CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2011 AND DECEMBER 31, 2010

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1 Compañía Española de Petróleos, S.A. and subsidiaries (Cepsa Group) Condensed Consolidated Interim Financial Statements and Consolidated Interim Management s Report for the six-month period ended June 30, 2011

2 CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2011 AND DECEMBER 31, 2010 ASSETS 06/30/ /31/2010 Non-current assets Intangible assets (Note 4) Intangible assets and rights 572, ,789 Impairment losses and depreciation (264,478) (258,044) intangible assets 307, ,745 Goodwill 65,101 65,941 Property, plant and equipment (Note 5) Tangible assets and rights 11,002,367 10,997,367 Impairment losses and depreciation (6,099,728) (5,927,968) property, plant and equipment 4,902,639 5,069,399 Investments accounted for using the equity method 117, ,289 Non-current financial assets (Note 8) 133, ,979 Deferred tax assets 76,050 66,442 TOTAL NON-CURRENT ASSETS 5,602,325 5,726,795 Current assets Inventories (Note 6) 2,455,294 2,016,418 Trade and other receivables 2,955,178 2,739,714 Current Income tax assets 31,743 36,145 Other current financial assets (Note 8) 156, ,145 Other current assets 21,099 13,398 Cash and cash equivalents 1,071, ,080 TOTAL CURRENT ASSETS 6,691,552 5,748,900 TOTAL ASSETS 12,293,877 11,475,695 (The accompanying explanatory notes 1 to 14 are an integral part of the Consolidated Balance Sheet at June 30, 2011). 1

3 CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2011 AND DECEMBER 31, 2010 EQUITY AND LIABILITIES 06/30/ /31/2010 Equity (Note 7) Share capital 267, ,575 Share premium 338, ,728 Revaluation reserve 90,936 90,936 Retained earnings 4,742,225 4,362,475 Profits attributable to the Shareholders of the Parent Company 396, ,946 Interim dividend - (120,409) Equity 5,835,634 5,573,251 Adjustments for changes in value Translation differences 48, ,794 Other adjustments for changes in value 17,857 (12,544) adjustments for changes in value 66, ,250 TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY 5,902,421 5,688,501 Minority Interests Equity attributable to minority interests 62,335 56,792 Profits attributable to minority interests 10,306 13,833 Minority Interests 72,641 70,625 TOTAL EQUITY 5,975,062 5,759,126 Non- current liabilities Bank borrowings (Note 8) 1,760,140 1,666,613 Other financial liabilities (Note 8) 140, ,779 Deferred tax liabilities 339, ,135 Grants related to assets 146,439 90,233 Provisions (Note 9) 153, ,064 Other non-current liabilities 44,755 23,845 TOTAL NON-CURRENT LIABILITIES 2,584,015 2,431,669 Current liabilities Bank borrowings (Note 8) 851, ,428 Other financial liabilities (Note 8) 101,593 90,463 Trade and other payables 2,648,284 2,632,719 Current income tax liabilities 126,627 15,427 Other current liabilities 7,262 7,863 TOTAL CURRENT LIABILITIES 3,734,800 3,284,900 TOTAL EQUITY AND LIABILITIES 12,293,877 11,475,695 (The accompanying explanatory notes 1 to 14 are an integral part of the Consolidated Balance Sheet at June 30, 2011). 2

4 CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2011 AND 2010 Thousands of Euro 06/30/ /30/2010 Sales and services rendered related to the ordinary activity 12,124,875 9,400,583 Excise tax on oil and gas charged on sales 1,105,914 1,147,493 Revenues (Note 11) 13,230,789 10,548,076 Changes in inventories of finished goods and work in progress inventories 240,150 68,841 In-house work on non-current assets 23,816 24,125 Supplies (10,224,869) (7,568,982) Other operating income 23,758 16,536 Personnel expenses (289,178) (282,978) Changes in operating provisions 8,131 (6,603) Other operating expenses: Excise tax on oil and gas (1,105,704) (1,148,054) Other expenses (951,553) (909,599) Depreciation and amortization (340,976) (323,170) Allocation of Grants related to non-financial assets and other grants 47,200 35,891 Impairment losses and gains or losses on disposals of non-current assets OPERATING INCOME (Note 11) 661, ,424 Share in profit of companies accounted for using the equity method 22,018 16,647 Finance income 25,320 17,420 Finance costs (23,972) (17,244) Impairment and gains or losses on disposals of financial instruments 783 (218) CONSOLIDATED PROFIT BEFORE TAX 685, ,029 Income tax (279,354) (184,746) CONSOLIDATED PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS 406, ,283 CONSOLIDATED PROFIT FOR THE PERIOD 406, ,283 Attributable to: Shareholders of the Parent 396, ,308 Minority interests 10,306 5,975 Earnings per share: Basic Diluted (The accompanying explanatory notes 1 to 14 are an integral part of the Consolidated Income Statements) 3

5 CONDENSED CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSES FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2011 AND /30/ /30/2010 A) CONSOLIDATED PROFIT FOR THE PERIOD per the income statement 406, ,283 B) INCOME AND EXPENSES RECOGNISED DIRECTLY IN EQUITY: (48,987) 58,210 Cash flow hedges 43,414 (95,588) Translation differences (79,679) 125,248 Companies accounted for using the equity method 214 (970) Tax effect (12,936) 29,520 C) TRANSFERS TO INCOME STATEMENT: (291) 1,077 Cash flow hedges (416) 1,549 Tax effect 125 (472) - - TOTAL RECOGNISED INCOME/(EXPENSES) (A+B+C) 357, ,570 a) Attributable to the Parent 347, ,180 b) Attributable to minority interests 9,491 9,390 (The accompanying explanatory notes 1 to 14 are an integral part of the condensed consolidated statement of recognized income and expenses) 4

6 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIODS ENDED 30 JUNE 2011 AND 2010 CURRENT PERIOD Share capital Share premium and reserves Treasury shares Profit for the Adjustments Other equity period attributable due to changes instruments to the Paren in fair value Minority interests equity Ending balance at 31/12/ Adjustments due to changes in accounting policies Adjustments due to errors Adjustments beginning balance recognised income/(expenses) (48.463) Transactions with shareholders or owners ( ) (7.475) ( ) Distribution of dividends ( ) (7.475) ( ) Other changes in equity ( ) Transfers between equity items ( ) Ending balance at 30/06/ PRIOR PERIOD Share capital Share premium and reserves Treasury shares Profit for the Adjustments Other equity period attributable due to changes instruments to the Paren in fair value Minority interests equity Ending balance at 31/12/ Adjustments due to changes in accounting policies Adjustments due to errors Adjustments beginning balance recognised income/(expenses) Transactions with shareholders or owners ( ) (3.609) ( ) Distribution of dividends ( ) (3.609) ( ) Other changes in equity ( ) Transfers between equity items ( ) Ending balance at 31/12/ (The accompanying explanatory notes 1 to 14 are an integral part of the condensed consolidated statements of changes in equity sheets) 5

7 CONDENSED CONSOLIDATED CASH FLOW STATEMENTS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2011 AND 2010 Cash flows from operating activities 06/30/ /30/2010 Profits before taxes for the year 685, ,029 Depreciation, impairment losses and results from disposals of assets 340, ,829 Change in provisions for contingencies and charges 39,098 42,742 Grants relating to assets and other deferred income transferred to the income statement (47,286) (35,891) Gains/(losses) on disposal of financial assets (783) 220 Current provisions changes (8,131) 4,984 Other changes (22,434) (15,097) Cash flows from operating activities before change in working capital 987, ,816 Change in working capital (590,780) (288,995) Interest Payments (22,600) (12,267) Interest Collected 11,136 6,200 Dividends Collected 8,453 10,251 Tax Income (Payments)/Collections (173,387) (156,740) Other cash flow from operation activities (176,398) (152,556) cash flows from operating activities 219, ,265 Cash flows from investing activities PAYMENTS Intangible assets (14,965) (11,538) Property, plant and equipment (217,396) (346,230) Non-current financial assets Associates and other investments (24,476) (596) Other financial assets (35,003) (13,256) Acquisition of consolidated shares (7,972) - Grants collected 2, payments (297,449) (370,868) COLLECTIONS Intangible assets Property, plant and equipment 1, Non-current financial assets 7,257 12,772 collections 9,480 14,461 cash flows from investing activities (287,969) (356,407) Cash flows from financing activities DIVIDENDS PAID: To shareholders of the parent company (133,787) (107,030) To minority interest (7,475) (3,609) dividends paid (141,262) (110,639) Net change in non-current financial liabilities 151, ,886 Net change in current financial liabilities 290,733 69,237 Net change in financial investments paid 3,820 (16,937) Finance lease payments paid (2,808) (4,680) cash flows from bank debt 442, ,506 cash flows from financing activities 301, ,867 Net change in cash and cash equivalents 233, ,725 Effect of changes in exchange rates (3,305) 18,012 Beginning balance of cash and cash equivalents 841, ,537 Ending balance of cash and cash equivalents 1,071, ,274 (The accompanying explanatory notes 1 to 14 are an integral part of the condensed consolidated cash flow statements sheets) 6

8 Explanatory Notes to the Condensed Consolidated Financial Statements for the six-month period ended June 30, 2011 Compañía Española de Petróleos, S.A. and Subsidiaries (Consolidated Group) 1.- CEPSA Group activities Compañía Española de Petróleos, S.A. ( CEPSA ), whose registered office is at Avenida del Partenón 12 (Campo de las Naciones), Madrid, was incorporated for an unlimited period of time on 26 September 1929 and is registered in the Madrid Mercantile Register in Volume 206 of the Companies book, Page 100, Sheet Its employer identification number is A CEPSA and its subsidiaries (together the CEPSA Group or The Group ) compose an integrated business Group which operates in the oil and gas industry in Spain and abroad and engages in business activities relating to the exploration for and extraction of crude oil, the production of petrochemical and energy products, asphalts, lubricants and polymers and the distribution and marketing thereof; as well as the distribution of gas and the generation of electricity. Table I, which forms part of the notes to CEPSA consolidated financial statements for 2010, shows the directly or indirectly owned subsidiaries, jointly controlled entities and associates which, together with CEPSA, compose the consolidated Group. The table lists these companies' registered offices and lines of business, together with the most significant economic and financial information thereon for The Group's consolidated financial statements for 2010 were approved by the shareholders at the Annual General Meeting of the Company held on 27 April Basis of presentation and other information a) Basis of presentation In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, all companies governed by the law of a European Union Member State and whose shares are listed on a regulated stock market of any of the Member States must present their consolidated financial statements for the years beginning on or after 1 January 2005 in accordance with International Financial Reporting Standards as previously adopted by the European Union (IFRSs) The Group s consolidated financial statements for 2010 were formally prepared by the directors in accordance with International Financial Reporting Standards as adopted by the European Union, applying the consolidation bases, accounting policies and measurement bases described in Notes 2 and 3 to the aforementioned consolidated financial statements and, accordingly, they present fairly the Group's consolidated equity and consolidated financial position at 31 December 2010 and the consolidated results of its operations, the changes in its consolidated equity and its consolidated cash flows in the year then ended. These condensed consolidated half-yearly financial statements are presented in accordance with IAS 34, Interim Financial Reporting, and, pursuant to Article 12 of Royal Decree 1362/2007, they were authorized for issue by the Group s directors on 2 August

9 In accordance with IAS 34, the interim financial information is prepared exclusively to update the content of the last annual consolidated financial statements prepared by the Group, focusing on new activities, events and circumstances arising during the six-month period, and does not duplicate the information previously reported in the consolidated financial statements for Consequently, in order to be able to properly comprehend the information included in these condensed consolidated half-yearly financial statements, they should be read together with the Group s consolidated financial statements for Changes in accounting policies EU-approved standards and interpretations applicable in the period The accounting policies applied in the preparation of the consolidated financial statements for the interim period ended June 30, 2011 are the same as those applied in the preparation of the consolidated financial statements for the year ended December 31, 2010, with the exception of the following amendments and interpretations: Standard or interpretation Content Effective date (*) IAS 32 Amendment Classification of Rights Issues 2/1/2010 IAS 24 Amendment Related Party Disclosures 1/1/2011 IFRIC 14 (1) Prepayments of a Minimum Funding Requirement 1/1/2011 IFRIC 19 (1) Extinguishing Financial Liabilities with Equity Instruments 7/1/2010 Improvements to IFRS (published in May 2010) Amendments to a number of standards Multiple (*) Years commencing on or after the effective date (1) Date of mandatory application according to the approval published in the Official Journal of the European Union, which differs from the original IASB date. Application of these amendments and interpretations has not had a significant impact on these interim consolidated financial statements. 8

10 Standards and interpretations published by the IASB not yet approved by the EU. At the date of publication of these consolidated financial statements, the following new and amended standards had been published by the IASB but were not mandatory and had yet to be endorsed by the EU: Standard or interpretation Content Effective date (*) Amendment to IFRS 7 Disclosures - Transfers of Financial Assets 7/1/2011 Amendment to IAS 12 Deferred Tax - Recovery of Underlying Assets 1/1/2012 Amendment to IAS 1 Presentation of items of other comprehensive income 7/1/2012 IFRS 9 Financial instruments 1/1/2013 IFRS 10 Consolidated financial statements 1/1/2013 IFRS 11 Joint Arrangements 1/1/2013 IFRS 12 Disclosure of Interests in Other Entities 1/1/2013 IFRS 13 Fair Value Measurement 1/1/2013 IAS 19 Employee benefits 1/1/2013 IAS 27 Consolidated and Separate Financial Statements 1/1/2013 IAS 28 (revised) Investments in Associates 1/1/2013 (*) Years commencing after the effective date The Group is currently analyzing the impact of applying these new and amended standards. Based on the analyses carried out to date, the Group considers that the application of these standards and amendments will not have a significant impact on the consolidated financial statements in the initial period. All mandatory accounting principles and policies with a significant effect on the condensed consolidated interim financial statements were applied. b) Use of estimates and assumptions The information contained in these financial statements is the responsibility of the Group's Directors, who expressly state that all the principles and methods provided for in IFRSs have been applied. The main accounting principles and policies and measurement basis are indicated in Notes 2 and 3 of CEPSA 2010 consolidated financial statements. In the preparation of the consolidated financial statements in accordance with IFRSs, the Directors were required to make estimates and assumptions. The final figures might differ on the basis of these estimates and assumptions. These estimates and assumptions relate basically to the following: - Determination of the recoverable amount for the calculation of impairment losses on certain assets, 9

11 - Estimation of the expected average weighted tax rate for the year which, in accordance with IAS 34, is used to calculate the income tax expense, - Estimation of crude oil reserves, which mainly affects depreciation calculated using the unit-ofproduction method in the area of exploration and production, and the calculation of the recoverable amounts based on the analyses of impairment tests performed on exploration and production assets, - Actuarial calculation of post-employment benefit liabilities and obligations; - Useful life of property, plant and equipment and intangible assets; - Measurement of liabilities relating to provisions. Although these estimates were made on the basis of the best information available at the present date on the events analyzed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) at 2011 year-end or in subsequent years. Changes in accounting estimates would be applied prospectively in accordance with the requirements of IAS 8, recognizing the effects of the change in estimates in the corresponding consolidated income statements. In the six-month period ended June 30, 2011, there were no significant changes with respect to the estimates used at 2010 year-end. c) Seasonality of the Group s transactions In view of the business activities in which the Group companies engage, their transactions are not of a cyclical or seasonal nature. Therefore, no specific disclosures are included in these explanatory notes to the condensed consolidated half-yearly financial statements for the six-month period ended June 30, d) Materiality In accordance with IAS 34, in deciding the information to be disclosed on the various items in the financial statements or other matters in the notes to the financial statements, the Group took into account their materiality in relation to the condensed consolidated half-yearly financial statements. e) Functional currency The items included in the consolidated financial statements of each of the Group companies are measured using the functional currency, i.e., the currency of the main economic environment in which the company operates. The consolidated financial statements are presented in euros, which is the functional currency and the presentation currency of the Cepsa Group. 3. Comparative information and changes in the composition of the Group a) Comparative information The information contained in these condensed consolidated interim financial statements related to the first half of 2010 is presented solely for the purposes of comparison with the information for the sixmonth period ended June 30,

12 b) Changes in the composition of the Group Tables I and II in the appendices to the consolidated financial statements for the year ended December 31, 2010 provide information on Group companies consolidated at that date and those accounted for using the equity method, as well as the main transactions and assets accounted for under joint control. In the first half of 2011 the only significant investment in other entities was the purchase of all the shares of Artenius San Roque, S.A.U. ( ASR ), on January 5, This company's name was later changed to CQ PET, S.A. (see Note 5.a). Based on the accounting of this transaction, which is still provisional, the fair value recognized in respect of this company's net assets (assets acquired less liabilities assumed) at the date of acquisition: Fair value at acquisition Assets 41,923 Liabilities 31,010 Net Assets 10,913 Goodwill - Acquisition cost of the combination 10,913 Changes in the scope of consolidation The scope of consolidation at June 30, 2011 differs from the scope considered at the end of 2010 due to the following change: Company Full/ proportionate Consolidation Investments in companies accounted for using the equity method CQ PET, S.A. I - Servicios Energéticos de Alta Eficiencia, S.A. I - I = Inclusion; E = Exclusion On the other hand, the scope of consolidation at June 30, 2010 differs from the scope considered at the end of 2009 due to the following change: 11

13 Company Full/ proportionate consolidation Investments in companies accounted for using the equity method Lubricantes Turia, S.A. (LUBRITURIA) E I = Inclusion; E = Exclusion 4. Intangible assets At June 30, 2011 and 2010, the inclusions for the period related basically to the value of emission rights granted at zero cost under the National Allocation Plans in force each year, which amounted to EUR 106,216 thousand and EUR 80,390 thousand, respectively. 5. Property, plant and equipment a) Changes in the period The additions to property, plant and equipment in the first six months of 2011 and 2010 amounted to EUR 198,014 thousand and 321,070 thousand, respectively, and relate most notably to the following items: - In the area of Exploration and Production, an increase in exploration activities in several countries. - In the area of Refining and Marketing, investments in the construction of the new Asphalt Oxidation Unit, the replacement of the land section of the oil pipeline at La Rábida refinery, the updating of boilers and the plant of the Osmosis facility at the Tenerife refinery. In addition, general improvements to industrial facilities to minimize the environmental impact and improve the safety of the Group's activities. - In the area of Petrochemicals, the most noteworthy is the inclusion of the fair value of the PP&E items from the newly acquired CQ PET, S.A. (see Note 3.b) - The most notable investments in the area of Gas and Electricity were in the construction of the combined heat and power plants at the Lubrisur plant, as well as the replacement of turbines at various GEPESA-owned plants. Disposals and retirements of tangible assets in the first half of 2011 and 2010, mainly included the derecognition technical installations. Practically all of these assets had been fully depreciated. b) Impairment losses There were no material impairment losses on items of property, plant and equipment in the first six months of 2011 and c) Property, plant and equipment purchase commitments At June 30, 2011 and at December 31, 2010, the Group had property, plant and equipment purchase commitments amounting to EUR 104,305 thousand and EUR 168,251 thousand, respectively, relating mainly to investments in course. 12

14 6. Inventories The detail of Inventories at June 30, 2011 and December 31, 2010 is as follows: Thousands of Euros 06/30/ /31/2010 Inventories 2,460,267 2,019,817 Provisions (4,973) (3,399) 2,455,294 2,016, Equity a) Share capital and share premium The share capital amounts to EUR 267,575 thousand and consists of 267,574,941 fully subscribed and paid shares of EUR 1 par value each traded by the book-entry system. Per the information provided by the members of the Board of Directors who are shareholders, at June 30, 2011,, S.A. and International Petroleum Investment Company (IPIC) directly and indirectly owned 48.83%, 47.06% respectively, of the share capital of CEPSA. The Consolidated Spanish Companies Law expressly permits the use of the share premium account balance to increase share capital and does not establish any specific restrictions as to its use. At June 30, 2011 and December 31, 2010, the balance of this account amounted to EUR 338,728 thousand. b) Revaluation reserve In 1996 CEPSA and several consolidated Group companies revalued their property, plant and equipment pursuant to Royal Decree-Law 7/1996, of 7 June, thereby increasing their net assets by EUR 58,438 thousand respectively. This latter figure was recognized under Consolidated Reserves on consolidation, included under Retained Earnings in the accompanying condensed consolidated balance sheets. The revaluation reserve also includes EUR 32,498 thousand relating to the revaluations made in 1979 and 1981 pursuant to State Budget Laws 1/1979 and 74/1980, respectively, which can now be transferred to unrestricted voluntary reserves. The balance of the Revaluation Reserve, Royal Decree-Law 7/1996 account can be used, free of tax, to eliminate recognized losses and to increase capital. From 1 January 2007 (i.e. ten years after the date of the balance sheet reflecting the revaluation transactions), the balance of this account can be taken to unrestricted reserves, provided that the monetary surplus has been realized. The surplus will be deemed to have been realized in respect of the portion on which depreciation has been taken for accounting purposes or when the revalued assets have been transferred or derecognized. If this balance were used in a manner other than that provided for in Royal Decree-Law 7/1996, it would be subject to tax. 13

15 c) Reserves in consolidated companies The breakdown, by company, of Retained Earnings, at June 30, 2011 and December 31, 2010 is as follows: 06/30/ /31/2010 Fully and proportionately consolidated companies: Cepsa Estaciones de Servicio, S.A. 221, ,064 Cepsa Lubricantes, S. A. 27,268 26,512 Cepsa Portuguesa, S.A. 8,947 9,025 Proas, S.A. 15,187 11,219 Cepsa Química 741, ,645 Cepsa Colombia 40,905 11,962 Other companies 166,429 82,471 fully and proportionately consolidated companies 1,211,561 1,060,898 Companies accounted for using the equity method: Compañía Logística de Hidrocarburos CLH, S.A. (13,299) (12,723) Other companies 22,631 18,202 companies accounted for using the equity method 9,332 5,479 TOTAL 1,230,893 1,066,377 d) Translation differences The detail, by company, of the balance of Translation Differences is as follows: Company 06/30/ /31/2010 Cepsa International, B.V. (5,105) (1,955) Deten Quimica, S.A. 42,808 45,687 Cepsa Colombia 26,811 78,506 Other companies (15,584) 5,556 translation differences 48, ,794 The change in the balance of this heading at June 30, 2011 was basically due to the fluctuation of initial and final exchange rates of the Brazilian Real and US dollar. e) Dividends paid by the Company Interim Dividend Paid during the Period in the condensed consolidated balance sheet at December 31, 2010 includes the dividend paid out of CEPSA's profit in 2010 which amounted to EUR 120,409 thousand. At the Annual General Meeting held on April 27, 2011, the shareholders resolved to pay a dividend of EUR 0.95 per share out of the profit for 2010 which, after deducting the interim dividend already paid, gave rise to a final dividend of EUR 0.50 per share. The dividend was paid on May 9, Also, the shareholders at the Annual General Meeting held on May 28, 2010 resolved to pay a dividend of EUR 0.80 per share out of the profit for 2009 which, after deducting the interim dividend already paid, gave rise to a final dividend of EUR 0.40 per share. This dividend was paid on June 21, It is not necessary to calculate the diluted earnings per share of the CEPSA Group since there are no effects of financial instruments, such as potential ordinary shares, on capital. 14

16 8. Classification and breakdown of financial assets and liabilities Following is a detail of the financial assets and liabilities at June 30, 2011 and December 31, 2010, by type and category for valuation purposes: FINANCIAL ASSETS by TYPE/CATEGORY 06/30/2011 Available for sale Held for trading financial assets financial Loans and Hedging assets receivables derivatives Equity instruments 38,724 38,724 Debt instruments 67,420 67,420 Other financial assets 26,869 26,869 Non current 38,724 94, ,013 Debt instruments 143, ,357 Derivatives 10,100 1,032 11,132 Other financial assets 2,445 2,445 Current 10, ,802 1, ,934 TOTAL 10,100 38, ,091 1, ,947 FINANCIAL ASSETS by TYPE/CATEGORY 12/31/2010 Available for sale Held for trading financial assets financial Loans and Hedging assets receivables derivatives Equity instruments 16,616 16,616 Debt instruments 104, ,255 Other financial assets 30,108 30,108 Non current 16, , ,979 Debt instruments 94,044 94,044 Derivatives 4,418 1,347 5,765 Other financial assets 2,336 2,336 Current 4,418 96,380 1, ,145 TOTAL 4,418 16, ,743 1, ,124 15

17 06/30/2011 FINANCIAL LIABILITIES by TYPE / CATEGORY Held for trading financial liabilities Borrowings and payables assets Hedging derivatives Bank borrowings 1,760,140 1,760,140 Other financial liabilities 140, ,153 Non current 1,900,293 1,900,293 Bank borrowings 851, ,034 Derivatives 1,515 1,187 2,702 Other financial liabilities 98,891 98,891 Current 1, ,925 1, ,627 TOTAL 1,515 2,850,218 1,187 2,852,920 12/31/2010 FINANCIAL LIABILITIES by TYPE / CATEGORY Held for trading financial liabilities Borrowings and payables assets Hedging derivatives Bank borrowings 1,666,613 1,666,613 Other financial liabilities 161, ,779 Non current 1,828,392 1,828,392 Bank borrowings 538, ,428 Derivatives 12,723 1,121 13,844 Other financial liabilities 76,619 76,619 Current 12, ,047 1, ,891 TOTAL 12,723 2,443,439 1,121 2,457, Provisions and contingent liabilities The main litigation of a tax and legal nature affecting the Group at December 31, 2010 is described in Notes 14, 17 and 21 to the consolidated financial statements for the year then ended. In the first half of 2011 there were no significant changes in the litigation in progress and no material additional claims were filed against the Group. The tax inspections which commenced in July 2010 to review, inter alia, the income tax returns of the CEPSA Tax Consolidation Group are on-going without exceptions. In fact, Group Management do not expect any discrepancies to be detected which would lead to unprovisioned liabilities. 10. Related parties and remuneration and other benefits of directors and senior executives In addition to subsidiaries, associates and jointly controlled entities, the key management personnel of the Company (members of the Board of Directors and executives, together with their close relatives) and the companies controlled by key management personnel or over which they have significant influence are also deemed to be related parties. The CEPSA Group did not perform any significant transactions with its directors and executives in the first half of The Group s transactions with related parties in the first six months of 2011 and 2010, drawing a distinction between key shareholders and other related parties, are shown below. The conditions of the transactions with related parties are the same as those of transactions carried out on an arm's length basis and the corresponding compensation in kind was allocated to the transactions. 16

18 RELATED PARTY TRANSACTIONS 06/30/2011 EXPENSES AND INCOME Directors Companies or Other Substantial and entities in the related shareholdings executive group(*) parties Finance costs Leases Services received 1,328 71,195 72,523 Purchases of assets (finished or in progress) 519,075 96, ,846 Other expenses EXPENSES 520, , ,994 Finance income 76 3,045 3,121 Services rendered 269 5,969 6,238 Gains on the derecognition or disposal of assets 404, ,678 1,215,456 Other income INCOME 405, ,692 1,224,825 OTHER TRANSACTIONS Substantial shareholdings Directors and executive Companies or entities in the group(*) Other related parties Dividends and other profits distributed 128, ,297 (*) Companies proportionately consolidated or accounted for using the equity method. RELATED PARTY TRANSACTIONS 06/30/2011 EXPENSES AND INCOME Directors Companies Other Substantial and or entities in related shareholdings executive the group(*) parties Finance costs Leases Services received 2,078 62,332 64,410 Purchases of assets (finished or in progress) 446, , ,118 Other expenses EXPENSES 449, , ,212 Finance income - 2,146 2,146 Services rendered 1,024 4,910 5,934 Gains on the derecognition or disposal of assets 298, , ,798 Other income INCOME 299, , ,991 OTHER TRANSACTIONS Substantial shareholdings Directors and executive Companies or entities in the group(*) Other related parties Dividends and other profits distributed 102, ,638 Remuneration and other benefits of directors 17

19 At June 30, 2010, the Board of Directors was composed of 13 members, including one woman and 12 men. The remuneration earned by the directors of the consolidated Group at June 30, 2011 and 2010 was as follows: Type of remunerations Thousands of Euros 06/30/ /30/2010 Fixed remuneration Variable remuneration Attendance fees Remuneration per By-law 2,295 2,825 Pension funds and plans: contributions ; insurance premiums and other items ,959 4,049 18

20 Remuneration and other benefits of senior executives The number of members of senior management at June30, 2011 remains at 15 people that were involved to June 30, The detail of remuneration of the senior executives that are not executive directors of the consolidated Group at June 30, 2011 and 2010 is as follows: Type of remunerations Thousands of Euros 06/30/ /30/2010 Fixed remuneration 2,447 2,340 Variable remuneration 1, Other concepts Pension funds and plans: contributions and obligations 1,371 1,231 5,247 4, Segment reporting a) Business segment reporting: The CEPSA Group organizes and manages its businesses through four business segments: Exploration and Production, which includes oil and gas exploration and production activities. Refining and Marketing, which includes supply, refining and distribution activities. Petrochemicals Derivatives, which includes their production, distribution and marketing. Gas and Electricity, which includes combined heat and power production and the distribution and retailing of electricity and natural gas. The selling prices between the business segments approximate market prices and the amounts of income, expenses, assets and liabilities were determined before the eliminations on consolidation, except for the internal eliminations of each business segment. The financial data shown below were obtained using the same methodology and internal reporting structures as those established to provide management information and to measure the profitability of the business segments on a basis consistent with that of

21 Compañía Española de P etróleos, S.A. and Subsidiaries (Consolidated Group) Thousands of Euros PRIMARY SEGMENT REPORTING Information excluding Non-Recurring Items 06/30/2011 Exploration & Production Refining & Distribution Petrochemical Gas & Power Eliminations Intra-Group Non-recurring items Consolidated INCOM E REVENUE Revenue from external customers 470,081 10,645,752 1,744, ,836-13,230,789-13,230,789 Intra-Group revenue 52, ,494 35, ,458 (1,071,904) - - revenue 522,976 11,526,246 1,779, ,294 (1,071,904) 13,230,789-13,230,789 Excise tax on oil and gas charged on sales - (1,105,914) (1,105,914) (1,105,914) Revenue without Excise tax on oil and gas 522,976 10,420,332 1,779, ,294 (1,071,904) 12,124,875-12,124,875 Procurements and changes in inventories of finished goods and work in progress (18,412) (9,333,563) (1,400,391) (419,182) 936,178 (10,235,370) 250,651 (9,984,719) Other operating income and expenses (121,730) (891,644) (244,522) (29,491) 135,726 (1,151,661) - (1,151,661) RESULT 382, , ,264 25, , , ,495 Changes in operating allowances - (1,030) 11,177 (558) 9,590 (1,459) 8,131 Change in provisions for liabilities and charges (1,284) 2, (80) 1,046 1,046 Depreciation and amortisation charge (126,315) (165,885) (40,465) (8,311) (340,976) (340,976) Allocation to profit or loss of grants related to non-financial assets and others , ,868 4,868 Impairment and gains or losses on disposals of non-current assets 8 (419) Profit from operations 255,243 30, ,781 16, , , ,681 Share in profits of equity companies - 18, ,377 22,018 22,018 Net financial profit 1,348 1,348 Impairment and gains or losses on disposals of financial instruments Consolidated profit before tax 436, , ,830 Income tax (204,597) (74,757) (279,354) Profit/loss for the year from discontinuing operations Consolidated net profit for the year 232, , ,476 Minority interest (10,306) - (10,306) Profit attributable to parent company 221, , ,170 Compañía Española de P etróleos, S.A. and Subsidiaries (Consolidated Group) Thousands of Euros PRIMARY SEGMENT REPORTING Information excluding Non-Recurring Items 06/30/2010 INCOM E REVENUE Exploration & Production Refining & Distribution Petrochemical Gas & Power Eliminations Intra-Group Non-recurring items Consolidated Revenue from external customers 372,147 8,396,566 1,395, ,865-10,548,076 10,548,076 Intra-Group revenue 16, ,615 28,589 77,083 (782,012) - - revenue 388,872 9,056,181 1,424, ,948 (782,012) 10,548,076 10,548,076 Excise tax on oil and gas charged on sales - (1,147,493) (1,147,493) (1,147,493) Revenue without Excise tax on oil and gas 388,872 7,908,688 1,424, ,948 (782,012) 9,400,583 9,400,583 Procurements and changes in inventories of finished goods and work in progress (14,162) (6,757,650) (1,106,815) (407,993) 648,592 (7,638,028) 137,887 (7,500,141) Other operating income and expenses (68,642) (923,153) (222,093) (30,297) 133,420 (1,110,765) - (1,110,765) RESULT 306, ,885 95,179 22, , , ,677 Changes in operating allowances - (6,704) (254) 23 (6,935) 332 (6,603) Change in provisions for liabilities and charges 1,327 (5,171) 262 (7,209) (10,791) (10,791) Depreciation and amortisation charge (142,064) (132,435) (41,214) (7,457) (323,170) (323,170) Allocation to profit or loss of grants related to non-financial assets and others , ,970 4,970 Impairment and gains or losses on disposals of non-current assets (247) 602 (14) Profit from operations 165,084 84,887 58,219 8, , , ,424 Share in profits of equity companies - 14,675 1,972-16,647 16,647 Net financial profit Impairment and gains or losses on disposals of financial instruments (218) (218) Consolidated profit before tax 332, , ,029 Income tax (143,279) (41,467) (184,746) Profit/loss for the year from discontinuing operations Consolidated net profit for the year 18 9, , ,283 Minority interest (5,975) - (5,975) Profit attributable to parent company 183,556 96, ,308 b) Geographical segment reporting: 20

22 The breakdown of revenue by geographical area is as follows: Revenue from sales to external customer 06/30/11 06/30/10 Spain (*) 8,319,714 7,438,971 Other EU Countries 1,813,154 1,742,615 África 527, ,055 América 1,362, ,716 Rest of the world 1,207, ,719 Consolidated total 13,230,789 10,548,076 (*) In Spain, the data relating to 2011 and 2010 included under Revenue from Sales to External Customers Includes excise taxes. c) Information on non-recurring items: The breakdown, by business segment, of the main items composing this heading is as follows: 06/30/2011 Profit from operations Exploration & Production Non Recurring Items Refining & Distribution Petrochemical Difference from inventories measurement at LIFO cost - 223,444 24,288 1, , ,444 24,288 1, ,192 Profit before tax Difference from inventories measurement at LIFO cost - 223,444 24,288 1, , ,444 24,288 1, ,192 Consolidated profit Difference from inventories measurement at LIFO cost - 156,411 17,002 1, , ,411 17,002 1, ,435 Gas & Power Non- Recurring Items 06/30/2010 Profit from operations Exploration & Production Refining & Distribution Petrochemical Difference from inventories measurement at LIFO cost - 115,013 20,779 2, , ,013 20,779 2, ,219 Profit before tax Difference from inventories measurement at LIFO cost - 115,013 20,779 2, , ,013 20,779 2, ,219 Consolidated profit Difference from inventories measurement at LIFO cost - 80,509 14,545 1,698 96,752-80,509 14,545 1,698 96,752 Gas & Power Non-recurring items include the difference in the value of inventories between the average cost method -used in the financial statements- and replacement cost -used to measure business segments-, thus facilitating the analysis of business segment performance and comparison between years. 21

23 12. Average headcount The detail of the average number of employees at June 30, 2011 and 2010, by gender, is as follows: Labor Force by Gender 06/30/ /30/2010 Men 7,975 7,845 Women 3,888 3,883 11,863 11, Events after the balance sheet date On February 4, 2011, in compliance with article 82 of the Securities Market Law 24/1988, of July 28, CEPSA announced that on February 3, 2011 it entered into an agreement with the American multinational CHEVRON to acquire all the shares of its subsidiary in Spain, CHEVRON España S.A. The transaction cannot be carried out until the competent organizations give the necessary authorizations, which at the date of preparing these condensed consolidated interim financial statements had not been granted. On February 16, 2011, the Abu Dhabi Sovereign Fund, International Petroleum Investment Company (IPIC), at that time holding 47.06% of CEPSA's share capital, announced via a significant event published by the CNMV (National Securities Exchange Commission) its takeover bid for all of CEPSA's shares. CEPSA's major shareholder, TOTAL, confirmed that it would sell all its 48,83% holding to the bidder. The offer price per share was 28 euros, plus a dividend of 0.50 euros payable to shareholders in May On July 6, 2011, the CNMV authorized IPIC's takeover bid and the cut-off date was July 22, Consequently, IPIC acquired 51,47% of CEPSA's share capital, the date of preparation of these interim consolidated financial statements, giving it an ownership interest of 98,53%. 14. Explanation added for translation to English These condensed consolidated half-yearly financial statements are presented on the basis of IFRSs as adopted by the European Union. Certain accounting practices applied by the Group that conform with IFRSs may not conform with other generally accepted accounting principles. 22