Exploration & Production, Canada

2017 Community Report

Welcome to our 2017 Community Report, Exploration & Production, Canada, a publication of Repsol Oil & Gas Canada Inc.* that showcases the social and environmental initiatives carried out in 2017. These initiatives demonstrate our continued dedication to business practices that reflect socially responsible and environmentally sustainable principles: responsible operations; trust-based stakeholder relationships; two-way dialogue; and benefits sharing with local communities.

Last year in London, I presented our socially sustainable approach to Duvernay development to ESG Investors who strongly believe environmental, social and governance factors help to better determine the future financial performance of companies. I was proud to be able to share in this forum how we integrate social and environmental considerations in our business decision-making as we develop our Duvernay unconventional resources.

In 2017, Repsol commissioned a survey on Oil and Gas industry perceptions. The results underlined that many Albertans believe our industry plays a vital role in generating economic development and that Albertans recognize industry’s efforts in managing the impacts of our activities. This research reflects the same expectations we consistently hear from local communities and landowners in terms of the importance of environmental protection, safety and innovation. This report highlights some of the work we did in these areas last year.

Safety is our top priority. Our dedication to incident prevention guides the design, operation and maintenance of our facilities. We carry out regular, proactive risk assessments in accordance with international best practices and we ensure our workforce is expertly trained.

Repsol is committed to making a positive impact on the communities in which we live and work. An example of this is the dedicated volunteer work of Repsol employees like Dave Anthony, Geologist in Training and our 2017 United Way Campaign Chair. Dave was presented with the Power of One Award by the United Way of Calgary and Area. Repsol’s United Way Committee achieved 70% employee participation and raised $816,275 for United Way programs directly benefiting our communities.

Our Community Report also touches on social investment initiatives in our operating areas, our efforts to innovate in areas of increasing public concern such as water management, greenhouse gas (GHG) emissions reductions and wetland protection and on our recent partnership with the University of Alberta which ensures engineering graduates will have fundamental training in safety and risk management.

Thank you for taking the time to read our 2017 Community Report and I look forward to your comments through communications-canada@repsol.com.

Jim HandVice PresidentCanada Business UnitRepsol Oil & Gas Canada Inc.

Letter from Jim Hand, Vice President

* Repsol Oil & Gas Canada Inc. is the legal name for our Canada business. For simplicity, “Repsol” is the company name used throughout our 2017 Community Report. Repsol S.A. is used when referring to the Spanish parent company.

Table of Contents

Exploration & Production: Spotlight on Canadian Operations ...................................2 Bringing a Positive Impact to Local Communities ...........................................................3Learning from Incidents and Near Misses ...........................................................................3 Employee Volunteering ................................................................................................................4Corporate Sponsorships ...............................................................................................................6

Promoting Responsible Water Management Facilitating Entrepreneurship and Success in the WorkplaceStrengthening the Governance of the Extractive Sector

Aboriginal Engagement ................................................................................................................8Repsol and First Nations Communities: A Two Way Dialogue Building Brighter FuturesConnecting to CultureHonouring Diversity

Edson ...................................................................................................................................................10Celebrating Arts and CinemaSafety in the Community Reduce, Reuse, Recycle and Recover

Chauvin ...............................................................................................................................................12Happy Birthday, EdgertonProviding State-of-the-Art Medical EquipmentLearning about Wetlands

Duvernay ...........................................................................................................................................14Building Wonderful Meeting PlacesHealth Care of the FutureCreating Recreational Opportunities

Safety and Environment ............................................................................................................16Walking the Safety TalkEncouraging Safety Excellence in Supervisors and Managers Water Storage, a Key Component of Repsol’s Water StrategyEdson Gas Plant: Improving Wastewater Handling Methane Emissions Reduction: Important Steps TakenWetland Protection: A Top Priority for Repsol

By The Numbers.............................................................................................................................22

Table of Contents

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Last year, the company invested CAD $216 million in the exploration and development of its Canadian assets, resulting in an average daily production of 64 mboe/d. Repsol holds roughly one million net acres of land in Western Canada.

Greater Edson• 2017 production: 289 mcf/d (51 kboe/d). Land base: ~ 619,000 net acres.• We implemented innovative technology for plunger artificial lift at its gas well sites.

This implementation resulted in safer, more cost-effective operations.• We converted high bleed pneumatic controllers to low bleed. 830 devices were converted on

time and budget, which resulted in an estimated GHG reduction of ~ 50,000 t CO2e/y. • The Alberta Energy Regulator (AER) reviewed the Edson Gas Plant ten year term renewal

application. Through their review process, the AER determines whether the plant operates in accordance with the Environmental Protection and Enhancement Act (EPEA) and associated regulations. As a result of Repsol’s collaboration with the AER, industry peers and the public, the renewal was issued and became effective March 1, 2018.

• We partnered with Delphi Energy Corporation to form a joint venture in the Bigstone area, North Western Alberta, to develop the Montney formation.

Chauvin• 2017 production: 9 kboe/d. Land base: ~107,000 net acres.• Chauvin Operations launched a project to automate more than 50% of its 1400+ wells, allowing

for flow, pressure and system operating data to be remotely available. This allows Repsol to remotely optimize oil wells, troubleshoot production downtime and reduce Safety and Environment (S+E) risk. This level of automation is expected to realize an additional 900,000 bbl of oil reserves over the next 30 years.

• We hosted our 15th Annual Community BBQ in Chauvin. The turnout for this year’s BBQ was one of our best ever, at over 400 people. Repsol Chauvin is grateful for all the support we have received from local stakeholders, community members and contractors.

Duvernay • 2017 production: 22 mcf/d (4 kboe/d). Land base: ~300,000 net acres.• Duvernay is an asset with significant resource and growth potential. • As we progress our development plans, we have been able to high grade our portfolio in order

to commit capital to the best areas.• We continued to test new completions technologies that resulted in more efficient operations.• Repsol will continue to drill wells in core areas to finish appraisal and best position the play

for future development; production results have met or exceeded expectations in core areas.

Exploration & Production Spotlight on Canadian Operations

Operations

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Bringing a Positive Impact to Local Communities

Social Investment Repsol’s Social Investment program helps to maximize positive impact and meet the needs identified by the communities in our operating areas. Our focus is based on three key investment areas:

Education and Training: education programs aimed at elementary and secondary school children and students in university and postgraduate programs.

Environment: projects to raise awareness about caring for and protecting the environment and learning about biodiversity.

Empowering Communities: projects that support our operating areas through measurable positive change through programs aiming to ensure healthy, vibrant communities.

Local Economic EngagementRepsol tracks the use of local vendors within the parameters of its Local Economic Engagement Strategy (LEES). When selecting suppliers, Repsol endeavours to hire local contractors and source regional services wherever possible. Our selection processes take into account safety, competitiveness and reliability. We also invest in capacity building initiatives in our local operating areas.

Employee EngagementWe support a wide variety of not-for-profit and charitable organizations where our employees and their immediate families volunteer outside of working hours. This hands-on involvement allows us to directly support the causes and community organizations that mean the most to our employees.

At Repsol, safety is our top priority. We strive for a zero injury rate and avoidance of factors that may lead to incidents that expose our employees, contractors and neighbours to risk. Repsol’s Safety and Environment Incident Management internal standard provides a consistent method to manage all incidents.

We systematically investigate all incidents and near misses that have caused or could have caused serious injuries, which are called High Profile Incidents (HPIs). HPIs are scrutinized by a formal investigation team with strict reporting procedures. Our investigation teams typically consist of: an employee not directly involved in the incident; an S+E manager; an investigation expert; and a subject matter or technical expert.

The objective of an HPI investigation is to prevent recurrence of the incident or similar incidents by determining the cause of each individual incident, so that we learn from the investigation and take the appropriate improvement actions. We also share the lessons learned across disciplines and across our organization.

Learning from Incidents and Near Misses

I am honoured to be part of a culture where meaningful volunteering and community engagement are encouraged.

In 2017, our employees volunteered over 1200 hours and raised close to $23,000 for local charities. These efforts are

helping to showcase that Repsol is a company that supports the Calgary community and I am proud of the

impact we’ve had in 2017.

Jen Gibson - Repsol Employee Volunteer Advisor, Calgary

Employee Volunteering

It is always fun to volunteer and give back to the community. For me, it was a great experience to pass on some knowledge about the sport of curling to the kids. I had lots of fun teaching the kids and they seemed to

enjoy it as well. Hopefully, they can use some of those skills in the future.

Kevin Koe - Surface Landman, Duvernay, Calgary, and Canadian curler

Junior curling clinic in Edson

It was an honour to chair Repsol’s 2017 campaign and receive the Power of One

Award from the United Way of Calgary and Area. Our Calgary based employees and contractors continue to lead the charge

in supporting services for Calgarians-in-need, the development of our youth and fighting poverty. Achieving our goal of 70%

participation was especially impressive during a difficult time in our city and reflects Repsol’s strong commitment to community.

Dave Anthony - Geologist IT and 2017 Campaign Chair, Calgary

As a parent of young children, we’ve accessed the expertise at the Alberta

Children’s Hospital a number of times and feel fortunate to have such an incredible facility in Calgary. I really appreciate

that Repsol supports initiatives in our community and encourages employee participation so that we can experience

the impact that we can have when we join together for an important cause.

Becky Horvath - Environment & Regulatory Lead, North America, Calgary

Through the Investing in Our Communities (IOC) program, Repsol supported the Boe’s River Run, an

event in honour of my husband, a former Senior Geologist of Legacy Talisman who lost his battle with cancer

in 2015. The funds raised were donated to the Calgary Rosedale Hospice to support their family group program which provides

a caring environment for those preparing for the loss of a loved one.

Angela Baskerville - Senior Geologist, Calgary

It was an honour to chair Repsol’s 2017 campaign and receive the Power of One

Award from the United Way of Calgary and Area. Our Calgary based employees and contractors continue to lead the charge

in supporting services for Calgarians-in-need, the development of our youth and fighting poverty. Achieving our goal of 70%

participation was especially impressive during a difficult time in our city and reflects Repsol’s strong commitment to community.

Dave Anthony - Geologist IT and 2017 Campaign Chair, Calgary

I support Team 4334, a First Robotics Competition team based in Calgary. We strongly

believe that competition and a consistent “try-again” attitude is what leads to innovation and

further understanding. Repsol’s support allows the team to work harder, push farther and achieve what some would consider impossible.

Shelley Organ - Continuous Improvement Lead, Calgary

Volunteering for the Nature Conservancy of Canada was a rewarding and impactful experience. The

External Relations team and I were able to see the results of our work making a real, measurable

difference to the health of the local ecosystem. As we spent the day in the pouring rain removing

barbed wire, I learned to understand each person a bit better and see the dynamics of how our team

worked together to achieve our goal.

Heather Shields - Surface Land Administrator, Calgary

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Promoting Excellent Water Management

The Red Deer River Watershed Alliance Society sent us the following note, which captures the essence of the ongoing relationship between Repsol and the Society:

“The Red Deer River Watershed Alliance (RDRWA) is a multi-stakeholder, non-profit organization working to promote the good use and proper management of water resources within the Red Deer River watershed, located in central Alberta.

The RDRWA engages with a wide number of stakeholders that influence water and land use practices in our communities. The RDRWA also leads on activities related to watershed planning, shares best management practices, fosters stewardship activities, reports on the state of the watershed and educates users on the importance of water resources in the Red Deer River watershed, an area of over 49,650 km² and home to over 300,000 people.

Repsol plays a key role in the RDRWA, both as a partner and a funder. We value the relationship we have built with Repsol’s Water Lead, JoAnne Volk. In addition to working with the RDRWA as one of our community partners, JoAnne also serves as an active member of the RDRWA Board and several sub-committees; sharing her expertise and providing valuable insights and guidance into RDRWA strategic planning and activities.

In September, RDRWA hosted a two-day event, ‘Rally for the River’, that brought together 50 people from various levels of government, non-profit and environmental non-governmental organizations, First Nations communities and private industry to delve into the complex world of water challenges and to consider new, collaborative and leading-edge approaches to tackling some of these critical water issues. RDRWA convened these 50 big thinkers in the world of water to help identify what is currently happening within the watershed, to map out areas with high potential for collaboration and change and to explore what is possible in a larger context.”

“ Repsol’s support as a sponsor of ‘Rally for the River’ was invaluable as it enabled us to host the event at no cost to attendees, ensuring that all stakeholders could have their voices heard with respect to future watershed management in the Red Deer River basin.”

– Rosemarie Ferjuc, Outreach and Communications Manager, Red Deer River Watershed Alliance Society

Corporate Sponsorships

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“ The commitment to fund the Repsol Hub for Social Enterprise will impact our hard working learners by continuing to build links to industry and provide enhanced learning opportunities to our student body. These opportunities make for broader and enriched learning and set our learners on a course to be innovative and socially-minded as they embark on their careers.”

– Ron Burke, Director, Fund Development, Bow Valley College, Calgary

Bow Valley College’s core business is to provide programs of instruction, training and services to help adult learners acquire the skills they need to succeed in the workplace. The Repsol Hub for Social Enterprise serves as an additional support mechanism for graduates and entrepreneurs. From the Repsol Hub for Social Enterprise comes the popular VentureQuest Business Idea Competition, which gives Bow Valley College students the chance to launch their business plans successfully.

At VentureQuest, students are taken through a process that teaches them problem-solving techniques to develop ideas that have the potential to be turned into a business. With the help of the Repsol Hub for Social Enterprise, VentureQuest is re-framing students’ thinking so they are better able to solve problems, a vital skill in today’s economy. Ron Burke of Bow Valley College says, “because of Repsol’s ongoing generosity, learners at Bow Valley College are provided the resources and encouragement needed to be successful in their pursuits.”

In 2014, Repsol entered into a multi-year agreement with the University of Calgary and continues to support the Extractive Resource Governance Program including a junior fellowship program at the School of Public Policy and the Chair in Energy Law and Regulation at the Faculty of Law.

In 2017, the Extractive Resource Governance Program saw experts from the University travel to Mongolia to deliver strategic revenue management and fiscal policy training sessions. In exchange, a group of Mongolian senior public servants came to the University of Calgary to offer training in sovereign wealth funds.

In addition to this funding, Repsol provides bursaries and scholarships for students in the areas of business, law, engineering and science.

Facilitating Entrepreneurship and Success in the Workplace

Strengthening the Governance of the Extractive Sector

“ Repsol’s generous support has already fueled incredible achievement across campus and is challenging us to set our sights even higher. On behalf of the entire university, I want to thank you for your generosity and for sharing our vision. I look forward to seeing the continued impact of your philanthropy, both on our campus and beyond.”

– Dr. Elizabeth Cannon, President and Vice-Chancellor, University of Calgary

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Repsol and First Nations Communities: A Two Way Dialogue Repsol ensures First Nations and Métis communities have the opportunity to review our proposed development activities and identify any potential impacts. We conduct field site visits where community Elders and monitors appraise the proposed development project area for potential impacts to their treaty rights and traditional uses prior to proceeding with surface land acquisition and regulatory approval phases.

In 2017, during a site visit conducted in an area specific to our Duvernay development, representatives from a First Nations group evaluated the proposed project area for a compressor facility. During the site assessment, First Nations Elders examined the plant species within the project area and also searched for traditional cultural sites. Monitors and Elders from the First Nations community identified a traditional campsite. Traditional gravesites were also found within the proposed project area.

The First Nations community engaged Alberta Culture and Tourism (ACT) to review these findings as it is their duty to designate Aboriginal historical and cultural sites throughout Alberta under the Historical Resources Act. The First Nations community requested that this site be protected and avoided. ACT acknowledged the identified sites and all parties discussed the need to maintain a buffer from these sites. Repsol agreed to move the compressor to a new location and maintain a safe buffer from the traditional sites.

“ Through field site visits, Repsol land staff and Community Elders assess proposed project locations and identify any potential impacts our development plans may have. Early and proactive community engagement allows us to make adjustments to our development plans to avoid disrupting these sacred and culturally significant sites.”

– Sarah Barcelo, Community Relations Advisor, Calgary

Building Brighter Futures

In 2017, as part of Repsol’s social investment funding, Repsol created a scholarship program supporting Alberta First Nations and Métis students who are enrolled in or have applied to a technical school, college or university in any program. In 2017, six scholarships were awarded.

Repsol’s Indigenous scholarships are designed to acknowledge the efforts of post-secondary students from Treaty 6, Treaty 7 and Treaty 8 communities, and from a Métis Settlement community in Alberta.

The scholarships may go toward the cost of tuition, books and supplies. Selection is based on proximity of the applicant’s residence to Repsol’s operations, the applicant’s career aspirations and demonstrated community involvement.

“ This scholarship will truly be an asset and it has challenged me even more to succeed, as now you also have invested in my future. This scholarship will go towards my tuition and books. It really will make a difference in my life as financial needs are always a struggle to attain without companies like Repsol that help students like me.”

– Juel Bundy, Recipient of Repsol’s Indigenous Scholarship Award, Calgary

Aboriginal Engagem

ent

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Through collaborative effort with other industry partners, Repsol worked with Sunchild First Nation to develop a framework for their very first one-day cultural awareness camp held at Sunchild First Nation. Repsol representatives were among the guests who attended the camp.

Participants had the honour of meeting with Elders and other community members. The camp participants learned about the history of Sunchild First Nation, the raising of a traditional teepee, significant cultural practices such as hunting and harvesting, traditional ceremonies and medicinal teachings.

Repsol’s support of the cultural awareness camp demonstrates our ongoing commitment to building meaningful relationships and respecting the traditional cultures of the First Nations communities.

Connecting to Culture

Honouring Diversity

June 21st is National Aboriginal Day. This is a day for all Canadians to recognize and celebrate the unique heritage, the diverse cultures and the outstanding contributions of First Nations, Inuit and Métis peoples. Although these groups share many similarities, they each have their own distinct heritage, language, cultural practices and spiritual beliefs.

In 2017, Repsol participated at the “Buffalo” sponsorship level during the Aboriginal Awareness Week in Calgary. Throughout the week, there were many events that celebrated Aboriginal cultures while creating awareness within Calgary.

The celebrations were attended by Elders, chiefs, dignitaries, celebrities, corporate executives and the Minister of Aboriginal Relations. Breakfasts, festivals and a pow-wow competition were part of the activities.

“Thank you for your support of our initiative to raise awareness and celebrate the cultural diversity of Canada’s Indigenous people.”

– Jo-Ann Gunderson, Chairperson, Aboriginal Awareness Week, Calgary

Photo courtesy of J. Keith Howie

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Celebrating Arts and Cinema

Repsol donated funds toward the Town of Hinton’s expansion of their performing arts centre – The Guild Performing Arts Venue. The Performing Arts Venue replaces the Roxy Theatre which was destroyed by fire in 2009. Construction is underway on the building which will include art/pottery studios, a theatre with stage, a cinema and additional seating and landscaping.

The motivation behind the enhancement of the Performing Arts Venue is to create a place for theatre production, cinema, a lecture hall and an exhibit space in which arts and cinema can have a home in the community and region. This dedicated multi-use space defines Hinton as a community that supports, invests, grows and celebrates the value of arts and cinema. Involvement with this important community space is a way for Repsol to strengthen and enrich the areas in which we operate.

The numerous programs that are currently run out of The Guild and the potential for more in the future, are a strong indication of how important these upgrades are to the local arts and culture organizations in Hinton and the community as a whole. Repsol and its employees are proud to invest in initiatives like this one in which everyone in the community can benefit for years to come.

“ It is important to recognize and celebrate the contribution made by Repsol that brought us further towards completion of a dedicated local venue for performers, contributors and supporters of arts and culture in Hinton. Community projects depend on contributions like this and we warmly acknowledge Repsol’s generosity in support of our performing arts centre.”

– Marcel Michaels, Mayor, Town of Hinton

Edson

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“ The Hinton Fire Department would like to thank Repsol for the ongoing generous donations to help support our existing and future fire department programs. Repsol continues to help our organization and the community in which we serve.”

– Todd Martens, Chief, Hinton Fire Department

Repsol reinforces our safety values by supporting the Hinton Fire Department, which runs several educational programs. Hinton Fire Chief Todd Martens recently wrote to describe how our funding is being used.

“Junior Fire Program – Repsol support is used to acquire bunker gear and other equipment necessary to equip our junior firefighters with the tools required to contemplate a career in fire service and other related fields.

PARTY program (Preventing Alcohol and Risk related Trauma in Youth) – Repsol support is used to acquire necessary items to help this invaluable initiative for our future generations. The program teaches the importance of preventing alcohol abuse and other risk related traumas, through live interactive presentations.

Burn Building – This building holds sessions for firefighters and outside agencies to train in simulated fire situations. Repsol support is used for upgrades to the building ensuring a high industry standard of fire safety training.”

The West Yellowhead Recycling Society was created in November, 2015. The society’s goals are to help enhance the education and promotion of the local waste authority’s vision and mission. Their mission is to be a leader in the region in waste reduction through collaborative efforts to reduce, reuse, recycle and recover in addition to the effective management of waste.

For the 12th year, Repsol was involved with Environment Week activities in Edson, Yellowhead County, Jasper and Hinton.

The theme last year was “Celebrate Our Nature”. West Yellowhead Recycling Society held free educational and participation programs. Repsol sponsored the Environment Week Festival and the Evergreen Theatre Production entitled The Legend of Four (Water, Fire, Air and Earth) which presented a theme of cooperation and sustainability.

Safety in the Community

Reduce, Reuse, Recycle and Recover

“ In 2017, thanks to the support of Repsol, we made additions to the Edson Community Garden, including six new plots and an interpretive centre geared toward the engagement of youth in developing sustainable and self-sufficient agricultural ecosystems. We rely on the support of Repsol to host the annual environment day festivals and educational programming in Edson, Yellowhead County and Hinton. These programs reached over 2800 students!”

– Anne Auriat, Environment Week Organizer, West Yellowhead Recycling Society

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Providing State-of-the-Art Medical Equipment

The Town of Wainwright’s Health Care Complex offers medical care and facilities to many patients living in our Chauvin operating area. There are 22 inpatient and 60 long-term care beds at the Complex, as well as intensive care, day surgery and operating room facilities. Repsol donated funds to the Wainwright and District Community Health Foundation to support the trauma room project and expansion of the emergency department at the Wainwright Health Care Complex. This upgrade will enable the emergency department to become more efficient with state-of-the-art equipment.

It is important to Repsol to support the broader community that utilizes the emergency department in Wainwright. The Wainwright and District Community Health Foundation’s mission statement is to enhance health care services and equipment for the Wainwright Health Care Complex. Repsol seeks opportunities with partners like the Wainwright and District Community Health Foundation and because of this partnership, there will be many who will benefit from expanded services and more specialized equipment.

“ The Wainwright and District Community Health Foundation thanks Repsol for its generous donation for our district’s initiative. All citizens of the region profit from the financial support received from our community partners like Repsol.”

– Janice Ewasiw, Secretary Treasurer, Wainwright and District Community Health Foundation

Chauvin

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The year 2017 was not just Canada’s 150th birthday, but it was also the 100th anniversary of the Village of Edgerton, 35 kilometers east of Wainwright. As the celebration’s Gold Sponsor, Repsol donated funds to Edgerton to help support a long weekend of events celebrating Edgerton over the past 100 years showcasing the history of the community and its people.

Various events included suppers, a theatrical production, artist exhibitions, museum tours and many types of local entertainment. A highlight was the parade, in which Repsol entered its own float. In addition to the local community, the festivities drew hundreds of visitors from out of town, including many former residents. Repsol has a long history of working with the Village of Edgerton and was proud to be a part of this memorable weekend.

For many years, Repsol has sponsored Inside Education’s Repsol Environment Days in our operating areas. Along with the almost 500 pupils who participated in this program in 2017, students in grades 4 and 5 from Macklin, Saskatchewan had the opportunity to learn about wetlands and their environment.

Each student received a bug viewer and a rubber duck courtesy of Repsol; the company provided snacks and lunches for all, which the Macklin School teachers said was “thoughtful and very much appreciated.”

Staff from Calgary and the Chauvin offices were on hand to cook and help out. Repsol is proud to continue as an Alliance Partner with Inside Education which offers these exceptional educational opportunities that align with the students’ curriculum and with Repsol’s values.

Happy Birthday, Edgerton

Learning about Wetlands

“ I would like to thank Repsol for sponsoring the Wetland Field Trip which was presented by Inside Education at Macklin Lake on May 31st. This is such a wonderful opportunity to learn about the animals and plants that live in our area. I find students to be more engaged and they definitely absorb more information anytime there is hands-on learning. This program fits directly into our Science Curriculum as one of our Units is called Habitats and Communities.”

– Suzette Hills, Teacher, Macklin School

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Building Wonderful Meeting Places

Members of the Dovercourt community near Rocky Mountain House tell us that they are extremely grateful that Repsol values community involvement within the areas in which we operate. The Community Hall Society is constantly working to keep the facility maintained and up-to-date for the many user groups and individual functions held there throughout the year. Part of Repsol’s support went to upgrade the playground equipment to meet safety regulations.

We are proud to provide the community with a facility for recreation, friendly social activities, weddings, meetings, weekly bingo and cowboy church services. By keeping up-to-date with current safety standards and modern facilities, Dovercourt Community Hall continues to strengthen community connections and attract great neighbours.

“ With the support from Repsol, we were able to achieve our goal of a safer playground much sooner and more efficiently. We are very thankful to Repsol for recognizing and appreciating the value of community investment.”

– Irene North, Dovercourt Community Hall

Duvernay

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“ Nursing staff are grateful because this new equipment provides quick vital sign information, saving valuable time. The design of the machine allows swift and thorough cleaning of the equipment between patient use. We are grateful for the support from Repsol and the improved patient care at our facility with this upgraded equipment!”

– Shirley Hope, Site Manager, Rocky Mountain House Health Centre

The Rocky Mountain House Health Centre provides 24/7 acute care and emergency services to the communities of Rocky Mountain House, Clearwater County, Nordegg, Caroline, in addition to the communities of Sunchild, O’Chiese and Bighorn First Nations.

Repsol made a donation to the Rocky Mountain House Health Centre enabling the centre to purchase eight new state-of-the-art portable electronic vital signs machines. These machines are helping patients receive timely and accurate assessments including temperature, heart rate, blood pressure and pulse oximetry.

Repsol cares deeply about the wellbeing of people in our operating areas and is pleased to support the Rocky Mountain House Health Centre.

Repsol and the Town of Fox Creek have entered into a sponsorship agreement for the Fox Creek Multiplex. In 2015, a Comprehensive Community Plan (partially sponsored by Repsol) was developed to set out a long-term vision for development and growth in Fox Creek.

A combination of meetings, workshops, public events and open houses took place and were used to engage local residents and obtain feedback from the community. Further to the community analysis completed under the comprehensive community plan and to Repsol’s extensive needs assessment of the Town, the requirement for an updated public sports facility was indicated as a key area of interest with support from local residents.

Repsol’s commitment to sponsoring a portion of the Fox Creek Multiplex will not only help to address some of the concerns heard from Town Council, but it will also help address needs expressed by Town residents.

Health Care of the Future

Creating Recreational Opportunities

“ Repsol will be donating $5,000.00 per year for five years in support of the Family Pool Change Room at our new Multiplex within Fox Creek. With Repsol’s continued support and partnership of our community, we are able to make part of our new facility not just a dream, but a reality. Thank you Repsol for all you do in our community.”

– Roy Dell, Chief Administrative Officer, Town of Fox Creek

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Walking the Safety Talk

Repsol entered into a five-year gift agreement with the University of Alberta (UofA), totaling $500,000. Our gift will contribute to a $15 million endowment fund at the Lynch School of Engineering Safety and Risk Management (ESRM), which was established in 2015.

It is mandatory that all UofA engineering students take at least one course in ESRM. This means that by 2018, more than 1,200 engineering graduates will have a solid grounding in safety and risk management to take with them into the workplace.

Our gift to the UofA demonstrates Repsol’s commitment to work safely – allowing us to “walk the talk”. Together, we can prevent and mitigate future workplace safety incidents. Thousands of students will go through the Repsol Lecture Theatre each week and those students will know that Repsol is serious about safety and risk management.

Repsol employees and our many UofA alumni are very proud of this partnership, which according to J. Fraser Forbes, Dean of the Faculty of Engineering at the UofA, inspires students to achieve more and do better for their communities and society.

“ Your gift is leading to a culture of safety and risk management within engineering, safeguarding people, stakeholder interests and our environment. The Lynch School helps our engineering students achieve the benefit of a great ESRM education and this stays with them throughout their lives as they do the work necessary to build safer structures, infrastructure, systems and processes. It has a lasting impact, supporting education and research so our engineers graduate with a solid grounding in best ESRM practices.”

– Dr. J. Fraser Forbes, Dean of Engineering, University of Alberta

Safety and Environment

Gord Winkel, Program Director, Engineering Safety and Risk Management Program, University of Alberta and Jennifer Findlay, Repsol’s Manager of External Relations celebrating the partnership.

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Repsol believes there is always room for improvement in safety performance. It’s also the company’s view that employees in a supervisory position are fundamental in clearly communicating the importance of safety to frontline workers.

In 2017, we adopted a safety leadership program called Safety Excellence for Supervisors and Managers (SEFSAM). This program focuses on providing leaders with the skills and knowledge to lead the workforce to an injury-free environment. SEFSAM consists of 17 modules that connect the necessary components of safety into our company’s management scope.

SEFSAM emerged as a vehicle to improve our safety culture in our field operations. Safety culture is the result of individual and group attitudes, beliefs, values and perceptions that drive the commitment and the approach to a company’s safety management. Our expectation is that SEFSAM will improve our supervisors’ interactions with their workers and drive an improved safety performance.

Repsol has also embarked upon a Journey to Zero Program in the Canada Business Unit, which is aligned with our commitment to safety and environment. This year, we will be focusing on a number of areas: strengthening our Emergency Response Plans; preventing workplace erosions; improving our job pre-planning; and reducing our worksite spills.

“ Repsol believes that a positive safety culture starts at the top and is grown by our senior leadership’s commitment to safety. Practical workplace practices for managing hazards and control of the hazards across the workplace are essential to achieve this.”

– Monday Cryne, Team Lead, Safety & Emergency Response, Calgary

Encouraging Safety Excellence in Supervisors and Managers

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Water Storage, a Key Component of Repsol’s Water Strategy

Repsol is committed to managing the impact of our operations and we work diligently to mitigate any impact to water in the areas in which we operate. We implement a water strategy that supports the responsible and sustainable use of freshwater within our hydraulic fracturing operations in the Duvernay area. In Alberta, oil and gas operators must apply to the Alberta Energy Regulator (AER) for a licence which allows withdrawal of a predetermined quantity of surface water to a predetermined maximum rate. Companies are required to report to the AER the amount of water they used during their development activities.

Part of Repsol’s water strategy consists of diverting freshwater during the spring and summer when the water volume in the rivers is highest and then storing the water so that it can be used during times of low water volume. By doing this, we minimize the environmental impact of the freshwater diversion.

In 2017, we constructed two water reservoirs. Repsol has been investigating the best materials and testing industry best practices to build these reservoirs. Depending on the conditions of the site and the installation practices, water reservoirs will be built using compacted clay liners, geosynthetic clay liners (hydraulic barriers made of clay bonded to geosynthetic layers), or geomembrane liners (low permeability synthetic membrane barriers).

Repsol expects to have a total of 11 water reservoirs built by the end of 2019 which, in conjunction with the efficient use of water during completions activities and the use of alternate water sourcing options, will support meeting the water needs of our Duvernay development.

In 2018, Repsol is evaluating the possibility of using municipal wastewater and landfill leachate (liquid that passes through a landfill) as a substitute for some of the freshwater use in completions operations for three wells in south Duvernay.

“ Instead of running our operations under temporary water diversion licences, Repsol is in the process of applying for longer-term water licences that will ensure the continuity of our annual development plans. Long-term water licences will allow the government to know long-term water needs of Duvernay operators, resulting in a more efficient management of water allocations.”

– JoAnne Volk, Water Lead, Canada Business Unit, Calgary

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In 2016, the Edson Gas Plant began a three-year project to improve surface water drainage and wastewater handling. The project involved cleaning up waste solid materials in the wastewater ponds, installing a new tank and pump system to contain the wastewaters, decommissioning three ponds and ensuring the integrity of the ponds that would be used for surface drainage after the tanks were installed.

The purpose of the improvements was to segregate wastewater from the surface runoff water to reduce the amount of clean water going to downhole disposal. Additional benefits included reducing the risk of animals being exposed to wastewater, improved operability, better wastewater containment and the opportunity to remove old surface and underground tanks that will no longer be required with this upgraded system.

In 2016, two surface runoff ponds were cleaned and liners were enhanced. In 2017, two wastewater ponds were cleaned and removed from service and the tank installation began. The new wastewater system will be commissioned in 2018 and the final wastewater pond will be cleaned and removed in late 2018.

This project did not have a return on investment, but the importance that Repsol and the Edson Gas Plant partners place on environmental performance and compliance is clear through the investment made in this wastewater handling upgrade.

Edson Gas Plant: Improving Wastewater Handling

“ Upgrading the wastewater handling at the Edson Gas Plant (EGP) has had a significant effect on morale and pride. Employees and by extension the community, have witnessed Repsol taking active steps to increase re-use, decrease disposal and reduce odours and wildlife interactions. The EGP is a legacy facility and investments in infrastructure have reduced Repsol’s impact on the local environment in which we operate and highlighted corporate values of sustainability and innovation.”

– Kyle Rolling, Plant Engineer, Edson

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In support of global initiatives to reduce greenhouse gases (GHGs), the Canada Business Unit implemented changes that reduced methane emissions at specific facilities and locations.

Across our operations, approximately 900 high-bleed gas pneumatic devices at well sites were replaced with new low-bleed devices that vent significantly less methane to the atmosphere. This resulted in a total GHG reduction of approximately 50,000 tonnes.

In 2017, we committed to a Solar Pump Trial in our Greater Edson Operations (Edson, Hinton and Fox Creek, Alberta). The goal is to test new solar/electric chemical injection pumps that could be installed on Repsol’s well sites to replace existing pneumatic pumps. A typical pneumatic pump is operated continuously and emits roughly 100 tonnes of GHGs per year. A solar/electric pump emits zero GHGs. The pump trial is expected to be completed in 2018 and depending on its outcomes, Repsol will be looking at initially installing a total of 25 solar units in the second half of the year.

Partnership to develop a near-zero emission well control system

Repsol is part of an industry consortium that is piloting a hybrid solar and fuel cell powered Near Zero Emission Well Control System (NZE WCS) to be deployed at oil and gas well sites in Alberta. Repsol and two other oil and gas operators are working with Calscan Energy Ltd. and SAFCell Inc. to incorporate this technology which aims to eliminate methane emissions from pneumatic process control equipment and pneumatic pumps. The NZE WCS will achieve a net greenhouse gas reduction of 99%+ compared to standard industry practices that use methane-emitting gas driven pneumatic devices.

Preliminary planning work was completed in 2017 and it’s expected that this new well control system will be installed at two Repsol sites near Edson during 2018.

In 2017, Repsol S.A. joined two initiatives: Principles for Responsible Investment-Methane Initiative: An international network of investors working together with oil and gas companies to ensure they are appropriately managing methane risk, adopting best practices to limit emissions and disclosing pertinent information. Methane Reduction Guidance Principles Roundtable: Signatories commit to implementing the following Guidance Principles: 1. Continually reduce methane emissions 2. Advance strong performance across gas value chains 3. lmprove accuracy of methane emissions data 4. Advocate sound policy and regulations on methane emissions and 5. lncrease transparency.

Methane Emissions Reduction: Important Steps Taken

“ The outcomes of projects such as the solar pump and solar well control systems could have a significant impact on our GHG emissions in the future. Achieving substantial GHG reductions will be made possible by the integration of near zero emissions equipment, renewable and innovative power generation into our existing design standard for new well facilities.”

– Greg Unrau, Senior Environmental Specialist, Calgary

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Wetland Protection: A Top Priority for Repsol

Wetlands are a critical part of the natural environment; they reduce the impacts of floods, replenish groundwater, improve water quality and provide habitat for many species, common and endangered. Repsol works collaboratively with government, regulators and stakeholders to protect wetlands and is one of the many organizations doing its part to avoid, minimize and mitigate potential negative impact on wetlands.

Over the past few years, Repsol has pursued cultural, structural and process changes to support the responsible management of our operations within Alberta and to increase environmental and regulatory awareness of wetland protection.

As part of the development planning process, the potential placement of wells, pipelines and associated infrastructure is reviewed for environmental considerations by means of a Constraints Assessment. Wetlands and waterbodies are key elements in this type of assessment; they are identified, mapped and avoided as a top priority.

Wellpad and pipelines are situated to avoid wetlands. When wetlands and waterbodies cannot be avoided, attempts are made to minimize the amount of wetland disturbed. Repsol will mitigate impacts by reclaiming the wetland at the end of the life of the well, or by contributing to the creation of new wetlands in the same area where the impact occurred.

Under the Alberta Wetland Policy, avoidance must be a priority at all stages of the regulatory process. It is Repsol’s responsibility to avoid wetland impact during the planned activities and to justify wetland impact where avoidance is not feasible. As such, Repsol has been successful in avoiding numerous wetland complexes over the last several years and we will continue this successful strategy in the future.

Photo courtesy of EDI Environmental Dynamics Inc.

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Investing in Our Communities (IOC)

Repsol employees are empowered to engage with communities in order to make a positive impact where they work and live. All eligible Repsol employees/retirees can request one CAD $500 Investing in Our Communities grant per calendar year for a registered not-for-profit or charitable organization. Employees can receive a matching grant by making a financial donation or by volunteering at least twenty hours.

In 2017, due to the generosity of Repsol employees, 185 organizations received the Investing in Our Communities employee match. Below are just a few of those recipient organizations.

Calgary• Banff Alpine Racers Ski Club• Bow Ridge Little League Baseball• Calgary ATV Riders Association• Calgary Canoe Club• Calgary Youth Science Fair Society• Canadian Society of Exploration

Geophysicists• Dress for Success

Chauvin Area• Chauvin Arena• Chauvin Tiny Tots Playschool• Dr. Folkins Community School• Edgerton Community Golf Club • Lloydminster Minor Ball Association• Macklin Curling Club • Wainwright Minor Hockey Association

Duvernay Area• Fox Creek for the Children

Fundraising Society• Fox Creek Minor Hockey Association• Fox Creek Motor Sports Association• Friends of Fox Creek Hospital Society• Hockey Hearts Foundation• Northland Sno-Goers • Silver Birch Golf Course

Edson Area• Arts Centre for Edson Society• Beaverhill Bird Observatory Society• Day Care Society of Edson• Edson Animal Rescue Society • Edson and District Public Library• Hinton Kids for Success• Yellowhead Agricultural Society

“ Repsol’s volunteer matching program provides an opportunity to enhance our equipment purchases where we strive to provide the safest possible training and race environments for our young athletes of the Banff Alpine Racers Ski Club.”

– Brent Molesky - Director Legal North America, Calgary

By the numbers

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Local Economic Engagement

2017 Taxes and Royalties ($CAD)

Location Property Taxes (Gross)

Royalties (Net, actual expensed)

Total

Chauvin and Area $6,424,769 $13,747,754 $20,172,523

Duvernay and Area $292,946 $1,368,875 $1,661,821

Edson and Area $6,402,947 $16,204,314 $22,607,261

Total $13,120,661 $31,320,943 $44,441,604

In 2017, Repsol paid provincial taxes, production royalties and municipal taxes:

In 2017, Repsol worked with vendors based in the following local areas:

Vendor Location Local Spend ($CAD)

CHAUVIN AND AREA

Chauvin $10,037,225

Edgerton $1,389,113

Hayter $326,250

Irma $264,094

Lloydminster $3,869,651

Provost $2,771,896

Wainwright $2,119,012

TOTAL $20,777,240

DUVERNAY AND AREA

Bentley $48,551

Caroline $21,433

Eckville $660,005

Fox Creek $1,734,151

Leslieville $2,904,097

Rimbey $85,660

Rocky Mountain House $10,530,024

Valleyview $236,113

TOTAL $16,220,035

EDSON AND AREA $236,113

Edson $15,385,310

Hinton $8,935,900

Whitecourt $2,175,670

Yellowhead County $2,289,698

TOTAL $28,786,577

LOCAL OPERATING AREA TOTAL $65,783,853

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Social Investment

In 2017, Repsol’s Social Investment spending was as follows:

Aboriginal $CAD

Education $44,500

Empowering Communities $90,500

Aboriginal Total $135,000

Calgary

Education $430,887

Empowering Communities $1,726,036

Environment $102,500

Investing in our Communities $31,795

Calgary Total $2,291,218

Chauvin

Education $13,552

Empowering Communities $53,440

Investing in our Communities $17,050

Chauvin Total $84,042

Duvernay

Education $10,500

Empowering Communities $82,054

Duvernay Total $92,554

Edson

Education $38,864

Empowering Communities $223,121

Environment $12,100

Investing in our Communities $67,410

Edson Total $341,495

Canada Social Investment Total $2,944,309

2000, 888 – 3rd St. S.W.Calgary, Alberta, Canada T2P 5C5

www.repsol.ca