Angel Bautista - Director of Investor Relations Miguel Martinez - CFO

Filipe Rosa - Espirito Santo Investment Brendan Warn - Bank of Montreal Haythem Rashed - Morgan Stanley Thomas Adolff - Credit Suisse Biraj Borkhataria - Real Bank of Canada Matt Lofting - Nomura Nitin Sharma - JP Morgan Raiffeisen Bank - Bank of America Merrill Lynch Irene Himona - Societe Generale Jon Rigby - UBS Lydia Rainforth - Barclays Anish Kapadia - Tudor, Pickering, Holt Jason Kenney - Santander, Banco Santander

Good day, ladies and gentlemen. This is Angel Bautista, Director of Investor Relations at Repsol. On behalf of our company, I would like to thank you for taking the time to attend this conference on Repsol’s First Quarter 2015 Results. This presentation will be conducted by Mr. Miguel Martinez, our Chief Financial Officer. Other members of the executive committee will be joining us as well. Before we start, I invite you to read our disclaimer note. We may make forward-looking statements, which are identified by the use of words such as will, expect or similar phrases. Recent results may differ materially depending on a number of factors as indicated on the slide. I now hand the conference over to Mr. Miguel Martinez.

Thanks, Angel and thank you all for attending this conference on first quarter 2015 results. CCS adjusted net income of the quarter EUR928 million, 74% higher compared with same period of last year. Before going into detail with the result, let’s review the structure of the conference and today we will address three topics; first, an update on the acquisition of Talisman; second, the market environment for the quarter together with the main operational highlights and finally, the quarter results. We ended the year 2014 with the announcement of the agreement with Talisman’s Board of Directors to acquire the company. In order to consolidate our strategic objective of growing in our upstream division, we decided to enter into this transformational transaction. During this month, many people from both organization have been devoting great efforts within the scope of the arrangement agreement in order to successfully close this transaction and achieve a smooth integration. As it was already announced in Annual General Meeting held on April the 30, the closing of the transaction will take place tomorrow. Therefore, from tomorrow on, Talisman assets will be part of Repsol and will consolidate within the upstream division. Repsol enters into this new phase with almost no debt and the integration will take us to a pro forma net debt to capital employed ratio of 27%. After the closing, our pro forma consolidated liquidity will remain strong at more than $8 billion representing 2.7 times the short-term debt. We will present information on that and the 2015 combined figures during the second quarter results presentation once we assign every assets its corresponding acquisition value. Additionally, the Repsol group will present a new strategic plan before the end of the year that will lay out the foundations for the expanded group’s activity with a very special focus on value creation. With our broader portfolio, better opportunities will be created in order to unlock the value through portfolio management, through streamlining CapEx and through the allocation of capital to the most valuable project and assets. I am sure you understand that we are unable to make any comments regarding Talisman assets or results until after the closing. Let me now give you an update on the market environment and the operational activity of the quarter. Starting with the macroeconomic environment, during the first quarter of the year the weakness in oil prices continued, counterweighted by a strong US dollar. Brent crude prices after the month of January in which a minimum of $45 per barrel was recorded showed a small upwards rally ending the period at same level with which 2014 closed, around $54 per barrel. After the end of the quarter we continued observing a certain upward trend in oil prices which supports our medium term view of higher prices, necessary to achieve the right balance between demand and supply. This scenario has occurred with a context of higher volatility which we believe will still be the case in the short term. However, thanks to the reverse correlation between the oil prices and the US dollar, our earnings had somehow hedged given that we generate our earnings US dollars while a significant part of our expenses are euro denominated. Nevertheless what is more important is that our integrated model allows us to remain resilient even in a low crude oil price scenario. Sustained higher refining margins are protecting us in the short-term from this situation. Additionally the significant portion of our gas production not linked to oil price provides further stability. And on top of that, we have the likelihood of the dividend flow on results of our affiliate, Gas Natural Fenosa, a stake that provides further optionality to protect the company against any possible scenario. Let me now address the operational activity of the quarter. Starting with the upstream business, in exploration, this first quarter, six wells, five exploratory and one appraisal were concluded. One exploratory well with a positive result in Russia and one positive appraisal well in Bolivia, the other four wells had a negative outcome. In April, we concluded two additional exploratory wells, in Algeria and in Alaska, both with positive results. Let me highlight the find in Algeria where continuing with the successful exploratory campaign, a new gas discovery was made the PDVSA [ph] well. It is the third one in the Odyssey block a high potential area in Southeast Algeria. Repsol is the operator of the block with a 52.5% stake. Additionally, in April, we concluded two appraisal wells with positive results in Alaska. The ongoing exploratory and appraisal campaigns in Alaska, Russia and Brazil continue advancing with good expectations on the results already obtained. In Alaska, where we have already accomplished all the drilling wells in the limited period of the time available, the production tests were positive. In Russia, a new discovery well in block K-1 will add contingent resources and in Brazil the Pao de Acucar appraisal 1 well consolidates certifiable volumes of resources in the compulsory fee. Let me highlight also our activity in the prolific [indiscernible] in Bolivia where new discoveries in wells Margarita 7 and 8 with a 5 million cubic meters per day production capacity will add reserves and bolster Repsol gas production on the country. At 30th of April, 12 exploratory and appraisal wells were ongoing, out of which 7 are exploratory in Angola, Brazil, Peru, Norway and Romania and 5 are appraisals, Brazil, Russia, Bolivia and the US. Talking about our development projects, it is worth highlighting, the progress in Sapinhoa in Brazil. In Sapinhoa North, the first well was connected to our second FPSO in place with Cidade de Ilhabela in November 2014. In the first quarter of 2015, a second well producing 40,000 barrels per day gross was connected. The quality of the reservoir is excellent and economics per barrel will improve further with the opening of new wells. At the end of 2015, peak production is expected to be reached in this second FPSO, which has a gross capacity of 150,000 barrels per day. Together with the first FPSO, the field will reach a plateau of 270,000 barrels per day. In Venezuela, first gas from Cardon is planned for mid-2015. This first phase of the development will produce 150 million standard cubic feet per day and we maintain the original dates for the other phases. Let me also give you an update on the situation in Libya. Unfortunately our production in the country continues to be interrupted and we have no visibility on when this situation may change. International efforts are concentrated on resolving the Libyan conflict and we will be ready to resume operations once the situation is normalized since our facilities have remained in good shape throughout the conflict. Turning to production, the average production for the quarter stood at 355,000 barrels of oil equivalent per day. The production was 4% higher year-on-year and 10% we believe is a strip out from both years. The main factors behind the increase are the ramp up of Sapinhoa and Mid-continent and the start-up in March 2014 of Kinteroni, all partially offset by the suspension of activity in Libya. Compared to last quarter production of 371,000 barrels of oil equivalent per day, the decrease is mainly attributable to the effects of the total interruption of production in Libya during this quarter that compares to the 13,000 barrels of oil equivalent per day produced in the fourth quarter 2014 and other minor decrease in Kinteroni and Trinidad and Tobago. In relation with cost, Repsol has always especially in the current situation has applied a strict cost efficiency culture. Several reduction initiatives are already in place and is starting to deliver, with regards to high impact drilling and logistics costs. Others has also been identified to be implemented in the near term. This quarter, we already had a 5.7% year-on-year decrease of upstream operating cost on a [indiscernible] basis. Moving now to the operational highlights of the downstream division, and with regards to the refining environment we have averaged record margins during the quarter, thanks to the strengthening of the spreads of products linked and not linked to oil prices, together with lower energy cost. We were able to better capture the benefits of this advantageous situation due to the complexity of our refining system, which after the strategic investments carried out in our refining system between 2007 and 2011 and the self consumption efficiency program addressed under the CO2 emission reduction program. In 2014, this energy savings rendered an extra premium of $1 per barrel compared to 2011 when this program was put in place. Our refining margin indicator in the quarter was $8.7 per barrel, higher than the $3.9 per barrel reached during the first quarter of 2014. The distillation utilization rate was 82% during the quarter, while combustion capacity reached 99% of utilization. During the beginning of the second quarter, we continue enjoying solid refining margins. In petrochemicals, the competitiveness program that we put in place some quarters ago has allowed us to increase efficiency, creating operational improvements in our sites. This together with higher sales and improved margins allowed us enhance the positive results achieved in previous quarters. In the commercial business, marketing and LPG, we had higher volumes. Let me emphasis that in the first quarter of 2015, sales in our marketing division in the Iberian Peninsula and the market in general continued the growth trend seen in 2014. In gas and power, while sales increased, the price environment in North America was tougher. Price fell around 40% year-on-year and the gas price reference Algonquin lost almost $9 per million Btu. Despite these factors, our result was above breakeven. Let me now move to the first quarter 2014, ‘15 earnings performance. First quarter 2015, CCS adjusted net income was EUR928 million, 74% higher compared with the same period of last year. The good results in the downstream business and the one-off gains coming from the exchange rate positions due to the net absolute dollar position helped for the acquisition of Talisman more compensated the lower results coming from the upstream business. It is worth noting that even in this challenging scenario, the company has been free cash flow positive during the quarter. Starting with the upstream business, adjusted net income for the first quarter was minus EUR190 million. The results has been affected by the lower oil prices, the suspension of our Libyan operations that had an impact of EUR148 million on the operating income and EUR51 million at the net income level, the exploration cost, the unusual tax effects related to the depreciation of the real again the dollar in brazil in an amount of EUR69 million and the one-off adjustments in Venezuela carried from 2014 coming from the operator in an amount of EUR50 million. The year-on-year performance excluding Libya is explained as follow. Lower crude and gas realization prices had a negative impact at the operating level of EUR349 million, higher production, thanks to the ramp up of Sapinhoa, Mid-continent and the start-up production in Kinteroni in March 2014 resulted in a positive impact of EUR76 million. Higher exploration cost led a decrease in the operating income of EUR75 million. The increased costs were mainly due to high amortization of wells, among which is worth highlighting Aster in Canada, Key Largo in Gulf of Mexico and [indiscernible] in Angola. Higher depreciation charges due to higher production had a negative impact of EUR22 million. Taxes had a positive impact of EUR42 million, however, the overall tax expenses have been much lower in this quarter given that the upstream division had a negative operating income during the quarter. The higher tax expense was largely driven by the effects related to the depreciation of the local currency against the dollar in Brazil. Income of equity affiliates and non-control in interest, the exchange rate effects and other explain the remaining differences. Turning to our downstream division. CCS adjusted net income in the quarter was EUR534 million, which compares with a EUR290 million of first quarter 2014. Drilling down into the quarterly results, in refining we saw a year-on-year increase in margins per barrel due to a generalized strengthening of the bulk spread and to lower energy cost derived from the efforts in efficiency undertaking in the past years. This higher margins and also higher utilization rate had a positive impact at the operating level of EUR295 million. It is worth noting that EUR23 million of increase in operating income corresponds to the improvement of the refining activity in Peru. In the petrochemical business, wider margins and higher volumes allow us to improve the operating income by EUR97 million. This improvement is the due to the competitiveness programs implemented together with a better market environment. In the commercial division, the LPG was the main driver of the EUR74 million increase in the operating income. Moving to gas and power, the operating income of this division was positive during the quarter. Higher volumes were commercialized. However, there was an year-on-year decrease of EUR210 million that is explained by on one hand the outstanding results of Q1 2014 and on the other the lower commercialization prices in North America. Finally, trading results, the exchange rate effect and others explain the remaining differences. In Gas Natural Fenosa, the EUR122 million adjusted net income in the first quarter 2015 was flat year-on-year. The contribution from the Chilean affiliate was offset by higher financial expenses and minority interest. In the quarter, it is worth highlighting the remarkable performance of the financial result, which registered a positive amount of EUR655 million. Since we monetize our Argentinean assets, we held a net long cash position in dollars. In December 2014, this dollar position was further lengthened when Repsol agreed to the acquisition of Talisman in order to pay the transaction and because our macroeconomic analysis forecasted strong signs of a dollar appreciation in the period to come. Let me explain the reasons behind our forecast based on the divergent euro zone and US economic and monitory policies. After the IMF increased the probability of euro zone recession in October 2014, it has been clear that the euro would weaken substantially against the dollar. However, the trigger for our view for a further weakening of the euro and a strengthening of the dollar was the ECB announcement of 1 trillion increase in its balance sheet. This announcement occurred just as the US Fed finished the tapering of its own period of quantitative easing. These two actions in effect were a reversion of the previous two years of ECB contraction and further expansion and provided a clear indication of a changing relationship between the dollar and the Euro. The results achieved have confirmed our view to be correct and during the first quarter we have registered a significant and positive result in the context of the dollar appreciation. From the March onwards, with the likelihood of closing of the Talisman acquisition, this dollar position has become an accounting hedge with zero impact on the company’s P&L. To finalize, I must say that in this quarter we have delivered a solid set of result with improved performance of our downstream business and the results obtained in the financials that offset the lower results in the upstream division. 2015 is the year in which Repsol will consolidate the transformation that began last year with a definite exit from Argentina and the acquisitions of Talisman. During this quarter, we have taken the steps in order to achieve this transformation and we have been able to demonstrate that our integrated model is resilient even in this low price oil scenario. We are now focusing on a smooth integration of Talisman which is already a reality and thereafter on establishing the strategy of Repsol. Thank you very much and we will be pleased to answer any questions you may wish to ask. Question-and: A - Angel Bautista: Thank you very much. We are now - yes.

Thank you. [Operator Instructions]

Thank you. Let’s move into the Q&A session. We will address your questions in principal only by phone but we will also enable a chat just in case we have any connection problems, but please only use it in case we actually have these connection problems. And now let us start. We have our first question from Filipe Rosa from Espirito Santo Investment. Hi, Filipe, go ahead with your question.

Hi good morning. Good morning to you all. There are few questions from me. The first one, I would like to know whether at this stage, with the strong results that you delivered in downstream and the fact that refining margins, according to your presentation, remained quite strong in Q2, are you willing to raise your guidance for downstream a bit from current? I think that currently it is EUR2.5 billion, would you at this stage - the fact that you’ve already delivered close to 40% of that amount in Q1, would you be willing to raise your guidance in total level? That is my first question. My second question, just to follow up on the financial impact from the FX, I don’t know if I understood it correctly but you booked in the Q1 an impact of EUR665 million, I don’t know whether this is in terms of a net income or in terms of financial income but my question is just trying to understand the fact that euro-dollar has now moved to Q113, would it have any impact on your P&L because then you said that your dollar position will become at a counting edge, so no impact on the P&L. Just trying to understand, on a full year basis, for 2015, what will be the impact we should impact, just for Q1 or you will not account any impact at all? And my third question relates to the fact that you have looked tax revenues in your cash flow statement, okay, so instead of paying taxes, you have received taxes and in your P&L you have taxes that you are supposed to pay, so there is a gap between your cash taxes and your P&L taxes, so I would like to understand what was the main driver for this and what should we expect over the next quarter, should there be a difference between your - any major difference between your P&L taxes and your cash taxes? Thank you very much.

Thanks, Filipe. Starting with your second question, I mean, the accountant rules shows you that you have to be really confident so that the probability of the transaction was clear before hedging it. So what we have done and we have done that since May last year was to be long in dollars through swaps. We increased that position in December, in January and in February and if you remember the first signals that we received that the transaction had a good possibilities came after the general assembly of Talisman that was held in February, the 18 and then we have by the beginning of March, also good inputs from the authorities that really can generate return in conditions like in Western Canada. So at this moment in which the probability was clear, we hedged. So answering your question, no impact on the dollar would affect P&L in the following quarter due to the fact that we have hedged our position in the first part of March. In relation with the guidance for downstream EBITDA, it is true that the results are much, much better that we initially estimated and I have to say that in the other side option was a little lower, so in global terms and it shows the resilience, we are more or less where we should be but I agree with you, I mean, it looks like it is going to be higher, let’s say between EUR2.8 billion and EUR3 billion at CCS, I think that the EBITDA would be there. And in relation with the last one, it is simply a cash situation, we advance cash before to the offer that is in Spain basically and at the year-end they have to turn it back to us. So it is just a, I would say, a timing difference between the accounting and the cash situation for the future.

Okay. Thank you very much.

You are welcome Filipe.

Thank you.

Thank you, Filipe. Now let’s move on. Let’s move on to Brendan Warn, Bank of Montreal. Hi, how are you Brendan? Go ahead with your questions.

Yes. Thank you and good afternoon gentlemen. This is Brendan Warn from BMO Capital Markets. Just wanted to ask a couple of questions focused on the upstream and just focused on a comment, if you can expand on a comment you made in your statement today, just that your operating income of the upstream division would have been positive, excluding exploration cost in light of no contribution from Libya. And could you just expand up on, correctly - if I caught it correctly that you have achieved 5.7% operating cost reductions year-on-year in your upstream, just what you believe will be achievable and what will remain sticky in terms of cost saving. And could you just further expand in terms of the net CapEx expenditure in the upstream, if you could just split out or talk about what was expansion or development CapEx versus maintenance. And again, just what sort of structural maintenance CapEx cost savings do you believe you’re been able to achieve and what you see throughout this year. Thank you.

Thanks, Brendan. In relation with the first one, in like for like basis, we obtained a reduction of 5.7%. Looking forward, our objective is to cut $5 per barrel and gain $5 per barrel. From those one will main efficiency, two of them will come from a lower exploration cost, I mean, seeing that we are moving our CapEx program, in comparison with last year, from $1.9 billion, down to $1.3 billion, so $2 would be saved in exploration and finally the entrance of Cardon and Sapinhoa, which will reduce the breakeven point. So in comparison with this quarter, we expect a cost reduction of $5 per barrel on average. In relation with the net CapEx, in the upstream division, we keep with the 27% reduction in comparison with last year in dollar terms so that implies that from the $3.8 billion we invested last year, we are cutting it down to $2.7 billion. I don’t have the split with me of between maintenance and development but through our IR people we will send you the split of the $2.7 billion between development and maintenance, okay?

Okay. Thanks Miguel.

You are welcome, Brendan.

Thank you, Brendan. Now let’s move to Haythem Rashed from Morgan Stanley. Good to speak with you Haythem, go ahead with your questions.

Thank you, Angel. Good afternoon, gentlemen. Just few questions from my side please. Perhaps if I could just pick up on the CapEx question, though there was discussion on CapEx in the last question. Perhaps just Miguel if you could then talk a little bit about the phasing for the rest of the year. So - and you mentioned you maintained a 27% cut, that in dollars terms, so when I look at sort of 1Q, it looks like we haven’t seen much of a decrease, at least in Euro terms, so just to be clear, the 27% cut, does that sort of incorporate a very substantial assumption around just FX and the sort of tailwind around FX moves or is that sort of an underlying an 27% cuts ex the dollar euro moves. And second question that I had was just relating to the Mississippi Lime, you talked about that being sort of contributed to growth year-on-year. Looking for the rest of this year, perhaps you could talk a little bit about how you think that will play out in the current oil price environment in terms of activity levels but also last week we saw one of your peers take some substantial impairments in the US unconventional upstream. I just wondered where sort of you were up with your, what do you have on the balance sheet for the Mississippi Lime play, whether that is something that you need to revisit or what you are comfortable with where it is today. Thank you.

Thanks, Haythem. Starting with the first one I would say that the 27% in dollars refers to a 12% in euro terms, so with that I think that you have the data. Also it may sound that the first, the figure of the first quarter in CapEx was a little higher but you have to take in account that in Cardon, we are awaiting for the entrance of PDVSA which will take - will reduce our present stake down to a 32.5%. Right now, Eni and ourselves are holding the whole CapEx of Cardon, so expect to be aligned with the strategic budget, with the budget that is the - shows the figure that I told you, $2.7 billion with a reduction of 27% in dollars terms and EUR2.5 billion, which is a 12% reduction in euro terms. In relation with the Mississippi Lime, first I have to say that last year we took an impairment of approximately $300 million and all impairments are analyzed in a long-term view. So difficult to assess as of today, whether or not there will be extra impairment there. What I can tell you is that we have already paid all the [indiscernible] of this investment and we are working now with eight rigs along with the operator and the idea at least in the first quarter, the production has been flat and we are only operating with eight rigs, so looking more for value than for growth. I think that I answered your two questions.

Yes. Thank you, Miguel. That’s very helpful, thanks.

Thank you, Haythem, as always. Now let’s move to Thomas Adolff from Credit Suisse. Hi, Thomas. Good to speak again with you today. Go ahead with your questions.

Thanks, Angel. Hi, Miguel. Two questions please. One on just free cash flow, since Miguel such a good forecaster. Presumably you have no visibility on Libya, let’s say there is no production in Libya for 2015, the US is the US, SandRidge and Eagle Ford from Talisman, debatable; Canada, potentially new taxes, the UK is the UK and it will be tough. So if we take that into account with you revised view on downstream and say $65 Brent on average for 2015, where do you think free cash flow will be assuming a 60% Script take up. Second question is on BM-S 9, I probably know the answer but also wanted to ask you, you obviously have the first right of refusal and I wondered whether you would be interested in it? Thank you.

Thanks, Thomas. In relation - well, first thank for the comment on my capability of prediction, I am not that sure of it. But, I mean, in the current basis, we ended up the first quarter even and a little above, I am thinking only the current factors, I mean, thinking how the financial gains, I expect the second - the nine months that we have in front to be a little better than the one we had this quarter for several reasons. First, we believe that the price deck for the rest of the year would be better than the $54 on average we had filed in the first quarter. Second, we have some, I would say issues in the upstream division like the EUR70 million of penalty in Brazil, which doesn’t imply cash but it is a penalty on the taxation due to the relation between the real and the dollar. And also I think that the rest of the year would be less risky in exploration terms. We have more appraisals in front of us, so basically with this 60% Script, which has already been included figures that I provided you about free cash in the first quarter, we paid the dividend in January so the quarter is affected by and penalized by the dividends we pay. So I am little more optimistic than the neutral free cash we obtained in the first quarter. In relation with the BM-S 9, we don’t have the first right of refusal. I mean normally, this right of refusal refers to 8% of a global transaction and BM-S 9 in comparison with the whole transaction doesn’t reach the limit, so we don’t have any right of refusal there. Okay?

Thank you. Just a follow-up on the first question, when you say free cash flow, you are telling that 60% Script take up and that also includes your view on the Talisman assets as and when you integrate them from tomorrow.

For sure, it doesn’t.

It doesn’t. Okay, got it.

Yes, it doesn’t Repsol on a stand-alone basis here.

Okay. Thank you very much.

You are welcome, Thomas.

Thank you, Thomas. Now let’s move to Biraj Borkhataria from Real Bank of Canada. Go ahead with your questions, Biraj.

Hi, Angel and Miguel. Thanks for taking my question. I had a couple of on Sapinhoa in Brazil, if I may. You mentioned the 40,000 barrels a day standard rate for the second well. I was wondering if you could comment on what you are seeing currently on the first well of the second FPSO, is that number close to 40? And also could you comment on when you are expecting next wells there to be hooked up? Thank.

In relation with the first one, they are telling me that, yes, the first tie-in well was approximately giving the same result as the one I mentioned in my spec. And it has been typical for all the wells we have been tying in Sapinhoa. If you remember, in the first FPSO, initially our plan was to tie in five wells but due to the productivity of those simply with nine wells we are able to really do all the jobs there. So the answer is yes. And in relation with the schedule, I will say that it would be progressive and the last one would be connected by the end of the year. So if you split between now and December, the three other wells be connected in more or less with the same path. Okay?

That’s very helpful, thanks.

You are welcome.

Thank you, Biraj as always. Well, Matt Lofting from Nomura. Hello, how are you? Please go ahead.

Hey, thanks, Angel. Two questions if I could. Firstly, just Miguel, I think on that sort of gearing perspective you talked about 27% net debt to capital employed on the close of the transaction, if you could just with a point of clarification flag how much equity treatment on the hybrid issue, your streaming in there. And then secondly, on hedging, I know at this point you can’t discuss Talisman assets but I just wondered if you could discuss the prevailing hedges they have had on the North American business and whether Repsol at this point would think about looking to continue running them or whether you think about monetizing them upfront and then taking the full exposure going forward into the second half of the year. Thanks.

Thanks, Matt. The gearing that we provided was linked to the accounting systems, so we are considering 1 billion out of the two as equity and the other one as debt. Okay? And in relation with hedges in North America, we are going to monetize it and we don’t hedge our production so, we will keep ahead with our policy.

Great. Very clear. Thanks a lot.

You are welcome, Matt.

Thank you, Matt. Now Nitin Sharma from JP Morgan. Hi, Nitin. Go ahead with your question.

Thanks. Good afternoon, gentlemen. Two questions from me please. The first one on shareholder structure. And Miguel, I know it is limited what you can say on this but recent press reports had suggested that one of your or rather your biggest shareholder Raiffeisen Bank may be looking partial sales of stake. So could you share some thoughts on this subject please? And second one, coming back to the issues impairments and this time on Libya, ongoing instability, shut production and the story has been same for some time in the region. When do you start looking at these assets in terms of impairing them? I ask this question because one of your peers have impaired all of their onshore Libyan assets. So I am wondering if some of your partners are thinking about those assets in these terms, would that force Repsol also to reassess the carrying value of these assets? Thanks.

Thanks, Nitin. In relation with the first one, the Chairman of Raiffeisen Bank told us, I think it was last week, yeah, it was last week, that his idea is simply to allocate our shares in criteria instead of the bank, so there are not any sales process. It is simply a restructuring of their portfolio. These were his words. And in relation with the impairment in Libya, I think the Total impaired didn’t write-off - didn’t make any write-off in the results, at least they didn’t announce. We have, if I am not wrong, till 2035 contract in our fields in Libya, 2035. So in our opinion it is a little too early to start with impairment. I mean, we have to see how the political situations evolve and on top of that no other operator as far as I know impaired their assets in Libya. So as of today, we keep attached to our way of thinking and we will think hopefully the future would be better for the country because I think it is totally needed for the people of Libya and for Europe to solve this situation ASAP.

Thanks, Miguel. Very clear, thank you.

Thank you very much as always, Nitin. Hamish Clegg, go ahead with your question, from Bank of America Merrill Lynch.

Good afternoon, gentlemen. I just would echo Thomas’ complementing your predicting ability, so hedge funds would be envious. I wondered if you could expand on the underlying position you took in euro dollars, if I am not mistaken it was around EUR8 billion. And given the gain you made, it implies slightly more than the six months [indiscernible] currency. Could you give us a bit more detail on that and also can you tell me if I am right in thinking about this as more of zero some gain because of the effective price you would be paying for Talisman is higher because of the move in the exchange rate, would this reverse in the second quarter following closure of the deal? My second question is still on your predicting ability. Given the refining margins are so strong right now and there is some skepticism in the market, would you consider hedging and locking in some of these high margins? Those are my two questions.

The second one easier and we don’t hedge refining margins either, so we will keep attached to our policy and we will see. So there would be no hedges there. And in relation with the first one, it is true that afterwards in euro terms the transaction will have a higher price, the only thing is - the only way that accounting you can hedge the position is when you have certainty of the transaction to happen. We have two options, either don’t do anything or really did what we did, which was take long positions in dollars and at the moment in which the certainty of the transaction was there we hedge. Having said so, physically will not be a major damage because cash stocking we have shields that we can take in advance. So I would say it is no major impact other than that we took the position upfront. If we haven’t done it, we would be paying the transaction higher and we will not have made the 700 million we made with the dollar euro gain. Okay.

So what was the underlying kind of investment, I know you said it was through swaps.

Yeah, it was through - all of them were through swaps, buying and selling, basically during December, during January, February and the first week of March when the real rally between dollar and euro happened.

Okay.

Okay. Thank you, Hamish.

Thank you. Thanks a lot guys.

Thank you, Hamish. Now, Irene. Irene Himona from Societe Generale. Hi, Irene. Good to speak with you again. Go ahead with your questions.

Hello. Good afternoon. Two questions please. So firstly a question on the downstream, Miguel, if you could possibly talk about the drivers behind the near 10% year-on-year increase in your oil products sales, there was a 13% increase in petrochemical sales and is it demand related, is it sustainable? What does the rest of the year look like? And within the downstream, LPG, I mean year-on-year, the EBIT nearly doubled. Again, can you talk about the drivers and the sustainability into the rest of 2015? My second question, you indicated that by sort of year end November perhaps you will be announcing the new strategic plan for the enlarged Repsol plus Talisman unit, the deal was obviously agreed in December last year, you had originally approached them in July, why does the market have to wait nearly a year to get more visibility on the new Repsol? Thank you.

Irene, starting with the second one that is easier. I mean, first, legally I cannot have all the information till I close the deal, first comment. Second you have to think that we have to re-state all the balance sheet of Talisman because we have to allocate the price - the purchase price to the different assets. So once we have hands on in the company is when we can really start to working. Having said so, our idea is to be within two weeks with a group of analysts in London just to establish a work plan to help you to see how can we help you with the modeling of the new company. And we will to re-state all the figures with a new balance sheet for 2014 in order for you to have a better comparison in the next quarters. But it is the way it is, I mean legally today we do not own Talisman and we don’t have access to all the data that is required.

Okay.

In relation with the downstream I have to say that the strong results in the LPG also refers to the delay on the formula, I mean we are taking advantage of a - I mean the formula refers to a longer period in the past, so there is an advantage that we have taken because the price formula refers to LPG prices with six months of differences, more or less. The advantage is that most of the consumption comes during the winter. So we are taking most of the volumes in the moment in which margins were higher. And in relation with the chemicals, I would say the national market is moving up. I mean, we are seeing real improvement in almost all the lines and the activity in Spain is growing, probably it would be this year well above 3% in GDP and what is important also related to our business is that the construction, which is a high consumer is starting to move up by 2%, so all things are moving in the right direction. So sales are looking in the right direction. Okay, Irene?

Thanks so much. Thank you, Miguel.

Thank you very much, Irene. Now let’s move to Jon Rigby from UBS. Hi, Jon. How are you? Go ahead with your questions please.

Hi, guys. I am well. Thank you. Two and half questions, I guess. The first is just on tax rates. Obviously it is a weird quarter, this quarter, in the upstream. I notice there is a sort of a tick down little bit in the downstream tax rate as well. So can you just run through what your expectation is the segmental tax rate on a go-forward basis? And around assumption, I guess, in Libya, your assumption is key in the upstream. And the second is just on the couple of the dry hole cost and their tax effect. Is it possible that some of those, I guess, tax credits can come back at some points or other, I think, Canada and the US once you start bringing in some more North American income with Talisman? And then the other big sort of main question is just on Angola, can you just run through for me what are the commitments you have in Angola and what the carrying value of Angola is on your balance sheet, please? Thanks.

Thanks, Jon, for the two and half questions. Starting with tax rates, I mean it is going to depend much on prices. It is going to depend, as you mentioned in Libya, as of today, if I have to make another assumption or to predict how graph to something like 41% at the upstream level and 28% at the downstream level. In relation with Angola, we have already committed with all the conditions of the authorities. Having said so, we still have one extra well that has been agreed with our partners. So after we finish the ongoing drilling, we have still one well to go but it is not mandatory, it is just because we have decided to go for it. And in relation with dry holes and tax effects in the US and Canada, I will have to give it a second thought. In the US, basically we are making money, so we are discounting the dry holes there. The situation in Canada, it is something that I may analyze, I am not able to provide you an answer - a right answer right now. Okay, Jon.

And just on Angola, have you got sort of residual signature bonuses and things left in addition to the well commitment, I mean is there trigger point if a final well is drilled and not found to be commercial that there is going to be a point at which you then have to look at the carrying value?

Okay, the whole thing that we have put in it has been $400 million as of today, around $400 million. Okay?

Thank you.

You are welcome, Jon.

Thank you very much, Jon. Now let’s move to Lydia Rainforth from Barclays. Hi, Lydia. Good to speak with you. Go ahead with the questions.

Thanks, Angel and good afternoon. A couple of questions, if I could. Firstly, on Talisman, I appreciate there isn’t a huge that you can say at the moment but how long do you think it will be before you are able to make changes to that business? So, suppose that integration process is a case once the deal closes tomorrow, is then just going to take time before you can do make any changes or are there things that you can do with the minimal stay in the US takeaway that you can do much more quickly? And then the second one was just on that final thing and [indiscernible] hybrid already and then [indiscernible], I just wanted to check that was still the case. Thank you.

Well, in relation with the first one, I will say that we would be in the driving seat next year and probably to really obtain full integration will take a little longer but I mean this year basically all the commitments were taken, so we cannot do much on 2015. Then I think that 2016 would be the first year in which we would be able to handle the combined entity in the direction we wanted. In relation with the issuance of hybrid, the answer is yes, and probably in the second part of the year, we will be issuing other - up to EUR3 billion extra in hybrid. This is a condition that we agreed with the agencies in December and we will deliver on it. Okay, Lydia.

Thank you. And just a very quick follow-up on just, given the forecasting sight. Do you have an integration where you can - the pro forma gearing will end the year up?

No idea at the present time Lydia. I referred to the combined entity. We have to look at it but it shouldn’t, I don’t expect that the combined entity will be really free cash negative massively. So if we start up with a 27, probably it will increase a little but we have to wait. I don’t have the figures. I don’t even have the new account that we have to generate, so it is quite difficult to assess any comment because the first move have to be to assess our purchase price into the different assets of Talisman based on our evaluation. So the whole accounting will change dramatically, I may suspect. And in relation with the hybrid, it is going also to depend on whether or not we issue it perpetual or not. So also, cannot give much input at the present time, sorry about that Lydia.

No, still hugely helpful. Thank you.

Fine.

Thank you very much, Lydia. And now let’s move to Anish Kapadia from TPH, Tudor, Pickering, Holt. Go ahead, Anish, go ahead with the questions.

Hi, Angel. Thanks very much. I have three questions if possible. Firstly, just kind of going back to Talisman again. In that end of your reserve report, I think that pre-reserves fell almost 20% in 2014 versus 2013. I was just wondering if that was something that you were expecting at the time when you did the deal or if that came as a surprise to you. Second question was on the US, SandRidge has announced pretty large cuts to the number of rigs running in the Mississippi Lime. I was wondering if you can outline what that means for production over the next kind of 12 months or so but also in terms of cash flow, CapEx for that JV. And then the final question was just to kind of get your view on North American gas prices. Clearly you are increasing your exposures in North American gas prices and also quite importantly your view on the differentials in kind of dealing the northeast. We saw Canadian gas prices averaging around $2 per Mcf so far this year. So I just wanted to get an idea of where you see gas prices going in terms of Henry Hub, also the differentials in the kind of key areas of Marcellus and Canada. Thank you.

Thanks, Anish. In relation with the results you mentioned, no surprises and I think both of it related to the sale of one name that were sold in 2015 but no surprises in our side. In relation with SandRidge, as mentioned we are reducing the number of rigs we are using there and the basic idea is to play for value growth, not for production, so CapEx will shrink at least to a 50% this year in comparison with the last one. And finally in relation with the North America gas prices, I don’t have any personal view or any comment we may make but at the end if you cut the number of rigs they are producing, the gas associated with the liquid will imply that we will have less gas in the offer side. So probably a figure a little higher than $3 which would be higher than the one we have the $2.5 we have this year, probably I may think optimistically because on the other side, with this lower price demand will go up. So the logic shows that the demand will grow, while at the same time the offer will shrink. So, I am optimistic today, so I may say that $3 is a figure that may be reachable. Did I answer you, Anish?

Yeah, I have got just a follow up to that now, just to get an idea of the cuts that you are making with SandRidge. Just wondering what that going to imply potentially for Talisman, are those cuts because SandRidge can’t afford the CapEx or are they because you think it is a prudent move in at kind of lower oil and gas price environment because obviously you can’t take any decision on Talisman whether you cut back the number of rigs that they are running. Just wondering why you made that decision with SandRidge?

Well, I refer to my previous answer. We are cutting CapEx by half and basically we expect the production flat. I don’t see the relation, the direct relation with the Marcellus or with Eagle Ford or with [indiscernible]. We will have to see which is the most efficient plant once we take control of the company but right now that we have only, I mean no capability, it is quite difficult for me to assess any comment in relation with Talisman assets whether in Canada or in the US. Okay, Anish?

Okay, sure. That was good. Thank you.

Thanks, Anish.

Okay. Thank you very much, Anish. And now we have Jason Kenney from Santander, Banco Santander. Hi, Jason, go ahead with your questions.

Hi, there. So I am just looking at the Sinopec relationship, obviously Repsol is strong with Sinopec in Brazil and Talisman, involved with Sinopec in the North Sea. And I was wondering if the potential for further strengthening of activity between Repsol and Sinopec going forward?

Thanks, Jason. I would say since day one, I think it was half years ago that we had the first agreement with Sinopec. We had been looking forward to have more relations with them going forward and look for opportunities. So, yes, the answer is yes we are permanently looking for doing more things with Sinopec. It is something we look forward. Okay, Jason?

Perfect. Thanks.

Well, with Jason, we finished this conference call of the first result of Repsol first quarter results of 2015. Thank you very much for attending it. You know that the IR area of Repsol is in entire service for any further queries or clarification that you may need and have a nice day. Thank you very much.