Repsol

Debt

1. Financial income/charges and financial situation of the Group (excluding Gas Natural Fenosa):

The Group’s net financial debt, excluding Gas Natural Fenosa amounted to 2,909 M€ at the end of third quarter 2011, 910 M€ higher that at 30 June 2011. It should be noted that the final dividend for 2010 totalling 641 M€ was paid in this quarter. In addition, EBITDA in the quarter was 14.3% higher than in the previous quarter.

Repsol has a solid financial position reflected in its net debt/capital employed ratio of 8.4%, excluding Gas Natural Fenosa. Taking preference shares into account, the ratio stands at 17.0%.

Unaudited figures (IFRS)

BREAKDOWN OF NET DEBT (M€) – GROUP EX GAS NATURAL FENOSA	2Q11	3Q11	%Variation 3Q11/2Q11	Jan-Sept 11
NET DEBT AT THE START OF THE PERIOD	2,180	1,999	-8.3	1,697
EBITDA	-1,631	-1,864	14.3	-5,606
VARIATION IN TRADE WORKING CAPITAL	300	252	-16.0	1,507
INVESTMENTS (1)	1,184	1,442	-21.8	3,661
DIVESTMENTS (1)	-10	-12	-20.0	-44
DISPOSAL OF STAKES IN COMPANIES WITHOUT RELINQUISHING CONTROL (2)	-949	-57	-94.0	-2,327
DIVIDENDS (including affiliates)	157	642	308.9	1,443
TRANSLATION DIFFERENCES	23	-133	-	143
INCOME TAX COLLECTIONS / PAYMENTS	592	351	-40.7	1,265
REDEMPTION OF AMERICAN PREFERENCE SHARES	-	-	-	535
INTEREST EXPENSE AND OTHER MOVEMENTS	153	289	89.9	635
NET DEBT AT THE CLOSE OF THE PERIOD	1,999	2,909	45.5	2,909
NET DEBT + PREFERENCE SHARES AT THE CLOSE OF THE PERIOD	5,003	5,911	18.1	5,911
Debt ratio
CAPITAL EMPLOYED	31,988	34,697	8.5	34,697
NET DEBT / CAPITAL EMPLOYED (%)	6.2	8.4	35.5	8.4
NET DEBT + PREFERENCE SHARES/ CAPITAL EMPLOYED (%)	15.6	17.0	8.9	17.0
ROACE before non-adjusted items (%)	8.0	8.8	10.0	9.5

(1) In third quarter 2011, there were financial investments totalling 2 M€ and financial divestments for the amount of 10 M€ which are not reflected in this table.
(2) Relates to the sale of YPF shares in the period. A financial loan (626 M€) was extended in second quarter 2011 to the Petersen Group representing 48% of the sum required for exercising the call option for a 10% stake in YPF.

The Group’s net financial expenses at 30 September 2011 (ex Gas Natural Fenosa) amounted to 419 M€ versus 422 M€ in the same period last year. The following aspects are worth mentioning:

Net interest expense: 80 M€ less, with the most salient aspects being the average balances in floating rate investments, much larger and with higher remuneration than in the same period in 2010, and the early redemption of U.S. preference shares on 8 February 2011 (725 MUSD at a 7.45% interest rate, higher than the Company’s average cost of debt).
Hedging positions income (expense): lower income mainly as a result of significant exchange rate fluctuations by the end of the quarter: the USD appreciation vs euro had a negative impact on USD-denominated liabilities .On the other hand, BRL-denominated assets were negatively affected by the BRL depreciation vs USD. These were partially offset by the positive impact of the depreciation of the ARS vs. the USD.
Capitalised interests: income increased by 24 M€ mainly as a result of the capitalisation of the interest expense associated with the financing of the upgrading projects for the Cartagena and Bilbao refineries.

Unaudited figures (IFRS)

3Q2010	2Q2011	3Q2011	% Variation 3Q11/3Q10	FINANCIAL INCOME/EXPENSES OF THE GROUP EX GAS NATURAL FENOSA (M€)	Jan-Sept 2010	Jan-Sept 2010	%Variation 11/10
-94	-54	-73	-22.3	NET INTEREST EXPENSE (incl. preference shares)	-281	-201	-28.5
26	47	-118	-	HEDGING POSITIONS INCOME/EXPENSE	35	-87	-
-35	-36	-13	-62.9	UPDATE OF PROVISIONS	-115	-94	-18.3
34	40	43	26.5	CAPITALISED INTEREST	94	118	25.5
-55	-50	-54	-1.8	OTHER FINANCIAL INCOME/EXPENSES	-155	-155	0
-124	-53	-215	73.4	TOTAL	-422	-419	-0.7

2. Financial income/charges and financial situation of the Consolidated Group:

BREAKDOWN OF NET DEBT – CONSOLIDATED GROUP (M€)	2Q11	3Q11	%Variation 3Q11/2T11	Jan-Sept 2011
NET DEBT AT THE START OF THE PERIOD	7,434	6,900	-7.2	7,224
EBITDA	-1,995	-2,210	13.0	-6,683
VARIATION IN TRADE WORKING CAPITAL	252	676	168.3	1,989
INVESTMENTS (1)	1,398	1,610	15.2	4,113
DIVESTMENTS (1)	-557	-286	-48.7	-866
DISPOSAL OF STAKES IN COMPANIES WITHOUT RELINQUISHING CONTROL (2)	-949	-57	-94.0	-2,327
DIVIDENDS (including affiliates)	167	645	286.2	1,463
TRANSLATION DIFFERENCES	19	-119	-	115
INCOME TAX COLLECTIONS / PAYMENTS	622	366	-41.2	1,327
REDEMPTION OF U.S. PREFERENCE SHARES	-	-	-	535
INTEREST EXPENSE AND OTHER MOVEMENTS	469	334	-28.8	969
NET DEBT AT THE CLOSE OF THE PERIOD	6,900	7,859	13.9	7,859
NET DEBT + PREFERENCE SHARES AT THE CLOSE OF THE PERIOD	10,085	11,041	9.5	11,041
Debt ratio
CAPITAL EMPLOYED (M€)	37,536	40,304	7.4	40,304
NET DEBT /CAPITAL EMPLOYED (%)	18.4	19.5	6.0	19.5
NET DEBT + PREFERENCE SHARES/ CAPITAL EMPLOYED (%)	26.9	27.4	1.9	27.4
ROACE before non- recurrent items (%)	7.5	8.1	8.0	8.7

(1) In third quarter 2011, there were financial investments totalling 2 M€ and financial divestments for the amount of 10 M€ which are not reflected in this table. It should also be mentioned that GNF's divestment of its combined cycle in Arrubal in third quarter included a finance transaction for the buyer.
(2) Relates to the sale of YPF shares in the period. A financial loan (626 M€) was extended in second quarter 2011 to the Petersen Group representing 48% of the sum required for exercising the call option for a 10% stake in YPF.

Unaudited figures

3Q2010	2Q2011	3Q2011	% Variation 3Q11/3Q10	FINANCIAL INCOME / EXPENSES CONSOLIDATED GROUP	Jan-Sept 2010	Jan-Sept 2011	%Variation 11/10
-160	-117	-137	-14.4	NET INTEREST EXPENSE (incl. preferred shares)	-490	-395	-19.4
27	45	-118	-	HEDGING POSITIONS INCOME/EXPENSE	37	-84	-
-39	-39	-17	-56.4	UPDATE OF PROVISIONS	-125	-104	-16.8
37	41	44	18.9	CAPITALISED INTEREST	106	121	14.2
-57	-57	-50	-12.3	OTHER FINANCIAL INCOME / EXPENSES	-187	-168	-10.2
-192	-127	-278	44.8	TOTAL	-659	-630	-4.4