Sensitivity to market environment

The financial performance of TOTAL is sensitive to a number of factors, the most significant being crude oil and natural gas prices, refining margins and exchange rates, in particular that of the dollar versus the euro.

Generally, a rise in the price of crude oil has a positive effect on earnings as a result of an increase in revenues from oil and gas production. Conversely, a decline in crude oil prices reduces revenues. For the year 2015, according to the scenarios retained, the Group estimates that an increase or decrease of $10 per barrel in the price of Brent crude would respectively increase or decrease the annual adjusted net operating income by approximately $1.7 billion and cash flow from operations by approximately $2 billion. The impact of changes in crude oil prices on downstream operations depends upon the speed at which the prices of finished products adjust to reflect these changes. The Group estimates that an increase or decrease in its European Refining Margin Indicator (ERMI) of $1.00 per ton would increase or decrease annual adjusted net operating income by approximately $0.05 billion and cash flow from operations by approximately $0.07 billion.

All of the Group’s activities are, to various degrees, sensitive to fluctuations in the dollar / euro exchange rate. The Group estimates that a decrease of 0.10 dollars per euro (strengthening of the dollar versus the euro) would increase adjusted net operating income by approximately $0.2 billion, and vice versa, while the impact on cash flow from operations is estimated to be not significant.

The Group’s results, particularly in the Chemicals activity, also depend on the overall economic environment.

The year 2014 was marked by a sharp oil price decline in the second half, which continued in early 2015. For more detailed information on this oil price decline and its impact on the Group’s 2014 results, financial position and outlook, refer to chapter 3.

Table : Summary of sensitivities 2014