In accordance with the Law 45/1981, of December 28th, governing the creation of the Instituto Nacional de Hidrocarburos, the Council of Ministers has authorized this Instituto to sell up to 45 million shares of Repsol, S.A.. These shares represent 15% of capital equity.

The INH is authorized to determine the instruments and set the terms for the placement as suitable for operations of this type.

INH currently owns 40% of Repsol capital equity, so this authorization permits the State to retain more than a 25% stake in Repsol.

The amount of the offer, bearing in mind Repsol's current share price, is approximately 165 billion pesetas. This means that, in terms of volume, this is one of the most important operations to be carried out in Spain.

This placement is directed to minority and institutional investors alike and will take place on national and international stock markets. There will be special incentives to encourage participation by small investors.

The institutional placement will be carried out in five tranches, one each for the main financial markets world-wide: Spain, the United Kingdom, Continental Europe, USA and the rest of the world.

Repsol began its privatization in 1989 with a public share offering which lowered the stake held by INH to 69.4%. In 1990, the Mexican oil company, PEMEX, took up a 2.9% holding, and further increased it to 5% in 1992. In that year, Repsol launched an issue of exchangeable bonds and, in 1993, an offering to the institutional market. These privatization processes produced an income of 367,622 million pesetas.

Repsol's solid financial situation, the good results achieved for the past financial year, the success of former privatizations and company strategy -which have permitted the company to report continuous profit growth- indicate that this transaction will meet with high acceptance on the part of investors.

At the close of 1994, Repsol had obtained a net income of 96,803 million pesetas, 20.8% up on year-earlier results. Revenues were 2,370 billion pesetas, showing a 7.2% rise, and cash-flow went up by 15.2% to 221,664 million pesetas.