• REPSOL OBTAINED A NET INCOME OF 74,129 MILLION PESETAS, UP 20.3% OVER THAT OF FIRST HALF OF 1997.
• OPERATING INCOME ROSE BY 32.3% OVER THE SAME PERIOD IN 1997.
• IMPORTANT GROWTH IN INCOME OCCURRED IN ALL AREAS OF ACTIVITY, EXCEPT EXPLORATION AND PRODUCTION, DUE TO LOW CRUDE OIL PRICES DURING THE PERIOD.

REPSOL INCREASES ITS NET INCOME BY 20.3% DURING THE FIRST HALF OF 1998, TO MORE THAN 74,000 MILLION PESETAS

Results

Repsol�s net income for the first half of 1998 was 74,129 million pesetas, showing a rise of 20.3% over the same period a year earlier. Operating income reached 137,401 million pesetas, up 32.3% over the first six months of 1997, while cash-flow increased by 16.2%, reaching 176,831 million pesetas.

Operating income for the second quarter of 1998 was 66,156 million pesetas, 30% up over 1997 figures.

The excellent performance of these first two quarters resulted in significant improvements in accumulated income, produced in spite of the existence of negative factors, such as the low crude oil price and the crisis of the Asian economies which is especially affecting derivative chemicals. This positive evolution of the results shows the balance of Repsol�s capacity for generating funds.

By areas of activity, these are the highlights for the first half of 1998:

In Exploration and Production, operating income was 12,027 million pesetas, showing a fall of 44% below that of the same period in 1997. This downturn in the results is due to the evolution of the crude oil price -with an average price for Brent of $13.65 per barrel as compared to $19.55 per barrel during the first six months of 1997- and which has been partially compensated by the increase in production and a favourable evolution of the dollar/peseta exchange rate. Net production of hydrocarbons reached 6.12 million tonnes, up 10.5% over that of the same period last year. Also of interest is the increase in the production of the Harding field (British North Sea), with an average production in the first half of 1998 of 87,000 barrels per day, and the start-up of the exploitation of the Mene Grande field in Venezuela.

Refining and Marketing posted, during the first six months of the year, an operating income of 71,209 million pesetas, showing an increase of 39% over the 51,245 million pesetas of 1997. This improvement was due to the positive evolution of refining and marketing margins, as well as to the favourable evolution of the dollar/peseta exchange rate. At the same time, other positive factors were the increase in the sales of petroleum products on the Spanish market, and the results of operations in Latin America (Argentina, Peru and Ecuador) attributable to refining and marketing, highlighting the increase in sales in Peru and Ecuador due to the development of the service station network in those countries.

Operating income for Chemicals during the first six months totaled 17,559 million pesetas, up 46% over 12,053 million pesetas reported in 1997. This improvement in the results is due to higher margins in derivative chemicals and a 25% increase in sales for the activity as a whole.

In Gas, accumulated operating income was 37,530 million pesetas as compared to 19,596 million pesetas last year. Main factors in the LPG area were the increase in sales in Spain and in Latin America, as well as the end, in July, 1997, of the government�s LPG price freeze. Total LPG sales grew by 4.4% with respect to the first six months of 1997, to more than 1.4 million tonnes. In the natural gas business, another positive factor was the expansion of sales in Spain as well as in Latin America. In consolidated terms, the Gas Natural Group distributes gas to 4,526,000 residential-commercial customers. Total sales of natural gas rose by 14.2% during the first semester, reaching 36,180 million thermies.

Investments made by Repsol during the first half of 1998 amounted to 163,939 millones de pesetas and were mainly spent in the areas of exploration and production, and gas.

Outstanding events

The most outstanding event during the first half of 1998 was the signature of an Agreement with Amoco in the natural gas sector which includes, principally, a contract for 6 bcm of gas, -of which a minimum of 4.5 bcm will be under a "take or pay" regime for the Spanish market - and a purchase of a 10% stake in Amoco�s reserves in Trinidad and Tobago, which can be increased, upon the option of Repsol, up to 30%. Furthermore, the Agreement contemplates the participation of Amoco in electric projects of the Repsol-Iberdrola Group in Spain and the undertaking of joint projects in Latin American gas and electricity markets. At present, work is still going on to establish the purchase price of the gas and thus be able to present the entire project for approval to the Government of Trinidad and Tobago and to the Board of Directors of Atlantic LNG, company in which Amoco and Repsol have stakes of 34% and 20% respectively.

Another important event of the period has been the increase of Repsol�s stake in Astra, which rose from 56.7% to 62.5%. Other operations reinforced the process of consolidation of Repsol�s expansion in Latin America. Among them stand out an important discovery of oil made by Astra in the Quiamare-La Ceiba block in Venezuela, and the agreement between Repsol and Mobil to found a 50-50 joint venture to produce, import and market lubricating oils in Argentina, using the Eg3 sale network as one of the main retail channels.

In July, Repsol purchased a 75% stake in the company Duragas, a company which markets LPG in Ecuador, complementing the LPG distribution activity in the area. Duragas has a 49% share of the LPG distribution market in Ecuador and it sells a total of 300,000 tonnes per year.

• $ = 153.48 in 1998
• $ = 147.45 in 1997
• * This includes financial results, goodwill amortization and income from non-consolidated affiliates