Income stable in spite of sharp drop in chemicals.

Repsol's net income for the first half of 1996 was 61,454 million pesetas, 1.1% below the 62,163 million pesetas obtained last year. Operating income was 96,046 million pesetas, and net cash-flow reached a level of 122,300 million pesetas, showing a 2.1% drop on figures achieved a year earlier.

This performance was registered over a period marked by the cyclical nature of the chemical area, which registered operating figures over three times lower than those for the first half of 1995, although there was considerable improvement in the second quarter. The cyclical behaviour of this activity makes comparison on equal terms difficult, for the first half of 1995 witnessed the best operating figures ever reported by the company in this area.

Other factors affecting company activities over the half year were: the improvement in crude oil prices and international refining margins over the second quarter, a slight rise in margins on the main types of plastic and the weakening of the peseta against the dollar, whilst it rose against the deutschmark.

Two outstanding operations were completed: the acquisition of a 37.7% stake in the Argentinian company, Astra, and a 60% interest in the La Pampilla refinery in Peru. These transactions will strengthen the company's presence in Latin America.

The most noteworthy aspects affecting the half-yearly income statement for each of Repsol's areas of activity are as follows:

In Exploration and Production,operating income amounted to 10,487 million pesetas, in comparison with 9,859 million pesetas a year earlier. Here, income was boosted by higher oil prices, at an average of 19.13 $ per barrel in the first six months of 1996 in comparison to 17.5 $ per barrel over the same period of 1995.

The Harding field, in the North Sea, went on-stream last April, and the Rodaballo field, near the Casablanca off-shore rig in the Mediterranean, went into production at the end of May, thus prolonging the latter's production span.

Operating income from Refining and Marketing was 36,984 million pesetas, which compares favourably with the 29,638 million pesetas obtained in the same period last year. This improvement may be attributed to higher international refining margins. However, there were two factors with a negative influence on the income statement for this area. A series of stoppages and start-ups during several strike periods at Petronor in the first half of 1996 produced break-downs at the distillation unit of the Bilbao refinery. Apart from this, the price war being waged in the United Kingdom lowered the price ceiling for gasolines in Spain, in as much as any fall in prices on the U.K. market affects the maximum price formula for the domestic market by 1/6.

Operating income from Chemicals for the first half of 1996 was 13,127 million pesetas in contrast to 41,337 million pesetas registered in 1995. However, the situation improved slightly for the main petrochemical products over the months closing the period. Gross margins on plastics showed a trend to improve in the second quarter. On the negative side, margins on base petrochemicals - fundamentally ethylene - and intermediate products were lower. The fall in sales may be largely attributed to a 25 day shut-down at the Puertollano cracker, the absence of economic revival in Germany and the stagnation of private consumption in Spain.

Turning to Gas, operating income rose by 9.6% over the same period last year, to 35,981 million pesetas. This is the result of growth in the natural gas area, where sales have increased to the residential-commercial sector and in particular to the industrial market.

Repsol made overall investments during the first half of 1996 amounting to 106,857 million pesetas, in comparison to 78,170 million pesetas a year earlier, mostly in the areas of refining and marketing and gas. 43,065 million pesetas were spent on refining and marketing to reinforce and extend the linking of service stations, raising the percentage of strongly linked Repsol sales outlets to 74% of the whole network. 34,612 million pesetas were allotted to gas (73.7% more than in the first half of 1995), for the construction of transmission infrastructures and distribution grids for natural gas, and the development of new marketing products for LPG.

As a result of recent changes in Repsol's capital structure, the Board of Directors was reorganised at the end of July, and its present composition is as follows: Chairman & CEO: Alfonso Cortina de Alcocer; Vice President of the Board: Emilio de Ybarra y Churruca (BBV); Directors: Pedro Ferreras (SEPI); Miguel �ngel Rodr�guez (SEPI); Carlos D�az (SEPI); Jos� Antonio P�rez-Nievas (BBV); Jos� M� Abril (BBV); Jos� Vilarasau (La Caixa); Antonio Brufau Niub� (La Caixa); Adri�n Lajous (Pemex); Pablo Espresate (Pemex); Enrique Aldama (independent); Ram�n Blanco (independent); Robert Malpas (independent), and Juan Molins (independent).

The Annual General Shareholders' Meeting approved a gross overall dividend against 1995 of 171 pesetas per share. This is a rise of 22% over the previous year.

REPSOL SUMMARISED INCOME STATEMENT

(Million pesetas)

- Non-audited figures -

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$ = 128.1 pesetas on 1996

$ = 120.74 pesetas on 1995

* Includes financial results, goodwill amortization and equity on earnings of unconsolidated affiliates

REPSOL COMPARATIVE BALANCE SHEET

(Million pesetas)

- Non-audited figures -