Repsol S A : Interim management report for the first half of 2022

REPSOL

Group

Management

Report

1st Half

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The company

Repsol's mission (its reason for being) is to provide energy to society in an efficient and sustainable way.

Our vision (where Repsol is heading) is to be a global energy company that relies on innovation, efficiency and respect to create sustainable value in the service of societal progress.

Repsol has laid down principles of action -Efficiency, Respect, Anticipation and Value Creation- and company behaviors - Results Orientation, Accountability, Cooperation, Entrepreneurial Attitude and Inspiring Leadership- to make this mission a reality and our vision an attainable challenge.

Further information available at www.repsol.com.

The Management Report

The Interim Management Report of the Repsol Group1, should be read in conjunction with the consolidated Management Report for 2021. In conjunction with this report, Repsol has published condensed interim consolidated financial statements for the first half of 2022 (hereinafter, "interim financial statements for the first half"). The Board of Directors of Repsol, S.A. approved both reports of Repsol, S.A. at its meeting of July 27, 2022.

Report information

The financial information contained in this document, unless expressly indicated otherwise, has been prepared in accordance with the Group's reporting model, as described below:

Repsol presents its segment results including joint ventures and other companies that are jointly managed in accordance with the Group's investment percentage, considering operational and economic indicators within the same perspective and degree of detail as those for companies consolidated under the full consolidation method. Thus, the Group considers that the nature of its businesses and the way in which results are analyzed for decision-making purposes are adequately reflected in this report.

Given the nature of its business and in order to make its disclosures more readily comparable with those of its peers, the Group relies on Adjusted Net Income when measuring the results of each business segment. Adjusted Net Income means the current cost of supply (CCS), net of taxes and minority interests and excluding certain specific items of income and expense ("Special items").

For current cost of supply (CCS) earnings, the cost of volumes sold is calculated on the basis of procurement and production costs incurred during the period in question and not based on weighted average cost, which is the accepted methodology under European accounting law and regulations. The difference between CCS earnings and earnings at weighted average cost is included in the so-called Inventory Effect, which also includes other adjustments to the valuation of inventories (write-offs, economic hedges, etc.) and is presented net of taxes and minority interests. This Inventory Effect largely affects the Industrial segment.

Furthermore, Adjusted Net Income does not include Special Items, i.e. certain material items that are presented separately to provide a more reliable view of the ordinary management of the businesses.

This standard report uses Alternative Performance Measures (APMs), meaning measures that are "adjusted" to those presented under IFRS-EU. The information, breakdowns and reconciliations are included in Appendix II - Alternative Performance Measures of this report and are updated quarterly on the Repsol website (www.repsol.com). The balance sheet, income statement and statement of cash flows prepared under the Group's reporting model are presented in Appendix III.

The non-financialinformation regarding the sustainability indicators included in this document has been calculated in accordance with the corporate rules that set out the standard criteria and methodology to be applied in each case. For more information, see section 6 - Sustainability of the Group's 2021 Management Report.

• Henceforth, the names "Repsol," "Repsol Group" or "the Company" are used interchangeably to refer to the company group consisting of Repsol, S.A. and its subsidiaries, associates and joint arrangements.

Contents

1.	First half of 2022	2
	overview
2.	Environment	6

1. Macroeconomic outlook
2. Energy landscape

3. Financial performance

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and shareholder remuneration

1. Results
2. Cash flow
3. Financial position
4. Shareholder remuneration

4. Performance of our	14
businesses

1. Upstream
2. Industrial
3. Commercial and Renewables

5.	Sustainability and	20
	corporate governance
6.	Outlook	23

1. Outlook for the energy sector
2. Outlook for our businesses
3. Russian invasion of Ukraine and other risks

Appendices25

Appendix I. Table of conversions and abbreviations

Appendix II. Alternative performance measurements

Appendix III. Consolidated Financial Statements - Repsol reporting model

1. First Half 2022	2. Environment	3. Financial performance	4. Performance of	5. Sustainability and	6. Outlook	Appendices
overview		and shareholder	our business	corporate governance
		remuneration

Good performance of businesses in a volatile

environment of growing uncertainty

• International context marked by coming out of the covid-19 crisis and the war in Ukraine.
• Improvement in results of businesses, especially Upstream and Refining.
• Future uncertainty due to possible developments in the energy crisis, the economic situation and regulatory measures.

Commitment to customers and shareholders

• Optimization of our industrial facilities to meet demand, in the face of disruptions in supply chains.
• Leaders in applying fuel price discounts at service stations in Spain to alleviate the effects of the crisis.
• Improved shareholder remuneration.

1. First half of 2022 overview

Complex international context

Still in the recovery phase from the COVID-19 crisis, the first half of 2022 was affected by the war in Ukraine. Disruptions in supply chains, increases in energy prices and, in general, sharpening of inflationary processes, and toughening of financial conditions have continually affected the period, which ends with concern about how the energy crisis will develop in Europe and about the economic situation in general.

In this context, which is volatile and uncertain, demand for our products increased, following the relaxation of mobility restrictions imposed by the pandemic, and international reference rose for a large proportion of our products.

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For more information, see section 2. Environment

Improved results and financial position

The measures defined in the Strategic Plan and our management oriented to efficiency and transformation of the businesses allowed Repsol to take advantage of the opportunities in the economic context to improve on the results for the previous year, which were still marked by the negative impact of the pandemic.

In particular, the significant investments made in past years in the refining industrial complexes in Spain - when a good part of our international competitors reduced their capacity- mean we can now increase and optimize the use of our facilities to respond to supply tensions in the international fuel market. And the management of our portfolio of international oil and gas production assets, begun in the previous context of very low prices, has allowed us to improve profitability in the new cycle of high prices.

Adjusted net income, which seeks to show the Company's performance from the normal course of its businesses, amounted to 3,177 million euros (959 million euros in 2021), driven by the Upstream and Industrial businesses.

Results for the period

(Million euros)	1H 2022	1H 2021		∆
Upstream	1,678	678	147 %
Industrial	1,393	239	483	%
Commercial and Renewables	215	228	(6)%
Corporate and others	(109)	(186)	41	%
Adjusted net income	3,177	959	231 %
Inventory effect	1,206	489	147	%
Special items	(1,844)	(213)	(766)%
Net income	2,539	1,235	106 %

The good results in Upstream (1,678 million euros) were influenced by the rise in crude oil and gas prices. In the Industrial segment, the improved results (1,393 million euros) are explained by higher production and margins in the Refining business and by opportunities taken advantage of in Trading on the international markets.

Conversely, the restrained results in the Commercial and Renewables businesses (215 million euros) reflect the drop in margins in Service Stations in Spain as a result of the more than 150 million euros of discounts applied by Repsol to fuel sale prices, despite a notable increase in sales after the restrictions associated with the pandemic were lifted. This negative trend in the fuel trading businesses was mitigated by better results in the low-carbon electricity generation businesses, by a notable increase in production and by high electricity prices.

The inventory effect (1,206 million euros) reflects the accounting impact of the higher value of inventories due to the rise in international prices of crude oil and products, which required high investment in working capital.

Lastly, special items (-1,844 million euros) importantly include provisions for impairment in the accounting values of the Group's refineries, mainly in Spain. This reflects the toughening of the business environment in Europe and its impact on the profitability and competitiveness of our facilities, which, as foreseen in our strategic plan, need to undergo a profound industrial transformation to guarantee their future sustainability.

Management Report 1st Half 2022

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1. First Half 2022	2. Environment	3. Financial performance	4. Performance of	5. Sustainability and	6. Outlook	Appendices
overview		and shareholder	our business	corporate governance
		remuneration

Our businesses seize opportunities in a complex

environment

• Increased use of refining and chemical facilities.
• Higher sales in commercial businesses.
• Increase in electricity production.

Transformation and promotion of decarbonization

• New partners to grow in Renewables and international expansion (United States).
• New projects and commitment to Hydrogen to transform and guarantee the future sustainability of our industrial businesses...
• Shareholders approve the climate change strategy.

As a result, net income obtained in the period came to 2,539 million euros (1,235 million euros in 2021).

This net result includes a corporate income tax expense of 2,014 million euros (effective rate of 44%). Repsol has paid a total of 7,566 million euros in taxes in the first half of the year, including 5,324 million euros in Spain.

The steady recovery of economic activity and prices led to an increase in EBITDA (8,019 million euros), which in turn allowed Repsol to improve cash flow from operations (2,930 million euros), despite the increase in working capital (3,963 million euros due to higher inventories). The free cash flow, net of investments, was 1,454 million euros, which allowed net debt to be reduced significantly to 5,031 million euros (leverage ratio of 16.6%) and liquidity to be increased

(9,380 million euros). This robust financial position has been appreciated by the rating agencies, which confirmed Repsol's investment grade rating, with Standard & Poor's upgrading its outlook from stable to positive.

The share price recovered significantly (+33%) and the shareholder remuneration in this half went up to 0.30 euros per share. Good business progress made it possible to make a capital reduction through the redemption of treasury shares, which improves earnings per share.

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For more information, see section 3. Financial performance

and shareholder remuneration

Business performance and transformation

Repsol continued with its transformation process throughout 2022. Key actions in the period included the process of making business management more efficient and agile to be able to adapt to the new situation in the markets, the incorporation of new technologies and the digitalization of operations, as well as the drive to build new businesses and transform traditional ones to achieve the decarbonization targets and align with the energy transition environment, which strongly influenced the Company's actions in the first half of the year.

At Upstream, the cost reduction plans and the redefinition of the asset production plans, under the premise of prioritizing value over volume, made it possible to take advantage of the better price environment (a rise of the realization price of 68% for the crude oil and of 106% for gas). Production (549 Kbep/d) was lower than in the same period in 2021, mainly because of asset divestments and interruptions due to security conditions in Libya and the natural decline of fields. A dynamic management of the asset portfolio was maintained to concentrate on strategic assets and in countries that offer competitive advantages. Thus, assets

were sold that represent our exit from countries such as Russia, Vietnam, Malaysia and Ecuador, and the exploratory activity in Greece was ended. Additionally, progress was made in the development of key projects in the United States (Marcellus, Eagle Ford and the Gulf of Mexico), Colombia and Norway.

At Industrial, Refining adjusted its production, logistics and commercial schemes to the prevailing environment characterized by a recovery in demand and high margins (compared to the exceptionally low margins and demand in the first half of 2021, as a result of the pandemic). Meanwhile, the Chemicals businesses continued to operate efficiently and without any significant operational incidents. The Group also continued to focus heavily on innovation and digitalization by launching a number of significant investment and industrial projects (renewable hydrogen, circular economy and use of differentiated materials and production of advanced biofuels) to demonstrate how decarbonization, approached from a technology-neutral perspective, can guarantee the future and profitability of our industrial complexes.

At Commercial, the increase in fuel sales in Spain Mobility and Aviation businesses (due to the lifting of mobility restrictions) stands out, as well as the necessary adaptation to the current context of high prices in the electricity and gas commercialization businesses. Repsol has shown its commitment to its customers by being the first operator in Spain to establish voluntary discounts at service stations, sacrificing its margins to mitigate the impact on consumers of the rise in fuel prices caused by the war in Ukraine. The customer-centric business strategy has been driven by the growth of the Waylet application (to reach 4.8 million digital customers, almost 50% more than at the end of 2021), the increase in electricity and gas customers (up to 1.4 million) and the development of new solutions for customers to improve sustainability in their homes and in mobility.

At Renewables, the Jicarillas photovoltaic project was launched in the United States (63 MW) and the first wind farms of the Delta II wind project in Spain (60 MW). Expansion continued in the United States with the Frye Solar photovoltaic project in Texas, which will be the Group's largest facility to date, with 637 MW, and an agreement was signed with Ørsted to identify and, where appropriate, jointly develop floating offshore wind projects in Spain. The second rotation of assets in Spain was completed, with the sale of a 49% stake in the Valdesolar photovoltaic project (Badajoz) to The Renewables Infrastructure Group (TRIG). Finally, reinforcing Repsol's objectives for building this business, an agreement was reached with Crédit Agricole Assurances and funds managed by Energy Infrastructure Partners (EIP) for the sale of a 25% stake in Repsol Renovables. The incorporation of partners entails a greater ambition for

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