• NET FOURTH QUARTER 1997 INCOME WAS 14.5% UP ON 1996 FINAL QUARTER. RETURN TO A PHASE OF STRONG AND SUSTAINED GROWTH.

•  REPSOL 1997 NET PROFIT WAS THE HIGHEST EVER ACHIEVED BY THE COMPANY, AT OVER 126 BILLION PESETAS, AND 5.8% UP ON 1996.

•  CASH-FLOW WAS 26.4% HIGHER THAN IN 1996. The differeNCE IN GROWTH BETWEEN NET INCOME AND CASH-FLOW WAS THE RESULT OF ASSET REVALUATION AND THE INCORPORATION OF ACTIVITIES IN LATIN AMERICA.

•  INCOME ROSE SHARPLY IN ALL BUSINESS AREAS, EXCEPT LPG, BECAUSE OF A GOVERNMENT PRICE FREEZE TO CONTROL INFLATION.

•  AT YEAR-END, REPSOL HAD RESERVES OF 1,037 MILLION BARRELS OF OIL EQUIVALENT, DOUBLE THE LEVEL TWO YEARS BEFORE.

•  IMPROVEMENT IN REFINING MARGINS AND THE COMPANY�S PRICE POLICY WERE LARGELY RESPONSIBLE FOR BOOSTING REFINING AND MARKETING INCOME BY NEARLY 40%.

•  BUSINESS ACQUISITIONS IN LATIN AMERICA HAVE ALREADY CONTRIBUTED 33 BILLION PESETAS TO THE COMPANY�S OPERATING INCOME IN 1997, AND HAVE EXCEEDED INITIAL EXPECTATIONS.

•  REPSOL INVESTED A 508 BILLION PESETAS IN 1997 - A RECORD FOR THE COMPANY. 54% OF THIS WAS SPENT TO STRENGTHEN ITS POSITION AS A TOP INTEGRATED ENERGY COMPANY IN LATIN AMERICA.

Repsol�s net income, after tax, for the 1997 financial year was 126,098 million pesetas, showing a rise of 5.8% over the 119,222 million pesetas obtained in 1996. This performance illustrates the company�s business strength, for it was achieved in a period marked by exceptional circumstances, such as higher amortizations from asset revaluation and a price freeze on LPG during the last seven months of the year. If these factors were disregarded, Repsol would have closed the 1997 financial year with a 25.4% higher income than in 1996.

Last year�s operating income also registered a considerable rise of 17.7%, at 233,687 million pesetas, in comparison to 198,610 million pesetas a year earlier, and cash-flow was a notable 26.4% up on the previous year, at 327,646 million pesetas. There was considerable growth in all business areas, except gas, for the reasons mentioned previously.

Throughout 1997, a series of steps were taken and provisions made, for an overall amount of 32,542 million pesetas, which allow us to confront 1998 with confidence. These include 17,800 million pesetas in inventory provisions. 6,590 million pesetas were also set aside for manpower restructuring programmes.

Last year, Repsol�s capital expenditure was 507,766 million pesetas, and it was a record year for the company as far as investments are concerned. This outlay went to bolster Repsol�s position as a top integrated energy company on an international scale, with special emphasis on Latin America.

Repsol has, thus, furthered its expansion in Latin America by acquiring important assets in exploration and production, and in the gas sector, where - through Gas Natural - it purchased several distribution companies, with considerable market shares, in Brazil and Colombia.

Another important event last year was the signature of an agreement between Repsol and Iberdrola for the start-up of several electricity projects, which will lead to the installation of 3,000 megawatts.

Taking each area of activity separately, the highlights of Repsol�s 1997 income statement were as follows:

Operating income from Exploration and Production was 44 % higher than in 1996, at 45,484 million pesetas, against the 31,579 million pesetas registered a year earlier. This good performance was achieved in spite of low crude oil prices, and with the help of a high dollar/peseta exchange rate. There was a 24% rise in Repsol�s net production in comparison to 1996 figures, for which Astra was substantially responsible over the whole year, mainly because of the acquisition of Pluspetrol and Mexpetrol fields. Also, higher production from Harding and Murzuq fields mitigated the decline in production from other fields. The company�s oil and gas reserves, increased by discoveries, extensions and revisions during 1997, were 8% higher than the year�s total production. At the year-end, proved reserves had reached a level of 1,037 million boe.

In refining and marketing, operating income rose by 36.3%, to 110,824 million pesetas, against 81,319 million pesetas in the previous year. These figures were boosted by high international refining margins (higher than in 1996), and the appreciation of the dollar versus the peseta. Refining in Peru also made a very positive contribution. In Spain, sales of oil products rose by 4.8% over the previous year. A high spot of the year was the signing of an agreement with Spain�s largest department-stores, El Corte Ingl�s, to develop and run service stations with supermarkets. Six of these centres will be opened next March.

In chemicals, operating income for last year was 28,379 million pesetas, showing a 17.9% rise over the previous year�s 24,069 million pesetas. This improvement may be largely attributed to higher international margins on base chemicals, which compensated for lower sales, due to a prolonged shut-down at the Tarragona olefin cracker. An agreement with Arco was also reached in 1997, settling the dispute regarding the technology licence to produce OP/SM. The construction of a new propylene oxide and styrene monomer plant at Tarragona will begin at the end of 1999, using technology which is only available to two other companies in the world, apart from Repsol.

Operating income from the gas sector was 50,321 million pesetas, in comparison to 62,629 million pesetas in 1996. In spite of this 19.7% fall, these figures should be considered positive, for there was an LPG price freeze during the last seven months of the year, and winter temperatures were extremely mild. In the natural gas area, our list of customers grew, both in Spain and Latin America.

Last December, the Repsol, S.A. Board of Directors decided to pay a gross interim dividend against 1997 of 89 pesetas per share. This is a rise of 12.7% over the 1996 interim dividend. The final dividend will be agreed at the Annual General Shareholders� Meeting, to be held on April 22^nd, 1998.