Growing from our strengths Strategic Plan 2012-2016 Investor s update August 2013
Disclaimer ALL RIGHTS ARE RESERVED REPSOL, S.A. 2013 Repsol, 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, 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. Some of the resources mentioned in this document do not constitute proved reserves and will be recognized as such when they comply with the formal conditions required by the U.S. Securities and Exchange Commission. This document contains statements that Repsol believes constitute forward-looking statements which may include statements regarding the intent, belief, or current expectations of Repsol and its management, including statements with respect to trends affecting Repsol 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 s control or may be difficult to predict. Within those risks are those factors and circumstances described in the filings made by Repsol 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 and/or its affiliates are listed. Repsol 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. 2
Agenda Company Overview Repsol: A Transformation Story Strategic Plan 2012-2016 : Growing from our strengths Financial Outlook Environmental, Social & Governance Summary 3
Company Overview
Company Overview Repsol today Norway Russia Canada Ireland Mexico USA Aruba Italy Spain Portugal Venezuela Tunisia Morocco Algeria Trinidad & Libya Tobago Mauritania Romania Bulgaria Guyana Kurdistan Colombia Ecuador Peru Bolivia Brazil Sierra Leone Liberia Angola Namibia Indonesia Australia E&P R&M Core Businesses Non Operated Shareholding E&P / R&M Upstream Downstream Gas Natural Fenosa 5
Company Overview Shareholders Structure 12,02% 9,38% Caixabank 62,94% 6,32% 9,34% 6.41% Sacyr Pemex Temasek Free Float SHAREHOLDERS % Caixabank 12.02% Sacyr 9.38% Pemex 9.34% Temasek 6.32% Free Float 62.94% Number of Shares: 1,302.47 million (as of August 2013) 6
Company Overview Repsol in figures M As of Jun.13 FY 2012 6M 2013 Capitalization (1) 23,431 EBITDA 6,956 3,376 (4) Capital Employed (2) 34,085 EBIT 4,286 1,991 (3) Net Debt + Preferred Shares 10,754 Net Income 1,890 945 Equity 28,528 CCS Adj. Net Income 1,954 1,185 (5) Investments 3,721 1,579 1. As of July, 31 st 2. Considering Gas Natural stake as a financial investment: 29,172 M 3. Ex-Gas Natural: 6,320 M 4. Ex-Gas Natural: 2,582 M 5. Net income from continuous operations 7
Company Overview Repsol in figures 2Q 2013 CCS Adjusted Operating Income by Business Segments (M ) 2Q 2012 1Q 2013 2Q 2013 Upstream 518 668 514 LNG 78 311 170 NA assets (1) -48 129 25 Rest of assets 126 182 145 Downstream 205 183 147 Gas Natural Fenosa 232 253 239 Corporate and others (97) (101) (91) CCS Adj. Op. Income 936 1,314 979 CCS Adj. Net Income 481 676 509 (1) FY 2012 Adjusted Operating Income = - 63 M 8
Repsol: A transformation story
Repsol: A transformation story Turnaround plan Objectives accomplished Portfolio Management Options to materialize value from our balance sheet through selective divestments Accomplishing the transformation of Repsol Upstream into the Group's growth engine Very successful exploration activity leveraged on increased investment and technical expertise Outstanding results in reserve replacement Delivering key growth development projects on time and on budget Optimize return on capital and improve competitiveness through targeted conversion expansion Leading competitive position as an integrated player in Spain Repsol among the European companies with highest conversion Solid cash generation from premier integrated position in the European downstream 10
Repsol: A transformation story Turnaround plan Enlarging and improving the portfolio base Algeria Gassi Touil Canada Canaport Brazil Carioca Algeria Reggane Canada Canaport Bolivia Margarita- Huacaya Venezuela Carabobo Peru Kinteroni Spain Cartagena and Bilbao refineries Venezuela Cardón IV Brazil Sapinhoa- Guará EEUU Midcontinent Bolivia Margarita- Huacaya Venezuela Carabobo Brazil Carioca Russia AROG Peru Kinteroni Venezuela Cardón IV US GoM Shenzi Peru Block 39 Algeria Reggane Brazil Sapinhoa- Guará Spain Lubina- Montanazo Algeria Reggane 2005 2008-2012 2010-2014 2012-2016 11
Repsol: A transformation story Project Turnaround (1) FID Start up New areas of Exploration Norway Guyana Namibia Alaska Brazil Carioca Brazil Sapinhoa Guará European Atlantic Angola Sierra Leone Colombia Kurdistán Bulgaria Canada Brazil BM-C-33 GoM Buckskin Algeria Reggane Venezuela Perla Venezuela Carabobo Libya I/R Peru Kinteroni Bolivia Margarita- Huacaya Canada Canaport US Midcontinent US GoM Shenzi Cartagena Bilbao Russia AROG Prospective Evaluation Construction Operation FID: Final Investment Decision Upstream Downstream GNL Stage of Advance 12
Strategic Plan 2012-2016 Growing from our strengths
Strategic Plan 2012-2016 2012-2016 Key strategic targets Production growth 2011-16 (1) : > 7% CAGR (2) Production 2016: ~500 kbpd RRR (3) 2011-2016: > 120% Upstream average capex: 2.9bn/year (4) (+120% vs. average 2008-2011) Downstream average Free Cash Flow: 1.2bn/year Downstream average capex: 0.7bn/year (-50% vs. avg. 2008-11) High growth in Upstream Maximize return on capital Downstream Financial strength Competitive shareholder compensation Self-financed plan generating 8.1-8.6 bn cash for dividends & debt reduction in base case, resilient to stress scenario Maintain investment grade rating Divestments & treasury stock: up to 4-4.5 bn in 2012-2016 (5) Dividend 2012: ~1 /share (scrip option) 40-55% pay-out ratio 1. 2011 production adjusted for Libyan revolution. It considers 2010 Libya production (14.7Mboe) instead of Libya 2011 production (3.4Mboe) 2. Compound annual growth rate 3. Average Reserve Replacement Ratio 2011-2016. 4. Net Capex. excluding G&G and G&A 5. divestments: 10% of treasury stock ( 2.4bn); LPG Chile & Amodaimi ( 0.6bn) and LNG business ( 4.4bn) 14
Upstream Our businesses strategy: 2012-2016
Upstream Focus on Exploration Setting the basis for the new waves of growth Exploration Capex: USD 1.0bn/year Including drilling, G&A and G&G RRR (2) >110-120% Additions to Proven Reserves: +200/250 Mboe # Wells/year: 25-30 75% focused on liquids Contract application and movements of resources to reserves Contingent resources/year (risked): +300/350 Mboe WI resources evaluated/year (unrisked): +1,500 Mboe Success ratio: 20-25% (1) 1. Historical success ratio above 30% 2. Average RRR (Reserve Replacement Ratio) beyond 2016 16
Upstream Focus on Exploration Highlights for 2013-2014 32 firm wells 2013 Back to full speed Investigate around 6 billion barrels in gross terms 70% of investments targeting oil Almost 65% spent in drilling Largest expenditure in USA, Brazil, Norway, Canada, Peru Strong activity offshore in Brazil, USA, Norway and Canada, coupled with recovery of onshore activity in Libya, Algeria and new operations in Russia 2014 Maintaining speed Targeting +30 wells (includes contingencies, from 40 in inventory) Another 6 billion barrels in gross terms to investigate Main drilling activity forecasted for Angola, Libya, Norway, Brazil, USA and possibly Colombia. Other plays investigated are Kurdistan, Portugal, Namibia and Canada Expected resources from 2014 again above 300 MBOE 17
Upstream Operational Activity and Main Events Exploration activity during First Half of 2013 Canada Russia USA Indonesia Colombia Algeria Positive Brazil 12 wells +1 appraisal completed, 9 positive 300 MBOE Addition Target 18
Upstream Operational Activity and Main Events Drilling Plan during Second Half of 2013 Alaska Canada Norway Russia Gulf of Mexico Libya Kurdistan Indonesia Brazil Target of 32 wells in 2013 19
Upstream Delivering Growth 10 key growth projects in 2012-2016 Brazil USA Africa & Europe 1 Sapinhoa Mid-continent Reggane Lubina-Montanazo Carioca (Guara) (USA) (Algeria) (Spain) 2 3 4 5 300 Kboed 150 Kboed 40 Kboed (1) 48 Kboed 5 Kboed 6 WI: 15% FID: 2010 FO: 2013 Capex 12-16: 1.2bn WI: 15% FID: 2012 FO: 2016 Capex 12-16: 0.8bn net production (1) - FO: 2012 Capex 12-16: 2.3bn WI: 29.25% FID: 2009 FG: 2016 Capex 12-16: 0.4bn WI: 100-75% FID: 2009 FO: 2012 Capex 12-16: 0.02bn 7 Margarita-Huacaya (Bolivia) 102 Kboed WI: 37.5% FID: 2010 FG: 2012 Capex 12-16: 0.3bn Kinteroni (Peru) 8 40 Kboed WI: 53.8% FID: 2009 FG: 2012 Capex 12-16: 0.07bn North Latam 9 Carabobo (Venezuela) 370 Kboed WI: 11% - FO: 2013 Capex 12-16: 0.7bn 2012-2016 10 Cardon IV (Venezuela) 53 Kboed (2) WI: 32.5% FID: 2011 FG: 2014 Capex 12-16: 0.5bn Russia AROG (Russia) 50 Kboed WI: 49% - FO: 2012 Capex 12-16: 0.4bn Post 2016 Next wave of growth Exploration Contingent resources Alaska C-33 (Seat, Gavea, Pao de Açucar) Presalt Albacora Sierra Leone Buckskin Malombe Iguaçu Piracuca-Panoramix-Vampira NC200 Sagari TIHS-1 Prospective resources GoM Beaufort Sea Louisiana East Canada Campos, Santos & Espiritu Santo Colombia RC11, RC12 & Tayrona Guyana Angola and Namibia Spain and Portugal Norway offshore Peru: Mashira... Key growth projects increasing Repsol net production: more than 200 Kboed in 2016 Low risk of delivery: 5 project already producing +1 starting Note: all production figures indicate gross plateau production; WI = Repsol Working Interest; FID = Final Investment Decision; FO: First Oil; FG: First Gas; Net capex 2012-2016, excluding G&G and G&A. 1. Average Repsol net production post royalties 2. Phase I gross production Producing as of August 1 st 2013 20
Upstream Delivering Growth Targets CAGR (2) >7% Net Production (1) 2012-2016 Reserve Replacement Ratio Reserves (kboed) 800 2012 332 kboed 2013(e) +10% increase 1H13 +12% increase (Mboe) 2,000 RRR 2012 204% (194% organic) Contingent Resources : 2011 1.5 Bn boe 2012 2.1 Bn boe Growth projects Producing assets 400 1,000 0 2011 2016 2021 0 2011 2016 2021 Production 2012-2016 entirely based on current assets + growth projects 2016 production target not built neither on contingent nor prospective resources from exploration 1. 2011 production adjusted for Libyan revolution: it considers 2010 Libya production (14.7Mboe) instead of Libya 2011 production (3.4Mboe) 2. Compound annual growth rate 3. Risked resources Annual addition of contingent resources through exploration: +300/350 Mboe (3) With a notable improvement in reserve replacement, without exhausting contingent resources bank 21
Our businesses strategy: 2012-2016 LNG
LNG Assets included in the transaction Atlantic LNG Peru LNG BBE ALNG1 ALNG 2/3 ALNG 4 Liquefaction Loans linked to the asset Generation Liquefaction Cap 1.: 4.1bcma Repsol: 20% Liquefaction Cap 1.: 9.0 bcma Repsol: 25% Liquefaction Cap 1.: 7.1 bcma Repsol: 22% Liquefaction Cap 1.: 6.1 bcma Repsol: 20% Generation Cap: 800MW Repsol: 25% Marketing, Shipping & Trading Activities Repsol off-take: 2.9 bcma GNF: 1.65 bcma BBE 1.1 bcma Repsol off-take: 1.6 bcma Other destinies Repsol off-take: 5.9 bcma Manzanillo: 4.4 bcma Other destinies: 1.5 bcma Fleet 9 LNG tankers 2 a long term time charter (5 x c.138,000m3 + 4 x c.173,000m3) 4 LNG tankers short term time charter (0.58 Mm3) Liquefaction Marketing & Trading Generation The North America LNG operations (the Canaport regasification plant and the North America Marketing & Trading businesses) were excluded from the transaction. Note: Transport and upstream assets are not included in the transaction perimeter. 1MMtpa=1.37bcm 1. Nameplate capacity of the plant 2. 7 chartered by Repsol and 2 chartered by Repsol and GNF
LNG Valuation and impact Enterprise Value and Equity Value 6.7 B$ 1.8 B$ 0.5 B$ 4.4 B$ Enterprise Value (economic date 30/09/2012) Financial Leases Gross Debt from non controlled entities Equity Value Accounting Impact 4,4 B$ NET DEBT IMPACT 1 0,9 B$ 3,5 B$ 2,7 B$ NET DEBT (31/12/2012) 4.4 Bn 0,8 B$ 1,4 B$ LNG SALE 1,3 B$ Equity Value Book Value as of 30th September 2012 Gross Result Fiscal impact Capital Gain North America Net Results Impairment after after taxes and taxes North America Provisions NET DEBT (31/12/2012) 2.2 Bn 1. Figures exclude Gas Natural Fenosa 24
Our businesses strategy: 2012-2016 Downstream 25
Downstream Improve profitability on operational excellence and efficiency Refining Petrochemicals Reduce energy costs Fuel consumption & losses down by 6% at 2016 Reduce CO 2 emissions by 15% at 2016 Operational excellence program in refineries Maximize value of integration with refining Continue cost reduction program Efficiency program Higher-value applications Marketing LPG Maximize value of marketing assets and competitive position Optimize retail asset portfolio Increase non-oil margins Increase international margin from lubricants and specialties Adequate production and commercial capacity to market conditions in Spain Profit growth in Latam with best-in-class operations Optimize portfolio Maximization of Integrated Margin in Downstream 26
Downstream Downstream strategy 2010-2014: Increased competitiveness of Downstream business Oil pipeline Repsol Oil pipelines CLH % FCC equivalent 100% 1Q 2Q 3Q 4Q CORUÑA BILBAO 80% PUERTOLLANO CARTAGENA TARRAGONA 60% 40% 20% 0% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Europe Mbpd Increased competitiveness of refining assets Top quartile position among European peers along the cycle Divested non-core / low return assets ( 1.4 (1) bn) (MTm) 30 20 10 0 Middle distillates production 16 2008 % FCC equivalent +25% 80 60 +20pp 20 2012 40 20 0 43 2008 Conversion 63 2012 Improved competitiveness of refining assets 1. Includes sale of 15% of CLH, non-integrated Downstream in LatAm (Chile, Brazil and Ecuador), PMMA Petrochemicals, Refap in Brazil and LPG France, some of them executed in Dec. 2007 27
Downstream Downstream: Premium asset base Integrated R&M margin (Repsol vs. Sector) Presence in a premium market for refining Completion of expansion and conversion projects Repsol margins Industry peer group maximum margin Industry peer group minimum margin Integrated refining portfolio, working as a unique system Efficient integration between the refining and marketing businesses Competitive Downstream business, linked to quality assets and geographical situation Note: Integrated 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) of a 14-peer-group. Based on annual reports and Repsol s estimates. 2013 data as of May 9 th public information. Source: Company filings 28
Downstream Maximize return on investment and cash generation Fully invested asset portfolio and portfolio management Refining margin to increase approx. 3 USD/bbl in 2016 due to new projects Leading middle-distillate yield in short neighboring markets Continue selective divestments of non-core assets during 2012-2016 period Maximize margins and return on investment Investment in Downstream of 0.7bn/year in 2012-16 (vs. 1.6bn/year in 2008-11) Downstream to generate + 1.2bn/year on average of free cash flow 2012-2016 Profit improvement through operational excellence and efficiency Operational excellence and debottlenecking initiatives Integrated margin enhancement Exploit focused high-value growth options with low capital requirements Leverage our premium portfolio to exploit in high return niche opportunities 29
Downstream Maximizing returns from the business and capital discipline Downstream EBITDA Downstream CAPEX ( bn/year) ( bn/year) 2.5 x1.3 2.5 2.0 2.0 1.5 1.5 x0.4 1.0 1.0 0.5 0.5 0.0 Avg. 2008-2011 Avg. 2012-2016 0.0 Avg. 2008-2011 Avg. 2012-2016 Marketing, LPG, Trading and Other Refining Petrochemicals Higher margins largely derived from expansion and conversion projects Downstream investment cycle already finalized 30
Our businesses strategy: 2012-2016 Gas Natural Fenosa
Gas Natural Fenosa Gas Natural A liquid asset, with long-term value and strategic benefits Strategically A good opportunity as an industrial package with a strategic value of its own Risk-management Regulated markets offer risk diversification and stability for credit rating purposes * Financially Strong cash stream for Repsol via dividend that is expected to increase in the short term GNF reached the objective set in the Strategic Plan of generating 5bn EBITDA by 2012 Liquid Asset Repsol has partially monetized its stake (keeping all the rights) through a Prepaid Forward that could be renewed if desired. Diversification, liquidity, stability and strong cash generation. * Limited impact of 27 and 54 M pre tax in 2013 and 2014 respectively due to the changes done in the law that regulates the electricity sector in Spain. Source: Repsol and Gas Natural Fenosa data 32
YPF Expropriation 33
YPF Expropriation Financial Impact 2008-11 risk mitigation Reduction of the exposure of the Group to YPF Divestment of 41.6% of YPF Financial impact (2011) Operating Income 1.2bn 25.6% 74.4% 25.6% Accounting of the expropriation Billion Deconsolidation of YPF participation - 4.7 Write off of all loans related to Petersen group - 1.4 Net income 0.5bn 21.0% 79.0% 21.0% Registration of the value as Assets for Sale + 5.6 Deferred tax effect + 0.5 Net effect on the P&L -> -38 million Investments 2.2bn 33.7% YPF 66.3% Repsol ex-ypf 33.7% The unlawful expropriation of YPF does not affect the growth capacity of any of Repsol's businesses outside Argentina 34
YPF Expropriation YPF Update 11,9% Repsol (stake subject to expropriation) 37,1% 51,0% Others Repsol (stake not subject to expropriation) As of August 2013 The lack of a fair compensation for the expropriation has compelled Repsol to implement a legal strategy in several jurisdiction to protect its rights. LEGAL ACTIONS: Claims filed in: US COURTS ICSID ARGENTINEAN COURTS SPANISH COURTS 11/07/2013: Constitution of the Tribunal Progressing according to the legal procedures. 35
YPF Expropriation YPF Update The YPF expropriation is manifestly unlawful and gravely discriminatory. The measure has been widely criticized by the international investment community. Repsol has an open attitude to reach an agreement which provides for a fair compensation. The value of the expropriated shares to be paid by the Republic of Argentina shall be determined in the ICSID arbitral proceeding. Last June Repsol indirectly received a compensation offer for the expropriated shares which amounted to 5.000 MUS$. This offer was unanimously rejected by the Board of Directors because (i) neither satisfied the losses suffered by Repsol; (ii) nor provided the necessary legal and financial guarantees; (iii) it lacked of liquidity and (iv) required significant and compulsory investments. 36
Financial Outlook
Financial Outlook Financial Discipline & Selective Divestments Financial Discipline Strong commitment to maintain investment grade Measures would allow a debt reduction of up to 7-9 Bn (1) : o Conversion of preferred shares (2) o Sale of treasury stock o Working capital optimization o Selective Divestments Maintain high liquidity Competitive compensation to shareholders Self-financed strategic plan Selective Divestments Strategic objective of 4-4.5 bn divestment already achieved: o o o Sale of treasury shares for 2.4bn Signed agreement to sell LNG assets to Shell for an EV of $6.7 bn Sale of Chile LPG and Ecuador Amodaimi for 551 M Other divestments under assessment: Non-strategic, non-core assets High risk exposure Low ROCE assets Market value perception Financial impact Divestments up to 4-4.5bn in 2012-2016 1. Debt reduction potential not considering adjusted dividend policy impact. 2. To be exchanged into a non dilutive instrument. 38
Financial Outlook 19bn focused capex program Capex 2012 = 3.3 bn Cumulative Capex (1) (2012-2016) bn Capex 2013E = 3.3/3.5 bn Upstream LNG (3) Downstream Corporation Total Producing assets 2.7 0.2 3.1 0.5 6.5 Growth projects & Future developments (2) & Exploration 12.0 0.6 12.6 14.7 0.2 3.7 0.5 19.1 77% CAPEX in Upstream 1. Net Capex, excluding G&G and G&A 2. Future develoments include proyects with start-up of production beyond 2016 3. From 2014 onwards no investment forecasted Note: all calculations ex-gas Natural Fenosa and YPF 39
Financial Outlook Actions to strengthen the Balance Sheet 2012 2013 2014 2015 2016 Divestments Chile LPG Ecuador Amodaimi 551 M Sale of LNG assets 6.7 Bn$ Adjusted dividend policy (pay-out, scrip dividend) 64%, 69% and 59% (acceptance rate) * Conversion of preferred shares 97% (acceptance rate) ** Working capital optimization 758 M Ongoing Sale of treasury stock *** 5% (1.4 Bn ) 5% (1 Bn ) *July 2012, January 2013 and July 2013 respectively. **Conversion at 97,5%: 475 in cash and a 500 nominal 3.5% -10-year bond. *** January 2012, March 4 th 2013. 40
Financial Outlook Net Debt Figures ex-gas Natural Fenosa Net Debt Net Debt+Pref./Capital Employed 5 Billion -22% % 25-3.6 bps 4 20 3 15 2 4.4 3.4 10 21.6 18.0 1 5 0 4Q 12 2Q 13 0 4Q 12 2Q 13 When the LNG sale is concluded Net Debt will decrease ~ 2.2 Bn (1) (1) Proforma figure at the economic date of the transaction, September 30 th, 2012 41
Financial Outlook Liquidity position Billion 12 10.1 10 2.3 x (*) 8 4.2 6 4 2 0 6.0 Liquidity Cash and equivalents 4.4 Short term maturities Undrawn credit lines No need for additional financing until 2014 As of June 30 th 2013, ex Gas Natural (*) Taking into account the cash disbursement as a result of the repurchase of the preference shares and the maturity of the July 22 th bond, amounting to 1,000 M, this ratio would stand at more than 3 times short-term debt maturities. 42
Environmental, Social & Governance
Environmental Social & Governance Conduct the business in a responsible manner Energy and Carbon Tracks & reports energy and carbon intensity KPIs. Strategy for reduction in our entire value chain. GHG emission reduction target. More than 2,5 million CO2eq emissions reduction in the period 2005-2012. Conduct sensitivity analysis of the impact of energy prices on company s financials. R&D for ecodesign of products. Development of non fossil energy: bioenergy, renewable electricity generation and transport electrification. Environmental Strong and detailed Environmental Management systems verified by third parties. Environmental issues are identified, studied and minimized throughout the entire lifecycle of industrial assets. Use of most recognized water risk assessment tools in the Oil&Gas. Clear path to value-creation for shareholders 1. Debt reduction potential not considering adjusted dividend policy impact. 2. Including treasury stock divestment 44
Environmental Social & Governance Conduct the business in a responsible manner Social Lost-time injury frequency rate shows a decreasing trend. Corporate Regulation to assess potential impacts on human rights under the United Nations "Protect, Respect and Remedy" framework. Strong regulation on Relations with communities, specially regarding Indigenous peoples. We engage with local communities to gain informed consent for all major projects, committing to maximize positive aspects and opportunities to generate shared value and to prevent and minimize negative impacts through dialogue and community involvement. Standards for suppliers covering issues such as, HR and ethics; and safety and environment issues. Governance Accountability and integrity underlined by centralized risk & crisis management framework. Transparency. Integration of sustainability into making decision process. Anti-corruption program covering all relevant aspects and business relationships. Clear path to value-creation for shareholders 45
Environmental Social & Governance Acknowledgements Repsol has led the Oil & Gas sector for two consecutive years, since 2011 edition of the prestigious Dow Jones Sustainability Indexes. The company also leads the Oil & Gas sector on the European index (DJSI Europe). Repsol has won recognition for its energy efficiency and carbon management for the third time in the last five years according to Climate Disclosure Leadership Index (CDLI). Other acknowledgements: 77% CAPEX in Upstream 1. 2011 production adjusted for Libyan revolution. It considers 2010 Libya production (14.7Mboe) instead of Libya 2011 production (3.4Mboe) 2. Compound annual growth rate 3. Reserve Replacement Ratio. 4. Net Capex. excluding G&G and G&A 5. 1.36bn of treasury stocks already divested in 1Q 2012 46
Summary
Summary Growing from our strengths Positioned for growth Upstream as growth engine Focus on exploration Delivery based on projects in development phase Profitability Maximize return on investment Operational excellence Fully invested assets in Downstream Sound financial position Self-financed strategic plan, resilient to stress scenarios Commitment to maintain investment grade Competitive dividend pay-out Clear path to value-creation for shareholders 48
Growing from our strengths Strategic Plan 2012-2016 Investor s update August 2013