In the first quarter 2001, Repsol YPF net income was 20.2% up on the 2000 equivalent, at 595 million euros. Net income before extraordinary items and goodwill amortisation was 766 million euros, in comparison to 645 million euros in the first quarter 2000.

Operating income for the quarter rose 13.5% on year earlier figures, to 1,503 million euros, and net cash-flow was 1,578 million euros, in comparison to 1,378 million euros the year before. Operating revenues were 10,962 million euros, showing a 10.4% rise on the 2000 equivalent. 62% of overall income came from businesses located outside Spain.

First quarter 2001 financial expenses were 308 million euros. Net financial debt at March 31^st 2001 was 20,766 million euros, giving a debt leverage of 49.9%.

This improved performance was achieved against a background of slightly lower international oil prices than in the same period of 2000. Refining margins showed further improvement and marketing margins continued the recovery observed towards the end of 2000. Chemicals continued to suffer the effect of weak international margins, and the natural gas and power sector followed the growth trend noted in our recent quarterly reports, despite high temperatures and rainfall (hydraulic power) in Spain and Argentina over the period.

Quarterly investments were 1,063 million euros, and focused mainly on exploration & production and gas & power. Expenditure in exploration and production was 514 million euros, mainly for exploration and development activities, and a cash payment of 154 million euros for the acquisition of assets in Bolivia. Investments in refining & marketing were 193 million euros, spent mainly to upgrade refining units, increase storage and transport capacity, upgrade the service station network and develop new retail products. In chemicals, 93 million euros were invested, mainly on the Profertil urea/ammonia and methanol projects, both in Argentina, and capacity increases and the upgrading of existing units. 227 million euros were spent on the natural gas & power business area, mainly for the extension of the natural gas transmission and distribution infrastructure, and projects to integrate the gas-power chain. Corporate investment amounted to 36 million euros.

Assets to the amount of 771 million euros were sold during the first quarter 2001, and mainly comprised sales in Egypt, and a stake in the Trasandino pipeline carrying crude oil from Argentina to Chile.

The Repsol YPF Annual General Shareholders Meeting, held on March 28th last, approved payment of a final dividend of 0.31 euros per share, giving an overall dividend against 2000 of 0.50 euros per share. This was 22.3% more than the dividend against 1999.

By areas of activities, these are the highlights for first quarter 2001:

In Exploration & Production, operating income rose 7.5% to 801 million euros. This figure includes 99 million euros of capital gains from the sale of assets in Egypt. The average price of Brent oil was US$25.8 per barrel, in comparison to $26.9 per barrel registered in the first quarter 2000.

Overall production in first quarter 2001 was 945,600 boepd. On equal terms, production was at a similar level to that for the first quarter 2000, allowing for the asset sales and acquisitions made during the quarters mentioned.

The company made important discoveries in Libya, Venezuela and Spain.

Hydrocarbon reserves at March 31st rose sharply to 5,756 million barrels of oil equivalent. During first quarter 2001, discoveries, extensions, revisions and improvements at fields contributed 166 million boe. The net balance of asset sale and acquisition, and the 100% consolidation of Andina increased reserves by 733 million boe.

Operating income from the Refining & Marketing area was 358 million euros, and showed a year-on-year rise of 43.2%. Refining margins were stronger and there was a recovery in marketing margins, following the trend observed in the last few months of 2000.

With reference to fuel and oil sales, in Spain, light product sales to our own network rose 4.5%, with an increase in gas-oil, and a drop in gasoline and aviation kerosene sales. In Argentina, sales of gasoline and gas-oil to our own network fell 2.7% as the result of a large reduction in the demand for gasoline. LPG sales also fell as a result of high temperatures during the quarter.

Operating income from Chemicals for the first quarter 2001 was 50% down on year earlier figures, at 17 million euros. This may be largely explained by generally lower margins on international markets for derivative chemicals, partially offset by higher income from base chemicals. Total sales of petrochemical products were 845,000 tons, showing a rise of 13.7%.

In Natural Gas and Power, operating income was 15.6% up on the 2000 equivalent, at 340 million euros. This growth was mainly the result of additional customers in the residential-commercial sector and increased trading and marketing activity. Repsol YPF overall sales of natural gas amounted to 61,485 million thermies, and showed a slight rise in comparison to first quarter 2000. It is worth noting that the Spanish natural gas sector has become much more open to competition, and 30% of the total market has already been effectively liberalised. Gas Natural SDG has supplied 77% of sales to this deregulated market.

In relation to the power sector, Repsol YPF has decided that Gas Natural SDG should be the company to develop all activities in this sector from now onwards, both in combined cycle generation from natural gas and marketing.

BREAK-DOWN OF REPSOL YPF OPERATING INCOME BY ACTIVITIES
(Million Euros)
(Unaudited figures)

	January-March		Variation %
	2000	2001
Exploration & Production	745	801	7.5
Refining & Marketing	250	358	43.2
Chemicals	34	17	(50.0)
Natural Gas & Power	294	340	15.6
Corporate and others	1	(13)
TOTAL	1,324	1,503	13.5

	January-March		Variation %
	2000	2001
Hydrocarbon production (Thousand boepd)	969	946	(2.4)
Sales of oil products (Thousand tons)	12,356	11,923	(3.5)
Sales of petrochemical products (Thousand tons)	743	845	13.7
Sales of natural gas (Million thermies)	61,308	61,485	0.3
Sales of LPG (Thousand tons)	977	926	(5.2)