129.86 Pesetas

1997 $1 = 152.40 Pesetas

1998 $1 = 141.77 Pesetas

OPERATING HIGHLIGHTS

(December 31^st, 1997)

COMPARATIVE OPERATING HIGHLIGHTS

(December 31^st, 1997)