Paul Ferneyhough provides an overview of Repsol s results for the second quarter of 2016.

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1 Dear, Please see the attached newsletter which contains a video in which I present an overview of the results for the second quarter of Additionally I also want to share with you a review of our Downstream business and how our net debt has evolved during the first half of the year. I encourage you to take a look at it. Enjoy our newsletter. pferneyhough.ir@repsol.com Interview of the month Paul Ferneyhough provides an overview of Repsol s results for the second quarter of Trending topic Downstream business review/ Net debt evolution. Figures of the period Repsol s second quarterly figures for FAQs The latest Frequently Asked Questions to our IR team. file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 1/11

2 On the road Our activities in September and October. Official Notice Repsol guarantees that the information contained in this section is exactly the same as the forwarded to the CNMV, CNV, SEC and OTCQX. Paul Ferneyhough provides an overview of Repsol s results for the second quarter of Repsol s integrated business model and the inclusion in 2015 of acquired assets into our portfolio have allowed the company to deliver a strong set of results despite the continued challenging environment. CCS Adjusted Net Income was 345 million Euros and 917 million Euros for the quarter and the first half of 2016, respectively. In the Upstream, adjusted Net Income for the second quarter was 46 million Euros positive, 94 million euros higher than in the same period of Lower commodity prices were offset by increased production volumes, lower costs and lower exploration expenses. In the Downstream the CCS Adjusted Net Income in the quarter was 378 million Euros, 14 per cent lower than in the second quarter of 2015 when we achieved record refining margins. In the second quarter of 2016 the planned turnarounds at the Cartagena and Tarragona file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 2/11

3 refineries have reduced, as expected, both our distillation and conversion capacity utilization. Nonetheless, the sustained strength of the Chemicals business and improved Commercial business results delivered another good quarter from this division. The consolidated net financial debt at the end of the second quarter of 2016 amounted to 11.7 billion Euros, a decrease of around 300 million Euros compared to the end of the previous quarter. We remain cautious on the short term recovery of commodities and continue to focus our efforts on achieving cash neutrality at around a 40 dollar Brent price level. Downstream business review Repsol s integrated downstream assets and its competitive position in the Iberian peninsula are combining to deliver solid results despite a volatile market environment. The integrated nature of our downstream business Refining, Chemicals, Marketing, GLP, Trading and Gas&Power make for a robust model, especially in a low price crude cycle, and allow Repsol to deliver better performance than our main competitors. During the first half of the year our refining business, despite a tough market environment and scheduled maintenance activities, once again delivered strong cash flow. Additionally the combination of sustained strength in the chemical business and the stability of our commercial division has resulted in consistent delivery from our Downstream business overall. The following standout items are worth noting: Our Refining business continues to show its resilience, obtaining healthy refining margins during the first half of the year and continuing to be a principle source of cash flow for Repsol. Our refining system in Spain, spread across 5 refineries, remains at the top of first quartile when compared to our European competitor margins. The second quarter margin was impacted by planned maintenance stoppages in the Cartagena and Tarragona refineries, reducing both our distillation and conversion capacity utilization. Following completion of these maintenance stoppages we have finished our planned maintenance program for 2016 and expect our actual margin to file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 3/11

4 recapture the full contribution of our industry leading facilities in the second half of the year. The Chemical business continues to deliver outstanding performance, increasing its adjusted net income in the first half of the year by more than 50% YoY. This is primarily the result of our Competitive Plan, launched in September 2013 and focused on Efficiency, Differentiation and Globalization. The results of which are being realized in our income, along with steady sales and strong margins. For the rest of the year, we expect margins to remain solid, supported by a favorable international environment and strong demand. If the improvement in Spanish and European market continues, our Chemical division may deliver an EBIT of around million by the year end. The Marketing business continues its steady recovery. Spanish fuel demand continued to grow and the market has grown by 3.6% up to the end of May. Overall, Repsol s downstream business is performing in line with our Strategic plan as forecasted at the beginning of the year. Net debt evolution During the first half of the year, despite low oil and gas prices, planned maintenance stoppages in Cartagena and Tarragona refineries and after paying dividends in the first quarter, Repsol was able to reduce its net financial debt. The outstanding operating cash flow generation of all our business in combination with the divestments we have made, has allowed us to reduce our net financial debt from 11.9 B to 11.7 B. Repsol maintains its firm commitment to reduce its net financial debt in coming months and significantly over the strategic plan period. file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 4/11

5 Repsol s second quarterly figures for 2016 file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 5/11

6 The last Frequently Asked Questions to our IR team Update North America assets: Marcellus, Eagle Ford, Duvernay? file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 6/11

7 Marcellus: The asset is performing well delivering solid results despite the current tough environment. Production has remained level year on year* whilst reducing drilling activity to just one rig in The asset is competitively positioned in the play and incorporates extensive midstream gathering and egress facilities. Additionally, significant cost efficiencies continue to be delivered. All of these, result in a breakeven close to 2 dollars per MBtu, with this asset becoming free cash flow generative at the gas price levels observed since the end of the 2nd quarter. * Excludes the impact of acquisition date (8th May 2015) Eagle Ford: During the first quarter of the year, the transition to a single operator was completed without any material interruptions. With this change the JV has been able to significantly reduce its administrative costs. In addition the JV has been successful in reducing costs through several initiatives such as completion design improvements, lower chemical usage cost and taking advantage of lower drilling rates. All in all, synergies achieved in Eagle Ford are delivering approximately 10 $/bbl of benefit. Duvernay: A material asset that could play a significant role in Repsol s future growth. The company has around 280,000 high graded net acres and the project is currently in the appraisal phase. Repsol is not in a rush to develop the asset, and due to current market volatility, the activity in the area will be minimal during 2016/2017. Can you provide some color on Brexit impact in Repsol activity? At the present time Repsol does not expect a material economic impact from Brexit. In the short to medium term we don t expect any changes to our current operations framework. We will monitor the situation closely and react should any unexpected circumstances arise. Are there refining maintenance activities expected during the second half of 2016? During the second quarter of the year Repsol launched the scheduled maintenance stops in Cartagena and Tarragona refineries. With these stops Repsol has already finished the maintenance program planned file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 7/11

8 for the whole year in its refining system in Spain. Which Upstream projects will be sanctioned this year and which ones will be postponed? During the 4th quarter of the year Repsol expects to FID the CRD project (also known as Red Emperor) in Vietnam, with first production expected for Does Repsol have margin to reduce Capex more if needed? If Repsol had to reduce its investment activity, due to an extended period of very low oil prices, this would delay the beginning of the development phase of projects such as Akacias, Alaska, C33, future discoveries, and would keep to a low level the investment in its unconventional assets. In addition, regarding exploration investment, Repsol doesn t have significant commitments to fulfil, in its current acreage, so the activity is scalable too. What is Repsol s exposure to Venezuela? What is the current situation in Venezuela? Venezuela represents less than 5% of Repsol s capital employed and around 10% of its current production. Its main assets in the country are Petroquiriquiri, Cardon IV and Carabobo. From operational point of view the assets in the country are performing as expected, no major changes have arisen. At the end of July Repsol s CEO, Josu Jon Imaz, and Head of Upstream, Luis Cabra, were in Venezuela; financial teams, from Repsol and PDVSA, are negotiating, and the issue will be solved shortly allowing the JVs work correctly. Which is the impact of COP 21 on Repsol s operations? The Paris agreement does not change Repsol s day to day operations. The company has been, for a considerable amount of time, committed to the goal of mitigating climate change, and we are already working through our CO2 emissions reduction and Energy Efficiency plans. In this regard, the Energy Carbon Plan developed between 2006 and 2013 achieved a reduction of 3.1 million tonnes of CO2, and we are now working on a new plan covering the period , which will represent an additional reduction of 1.9 million file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 8/11

9 tonnes of CO2. This allows us to create a more sustainable but also a more competitive company. IR activities in September and October The following list of events will be attended by members of the IR team along with representatives from the business.aa file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 9/11

10 Repsol guarantees that the information contained in this section is exactly the same as the forwarded to the CNMV, CNV, SEC and OTCQX. Repsol analyzes a posible partial divestment in Gas Natural SDG, S.A. Webcast 2Q2016. Financial Statements First Hall Press releases on the results for the first half of the year Information on the results for the first half file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 10/11

11 Repsol, S.A All rights reserved. Legal notice Código de comunicación: ms78lo90ms. file:///volumes/working/repsol_inversores/2016/03.newsletters/investors/05.septiembre/web/index.html 11/11