Investors update April 2012
Disclaimer ALL RIGHTS ARE RESERVED REPSOL YPF, S.A. 2012 Repsol YPF, S.A. is the exclusive owner of this document. No part of this document may be reproduced (including photocopying), stored, duplicated, copied, distributed or introduced into a retrieval system of any nature or transmitted in any form or by any means without the prior written permission of Repsol YPF, S.A. This document does not constitute an offer or invitation to purchase or subscribe shares, in accordance with the provisions of the Spanish Securities Market Law (Law 24/1988, of July 28, as amended and restated) and its implementing regulations. In addition, this document does not constitute an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange of securities in any other jurisdiction. In particular, This document does not constitute an offer to purchase, subscribe, sale or exchange of Repsol YPF's or YPF Sociedad Anonima's respective ordinary shares or ADSs in the United States or otherwise. Repsol YPF's and YPF Sociedad Anonima's respective ordinary shares and ADSs may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended. This document contains statements that Repsol YPF believes constitute forward-looking statements which may include statements regarding the intent, belief, or current expectations of Repsol YPF and its management, including statements with respect to trends affecting Repsol YPF s financial condition, financial ratios, results of operations, business, strategy, geographic concentration, production volume and reserves, capital expenditures, costs savings, investments and dividend payout policies. These forward-looking statements may also include assumptions regarding future economic and other conditions, such as future crude oil and other prices, refining and marketing margins and exchange rates and are generally identified by the words expects, anticipates, forecasts, believes, estimates, notices and similar expressions. These statements are not guarantees of future performance, prices, margins, exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be beyond Repsol YPF s control or may be difficult to predict. Within those risks are those factors described in the filings made by Repsol YPF and its affiliates with the Comisión Nacional del Mercado de Valores in Spain, the Comisión Nacional de Valores in Argentina, the Securities and Exchange Commission in the United States and with any other supervisory authority of those markets where the securities issued by Repsol YPF and/or its affiliates are listed. Repsol YPF does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that the projected performance, conditions or events expressed or implied therein will not be realized. The information contained in the document has not been verified or revised by the Auditors of Repsol YPF. April 2012 1
Agenda 1. Strategy Execution 2. Financial Performance 3. Summary April 2012 2
Agenda 1. Strategy Execution 2. Financial Performance 3. Summary April 2012 3
Our vision Core Businesses Upstream Growth engine leveraging on successful exploration activity GNL Cash generation & value of flexibility Downstream Harvesting fully invested best-in-class assets Affiliates YPF 51% shares expropriated Gas Natural Fenosa Diversification, stability and strong cash generation 4
Transformation of the Upstream business On track with 2014 objectives Production growth 3-4% p.a. to 2014 and 5% from 2015 to 2019 Proved reserve replacement ratio greater than 110% Net production (Mboe) 250 200 150 100 3-4% 5% 200 % 160 % 120 % 80 % 65 % 94 % 128 % 162 % > 110 % 50 3% 40 % 0 2009 2010 2014 2019 0 % 2008 2009 2010 2011 2010-2014 1. All figures exclude Argentina and consider 40% dilution in Brazil assets Exploration & Contingent Resources Key growth projects Currently Producing Assets Expect to deliver production targets despite dilution in Brazil April 2012 5
Transformation of the Upstream business Key projects sustaining objectives Shenzi Development of deepwater oil field in the U.S. GoM - W.I. Repsol : 28% - FID: 2006 Production: 121 kboe/d Kinteroni 800 MUS$ Block 57 wet gas field delineation and development W.I. Repsol : 53.8 % - FID: 2009 Production: 5 Mm3/d Margarita- Huacaya 250 MUS$ 2 gas/liquids fields under development in Caipipendi block W.I. Repsol : 37.5%; (Op) - FID: 2010 Production: 11 Mm3/d (2nd phase) Piracuca 370 MUS$ 350 MUS$ Development of oil and gas field in the shallow waters of Santos Basin W.I. Repsol :22.2% - FID: 2011 Production: 25 kboe/d 1. All production figures indicate gross plateau production Cardon IV 750 MUS$ Carabobo 750 MUS$ Perla s offshore gas field under development W.I. Repsol : 32.5% (co-op.) - FID: 2011 Production: 8 Mm 3 /d (1st phase) Sapinhoá (Guará) 1,250 MUS$ Development of Santos basin pre-salt oil field W.I. Repsol : 15% Declaration of Comerciality: Dec 2011 Production: 250 kboe/d Start-up of extra-heavy crude production field in the Orinoco Belt W.I. Repsol : 11% - FID: 2012 Production: 400 kboe/d Albacora Leste W.I. Repsol : 6% Important pre-salt discovery in evaluation Lubina- Montanazo 90 MUS$ Development of new oil discoveries adjacent to production fields. W.I. Repsol : 100% (Lubina); 75% (Montan.) (Op) Production: 5.6 kboe/d Reganne 6 onshore gas fields under development W.I. Repsol :29.3% (Op) -FID: 2009 PoD: 2011 Production: 8 Mm3/d I/R 400 MUS$ 140 MUS$ Development of oil field I/R, belonging to the blocks NC 186 and NC 115 W.I. Repsol: 20% (NC-115), 16% (NC-186) (foreign Op.) - FID: 2007 / Production: 75 kboe/d MUS$ NET CAPEX 10-14 Projects with a better performance New projects not considered in SP Update 2010-2014 (April 2010) April 2012 6
Transformation of the Upstream business Consistent exploration program sustaining objectives $/boe 14 12 Exploration Investment ($/boe produced) 12,4 New contingent resources (Mboe) (1) 10 8 6 4 2 0 8,6 8,2 7,5 7,7 7,0 5,8 5,9 5,8 5,3 5,6 4,4 5,2 2,9 3,2 4,6 3,12,2 3,8 3,8 4,0 3,3 2,6 2,8 1,9 1,6 1,8 2,1 2,3 2,3 0,9 1,1 2004 2005 2006 2007 2008 2009 2010 2011 DG Upstream Industry Average Majors Average E&P Independents Average Note: 2011 figures only includes companies with reported data at 26/03/2012. Note: 2011 only includes companies with reported data as of 26 th of March 2012 Source: Repsol 2011. Repsol figures include drilling and G&G costs Contingent Resources 2008 : 765 Mboe Contingent Resources 2009 : 1.404 Mboe Contingent Resources 2010 : 1.581 Mboe Contingent Resources 2011: 1.509 Mboe (2) (Note: Internal figures. Brazil 15%) (1) Contingent resources evaluated considering 40% dilution in Brazil assets. (2) 720Mboe added in 2011 as contingent resources and 790Mboe moved form Contingent Resources to 3P Reserves. 177 Mboe added to 1P Reserves mainly from Perla in Venezuela, Reganne in Algeria, initial declaration of Sapinhoa in Brazil and Kinteroni in Peru. Repsol s consistent exploration investment has led to a solid pipeline of contingent resources April 2012 7
Transformation of the Upstream business What we are working on. ALASKA CUBA & GUYANA ALGERIA NORWAY Begin intense drilling campaign in Alaska (winter window) Spud of Jaguar and Jagüey Initiate drilling in SE Illizi in Algeria Two wells in Norway RUSSIA GOM Re- initiate exploratory and appraisal activity in GoM COLOMBIA Three exploration wells Spud of our first wells in Russia (winter 2012-2013) LIBYA Resumption of exploration operations in Libya after civil conflict PERU Sagari and continue exploration around Kinteroni and rest of Block 57 BRAZIL WEST AFRICA BOLIVIA Finalise Sararenda 4 exploration wells in Brazil 1 new well and the finalization of other one 2012 April 2012 8
Transformation of the Upstream business LNG on track as well Peru LNG started in June 2010 Canaport regasification plant (Canada) also on stream Increase in LNG adjusted operating income - 2010: 127M - 2011: 388M Solid yearly earnings from 2012 onwards April 2012 9
% %FCC equivalent Downstream: Best-in-Class Assets Objectives accomplished 100% 80% 1Q 2Q 3Q 4Q Cartagena today Bilbao today Improved capacity to process lower quality crude oils and to produce high quality diesel 60% Bilbao pre-upgrade 40% 20% Cartagena pre-upgrade 0% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 La Coruña Puertollano Tarragona Mbcd Repsol has achieved one of the highest conversion ratios among European majors (first quartile of industry) Mbpd Note: %FCC equivalent without Lubes of Cartagena and Puertollano of 92% and 79%, respectively April 2012 10
Downstream: Best-in-Class Assets Key projects have added a premium on margins Real and simulated premium under current conditions Refining margins will consistently show a premium. Increase in Free Operating Cash Flow before taxes 2012 vs. 2011 ~ 1,1 1,3 Bn (*) (*) Based on a +2$/bbl premium, 80% utilization, and taking into account the difference in investments between both years. Septembre April 2012 2011 11
Downstream: Best-in-Class Assets Middle-distillates deficit supports investments Spanish market to continue to show deficit Privileged middle-distillates position 7,4 60 12,0 % Middle distillates yields by company 3,7 30 2010 Figures in million tons 2020 Middle distillates deficit in 2020 include new production from Repsol and Cepsa projects, and demand covered with biodiesel (10% in 2020) % Yield after growth projects Source: WoodMackenzie 2010, Repsol estimates From 2012 on, solid cash generation and margin increase from premier integrated position in the European downstream April 2012 12
Downstream: Best-in-Class Assets On the top of the range throughout the cycle $/bbl R&M Integrated Margin (1) 0 2005 2006 2007 2008 2009 2010 2011 Note: (1) R&M margin calculated as CCS/LIFO-Adjusted operating profit of the R&M Segment divided by the total volume of crude processed (excludes petrochemical business). 2011 data is provisional (2) 14-peer-group, as of December 31 2011, including Eni, Shell, BP, Total, Cepsa, Galp, Petroplus, OMV, Conoco Philips, Exxon Mobil, Chevron Texaco, Sunoco, Valero, Tesoro., based on annual reports and Repsol s estimates. Repsol is maintaining one of the highest integrated margins in the industry Septembre April 2012 2011 13
YPF expropiation Energy situation in Argentina The total amount in subsidies increases: because of the difference between import prices and internal rates, and because of growing import volumes ENERGY TRADE BALANCE In Millions of Dolars Year Exports Imports Balance 2003 5.412 548 4.864 2004 6.195 1.004 5.192 2005 7.132 1.545 5.587 2006 7.760 1.729 6.031 2007 6.919 2.845 4.074 2008 7.996 4.334 3.662 2009 6.438 2.626 3.812 2010 6.401 4.443 1.958 2011 e 5.657 9.095-3.438 Source: OJF & Asociados in base of INDEC SUBSIDIES Gas realization prices (at the wellhead) 2011 USD/MBtu 10-16 8-12 4-5 Imports (Bolivia and LNG) Cost of new reserves (Non-Conventional) Current cost of gas reserve replacement (in mature basins) Imports of LNG and from Bolivia are at international prices, much higher than prices in the country. Source: Secretaría de Energía (Argentina), Ministerio de economía (Argentina), Ministerio de Minas e Energia-ANP (Brazil), Fondo de Compensación y Comisión Nacional de Energía (Chile), EIA (Henry-Hub) Septembre April 2012 2011 14 14
YPF expropiation Evolution of Key Metrics INVESTMENT IN FIXED ASSETS ACQUISITION YPF (In Millions of Dollars) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 963 1.173 1.286 867 834 981 1.282 1.638 1.991 2.239 1.518 2.242 2.990 YPF NET INCOME (In Millions of Dollars) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 477 1.229 819 1.076 1.596 1.679 1.847 1.459 1.320 1.241 994 1.487 1.289 According to Argentinean Gaap (pesos) with accumulated average exchange rate pesos/us$ Since 2006 investment has been higher than earnings. Record investment in 2011 Septembre April 2012 2011 15
YPF expropiation Accounting impact Maximum Exposure in the Financial Statements (Dec 31 2011): 5,7 Bn % YPF over total Group 2011 P&L: Operating Income 25.6% Net Income 21.0% Investments 33.7% April 2012 16
YPF expropiation IPO price according to Privatization Law and YPF Bylaws In the hipothetical case of an acquisition equal or greater than 15% and as per Articles 7 and 28 of theypf bylaws, the party acquiring the shares must launch a tender offer for the total shares of the company, which shall be paid in cash, according to the highest price of 4 possible caculation criteria. The applicable price which emerges from the calculations consists of the YPF maximum PER of the last two years multiplied by the net income per share share of the last twelve months. After applying the abovementioned formula, the estimated value comes to us$ 46.55 per share, resulting in a valuation of us$ 18,300 million for 100% of the company and us$ 10,504 million for 57.4%. April 2012 17
YPF expropiation Final considerations Repsol considers the announcement: Unlawful Discriminatory Does not justify the public interest pursued Obligations assumed at the time of privatization of YPF by the Argentinean state have been breached Violates the international investment community confidence. Consequently, Repsol will take all legal measures to preserve the value of its assets and interests of all shareholders. The unlawful expropriation of YPF does not affect the growth capacity of any of Repsol s businesses outside Argentina April 2012 18
Creating a vertically integrated leader in gas and power Gas Natural Fenosa A liquid asset, with long-term value and strategic benefits Strategically, a good opportunity since Repsol s participation in GN is an industrial package with a strategic value of its own Financially, the dividend s return exceeds the benefit of lowering the debt level Operationally, quite complementary to Repsol s portfolio of activities Risk-wise, activities in regulated markets offer risk diversification/balance and stability for credit rating purposes Repsol s cash not affected by Gas Natural Fenosa s debt April 2012 19
Efficient portfolio management Combining organic growth and external opportunities ALASKA Agreement with 70 & 148 LLC (affiliate of Armstrong Oil & Gas Inc) and GMT Exploration LLC to jointly carry out exploration activity in the blocks in Alaska s prolific North Slope Repsol will have a 70% working interest in the blocks RUSSIA Creation of a 840 M$ JV in the Russian Federation, the largest gas and oil producer in the world Alliance Oil contributed with 2 producing assets valued at 570 M$ while Repsol has contributed with Eurotek, worth 230 M$. Repsol will buy shares in the JV in order to reach a 49% ownership. US Agreement with SandRidge to acquire an acreage of 1,500 km 2 in producing areas of Oklahoma and Kansas called Original Mississippian and Mississippian Extension. Repsol will invest $ 1 Billion in the next three years and will incorporate reserves and production starting 2012. Net production of 90 kboed is expected by 2019. Deals aligned with strategy of searching new platforms for future growth with limited geographical and financial exposure, a local partner, and exploration upside potential Cash flow contribution in the medium-term through volume growth and strong focus on value creation April 2012 20
Agenda 1. Strategy Execution 2. Financial Performance 3. Summary April 2012 21
Financial performance update Strong balance sheet supported by strict financial discipline M 5% shares sold among institutional investors M 14.000 12,473 131% 10% shares acquisition 12.000 10.000 9,504 8.000 6.000 4.000 2.000 - Liquidity Gross Debt Cash and equivalents Undrawn credit lines Financial Investments Figures ex Gas Natural April 2012 22
Financial discipline allowing for steady shareholder returns Dividends ( /share) Payout ratio (%) 1.6 100 90 1.2 Dividends Payout ratio 1.05 1.16 80 70 0.8 0.4 0.50 0.40 0.31 0.60 0.72 1.00 1.05 0.85 +10% 60 50 40 30 20 10 0.0 02 03 04 05 06 07 08 09 10 * 11 ** 12 0 (*) Pay-out in 2010 (69,5%) adjusted for the Repsol- Sinopec transaction (**) In July 2012 exists an option to get a scrip dividend Keeping an adequate dividend level is a top priority. Lack of cash dividend from affiliate YPF will be partially offset by Repsol scrip dividend April 2012 23
Agenda 1. Strategy Execution 2. Financial Performance 3. Summary April 2012 24
Summary Positioned for growth Accomplishing the transformation of Repsol Upstream into the Group s growth engine through key attractive current projects Leverage on strong recent exploration track record to create value from current exploration pipeline Benefit from enhanced best-in-class Downstream assets to capitalize market recovery Portfolio Optimization Geographical Balance Core Assets consolidation Portfolio Optimization Strong balance sheet to fund future growth Stable dividend from Gas Natural 51% YPF shares expropriated. Remaining 6% YPF shares under interrogation Under the assumed scenario, cash generated will allow us to fund investments, increase dividends and improve the leverage ratio April 2012 25
From Mid-continent and Gulf Basins Niagara River Waddington Leidy Philipsburg Wright Brookfield VT Pittsburg NH Dracut MA CT Shelton RI Maine Beverly Cumberland New Brunswick (Everett) Strategic roadmap Another year of value creation Start up of key Downstream projects Lubina- Montanazo (Spain) On going projects * US GoM Shenzi (US GoM) Brasil Capital Increase FID (2009) Production: 6 kboe/d Kinteroni (Peru) Carabobo (Venezuela) Reggane (Algeria) Buckskin Shenzi G-104 & Shenzi-8 increase the potential of the current fields and the North Flank I/R (Libya) FID: 2006 Production: 121 kboe/d Canaport Peru LNG Bilbao / Cartagena Refineries (Spain) FID (2009) Production: 5 Mm 3 /d Margarita Huacaya (Bolivia) Guará (Brazil) FID (2011) Production: 400 kboe/d Cardon IV (Venezuela) Prelim FID (2009) PoD (2011) Production: 8 Mm 3 /d Carioca (Brazil) Brazil Carioca, Abaré, Abaré West & Iguazú in BM-S-9 Albacora Leste pre-salt Panoramix Piracucá Gavea, Vampira, Malombe Start up FID: 2007 Production: 75 kboe/d Sale of 15% stake to Petersen Group 2008 New York Boston Start-up: 3Q 2009 Capacity: 10 Bcma Start-up: 2Q 2010 Capacity: 6 Bcma Sale of 4,2% stake to institutional investors Crude RRR 72% 70% 100% RRR 65% 94% 131% Reserves (Mboe) 1067 1060 1099 Production (kboe/d) 333 333 344 Add. Resources 362 599 715 (Mboe/Year) On stream: 4Q11 FID (2010-2011) Production: Phase1 +6 Mm 3 /d Phase2 +6 Mm 3 /D DoC (2011) Production: 270 kboe/d FID (2011) Production: 8 Mm 3 /d DoC (2013) Production: 150 kboe/d 2009 2010 2011 2012 2013 2014 2015-2016... beyond (**) 162% 1167 299 720 Portfolio: Divestment Operations: Improvement of recovery factor and development of unconventional resources >110% 3-4% CAGR +275 Mboe average per year (**) Considering 40% dilution in Brazil assets (*) All production data refers to plateau production Sierra Leone & West Africa - Venus B -1 first offshore discovery in an unexplored area Mercury discovery Liquids Gas LNG April 2012 26
Investors update April 2012