Repsol�s net income for the first quarter of 1997 was 31,037 million pesetas in comparison with 35,406 million pesetas for the same period a year earlier. Operating income, which was 52,951 million pesetas, was practically the same as in 1996. These quarterly results are considered very positive.

In fact, the quality of Repsol�s performance is best shown by the 21.6% rise obtained in cash-flow in comparison with 1996, which totaled 80,472 million pesetas.

The level of operating income was maintained, although, this year, the company has taken fiscal advantages because of a recent assets revaluation, which involved 4,910 million pesetas more in amortizations in this quarter. This means that, if this effect had not existed, operating income would have risen by 8.5% over that of the first quarter of 1996.

This fact is even more important when we consider that a freeze on LPG prices over the period cut back operating figures by 11,900 million pesetas, forcing Repsol Butano to operate at a loss.

Unusually warm weather in February and March also had an adverse effect. The negative impact of this mild weather can be evaluated at 4,500 million pesetas for both Repsol Butano and Gas Natural.

The company�s ability to absorb these higher voluntary amortizations, and the negative impact of the LPG price freeze and warm temperatures, is a sign that all its other businesses in Spain and Latin America have operated successfully.

Details for each of Repsol�s areas of activity are as follows:

Operating income for exploration and production was 12,130 million pesetas in comparison to 4,338 million pesetas a year earlier. Operating cash-flow rose by 102.4% over 1996 figures for the same period, to 22,002 million pesetas. This improvement in the results is due, basically, to the favourable evolution of crude oil prices and the appreciation of the dollar against the peseta; the inclusion of Astra activities; improvement in exploitation margins, with the start up of production from higher added-value fields (Harding, Egypt and Libya); and, finally, divestment of our stake in the Magnus field. Repsol�s overall production of hydrocarbons was 3.28 million tonnes of oil equivalent, 33.3% more than in 1996.

In refining and marketing, operating income was 22,906 million pesetas, 13.1% higher than that registered in 1996. This improvement in the income statement may be attributed to higher international refining margins, boosted by the strength of the dollar against the peseta; which counteracted the negative effect of withdrawal from the Dutch and German markets of leaded gasoline and the consequent suppression of these products from the maximum price formula. A sales policy, involving selective price discounts, with particular emphasis on unleaded 95 octane gasoline, was introduced in September, 1996, and has produced successful results. Sales of light products increased by 3.1% with respect to the same quarter of last year.

Chemicals reported an operating income of 7,246 million pesetas, in comparison to 5,564 million pesetas for the first quarter of 1996, while cash flow was 8,810 million pesetas, showing a rise of 24.3% over the same period in 1996. Better performance is explained by the strong growth in base petrochemical margins, although this was partly reduced by a certain drop in sales and in derivative petrochemical margins, since the markets did not totally compensate by rising prices the important increase in the cost of raw materials.

In the gas sector, operating income was 10,937 million pesetas, in comparison to 23,229 million pesetas for the same period in 1996.

In the LPG activity (propane and butane), the economic effect of warm temperatures may be estimated at 1,700 million pesetas, whereas losses caused by the price freeze account for 11,900 million pesetas. In summary, operating income showed losses of 564 million pesetas, in spite of the growth of 15.5% in piped gas which has continued its process of expansion.

Natural gas registered an operating income of 11,244 million pesetas, almost 14% lower than the first quarter of the previous year, again due to the drop in residential and commercial sales as a consequence of mild weather, in spite of the increase in the number of customers and greater sales to the industrial sector and power stations.

Total investments amounted to 105,564 million pesestas, as compared to 48,765 million pesetas in the first quarter of last year, and were destined to the areas of exploration and production, refining and marketing, and gas. The largest amounts were spent on the acquisition of the 45% of Pluspetrol Energy and the development of new exploratory projects. In chemicals, investments corresponded to the new propylene plant in Tarragona.

Repsol�s Annual General Shareholders Meeting will be held on June 6th, 1997, in the Palacio Municipal de Congresos of Madrid, and will be formally called in the next few days. In this meeting, in addition to providing information about the 1996 results and the most relevant events that have occurred during the first months of the year, Repsol will propose the approval of a total gross dividend of 181 pesetas per share, which represents a rise of 6% over the amount paid out a year earlier.

REPSOL SUMMARIZED INCOME STATEMENTS

(Million pesetas)

(NON-AUDITED FIGURES)

____________________________________

$= 124.11 pesetas in 1Q96
$= 142.05 pesetas in 1Q97
*This includes financial results, goodwill amortization and income from non-consolidated affiliates

REPSOL COMPARATIVE BALANCE SHEET

(Million pesetas)

(Non-audited figures)