Repsol’s Recent Inorganic Acquisitions in Russia and in the U.S.

JV with Alliance OilEurotek acquisitionAcquisition of a stake in Mississippian Lime

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Selective inorganic growth with upside potential

• Repsol ‘s excellent track record in acquisitions has been behind the consolidation of our growth program and has bolstered our portfolio.

• Focused on the selective search for new opportunities that fit in with the strategic plan and offer upside potential.

Projects :    Camisea TSP Shenzi/Gk

IRR (full cycle) >14% at 100$ 2012 / bbl Brent

Alaska Russia SandRidge

20062005 2011

Acquisitions of assets with upside

Joint Venture Alliance – Repsol “AROG”Acquisition of EurotekRussia

Acquisition of 10% of WSR

Repsol and AOC – a 6-year alliance

• In February 2006, Repsolacquired a10% stake in WSR worth 88M$, acquiring 50% through a new private placement.

WSR and AOC merger Joint Venture with AOC

• In 2008, the merger of WSR with AOC, mainly an upstream company, increased the size of the company by more than twofold.

• Repsol’s stake in the merged company was diluted to 3.5%.

• Technical cooperation has enabled Repsol to gain a better understanding of the AOC upstream assets and choose the right assets for the JV

• JV fulfill the company’s objectives of immediate output in the region with infrastructures and reserves.

• The partners’ relationship based on trust has been bolstered by the 5-year alliance.

Our strategy in Russia

0 600 1200 km.200

Karabashsky-

Salymsky-

Kumolsky-

TIMAN PECHORA

WEST SIBERIA

Our strategy in Russia focuses on:  

• Organic growth in West Siberia and Timan Pechora

• Inorganic growth through the joint venture with AOC

VOLGA URALES

SNOTNO

SK YK

Eurotek acquisition

Description License status

Production (1) Reserves (1)

Yuzhno-Khadyryakhinskoye (YK)Syskonsyninskoye (SK)

• Situated in the Khanty-Mansiysk and Yamal-Nenets regions (West Siberia Basin)• 9 exploration and production licenses • The gas licenses for the SK and YF fields are of particular

interest due to their level of development, especially SK which is about to come on stream (2012)

• Eurotek (25.1%) and Repsol (74.9%) are holders of the Eurotek-Yugra exploration licenses.

• The current workforce is 35 employees.

Repsol is interested in 2 exploration licenses.

(1) Technical profiles of Repsol at November 2011.

PRODUCCIÓN 100%: SK &YK

05000

100001500020000250003000035000

2012

201

4 2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

boed

SK gas production YK gas production

2P Reserves 647.3 Bcf (1)

65%

35%

2P YK Reserves2P SK Reserves

88

Eurotek acquisition: Why gas from Russia?

• Resources of about 5800 TCF,• Surplus reserves at more than 7200 TCF

• Nearly 42% of yet to be discovered resource in West Siberia region, where Repsol is present

Russia : giant producer and consumer

Russian Domestic gas market Upside

Domestic price vs. Netback parity

Source: BP Statistics 2011,

Russian Government decided to liberalized the market

Doubts about the

possibility of reaching gas

net back parity

?

55% discount

• Largest gas reserves holder in the world

• Second-leading gas producer of the world

• Second gas consumer worldwide

• Rapid expansion in installed power capacity • Gasprom’s operated production declining. • Gasprom’s focus on exports. • New non-discriminatory access to the

network. • Liberalization. • Royalties much lower than those for oil

production

JV- Market multiples valuation*

Valuation of assets contributed to the JV Multiples and discounted cash flows

Avg.: 4.5$/boe

Avg.: 2.4$/boe

586 M$ (1)

230 M$

(1)

Eurotek- Market multiples valuation

*(excluding Gusikhinskoye and exploration)

Valuation hypotheses:Brent (SNO/TNO): 85.00 $/bbl at 2011, 85.75 $/bbl at 2012, 87.90 $/bbl at 2013, +2.5% per annum since 2014; Gas (SK/YK): 1.58 $/kscf (YK) and 1.87 $/kscf (SK) at 2011, +15% per annum from 2012 to 2016, +2.5% p.a. as of 2017; Transport: 5.75 $/bbl (SNO), 4.59 $/bbl (TNO); Valuation at June 2011 for TNO and SON and at January 2012 for SK and YK (Valuation does not include acquisition price).

(1) 3,5$ multiple on the back of 2P reserves at 31 December 2010 based on DeGovler & MacNaughton report, minus production of first quarter 2011, taking into account 99.54% of TNO. Discounting working capital, the valuation at 30 June 2011 is 570 M$.

Holland

Russia

ALREP OIL BVJV Company

AOC

Repsol

Eurotek Future AcquisitionsSaneco TNO

NK AllianceMgmt Co. (1)

Management instructions

CFO

DCFO

COO

CEO

Trading

Board resolutions

Management instructions (SNO and TNO)

JV organizational chart and governanceJoint management

Other

JV Operating and Mgmt Co. (1)

Annual General Meeting

• Proportional representation of JV

• Qualified issues: unanimous• Quorum: both shareholders

Board of Directors

• 7 members: 4 Alliance + 3 Repsol

• Quorum: at least one director from each party

• Qualified issues: unanimous• Chairman of the Board,

appointed by AOC.

Sandridge / Repsol Joint VentureAcquisition of stake in the “Mississippi Lime Field”. Oklahoma / Kansas

Joint Venture with SandRidge, Mississippi Lime Field Executive Summary (1/2)

2

• Repsol acquired from the oil company SandRidge a vast oil field with associated gas produced from fractured carbonates in the Mississippian Lime Play.

• The acquired area comprises two sectors:

“Original Area”: 113,636 net acres for Repsol, 16.2% interest

“Extension Area”: 250,000 net acres for Repsol - 25% interest

Mississippian – High Perm, Carbonate Oil PlayAnadarko Basin in NW Oklahoma / SW Kansas

~700K acres (“Original Area”)~1MM acres (“Area Extensión”)

Kansas

Oklahoma

• Both are proven areas with production throughout more than 30 years and more than14,000 vertical wells drilled in both States.

• Appealing improved recovery per well and lower Capex/bbl unit cost.

• The Original Area has a historical record of production with horizontal wells

• Production in the Extension Area is limited, although similar performance is anticipated based on geological elements.

13

• Net resources: 382 MBOE (179 MBO and 1,139 BCF)

• Net production reaching a peak of 90 kboepd (45% oil and 55% gas) by 2018.

• Option to acquire new mining acreage during the next 7 years.

• Nominal average acquisition cost: $2,750/Acre

• Initial payment of $ 250 million

• 200% carry of Sandridge

Joint Venture with SandRidge, Mississippi Lime Field Executive Summary (2/2)

Nature of the producing warehouse

Joint Venture with SandRidge, Mississippi Lime Field Activity in the “Original Area”

CalyxPlymouthEagle EnergyHorizontal Wells

Horizontals operated by SandRidgeHorizontals operated by other operatorsVertical wells

290 to 435 Mboe EUR≈ 4.000’ lateral$2.8 million per well

300 to 650 Mboe EUR

300 to 500 Mboe EUR22 days drilling (4,500’ lateral)

$3.0 million per well

Ross Smith (Independent Engineers)Ross Smith (Independent Engineers)

253 to 343 Mboe EUR

Range Resources

400 to 500 Mboe EUR2.200’ lateral$3.1 million per well

Eagle Energy

Chesapeake

SandRidge

456 Mboe EUR (NSAI Consultant)

$2.7 million per well

$2.5 million per well

SandRidgeEnergy

Chesapeake Range Resources

Pablo / Territory

SHELL

Devon

14

Hz. Mississippian

Eagle Ford

Wolfberry

Niobrara

Bakken

Mississippi Lime: An emerging “Resource Play”

15

• Conventional• Good porosity and permeability• Known storage rock: + 30 years’ of historical

production in 15,000 wells• Size: 17 million acres• Low cost: 3 M$/well

Characteristics that make “Mississippi Lime”an attractive play:

Joint Venture with Sandridge, Mississippi Lime Field Business and competition scenario

16

• SandRidge is the most active operatorin the area: 21 active rigs, more than 200 horizontal wells, 18,000 bopd (@ 12/11)

• Sufficient collection, treatment and transport facilities.

• Favorable realization price

• Services companies and necessary materials available in the area.

• Companies in the Mississippi Lime are protected from inflationary tensions

Mississippi Lime: Full Cycle Economics comparison with other Resource Plays

18

Sunflower Project: Mississippi Lime Strategic sense

• Production: Net production contribution from start of project, with a proportion of liquids production of 46% and good quality oil.

• Cash flow: only 2 years of negative cash flow, followed by 3 years of neutral cash flow generation and very positive cash flow as of the 6th year. WTI and HH increases would improve cash rapidly.

• Earnings contribution: the project makes it possible to obtain positive operating income as of the first year.

• Operating efficiency: F&D of ~13.5 $/boe (including acquisition price) is in line with the current average in the Upstream Division (~ in the Upstream Division 13 $/boe).

• Geostrategic sense: fulfills strategic objective of increasing the relevance of our presence in OECD countries. Fiscal and legal security offered by the US is not an impediment to reaching interesting rates of profitability.

• Rapid access to new horizontal and fracturing drilling technologies that could be applied in other areas (Argentina).

Repsol’s Recent Inorganic Acquisitions in Russia and in the U.S.

JV with Alliance OilEurotek acquisitionAcquisition of a stake in Mississippian Lime

Analysts’ Presentation20 January 2012