DBRS Releases Report on Total S.A.

DBRS has today updated its report on Total S.A and Subsidiaries. The credit quality of Total S.A. (Total or the Company) is supported by its continued strong financial profile and global scale, which enable the Company to withstand economic shocks with relatively limited impact on credit metrics, as evidenced by its consistently strong operating performance in the midst of the global financial crisis in 2009. Although gross leverage is relatively high among peers at over 30%, the Company has traditionally kept net debt at the low end of, or below, its targeted range of 20% to 30% over the last five years. DBRS notes that Total has increased its capital spending (capex) significantly in the last two years, which could result in negative pressure on credit metrics; however, DBRS anticipates that Total will continue to manage its leverage at reasonable levels to maintain its financial flexibility. Should leverage increase materially as a result of persistent free cash flow deficits, negative rating action could be likely.

The Company also benefits from its integrated operations, which act as a natural hedge during volatile pricing markets. During periods of weakened pricing, downstream operations benefit from lower feedstock prices, which partially compensate for the decrease in price realizations in upstream operations. Stripping out the impact of foreign exchange rates, Total’s earnings were relatively flat in the first half of 2012 (H1 2012) (as compared to H1 2011), despite a weakening of crude oil prices in Q2.