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+44 (0)20 7232 3090 Traded on

AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange Regulated and

LSE: IIR authorised by

Repsol YPF 11 July 2008

Update Report – 1Q 08 Results

Increase in hydrocarbon and retail prices to drive company’s top-line, going forward

Common BUY Fundamental research indicates a 19% upside in the common stock over the next 6–12 months. We
Direct accessthetotarget
have calculated theprice
report free of charge
on fundamental factors, at
using a weighted average of target
prices obtained using DCF and comparative valuation methodologies. We continue to take a 6–12
month investment horizon for this stock, as the commodities market in which the company operates is
highly cyclical and therefore trends can be captured more accurately within a shorter investment
Ticker: REP.MC horizon.
Target price: €27.32 We reiterate the common stock to a BUY with a 6–12 month target price of €27.32 per share.
Current price: €22.99

ADR BUY The ADR is expected to appreciate approximately 12% over the next 6–12 months as the 19%
fundamental upside is offset by 6 percentage point’s downside attributable purely to the anticipated
depreciation of the Euro against the US dollar and 1 percentage point downside attributable to the
reduction of current premium over the same period1.
Ticker: REP
Target price: US$40.98
Current price: US$36.66
We reiterate the ADR (1 ADR = 1 common share) a BUY with a 6–12 month target price of US$40.75.

Supervisor: Nirav Shah

Analyst: Deepak Chugh Investment horizon- short term actionable trading strategies
Editor: Matthew Bridle This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If
Global Research Director: this report is provided to you by your broker under the Global Settlement, you may now also access (free of
Satish Betadpur, CFA charge) the short term trading outlook that we publish from time to time for this issuer, looking at the coming
5-30 days for readers with a shorter trading horizon. These are available online only at
Next news due:
2Q 08 results, 31 July 2008
Report summary
Repsol YPF (Repsol) reported a robust increase in its top-line during 1Q 08 driven by strong
performances across all of its business segments. Although its operating margin was impacted by a
rise in input costs, its net margin improved with a decline in the effective tax rate given the divestment
of its YPF segment. Going forward, we are confident of an expansion in the company’s production
volumes given the company’s extensive capital expenditure plans coupled with the onset of drilling at
its recently discovered field in Carioca. An expansion in production capacity coupled with our
anticipated increase in crude oil and gas prices in the short to medium term will benefit the company’s
top-line over our investment horizon. However, rising prices for oil are likely to increase input costs
within its Downstream segment, pressuring Repsol’s margins. However, based on our fundamental
outlook and current price levels, we view Repsol’s common stock as an attractive buying opportunity.

Currency impact for US investors

By itself, the impact of the anticipated currency movements on the ADR (now US$36.66), without
considering changes in the share price, is broadly negative and is expected to be:

Over 6 months: US$39.04

Over 12 months: US$34.86

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