# UNITED	STATES	SECURITIES	AND	EXCHANGE	COMMISSION

# (Mark	One)

x ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

For	the	fiscal	year	ended	December	31,	2012

¨ TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

Commission	File	Number	1-4601

# Schlumberger	N.V.	(Schlumberger	Limited)

(Exact	name	of	registrant	as	specified	in	its	charter)

Curaçao

(Addresses	of	principal	executive	offices)

(Zip	Codes)

Registrant's	telephone	number	in	the	United	States,	including	area	code,	is:

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	each	class

Name	of	each	exchange	on	which	registered

New	York	Stock	Exchange

Euronext	Paris

The	London	Stock	Exchange

SIX	Swiss	Exchange

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.	YES	x		NO	¨

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.	YES	¨		NO	x

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90 days.	YES	x		NO	¨

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be submitted	and	posted	pursuant	to	Rule	405	of	Regulation	S-T	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and post	such	files.)	YES	x		NO	¨

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of	the registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.	¨ Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the	definitions of	"large	accelerated	filer",	"accelerated	filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer	x		Accelerated	filer	¨		Non-accelerated	filer	¨	Smaller	reporting	company	¨

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).	YES	¨		NO	x

As	of	June	30,	2012,	the	aggregate	market	value	of	the	common	stock	of	the	registrant	held	by	non-affiliates	of	the	registrant	was	approximately	$86.1	billion.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Certain	information	required	to	be	furnished	pursuant	to	Part	III	of	this	Form	10-K	is	set	forth	in,	and	is	hereby	incorporated	by	reference	herein	from,	Schlumberger's definitive	proxy	statement	for	its	2013	Annual	General	Meeting	of	Stockholders,	to	be	filed	by	Schlumberger	with	the	Securities	and	Exchange	Commission	pursuant	to Regulation	14A	within	120	days	after	December	31,	2012	(the	"2013	Proxy	Statement").

# SCHLUMBERGER	LIMITED

# Table	of	Contents

# PART	IV

Certifications

PART	I

# Item	1. Business.

All	references	in	this	report	to	"Registrant,"	"Company,"	"Schlumberger,"	"we"	or	"our"	are	to	Schlumberger	Limited	(Schlumberger	N.V.,	incorporated	in	Curaçao) and	its	consolidated	subsidiaries.

Founded	in	1926,	Schlumberger	is	the	world's	leading	supplier	of	technology,	integrated	project	management	and	information	solutions	to	the	international	oil	and gas	exploration	and	production	industry.	Having	invented	wireline	logging	as	a	technique	for	obtaining	downhole	data	in	oil	and	gas	wells,	Schlumberger	today	provides the	industry's	widest	range	of	products	and	services	from	exploration	through	production.	As	of	December	31,	2012,	the	Company	employed	approximately	118,000 people	of	over	140	nationalities	operating	in	approximately	85	countries.	Schlumberger	has	principal	executive	offices	in	Paris,	Houston	and	The	Hague.

Schlumberger	operates	in	each	of	the	major	oilfield	service	markets,	managing	its	business	through	three	Groups:	Reservoir	Characterization,	Drilling	and Production.	Each	Group	consists	of	a	number	of	technology-based	service	and	product	lines,	or	Technologies.	These	Technologies	cover	the	entire	life	cycle	of	the reservoir	and	correspond	to	a	number	of	markets	in	which	Schlumberger	holds	leading	positions.	The	business	is	also	reported	through	four	geographic	Areas:	North America,	Latin	America,	Europe/CIS/Africa	and	Middle	East	&	Asia.	Within	these	Areas,	a	network	of	GeoMarket*	regions	provides	logistical,	technical	and commercial	coordination.

The	role	of	the	Groups	and	Technologies	is	to	ensure	that	Schlumberger	provides	the	best	possible	service	to	customers	and	that	it	remains	at	the	forefront	of technology	development.	The	Groups	and	Technologies	are	collectively	responsible	for	driving	excellence	in	execution	throughout	their	businesses,	overseeing operational	processes,	resource	allocation,	personnel	and	delivering	superior	financial	results.	The	GeoMarket	structure	offers	customers	a	single	point	of	contact	at	the local	level	for	field	operations	and	brings	together	geographically	focused	teams	to	meet	local	needs	and	deliver	customized	solutions.	The	Areas	and	GeoMarkets	are responsible	for	providing	the	most	efficient	and	cost	effective	support	possible	to	the	operations.

# The	Groups	are	as	follows:

Reservoir	Characterization	Group	–	Consists	of	the	principal	Technologies	involved	in	finding	and	defining	hydrocarbon	resources.	These	include	WesternGeco, Wireline,	Testing	Services,	Schlumberger	Information	Solutions	and	PetroTechnical	Services.

— 	 WesternGeco	is	the	world's	leading	geophysical	services	company,	providing	comprehensive	worldwide	reservoir	imaging,	monitoring	and	development services.	WesternGeco	offers	the	industry's	most	extensive	multiclient	data	library.

— 	 Wireline	provides	the	information	necessary	to	evaluate	subsurface	formation	rocks	and	fluids	to	plan	and	monitor	well	construction,	and	to	monitor	and evaluate	well	production.	Wireline	offers	both	openhole	and	cased-hole	services	including	wireline	perforating.

— Testing	Services	provides	exploration	and	production	pressure	and	flow-rate	measurement	services	both	at	the	surface	and	downhole.	The	Technology	also provides	tubing-conveyed	perforating	services.

— Schlumberger	Information	Solutions	provides	software,	consulting,	information	management	and	IT	infrastructure	services	that	support	core	oil	and	gas industry	operational	processes.

— PetroTechnical	Services	supplies	interpretation	and	integration	of	all	exploration	and	production	data	types,	as	well	as	expert	consulting	services	for	reservoir characterization,	field	development	planning	production	enhancement	and	multi-disciplinary	reservoir	and	production	solutions.	PetroTechnical	Services	also provides	industry	petrotechnical	training	solutions.

Drilling	Group	–	Consists	of	the	principal	Technologies	involved	in	the	drilling	and	positioning	of	oil	and	gas	wells	and	comprises	Bits	&	Advanced	Technologies,	M-I SWACO,	Geoservices,	Drilling	&	Measurements,	PathFinder,	Drilling	Tools	&	Remedial	Services,	Dynamic	Pressure	Management	and	Integrated	Project	Management well	construction	projects.

— Bits	&	Advanced	Technologies	designs,	manufactures	and	markets	roller	cone	and	fixed	cutter	drill	bits	for	all	environments.	The	drill	bits	include	designs	for premium	market	segments	where	faster	penetration	rates	and

increased	footage	provide	significant	economic	benefits	in	lowering	overall	well	costs.	The	technologies	leverage	proprietary	modeling	and	simulation software	for	the	design	of	application-specific	bits	and	cutting	structures.

— 	 M-I	SWACO	is	the	leading	supplier	of	drilling	fluid	systems	engineered	to	improve	drilling	performance	by	anticipating	fluids-related	problems,	fluid systems	and	specialty	equipment	designed	to	optimize	wellbore	productivity	and	production	technology	solutions	formulated	to	maximize	production	rates. The	Technology	also	includes	environmental	solutions	that	safely	manage	waste	volumes	generated	in	both	drilling	and	production	operations.

— 	 Geoservices	supplies	mud	logging	services	for	geological	and	drilling	surveillance.

— 	 Drilling	&	Measurements	and	PathFinder	provide	directional-drilling,	measurement-while-drilling	and	logging-while-drilling	services	for	all	well	profiles	as well	as	engineering	support.

— 	 Drilling	Tools	&	Remedial	provides	a	wide	variety	of	bottom	hole	assembly	drilling	tools,	borehole	enlargement	technologies	and	impact	tools,	as	well	as	a comprehensive	collection	of	tubulars	and	tubular	services	for	oil	and	gas	drilling	operations.

— 	 Dynamic	Pressure	Management	consolidates	managed	pressure	drilling	and	underbalanced	drilling	into	a	single	provider	of	engineered	solutions	for	pressure drilling	services.

Production	Group	–	Consists	of	the	principal	Technologies	involved	in	the	lifetime	production	of	oil	and	gas	reservoirs	and	includes	Well	Services,	Completions, Artificial	Lift,	Well	Intervention,	Subsea,	Water	Services,	Carbon	Services	and	Schlumberger	Production	Management	field	production	projects.

— 	 Well	Services	provides	services	used	during	oil	and	gas	well	drilling	and	completion	as	well	as	those	used	to	maintain	optimal	production	throughout	the	life of	a	well.	The	services	include	pressure	pumping,	well	cementing	and	stimulation	operations	as	well	as	intervention	activities.

— 	 Completions	supplies	well	completion	services	and	equipment	that	include	packers,	safety	valves,	sand	control	technology	as	well	as	a	range	of	intelligent well	completions	technology	and	equipment.

— Artificial	Lift	provides	production	equipment	and	optimization	services	using	electrical	submersible	pumps	and	gas	lift	equipment,	as	well	as	surface horizontal	pumping	systems.

— 	 Well	Intervention	develops	coiled	tubing	equipment	and	services	and	provides	slickline	services	for	downhole	mechanical	well	intervention,	reservoir monitoring	and	downhole	data	acquisition.

— Subsea	offers	solutions	that	are	designed	to	improve	reservoir	recovery,	optimize	production	and	maximize	production	uptime	of	subsea	assets.

— 	 Water	Services	specializes	in	the	development,	management	and	environmental	protection	of	water	resources.

— 	 Carbon	Services	provides	comprehensive	geological	storage	solutions	including	storage	site	characterization	for	carbon	dioxide.

Schlumberger	also	offers	customers	its	services	through	business	models	known	as	Integrated	Project	Management	(for	well	construction	projects)	and	Schlumberger Production	Management	(for	field	production	projects).	These	models	combine	the	required	services	and	products	of	the	Technologies	with	both	drilling	rig management	expertise	and	project	management	skills	to	provide	a	complete	solution	to	well	construction	and	production	improvement.	Projects	are	typically	of multiyear	duration	and	include	start-up	costs	and	significant	third-party	components	that	cover	services	that	Schlumberger	does	not	provide	directly.	Projects	may	be fixed	price	in	nature,	contain	penalties	for	non-performance	and	may	also	offer	opportunities	for	bonus	payments	where	performance	exceeds	agreed	targets.	Integrated Project	Management	and	Schlumberger	Production	Management	also	provide	specialized	engineering	and	project	management	expertise	when	Schlumberger	is requested	to	include	these	capabilities	with	services	and	products	across	the	Technologies	in	a	single	contract.	In	no	circumstances	does	Schlumberger	take	any	stake	in the	ownership	of	oil	or	gas	reserves.

Supporting	the	Technologies	is	a	global	network	of	research	and	engineering	centers.	Through	this	organization,	Schlumberger	is	committed	to	advanced	technology programs	that	enhance	oilfield	efficiency,	lower	finding	and	producing	costs,	improve	productivity,	maximize	reserve	recovery	and	increase	asset	value	while accomplishing	these	goals	in	a	safe	and	environmentally	sound	manner.

Managed	outside	the	Group	structure	is	Schlumberger	Business	Consulting,	which	helps	oil	and	gas	companies	achieve	fast	and	sustainable	performance improvements.

Schlumberger	primarily	uses	its	own	personnel	to	market	its	offerings.	The	customer	base,	business	risks	and	opportunities	for	growth	are	essentially	uniform	across all	services.	There	is	a	sharing	of	manufacturing	and	engineering	facilities	as	well	as	research	centers,	and	the	labor	force	is	interchangeable.	Technological	innovation, quality	of	service	and	price	differentiation	are	the	principal	methods	of	competition,	which	varies	geographically	with	respect	to	the	different	services	offered.	While there	are	numerous	competitors,	both	large	and	small,	Schlumberger	believes	that	it	is	an	industry	leader	in	providing	wireline	logging,	well	testing,	drilling	and completion	fluids,	coiled-tubing,	drill	bits,	measurement-while-drilling,	logging-while-drilling	and	directional-drilling	services,	mud	logging,	as	well	as	fully computerized	logging	and	geoscience	software	and	computing	services.	A	large	proportion	of	Schlumberger	offerings	is	non-rig	related;	consequently,	revenue	does	not necessarily	correlate	to	rig	count	fluctuations.

# Acquisitions

Schlumberger	completed	a	number	of	acquisitions	during	2012,	none	of	which	were	significant.	Information	about	acquisitions	made	by	Schlumberger	appears	in Note	4	of	the	Consolidated	Financial	Statements.

# GENERAL

# Intellectual	Property

Schlumberger	and	its	affiliates	own	and	control	a	variety	of	intellectual	property,	including	but	not	limited	to	patents,	proprietary	information	and	software	tools	and applications	that,	in	the	aggregate,	are	material	to	Schlumberger's	business.	While	Schlumberger	seeks	and	holds	numerous	patents	covering	various	products	and processes,	no	particular	patent	or	group	of	patents	is	considered	material	to	Schlumberger's	business.

# Seasonality

Seasonal	changes	in	weather	and	significant	weather	events	can	temporarily	affect	the	delivery	of	oilfield	services.	For	example,	the	spring	thaw	in	Canada	and consequent	road	restrictions	can	affect	activity	levels,	while	the	winter	months	in	the	North	Sea,	Russia	and	China	can	produce	severe	weather	conditions	which	typically result	in	reduced	levels	of	activity.	Hurricanes	and	typhoons	can	disrupt	coastal	and	offshore	operations.	Additionally,	customer	spending	patterns	for	multiclient	data, software	and	other	oilfield	services	and	products	generally	result	in	higher	activity	in	the	fourth	quarter	of	each	year	as	clients	seek	to	utilize	their	annual	budgets.

# Customers	and	Backlog	of	Orders

For	the	year	ended	December	31,	2012,	no	single	customer	exceeded	10%	of	consolidated	revenue.	Other	than	WesternGeco,	Schlumberger	has	no	significant backlog	due	to	the	nature	of	its	businesses.	The	WesternGeco	backlog,	which	is	based	on	signed	contracts	with	customers,	was	$1.0	billion	at	December	31,	2012	($1.0 billion	at	December	31,	2011).

# Financial	Information

Financial	information	by	business	segment	and	geographic	area	for	the	years	ended	December	31,	2012,	2011	and	2010	is	provided	in	Note	17	of	the	Consolidated Financial	Statements.

# Executive	Officers	of	Schlumberger

The	following	table	sets	forth,	as	of	January	31,	2013,	the	names	and	ages	of	the	executive	officers	of	Schlumberger,	including	all	offices	and	positions	held	by	each for	at	least	the	past	five	years.

# Available	Information

The	Schlumberger	Internet	website	is	www.slb.com.	Schlumberger	uses	its	Investor	Relations	website,	www.slb.com/ir,	as	a	channel	for	routine	distribution	of important	information,	including	news	releases,	analyst	presentations,	and	financial	information.	Schlumberger	makes	available	free	of	charge	on	or	through	its	Investor Relations	website	at	www.slb.com/ir	access	to	its	Annual	Reports	on	Form	10-K,	Quarterly	Reports	on	Form	10-Q,	Current	Reports	on

Form	8-K,	its	proxy	statements	and	Forms	3,	4	and	5	filed	on	behalf	of	directors	and	executive	officers,	and	amendments	to	each	of	those	reports,	as	soon	as	reasonably practicable	after	such	material	is	filed	with	or	furnished	to	the	Securities	and	Exchange	Commission	("SEC").	Alternatively,	you	may	access	these	reports	at	the	SEC's Internet	website	at	www.sec.gov.

Schlumberger's	corporate	governance	materials,	including	Board	Committee	Charters,	Corporate	Governance	Guidelines	and	Code	of	Ethics,	may	also	be	found	at www.slb.com/ir.	From	time	to	time,	corporate	governance	materials	on	our	website	may	be	updated	to	comply	with	rules	issued	by	the	SEC	and	the	New	York	Stock Exchange	("NYSE")	or	as	desirable	to	promote	the	effective	governance	of	Schlumberger.

Any	stockholder	wishing	to	receive,	without	charge,	a	copy	of	any	of	Schlumberger's	SEC	filings	should	write	to	the	Secretary,	Schlumberger	Limited,	5599	San Felipe,	17 	Floor,	Houston,	Texas	77056,	USA. th

Schlumberger	has	filed	the	required	certifications	under	Section	302	of	the	Sarbanes-Oxley	Act	of	2002	as	Exhibits	31.1	and	31.2	to	this	Form	10-K.

The	information	on	our	website	or	any	other	website	is	not	incorporated	by	reference	in	this	Form	10-K	and	should	not	be	considered	part	of	this	Form	10-K	or	any other	filing	Schlumberger	makes	with	the	SEC.

# Item	1A. Risk	Factors.

The	following	discussion	of	risk	factors	are	important	information	in	understanding	our	"forward-looking	statements,"	which	are	discussed	immediately	following Item	7A.	of	this	Form	10-K	and	elsewhere.	These	risk	factors	should	also	be	read	in	conjunction	with	Item	7.	Management's	Discussion	and	Analysis	of	Financial Condition	and	Results	of	Operations,	and	the	consolidated	financial	statements	and	related	notes	included	in	this	Form	10-K.

We	urge	you	to	consider	carefully	the	risks	described	below,	as	well	as	in	other	reports	and	materials	that	we	file	with	the	SEC	and	the	other	information	included	or incorporated	by	reference	in	this	Form	10-K.	If	any	of	the	risks	described	below	or	elsewhere	in	this	Form	10-K	were	to	materialize,	our	business,	financial	condition, results	of	operations,	cash	flows	or	prospects	could	be	materially	adversely	affected.	In	such	case,	the	trading	price	of	our	common	stock	could	decline	and	you	could lose	part	or	all	of	your	investment.	Additional	risks	and	uncertainties	not	currently	known	to	us	or	that	we	currently	deem	immaterial	may	also	materially	adversely affect	our	financial	condition,	results	of	operations	and	cash	flows.

Demand	for	the	majority	of	our	services	is	substantially	dependent	on	the	levels	of	expenditures	by	the	oil	and	gas	industry.	A	substantial	or	an	extended decline	in	oil	and	gas	prices	could	result	in	lower	expenditures	by	the	oil	and	gas	industry,	which	could	have	a	material	adverse	effect	on	our	financial condition,	results	of	operations	and	cash	flows.

Demand	for	the	majority	of	our	services	depends	substantially	on	the	level	of	expenditures	by	the	oil	and	gas	industry	for	the	exploration,	development	and production	of	oil	and	natural	gas	reserves.	These	expenditures	are	generally	dependent	on	the	industry's	view	of	future	oil	and	natural	gas	prices	and	are	sensitive	to	the industry's	view	of	future	economic	growth	and	the	resulting	impact	on	demand	for	oil	and	natural	gas.	Declines,	as	well	as	anticipated	declines,	in	oil	and	gas	prices could	also	result	in	project	modifications,	delays	or	cancellations,	general	business	disruptions,	and	delays	in	payment	of,	or	nonpayment	of,	amounts	that	are	owed	to	us. These	effects	could	have	a	material	adverse	effect	on	our	financial	condition,	results	of	operations	and	cash	flows.

The	prices	for	oil	and	natural	gas	have	historically	been	volatile	and	can	be	affected	by	a	variety	of	factors,	including:

— demand	for	hydrocarbons,	which	is	affected	by	general	economic	and	business	conditions;

— the	ability	of	the	Organization	of	Petroleum	Exporting	Countries	("OPEC")	to	set	and	maintain	production	levels	for	oil;

— oil	and	gas	production	levels	by	non-OPEC	countries;

— the	level	of	excess	production	capacity;

— political	and	economic	uncertainty	and	geopolitical	unrest;

— the	level	of	worldwide	oil	and	gas	exploration	and	production	activity;

— access	to	potential	resources;

— governmental	policies	and	subsidies;

— the	costs	of	exploring	for,	producing	and	delivering	oil	and	gas;

— technological	advances	affecting	energy	consumption;	and

# — 	 weather	conditions.

The	oil	and	gas	industry	has	historically	experienced	periodic	downturns,	which	have	been	characterized	by	diminished	demand	for	oilfield	services	and	downward pressure	on	the	prices	we	charge.	A	significant	downturn	in	the	oil	and	gas	industry	could	result	in	a	reduction	in	demand	for	oilfield	services	and	could	adversely	affect our	financial	condition,	results	of	operations	and	cash	flows.

# A	significant	portion	of	our	revenue	is	derived	from	our	non-United	States	operations,	which	exposes	us	to	risks	inherent	in	doing	business	in	each	of	the approximately	85	countries	in	which	we	operate.

Our	non-United	States	operations	accounted	for	approximately	72%	of	our	consolidated	revenue	in	2012,	71%	in	2011	and	78%	in	2010.	Operations	in	countries other	than	the	United	States	are	subject	to	various	risks,	including:

— political	and	economic	conditions	in	certain	areas;

— exposure	to	possible	expropriation	of	our	assets	or	other	governmental	actions;

— social	unrest,	acts	of	terrorism,	war	or	other	armed	conflict;

— confiscatory	taxation	or	other	adverse	tax	policies;

— deprivation	of	contract	rights;

— trade	restrictions	or	embargoes	imposed	by	the	United	States	or	other	countries;

— restrictions	under	the	United	States	Foreign	Corrupt	Practices	Act	or	similar	legislation	in	other	countries;

— restrictions	on	the	repatriation	of	income	or	capital;

— currency	exchange	controls;

— inflation;	and

— currency	exchange	rate	fluctuations	and	devaluations.

In	addition,	we	are	subject	to	risks	associated	with	our	operations	in	countries,	including	Iran,	Syria,	North	Sudan	and	Cuba,	that	are	subject	to	trade	and	economic sanctions	or	other	restrictions	imposed	by	the	United	States	or	other	governments	or	organizations.	United	States	law	enforcement	authorities	are	currently	conducting	a grand	jury	investigation	and	an	associated	regulatory	inquiry	related	to	our	operations	in	certain	of	these	countries.	Additionally,	in	2009	prior	to	being	acquired	by Schlumberger,	Smith	International,	Inc.	received	an	administrative	subpoena	with	respect	to	its	historical	business	practices	in	certain	countries	that	are	subject	to	United States	trade	and	economic	sanctions.	If	any	of	the	risks	described	above	materialize,	or	if	any	governmental	investigation	results	in	criminal	or	civil	penalties	or	other remedial	measures,	it	could	reduce	our	earnings	and	our	cash	available	for	operations.

We	are	also	subject	to	risks	related	to	investment	in	our	common	stock	in	connection	with	certain	US	state	divestment	or	investment	limitation	legislation	applicable to	companies	with	operations	in	these	countries,	and	similar	actions	by	some	private	investors,	which	could	adversely	affect	the	market	price	of	our	common	stock. During	2012,	certain	non-U.S.	subsidiaries	of	Schlumberger	provided	oilfield	services	to	the	National	Iranian	Oil	Company	and	certain	of	its	affiliates	("NIOC"). Schlumberger	has	not	bid	on	any	new	contracts	relating	to	Iran's	petroleum	production	since	March	2009.	Schlumberger's	full-year	2012	revenue	attributable	to	this activity	was	$418	million,	which	resulted	in	net	income	of	$208	million	in	its	consolidated	financial	statements.	Schlumberger	intends	to	discontinue	such	activity	in	Iran in	2013	and	is	currently	winding	down	its	operations	there.	In	this	regard,	during	the	fourth	quarter	of	2012,	Schlumberger	recorded	revenue	relating	to	this	activity	in Iran	of	$92	million	and	net	income	of	$48	million	in	its	consolidated	financial	statements.	This	activity	included	obtaining	services	from	and	engaging	in	other	dealings with	the	government	of	Iran	that	are	incidental	to	operating	in	Iran,	and	the	expenses	of	which	are	reflected	in	the	net	income	disclosed	above.	These	services	and	other dealings	consisted	of	paying	taxes,	duties,	license	fees	and	other	typical	governmental	charges,	along	with	payments	for	utilities,	transportation,	hotel	accommodations, facility	rentals,

telecommunications	services,	newspaper	advertisements,	recreational	and	fitness	memberships,	and	the	purchase	of	routine	office	and	similar	supplies	from	entities associated	with	the	government	of	Iran.	Collections	of	amounts	owed	to	Schlumberger	were	received	in	part	by	depository	accounts	held	by	two	non-U.S.	subsidiaries	of Schlumberger	at	a	branch	of	Bank	Saderat	Iran	("Saderat"),	and	in	part	by	a	depositary	account	held	by	one	of	such	non-U.S.	subsidiaries	at	Bank	Tejarat	("Tejarat")	in Tehran.	The	accounts	at	Saderat	are	maintained	solely	for	the	deposit	by	NIOC	of	amounts	owed	to	non-U.S.	subsidiaries	of	Schlumberger.	The	account	at	Tejarat	is maintained	also	for	payment	of	expenses	in	connection	with	operating	in	Iran,	such	as	payroll	expenses,	rental	payments	and	taxes.	In	addition,	NIOC	maintains	bank accounts	at	Bank	Melli	Iran	("Melli")	through	which	it	made	payments	to	a	non-U.S.	subsidiary	of	Schlumberger	for	services	provided	in	Iran	under	letters	of	credit issued	by	Melli.	Schlumberger	maintains	no	bank	accounts	at	Melli.	Schlumberger	will	discontinue	its	dealings	with	Melli,	Saderat	and	Tejarat	following	the	receipt	of all	amounts	owed	to	Schlumberger	for	services	in	Iran.

# Environmental	compliance	costs	and	liabilities	could	reduce	our	earnings	and	cash	available	for	operations.

We	are	subject	to	increasingly	stringent	laws	and	regulations	relating	to	importation	and	use	of	hazardous	materials,	radioactive	materials	and	explosives	and	to environmental	protection,	including	laws	and	regulations	governing	air	emissions,	water	discharges	and	waste	management.	We	incur,	and	expect	to	continue	to	incur, capital	and	operating	costs	to	comply	with	environmental	laws	and	regulations.	The	technical	requirements	of	these	laws	and	regulations	are	becoming	increasingly complex,	stringent	and	expensive	to	implement.	These	laws	may	provide	for	"strict	liability"	for	remediation	costs,	damages	to	natural	resources	or	threats	to	public health	and	safety.	Strict	liability	can	render	a	party	liable	for	damages	without	regard	to	negligence	or	fault	on	the	part	of	the	party.	Some	environmental	laws	provide	for joint	and	several	strict	liability	for	remediation	of	spills	and	releases	of	hazardous	substances.

We	use	and	generate	hazardous	substances	and	wastes	in	our	operations.	In	addition,	many	of	our	current	and	former	properties	are,	or	have	been,	used	for	industrial purposes.	Accordingly,	we	could	become	subject	to	material	liabilities	relating	to	the	investigation	and	cleanup	of	potentially	contaminated	properties,	and	to	claims alleging	personal	injury	or	property	damage	as	the	result	of	exposures	to,	or	releases	of,	hazardous	substances.	In	addition,	stricter	enforcement	of	existing	laws	and regulations,	new	laws	and	regulations,	the	discovery	of	previously	unknown	contamination	or	the	imposition	of	new	or	increased	requirements	could	require	us	to	incur costs	or	become	the	basis	of	new	or	increased	liabilities	that	could	reduce	our	earnings	and	our	cash	available	for	operations.	We	believe	we	are	currently	in	substantial compliance	with	environmental	laws	and	regulations.

# We	could	be	subject	to	substantial	liability	claims,	which	could	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.

The	technical	complexities	of	our	operations	are	such	that	we	are	exposed	to	a	wide	range	of	significant	health,	safety	and	environmental	risks.	Our	offerings	involve production-related	activities,	radioactive	materials,	explosives	and	other	equipment	and	services	that	are	deployed	in	challenging	exploration,	development	and production	environments.	An	accident	involving	these	services	or	equipment,	or	a	failure	of	a	product,	could	cause	personal	injury,	loss	of	life,	damage	to	or	destruction of	property,	equipment	or	the	environment,	or	suspension	of	operations.	Our	insurance	may	not	protect	us	against	liability	for	some	kinds	of	events,	including	events involving	pollution,	or	against	losses	resulting	from	business	interruption.	Moreover,	we	may	not	be	able	to	maintain	insurance	at	levels	of	risk	coverage	or	policy	limits that	we	deem	adequate.	Any	damages	caused	by	our	services	or	products	that	are	not	covered	by	insurance,	or	are	in	excess	of	policy	limits	or	are	subject	to	substantial deductibles,	could	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.

# Demand	for	our	products	and	services	could	be	reduced	by	changes	in	governmental	regulations	or	in	the	law.

Some	international,	national	and	state	governments	and	agencies	are	currently	evaluating	and	promulgating	climate-related	legislation	and	regulations	that	are focused	on	restricting	greenhouse	gas	emissions.	Such	legislation,	as	well	as	government	initiatives	to	conserve	energy	or	to	promote	the	use	of	alternative	energy sources,	may	significantly	curtail	demand	for	and	production	of	fossil	fuels	such	as	oil	and	gas	in	areas	of	the	world	where	our	customers	operate	and	thus	adversely affect	future	demand	for	our	services,	which	may	in	turn	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.

Some	international,	national	and	state	governments	and	agencies	have	also	adopted	laws	and	regulations	or	are	evaluating	proposed	legislation	and	regulations	that are	focused	on	the	extraction	of	shale	gas	or	oil	using	hydraulic	fracturing.	Hydraulic	fracturing	is	a	stimulation	treatment	routinely	performed	on	oil	and	gas	wells	in low-permeability	reservoirs.	Specially	engineered	fluids	are	pumped	at	high	pressure	and	rate	into	the	reservoir	interval	to	be	treated,

causing	cracks	in	the	target	formation.	Proppant,	such	as	sand	of	a	particular	size,	is	mixed	with	the	treatment	fluid	to	keep	the	cracks	open	when	the	treatment	is complete.	Future	hydraulic	fracturing-related	legislation	or	regulations	could	lead	to	operational	delays	and	increased	costs	and,	therefore,	reduce	demand	for	our pressure	pumping	services.	If	such	additional	international,	national	or	state	legislation	or	regulations	are	enacted,	it	could	adversely	affect	our	financial	condition,	results of	operations	and	cash	flows.

# If	we	are	unable	to	maintain	technology	leadership,	this	could	adversely	affect	any	competitive	advantage	we	hold.

If	we	are	unable	to	continue	to	develop	and	produce	competitive	technology	or	deliver	it	to	our	clients	in	a	timely	and	cost-competitive	manner	in	the	various	markets we	serve,	it	could	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.

# Limitations	on	our	ability	to	protect	our	intellectual	property	rights,	including	our	trade	secrets,	could	cause	a	loss	in	revenue	and	any	competitive	advantage we	hold.

Some	of	our	products	or	services,	and	the	processes	we	use	to	produce	or	provide	them,	have	been	granted	patent	protection,	have	patent	applications	pending	or	are trade	secrets.	Our	business	may	be	adversely	affected	if	our	patents	are	unenforceable,	the	claims	allowed	under	our	patents	are	not	sufficient	to	protect	our	technology, our	patent	applications	are	denied,	or	our	trade	secrets	are	not	adequately	protected.	Our	competitors	may	be	able	to	develop	technology	independently	that	is	similar	to ours	without	infringing	on	our	patents	or	gaining	access	to	our	trade	secrets,	which	could	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.

# We	may	be	subject	to	litigation	if	another	party	claims	that	we	have	infringed	upon	its	intellectual	property	rights.

The	tools,	techniques,	methodologies,	programs	and	components	we	use	to	provide	our	services	may	infringe	upon	the	intellectual	property	rights	of	others. Infringement	claims	generally	result	in	significant	legal	and	other	costs	and	may	distract	management	from	running	our	core	business.	Royalty	payments	under	licenses from	third	parties,	if	available,	would	increase	our	costs.	If	a	license	were	not	available,	we	might	not	be	able	to	continue	providing	a	particular	service	or	product,	which could	adversely	affect	our	financial	condition,	results	of	operations	and	cash	flows.	Additionally,	developing	non-infringing	technologies	would	increase	our	costs.

# Failure	to	obtain	and	retain	skilled	technical	personnel	could	impede	our	operations.

We	require	highly	skilled	personnel	to	operate	and	provide	technical	services	and	support	for	our	business.	Competition	for	the	personnel	required	for	our	businesses intensifies	as	activity	increases.	In	periods	of	high	utilization	it	may	become	more	difficult	to	find	and	retain	qualified	individuals.	This	could	increase	our	costs	or	have other	adverse	effects	on	our	operations.

# Severe	weather	conditions	may	affect	our	operations.

Our	business	may	be	materially	affected	by	severe	weather	conditions	in	areas	where	we	operate.	This	may	entail	the	evacuation	of	personnel	and	stoppage	of services.	In	addition,	if	particularly	severe	weather	affects	platforms	or	structures,	this	may	result	in	a	suspension	of	activities.	Any	of	these	events	could	adversely	affect our	financial	condition,	results	of	operations	and	cash	flows.

# Item	1B. Unresolved	Staff	Comments.

# None.

# Item	2. Properties.

Schlumberger	owns	or	leases	numerous	manufacturing	facilities,	administrative	offices,	service	centers,	research	centers,	data	processing	centers,	mines,	ore,	drilling fluid	and	production	chemical	processing	centers,	sales	offices	and	warehouses	throughout	the	world.	Schlumberger	views	its	principal	manufacturing,	mining	and processing	facilities,	research	centers	and	data	processing	centers	as	its	"principal	owned	or	leased	facilities."

# The	following	sets	forth	Schlumberger's	principal	owned	or	leased	facilities:

Beijing,	China;	Clamart,	France;	Mumbai,	India;	Fuchinobe,	Japan;	Oslo,	Norway;	Singapore;	Abingdon,	Cambridge	and	Stonehouse,	United	Kingdom;	Moscow,

Russia;	and	within	the	United	States:	Boston,	Massachusetts;	Houston,	Rosharon	and	Sugar	Land,	Texas;	Battle	Mountain,	Nevada;	Greybull,	Wyoming	and	Florence,

Kentucky.

# Item	3. Legal	Proceedings.

The	information	with	respect	to	Item	3.	Legal	Proceedings	is	set	forth	in	Note	16	of	the	Consolidated	Financial	Statements.

# Item	4. Mine	Safety	Disclosures.

The	barite	and	bentonite	mining	operations	of	M-I	LLC,	an	indirect	wholly-owned	subsidiary,	are	subject	to	regulation	by	the	federal	Mine	Safety	and	Health Administration	under	the	Federal	Mine	Safety	and	Health	Act	of	1977.	Information	concerning	mine	safety	violations	or	other	regulatory	matters	required	by	section 1503(a)	of	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	and	Item	104	of	Regulation	S-K	is	included	in	Exhibit	95	to	this	Form	10-K.

# PART	II

# Item	5. Market	for	Schlumberger's	Common	Stock,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities.

As	of	December	31,	2012,	there	were	approximately	22,455	stockholders	of	record.	The	principal	United	States	market	for	Schlumberger's	common	stock	is	the NYSE,	where	it	is	traded	under	the	symbol	"SLB,"	although	it	is	traded	on	other	exchanges	in	and	outside	the	United	States,	including	the	Euronext	Paris,	the	London Stock	Exchange	and	the	SIX	Swiss	Exchange.

# Common	Stock,	Market	Prices	and	Dividends	Declared	per	Share

Quarterly	high	and	low	prices	for	Schlumberger's	common	stock	as	reported	by	the	NYSE	(composite	transactions),	together	with	dividends	declared	per	share	in each	quarter	of	2012	and	2011,	were:

|  | High | Low | Declared |
| :--- | :--- | :--- | :--- |
| 2012 |  |  |  |
| QUARTERS |  |  |  |
| First | $\t80.78 | $\t67.12 | $ \t0.275 |
| Second | 76.19 | 59.12 | 0.275 |
| Third | 78.47 | 64.19 | 0.275 |
| Fourth | 75.70 | 66.85 | 0.275 |
| 2011 |  |  |  |
| QUARTERS |  |  |  |
| First | $95.64 | $79.74 | $0.25 |
| Second | 95.00 | 79.55 | 0.25 |
| Third | 95.53 | 58.77 | 0.25 |
| Fourth | 77.65 | 54.79 | 0.25 |

On	January	17,	2013,	Schlumberger	announced	that	its	Board	of	Directors	had	approved	an	increase	in	the	quarterly	dividend	of	13.6%,	to	$0.3125.

There	are	no	legal	restrictions	on	the	payment	of	dividends	or	ownership	or	voting	of	such	shares,	except	as	to	shares	held	as	treasury	stock.	Under	current	legislation, stockholders	are	not	subject	to	any	Curaçao	withholding	or	other	Curaçao	taxes	attributable	to	the	ownership	of	such	shares.

The	following	graph	compares	the	cumulative	total	stockholder	return	on	Schlumberger	common	stock,	assuming	reinvestment	of	dividends	on	the	last	day	of	the month	of	payment	into	common	stock	of	Schlumberger,	with	the	cumulative	total	return	on	the	Standard	&	Poor's	500	Index	(S&P	500	Index)	and	the	cumulative	total return	on	the	Philadelphia	Oil	Service	Index	(OSX)	over	the	five-year	period	ended	December	31,	2012.	The	stockholder	return	set	forth	below	is	not	necessarily indicative	of	future	performance.	The	following	graph	and	related	information	shall	not	be	deemed	"soliciting	material"	or	to	be	"filed"	with	the	SEC,	nor	shall	such information	be	incorporated	by	reference	into	any	future	filing	under	the	Securities	Act	of	1933	or	the	Securities	Exchange	Act	of	1934,	except	to	the	extent	that Schlumberger	specifically	incorporates	it	by	reference	into	such	filing.

# Comparison	of	five-year	cumulative	total	return	among

# Schlumberger	common	stock,	the	S&P	500	Index	and	the

# Philadelphia	Oil	Service	Index	(OSX)

Assumes	$100	invested	on	December	31,	2007	in	Schlumberger	common	stock,	in	the	S&P	500	Index	and	in	the	Philadelphia	Oil	Service	Index	(OSX)	and reinvestment	of	dividends	on	the	last	day	of	the	month	of	payment.

# Share	Repurchases

On	April	17,	2008,	the	Schlumberger	Board	of	Directors	approved	an	$8	billion	share	repurchase	program	for	Schlumberger	common	stock,	to	be	acquired	in	the open	market	before	December	31,	2011.	On	July	21,	2011,	the	Board	of	Directors	approved	an	extension	of	this	repurchase	program	to	December	31,	2013.

Schlumberger	did	not	repurchase	any	common	stock	during	the	three	months	ended	December	31,	2012.	The	maximum	value	of	shares	that	may	be	purchased	under this	program	as	of	December	31,	2012	was	$879	million.

In	connection	with	the	exercise	of	stock	options	under	Schlumberger's	incentive	compensation	plans,	Schlumberger	routinely	receives	shares	of	its	common	stock from	optionholders	in	consideration	of	the	exercise	price	of	the	stock	options.	Schlumberger	does	not	view	these	transactions	as	requiring	disclosure	under	this	Item	5	as the	number	of	shares	of	Schlumberger	common	stock	received	from	optionholders	is	not	material.

# Unregistered	Sales	of	Equity	Securities

As	discussed	in	Note	13	of	the	Consolidated	Financial	Statements,	Schlumberger	maintains	a	Discounted	Stock	Purchase	Plan	(the	"DSPP"),	which	was	established in	1988.	The	DSPP	provides	for	two	purchase	periods	each	calendar	year:	January	1	to	June	30	and	July	1	to	December	31.	Schlumberger	filed	registration	statements with	the	SEC	to	register	the	shares	initially	available	for	purchase	under	the	DSPP	as	well	as	to	register	additional	shares	that	were	approved	by	Schlumberger stockholders	in	2005.	In	2010,	Schlumberger	stockholders	approved	an	amendment	to	the	DSPP	that,	among	other	things,	increased	the	number	of	shares	available	for purchase	under	the	DSPP	by	10,000,000	shares.	In	December	2012,	Schlumberger	discovered	that	it	had	inadvertently	failed	to	file	a	registration	statement	with	the	SEC to	register	the	additional	DSPP	shares	approved	in	2010.	In	December	2012,	Schlumberger	registered	the	sale	of	the	shares	that	remain	available	for	purchase	under	the DSPP.	Prior	to	such	registration,	however,	some	of	the	shares	Schlumberger	sold	under	the	DSPP	were	unregistered.	With	respect	to	the	six-month

purchase	period	ending	June	30,	2012,	2,197,151	unregistered	shares	were	sold	at	a	discounted	purchase	price	of	$59.89	per	share,	resulting	in	cash	proceeds	of approximately	$132	million.	The	Company	believes	that	it	has	historically	provided	participants	in	the	DSPP	with	the	same	information	they	would	have	received	had the	registration	statement	been	filed.	Nonetheless,	original	purchasers	of	the	unregistered	shares	may	have	rescission	rights	with	respect	to	the	shares	purchased	by	them with	respect	to	the	six-month	purchase	period	ended	June	30,	2012.	Schlumberger	believes	that	any	liability	resulting	from	a	potential	rescission	would	be	immaterial, particularly	in	light	of	the	fact	that	the	market	price	of	Schlumberger's	common	stock	has	exceeded	the	participants'	discounted	purchase	price	since	the	date	of purchase.

# Item	6. Selected	Financial	Data.

The	following	selected	consolidated	financial	data	should	be	read	in	conjunction	with	both	"Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition and	Results	of	Operations"	and	"Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K	in	order	to	understand	factors,	such	as	business	combinations and	charges	and	credits,	which	may	affect	the	comparability	of	the	Selected	Financial	Data:

(Stated	in	millions,	except	per	share	amounts)

|  |  | Year	Ended	December	31, | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2012 | 2011 | 2010 | 2009 | 2008 |
| Revenue | $42,149 | $36,959 | $26,672 | $22,702 | $27,163 |
| Income\tfrom\tcontinuing\toperations | $5,468 | $4,730 | $4,253 | $3,164 | $5,422 |
| Diluted\tearnings\tper\tshare\tfrom\tcontinuing\toperations | $4.06 | $3.47 | $3.37 | $2.61 | $4.42 |
| Working\tcapital | $11,788 | $10,001 | $7,233 | $6,391 | $4,811 |
| Total\tassets | $61,547 | $55,201 | $51,767 | $33,465 | $32,094 |
| Net\tdebt\t^(1) | $5,111 | $4,850 | $2,638 | $126 | $1,129 |
| Long-term\tdebt | $9,509 | $8,556 | $5,517 | $4,355 | $3,694 |
| Schlumberger\tstockholders'\tequity | $34,751 | $31,263 | $31,226 | $19,120 | $16,862 |
| Cash\tdividends\tdeclared\tper\tshare | $1.10 | $1.00 | $0.84 | $0.84 | $0.84 |

"Net	Debt"	represents	gross	debt	less	cash,	short-term	investments	and	fixed	income	investments,	held	to	maturity.	Management	believes	that	Net	Debt	provides	useful	information	regarding	the	level	of Schlumberger	indebtedness	by	reflecting	cash	and	investments	that	could	be	used	to	repay	debt. (1)

# Item	7. Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

The	following	discussion	and	analysis	contains	forward-looking	statements,	including,	without	limitation,	statements	relating	to	our	plans,	strategies,	objectives, expectations,	intentions	and	resources.	Such	forward-looking	statements	should	be	read	in	conjunction	with	our	disclosures	under	"Item	1A.	Risk	Factors"	of	this	Form 10-K.

# Executive	Overview

Schlumberger	revenue	reached	a	new	high	of	$42.15	billion	in	2012	–	an	increase	of	14%	over	2011	–	driven	by	robust	exploration	and	development	both	offshore and	in	key	land	markets.	Outside	North	America,	revenue	grew	16%,	while	North	America	revenue	grew	9%,	with	strong	offshore	activity	in	the	US	Gulf	of	Mexico outweighing	a	challenging	land	market.

Global	demand	for	oil	recorded	annual	growth	of	some	0.8	million	barrels	per	day	for	the	second	year	running	following	the	exceptionally	strong	recovery	of	2010. Lower	demand	in	the	OECD	countries	through	energy	efficiency	gains	tempered	stronger	growth	in	the	non-OECD	economies	and	in	China	in	particular.	Oil	supply grew	by	more	than	one	million	barrels	per	day	in	North	America	as	light	tight	oil	production	accelerated	although	this	was	partially	offset	by	decline	in	a	number	of non-OPEC	countries.	Within	OPEC,	production	in	Libya	continued	to	recover	leading	to	a	slight	increase	in	spare	capacity,	which	remained	relatively	slim.	This, together	with	ongoing	geopolitical	tension	and	the	associated	risk	of	supply	disruption,	continued	to	support	oil	prices.

For	natural	gas,	the	three	main	markets	continued	to	behave	independently.	In	North	America,	storage	levels	remained	at	record	highs	throughout	the	year	as	a	result of	growing	domestic	production	and	mild	weather	that	pushed	spot	prices	to	10-year	lows	in	April.	Toward	the	end	of	the	year,	however,	storage	levels	returned	closer to	historical	averages.	In	Asia,	natural	gas	prices	remained	close	to	oil	parity,	supported	by	sustained	high	demand	in	Japan	following	the	2011	nuclear	incident	and	by strong	demand	in	China.	In	Europe,	lower	demand	was	offset	by	declining	domestic	supply	and	the	effect	of	demand	in	Asia.

In	this	environment,	Schlumberger	achieved	a	record	high	for	revenue,	with	strong	contributions	from	all	Areas.	International	performance	was	led	by	the Europe/CIS/Africa	Area,	where	revenue	was	up	18%,	mainly	from	strength	in	Russia	and	in	the	Nigeria	&	Gulf	of	Guinea,	Angola,	East	Africa	and	North	Sea GeoMarkets.	In	Latin	America,	revenue	grew	by	17%,	driven	by	Integrated	Project	Management	contracts	on	land,	and	activity	for	Wireline	services	and	Drilling	Group product	and	services	offshore	–	mainly	in	the	Mexico	&	Central	America;	Venezuela,	Trinidad	&	Tobago;	and	Ecuador	GeoMarkets.	Revenue	in	the	Middle	East	& Asia	Area	increased	by	13%	on	strong	results	in	the	Saudi	Arabia	&	Bahrain,	Australasia,	Brunei,	Malaysia	&	Philippines,	and	China	GeoMarkets.	And	in	North America,	revenue	grew	by	$1.2	billion	to	reach	$13.5	billion,	driven	by	a	robust	38%	increase	in	demand	for	deepwater	and	exploration	services	offshore,	particularly	in the	US	Gulf	of	Mexico.	Revenue	from	North	America	land	also	improved	a	modest	4%	on	strong	demand	for	Production	Group	technology,	although	this	was	tempered by	weakness	in	the	hydraulic	fracturing	market.

All	Product	Groups	recorded	double-digit	revenue	growth.	Reservoir	Characterization	revenue	of	$11.4	billion	increased	by	15%,	with	all	Technologies	also	posting double-digit	growth	driven	by	offshore	exploration	activity	across	the	Areas.	Drilling	Group	revenue	increased	15%	to	$16.0	billion,	led	by	strong	growth	in	M-I SWACO,	Drilling	&	Measurements,	and	Drilling	Tools	&	Remedial	technologies.	Production	Group	revenue	of	$14.9	billion	increased	13%,	with	double-digit	growth	in Well	Intervention,	Completions	and	Artificial	Lift	Technologies.	Well	Services	revenue	also	increased,	primarily	from	offshore	activity.

Entering	2013,	the	world	macroeconomic	environment	remains	uncertain	with	the	GDP	growth	outlook	unchanged.	However,	global	oil	demand	is	expected	to	grow at	similar	levels	to	those	seen	in	2012	and	2011	and	supply	will	see	further	growth	in	North	America	as	light	tight	oil	production	increases.	Other	non-OPEC	production, however,	can	be	expected	to	continue	to	face	delays	and	decline	challenges.	As	a	result,	global	spare	capacity	should	remain	largely	unchanged	absent	any	unexpected macroeconomic	or	geopolitical	events,	and	this	will	support	oil	prices	within	the	band	we	have	seen	since	2011.	For	natural	gas,	little	change	is	expected	in	the	behavior of	the	main	geographical	markets	in	2013.

The	following	discussion	and	analysis	of	results	of	operations	should	be	read	in	conjunction	with	the	Consolidated	Financial	Statements.

# Fourth	Quarter	2012	Results

# Product	Groups

|  | Fourth	Quarter	2012 | Fourth	Quarter	2012 |  | Third	Quarter	2012 |
| :--- | :--- | :--- | :--- | :--- |
|  | Revenue | Income\nbefore\ntaxes | Revenue | Income\nbefore\ntaxes |
| Oilfield\tServices |  |  |  |  |
| Reservoir\tCharacterization | $3,150 | $917 | $2,910 | $838 |
| Drilling | 4,137 | 696 | 4,048 | 733 |
| Production | 3,924 | 590 | 3,675 | 548 |
| Eliminations\t&\tother | (37) | (39) | (25) | 23 |
|  | 11,174 | 2,164 | 10,608 | 2,142 |
| Corporate\t&\tother^\t(1) | – | (180) | – | (176) |
| Interest\tincome\t^(2) | – | 6 | – | 8 |
| Interest\texpense\t^(3) | – | (90) | – | (85) |
| Charges\t&\tcredits\t^(4) | – | (93) | – | (32) |
|  | $11,174 | $1,807 | $10,608 | $1,857 |

# Geographic	Areas

|  | Fourth	Quarter	2012 | Fourth	Quarter	2012 | Third	Quarter	2012 | Third	Quarter	2012 |
| :--- | :--- | :--- | :--- | :--- |
|  | Revenue | Income\nbefore\ntaxes | Revenue | Income\nbefore\ntaxes |
| Oilfield\tServices |  |  |  |  |
| North\tAmerica | $3,409 | $655 | $3,290 | $610 |
| Latin\tAmerica | 2,071 | 377 | 1,860 | 333 |
| Europe/CIS/Africa | 2,958 | 579 | 2,985 | 646 |
| Middle\tEast\t&\tAsia | 2,577 | 601 | 2,352 | 570 |
| Eliminations\t&\tother | 159 | (48) | 121 | (17) |
|  | 11,174 | 2,164 | 10,608 | 2,142 |
| Corporate\t&\tother^\t(1) | – | (180) | – | (176) |
| Interest\tincome\t^(2) | – | 6 | – | 8 |
| Interest\texpense^\t(3) | – | (90) | – | (85) |
| (4)\nCharges\t&\tcredits | – | (93) | – | (32) |
|  | $11,174 | $1,807 | $10,608 | $1,857 |

Comprised	principally	of	corporate	expenses	not	allocated	to	the	segments,	interest	on	postretirement	medical	benefits,	stock-based	compensation	costs,	amortization	expense	associated	with	intangible	assets recorded	as	a	result	of	the	2010	acquisition	of	Smith	International,	Inc.	("Smith")	and	certain	other	nonoperating	items.

Excludes	interest	income	included	in	the	segments'	income	(fourth	quarter	2012	–	$-	million;	third	quarter	2012	–	$-	million). (2)

Excludes	interest	expense	included	in	the	segments'	income	(fourth	quarter	2012–$3	million;	third	quarter	2012	–	$3	million). Charges	and	credits	are	described	in	detail	in	Note	3	to	the Consolidated	Financial	Statements. (3) (4)

# Oilfield	Services

Fourth-quarter	revenue	of	$11.17	billion	increased	$567	million	or	5%	sequentially,	on	robust	international	activity.	Of	the	revenue	increase,	approximately	36% came	from	the	typical	year-end	surge	in	product	and	software	sales,	and	12%	came	from	the	increase	in	WesternGeco	multiclient	sales.	Reservoir	Characterization Group	revenue	grew	8%	to	reach	$3.2	billion,	while	Drilling	Group	revenue	of	$4.1	billion	was	2%	higher.	Production	Group	revenue	increased	7%	to	$3.9	billion. Geographically,	International	revenue	of	$7.6	billion	increased	$409	million	or	6%	sequentially,	while	North	America	revenue	of	$3.4	billion	grew	by	$118	million	or 4%	sequentially.

The	sequential	increase	in	Reservoir	Characterization	Group	revenue	resulted	mainly	from	robust	international	end-of-year	Schlumberger	Information	Solutions	(SIS) software	sales.	Testing	Services	grew	for	the	third	successive	quarter	from	higher	activity	in	the	Saudi	Arabia	&	Bahrain	GeoMarket.	PetroTechnical	Services	posted double-digit	revenue	growth	on	strong	consulting	activity	in	the	Mexico	&	Central	America	GeoMarket.	WesternGeco	increased	slightly	as	the	end-of-year	multiclient sales	and	UniQ*	land	seismic	technology	direct	sale	in	Russia	were	partly	offset	by	a	sharp	seasonal	decline	in	Marine	revenue	on	lower	vessel	utilization	following	the seasonal	transits	out	of	the	North	Sea.	Wireline	revenue	grew	from	increased	activity	in	the	US	Gulf	of	Mexico	but	this	was	largely	offset	by	a	seasonal	activity	decline in	Asia.	Drilling	Group	revenue	increased	on	international	and	offshore	demand	for	Drilling	&	Measurements	and	M-I	SWACO	technologies.	Drilling	Tools	&	Remedial Services	also	contributed	to	growth	with	the	full-quarter	revenue	from	Radius	services.	IPM	improved	slightly	as	the	combination	of	an	increase	in	projects	in	Australia and	new	start-ups	in	Iraq	and	Argentina	was	partly	offset	by	project	completions	in	North	Africa.	The	increase	in	Production	Group	revenue	resulted	primarily	from stronger	Completions	and	Artificial	Lift	product	year-	end	sales	coupled	with	new	Framo	subsea	projects	in	the	US	Gulf	of	Mexico	and	in	the	North	Sea	and	Angola GeoMarkets.	Well	Intervention	Services	revenue	also	increased	on	higher	activity	in	the	Mexico	&	Central	America	and	Saudi	Arabia	&	Bahrain	GeoMarkets.	Well Services	revenue	grew	mainly	due	to	higher	activity	in	international	and	offshore	North	America	markets.	Well	Services	stage	count	in	North	America	land	also increased,	but	revenue	declined	from	continued	pricing	weakness	as	a	result	of	hydraulic	horsepower	oversupply.

Among	the	Areas,	Middle	East	&	Asia	revenue	of	$2.6	billion	grew	10%	sequentially	led	by	the	start	of	new	IPM	turnkey	projects	in	Iraq;	higher	Testing,	Well Intervention	and	Drilling	Group	services	in	addition	to	year-end	product	sales	in	the	Saudi	Arabia	&	Bahrain	GeoMarket;	the	start	of	the	Jurassic	seismic	project	as	well as	strong	product	and	year-end	software	sales	in	Kuwait;	and	the	increase	in	IPM	onshore	projects	and	strong	drilling	activity	in	the	Australasia	GeoMarket.	In	Latin America,	revenue	of	$2.1	billion	increased	11%	sequentially	led	by	robust	year-end	software	and	product	sales,	strong	PetroTechnical	Services	consulting	activity, unconventional	fracturing	and	well	intervention	stimulation	activity	in	the	Mexico	&	Central	America	GeoMarket.	Higher	WesternGeco	vessel	utilization	for	new seismic	acquisition	surveys	in	Brazil,	Trinidad	and	Uruguay,	coupled	with	the	start	of	an	IPM	project	in	Argentina,	also	contributed	to	the	increase.	In Europe/CIS/Africa,	revenue	of	$3.0	billion	declined	1%	mainly	due	to	lower	WesternGeco	vessel	utilization	following	the	seasonal	transit	of	vessels	out	of	the	North Sea.	Completed	IPM	projects	and	service	contract	delays	in	North	Africa	and	the	completion	of	the	WesternGeco	survey	in	the	Kara	Sea	in	Russia	also	contributed	to	the decline.	The	sequential	decrease,	however,	was	partially	offset	by	increased	activity	in	Angola	and	higher	product	and	software	sales	in	the	Russia	and	Central	Asia region	and	the	Continental	Europe	GeoMarket.	North	America	revenue	of	$3.4	billion	increased	4%	sequentially—mainly	from	offshore	which	rose	by	24%,	while	land fell	by	2%.	The	increase	in	offshore	revenue	resulted	from	both	higher	drilling	activity	as	the	number	of	deepwater	drilling	rigs	increased	and	stronger	year-end WesternGeco	multiclient	sales.	The	decline	in	land	revenue	was	mainly	due	to	continued	pricing	weakness	for	Well	Services	hydraulic	fracturing	activities.	A	seasonal decline	in	deviated	and	horizontal	land	drilling	activity	paired	with	pricing	weakness	also	affected	the	Drilling	Group	segment	in	North	America.

On	a	worldwide	basis,	fourth-quarter	pretax	operating	income	of	$2.2	billion	increased	1%	sequentially.	International	pretax	operating	income	of	$1.6	billion	grew 1%,	while	North	America	pretax	operating	income	of	$655	million	increased	7%.

Pretax	operating	margin	of	19.4%	declined	83	basis	points	(bps)	sequentially.	International	pretax	operating	margin	of	20.5%	declined	104	bps,	which	stemmed	from a	higher-than-usual	seasonal	slowdown	and	contractual	delays	in	the	Europe/CIS/Africa	Area	that	traditionally	attract	higher	margins.	In	North	America,	pretax operating	margin	of	19.2%	increased	65	bps	sequentially	due	to	the	increased	contribution	of	high-margin	offshore	services,	particularly	in	the	US	Gulf	of	Mexico, which	more	than	offset	margin	decline	in	Drilling	Group	and	Well	Services	activities	on	land.	By	segment,	Reservoir	Characterization	Group	pretax	operating	margin reached	29.1%	while	the	pretax	operating	margins	of	the	Drilling	and	Production	Groups	were	16.8%	and	15.0%,	respectively.

# Reservoir	Characterization	Group

Fourth-quarter	revenue	of	$3.15	billion	increased	$240	million	or	8%	sequentially.	Pretax	operating	income	of	$917	million	was	9%	higher	sequentially. Revenue	increased	mainly	through	robust	international	end-of-year	SIS	software	sales	while	Testing	Services	grew	for	the	third	successive	quarter	from	higher activity	in	the	Saudi	Arabia	&	Bahrain	and	Mexico	&	Central	America

GeoMarkets.	PetroTechnical	Services	revenue	also	posted	double-digit	growth	on	strong	consulting	activity	in	the	Mexico	&	Central	America	GeoMarket.	WesternGeco increased	slightly	as	the	end-of-year	multiclient	sales	and	UniQ	land	seismic	technology	direct	sale	in	Russia	were	partly	offset	by	the	sharp	seasonal	decline	in	Marine revenue	on	lower	vessel	utilization	following	seasonal	transits	out	of	the	North	Sea.	Wireline	grew	slightly	on	increased	activity	in	the	US	Gulf	of	Mexico	following	the recovery	from	the	activity	shut-down	associated	with	Hurricane	Isaac	in	the	previous	quarter,	but	this	was	offset	by	a	seasonal	activity	decline	in	Asia,	mainly	in	the Australasia	and	China	GeoMarkets.

Pretax	operating	margin	of	29.1%	increased	31	bps	sequentially.	Margin	expansion	was	primarily	due	to	traditionally	strong	end-of-year	sales	of	Schlumberger Information	Services	(SIS)	software	and	WesternGeco	multiclient	licenses.	Testing	Services,	Wireline	and	PetroTechnical	Services	margins	also	expanded	on	a	more favorable	technology	mix	in	exploration	and	development	projects.	These	improvements	were,	however,	subdued	by	lower	WesternGeco	Marine	margin	as	a	result	of lower	vessel	utilization.

# Drilling	Group

Fourth-quarter	revenue	of	$4.1	billion	increased	$88	million	or	2%	sequentially.	Pretax	operating	income	of	$696	million	was	5%	lower	sequentially. Revenue	increased	on	international	and	offshore	demand	for	Drilling	&	Measurements	and	M-I	SWACO	products	and	services.	Drilling	Tools	&	Remedial	Services activity	also	contributed	to	growth	with	a	full-quarter	of	revenue	for	Radius	services.	IPM	revenue	grew	slightly,	as	increased	projects	in	Australia	and	new	start-ups	in Iraq	and	Argentina	were	partly	offset	by	project	completions	in	North	Africa.	The	overall	revenue	increase	was	tempered	by	a	decline	in	drilling-related	services,	mainly in	North	America	land,	due	to	a	seasonal	decline	in	deviated	and	horizontal	drilling	activity	coupled	with	pricing	weakness.

Pretax	operating	margin	of	16.8%	decreased	128	bps	sequentially.	Among	the	Group	Technologies,	sequential	margins	in	Drilling	&	Measurements	and	Drilling Tools	&	Remedial	Services	were	flat,	while	margin	contractions	were	recorded	at	M-I	SWACO	and	IPM	due	to	geographical	mix	and	operational	and	start-up	delays.

# Production	Group

Fourth-quarter	revenue	of	$3.9	billion	increased	$249	million	or	7%	sequentially.	Pretax	operating	income	of	$590	million	was	8%	higher	sequentially.

The	increase	in	revenue	resulted	primarily	from	stronger	Completions	and	Artificial	Lift	product	year-end	sales	coupled	with	new	Framo	subsea	projects	in	the	US Gulf	of	Mexico	and	in	the	North	Sea	and	Angola	GeoMarkets.	Well	Intervention	Services	revenue	increased	on	higher	activity	in	the	Mexico	&	Central	America	and Saudi	Arabia	&	Bahrain	GeoMarkets.	Well	Services	revenue	grew	mainly	due	to	higher	activity	in	the	international	and	the	North	America	offshore	markets.

International	activities	were	strong	from	stimulation	vessel	operations	in	Brazil,	unconventional	fracturing	activity	in	Mexico,	and	new	projects	in	Kuwait	and	Iraq.	Well Services	stage	count	in	North	America	land	also	grew	but	land	revenue	declined	on	continued	pricing	weakness	from	the	oversupply	of	hydraulic	horsepower.

Pretax	operating	margin	increased	13	bps	sequentially	to	15%.	The	increase	was	largely	attributable	to	the	favorable	impact	of	year-end	Completions	and	Artificial Lift	product	sales	coupled	with	improved	profitability	from	new	Framo	subsea	projects.	This	margin	increase	was	largely	offset	by	continued	Well	Services	pricing weakness.

# Full-Year	2012	Results

|  | Revenue | Income<br>before<br>taxes | Revenue | Income<br>before<br>taxes |
| :--- | :--- | :--- | :--- | :--- |
| Oilfield\tServices |  |  |  |  |
| Reservoir\tCharacterization | $11,424 | $3,212 | $9,929 | $ 2,449 |
| Drilling^\t(1) | 15,971 | 2,824 | 13,860 | 2,254 |
| Production\t^(1) | 14,875 | 2,371 | 13,136 | 2,637 |
| Eliminations\t&amp;\tother | (121) | (60) | 34 | (35) |
|  | 42,149 | 8,347 | 36,959 | 7,305 |
| Corporate\t&amp;\tother^\t(2) | – | (694) | – | (590) |
| Interest\tincome\t^(3) | – | 30 | – | 37 |
| Interest\texpense\t^(4) | – | (331) | – | (290) |
| Charges\t&amp;\tcredits\t^(5) | – | (161) | – | (223) |
|  | $42,149 | $7,191 | $ 36,959 | $ 6,239 |

|  | Revenue | Income<br>before<br>taxes | Revenue | Income<br>before<br>taxes |
| :--- | :--- | :--- | :--- | :--- |
| Oilfield\tServices |  |  |  |  |
| North\tAmerica | $13,485 | $2,736 | $12,323 | $3,052 |
| Latin\tAmerica | 7,554 | 1,387 | 6,467 | 1,074 |
| Europe/CIS/Africa | 11,443 | 2,245 | 9,676 | 1,477 |
| Middle\tEast\t&amp;\tAsia | 9,194 | 2,152 | 8,102 | 1,874 |
| Eliminations\t&amp;\tother | 473 | (173) | 391 | (172) |
|  | 42,149 | 8,347 | 36,959 | 7,305 |
| Corporate\t&amp;\tother^\t(2) | – | (694) | – | (590) |
| Interest\tincome\t^(3) | – | 30 | – | 37 |
| Interest\texpense^\t(4) | – | (331) | – | (290) |
| Charges\t&amp;\tcredits\t^(5) | – | (161) | – | (223) |
|  | $42,149 | $7,191 | $36,959 | $6,239 |

Effective	January	1,	2012,	a	component	of	the	Drilling	Group	was	reallocated	to	the	Production	Group.	Historical	information	has	been	reclassified	to	conform	to	this	presentation. (1)

Comprised	principally	of	corporate	expenses	not	allocated	to	the	segments,	interest	on	postretirement	medical	benefits,	stock-based	compensation	costs,	amortization	expense	associated	with	intangible	assets recorded	as	a	result	of	the	acquisition	of	Smith	and	certain	other	nonoperating	items. Excludes	interest	income	included	in	the	segments'	income	(2012	–	$-	million;	2011	–	$3	million). Excludes	interest	expense	included	in	the	segments'	income	(2012	–	$8	million;	2011	–	$8	million). (2) (3) (4)

Charges	and	credits	are	described	in	detail	in	Note	3	to	the Consolidated	Financial	Statements. (5)

Full-year	2012	revenue	of	$42.15	billion	increased	14%	versus	the	same	period	last	year	with	North	America	Area	9%	higher	and	international	activity	16%	higher.

Internationally,	higher	exploration	and	development	activities	in	a

number	of	GeoMarkets	both	offshore	and	in	key	land	markets	contributed	to	the	increase.	The	increase	was	led	by	the	Europe/CIS/Africa	Area	which	increased	18%, mainly	in	Russia	and	in	the	Nigeria	&	Gulf	of	Guinea,	Angola,	the	East	Africa	and	North	Sea	Africa	GeoMarkets.	Latin	America	was	higher	by	17%,	mainly	in	the Mexico	&	Central	America;	Venezuela,	Trinidad	&	Tobago;	and	Ecuador	GeoMarkets	driven	by	strong	Integrated	Project	Management	(IPM)	activity	on	land	and robust	offshore	activity	for	Wireline	and	Drilling	Group	services	and	products.	Middle	East	&	Asia	increased	13%	on	strong	results	in	the	Saudi	Arabia	&	Bahrain; Australasia;	Brunei,	Malaysia	&	Philippines;	and	China	GeoMarkets.	The	increase	in	North	America	was	due	to	strong	growth	in	North	America	offshore	driven	by robust	deepwater	and	exploration	activity	that	benefited	the	Reservoir	Characterization	and	Drilling	Groups	Technologies.	There	was	also	an	improvement	in	activity	in North	America	land	for	the	Production	Group	Technologies	although	the	increase	slowed	in	the	second	half	of	the	year	due	to	the	weakness	in	the	hydraulic	fracturing market.

Full-year	2012	pretax	operating	income	of	$8.3	billion	increased	14%	year-on-year	as	international	pretax	operating	income	of	$5.8	billion	increased	31%	while North	America	pretax	operating	income	of	$2.7	billion	declined	by	10%	year-on-year.

Pretax	operating	margin	was	essentially	flat	at	19.8%	as	international	pretax	operating	margin	expanded	226	bps	to	20.5%	while	North	America	pretax	operating margin	declined	448	bps	to	20.3%.	Europe/CIS/Africa	posted	a	435	bps	improvement	to	reach	19.6%	and	Latin	America	increased	175	bps	to	18.4%	and	Middle	East	& Asia	reported	a	27	bps	increase	to	23.4%.	North	America	margin	decline	was	due	to	Well	Services	production	technologies,	as	a	result	of	pricing	pressure	and	cost inflation.

Full-year	revenue	of	$11.42	billion	was	15%	higher	than	the	same	period	last	year	led	by	Wireline,	Testing	Services,	WesternGeco	and	SIS	Technologies	driven	by improved	offshore	exploration	activities	across	all	Areas	Pretax	operating	margin	increased	345	bps	to	28.1%	largely	due	to	the	higher-margin	exploration	activities	that benefited	Wireline	and	Testing	Services,	higher	SIS	software	sales,	higher	WesternGeco	marine	vessel	utilization	and	improved	UniQ	land	seismic	productivity.

Full-year	revenue	of	$15.97	billion	was	15%	higher	than	the	previous	year	primarily	due	to	the	significantly	improved	exploration	and	development	activities	of	M-I SWACO,	Drilling	&	Measurements,	and	the	other	Drilling	Group	Technologies	in	North	America	offshore	and	in	the	international	markets.

Pretax	operating	margin	increased	142	bps	to	17.7%	primarily	due	to	the	increase	in	higher-margin	activities	of	Drilling	&	Measurements,	M-I	SWACO	and	Drilling Tools	&	Remedial	technologies	–	all	of	which	benefited	from	exploration	activities	in	North	America	offshore	and	in	the	international	markets	–	mainly	in	the Europe/CIS/Africa	Area.

Full-year	revenue	of	$14.88	billion	increased	13%	year-on-year,	both	in	North	America	and	the	international	markets.	Well	Intervention,	Artificial	Lift	and Completions	Technologies	posted	strong	growth	across	all	Areas.	Well	Services	grew	both	in	North	America	and	internationally,	with	international	growth	led	by	Latin America	and	by	Europe/CIS/Africa.

Pretax	operating	margin	decreased	414	bps	to	15.9%	mainly	due	to	a	decline	in	margins	for	Well	Services	production	technologies,	primarily	in	North	America,	as	a result	of	pricing	pressure	and	cost	inflation.	This	was	mitigated	by	margin	expansion	for	the	other	Production	Group	Technologies	led	by	Well	Intervention	Services	and Completions.

|  | Revenue | Income<br>before<br>taxes | Revenue | Income<br>before<br>taxes |
| :--- | :--- | :--- | :--- | :--- |
| Oilfield\tServices |  |  |  |  |
| Reservoir\tCharacterization | $9,929 | $2,449 | $9,321 | $ 2,321 |
| Drilling\t^(1) | 13,860 | 2,254 | 7,917 | 1,313 |
| Production^\t(1) | 13,136 | 2,637 | 9,366 | 1,389 |
| Eliminations\t&amp;\tother | 34 | (35) | 68 | 48 |
|  | 36,959 | 7,305 | 26,672 | 5,071 |
| Corporate\t&amp;\tother^\t(2) | – | (590) | – | (405) |
| Interest\tincome\t^(3) | – | 37 | – | 43 |
| Interest\texpense\t^(4) | – | (290) | – | (202) |
| Charges\t&amp;\tcredits\t^(5) | – | (223) | – | 625 |
|  | $36,959 | $6,239 | $ 26,672 | $ 5,132 |

|  | Revenue | Income<br>before<br>taxes | Revenue | Income<br>before<br>taxes |
| :--- | :--- | :--- | :--- | :--- |
| Oilfield\tServices |  |  |  |  |
| North\tAmerica | $12,323 | $3,052 | $6,730 | $ 1,145 |
| Latin\tAmerica | 6,467 | 1,074 | 4,985 | 807 |
| Europe/CIS/Africa | 9,676 | 1,477 | 7,850 | 1,449 |
| Middle\tEast\t&amp;\tAsia | 8,102 | 1,874 | 6,652 | 1,762 |
| Eliminations\t&amp;\tother | 391 | (172) | 455 | (92) |
|  | 36,959 | 7,305 | 26,672 | 5,071 |
| Corporate\t&amp;\tother^\t(2) | – | (590) | – | (405) |
| Interest\tincome\t^(3) | – | 37 | – | 43 |
| Interest\texpense^\t(4) | – | (290) | – | (202) |
| Charges\t&amp;\tcredits\t^(5) | – | (223) | – | 625 |
|  | $36,959 | $6,239 | $ 26,672 | $ 5,132 |

Comprised	principally	of	corporate	expenses	not	allocated	to	the	segments,	interest	on	postretirement	medical	benefits,	stock-based	compensation	costs,	amortization	expense	associated	with	intangible	assets recorded	as	a	result	of	the	acquisition	of	Smith	and	certain	other	nonoperating	items.

Excludes	interest	income	included	in	the	segments'	income	(2011—$3	million;	2010—$7	million).

Excludes	interest	expense	included	in	the	segments'	income	(2011—$8	million;	2010—$5	million).

Full-year	2011	revenue	of	$37.0	billion	was	39%	higher	than	2010	primarily	reflecting	the	acquisition	of	Smith	on	August	27,	2010	as	well	as	the	significantly improved	activity,	pricing	and	asset	efficiency	for	Well	Services	Technologies	in	North	America	as	the	market	transitioned	to	liquid-rich	plays	demanding	increasing service	intensity	in	drilling	and	completing	horizontal	wells.

Year-on-year	pretax	operating	margin	increased	79	bps	to	19.8%	largely	due	to	the	improved	pricing	and	asset	efficiency	for	Well	Services	Technologies	in	North America	and	the	resumption	of	higher-margin	activity	in	the	US	Gulf	of	Mexico.	However,	the	margin	expansion	was	tempered	by	activity	disruptions	from	the geopolitical	unrest	in	North	Africa	and	in	the	Middle	East	during	the	first	quarter	of	2011.

Full-year	revenue	of	$9.93	billion	was	7%	higher	than	the	previous	year	on	stronger	Wireline	activity,	higher	WesternGeco	marine	and	multiclient	sales,	and increased	SIS	software	sales.

Year-on-year,	pretax	operating	margin	decreased	23	bps	to	24.7%	led	by	margin	declines	in	Wireline	and	Testing	Services,	largely	due	to	the	revenue	mix,	as	well	as the	impact	of	geopolitical	events	which	prevailed	during	the	first	quarter	of	2011.	The	margin	decline	however	was	partially	offset	by	a	favorable	WesternGeco multiclient	sales	mix	and	improved	marine	vessel	utilization.

Full-year	revenue	of	$13.86	billion	was	75%	higher	than	the	previous	year	reflecting	the	acquisitions	of	Smith,	in	August	2010,	and	Geoservices,	in	April	2010, partially	offset	by	a	decrease	in	IPM	activities	in	Mexico.	The	ramp-up	of	IPM	projects	in	Iraq	also	contributed	to	the	revenue	increase.

Year-on-year,	pretax	operating	margin	decreased	32	bps	to	16.3%	largely	due	to	the	addition	of	the	Smith	and	Geoservices	activities	as	well	as	the	effects	of	the geopolitical	events.

Full-year	revenue	of	$13.14	billion	was	40%	higher	than	the	previous	year	while	pretax	operating	margin	increased	525	bps	to	20.1%.	Well	Services	revenue	and margins	expanded	strongly	in	North	America	on	higher	pricing,	capacity	additions	and	improved	asset	utilization	and	efficiency	as	the	market	transitioned	to	liquid-rich plays.	Internationally,	Well	Services	also	posted	growth	on	the	strength	of	higher	activity,	despite	the	exceptional	geopolitical	events	that	occurred	during	the	first quarter	of	2011.

# Interest	and	Other	Income

Interest	and	other	income	consisted	of	the	following:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Interest\tincome | $30 | $40 | $50 |
| Equity\tin\tnet\tearnings\tof\taffiliated\tcompanies: |  |  |  |
| M-I\tSWACO | – | – | 78 |
| Others | \t 142 | 90 | 87 |
|  | $172 | $130 | $215 |

Equity	income	from	the	M-I	SWACO	joint	venture	in	2010	represented	eight	months	of	equity	income	through	the	closing	of	the	Smith	transaction.

# Interest	Expense

Interest	expense	of	$298	million	in	2011	increased	by	$91	million	compared	to	2010	primarily	due	to	the	$4.6	billion	of	long-term	debt	that	Schlumberger	issued	during 2011.

# Other

Research	&	engineering	and	General	&	administrative	expenses,	as	a	percentage	of	Revenue,	were	as	follows:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Research\t&amp;\tengineering | 2.8% | 2.9% | 3.4% |
| General\t&amp;\tadministrative | 1.0% | 1.1% | 1.2% |

Although	Research	&	engineering	decreased	as	a	percentage	of	revenue	in	2011	as	compared	to	2010,	it	increased	in	absolute	dollars	by	$154	million.	This	increase in	absolute	dollars	was	driven	in	large	part	by	the	impact	of	the	Smith	acquisition.

# Income	Taxes

The	Schlumberger	effective	tax	rate	is	sensitive	to	the	geographic	mix	of	earnings.	When	the	percentage	of	pretax	earnings	generated	outside	of	North	America increases,	the	Schlumberger	effective	tax	rate	will	generally	decrease.	Conversely,	when	the	percentage	of	pretax	earnings	generated	outside	of	North	America decreases,	the	Schlumberger	effective	tax	rate	will	generally	increase.

The	effective	tax	rate	for	both	2011	and	2010	was	impacted	by	the	charges	and	credits	described	in	Note	3	to	the	Consolidated	Financial	Statements.	Excluding	the impact	of	these	charges	and	credits,	the	effective	tax	rate	in	2011	was	23.8%	compared	to	20.5%	in	2010.	This	increase	in	the	effective	tax	rate,	excluding	the	impact	of the	charges	and	credits,	was	primarily	attributable	to	the	fact	that	Schlumberger	generated	a	larger	proportion	of	its	pretax	earnings	in	North	America	in	2011	as compared	to	2010	as	a	result	of	improved	market	conditions	and	the	effect	of	a	full	year's	activity	from	the	acquired	Smith	businesses.

# Charges	and	Credits

Schlumberger	recorded	significant	charges	and	credits	in	continuing	operations	during	2012,	2011	and	2010.	These	charges	and	credits,	which	are	summarized below,	are	more	fully	described	in	Note	3	to	the	Consolidated	Financial	Statements.

The	following	is	a	summary	of	the	2012	charges	and	credits:

|  | Pretax | Tax | Net | of	Income	Classification |
| :--- | :--- | :--- | :--- | :--- |
| Merger-related\tintegration\tcosts | $128 | $ 16 | $112 | Merger\t&amp;\tintegration |
| Workforce\treduction | 33 | 6 | 27 | Restructuring\t&amp;\tother |
|  | $161 | $ 22 | $139 |  |

|  | Pretax | Tax | Net | of	Income	Classification |
| :--- | :--- | :--- | :--- | :--- |
| Merger-related\tintegration\tcosts | $113 | $ 18 | $95 | Merger\t&amp;\tintegration |
| Donation\tto\tthe\tSchlumberger\tFoundation | 50 | 10 | 40 | General\t&amp;\tadministrative |
| Write-off\tof\tassets\tin\tLibya | 60 | – | 60 | Cost\tof\trevenue |
|  | $223 | $ 28 | $195 |  |

# The	following	is	a	summary	of	the	2010	charges	and	credits:

|  | Pretax | Tax | Net | of	Income	Classification |
| :--- | :--- | :--- | :--- | :--- |
| Restructuring\tand\tMerger-related\tCharges: |  |  |  |  |
| Severance\tand\tother | $90 | $13 | $77 | Restructuring\t&amp;other |
| Impairment\trelating\tto\tWesternGeco's\tfirst\tgeneration\tQ-Land\tacquisition\tsystem | 78 | 7 | 71 | Restructuring\t&amp;\tother |
| Other\tWesternGeco-related\tcharges | 63 | – | 63 | Restructuring\t&amp;\tother |
| Professional\tfees\tand\tother | 107 | 1 | 106 | Merger\t&amp;\tintegration |
| Merger-related\temployee\tbenefits | 54 | 10 | 44 | Merger\t&amp;\tintegration |
| Inventory\tfair\tvalue\tadjustments | 153 | 56 | 97 | Cost\tof\trevenue |
| Mexico\trestructuring | 40 | 4 | 36 | Restructuring\t&amp;\tother |
| Repurchase\tof\tbonds | 60 | 23 | 37 | Restructuring\t&amp;\tother |
| Total\trestructuring\tand\tmerger-related\tcharges | 645 | \t 114 | 531 |  |
| Gain\ton\tinvestment\tin\tM-I\tSWACO | (1,270) | (32) | (1,238) | Gain\ton\tInvestment\tin\tM-I\tSWACO |
| Impact\tof\telimination\tof\ttax\tdeduction\trelated\tto\tMedicare\tPart\tD\tsubsidy | – | (40) | 40 | Taxes\ton\tincome |
|  | $(625) | $42 | $(667) |  |

# Cash	Flow

Net	Debt	represents	gross	debt	less	cash,	short-term	investments	and	fixed	income	investments,	held	to	maturity.	Management	believes	that	Net	Debt	provides useful	information	regarding	the	level	of	Schlumberger's	indebtedness	by	reflecting	cash	and	investments	that	could	be	used	to	repay	debt. Details	of	Net	Debt	follow:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Net\tDebt,\tbeginning\tof\tyear | $(4,850) | $(2,638) | $(126) |
| Income\tfrom\tcontinuing\toperations | 5,468 | 4,730 | 4,253 |
| Depreciation\tand\tamortization\t^(1) | 3,500 | 3,274 | 2,757 |
| Gain\ton\tM-I\tSWACO\tinvestment | – | – | (1,270) |
| Pension\tand\tother\tpostretirement\tbenefits\texpense | 404 | 365 | 299 |
| Excess\tof\tequity\tincome\tover\tdividends\treceived | (61) | (64) | (85) |
| Stock\t-based\tcompensation\texpense | 335 | 271 | 198 |
| Other\tnon-cash\titems | 97 | 203 | 327 |
| Pension\tand\tother\tpostretirement\tbenefits\tfunding | (673) | (601) | (868) |
| (Increase)\tdecrease\tin\tworking\tcapital | (1,968) | (2,144) | 267 |
| Capital\texpenditures | (4,695) | (4,008) | (2,912) |
| Multiclient\tseismic\tdata\tcapitalized | (351) | (289) | (326) |
| Dividends\tpaid | (1,432) | (1,300) | (1,040) |
| Stock\trepurchase\tprogram | (972) | (2,998) | (1,717) |
| Proceeds\tfrom\temployee\tstock\tplans | 410 | 438 | 401 |
| Net\tdebt\tassumed\tin\tmerger\twith\tSmith | – | – | (1,829) |
| Geoservices\tacquisition,\tnet\tof\tdebt\tacquired | – | – | (1,033) |
| Business\tacquisitions\tand\tother\ttransactions | (845) | (610) | (212) |
| Proceeds\tfrom\tdivestiture\tof\tWilson\tdistribution\tbusiness | 906 | – | – |
| Proceeds\tfrom\tdivestiture\tof\tCE\tFranklin\tbusiness | 122 | – | – |
| Proceeds\tfrom\tdivestiture\tof\tGlobal\tConnectivity\tServices\tbusiness | – | 385 | – |
| Discontinued\toperations | (152) | 22 | (24) |
| Conversion\tof\tdebentures | – | – | 320 |
| Translation\teffect\ton\tnet\tdebt | (45) | 23 | 30 |
| Other | (309) | 91 | (48) |
| Net\tDebt,\tend\tof\tyear | $(5,111) | $(4,850) | $(2,638) |

(1)Includes	multiclient	seismic	data	costs.

| Components	of	Net	Debt | Dec.	31<br>2012 | Dec.	31<br>2011 | Dec.	31<br>2010 |
| :--- | :--- | :--- | :--- |
| Cash | $1,905 | $1,705 | $1,764 |
| Short-term\tinvestments | 4,369 | 3,122 | 3,226 |
| Fixed\tincome\tinvestments,\theld\tto\tmaturity | 245 | 256 | 484 |
| Short-term\tborrowings\tand\tcurrent\tportion\tof\tlong-term\tdebt | (2,121) | (1,377) | (2,595) |
| Long-term\tdebt | (9,509) | (8,556) | (5,517) |
|  | $(5,111) | $(4,850) | $(2,638) |

— 	 During	the	third	quarter	of	2012,	Schlumberger	completed	the	divestiture	of	its	56%	interest	in	CE	Franklin	Ltd.	for	$122	million	in	cash.

— 	 During	the	second	quarter	of	2012,	Schlumberger	completed	the	divestiture	of	its	Wilson	distribution	business	for	$906	million	in	cash.

— 	 During	the	third	quarter	of	2011,	Schlumberger	issued	$1.1	billion	of	1.95%	Senior	Notes	due	2016,	$1.6	billion	of	3.30%	Senior	Notes	due	2021	and	$300 million	of	Floating	Rate	Senior	Notes	due	2014	that	bear	interest	at	a	rate	equal	to	three-month	LIBOR	plus	55	bps	per	year.

— 	 During	the	second	quarter	of	2011,	Schlumberger	completed	the	divestiture	of	its	Global	Connectivity	Services	business	for	approximately	$385	million	in cash.

— 	 As	a	result	of	the	Smith	acquisition	on	August	27,	2010,	Schlumberger	assumed	net	debt	of	$1.8	billion.	This	amount	consisted	of	$2.2	billion	of	debt (including	a	$0.4	billion	adjustment	to	increase	Smith's	long-term	fixed	rate	debt	to	its	estimated	fair	value)	and	$0.4	billion	of	cash.

— 	 During	the	second	quarter	of	2010,	Schlumberger	completed	the	acquisition	of	Geoservices	for	cash	of	$0.9	billion.	Schlumberger	assumed	net	debt	of	$0.1 billion	in	connection	with	this	transaction.

— 	 During	the	third	and	fourth	quarters	of	2010,	Schlumberger	repurchased	the	following	debt:

The	premium	paid	in	excess	of	the	carrying	value	to	repurchase	the	$1.275	billion	of	debt	was	approximately	$67	million.

— Schlumberger	maintains	a	€3.0	billion	Euro	Medium	Term	Note	program.	This	program	provides	for	the	issuance	of	various	types	of	debt	instruments	such as	fixed	or	floating	rate	notes	in	Euro,	US	dollar	or	other	currencies.

During	the	fourth	quarter	of	2010,	Schlumberger	issued	€1.0	billion	2.75%	Guaranteed	Notes	due	under	this	program.	Schlumberger	entered	into	agreements to	swap	these	euro	notes	for	US	dollars	on	the	date	of	issue	until	maturity,	effectively	making	this	a	US	denominated	debt	on	which	Schlumberger	will	pay interest	in	US	dollars	at	a	rate	of	2.56%.	During	the	first	quarter	of	2009,	Schlumberger	issued	€1.0	billion	4.50%	Guaranteed	Notes	due	2014	under	this program.	Schlumberger	entered	into	agreements	to	swap	these	euro	notes	for	US	dollars	on	the	date	of	issue	until	maturity,	effectively	making	this	a	US dollar	denominated	debt	on	which	Schlumberger	will	pay	interest	in	US	dollars	at	a	rate	of	4.95%.

— 	 On	April	17,	2008,	the	Schlumberger	Board	of	Directors	approved	an	$8	billion	share	repurchase	program	for	shares	of	Schlumberger	common	stock,	to	be acquired	in	the	open	market	before	December	31,	2011.	On	July	21,	2011,	the	Schlumberger	Board	of	Directors	approved	an	extension	of	this	repurchase program	to	December	31,	2013.	Schlumberger	had	repurchased	$7.12	billion	of	shares	under	this	program	as	of	December	31,	2012.

The	following	table	summarizes	the	activity	under	this	share	repurchase	program	during	2012,	2011	and	2010:

|  | Total	cost<br>of	shares<br>purchased | Total	number<br>of	shares<br>purchased | Average<br>price	paid<br>per	share |
| :--- | :--- | :--- | :--- |
| 2012 | $971,883 | 14,087.8 | $68.99 |
| 2011 | $2,997,688 | 36,940.4 | $81.15 |
| 2010 | $1,716,675 | 26,624.8 | $64.48 |

In	recent	years,	Schlumberger	has	actively	managed	its	activity	levels	in	Venezuela	relative	to	its	accounts	receivable	balance,	and	has	recently	experienced an	increased	delay	in	payment	from	its	national	oil	company	customer	there.	Schlumberger	operates	in	approximately	85	countries.	At	December	31,	2012, only	five	of	those	countries	(including	Venezuela)	individually	accounted	for	greater	than	5%	of	Schlumberger's	accounts	receivable	balance	of	which	only one,	the	United	States,	represented	greater	than	10%.

On	January	19,	2012,	Schlumberger	announced	that	its	Board	of	Directors	had	approved	an	increase	in	the	quarterly	dividend	of	10%,	to	$0.275.

— 	 During	2012,	2011	and	2010	Schlumberger	made	contributions	of	$673	million,	$601	million	and	$868	million,	respectively,	to	its	postretirement	benefit plans.	The	US	pension	plans	were	82%	funded	at	December	31,	2012	based	on	the	projected	benefit	obligation.	This	compares	to	87%	funded	at December	31,	2011.

Schlumberger's	international	defined	benefit	pension	plans	are	a	combined	88%	funded	at	December	31,	2012	based	on	the	projected	benefit	obligation.	This compares	to	88%	funded	at	December	31,	2011.

Schlumberger	currently	anticipates	contributing	approximately	$650	million	to	its	postretirement	benefit	plans	in	2013,	subject	to	market	and	business conditions.

— There	were	$321	million	outstanding	Series	B	debentures	at	December	31,	2009.	During	2010,	the	remaining	$320	million	of	the	2.125%	Series	B Convertible	Debentures	due	June	1,	2023	were	converted	by	holders	into	8.0	million	shares	of	Schlumberger	common	stock	and	the	remaining	$1	million	of outstanding	Series	B	debentures	were	redeemed	for	cash.

As	of	December	31,	2012,	Schlumberger	had	approximately	$6.3	billion	of	cash	and	short-term	investments	on	hand.	Schlumberger	had	separate	committed	debt facility	agreements	aggregating	$4.1	billion	with	commercial	banks,	of	which	$3.8	billion	was	available	and	unused	as	of	December	31,	2012.	This	included	$3.5	billion of	committed	facilities	which	support	commercial	paper	borrowings	in	the	United	States	and	Europe.	Schlumberger	believes	that	these	amounts	are	sufficient	to	meet future	business	requirements	for	at	least	the	next	12	months.

Schlumberger	did	not	have	any	commercial	paper	borrowings	outstanding	as	of	December	31,	2012.

# Summary	of	Major	Contractual	Obligations

|  |  |  | Payment	Period |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Contractual\tObligations | Total | 2013 | 2014\t–\t2015 | 2016\t–\t2017 | After\t2017 |
| Debt\t^(1) | $11,630 | $2,121 | $2,975 | $2,842 | $3,692 |
| Interest\ton\tfixed\trate\tdebt\tobligations^\t(2) | 1,445 | 292 | 425 | 282 | 446 |
| Operating\tleases | 1,615 | 371 | 442 | 283 | 519 |
| Purchase\tobligations\t^(3) | 1,574 | \t 1,432 | 138 | 4 | – |
|  | $16,264 | $4,216 | $3,980 | $3,411 | $4,657 |

Excludes	future	payments	for	interest.

Excludes	interest	on	$1.6	billion	of	variable	rate	debt,	which	had	a	weighted	average	interest	rate	of	3.6%	as	of	December	31,	2012.

Represents	an	estimate	of	contractual	obligations	in	the	ordinary	course	of	business.	Although	these	contractual	obligations	are	considered	enforceable	and	legally	binding,	the	terms	generally	allow	Schlumberger the	option	to	reschedule	and	adjust	its	requirements	based	on	business	needs	prior	to	the	delivery	of	goods.

Refer	to	Note	18	Pension	and	Other	Benefit	Plans	of	the	Consolidated	Financial	Statements	for	details	regarding	Schlumberger's	pension	and	other	postretirement benefit	obligations.

As	discussed	in	Note	14	Income	Taxes	of	the	Consolidated	Financial	Statements,	included	in	the	Schlumberger	Consolidated	Balance	Sheet	at	December	31,	2012	is approximately	$1.45	billion	of	liabilities	associated	with	uncertain	tax	positions	in	the	over	100	jurisdictions	in	which	Schlumberger	conducts	business.	Due	to	the uncertain	and	complex	application	of	tax	regulations,	combined	with	the	difficulty	in	predicting	when	tax	audits	throughout	the	world	may	be	concluded,	Schlumberger cannot	make	reliable	estimates	of	the	timing	of	cash	outflows	relating	to	these	liabilities.

Schlumberger	has	outstanding	letters	of	credit/guarantees	which	relate	to	business	performance	bonds,	custom/excise	tax	commitments,	facility	lease/rental obligations,	etc.	These	were	entered	into	in	the	ordinary	course	of	business	and	are	customary	practices	in	the	various	countries	where	Schlumberger	operates.

# Critical	Accounting	Policies	and	Estimates

The	preparation	of	financial	statements	and	related	disclosures	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	requires Schlumberger	to	make	estimates	and	assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities,	the	disclosure	of	contingent	assets	and	liabilities	and	the reported	amounts	of	revenue	and	expenses.	The	following	accounting	policies	involve	"critical	accounting	estimates"	because	they	are	particularly	dependent	on estimates	and	assumptions	made	by	Schlumberger	about	matters	that	are	inherently	uncertain.	A	summary	of	all	of	Schlumberger's	significant	accounting	policies	is included	in	Note	2	to	the	Consolidated	Financial	Statements.

Schlumberger	bases	its	estimates	on	historical	experience	and	on	various	assumptions	that	are	believed	to	be	reasonable	under	the	circumstances,	the	results	of	which form	the	basis	for	making	judgments	about	the	carrying	values	of	assets	and	liabilities	that	are	not	readily	apparent	from	other	sources.	Actual	results	may	differ	from these	estimates	under	different	assumptions	or	conditions.

# Multiclient	Seismic	Data

The	WesternGeco	business	capitalizes	the	costs	associated	with	obtaining	multiclient	seismic	data.	The	carrying	value	of	the	multiclient	seismic	data	library	at December	31,	2012	and	2011	was	$518	million	and	$425	million,	respectively.	Such	costs	are	charged	to	Cost	of	revenue	based	on	the	percentage	of	the	total	costs	to	the estimated	total	revenue	that	Schlumberger	expects	to	receive	from	the	sales	of	such	data.	However,	under	no	circumstances	will	an	individual	survey	carry	a	net	book value	greater	than	a	4-year,	straight-line	amortized	value.

The	carrying	value	of	surveys	is	reviewed	for	impairment	annually	as	well	as	when	an	event	or	change	in	circumstance	indicates	an	impairment	may	have	occurred.

Adjustments	to	the	carrying	value	are	recorded	when	it	is

determined	that	estimated	future	revenues,	which	involve	significant	judgment	on	the	part	of	Schlumberger,	would	not	be	sufficient	to	recover	the	carrying	value	of	the surveys.	Significant	adverse	changes	in	Schlumberger's	estimated	future	cash	flows	could	result	in	impairment	charges	in	a	future	period.	For	purposes	of	performing	the annual	impairment	test	of	the	multiclient	library,	future	cash	flows	are	analyzed	primarily	based	on	two	pools	of	surveys:	United	States	and	non-United	States.	The United	States	and	non-United	States	pools	were	determined	to	be	the	most	appropriate	level	at	which	to	perform	the	impairment	review	based	upon	a	number	of	factors including	(i)	various	macroeconomic	factors	that	influence	the	ability	to	successfully	market	surveys	and	(ii)	the	focus	of	the	sales	force	and	related	costs.	Certain	larger surveys,	which	are	typically	prefunded	by	customers,	are	analyzed	for	impairment	on	a	survey	by	survey	basis.

# Allowance	for	Doubtful	Accounts

Schlumberger	maintains	an	allowance	for	doubtful	accounts	in	order	to	record	accounts	receivable	at	their	net	realizable	value.	Judgment	is	involved	in	recording	and making	adjustments	to	this	reserve.	Allowances	have	been	recorded	for	receivables	believed	to	be	uncollectible,	including	amounts	for	the	resolution	of	potential	credit and	other	collection	issues	such	as	disputed	invoices.	Depending	on	how	such	potential	issues	are	resolved,	or	if	the	financial	condition	of	Schlumberger	customers	were to	deteriorate	resulting	in	an	impairment	of	their	ability	to	make	payments,	adjustments	to	the	allowance	may	be	required.

# Goodwill,	Intangible	Assets	and	Long-Lived	Assets

Schlumberger	records	the	excess	of	purchase	price	over	the	fair	value	of	the	tangible	and	identifiable	intangible	assets	acquired	as	goodwill.	The	goodwill	relating	to each	of	Schlumberger's	reporting	units	is	tested	for	impairment	annually	as	well	as	when	an	event,	or	change	in	circumstances,	indicates	an	impairment	may	have occurred.

Under	generally	accepted	accounting	principles,	Schlumberger	has	the	option	to	first	assess	qualitative	factors	to	determine	whether	the	existence	of	events	or circumstances	leads	to	a	determination	that	it	is	more	likely	than	not	that	the	fair	value	of	one	of	its	reporting	units	is	greater	than	its	carrying	amount.	If,	after	assessing the	totality	of	events	or	circumstances,	Schlumberger	determines	it	is	more	likely	than	not	that	the	fair	value	of	a	reporting	unit	is	greater	than	its	carrying	amount,	then there	is	no	need	to	perform	any	further	testing.	However,	if	Schlumberger	concludes	otherwise,	then	it	is	required	to	perform	the	first	step	of	a	two-step	impairment	test by	calculating	the	fair	value	of	the	reporting	unit	and	comparing	the	fair	value	with	the	carrying	amount	of	the	reporting	unit.	If	the	fair	value	of	the	reporting	unit	is	less than	its	carrying	value,	an	impairment	loss	is	recorded	to	the	extent	that	the	implied	fair	value	of	the	goodwill	of	the	reporting	unit	is	less	than	its	carrying	value.

Schlumberger	has	the	option	to	bypass	the	qualitative	assessment	for	any	reporting	unit	in	any	period	and	proceed	directly	to	performing	the	first	step	of	the	two-step goodwill	impairment	test.

For	purposes	of	performing	the	impairment	test	for	goodwill,	Schlumberger's	reporting	units	are	its	three	Groups:	Reservoir	Characterization,	Drilling	and Production.	Schlumberger	elected	to	perform	the	qualitative	assessment	described	above	for	purposes	of	its	annual	goodwill	impairment	test.	Based	on	this	assessment, Schlumberger	concluded	that	it	was	more	likely	than	not	that	the	fair	value	of	each	of	its	reporting	units	was	greater	than	its	carrying	amount.	Accordingly,	no	further testing	was	required.

Long-lived	assets,	including	fixed	assets	and	intangible	assets,	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying value	may	not	be	recoverable.	In	reviewing	for	impairment,	the	carrying	value	of	such	assets	is	compared	to	the	estimated	undiscounted	future	cash	flows	expected	from the	use	of	the	assets	and	their	eventual	disposition.	If	such	cash	flows	are	not	sufficient	to	support	the	asset's	recorded	value,	an	impairment	charge	is	recognized	to reduce	the	carrying	value	of	the	long-lived	asset	to	its	estimated	fair	value.	The	determination	of	future	cash	flows	as	well	as	the	estimated	fair	value	of	long-lived	assets involves	significant	estimates	on	the	part	of	management.	If	there	is	a	material	change	in	economic	conditions	or	other	circumstances	influencing	the	estimate	of	future cash	flows	or	fair	value,	Schlumberger	could	be	required	to	recognize	impairment	charges	in	the	future.	Schlumberger	evaluates	the	remaining	useful	life	of	its intangible	assets	on	a	periodic	basis	to	determine	whether	events	and	circumstances	warrant	a	revision	to	the	remaining	estimated	amortization	period.

Schlumberger	conducts	business	in	more	than	100	tax	jurisdictions,	a	number	of	which	have	tax	laws	that	are	not	fully	defined	and	are	evolving.	Schlumberger's	tax filings	are	subject	to	regular	audits	by	the	tax	authorities.	These

audits	may	result	in	assessments	for	additional	taxes	which	are	resolved	with	the	authorities	or,	potentially,	through	the	courts.	Tax	liabilities	are	recorded	based	on estimates	of	additional	taxes	which	will	be	due	upon	the	conclusion	of	these	audits.	Estimates	of	these	tax	liabilities	are	made	based	upon	prior	experience	and	are updated	in	light	of	changes	in	facts	and	circumstances.	However,	due	to	the	uncertain	and	complex	application	of	tax	regulations,	it	is	possible	that	the	ultimate resolution	of	audits	may	result	in	liabilities	which	could	be	materially	different	from	these	estimates.	In	such	an	event,	Schlumberger	will	record	additional	tax	expense or	tax	benefit	in	the	period	in	which	such	resolution	occurs.

# Pension	and	Postretirement	Benefits

Schlumberger's	pension	and	postretirement	benefit	obligations	are	described	in	detail	in	Note	18	to	the	Consolidated	Financial	Statements.	The	obligations	and related	costs	are	calculated	using	actuarial	concepts,	which	include	critical	assumptions	related	to	the	discount	rate,	expected	rate	of	return	on	plan	assets	and	medical cost	trend	rates.	These	assumptions	are	important	elements	of	expense	and/or	liability	measurement	and	are	updated	on	an	annual	basis,	or	upon	the	occurrence	of significant	events.

The	discount	rate	Schlumberger	uses	reflects	the	prevailing	market	rate	of	a	portfolio	of	high-quality	debt	instruments	with	maturities	matching	the	expected	timing of	the	payment	of	the	benefit	obligations.	The	following	summarizes	the	discount	rates	utilized	by	Schlumberger	for	its	various	pension	and	postretirement	benefit	plans:

•The	discount	rate	utilized	to	determine	the	liability	for	Schlumberger's	United	States	pension	plans	and	postretirement	medical	plans	was	4.25%	at December	31,	2012	and	5.00%	at	December	31,	2011.

•The	weighted-average	discount	rate	utilized	to	determine	the	liability	for	Schlumberger's	international	pension	plans	was	4.38%	at	December	31,	2012	and 4.95%	at	December	31,	2011.

•The	weighted-average	discount	rate	utilized	to	determine	expense	for	Schlumberger's	United	States	pension	plans	and	postretirement	medical	plans decreased	from	5.50%	in	2011	to	5.00%	in	2012.

•The	weighted-average	discount	rate	utilized	to	determine	expense	for	Schlumberger's	international	pension	plans	decreased	from	5.47%	in	2011	to	4.95% in	2012.

A	higher	discount	rate	decreases	the	present	value	of	benefit	obligations	and	decreases	expense.

The	expected	rate	of	return	for	our	retirement	benefit	plans	represents	the	average	rate	of	return	expected	to	be	earned	on	plan	assets	over	the	period	that	benefits included	in	the	benefit	obligation	are	expected	to	be	paid.	The	expected	rate	of	return	for	Schlumberger's	United	States	pension	plans	has	been	determined	based	upon expectations	regarding	future	rates	of	return	for	the	investment	portfolio,	with	consideration	given	to	the	distribution	of	investments	by	asset	class	and	historical	rates	of return	for	each	individual	asset	class.	The	weighted	average	expected	rate	of	return	on	plan	assets	for	each	of	the	United	States	and	international	pension	plans	was 7.50%	in	both	2012	and	2011.	A	lower	expected	rate	of	return	would	increase	pension	expense.

Schlumberger's	medical	cost	trend	rate	assumptions	are	developed	based	on	historical	cost	data,	the	near-term	outlook	and	an	assessment	of	likely	long-term	trends. The	overall	medical	cost	trend	rate	assumption	utilized	to	determine	the	2012	postretirement	medical	expense	was	8%	graded	to	5%	over	the	next	seven	years.	The overall	medical	trend	rate	assumption	utilized	to	determine	the	postretirement	medical	liability	at	December	31,	2012	was	7.5%	graded	to	5%	over	the	next	eleven	years.

The	following	illustrates	the	sensitivity	to	changes	in	certain	assumptions,	holding	all	other	assumptions	constant,	for	the	United	States	and	international	pension plans:

|  | Effect	on	2012 | Effect	on |
| :--- | :--- | :--- |
|  | Pretax\tPension | Dec.\t31,\t2012 |
| Change\tin\tAssumption | Expense | Liability |
| 25\tbasis\tpoint\tdecrease\tin\tdiscount\trate | +\t$39 | +\t$377 |
| 25\tbasis\tpoint\tincrease\tin\tdiscount\trate | -\t$38 | -\t$356 |
| 25\tbasis\tpoint\tdecrease\tin\texpected\treturn\ton\tplan\tassets | +\t$17 | – |
| 25\tbasis\tpoint\tincrease\tin\texpected\treturn\ton\tplan\tassets | -\t$17 | – |

The	following	illustrates	the	sensitivity	to	changes	in	certain	assumptions,	holding	all	other	assumptions	constant,	for	Schlumberger's	United	States	postretirement medical	plans:

|  | Effect	on	2012 | Effect	on |
| :--- | :--- | :--- |
| Change\tin\tAssumption | Pretax\tPostretirement\nMedical\tExpense | Dec.\t31,\t2012\nLiability |
| 25\tbasis\tpoint\tdecrease\tin\tdiscount\trate | +\t$5 | +$55 |
| 25\tbasis\tpoint\tincrease\tin\tdiscount\trate | -\t$4 | -\t$52 |
| 100\tbasis\tpoint\tdecrease\tper\tannum\tin\tmedical\tcost\ttrend\trate | -\t$14 | -$203 |
| 100\tbasis\tpoint\tincrease\tper\tannum\tin\tmedical\tcost\ttrend\trate | +$18 | +$287 |

# Investments	in	Affiliated	Companies

Investments	in	Affiliated	Companies	on	the	consolidated	balance	sheet	primarily	reflects	Schlumberger's	investments	in	privately	held	companies,	some	of	which	are in	the	startup	or	development	stages	and	are	often	still	defining	their	strategic	direction.	Such	investments	are	inherently	risky	and	their	success	is	dependent	on	factors such	as	technology	development,	market	acceptance	and	their	ability	to	raise	additional	funds.	The	technology	being	developed	by	these	companies	may	never materialize	and	they	could	fail.	Schlumberger	monitors	its	portfolio	to	determine	if	any	investment	is	other-than-temporarily	impaired.	If	an	investment	is	considered	to be	other-than-temporarily	impaired,	it	is	written	down	to	its	fair	value.

# Item	7A. Quantitative	and	Qualitative	Disclosures	About	Market	Risk.

Schlumberger	is	subject	to	market	risks	primarily	associated	with	changes	in	foreign	currency	exchange	rates,	commodity	prices	and	interest	rates.

As	a	multinational	company,	Schlumberger	conducts	business	in	approximately	85	countries.	Schlumberger's	functional	currency	is	primarily	the	US	dollar,	which	is consistent	with	the	oil	and	gas	industry.	Approximately	75%	of	Schlumberger's	revenue	in	2012	was	denominated	in	US	dollars.	However,	outside	the	United	States,	a significant	portion	of	Schlumberger's	expenses	is	incurred	in	foreign	currencies.	Therefore,	when	the	US	dollar	weakens	in	relation	to	the	foreign	currencies	of	the countries	in	which	Schlumberger	conducts	business,	the	US	dollar-reported	expenses	will	increase.

A	5%	increase	or	decrease	in	the	average	exchange	rates	of	all	the	foreign	currencies	in	2012	would	have	changed	revenue	by	approximately	1%.	If	the	2012	average exchange	rates	of	the	US	dollar	against	all	foreign	currencies	had	strengthened	by	5%,	Schlumberger's	income	from	continuing	operations	would	have	increased	by approximately	2%.	Conversely,	a	5%	weakening	of	the	US	dollar	average	exchange	rates	would	have	decreased	income	from	continuing	operations	by	approximately 2%.

Schlumberger	maintains	a	foreign-currency	risk	management	strategy	that	uses	derivative	instruments	to	protect	its	interests	from	unanticipated	fluctuations	in earnings	and	cash	flows	caused	by	volatility	in	currency	exchange	rates.	Foreign	currency	forward	contracts	and	foreign	currency	options	provide	a	hedge	against currency	fluctuations	either	on	monetary	assets/liabilities	denominated	in	other	than	a	functional	currency	or	on	expenses.

At	December	31,	2012,	contracts	were	outstanding	for	the	US	dollar	equivalent	of	$7.5	billion	in	various	foreign	currencies	of	which	$3.9	billion	relate	to	hedges	of debt	balances	denominated	in	currencies	other	than	the	functional	currency.

Schlumberger	is	subject	to	the	risk	of	market	price	fluctuations	of	certain	commodities,	such	as	fuel.	Schlumberger	utilizes	forward	contracts	to	manage	a	small percentage	of	the	price	risk	associated	with	forecasted	fuel	purchases.	As	of	December	31,	2012,	$43	million	of	commodity	forward	contracts	were	outstanding.

Schlumberger	is	subject	to	interest	rate	risk	on	its	debt	and	its	investment	portfolio.	Schlumberger	maintains	an	interest	rate	risk	management	strategy	that	uses	a	mix of	variable	and	fixed	rate	debt	combined	with	its	investment	portfolio	and	interest	rate	swaps	to	mitigate	the	exposure	to	changes	in	interest	rates.	At	December	31,	2012, Schlumberger	had	fixed	rate	debt	aggregating	approximately	$10.0	billion	and	variable	rate	debt	aggregating	approximately	$1.6	billion.	Schlumberger	has	entered	into interest	rate	swaps	relating	to	$0.5	billion	of	its	fixed	rate	debt	as	of	December	31,	2012	whereby	Schlumberger	will	receive	interest	at	a	fixed	rate	and	pay	interest	at	a variable	rate.

Schlumberger's	exposure	to	interest	rate	risk	associated	with	its	debt	is	also	partially	mitigated	by	its	investment	portfolio.	Both	Short-term	investments	and	Fixed income	investments,	held	to	maturity,	which	totaled	approximately	$4.6	billion	at	December	31,	2012,	are	comprised	primarily	of	money	market	funds,	eurodollar	time deposits,	certificates	of	deposit,	commercial	paper,	euro	notes	and	Eurobonds	and	are	substantially	all	denominated	in	US	dollars.	The	average	return	on	investment	was 0.6%	in	2012.

The	following	table	represents	carrying	amounts	of	Schlumberger's	debt	at	December	31,	2012	by	year	of	maturity:

|  |  |  |  | Expected	Maturity	Dates | Expected	Maturity	Dates |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2014 | 2015 | 2016 | 2017 | 2021 | 2022 | Total |
| Fixed\trate\tdebt |  |  |  |  |  |  |  |  |
| 5.25%\tGuaranteed\tNotes | $662 |  |  |  |  |  |  | $662 |
| 3.00%\tGuaranteed\tNotes | 452 |  |  |  |  |  |  | 452 |
| 4.50%\tGuaranteed\tNotes |  | $1,324 |  |  |  |  |  | 1,324 |
| 2.75%\tGuaranteed\tNotes |  |  | $1,318 |  |  |  |  | 1,318 |
| 2.650%\tSenior\tNotes |  |  |  | $500 |  |  |  | 500 |
| 1.950%\tSenior\tNotes |  |  |  | \t 1,099 |  |  |  | 1,099 |
| 3.300%\tSenior\tNotes |  |  |  |  |  | $1,595 |  | 1,595 |
| 4.200%\tSenior\tNotes |  |  |  |  |  | \t 1,099 |  | 1,099 |
| 1.250%\tSenior\tNotes |  |  |  |  | $999 |  |  | 999 |
| 2.400%\tSenior\tNotes |  |  |  |  |  |  | $998 | 998 |
| Total\tfixed\trate\tdebt | $1,114 | $1,324 | $1,318 | $1,599 | $999 | $2,694 | $998 | $10,046 |
| Variable\trate\tdebt | \t 1,007 | 333 | – | 244 | – | – | – | 1,584 |
| Total | $2,121 | $1,657 | $1,318 | $1,843 | $999 | $2,694 | $998 | $11,630 |

The	fair	market	value	of	the	outstanding	fixed	rate	debt	was	approximately	$10.5	billion	as	of	December	31,	2012.	The	weighted	average	interest	rate	on	the	variable rate	debt	as	of	December	31,	2012	was	3.6%.

Schlumberger	does	not	enter	into	derivatives	for	speculative	purposes.

# Forward-looking	Statements

This	Form	10-K	and	other	statements	we	make	contain	"forward-looking	statements"	within	the	meaning	of	the	federal	securities	laws,	which	include	any	statements that	are	not	historical	facts,	such	as	our	forecasts	or	expectations	regarding	business	outlook;	growth	for	Schlumberger	as	a	whole	and	for	each	of	its	segments	(and	for specified	products	or	geographic	areas	within	each	segment);	oil	and	natural	gas	demand	and	production	growth;	oil	and	natural	gas	prices;	improvements	in	operating procedures	and	technology;	capital	expenditures	by	Schlumberger	and	the	oil	and	gas	industry;	the	business	strategies	of	Schlumberger's	customers;	future	global economic	conditions;	and	future	results	of	operations.	These	statements	are	subject	to	risks	and	uncertainties,	including,	but	not	limited	to,	global	economic	conditions; changes	in	exploration	and	production	spending	by	Schlumberger's	customers	and	changes	in	the	level	of	oil	and	natural	gas	exploration	and	development;	general economic,	political	and	business	conditions	in	key	regions	of	the	world;	pricing	erosion;	weather	and	seasonal	factors;	operational	delays;	production	declines;	changes in	government	regulations	and	regulatory	requirements,	including	those	related	to	offshore	oil	and	gas	exploration,	radioactive	sources,	explosives,	chemicals,	hydraulic fracturing	services	and	climate-related	initiatives;	the	inability	of	technology	to	meet	new	challenges	in	exploration;	and	other	risks	and	uncertainties	detailed	in	the	Risk Factors	section	of	this	Form	10-K	and	other	filings	that	we	make	with	the	Securities	and	Exchange	Commission.	If	one	or	more	of	these	or	other	risks	or	uncertainties materialize	(or	the	consequences	of	such	a	development	changes),	or	should	our	underlying	assumptions	prove	incorrect,	actual	outcomes	may	vary	materially	from those	reflected	in	our	forward-looking	statements.	Schlumberger	disclaims	any	intention	or	obligation	to	update	publicly	or	revise	such	statements,	whether	as	a	result	of new	information,	future	events	or	otherwise.

# Item	8. Financial	Statements	and	Supplementary	Data.

# SCHLUMBERGER	LIMITED	AND	SUBSIDIARIES

# CONSOLIDATED	STATEMENT	OF	INCOME

| Year	Ended	December	31, | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Revenue | $42,149 | $36,959 | $26,672 |
| Interest\tand\tother\tincome | 172 | 130 | 215 |
| Gain\ton\tinvestment\tin\tM-I\tSWACO | – | – | 1,270 |
| Expenses |  |  |  |
| Cost\tof\trevenue | \t 33,056 | \t 28,939 | \t 21,097 |
| Research\t&amp;\tengineering | 1,168 | 1,073 | 919 |
| General\t&amp;\tadministrative | 405 | 427 | 311 |
| Merger\t&amp;\tintegration | 128 | 113 | 160 |
| Restructuring\t&amp;\tother | 33 | – | 331 |
| Interest | 340 | 298 | 207 |
| Income\tfrom\tcontinuing\toperations\tbefore\ttaxes | 7,191 | 6,239 | 5,132 |
| Taxes\ton\tincome | 1,723 | 1,509 | 879 |
| Income\tfrom\tcontinuing\toperations | 5,468 | 4,730 | 4,253 |
| Income\tfrom\tdiscontinued\toperations | 51 | 277 | 12 |
| Net\tincome | 5,519 | 5,007 | 4,265 |
| Net\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 29 | 10 | (2) |
| Net\tincome\tattributable\tto\tSchlumberger | $5,490 | $4,997 | $4,267 |
| Schlumberger\tamounts\tattributable\tto: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $5,439 | $4,720 | $4,255 |
| Income\tfrom\tdiscontinued\toperations | 51 | 277 | 12 |
| Net\tincome | $5,490 | $4,997 | $4,267 |
| Basic\tearnings\tper\tshare\tof\tSchlumberger: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $4.09 | $3.50 | $3.40 |
| Income\tfrom\tdiscontinued\toperations | 0.04 | 0.21 | 0.01 |
| Net\tincome\t^(1) | $4.13 | $3.70 | $3.41 |
| Diluted\tearnings\tper\tshare\tof\tSchlumberger: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $4.06 | $3.47 | $3.37 |
| Income\tfrom\tdiscontinued\toperations | 0.04 | 0.20 | 0.01 |
| Net\tincome | $4.10 | $3.67 | $3.38 |
| Average\tshares\toutstanding: |  |  |  |
| Basic | 1,330 | 1,349 | 1,250 |
| Assuming\tdilution | 1,339 | 1,361 | 1,263 |

		Amountsmay	not	add	due	to	rounding. (1)

See	the	Notes	to	Consolidated	Financial	Statements

# CONSOLIDATED	STATEMENT	OF	COMPREHENSIVE	INCOME

| Year	Ended	December	31, | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Net\tincome | $ 5,519 | $ 5,007 | $4,265 |
| Currency\ttranslation\tadjustments |  |  |  |
| Unrealized\tnet\tchange\tarising\tduring\tthe\tperiod | 76 | (82) | (26) |
| Marketable\tsecurities |  |  |  |
| Unrealized\tgain\tarising\tduring\tthe\tperiod | 141 | – | – |
| Derivatives |  |  |  |
| Net\tderivatives\tgain\t(loss)\ton\thedge\ttransactions | 92 | (79) | (269) |
| Reclassification\tto\tnet\tincome\tof\tnet\trealized\t(gain)\tloss | (36) | 8 | 274 |
| Pension\tand\tother\tpostretirement\tbenefit\tplans |  |  |  |
| Actuarial\tloss |  |  |  |
| Actuarial\tloss\tarising\tduring\tthe\tperiod | (1,016) | (1,008) | (117) |
| Amortization\tto\tnet\tincome\tof\tnet\tactuarial\tloss | 187 | 133 | 90 |
| Prior\tservice\tcost |  |  |  |
| Prior\tservice\tgain\t(cost)\tarising\tduring\tthe\tperiod | – | 1 | (162) |
| Amortization\tto\tnet\tincome\tof\tnet\tprior\tservice\tcost | 125 | 121 | 96 |
| Income\ttaxes\ton\tpension\tand\tother\tpostretirement\tbenefit\tplans | 100 | 117 | 20 |
| Comprehensive\tincome | 5,188 | 4,218 | \t 4,171 |
| Comprehensive\tincome\t(loss)\tattributable\tto\tnoncontrolling\tinterests | 29 | 10 | (2) |
| Comprehensive\tincome\tattributable\tto\tSchlumberger | $ 5,159 | $ 4,208 | $4,173 |

# CONSOLIDATED	BALANCE	SHEET

| December	31, | 2012 | 2011 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tAssets |  |  |
| Cash | $1,905 | $1,705 |
| Short-term\tinvestments | 4,369 | 3,122 |
| Receivables\tless\tallowance\tfor\tdoubtful\taccounts\t(2012\t–\t$202;\t2011\t–\t$177) | \t 11,351 | 9,500 |
| Inventories | 4,785 | 4,700 |
| Deferred\ttaxes | 343 | 456 |
| Other\tcurrent\tassets | 1,403 | 1,056 |
|  | \t 24,156 | \t 20,539 |
| Fixed\tIncome\tInvestments,\theld\tto\tmaturity | 245 | 256 |
| Investments\tin\tAffiliated\tCompanies | 1,502 | 1,266 |
| Fixed\tAssets\tless\taccumulated\tdepreciation | \t 14,780 | \t 12,993 |
| Multiclient\tSeismic\tData | 518 | 425 |
| Goodwill | \t 14,585 | \t 14,154 |
| Intangible\tAssets | 4,802 | 4,882 |
| Other\tAssets | 959 | 686 |
|  | $61,547 | $55,201 |
| LIABILITIES\tAND\tEQUITY |  |  |
| Current\tLiabilities |  |  |
| Accounts\tpayable\tand\taccrued\tliabilities | $8,453 | $7,579 |
| Estimated\tliability\tfor\ttaxes\ton\tincome | 1,426 | 1,245 |
| Long-term\tdebt\t–\tcurrent\tportion | 1,163 | 1,041 |
| Short-term\tborrowings | 958 | 336 |
| Dividends\tpayable | 368 | 337 |
|  | \t 12,368 | \t 10,538 |
| Long-term\tDebt | 9,509 | 8,556 |
| Postretirement\tBenefits | 2,169 | 1,732 |
| Deferred\tTaxes | 1,493 | 1,731 |
| Other\tLiabilities | 1,150 | 1,252 |
|  | \t 26,689 | \t 23,809 |
| Equity |  |  |
| Common\tstock | \t 11,912 | \t 11,639 |
| Treasury\tstock | (6,160) | (5,679) |
| Retained\tearnings | \t 32,887 | \t 28,860 |
| Accumulated\tother\tcomprehensive\tloss | (3,888) | (3,557) |
| Schlumberger\tstockholders'\tequity | \t 34,751 | \t 31,263 |
| Noncontrolling\tinterests | 107 | 129 |
|  | \t 34,858 | \t 31,392 |
|  | $61,547 | $55,201 |

# CONSOLIDATED	STATEMENT	OF	CASH	FLOWS

| Year	Ended	December	31, | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tIncome | $ 5,519 | $ 5,007 | $ 4,265 |
| Income\tfrom\tdiscontinued\toperations | (51) | (277) | (12) |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization\t^(1) | 3,500 | 3,274 | 2,757 |
| Gain\ton\tinvestment\tin\tM-I\tSWACO | – | – | (1,270) |
| Earnings\tof\tcompanies\tcarried\tat\tequity,\tless\tdividends\treceived | (61) | (64) | (85) |
| Deferred\tincome\ttaxes | (76) | (26) | (130) |
| Stock-based\tcompensation\texpense | 335 | 272 | 198 |
| Pension\tand\tother\tpostretirement\tbenefits\texpense | 404 | 365 | 299 |
| Other\tnon-cash\titems | 97 | 203 | 327 |
| Pension\tand\tother\tpostretirement\tbenefits\tfunding | (673) | (601) | (868) |
| \t(2)\nChange\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Increase\tin\treceivables | (2,116) | (1,281) | (290) |
| Increase\tin\tinventories | (643) | (864) | (50) |
| (Increase)\tdecrease\tin\tother\tcurrent\tassets | (314) | (93) | 133 |
| Increase\t(decrease)\tin\taccounts\tpayable\tand\taccrued\tliabilities | 928 | 597 | (75) |
| Increase\t(decrease)\tin\testimated\tliability\tfor\ttaxes\ton\tincome | 127 | (561) | 476 |
| Increase\t(decrease)\tin\tother\tliabilities | 1 | 169 | (89) |
| Other\t–\tnet | (163) | (5) | (77) |
| NET\tCASH\tPROVIDED\tBY\tOPERATING\tACTIVITIES | 6,814 | 6,115 | 5,509 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Capital\texpenditures | (4,695) | (4,008) | (2,912) |
| Multiclient\tseismic\tdata\tcapitalized | (351) | (289) | (326) |
| Cash\tacquired\tin\tacquisition\tof\tSmith\tInternational,\tInc. | – | – | 399 |
| Acquisition\tof\tGeoservices,\tnet\tof\tcash\tacquired | – | – | (889) |
| Other\tbusiness\tacquisitions\tand\tinvestments,\tnet\tof\tcash\tacquired | (845) | (186) | (212) |
| (Purchase)\tsale\tof\tinvestments,\tnet | (1,228) | 351 | 1,023 |
| Other | (55) | 230 | (19) |
| NET\tCASH\tUSED\tIN\tINVESTING\tACTIVITIES | (7,174) | (3,902) | (2,936) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Dividends\tpaid | (1,432) | (1,300) | (1,040) |
| Proceeds\tfrom\temployee\tstock\tpurchase\tplan | 247 | 208 | 179 |
| Proceeds\tfrom\texercise\tof\tstock\toptions | 163 | 230 | 222 |
| Stock\trepurchase\tprogram | (972) | (2,998) | (1,717) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 2,832 | 6,884 | 2,815 |
| Repayment\tof\tlong-term\tdebt | (1,817) | (4,992) | (1,814) |
| Net\tincrease\t(decrease)\tin\tshort-term\tborrowings | 621 | (119) | (68) |
| Other | 19 | (613) | 14 |
| NET\tCASH\tUSED\tIN\tFINANCING\tACTIVITIES | (339) | (2,700) | (1,409) |
| Cash\tflow\tfrom\tdiscontinued\toperations\t–\toperating\tactivities | (126) | 55 | (15) |
| Cash\tflow\tfrom\tdiscontinued\toperations\t–\tinvesting\tactivities | 1,012 | 376 | (2) |
| Cash\tflow\tfrom\tdiscontinued\toperations | 886 | 431 | (17) |
| Net\tincrease\t(decrease)\tin\tcash\tbefore\ttranslation\teffect | 187 | (56) | 1,147 |
| Translation\teffect\ton\tcash | 13 | (3) | – |
| Cash,\tbeginning\tof\tyear | 1,705 | 1,764 | 617 |
| Cash,\tend\tof\tyear | $ 1,905 | $ 1,705 | $ 1,764 |

(2)		Net	of	the	effect	of	business	acquisitions.

# CONSOLIDATED	STATEMENT	OF	STOCKHOLDERS'	EQUITY

|  |  | In | Retained | Comprehensive | Noncontrolling |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Issued | Treasury | Earnings | Loss | Interests | Total |
| Balance,\tJanuary\t1,\t2010 | $4,777 | $(5,002) | $22,019 | $(2,674) | $109 | $19,229 |
| Net\tincome |  |  | 4,267 |  | (1) | 4,266 |
| Currency\ttranslation\tadjustments |  |  |  | (26) |  | (26) |
| Changes\tin\tfair\tvalue\tof\tderivatives |  |  |  | 5 |  | 5 |
| Pension\tand\tother\tpostretirement\tbenefit\tplans |  |  |  | (73) |  | (73) |
| Shares\tsold\tto\toptionees\tless\tshares\texchanged | (8) | 230 |  |  |  | 222 |
| Vesting\tof\trestricted\tstock | (11) | 11 |  |  |  | – |
| Shares\tissued\tunder\temployee\tstock\tpurchase\tplan | 49 | 130 |  |  |  | 179 |
| Stock\trepurchase\tprogram |  | (1,717) |  |  |  | (1,717) |
| Stock-based\tcompensation\tcost | 198 |  |  |  |  | 198 |
| Shares\tissued\ton\tconversions\tof\tdebentures | 17 | 303 |  |  |  | 320 |
| Acquisition\tof\tSmith\tInternational,\tInc. | 6,880 | 2,948 |  |  | 111 | 9,939 |
| Dividends\tdeclared\t($0.84\tper\tshare) |  |  | (1,076) |  |  | (1,076) |
| Other | 18 | (39) |  |  | (1) | (22) |
| Balance,\tDecember\t31,\t2010 | \t 11,920 | (3,136) | 25,210 | (2,768) | 218 | \t 31,444 |
| Net\tincome |  |  | 4,997 |  | 16 | 5,013 |
| Currency\ttranslation\tadjustments |  |  |  | (82) |  | (82) |
| Changes\tin\tfair\tvalue\tof\tderivatives |  |  |  | (71) |  | (71) |
| Pension\tand\tother\tpostretirement\tbenefit\tplans |  |  |  | (636) |  | (636) |
| Shares\tsold\tto\toptionees\tless\tshares\texchanged | (29) | 259 |  |  |  | 230 |
| Vesting\tof\trestricted\tstock | (39) | 39 |  |  |  | – |
| Shares\tissued\tunder\temployee\tstock\tpurchase\tplan | 53 | 155 |  |  |  | 208 |
| Stock\trepurchase\tprogram |  | (2,998) |  |  |  | (2,998) |
| Stock-based\tcompensation\tcost | 272 |  |  |  |  | 272 |
| Acquisition\tof\tnoncontrolling\tinterests | (553) |  |  |  | (80) | (633) |
| Dividends\tdeclared\t($1.00\tper\tshare) |  |  | (1,347) |  |  | (1,347) |
| Other | 15 | 2 |  |  | (25) | (8) |
| Balance,\tDecember\t31,\t2011 | \t 11,639 | (5,679) | 28,860 | (3,557) | 129 | \t 31,392 |
| Net\tincome |  |  | 5,490 |  | 29 | 5,519 |
| Currency\ttranslation\tadjustments |  |  |  | 71 |  | 71 |
| Change\tin\tunrealized\tgain\ton\tmarketable\tsecurities |  |  |  | 141 |  | 141 |
| Changes\tin\tfair\tvalue\tof\tderivatives |  |  |  | 56 |  | 56 |
| Pension\tand\tother\tpostretirement\tbenefit\tplans |  |  |  | (604) |  | (604) |
| Shares\tsold\tto\toptionees\tless\tshares\texchanged | (75) | 238 |  |  |  | 163 |
| Vesting\tof\trestricted\tstock | (20) | 20 |  |  |  | – |
| Shares\tissued\tunder\temployee\tstock\tpurchase\tplan | 16 | 231 |  |  |  | 247 |
| Stock\trepurchase\tprogram |  | (972) |  |  |  | (972) |
| Stock-based\tcompensation\tcost | 335 |  |  |  |  | 335 |
| Sale\tof\tCE\tFranklin |  |  |  | 5 | (68) | (63) |
| Acquisition\tof\tnoncontrolling\tinterests | (3) |  |  |  | 15 | 12 |
| Dividends\tdeclared\t($1.10\tper\tshare) |  |  | (1,463) |  |  | (1,463) |
| Other | 20 | 2 |  |  | 2 | 24 |
| Balance,\tDecember\t31,\t2012 | $11,912 | $(6,160) | $32,887 | $(3,888) | $107 | $34,858 |

# SHARES	OF	COMMON	STOCK

|  | Issued | In	Treasury | Outstanding |
| :--- | :--- | :--- | :--- |
| Balance,\tJanuary\t1,\t2010 | \t1,334 | (139) | 1,195 |
| Acquisition\tof\tSmith\tInternational,\tInc. | 100 | 76 | 176 |
| Shares\tsold\tto\toptionees\tless\tshares\texchanged | – | 6 | 6 |
| Shares\tissued\tunder\temployee\tstock\tpurchase\tplan | – | 3 | 3 |
| Stock\trepurchase\tprogram | – | (27) | (27) |
| Issued\ton\tconversions\tof\tdebentures | – | 8 | 8 |
| Balance,\tDecember\t31,\t2010 | \t1,434 | (73) | 1,361 |
| Shares\tsold\tto\toptionees\tless\tshares\texchanged | – | 6 | 6 |
| Vesting\tof\trestricted\tstock | – | 1 | 1 |
| Shares\tissued\tunder\temployee\tstock\tpurchase\tplan | – | 3 | 3 |
| Stock\trepurchase\tprogram | – | (37) | (37) |
| Balance,\tDecember\t31,\t2011 | \t1,434 | (100) | 1,334 |
| Shares\tsold\tto\toptionees\tless\tshares\texchanged | – | 4 | 4 |
| Shares\tissued\tunder\temployee\tstock\tpurchase\tplan | – | 4 | 4 |
| Stock\trepurchase\tprogram | – | (14) | (14) |
| Balance,\tDecember\t31,\t2012 | \t1,434 | (106) | 1,328 |

# Notes	to	Consolidated	Financial	Statements

# 1.					Business	Description

Schlumberger	Limited	(Schlumberger	N.V.,	incorporated	in	Curaçao)	and	its	consolidated	subsidiaries	(collectively,	"Schlumberger")	form	the	world's	leading supplier	of	technology,	integrated	project	management	and	information	solutions	to	customers	in	the	international	oil	and	gas	exploration	and	production	industry.

# 2.					Summary	of	Accounting	Policies

The	Consolidated	Financial	Statements	of	Schlumberger	have	been	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of America.

# Principles	of	Consolidation

The	accompanying	Consolidated	Financial	Statements	include	the	accounts	of	Schlumberger,	its	wholly-owned	subsidiaries,	and	other	subsidiaries	over	which	it exercises	a	controlling	financial	interest.	All	significant	intercompany	transactions	and	balances	have	been	eliminated.

# Reclassifications

Certain	prior	year	items	have	been	reclassified	to	conform	to	the	current	year	presentation.

# Use	of	Estimates

The	preparation	of	financial	statements	in	conformity	with	generally	accepted	accounting	principles	requires	management	to	make	estimates	and	assumptions	that affect	the	reported	amounts	of	assets	and	liabilities,	disclosure	of	contingent	liabilities	at	the	date	of	the	financial	statements	and	the	reported	amounts	of	revenue	and expenses	during	the	reporting	period.	On	an	on-going	basis,	Schlumberger	evaluates	its	estimates,	including	those	related	to	collectibility	of	accounts	receivable; recoverability	of	goodwill,	intangible	assets	and	investments	in	affiliates;	income	taxes;	multiclient	seismic	data;	contingencies	and	actuarial	assumptions	for	employee benefit	plans.	Schlumberger	bases	its	estimates	on	historical	experience	and	on	other	assumptions	that	are	believed	to	be	reasonable	under	the	circumstances,	the	results of	which	form	the	basis	for	making	judgments	about	the	carrying	values	of	assets	and	liabilities	that	are	not	readily	apparent	from	other	sources.	Actual	results	may differ	from	these	estimates	under	different	assumptions	or	conditions.

# Revenue	Recognition

Schlumberger	recognizes	revenue	based	upon	purchase	orders,	contracts	or	other	persuasive	evidence	of	an	arrangement	with	the	customer	that	include	fixed	or determinable	prices	provided	that	collectibility	is	reasonably	assured.	Revenue	is	recognized	for	services	when	they	are	rendered.	Revenue	is	recognized	for	products upon	delivery,	when	the	customer	assumes	the	risks	and	rewards	of	ownership.

Revenue	from	seismic	contract	services	performed	on	a	dayrate	basis	is	recognized	as	the	service	is	performed.	Revenue	from	other	services,	including	pre-funded multiclient	surveys,	is	recognized	as	the	seismic	data	is	acquired	and/or	processed	on	a	proportionate	basis	as	work	is	performed.	This	method	requires	revenue	to	be recognized	based	upon	quantifiable	measures	of	progress,	such	as	square	kilometers	acquired.	Multiclient	data	surveys	are	licensed	or	sold	to	customers	on	a	non-

transferable	basis.	Revenue	from	sales	of	completed	multiclient	data	surveys	is	recognized	upon	obtaining	a	signed	licensing	agreement	and	providing	customers	with access	to	such	data.

Revenue	is	occasionally	generated	from	contractual	arrangements	that	include	multiple	deliverables.	Revenue	from	these	arrangements	is	recognized	as	each	item	is delivered	based	on	their	relative	fair	value	and	when	the	delivered	items	have	stand-alone	value	to	the	customer.

Revenue	derived	from	the	sale	of	licenses	of	Schlumberger	software	may	include	installation,	maintenance,	consulting	and	training	services.	If	services	are	not essential	to	the	functionality	of	the	software,	the	revenue	for	each	element	of	the	contract	is	recognized	separately	based	on	its	respective	vendor	specific	objective evidence	of	fair	value	when	all	of	the	following	conditions	are	met:	a	signed	contract	is	obtained,	delivery	has	occurred,	the	fee	is	fixed	or	determinable	and	collectibility is	probable.

# Translation	of	Non-United	States	Currencies

The	functional	currency	of	Schlumberger	is	primarily	the	US	dollar.	Assets	and	liabilities	recorded	in	functional	currencies	other	than	US	dollars	are	translated	at period	end	exchange	rates.	The	resulting	adjustments	are	charged	or	credited	directly	to	the	Equity	section	of	the	Consolidated	Balance	Sheet.	Revenue	and	expenses	are translated	at	the	weighted-average	exchange	rates	for	the	period.	Realized	and	unrealized	transaction	gains	and	losses	are	included	in	income	in	the	period	in	which	they occur.	Transaction	losses	of	$37	million,	$25	million	and	$27	million,	net	of	hedging	activities,	were	recognized	in	2012,	2011	and	2010,	respectively.

# Short-term	and	Fixed	Income	Investments

The	Consolidated	Balance	Sheet	reflects	the	Schlumberger	investment	portfolio	separated	between	current	and	long	term,	based	on	maturity.	Both	Short-term investments	and	Fixed	Income	Investments,	held	to	maturity	are	comprised	primarily	of	money	market	funds,	eurodollar	time	deposits,	certificates	of	deposit, commercial	paper,	euro	notes	and	Eurobonds,	and	are	substantially	denominated	in	US	dollars.	Under	normal	circumstances	it	is	the	intent	of	Schlumberger	to	hold	the investments	until	maturity,	with	the	exception	of	investments	that	are	considered	trading	(December	31,	2012	–	$194	million;	December	31,	2011	–	$190	million). Short-term	investments	that	are	designated	as	trading	are	stated	at	fair	value,	which	is	estimated	using	quoted	market	prices	for	those	or	similar	investments.	All	other investments	are	stated	at	cost	plus	accrued	interest,	which	approximates	market.	The	unrealized	gains/losses	on	investments	designated	as	trading	were	not	significant	at both	December	31,	2012	and	2011.

For	purposes	of	the	Consolidated	Statement	of	Cash	Flows,	Schlumberger	does	not	consider	Short-term	investments	to	be	cash	equivalents.

# Inventories

Inventories	are	stated	at	average	cost	or	at	market,	whichever	is	lower.	Costs	included	in	Inventories	consist	of	materials,	direct	labor	and	manufacturing	overhead.

Investments	in	companies	in	which	Schlumberger	does	not	have	a	controlling	financial	interest,	but	over	which	it	has	significant	influence	are	accounted	for	using	the equity	method.	Schlumberger's	share	of	the	after-tax	earnings	of	equity	method	investees	is	included	in	Interest	and	other	income.	Investments	in	privately	held companies	in	which	Schlumberger	does	not	have	the	ability	to	exercise	significant	influence	are	accounted	for	using	the	cost	method.	Investments	in	publicly	traded companies	in	which	Schlumberger	does	not	have	significant	influence	are	accounted	for	as	available-for-sale	marketable	securities.	These	marketable	securities	are reported	at	fair	value,	based	on	quoted	market	prices,	with	unrealized	gains	and	losses	reported	as	a	component	of	Accumulated	other	comprehensive	loss.	The	fair	value and	cost	basis	of	these	marketable	securities	was	$222	million	and	$81	million,	respectively	at	December	31,	2012.	Schlumberger	did	not	have	any	investments	in marketable	securities	at	December	31,	2011.

Equity	and	cost	method	investments	as	well	as	investments	in	publicly	traded	companies	are	classified	as	Investments	in	Affiliated	Companies	in	the	Consolidated Balance	Sheet.

# Fixed	Assets	and	Depreciation

Fixed	assets	are	stated	at	cost	less	accumulated	depreciation,	which	is	provided	for	by	charges	to	income	over	the	estimated	useful	lives	of	the	assets	using	the straight-line	method.	Fixed	assets	include	the	manufacturing	cost	of	oilfield	technical	equipment	manufactured	or	assembled	by	subsidiaries	of	Schlumberger.

Expenditures	for	replacements	and	improvements	are	capitalized.	Maintenance	and	repairs	are	charged	to	operating	expenses	as	incurred.	Upon	sale	or	other	disposition, the	applicable	amounts	of	asset	cost	and	accumulated	depreciation	are	removed	from	the	balance	sheet	and	the	net	amount,	less	proceeds	from	disposal,	is	charged	or credited	to	income.

The	multiclient	library	consists	of	completed	and	in-process	seismic	surveys	that	are	licensed	on	a	nonexclusive	basis.	Multiclient	surveys	are	primarily	generated utilizing	Schlumberger	resources.	Schlumberger	capitalizes	costs

directly	incurred	in	acquiring	and	processing	the	multiclient	seismic	data.	Such	costs	are	charged	to	Cost	of	revenue	based	on	the	percentage	of	the	total	costs	to	the estimated	total	revenue	that	Schlumberger	expects	to	receive	from	the	sales	of	such	data.	However,	under	no	circumstance	will	an	individual	survey	carry	a	net	book value	greater	than	a	4-year,	straight-line	amortized	value.

The	carrying	value	of	the	multiclient	library	is	reviewed	for	impairment	annually	as	well	as	when	an	event	or	change	in	circumstance	indicating	impairment	may have	occurred.	Adjustments	to	the	carrying	value	are	recorded	when	it	is	determined	that	estimated	future	cash	flows,	which	involves	significant	judgment	on	the	part	of Schlumberger,	would	not	be	sufficient	to	recover	the	carrying	value	of	the	surveys.	Significant	adverse	changes	in	Schlumberger's	estimated	future	cash	flows	could result	in	impairment	charges	in	a	future	period.

# Goodwill,	Other	Intangibles	and	Long-lived	Assets

Long-lived	assets,	including	fixed	assets	and	intangible	assets,	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying value	may	not	be	recoverable.	In	reviewing	for	impairment,	the	carrying	value	of	such	assets	is	compared	to	the	estimated	undiscounted	future	cash	flows	expected	from the	use	of	the	assets	and	their	eventual	disposition.	If	such	cash	flows	are	not	sufficient	to	support	the	asset's	recorded	value,	an	impairment	charge	is	recognized	to reduce	the	carrying	value	of	the	long-lived	asset	to	its	estimated	fair	value.	The	determination	of	future	cash	flows	as	well	as	the	estimated	fair	value	of	long-lived	assets involve	significant	estimates	on	the	part	of	management.	If	there	is	a	material	change	in	economic	conditions	or	other	circumstances	influencing	the	estimate	of	future cash	flows	or	fair	value,	Schlumberger	could	be	required	to	recognize	impairment	charges	in	the	future.

Intangible	assets	consist	primarily	of	customer	relationships,	technology/technical	know-how	and	tradenames	acquired	in	business	combinations.	Customer relationships	are	generally	amortized	over	periods	ranging	from	15	to	28	years,	acquired	technology/technical	know-how	are	generally	amortized	over	periods	ranging from	10	to	18	years	and	tradenames	are	generally	amortized	over	periods	ranging	from	15	to	30	years.

# Taxes	on	Income

Schlumberger	computes	taxes	on	income	in	accordance	with	the	tax	rules	and	regulations	of	the	many	taxing	authorities	where	the	income	is	earned.	The	income	tax rates	imposed	by	these	taxing	authorities	vary	substantially.	Taxable	income	may	differ	from	pretax	income	for	financial	accounting	purposes.	To	the	extent	that differences	are	due	to	revenue	or	expense	items	reported	in	one	period	for	tax	purposes	and	in	another	period	for	financial	accounting	purposes,	an	appropriate	provision for	deferred	income	taxes	is	made.	Any	effect	of	changes	in	income	tax	rates	or	tax	laws	are	included	in	the	provision	for	income	taxes	in	the	period	of	enactment.	When it	is	more	likely	than	not	that	a	portion	or	all	of	the	deferred	tax	asset	will	not	be	realized	in	the	future,	Schlumberger	provides	a	corresponding	valuation	allowance against	deferred	tax	assets.

Schlumberger's	tax	filings	are	subject	to	regular	audit	by	the	tax	authorities	in	most	of	the	jurisdictions	in	which	it	conducts	business.	These	audits	may	result	in assessments	for	additional	taxes	which	are	resolved	with	the	authorities	or,	potentially,	through	the	courts.	Schlumberger	recognizes	the	impact	of	a	tax	position	in	its financial	statements	if	that	position	is	more	likely	than	not	of	being	sustained	on	audit,	based	on	the	technical	merits	of	the	position.	Tax	liabilities	are	recorded	based	on estimates	of	additional	taxes	which	will	be	due	upon	the	conclusion	of	these	audits.	Estimates	of	these	tax	liabilities	are	made	based	upon	prior	experience	and	are updated	in	light	of	changes	in	facts	and	circumstances.	However,	due	to	the	uncertain	and	complex	application	of	tax	regulations,	it	is	possible	that	the	ultimate resolution	of	audits	may	result	in	liabilities	which	could	be	materially	different	from	these	estimates.	In	such	an	event,	Schlumberger	will	record	additional	tax	expense or	tax	benefit	in	the	year	in	which	such	resolution	occurs.

Schlumberger	generally	does	not	provide	income	taxes	relating	to	undistributed	earnings,	as	the	earnings	either	would	not	be	taxable	when	remitted	or	are	considered to	be	indefinitely	reinvested.

# Concentration	of	Credit	Risk

Schlumberger's	assets	that	are	exposed	to	concentrations	of	credit	risk	consist	primarily	of	cash,	short-term	investments,	fixed	income	investments	held	to	maturity, receivables	from	clients	and	derivative	financial	instruments.	Schlumberger	places	its	cash,	short-term	investments	and	fixed	income	investments	held	to	maturity	with financial	institutions	and	corporations,	and	limits	the	amount	of	credit	exposure	with	any	one	of	them.	Schlumberger	regularly	evaluates	the	creditworthiness	of	the issuers	in	which	it	invests.	The	receivables	from	clients	are	spread	over	many	countries	and	customers.	Schlumberger	maintains	an	allowance	for	uncollectible	accounts receivable	based	on	expected	collectibility	and	performs	ongoing	credit	evaluations	of	its	customers'	financial	condition.	By	using	derivative	financial	instruments	to hedge	exposure	to	changes	in	exchange	rates	and	commodity	prices,	Schlumberger	exposes	itself	to	some	credit	risk.	Schlumberger	minimizes	this	credit	risk	by	entering into	transactions	with	high-quality	counterparties,	limiting	the	exposure	to	each	counterparty	and	monitoring	the	financial	condition	of	its	counterparties.

# Research	&	Engineering

All	research	and	engineering	expenditures	are	expensed	as	incurred.

# Earnings	per	Share

Basic	earnings	per	share	of	Schlumberger	from	continuing	operations	is	calculated	by	dividing	income	from	continuing	operations	attributable	to	Schlumberger	by the	weighted	average	number	of	common	shares	outstanding	during	the	year.	Diluted	earnings	per	share	is	calculated	by	dividing	income	from	continuing	operations attributable	to	Schlumberger	by	the	sum	of	(i)	unvested	restricted	stock	units	and	(ii)	the	weighted	average	number	of	common	shares	outstanding	assuming	dilution. The	weighted	average	number	of	common	shares	outstanding	assuming	dilution	assumes	that	all	stock	options	which	are	in	the	money	are	exercised	at	the	beginning	of the	period	and	that	the	proceeds	are	used	by	Schlumberger	to	purchase	shares	at	the	average	market	price	for	the	period.

The	following	is	a	reconciliation	from	basic	to	diluted	earnings	per	share	from	continuing	operations	of	Schlumberger	for	each	of	the	last	three	years:

|  | Schlumberger<br>Income	from<br>Continuing<br>Operations | Weighted<br>Average<br>Shares<br>Outstanding | Earnings	Per<br>Share	from<br>from	Continuing<br>Operations |
| :--- | :--- | :--- | :--- |
| 2012: |  |  |  |
| Basic | $5,439 | 1,330 | $4.09 |
| Assumed\texercise\tof\tstock\toptions | – | 5 |  |
| Unvested\trestricted\tstock | – | 4 |  |
| Diluted | $5,439 | 1,339 | $4.06 |
| 2011: |  |  |  |
| Basic | $4,720 | 1,349 | $3.50 |
| Assumed\texercise\tof\tstock\toptions | – | 10 |  |
| Unvested\trestricted\tstock | – | 2 |  |
| Diluted | $4,720 | 1,361 | $3.47 |
| 2010: |  |  |  |
| Basic | $4,255 | 1,250 | $3.40 |
| Assumed\tconversion\tof\tdebentures | 3 | 2 |  |
| Assumed\texercise\tof\tstock\toptions | – | 9 |  |
| Unvested\trestricted\tstock | – | 2 |  |
| Diluted | $4,258 | 1,263 | $3.37 |

Employee	stock	options	to	purchase	approximately	21.0	million,	14.0	million	and	12.5	million	shares	of	common	stock	at	December	31,	2012,	2011	and	2010, respectively,	were	outstanding	but	were	not	included	in	the	computation	of	diluted	earnings	per	share	because	the	option	exercise	price	was	greater	than	the	average market	price	of	the	common	stock,	and	therefore,	the	effect	on	diluted	earnings	per	share	would	have	been	anti-dilutive.

Schlumberger	recorded	the	following	charges	and	credits	in	continuing	operations	during	2012,	2011	and	2010:

— Schlumberger	recorded	the	following	merger	and	integration-related	charges	in	connection	with	its	2010	acquisitions	of	Smith	International,	Inc.	("Smith") and	Geoservices	(see	Note	4	–	Acquisitions).

|  | Pretax | Tax | Net |
| :--- | :--- | :--- | :--- |
| First\tquarter | $14 | $1 | $13 |
| Second\tquarter | 22 | 1 | 21 |
| Third\tquarter | 32 | 4 | 28 |
| Fourth\tquarter | 60 | \t 10 | 50 |
|  | $128 | $16 | $112 |

— 	 During	the	fourth	quarter,	Schlumberger	recorded	a	pretax	charge	of	$33	million	($27	million	after-tax)	relating	to	severance	in	connection	with	an	initiative to	rationalize	global	overhead	costs.

The	following	is	a	summary	of	these	charges:

|  | Pretax | Tax | Net | of	Income	Classification |
| :--- | :--- | :--- | :--- | :--- |
| Merger-related\tintegration\tcosts | $128 | $16 | $112 | Merger\t&amp;\tintegration |
| Workforce\treduction | 33 | 6 | 27 | Restructuring\t&amp;\tother |
|  | $161 | $22 | $139 |  |

— Schlumberger	recorded	the	following	merger	and	integration-related	charges	in	connection	with	its	acquisitions	of	Smith	and	Geoservices.

|  | Pretax | Tax | Net |
| :--- | :--- | :--- | :--- |
| First\tquarter | $33 | $5 | $28 |
| Second\tquarter | 32 | 8 | \t 24 |
| Third\tquarter | 26 | 3 | \t 23 |
| Fourth\tquarter | 22 | 2 | \t 20 |
|  | $113 | $18 | $95 |

— 	 During	the	fourth	quarter,	Schlumberger	was	able	to	physically	assess	the	status	of	its	assets	in	Libya.	This	assessment	resulted	in	Schlumberger	recording	a pretax	and	after-tax	charge	of	$60	million	relating	to	certain	assets	that	were	no	longer	recoverable	as	a	result	of	the	political	unrest	in	Libya.

— 	 During	the	second	quarter,	Schlumberger	made	a	$50	million	grant	to	the	Schlumberger	Foundation	to	support	the	Foundation's	Faculty	for	the	Future program,	which	supports	talented	women	scientists	from	the	developing	world	by	helping	them	pursue	advanced	graduate	studies	in	scientific	disciplines	at leading	universities	worldwide.	As	a	result,	Schlumberger	recorded	a	$50	million	charge	($40	million	after-tax).

# (Stated	in	millions)

|  | Pretax | Tax | Net | of	Income	Classification |
| :--- | :--- | :--- | :--- | :--- |
| Merger-related\tintegration\tcosts | $113 | $18 | $95 | Merger\t&amp;\tintegration |
| Donation\tto\tthe\tSchlumberger\tFoundation | 50 | \t 10 | 40 | General\t&amp;\tadministrative |
| Write-off\tof\tassets\tin\tLibya | 60 | – | 60 | Cost\tof\trevenue |
|  | $223 | $28 | $195 |  |

Fourth	quarter	of	2010:

— In	connection	with	the	acquisition	of	Smith,	Schlumberger	recorded	the	following	pretax	charges:	$115	million	($73	million	after-tax)	relating	to	the amortization	of	purchase	accounting	adjustments	associated	with	the	write-up	of	acquired	inventory	to	its	estimated	fair	value,	$17	million	($16	million	after- tax)	of	professional	and	other	fees	and	$15	million	($11	million	after-tax)	relating	to	employee	benefits.

— Schlumberger	repurchased	the	following	debt:

As	a	result	of	these	transactions,	Schlumberger	incurred	pretax	charges	of	$32	million	($20	million	after-tax).

— 	 As	a	result	of	the	decision	to	rationalize	support	costs	across	the	organization	as	well	as	to	restructure	the	North	America	land	operations	to	provide	greater operating	efficiency,	Schlumberger	recorded	a	pretax	charge	of	$90	million	($77	million	after-tax).

— Following	the	successful	introduction	of	UniQ,	a	new	generation	single-sensor	land	acquisition	system,	Schlumberger	recorded	a	$78	million	pretax	charge ($71	million	after-tax)	related	to	the	impairment	of	WesternGeco's	first	generation	Q-Land	system	assets.

— 	 A	pretax	and	after-tax	charge	of	$63	million	primarily	relating	to	the	early	termination	of	a	vessel	lease	associated	with	WesternGeco's	electromagnetic service	offering	as	well	as	related	assets,	including	a	$30	million	impairment	related	to	an	equity-method	investment.

— In	connection	with	the	acquisition	of	Smith,	Schlumberger	recorded	the	following	pretax	charges:	$56	million	($55	million	after-tax)	of	merger-related transaction	costs	including	advisory	and	legal	fees,	$38	million	($32	million	after-tax)	relating	to	employee	benefits	for	change	in	control	payments	and retention	bonuses	and	$38	million	($24	million	after-tax)	relating	to	the	amortization	of	purchase	accounting	adjustments	associated	with	the	write-up	of acquired	inventory	to	its	estimated	fair	value.

— $40	million	pretax	charge	($36	million	after-tax)	for	the	early	termination	of	rig	contracts	and	workforce	reductions	in	Mexico	due	to	the	slowdown	of project	activity.

— Schlumberger	repurchased	$352	million	of	its	6.50%	Notes	due	2012	and,	as	a	result,	incurred	a	pretax	charge	of	$28	million	($18	million	after-tax).

— Schlumberger	recorded	a	pretax	gain	of	$1.27	billion	($1.24	billion	after-tax)	as	a	result	of	remeasuring	its	previously	held	40%	equity	interest	in	the	M-I SWACO	joint	venture.	Refer	to	Note	4	–	Acquisitions	for	further	details.

— Schlumberger	incurred	$35	million	of	pretax	and	after-tax	merger-related	costs	in	connection	with	the	Smith	and	Geoservices	acquisitions.	These	costs primarily	consisted	of	advisory	and	legal	fees.

— 	 During	March	2010,	the	Patient	Protection	and	Affordable	Care	Act	(PPACA)	was	signed	into	law	in	the	United	States.	Among	other	things,	the	PPACA eliminated	the	tax	deductibility	of	retiree	prescription	drug	benefits	to	the	extent	of	the	Medicare	Part	D	subsidy	that	companies,	such	as	Schlumberger, receive.	As	a	result	of	this	change	in	law,	Schlumberger	recorded	a	$40	million	charge	to	adjust	its	deferred	tax	assets	to	reflect	the	loss	of	this	future	tax deduction.

The	following	is	a	summary	of	2010	charges	and	credits:

|  | Pretax | Tax | Net | of	Income	Classification |
| :--- | :--- | :--- | :--- | :--- |
| Restructuring\tand\tMerger-related\tCharges: |  |  |  |  |
| Severance\tand\tother | $90 | $13 | $77 | Restructuring\t&amp;\tother |
| Impairment\trelating\tto\tWesternGeco's\tfirst\tgeneration\tQ-Land\tacquisition\tsystem | 78 | 7 | 71 | Restructuring\t&amp;\tother |
| Other\tWesternGeco-related\tcharges | 63 | – | 63 | Restructuring\t&amp;\tother |
| Professional\tfees\tand\tother | 107 | 1 | 106 | Merger\t&amp;\tintegration |
| Merger-related\temployee\tbenefits | 54 | 10 | 44 | Merger\t&amp;\tintegration |
| Inventory\tfair\tvalue\tadjustments | 153 | 56 | 97 | Cost\tof\trevenue |
| Mexico\trestructuring | 40 | 4 | 36 | Restructuring\t&amp;\tother |
| Repurchase\tof\tbonds | 60 | 23 | 37 | Restructuring\t&amp;\tother |
| Total\trestructuring\tand\tmerger-related\tcharges | 645 | 114 | 531 |  |
| Gain\ton\tinvestment\tin\tM-I\tSWACO | (1,270) | (32) | (1,238) | Gain\ton\tInvestment\tin\tM-I\tSWACO |
| Impact\tof\telimination\tof\ttax\tdeduction\trelated\tto\tMedicare\tPart\tD\tsubsidy | – | (40) | 40 | Taxes\ton\tincome |
|  | $(625) | $42 | $(667) |  |

# Acquisition	of	Smith	International,	Inc.

On	August	27,	2010,	Schlumberger	acquired	all	of	the	outstanding	shares	of	Smith,	a	leading	supplier	of	premium	products	and	services	to	the	oil	and	gas	exploration and	production	industry.	The	transaction	brought	together	the	complementary	drilling	and	measurements	technologies	and	expertise	of	Schlumberger	and	Smith	in	order to	facilitate	the	engineering	of	complete	drilling	systems	which	optimize	all	of	the	components	of	the	drill	string.

Under	the	terms	of	the	transaction,	Smith	became	a	wholly-owned	subsidiary	of	Schlumberger.	Each	share	of	Smith	common	stock	issued	and	outstanding immediately	prior	to	the	effective	time	of	the	acquisition	was	converted	into	the	right	to	receive	0.6966	shares	of	Schlumberger	common	stock,	with	cash	paid	in	lieu	of fractional	shares.

The	following	details	the	fair	value	of	the	consideration	transferred	to	effect	the	acquisition	of	Smith.

# Certain	amounts	reflect	rounding	adjustments

Prior	to	the	completion	of	the	acquisition,	Smith	and	Schlumberger	operated	M-I	SWACO,	a	drilling	fluids	joint	venture	that	was	40%	owned	by	Schlumberger	and 60%	owned	by	Smith.	Effective	at	the	closing	of	the	transaction,	M-I	SWACO	became	100%	owned	by	Schlumberger.	As	a	result	of	obtaining	control	of	this	joint venture,	Schlumberger	was	required	under	generally	accepted	accounting	principles	to	remeasure	its	previously	held	equity	interest	in	the	joint	venture	at	its	acquisition- date	fair	value	and	recognize	the	resulting	pretax	gain	of	$1.3	billion	($1.2	billion	after-tax)	in	earnings.	This	gain	is	classified	as	Gain	on	Investment	in	M-I	SWACO	in the	Consolidated	Statement	of	Income.

Prior	to	acquiring	Smith,	Schlumberger	recorded	income	relating	to	this	joint	venture	using	the	equity	method	of	accounting.	Schlumberger's	equity	income	from this	joint	venture	was	$78	million	in	2010	(representing	the	period	from	January	1,	2010	to	August	27,	2010).	Schlumberger	received	cash	distributions	from	the	joint venture	of	$50	million	in	2010.

# Acquisition	of	Geoservices

On	April	23,	2010,	Schlumberger	completed	the	acquisition	of	Geoservices,	a	privately	owned	oilfield	services	company	specializing	in	mud	logging,	slickline	and production	surveillance	operations,	for	$915	million	in	cash.

Schlumberger	has	made	other	acquisitions	and	investments,	none	of	which	were	significant	on	an	individual	basis,	for	cash	payments,	net	of	cash	acquired,	of	$845 million	during	2012,	$610	million	during	2011,	and	$212	million	during	2010.

On	November	15,	2012,	Cameron	International	Corporation	("Cameron")	and	Schlumberger	announced	that	they	had	entered	into	an	agreement	with	respect	to	the creation	of	OneSubsea,	a	joint	venture	to	manufacture	and	develop	products,	systems	and	services	for	the	subsea	oil	and	gas	market.	Schlumberger	will	own	40%	of OneSubsea.	The	transaction	is	subject	to	regulatory	approvals	and	other	customary	closing	conditions	and	is	expected	to	close	by	the	second	quarter	of	2013.	Under	the terms	of	the	formation	agreement,	Cameron	and	Schlumberger	will	each	contribute	all	of	their	respective	subsea	businesses	to	the	joint	venture	and	Schlumberger	will make	a	$600	million	cash	payment	to	Cameron.	In	accordance	with	generally	accepted	accounting	principles,	upon	the	closing	of	this	transaction,	Schlumberger	will recognize	a	gain	as	a	result	of	the	deconsolidation	of	its	subsea	business.	This	pretax	gain	will	be	equal	to	the	difference	between	the	fair	value	of	the	Schlumberger subsea	businesses	and	their	carrying	value	at	the	time	of	closing	and	is	currently	estimated	to	be	in	excess	of	$1.2	billion.

A	summary	of	inventory	follows:

| As	at	December	31, | 2012 | 2011 |
| :--- | :--- | :--- |
| Raw\tmaterials\t&amp;\tfield\tmaterials | $2,519 | $2,066 |
| Work\tin\tprocess | 349 | 364 |
| Finished\tgoods | \t 1,917 | \t 2,270 |
|  | $4,785 | $4,700 |

A	summary	of	fixed	assets	follows:

| As	at	December	31, | 2012 | 2011 |
| :--- | :--- | :--- |
| Land | $366 | $362 |
| Buildings\t&amp;\timprovements | 3,209 | 2,912 |
| Machinery\t&amp;\tequipment | \t 27,690 | \t 24,404 |
| Seismic\tvessels | 1,903 | 1,873 |
|  | \t 33,168 | \t 29,551 |
| Less\taccumulated\tdepreciation | \t 18,388 | \t 16,558 |
|  | $14,780 | $12,993 |

The	estimated	useful	lives	of	Buildings	&	improvements	are	primarily	30	to	40	years.	The	estimated	useful	lives	of	Machinery	&	equipment	are	primarily	5	to	10 years.	Seismic	vessels	are	depreciated	over	periods	ranging	from	20	to	30	years.

The	change	in	the	carrying	amount	of	multiclient	seismic	data	is	as	follows:

|  | 2012 | 2011 |
| :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $ 425 | $ 394 |
| Capitalized\tin\tyear | 351 | 289 |
| Charged\tto\texpense | (258) | (258) |
|  | $ 518 | $ 425 |

The	changes	in	the	carrying	amount	of	goodwill	by	reporting	unit	were	as	follows:

|  | Characterization | Drilling | Production | Distribution | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t1,\t2011 | $3,381 | $8,150 | $2,351 | $70 | $13,952 |
| Adjustments\trelating\tto\tSmith\tacquisition | – | 175 | 13 | 6 | 194 |
| Other\tacquisitions | 42 | 45 | – | – | 87 |
| Divestiture\tof\tbusiness | (51) | – | – | – | (51) |
| Impact\tof\tchanges\tin\texchange\trates | (12) | (8) | (8) | – | (28) |
| Balance,\tDecember\t31,\t2011 | 3,360 | 8,362 | 2,356 | 76 | \t 14,154 |
| Acquisitions | 391 | 93 | – | – | 484 |
| Reallocation | – | (125) | 125 | – | – |
| Divestiture\tof\tbusiness | – | – | – | (76) | (76) |
| Impact\tof\tchanges\tin\texchange\trates | 9 | 7 | 7 | – | 23 |
| Balance,\tDecember\t31,\t2012 | $3,760 | $8,337 | $2,488 | $– | $14,585 |

# 9.				Intangible	Assets

Intangible	assets	principally	comprise	technology/technical	know-how,	tradenames	and	customer	relationships.	At	December	31,	intangible	assets	were	as	follows:

|  |  | 2012 |  |  | 2011 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Gross\nBook\tValue | Accumulated\nAmortization | \t\t\t\tNet\tBook\nValue | Gross\nBook\tValue | Accumulated\nAmortization | \t\t\t\tNet\nBook\nValue |
| Technology/Technical\tKnow-How | $1,967 | $474 | $1,493 | $1,875 | $341 | $1,534 |
| Tradenames | 1,647 | 188 | 1,459 | 1,677 | 131 | \t 1,546 |
| Customer\tRelationships | 2,115 | 312 | 1,803 | 1,954 | 209 | \t 1,745 |
| Other | 369 | 322 | 47 | 356 | 299 | 57 |
|  | $6,098 | $1,296 | $4,802 | $5,862 | $980 | $4,882 |

The	weighted	average	amortization	period	for	all	intangible	assets	is	approximately	20	years.

# 10.				Long-term	Debt	and	Debt	Facility	Agreements

Long-term	Debt	consists	of	the	following:

| As	at	December	31, | 2012 | 2011 |
| :--- | :--- | :--- |
| 3.30%\tSenior\tNotes\tdue\t2021 | $1,595 | $1,595 |
| 4.50%\tGuaranteed\tNotes\tdue\t2014\t^(1) | \t 1,324 | \t 1,297 |
| 2.75%\tGuaranteed\tNotes\tdue\t2015^\t(1) | \t 1,318 | \t 1,290 |
| 1.95%\tSenior\tNotes\tdue\t2016 | \t 1,099 | \t 1,099 |
| 4.20%\tSenior\tNotes\tdue\t2021 | \t 1,099 | \t 1,099 |
| 1.25%\tSenior\tNotes\tdue\t2017 | 999 | – |
| 2.40%\tSenior\tNotes\tdue\t2022 | 998 | – |
| 5.25%\tGuaranteed\tNotes\tdue\t2013^\t(2) | – | 649 |
| 2.65%\tSenior\tNotes\tdue\t2016\t^(3) | 500 | 498 |
| 3.00%\tGuaranteed\tNotes\tdue\t2013 | – | 450 |
| Floating\tRate\tSenior\tNotes\tdue\t2014^\t(4) | 300 | 300 |
| Other\tvariable\trate\tdebt | 277 | 271 |
|  | \t 9,509 | \t 8,548 |
| Fair\tvalue\tadjustment\t–\thedging^\t(5) | – | 8 |
|  | $9,509 | $8,556 |

Schlumberger	maintains	a	€3.0	billion	Euro	Medium	Term	Note	program	that	provides	for	the	issuance	of	various	types	of	debt	instruments	such	as	fixed	or	floating rate	notes	in	euro,	US	dollar	or	other	currencies.	Schlumberger	issued	€1.0	billion	2.75%	Guaranteed	Notes	due	2015	in	the	fourth	quarter	of	2010	under	this program.	Schlumberger	entered	into	agreements	to	swap	these	euro	notes	for	US	dollars	on	the	date	of	issue	until	maturity,	effectively	making	this	a	US	dollar denominated	debt	on	which	Schlumberger	will	pay	interest	in	US	dollars	at	a	rate	of	2.56%.	Schlumberger	also	issued	€1.0	billion	4.50%	Guaranteed	Notes	due	2014 in	the	first	quarter	of	2009	under	this	program.	Schlumberger	entered	into	agreements	to	swap	these	euro	notes	for	US	dollars	on	the	date	of	issue	until	maturity, effectively	making	this	a	US	dollar	denominated	debt	on	which	Schlumberger	will	pay	interest	in	US	dollars	at	a	rate	of	4.95%. (1)

	 Schlumberger	entered	into	agreements	to	swap	these	euro	notes	for	US	dollars	on	the	date	of	issue	until	maturity,	effectively	making	this	a	US	dollar-denominated debt	on	which	Schlumberger	pays	interest	in	US	dollars	at	a	rate	of	4.74%. (2)

	 Schlumberger	entered	into	agreements	to	swap	these	dollar	notes	for	euros	on	the	date	of	issue	until	maturity,	effectively	making	this	a	euro-denominated	debt	on which	Schlumberger	pays	interest	in	euros	at	a	rate	of	2.39%. (3)

	 These	notes	bear	interest	at	a	rate	equal	to	three-month	LIBOR	plus	55	basis	points	per	year. (4)

	 Represents	changes	in	the	fair	value	of	the	portion	of	Schlumberger's	fixed	rate	debt	that	is	hedged	through	the	use	of	interest	rate	swaps. (5)

Schlumberger	Limited	fully	and	unconditionally	guarantees	the	securities	issued	by	certain	of	its	subsidiaries,	including	the	securities	by	Schlumberger	Investment SA,	a	100%	–	owned	finance	subsidiary	of	Schlumberger.

At	December	31,	2012,	Schlumberger	had	separate	committed	debt	facility	agreements	aggregating	$4.1	billion	with	commercial	banks,	of	which	$3.8	billion	was available	and	unused.	This	included	$3.5	billion	of	committed	facilities	which	support	commercial	paper	programs	in	the	United	States	and	Europe,	of	which	$0.5	billion mature	in	December	2013	and	$3.0	billion	mature	in	July	2016.	Interest	rates	and	other	terms	of	borrowing	under	these	lines	of	credit	vary	from	country	to	country. There	were	no	borrowings	under	the	commercial	paper	programs	at	December	31,	2012.	At	December	31,	2011,	Schlumberger	had	$0.9	billion	of	outstanding commercial	paper	borrowings,	which	were	classified	within	Long-term	debt	–	current	portion	in	the	Consolidated	Balance	Sheet.

Commercial	paper	borrowings	outstanding	at	December	31,	2011	included	certain	notes	issued	in	currencies	other	than	the	US	dollar	which	were	swapped	for	US dollars	and	pounds	sterling	on	the	date	of	issue	until	maturity.	Commercial	paper	borrowings	are	classified	as	long-term	debt	to	the	extent	of	their	backup	by	available and	unused	committed	credit	facilities	maturing	in	more	than	one	year	and	to	the	extent	it	is	Schlumberger's	intent	to	maintain	these	obligations	for	longer	than	one	year.

The	weighted	average	interest	rate	on	variable	rate	debt	as	of	December	31,	2012	was	3.6%.

The	fair	value	of	Schlumberger's	Long-term	Debt	at	December	31,	2012	and	December	31,	2011	was	$9.9	billion	and	$8.9	billion,	respectively,	and	was	estimated based	on	quoted	market	prices.

# 11.				Derivative	Instruments	and	Hedging	Activities

Schlumberger	is	exposed	to	market	risks	related	to	fluctuations	in	foreign	currency	exchange	rates,	commodity	prices	and	interest	rates.	To	mitigate	these	risks, Schlumberger	utilizes	derivative	instruments.	Schlumberger	does	not	enter	into	derivatives	for	speculative	purposes.

# Foreign	Currency	Exchange	Rate	Risk

As	a	multinational	company,	Schlumberger	conducts	its	business	in	approximately	85	countries.	Schlumberger's	functional	currency	is	primarily	the	US	dollar, which	is	consistent	with	the	oil	and	gas	industry.	Approximately	75%	of	Schlumberger's	revenue	in	2012	was	denominated	in	US	dollars.	However,	outside	the	United States,	a	significant	portion	of	Schlumberger's	expenses	is	incurred	in	foreign	currencies.	Therefore,	when	the	US	dollar	weakens	(strengthens)	in	relation	to	the	foreign currencies	of	the	countries	in	which	Schlumberger	conducts	business,	the	US	dollar	–	reported	expenses	will	increase	(decrease).

Schlumberger	is	exposed	to	risks	on	future	cash	flows	to	the	extent	that	local	currency	expenses	exceed	revenues	denominated	in	local	currency	that	are	other	than the	functional	currency.	Schlumberger	uses	foreign	currency	forward	contracts	and	foreign	currency	options	to	provide	a	hedge	against	a	portion	of	these	cash	flow risks.	These	contracts	are	accounted	for	as	cash	flow	hedges,	with	the	effective	portion	of	changes	in	the	fair	value	of	the	hedge	recorded	on	the	Consolidated	Balance Sheet	and	in	Accumulated	other	comprehensive	loss.	Amounts	recorded	in	Accumulated	other	comprehensive	loss	are	reclassified	into	earnings	in	the	same	period	or periods	that	the	hedged	item	is	recognized	in	earnings.	The	ineffective	portion	of	changes	in	the	fair	value	of	hedging	instruments,	if	any,	is	recorded	directly	to	earnings. At	December	31,	2012,	Schlumberger	recognized	a	cumulative	net	$30	million	gain	in	Accumulated	other	comprehensive	loss	relating	to	revaluation	of	foreign currency	forward	contracts	and	foreign	currency	options	designated	as	cash	flow	hedges,	the	majority	of	which	is	expected	to	be	reclassified	into	earnings	within	the	next twelve	months.

Schlumberger	is	also	exposed	to	changes	in	the	fair	value	of	assets	and	liabilities,	including	certain	of	its	long-term	debt,	which	are	denominated	in	currencies	other than	the	functional	currency.	Schlumberger	uses	foreign	currency	forward	contracts	and	foreign	currency	options	to	hedge	this	exposure	for	certain	currencies.	The	fair value	of	these	contracts	are	recorded	on	the	Consolidated	Balance	Sheet	and	changes	in	the	fair	value	recognized	in	the	Consolidated	Statement	of	Income	along	with	the change	in	fair	value	of	the	hedged	item.

At	December	31,	2012,	contracts	were	outstanding	for	the	US	dollar	equivalent	of	$7.5	billion	in	various	foreign	currencies,	of	which	$3.9	billion	relate	to	hedges	of debt	denominated	in	currencies	other	than	the	functional	currency.

# Commodity	Price	Risk

Schlumberger	is	exposed	to	the	impact	of	market	fluctuations	in	the	price	of	certain	commodities,	such	as	metals	and	fuel.	Schlumberger	utilizes	forward	contracts	to manage	a	small	percentage	of	the	price	risk	associated	with	forecasted	metal	purchases.	The	objective	of	these	contracts	is	to	reduce	the	variability	of	cash	flows associated	with	the	forecasted	purchase	of	those	commodities.	These	contracts	do	not	qualify	for	hedge	accounting	treatment	and	therefore,	changes	in	the	fair	value	of the	forward	contracts	are	recorded	directly	to	earnings.

The	notional	amount	of	outstanding	commodity	forward	contracts	was	$43	million	at	December	31,	2012.

# Interest	Rate	Risk

Schlumberger	is	subject	to	interest	rate	risk	on	its	debt	and	its	investment	portfolio.	Schlumberger	maintains	an	interest	rate	risk	management	strategy	that	uses	a	mix of	variable	and	fixed	rate	debt	combined	with	its	investment	portfolio	and,	from	time	to	time,	interest	rate	swaps	to	mitigate	the	exposure	to	changes	in	interest	rates. During	2009,	Schlumberger	entered	into	an	interest	rate	swap	for	a	notional	amount	of	$450	million	in	order	to	hedge	changes	in	the	fair	value	of	Schlumberger's $450	million	3.00%	Notes	due	2013.	Under	the	terms	of	this	swap,	Schlumberger	receives	interest	at	a	fixed	rate	of	3.0%	annually	and	will	pay	interest	quarterly	at	a floating	rate	of	three-month	LIBOR	plus	a	spread	of	0.765%.	This	interest	rate	swap	is	designated	as	a	fair	value	hedge	of	the	underlying	debt.	This	derivative	instrument is	marked	to	market	with	gains	and	losses	recognized	currently	in	income	to	offset	the	respective	losses	and	gains	recognized	on	changes	in	the	fair	value	of	the	hedged debt.	This	results	in	no	net	gain	or	loss	being	recognized	in	the	Consolidated	Statement	of	Income.

At	December	31,	2012,	Schlumberger	had	fixed	rate	debt	aggregating	approximately	$9.6	billion	and	variable	rate	debt	aggregating	approximately	$2.0	billion,	after taking	into	account	the	effect	of	the	interest	rate	swap.

The	fair	values	of	outstanding	derivative	instruments	are	summarized	as	follows:

|  | Fair	Value	of<br>												Derivatives | Fair	Value	of<br>												Derivatives |  |
| :--- | :--- | :--- | :--- |
|  | Dec.\t31, | Dec.\t31, |  |
| Derivative\tassets | 2012 | 2011 | Consolidated\tBalance\tSheet\tClassification |
| Derivative\tdesignated\tas\thedges: |  |  |  |
| Foreign\texchange\tcontracts | $26 | $2 | Other\tcurrent\tassets |
| Foreign\texchange\tcontracts | 22 | 4 | Other\tAssets |
| Interest\trate\tswaps | – | 9 | Other\tAssets |
| Interest\trate\tswaps | 2 | – | Other\tcurrent\tassets |
|  | 50 | 15 |  |
| Derivative\tnot\tdesignated\tas\thedges: |  |  |  |
| Foreign\texchange\tcontracts | 10 | 8 | Other\tcurrent\tassets |
| Foreign\texchange\tcontracts | 6 | 9 | Other\tAssets |
|  | 16 | 17 |  |
|  | $66 | $32 |  |
| Derivative\tLiabilities |  |  |  |
| Derivative\tdesignated\tas\thedges: |  |  |  |
| Foreign\texchange\tcontracts | $80 | $47 | Accounts\tpayable\tand\taccrued\tliabilities |
| Foreign\texchange\tcontracts | 19 | 130 | Other\tLiabilities |
|  | 99 | 177 |  |
| Derivative\tnot\tdesignated\tas\thedges: |  |  |  |
| Commodity\tcontracts | – | 3 | Accounts\tpayable\tand\taccrued\tliabilities |
| Foreign\texchange\tcontracts | 3 | 9 | Accounts\tpayable\tand\taccrued\tliabilities |
|  | 3 | 12 |  |
|  | $102 | $189 |  |

The	fair	value	of	all	outstanding	derivatives	is	determined	using	a	model	with	inputs	that	are	observable	in	the	market	or	can	be	derived	from	or	corroborated	by observable	data.

The	effect	of	derivative	instruments	designated	as	fair	value	hedges	and	not	designated	as	hedges	on	the	Consolidated	Statement	of	Income	was	as	follows:

|  | 2012 | 2011 | 2010 | Consolidated	Statement	of	Income	Classifiaction |
| :--- | :--- | :--- | :--- | :--- |
| Derivatives\tdesignated\tas\tfair\tvalue\thedges: |  |  |  |  |
| Foreign\texchange\tcontracts | $– | $– | $(8) | Cost\tof\trevenue |
| Interest\trate\tswaps | 1 | 9 | 22 | Interest\texpense |
|  | $1 | $9 | $14 |  |
| Derivatives\tnot\tdesignated\tas\thedges: |  |  |  |  |
| Foreign\texchange\tcontracts | $5 | $(17) | $(13) | Cost\tof\trevenue |
| Commodity\tcontracts | 1 | (5) | 1 | Cost\tof\trevenue |
|  | $6 | $(22) | $(12) |  |

The	effect	of	derivative	instruments	in	cash	flow	hedging	relationships	on	income	and	Accumulated	other	comprehensive	loss	(AOCL)	was	as	follows:

# Gain	(Loss)	Reclassified	from

|  | 2012 | 2011 | 2010 | Consolidated	Statement	of	Income	Classification |
| :--- | :--- | :--- | :--- | :--- |
| Foreign\texchange\tcontracts | $49 | $(25) | $(260) | Cost\tof\trevenue |
| Foreign\texchange\tcontracts | (13) | 17 | (14) | Research\t&amp;\tengineering |
|  | $36 | $(8) | $(274) |  |

|  |  |  | (Stated	in	millions) |
| :--- | :--- | :--- | :--- |
|  |  | Gain\t(Loss)\tRecognized\tin\tAOCL |  |
|  | 2012 | 2011 | 2010 |
| Foreign\texchange\tcontracts | $92 | $(79) | $(269) |

# 12.				Stockholders'	Equity

Schlumberger	is	authorized	to	issue	4,500,000,000	shares	of	common	stock,	par	value	$0.01	per	share,	of	which	1,328,255,773	and	1,333,775,406	shares	were outstanding	on	December	31,	2012	and	2011,	respectively.	Holders	of	common	stock	are	entitled	to	one	vote	for	each	share	of	stock	held.	Schlumberger	is	also authorized	to	issue	200,000,000	shares	of	preferred	stock,	par	value	$0.01	per	share,	which	may	be	issued	in	series	with	terms	and	conditions	determined	by	the	Board	of Directors.	No	shares	of	preferred	stock	have	been	issued.

Accumulated	Other	Comprehensive	Loss	consists	of	the	following:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Currency\ttranslation\tadjustments | $(918) | $(993) | $(912) |
| Fair\tvalue\tof\tderivatives | 30 | (26) | 45 |
| Pension\tand\tother\tpostretirement\tbenefit\tplans | (3,141) | (2,538) | (1,901) |
| Unrealized\tgains\ton\tmarketable\tsecurities | 141 | – | – |
|  | $(3,888) | $(3,557) | $(2,768) |

# 13.				Stock-based	Compensation	Plans

Schlumberger	has	three	types	of	stock-based	compensation	programs:	stock	options,	a	restricted	stock	and	restricted	stock	unit	program	(collectively	referred	to	as "restricted	stock")	and	a	discounted	stock	purchase	plan	("DSPP").

# Stock	Options

Key	employees	are	granted	stock	options	under	Schlumberger	stock	option	plans.	For	all	of	the	stock	options	granted,	the	exercise	price	equals	the	average	of	the high	and	low	sales	prices	of	Schlumberger	stock	on	the	date	of	grant;	an	option's	maximum	term	is	ten	years,	and	options	generally	vest	in	increments	over	four	or	five years.

The	fair	value	of	each	stock	option	grant	was	estimated	on	the	date	of	grant	using	the	Black-Scholes	option-pricing	model	with	the	following	weighted-average assumptions	and	resulting	weighted-average	fair	value	per	share:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Dividend\tyield | 1.5% | 1.2% | 1.3% |
| Expected\tvolatility | 39% | 37% | 35% |
| Risk\tfree\tinterest\trate | 1.5% | 2.8% | 2.9% |
| Expected\toption\tlife\tin\tyears | 6.9 | 6.9 | 6.9 |
| Weighted-average\tfair\tvalue\tper\tshare | $25.26 | $31.38 | $24.13 |

The	following	table	summarizes	information	concerning	options	outstanding	and	options	exercisable	by	five	ranges	of	exercise	prices	as	of	December	31,	2012:

| Exercise	prices	range | Options<br>Outstanding | average<br>remaining<br>contractual	life<br>(in	years) | Weighted-<br>average<br>exercise<br>price | Options<br>Exercisable | Weighted-<br>average<br>exercise	price |
| :--- | :--- | :--- | :--- | :--- | :--- |
| $20.65\t-\t$32.46 | 631 | 1.31 | $28.19 | 631 | $28.19 |
| $32.62\t-\t$37.85 | 4,988 | 5.68 | $37.45 | 2,670 | $37.11 |
| $39.08\t-\t$55.69 | 4,779 | 4.09 | $52.55 | 4,003 | $53.24 |
| $56.61\t-\t$74.57 | 18,519 | 7.49 | $68.22 | 5,645 | $63.42 |
| $83.89\t-\t$110.78 | 13,142 | 7.02 | $86.10 | 5,913 | $87.58 |
|  | 42,059 | 6.65 | $67.77 | 18,862 | $63.93 |

The	weighted	average	remaining	contractual	life	of	stock	options	exercisable	as	of	December	31,	2012	was	5.1	years.

The	following	table	summarizes	stock	option	activity	during	the	years	ended	December	31,	2012,	2011	and	2010:

|  |  | Weighted- |  | Weighted- |  | Weighted- |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | average |  | average |  | average |
|  |  | exercise |  | exercise |  | exercise |
|  | Shares | price | Shares | price | Shares | price |
| Outstanding\tat\tbeginning\tof\tyear | \t40,027 | \t\t\t\t$63.84 | \t37,499 | $55.33 | \t35,500 | \t\t\t\t$50.30 |
| Granted | 8,664 | \t\t\t\t$72.04 | 9,528 | $84.29 | 8,283 | \t\t\t\t$66.67 |
| Assumed\tin\tSmith\ttransaction | – | \t\t\t\t$– | – | $– | 581 | \t\t\t\t$28.77 |
| Exercised | (4,171) | \t\t\t\t$39.07 | (5,470) | $42.36 | (5,962) | \t\t\t\t$37.60 |
| Forfeited | (2,461) | \t\t\t\t$67.50 | (1,530) | $58.82 | (903) | \t\t\t\t$61.28 |
| Outstanding\tat\tyear-end | \t42,059 | \t\t\t\t$67.77 | \t40,027 | $63.84 | \t37,499 | \t\t\t\t$55.33 |

The	aggregate	intrinsic	value	of	stock	options	outstanding	as	of	December	31,	2012	was	approximately	$308	million.

The	aggregate	intrinsic	value	of	stock	options	exercisable	as	of	December	31,	2012	was	approximately	$209	million.

The	total	intrinsic	value	of	options	exercised	during	the	years	ended	December	31,	2012,	2011	and	2010,	was	$142	million,	$246	million	and	$188	million, respectively.

# Restricted	Stock

Restricted	stock	awards	generally	vest	at	the	end	of	three	years.	As	of	December	31,	2012,	there	have	not	been	any	grants	to	date	that	are	subject	to	performance- based	vesting.

The	following	table	summarizes	information	about	restricted	stock	transactions:

|  |  | Weighted |  | Weighted |  | Grant |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Average |  | Average |  | Date |
|  | Restricted | Grant\tDate | Restricted | Grant\tDate | Restricted | Fair |
|  | Stock | Fair\tValue | Stock | Fair\tValue | Stock | Value |
| Unvested\tat\tbeginning\tof\tyear | 2,433 | \t\t\t\t$72.25 | 2,223 | \t\t\t\t$64.27 | 1,343 | \t\t\t\t$ 62.75 |
| Granted | 1,668 | 71.09 | 1,136 | 84.61 | 1,261 | 65.79 |
| Vested | (351) | 52.26 | (767) | 67.36 | (286) | 63.92 |
| Forfeited | (184) | 73.38 | (159) | 72.51 | (95) | 64.16 |
| Unvested\tat\tend\tof\tyear | \t\t\t\t3,566 | \t\t\t\t$73.62 | \t\t\t\t2,433 | \t\t\t\t$72.25 | \t\t\t\t2,223 | \t\t\t\t$ 64.27 |

# Discounted	Stock	Purchase	Plan

Under	the	terms	of	the	DSPP,	employees	can	choose	to	have	a	portion	of	their	earnings	withheld,	subject	to	certain	restrictions,	to	purchase	Schlumberger	common stock.	The	purchase	price	of	the	stock	is	92.5%	of	the	lower	of	the	stock	price	at	the	beginning	or	end	of	the	plan	period	at	six-month	intervals.

The	fair	value	of	the	employees'	purchase	rights	under	the	DSPP	was	estimated	using	the	Black-Scholes	model	with	the	following	assumptions	and	resulting weighted	average	fair	value	per	share:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Dividend\tyield | 1.6% | 1.2% | 1.6% |
| Expected\tvolatility | 41% | 28% | 36% |
| Risk\tfree\tinterest\trate | 0.2% | 0.2% | 0.3% |
| Weighted\taverage\tfair\tvalue\tper\tshare | $12.71 | $12.83 | $10.30 |

# Total	Stock-based	Compensation	Expense

The	following	summarizes	stock-based	compensation	expense	recognized	in	income:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Stock\toptions | $203 | $176 | $121 |
| Restricted\tstock | 82 | 60 | 44 |
| DSPP | 50 | 36 | 33 |
|  | $335 | $272 | $198 |

At	December	31,	2012,	there	was	$565	million	of	total	unrecognized	compensation	cost	related	to	nonvested	stock-based	compensation	arrangements	of	which	$234 million	is	expected	to	be	recognized	in	2013,	$180	million	in	2014,	$108	million	in	2015,	$42	million	in	2016	and	$1	million	in	2017.

Schlumberger	operates	in	more	than	100	tax	jurisdictions,	where	statutory	tax	rates	generally	vary	from	0%	to	40%.

Income	from	continuing	operations	before	taxes	which	were	subject	to	United	States	and	non-United	States	income	taxes	for	each	of	the	three	years	ended December	31,	was	as	follows:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| United\tStates | $1,980 | $2,246 | $617 |
| Outside\tUnited\tStates | \t 5,211 | \t 3,993 | \t 4,515 |
|  | $7,191 | $6,239 | $5,132 |

Schlumberger	recorded	$161	million	of	pretax	charges	in	2012	($52	million	in	the	US	and	$109	million	outside	the	US).	Schlumberger	recorded	$223	million	of	net pretax	charges	in	2011	($104	million	in	the	US	and	$119	million

outside	the	US)	and	$625	million	of	pretax	credits	in	2010	($222	million	of	net	charges	in	the	US	and	$847	million	of	net	credits	outside	the	US).	These	charges	and credits	are	included	in	the	table	above	and	are	more	fully	described	in	Note	3	–	Charges	and	Credits.

The	components	of	net	deferred	tax	assets	(liabilities)	were	as	follows:

|  | 2012 | 2011 |
| :--- | :--- | :--- |
| Postretirement\tbenefits | $543 | $440 |
| Intangible\tassets | (1,490) | (1,498) |
| Investments\tin\tnon-US\tsubsidiaries | (317) | (349) |
| Other,\tnet | 114 | 132 |
|  | $ (1,150) | $(1,275) |

The	above	deferred	tax	balances	at	December	31,	2012	and	2011	were	net	of	valuation	allowances	relating	to	net	operating	losses	in	certain	countries	of	$256	million and	$239	million,	respectively.

The	components	of	Taxes	on	income	were	as	follows:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Current: |  |  |  |
| United\tStates\t–\tFederal | $698 | $809 | $89 |
| United\tStates\t–\tState | 53 | 42 | 14 |
| Outside\tUnited\tStates | \t 1,048 | 684 | 906 |
|  | $1,799 | $1,535 | $1,009 |
| Deferred: |  |  |  |
| United\tStates\t–\tFederal | $(105) | $(73) | $161 |
| United\tStates\t–\tState | (7) | (7) | 2 |
| Outside\tUnited\tStates | 22 | 75 | (280) |
| Valuation\tallowance | 14 | (21) | (13) |
|  | $(76) | $(26) | $(130) |
| Consolidated\ttaxes\ton\tincome | $1,723 | $1,509 | $879 |

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| US\tstatutory\tfederal\trate | 35% | 35% | 35% |
| Non-US\tincome\ttaxed\tat\tdifferent\trates | (10) | (10) | (14) |
| Charges\tand\tcredit\t(See\tNote\t3) | – | – | (3) |
| Other | (1) | (1) | (1) |
| Effective\tincome\ttax\trate | \t\t\t\t\t24% | \t\t\t\t\t24% | \t\t\t\t\t17% |

Schlumberger	conducts	business	in	more	than	100	tax	jurisdictions,	a	number	of	which	have	tax	laws	that	are	not	fully	defined	and	are	evolving.	Schlumberger's	tax filings	are	subject	to	regular	audit	by	the	tax	authorities.	Tax	liabilities	are	recorded	based	on	estimates	of	additional	taxes	which	will	be	due	upon	the	conclusion	of	these audits.

A	reconciliation	of	the	beginning	and	ending	amount	of	liabilities	associated	with	uncertain	tax	positions	for	the	years	ended	December	31,	2012,	2011	and	2010	is	as follows:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tyear | $1,353 | $1,338 | $1,026 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 156 | 153 | 190 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 98 | 49 | 8 |
| Additions\trelated\tto\tacquisitions | – | 48 | 288 |
| Impact\tof\tchanges\tin\texchange\trates | 12 | (18) | (3) |
| Settlements\twith\ttax\tauthorities | (17) | (77) | (36) |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (103) | (102) | (99) |
| Reductions\tdue\tto\tthe\tlapse\tof\tthe\tapplicable\tstatute\tof\tlimitations | (46) | (38) | (36) |
| Balance\tat\tend\tof\tyear | $1,453 | $1,353 | $1,338 |

The	amounts	above	exclude	accrued	interest	and	penalties	of	$250	million,	$225	million	and	$210	million	at	December	31,	2012,	2011	and	2010	respectively.

Schlumberger	classifies	interest	and	penalties	relating	to	uncertain	tax	positions	within	Taxes	on	income	in	the	Consolidated	Statement	of	Income.	During	2012,	2011	and 2010,	Schlumberger	recognized	approximately	$25	million,	$15	million	and	$42	million	in	interest	and	penalties,	respectively.

The	following	table	summarizes	the	tax	years	that	are	either	currently	under	audit	or	remain	open	and	subject	to	examination	by	the	tax	authorities	in	the	most significant	jurisdictions	in	which	Schlumberger	operates:

| Brazil | 2006	–	2012 |
| :--- | :--- |
| Canada | 2005\t–\t2012 |
| Mexico | 2007\t–\t2012 |
| Norway | 2003\t–\t2012 |
| Russia | 2009\t–\t2012 |
| Saudi\tArabia | 2001\t–\t2012 |
| United\tKingdom | 2009\t–\t2012 |
| United\tStates | 2008\t–\t2012 |

In	certain	of	the	jurisdictions	noted	above,	Schlumberger	operates	through	more	than	one	legal	entity,	each	of	which	has	different	open	years	subject	to	examination. The	table	above	presents	the	open	years	subject	to	examination	for	the	most	material	of	the	legal	entities	in	each	jurisdiction.	Additionally,	it	is	important	to	note	that	tax years	are	technically	not	closed	until	the	statute	of	limitations	in	each	jurisdiction	expires.	In	the	jurisdictions	noted	above,	the	statute	of	limitations	can	extend	beyond the	open	years	subject	to	examination.

# 15.				Leases	and	Lease	Commitments

Total	rental	expense	was	$1.9	billion	in	2012,	$1.6	billion	in	2011,	and	$1.2	billion	in	2010.	Future	minimum	rental	commitments	under	noncancelable	operating leases	for	each	of	the	next	five	years	are	as	follows:

| 2013 | $371 |
| :--- | :--- |
| 2014 | 250 |
| 2015 | 192 |
| 2016 | 154 |
| 2017 | 129 |
| Thereafter | 519 |

# 16.				Contingencies

In	2007,	Schlumberger	received	an	inquiry	from	the	United	States	Department	of	Justice	("DOJ")	related	to	the	DOJ's	investigation	of	whether	certain	freight forwarding	and	customs	clearance	services	of	Panalpina,	Inc.,	and	other	companies	provided	to	oil	and	oilfield	service	companies,	including	Schlumberger,	violated	the Foreign	Corrupt	Practices	Act.	In	October	2012,	Schlumberger	was	advised	by	the	DOJ	that	it	has	closed	its	inquiry	as	it	relates	to	Schlumberger.

In	2009,	Schlumberger	learned	that	United	States	officials	began	a	grand	jury	investigation	and	an	associated	regulatory	inquiry,	both	related	to	certain	Schlumberger operations	in	specified	countries	that	are	subject	to	United	States	trade	and	economic	sanctions.	Also	in	2009,	prior	to	being	acquired	by	Schlumberger,	Smith	received an	administrative	subpoena	with	respect	to	its	historical	business	practices	in	certain	countries	that	are	subject	to	United	States	trade	and	economic	sanctions.

Schlumberger	is	cooperating	with	the	governmental	authorities.

On	April	20,	2010,	a	fire	and	explosion	occurred	onboard	the	semisubmersible	drilling	rig	Deepwater	Horizon,	owned	by	Transocean	Ltd.	and	under	contract	to	a subsidiary	of	BP	plc.	Pursuant	to	a	contract	between	M-I	SWACO	and	BP,	M-I	SWACO	provided	certain	services	under	the	direction	of	BP.	A	number	of	legal	actions, certain	of	which	name	an	M-I	SWACO	entity	as	a	defendant,	have	been	filed	in	connection	with	the	Deepwater	Horizon	incident,	and	additional	legal	actions	may	be filed	in	the	future.	Based	on	information	currently	known,	the	amount	of	any	potential	loss	attributable	to	M-I	SWACO	with	respect	to	potential	liabilities	related	to	the incident	would	not	be	material	to	Schlumberger's	consolidated	financial	statements.

Schlumberger	and	its	subsidiaries	are	party	to	various	other	legal	proceedings	from	time	to	time.	A	liability	is	accrued	when	a	loss	is	both	probable	and	can	be reasonably	estimated.	Management	believes	that	the	probability	of	a	material	loss	is	remote.	However,	litigation	is	inherently	uncertain	and	it	is	not	possible	to	predict the	ultimate	disposition	of	these	proceedings.

# 17.				Segment	Information

Schlumberger's	segments	are	as	follows:

— 	 Reservoir	Characterization	Group	–	Consists	of	the	principal	technologies	involved	in	finding	and	defining	hydrocarbon	deposits.	These	include WesternGeco,	Wireline,	Testing	Services,	Schlumberger	Information	Services	and	PetroTechnical	Services.

— 	 Drilling	Group	–	Consists	of	the	principal	technologies	involved	in	the	drilling	and	positioning	of	oil	and	gas	wells	and	is	comprised	of	Bits	&	Advanced Technologies,	M-I	SWACO,	Geoservices,	Drilling	&	Measurements,	Pathfinder,	Drilling	Tools	&	Remedial	Services,	Dynamic	Pressure	Management	and Integrated	Project	Management	well	construction	projects.

— Production	Group	–	Consists	of	the	principal	technologies	involved	in	the	lifetime	production	of	oil	and	gas	reservoirs	and	includes	Well	Services, Completions,	Artificial	Lift,	Well	Intervention,	Subsea,	Water	Services,	Carbon	Services	and	the	Schlumberger	Production	Management	field	production projects.

The	Groups	are	collectively	referred	to	as	"Oilfield	Services".

Financial	information	for	the	years	ended	December	31,	2012,	2011	and	2010,	by	segment,	is	as	follows:

|  |  |  |  | Revenue | Income<br>before<br>taxes | Assets | Depn.	&amp;<br>Amortn. | Capital<br>Expenditures |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| OILFIELD\tSERVICES |  |  |  |  |  |  |  |  |
| Reservoir\tCharacterization | Reservoir\tCharacterization | Reservoir\tCharacterization | Reservoir\tCharacterization | $11,424 | $3,212 | $8,699 | $1,311 | $1,236 |
| Drilling | \t(1) |  |  | 15,971 | 2,824 | \t 11,027 | 1,086 | 1,668 |
| Production | Production | \t(1) |  | 14,875 | 2,371 | 9,643 | 724 | 1,439 |
| Eliminations\t&amp;\tother | Eliminations\t&amp;\tother | Eliminations\t&amp;\tother | (2) | (121) | (60) | 2,065 | 181 | 352 |
|  |  |  |  | 42,149 | 8,347 | \t 31,434 | 3,302 | 4,695 |
| Goodwill\tand\tintangible\tassets | Goodwill\tand\tintangible\tassets | Goodwill\tand\tintangible\tassets | (3) |  |  | \t 19,387 |  |  |
| All\tother\tassets |  |  |  |  |  | 2,705 |  |  |
| \t(4)\nCorporate |  |  |  |  | (694) | 8,021 | 198 |  |
| Interest\tincome | \t(5) |  |  |  | 30 |  |  |  |
| Interest\texpense | \t(6) |  |  |  | (331) |  |  |  |
| Charges\t&amp;\tcredits | Charges\t&amp;\tcredits | (7) |  |  | (161) |  |  |  |
|  |  |  |  | $42,149 | $7,191 | $61,547 | $3,500 | $4,695 |

|  | Revenue | Income<br>before<br>taxes | Assets | Depn.	&amp;<br>Amortn. | Capital<br>Expenditures |
| :--- | :--- | :--- | :--- | :--- | :--- |
| OILFIELD\tSERVICES |  |  |  |  |  |
| Reservoir\tCharacterization | $9,929 | $2,449 | $7,621 | $1,285 | $1,057 |
| Drilling\t^(1) | 13,860 | 2,254 | 9,093 | 982 | 1,420 |
| Production\t^(1) | 13,136 | 2,637 | 8,007 | 643 | 1,383 |
| Eliminations\t&amp;\tother\t^(2) | 34 | (35) | 1,958 | 162 | 148 |
|  | 36,959 | 7,305 | \t 26,679 | 3,072 | 4,008 |
| Goodwill\tand\tintangible\tassets\t^(3) |  |  | \t 18,932 |  |  |
| Discontinued\toperations\tassets |  |  | 1,055 |  |  |
| All\tother\tassets |  |  | 2,202 |  |  |
| Corporates\t^(4) |  | (590) | 6,333 | 202 |  |
| Interest\tincome\t^(5) |  | 37 |  |  |  |
| Interest\texpense\t^(6) |  | (290) |  |  |  |
| Charges\t&amp;\tcredits^\t(7) |  | (223) |  |  |  |
|  | $36,959 | $6,239 | $55,201 | $3,274 | $4,008 |

|  | Revenue | Income<br>before<br>taxes | Assets | Depn.	&amp;<br>Amortn. | Capital<br>Expenditures |
| :--- | :--- | :--- | :--- | :--- | :--- |
| OILFIELD\tSERVICES |  |  |  |  |  |
| Reservoir\tCharacterization | $9,321 | $2,321 | $7,338 | $1,246 | $885 |
| Drilling\t^(1) | 7,917 | 1,313 | 8,355 | 721 | 942 |
| Production^\t(1) | 9,366 | 1,389 | 6,254 | 571 | 850 |
| Eliminations\t&amp;\tother\t^(2) | 68 | 48 | 1,801 | 142 | 234 |
|  | 26,672 | 5,071 | \t 23,748 | 2,680 | 2,911 |
| Goodwill\tand\tintangible\tassets^\t(3) |  |  | \t 19,014 |  |  |
| Discontinued\toperations\tassets |  |  | 862 |  |  |
| All\tother\tassets |  |  | 1,599 |  |  |
| Corporate^\t(4) |  | (405) | 6,544 | 77 | 1 |
| Interest\tincome^\t(5) |  | 43 |  |  |  |
| Interest\texpense^\t(6) |  | (202) |  |  |  |
| Charges\t&amp;\tcredits\t^(7) |  | 625 |  |  |  |
|  | $26,672 | $5,132 | $51,767 | $2,757 | $2,912 |

(2) Includes	certain	headquarter	administrative	costs	which	are	not	allocated	to	the	segments,	and	certain	other	operations	and	other	cost	and	income	items maintained	at	the	Oilfield	Services	level.

(3) Excludes	goodwill	and	intangible	assets	relating	to	discontinued	operations.

(4) Comprised	principally	of	corporate	expenses	not	allocated	to	the	segments,	interest	on	postretirement	medical	benefits,	stock-based	compensation	costs,

amortization	expense	associated	with	intangible	assets	recorded	as	a	result	of	the	acquisition	of	Smith	and	certain	other	nonoperating	items.	Corporate	assets consist	of	cash,	short-term	investments,	fixed	income	investments,	held	to	maturity	and	investments	in	affiliates.

Segment	assets	consist	of	receivables,	inventories,	fixed	assets	and	multiclient	seismic	data.

# Depreciation	&	Amortization	includes	multiclient	seismic	data	costs.

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| North\tAmerica | $13,485 | $12,323 | $6,730 |
| Latin\tAmerica | 7,554 | 6,467 | 4,985 |
| Europe/CIS/Africa | \t 11,443 | 9,676 | 7,850 |
| Middle\tEast\t&amp;\tAsia | 9,194 | 8,102 | 6,652 |
| Eliminations\t&amp;\tother | 473 | 391 | 455 |
|  | $42,149 | $36,959 | $26,672 |

# Revenue	is	based	on	the	location	where	services	are	provided.

During	each	of	the	three	years	ended	December	31,	2012,	2011	and	2010,	no	single	customer	exceeded	10%	of	consolidated	revenue.

Schlumberger	did	not	have	revenue	from	third-party	customers	in	its	country	of	domicile	during	the	last	three	years.	Revenue	in	the	United	States	in	2012,	2011	and 2010	was	$11.8	billion,	$10.7	billion	and	$5.8	billion,	respectively.

Fixed	Assets	less	accumulated	depreciation	by	geographic	area	are	as	follows:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| North\tAmerica | $4,868 | $4,230 | $3,624 |
| Latin\tAmerica | 1,788 | 1,472 | 1,274 |
| Europe/CIS/Africa | 3,414 | 3,341 | 3,339 |
| Middle\tEast\t&amp;\tAsia | 2,908 | 2,233 | 2,004 |
| Unallocated^\t(1) | 1,802 | 1,717 | 1,830 |
|  | $14,780 | $12,993 | $12,071 |

	 Represents	seismic	vessels,	including	the	related	on-board	equipment,	which	frequently	transition	between	geographic	areas. (1)

# 18.				Pension	and	Other	Benefit	Plans

# Pension	Plans

Schlumberger	sponsors	several	defined	benefit	pension	plans	that	cover	substantially	all	US	employees	hired	prior	to	October	1,	2004.	The	benefits	are	based	on years	of	service	and	compensation,	on	a	career-average	pay	basis.

In	addition	to	the	United	States	defined	benefit	pension	plans,	Schlumberger	sponsors	several	other	international	defined	benefit	pension	plans.	The	most	significant of	these	international	plans	are	the	International	Staff	Pension	Plan	and	the	UK	pension	plan	(collectively,	the	"International	plans").	The	International	Staff	Pension Plan	covers	certain	international	employees	and	is	based	on	years	of	service	and	compensation	on	a	career-average	pay	basis.	The	UK	plan	covers	employees	hired	prior to	April	1,	1999,	and	is	based	on	years	of	service	and	compensation,	on	a	final	salary	basis.

The	weighted-average	assumed	discount	rate,	compensation	increases	and	the	expected	long-term	rate	of	return	on	plan	assets	used	to	determine	the	net	pension	cost for	the	US	and	International	plans	were	as	follows:

|  |  | US |  |  | International |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 |
| Discount\trate | \t5.00% | \t5.50% | \t6.00% | \t4.95% | \t5.47% | \t5.89% |
| Compensation\tincreases | \t4.00% | \t4.00% | \t4.00% | \t4.91% | \t4.91% | \t4.93% |
| Return\ton\tplan\tassets | \t7.50% | \t7.50% | \t8.50% | \t7.50% | \t7.50% | \t8.00% |

Net	pension	cost	for	2012,	2011	and	2010	included	the	following	components:

|  |  | US |  |  | International |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 |
| Service\tcost\t–\tbenefits\tearned\tduring\tthe\tperiod | $68 | $59 | $56 | $86 | $64 | $51 |
| Interest\tcost\ton\tprojected\tbenefit\tobligation | 152 | 150 | 142 | 241 | 226 | 208 |
| Expected\treturn\ton\tplan\tassets | (185) | (170) | (191) | (328) | (279) | (228) |
| Amortization\tof\tnet\tloss | 93 | 90 | 60 | 76 | 31 | 19 |
| Amortization\tof\tprior\tservice\tcost | 16 | 12 | 4 | 120 | 120 | 113 |
|  | $ 144 | $ 141 | $71 | $ 195 | $ 162 | $ 163 |

The	weighted-average	assumed	discount	rate	and	compensation	increases	used	to	determine	the	projected	benefit	obligations	for	the	US	and	International	plans	were as	follows:

|  | US |  | International | International |
| :--- | :--- | :--- | :--- | :--- |
|  | 2012 | 2011 | 2012 | 2011 |
| Discount\trate | \t4.25% | \t5.00% | \t4.38% | \t4.95% |
| Compensation\tincreases | \t4.00% | \t4.00% | \t4.83% | \t4.91% |

The	changes	in	the	projected	benefit	obligation,	plan	assets	and	funded	status	of	the	plans	were	as	follows:

|  | 2012 | US | 2011 | International<br>2012 | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Change\tin\tProjected\tBenefit\tObligations |  |  |  |  |  |
| Projected\tbenefit\tobligation\tat\tbeginning\tof\tyear | $3,073 |  | $2,769 | $4,666 | $4,088 |
| Service\tcost | 68 |  | 59 | 86 | 64 |
| Interest\tcost | 152 |  | 150 | 241 | 226 |
| Contributions\tby\tplan\tparticipants | – |  | – | 97 | 102 |
| Actuarial\tlosses | 399 |  | 225 | 786 | 321 |
| Currency\teffect | – |  | – | 62 | (8) |
| Benefits\tpaid | (134) |  | (130) | (140) | (127) |
| Projected\tbenefit\tobligation\tat\tend\tof\tyear | $3,558 |  | $3,073 | $5,798 | $4,666 |
| Change\tin\tPlan\tAssets |  |  |  |  |  |
| Plan\tassets\tat\tfair\tvalue\tat\tbeginning\tof\tyear | $2,655 |  | $2,635 | $4,097 | $3,764 |
| Actual\treturn\ton\tplan\tassets | 336 |  | 78 | 490 | – |
| Currency\teffect | – |  | – | 62 | (6) |
| Company\tcontributions | 53 |  | 72 | 514 | 364 |
| Contributions\tby\tplan\tparticipants | – |  | – | 97 | 102 |
| Benefits\tpaid | (134) |  | (130) | (140) | (127) |
| Plan\tassets\tat\tfair\tvalue\tat\tend\tof\tyear | $2,910 |  | $2,655 | $5,120 | $4,097 |
| Unfunded\tLiability | $(648) |  | $(418) | $(678) | $(569) |
| Amounts\tRecognized\tin\tBalance\tSheet |  |  |  |  |  |
| Postretirement\tBenefits | $(648) |  | $(418) | $(687) | $(569) |
| Other\tAssets | – |  | – | 9 | – |
|  | $(648) |  | $(418) | $(678) | $(569) |
| Amounts\tRecognized\tin\tAccumulated\tOther\tComprehensive\tLoss |  |  |  |  |  |
| Actuarial\tlosses | $1,197 |  | $1,048 | $1,234 | $1,002 |
| Prior\tservice\tcost | 90 |  | 101 | 598 | 729 |
|  | $1,287 |  | $1,149 | $1,832 | $1,731 |
| Accumulated\tbenefit\tobligation | $3,262 |  | $2,861 | $5,401 | $4,336 |

The	unfunded	liability	represents	the	difference	between	the	plan	assets	and	the	projected	benefit	obligation	("PBO").	The	PBO	represents	the	actuarial	present	value of	benefits	based	on	employee	service	and	compensation	and	includes	an	assumption	about	future	compensation	levels.	The	accumulated	benefit	obligation	represents the	actuarial	present	value	of	benefits	based	on	employee	service	and	compensation,	but	does	not	include	an	assumption	about	future	compensation	levels.

The	weighted-average	allocation	of	plan	assets	and	the	target	allocation	by	asset	category	are	as	follows:

|  |  | US |  | International | International |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Target | 2012 | 2011 | Target | 2012 | 2011 |
| Equity\tsecurities | \t45\t–\t55% | 47% | 47% | \t50\t–\t70% | 56% | 51% |
| Debt\tsecurities | \t33\t–\t45 | 42 | 39 | \t25\t–\t40 | 35 | 38 |
| Cash\tand\tcash\tequivalents | 0\t–\t3 | 2 | 6 | 0\t–\t3 | 3 | 4 |
| Alternative\tinvestments | 0\t–\t10 | 9 | 8 | 0\t–\t20 | 6 | 7 |
|  | 100% | \t 100% | \t 100% | 100% | \t 100% | \t 100% |

Schlumberger's	investment	policy	includes	various	guidelines	and	procedures	designed	to	ensure	that	assets	are	prudently	invested	in	a	manner	necessary	to	meet	the future	benefit	obligation	of	the	pension	plans.	The	policy	does	not	permit	the	direct	investment	of	plan	assets	in	any	Schlumberger	security.	Schlumberger's	investment horizon	is	long-term	and	accordingly	the	target	asset	allocations	encompass	a	strategic,	long-term	perspective	of	capital	markets,	expected	risk	and	return	behavior	and perceived	future	economic	conditions.	The	key	investment	principles	of	diversification,	assessment	of	risk	and	targeting	the	optimal	expected	returns	for	given	levels	of risk	are	applied.	The	target	asset	allocation	is	reviewed	periodically	and	is	determined	based	on	a	long-term	projection	of	capital	market	outcomes,	inflation	rates,	fixed income	yields,	returns,	volatilities	and	correlation	relationships.	The	inclusion	of	any	given	asset	class	in	the	target	asset	allocation	is	considered	in	relation	to	its	impact on	the	overall	risk/return	characteristics	as	well	as	its	impact	on	the	overall	investment	return.	As	part	of	its	strategy,	Schlumberger	may	utilize	certain	derivative instruments,	such	as	options,	futures,	swaps	and	forwards,	within	the	plans	to	manage	risks	(currency,	interest	rate,	etc.),	as	a	substitute	for	physical	securities	or	to obtain	exposure	to	different	markets.

Asset	performance	is	monitored	frequently	with	an	overall	expectation	that	plan	assets	will	meet	or	exceed	the	weighted	index	of	its	target	asset	allocation	and component	benchmark	over	rolling	five-year	periods.

The	expected	long-term	rate	of	return	on	assets	assumptions	reflect	the	average	rate	of	earnings	expected	on	funds	invested	or	to	be	invested.	The	assumptions	have been	determined	by	reflecting	expectations	regarding	future	rates	of	return	for	the	portfolio	considering	the	asset	allocation	and	related	historical	rates	of	return.	The appropriateness	of	the	assumptions	is	reviewed	annually.

The	fair	value	of	Schlumberger's	pension	plan	assets	at	December	31,	2012	and	2011,	by	asset	category,	are	presented	below	and	were	determined	based	on valuation	techniques	categorized	as	follows:

— Level	One:	The	use	of	quoted	prices	in	active	markets	for	identical	instruments.

— Level	Two:	The	use	of	quoted	prices	for	similar	instruments	in	active	markets	or	quoted	prices	for	identical	or	similar	instruments	in	markets	that	are	not active	or	other	inputs	that	are	observable	in	the	market	or	can	be	corroborated	by	observable	market	data.

— Level	Three:	The	use	of	significantly	unobservable	inputs	that	typically	require	the	use	of	management's	estimates	of	assumptions	that	market	participants would	use	in	pricing.

(a) US	equities	include	companies	that	are	well	diversified	by	industry	sector	and	equity	style	(i.e.,	growth	and	value	strategies).	Active	and	passive	management	strategies	are	employed.	Investments	are	primarily	in large	capitalization	stocks	and,	to	a	lesser	extent,	mid-	and	small-cap	stocks.

(b) International	equities	are	invested	in	companies	that	are	traded	on	exchanges	outside	the	US	and	are	well	diversified	by	industry	sector,	country	and	equity	style.	Active	and	passive	strategies	are	employed.	The vast	majority	of	the	investments	are	made	in	companies	in	developed	markets	with	a	small	percentage	in	emerging	markets.

(c) Corporate	bonds	consist	primarily	of	investment	grade	bonds	from	diversified	industries.

(d) Government	and	government-related	debt	securities	are	comprised	primarily	of	inflation	protected	US	treasuries	and,	to	a	lesser	extent,	other	government-related	securities.

(e) Government	agency	collateralized	mortgage	obligations	and	mortgage	backed-securities	are	debt	obligations	that	represent	claims	to	the	cash	flows	from	pools	of	mortgage	loans	which	are	purchased	from	banks, mortgage	companies,	and	other	originators	and	then	assembled	into	pools	by	governmental	and	quasi-governmental	entities.

(f) Other	collateralized	mortgage	obligations	and	mortgage-backed	securities	are	debt	obligations	that	represent	claims	to	the	cash	flows	from	pools	of	mortgage	loans	which	are	purchased	from	banks,	mortgage companies,	and	other	originators	and	then	assembled	into	pools	by	private	entities.

(g) Private	equity	includes	investments	in	several	fund	of	funds	limited	partnerships.

(h) Real	estate	primarily	includes	investments	in	real	estate	limited	partnerships,	concentrated	in	commercial	real	estate.

The	funding	policy	is	to	annually	contribute	amounts	that	are	based	upon	a	number	of	factors	including	the	actuarial	accrued	liability,	amounts	that	are	deductible	for income	tax	purposes,	legal	funding	requirements	and	available	cash	flow.	Schlumberger	currently	anticipates	contributing	approximately	$650	million	to	its postretirement	benefit	plans	in	2013,	subject	to	market	and	business	conditions.

# Postretirement	Benefits	Other	than	Pensions

Schlumberger	provides	certain	health	care	benefits	to	former	US	employees	who	have	retired.

The	actuarial	assumptions	used	to	determine	the	accumulated	postretirement	benefit	obligation	and	net	periodic	benefit	cost	for	the	US	postretirement	medical	plan were	as	follows:

|  | Benefit	Obligation<br>at	December	31, | Benefit	Obligation<br>at	December	31, | Net	Periodic	Benefit	Cost<br>for	the	year | Net	Periodic	Benefit	Cost<br>for	the	year |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2012 | 2011 | 2012 | 2011 | 2010 |
| Discount\trate | 4.25% | 5.00% | 5.00% | 5.50% | 6.00% |
| Return\ton\tplan\tassets | – | – | 7.00% | 7.00% | 8.00% |
| Current\tmedical\tcost\ttrend\trate | 7.50% | 8.00% | 8.00% | 8.00% | 8.00% |
| Ultimate\tmedical\tcost\ttrend\trate | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% |
| Year\tthat\tthe\trate\treaches\tthe\tultimate\ttrend\trate | 2023 | 2018 | \t2018 | \t 2017 | 2016 |

The	net	periodic	benefit	cost	for	the	US	postretirement	medical	plan	included	the	following	components:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Service\tcost\t–\tbenefits\tearned\tduring\tthe\tperiod | $29 | $24 | $23 |
| Interest\tcost\ton\tprojected\tbenefit\tobligation | 58 | 57 | 58 |
| Expected\treturn\ton\tplan\tassets | (30) | (20) | (6) |
| Amortization\tof\tnet\tloss | 16 | 13 | 11 |
| Amortization\tof\tprior\tservice\tcredit | (8) | (12) | (21) |
|  | $65 | $62 | $65 |

The	changes	in	the	accumulated	postretirement	benefit	obligation,	plan	assets	and	funded	status	were	as	follows:

|  | 2012 | 2011 |
| :--- | :--- | :--- |
| Change\tin\tAccumulated\tPostretirement\tBenefit\tObligation |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $1,188 | $1,051 |
| Service\tcost | 29 | 24 |
| Interest\tcost | 58 | 57 |
| Contributions\tby\tplan\tparticipants | 6 | 6 |
| Actuarial\tlosses | 171 | 90 |
| Benefits\tpaid | (42) | (40) |
| Benefit\tobligation\tat\tend\tof\tyear | $1,410 | $1,188 |
| Change\tin\tPlan\tAssets |  |  |
| Plan\tassets\tat\tfair\tvalue\tat\tbeginning\tof\tyear | $443 | $290 |
| Company\tcontributions | 106 | 165 |
| Contributions\tby\tplan\tparticipants | 6 | 6 |
| Benefits\tpaid | (42) | (40) |
| Actual\treturn\ton\tplan\tassets | 63 | 22 |
| Plan\tassets\tat\tfair\tvalue\tat\tend\tof\tyear | $576 | $443 |
| Unfunded\tLiability | $(834) | $(745) |
| Amounts\tRecognized\tin\tAccumulated |  |  |
| Other\tComprehensive\tLoss |  |  |
| Actuarial\tlosses | $411 | $286 |
| Prior\tservice\tcost | (16) | (24) |
|  | $395 | $262 |

The	unfunded	liability	is	included	in	Postretirement	Benefits	in	the	Consolidated	Balance	Sheet.

The	assets	of	the	US	postretirement	medical	plan	are	invested	63%	in	US	equity	securities	and	37%	in	government	and	government-related	debt	securities.	The	fair value	of	these	assets	were	determined	based	on	quoted	prices	in	active	markets	for	identical	instruments.

Assumed	health	care	cost	trend	rates	have	a	significant	effect	on	the	amounts	reported	for	the	US	postretirement	medical	plan.	A	one	percentage	point	change	in assumed	health	care	cost	trend	rates	would	have	the	following	effects:

|  | One	percentage<br>point	increase | One	percentage<br>point	decrease |
| :--- | :--- | :--- |
| Effect\ton\ttotal\tservice\tand\tinterest\tcost\tcomponents | $18 | $(14) |
| Effect\ton\taccumulated\tpostretirement\tbenefit\tobligation | $287 | $(203) |

# Other	Information

The	expected	benefits	to	be	paid	under	the	US	and	International	pension	plans	as	well	as	the	postretirement	medical	plan	(which	is	disclosed	net	of	the	annual Medicare	Part	D	subsidy,	which	ranges	from	$4	million	to	$11	million	per	year)	were	as	follows:

|  |  | Pension	Benefits | Postretirement |
| :--- | :--- | :--- | :--- |
|  | US | International | Medical\tPlan |
| 2013 | $141 | $179 | $48 |
| 2014 | \t 145 | 193 | 51 |
| 2015 | \t 151 | 208 | 54 |
| 2016 | \t 158 | 223 | 58 |
| 2017 | \t 166 | 242 | 62 |
| 2018-2022 | \t 971 | 1,397 | 380 |

Included	in	Accumulated	other	comprehensive	loss	at	December	31,	2012	are	non-cash	pretax	charges	which	have	not	yet	been	recognized	in	net	periodic	benefit cost.	The	estimated	amounts	that	will	be	amortized	from	the	estimated	portion	of	each	component	of	Accumulated	other	comprehensive	loss	which	is	expected	to	be recognized	as	a	component	of	net	periodic	benefit	cost	during	the	year	ending	December	31,	2013	are	as	follows:

|  | Pension | Medical |
| :--- | :--- | :--- |
|  | Plans | Plan |
| Net\tactuarial\tlosses | $249 | $27 |
| Prior\tservice\tcost\t(credit) | $133 | $(4) |

In	addition	to	providing	defined	pension	benefits	and	a	postretirement	medical	plan,	Schlumberger	and	its	subsidiaries	have	other	deferred	benefit	programs,

primarily	profit	sharing	and	defined	contribution	pension	plans.	Expenses	for	these	programs	were	$620	million,	$582	million	and	$403	million	in	2012,	2011	and	2010, respectively.

# 19.					Supplementary	Information

Cash	paid	for	interest	and	income	taxes	was	as	follows:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Interest | $313 | $294 | $234 |
| Income\ttaxes | $1,736 | $1,836 | $571 |

Accounts	payable	and	accrued	liabilities	are	summarized	as	follows:

|  | 2012 | 2011 |
| :--- | :--- | :--- |
| Payroll,\tvacation\tand\temployee\tbenefits | $1,825 | $1,597 |
| Trade | \t 3,550 | \t 3,389 |
| Other | \t 3,078 | \t 2,593 |
|  | $8,453 | $7,579 |

# Interest	and	other	income	includes	the	following:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Interest\tincome | $30 | $40 | $50 |
| Equity\tin\tnet\tearnings\tof\taffiliated\tcompanies: |  |  |  |
| M-I\tSWACO | – | – | 78 |
| Others | \t 142 | 90 | 87 |
|  | $172 | $130 | $215 |

# Allowance	for	doubtful	accounts	is	as	follows:

|  |  | (Stated	in	millions) | (Stated	in	millions) |
| :--- | :--- | :--- | :--- |
|  | 2012 | 2011 | 2010 |
| Balance\tat\tbeginning\tof\tyear | $177 | $185 | $160 |
| Provision | 37 | 37 | 38 |
| Amounts\twritten\toff | (10) | (45) | (13) |
| Divestiture\tof\tbusiness | (2) | – | – |
| Balance\tat\tend\tof\tyear | $202 | $177 | $185 |

# Discontinued	Operations

During	the	second	quarter	of	2012,	Schlumberger	sold	its	Wilson	distribution	business	to	National	Oilwell	Varco	Inc.	("NOV")	for	$906	million	in	cash.	A	pretax gain	of	$137	million	($16	million	after-tax)	was	recognized	in	connection	with	this	transaction.

During	the	third	quarter	of	2012,	Schlumberger	completed	the	sale	of	its	56%	interest	in	CE	Franklin	Ltd.	to	NOV	for	$122	million	in	cash.	A	pretax	gain	of	$30 million	($12	million	after-tax)	was	recognized	in	connection	with	this	transaction.

As	Wilson	and	CE	Franklin	comprised	Schlumberger's	previously	reported	Distribution	segment,	the	results	of	this	entire	segment	have	been	classified	as discontinued	operations	in	the	Consolidated	Statement	of	Income.

During	the	second	quarter	of	2011,	Schlumberger	completed	the	divestiture	of	its	Global	Connectivity	Services	business	for	$385	million	in	cash.	An	after-tax	gain	of $220	million	was	recognized	in	connection	with	this	transaction,	and	is	classified	in	Income	from	discontinued	operations	in	the	Consolidated	Statement	of	Income.	The historical	results	of	this	business	were	not	significant	to	Schlumberger's	consolidated	financial	statements	and,	as	such,	have	not	been	reclassified	to	discontinued operations.

The	following	table	summarizes	the	results	of	these	discontinued	operations:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Revenue | $982 | $2,581 | $1,908 |
| Income\tbefore\ttaxes | $43 | $99 | $24 |
| Tax\texpense | (15) | (36) | (11) |
| Net\tincome\tattributable\tto\tnoncontrolling\tinterests | (5) | (6) | (1) |
| Gain\ton\tdivestitures,\tnet\tof\ttax | 28 | 220 | – |
| Income\tfrom\tdiscontinued\toperations | $51 | $277 | $12 |

# Management's	Report	on	Internal	Control	Over	Financial	Reporting

Schlumberger	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	as	defined	in	Rule	13a	–	15(f)	of	the Securities	Exchange	Act	of	1934,	as	amended.	Schlumberger's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding the	reliability	of	financial	reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles. Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

Schlumberger	management	assessed	the	effectiveness	of	its	internal	control	over	financial	reporting	as	of	December	31,	2012.	In	making	this	assessment,	it	used	the criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO)	in	Internal	Control	–	Integrated	Framework.	Based	on	this assessment	Schlumberger's	management	has	concluded	that,	as	of	December	31,	2012,	its	internal	control	over	financial	reporting	is	effective	based	on	those	criteria. The	effectiveness	of	Schlumberger's	internal	control	over	financial	reporting	as	of	December	31,	2012,	has	been	audited	by	PricewaterhouseCoopers	LLP,	an independent	registered	public	accounting	firm,	as	stated	in	their	report	which	appears	herein.

# Report	of	Independent	Registered	Public	Accounting	Firm

# To	the	Board	of	Directors	and	Stockholders

# of	Schlumberger	Limited

In	our	opinion,	the	accompanying	consolidated	balance	sheets	and	the	related	consolidated	statements	of	income,	of	comprehensive	income,	of	stockholders'	equity and	of	cash	flows	present	fairly,	in	all	material	respects,	the	financial	position	of	Schlumberger	Limited	and	its	subsidiaries	at	December	31,	2012	and	2011,	and	the results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2012	in	conformity	with	accounting	principles	generally accepted	in	the	United	States	of	America.	Also	in	our	opinion,	the	Company	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of December	31,	2012,	based	on	criteria	established	in	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway Commission	(COSO).	The	Company's	management	is	responsible	for	these	financial	statements,	for	maintaining	effective	internal	control	over	financial	reporting	and for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting,	included	in	the	accompanying	Management's	Report	on	Internal	Control	Over Financial	Reporting.	Our	responsibility	is	to	express	opinions	on	these	financial	statements	and	on	the	Company's	internal	control	over	financial	reporting	based	on	our integrated	audits.	We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards require	that	we	plan	and	perform	the	audits	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement	and	whether	effective internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audits	of	the	financial	statements	included	examining,	on	a	test	basis,	evidence supporting	the	amounts	and	disclosures	in	the	financial	statements,	assessing	the	accounting	principles	used	and	significant	estimates	made	by	management,	and evaluating	the	overall	financial	statement	presentation.	Our	audit	of	internal	control	over	financial	reporting	included	obtaining	an	understanding	of	internal	control	over financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and	evaluating	the	design	and	operating	effectiveness	of	internal	control	based	on	the assessed	risk.	Our	audits	also	included	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe	that	our	audits	provide	a reasonable	basis	for	our	opinions.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	and	directors	of	the	company;	and	(iii)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

/s/				PricewaterhouseCoopers	LLP PricewaterhouseCoopers	LLP Houston,	Texas January	31,	2013

# Quarterly	Results

# (Unaudited)

The	following	table	summarizes	Schlumberger's	results	by	quarter	for	the	years	ended	December	31,	2012	and	2011.

|  | Revenue^	2 | 1,	2<br>Margin | 2 | Basic | Diluted |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Quarters-2012 |  |  |  |  |  |
| First\t^(3) | $9,918 | $2,107 | $1,301 | $0.98 | $0.97 |
| Second\t^(4) | 10,448 | 2,286 | 1,403 | \t 1.05 | 1.05 |
| Third\t^(5) | 10,608 | 2,322 | 1,424 | \t 1.07 | 1.07 |
| Fourth\t^(6) | 11,174 | 2,377 | 1,362 | \t 1.03 | 1.02 |
|  | $42,149 | $9,093 | $5,490 | $4.13 | $4.10 |
| Quarters\t-2011 |  |  |  |  |  |
| First\t^(7) | $8,122 | $1,639 | $944 | $0.69 | $0.69 |
| Second\t^(8) | 8,990 | 1,965 | 1,339 | \t 0.99 | 0.98 |
| Third\t^(9) | 9,546 | 2,102 | 1,301 | \t 0.97 | 0.96 |
| Fourth\t^(10) | 10,301 | 2,304 | 1,414 | \t 1.06 | 1.05 |
|  | $36,959 | $8,010 | $4,997 | $3.70 | $3.67 |

Gross	margin	equals	Revenue	less	Cost	of	revenue. 1.

Net	income	in	the	first	quarter	of	2012	includes	after-tax	charges	of	$13	million. 3.

Net	income	in	the	second	quarter	of	2012	includes	after-tax	charges	of	$21	million. 4.

Net	income	in	the	third	quarter	of	2012	includes	after-tax	charges	of	$28	million. 5.

Net	income	in	the	fourth	quarter	of	2012	includes	after-tax	charges	of	$77	million. 6.

Net	income	in	the	fourth	quarter	of	2011	includes	after-tax	charges	of	$80	million. 10.

* Mark	of	Schlumberger

# Item	9. Changes	in	and	Disagreements	with	Accountants	on	Accounting	and	Financial	Disclosure.

# Item	9A. Controls	and	Procedures.

Schlumberger	has	carried	out	an	evaluation	under	the	supervision	and	with	the	participation	of	Schlumberger's	management,	including	the	Chief	Executive	Officer ("CEO")	and	the	Chief	Financial	Officer	("CFO"),	of	the	effectiveness	of	Schlumberger's	"disclosure	controls	and	procedures"	(as	such	term	is	defined	in	Rules	13a- 15(e)	and	15d-15(e)	under	the	Securities	Exchange	Act	of	1934	(the	"Exchange	Act"))	as	of	the	end	of	the	period	covered	by	this	report.	Based	on	this	evaluation,	the CEO	and	the	CFO	have	concluded	that,	as	of	the	end	of	the	period	covered	by	this	report,	Schlumberger's	disclosure	controls	and	procedures	were	effective	to	provide reasonable	assurance	that	information	required	to	be	disclosed	in	the	reports	that	Schlumberger	files	or	submits	under	the	Exchange	Act	is	recorded,	processed, summarized	and	reported	within	the	time	periods	specified	in	the	Securities	and	Exchange	Commission's	rules	and	forms.	Schlumberger's	disclosure	controls	and procedures	include	controls	and	procedures	designed	to	ensure	that	information	required	to	be	disclosed	in	reports	filed	or	submitted	under	the	Exchange	Act	is accumulated	and	communicated	to	its	management,	including	the	CEO	and	the	CFO,	as	appropriate,	to	allow	timely	decisions	regarding	required	disclosure.	There	has been	no	change	in	Schlumberger's	internal	control	over	financial	reporting	that	occurred	during	the	fourth	quarter	of	2012	that	has	materially	affected,	or	is	reasonably likely	to	materially	affect,	Schlumberger's	internal	control	over	financial	reporting.

# Item	9B. Other	Information.

# PART	III

# Item	10. Directors,	Executive	Officers	and	Corporate	Governance	of	Schlumberger.

See	"Item	1.	Business	–	Executive	Officers	of	Schlumberger"	of	this	Report	for	Item	10	information	regarding	executive	officers	of	Schlumberger.	The	information under	the	captions	"Election	of	Directors,"	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance,"	"Corporate	Governance	–	Director	Nominations"	and "Corporate	Governance	–	Board	Committees	–	Audit	Committee"	in	Schlumberger's	2013	Proxy	Statement	is	incorporated	herein	by	reference.

Schlumberger	has	adopted	a	Code	of	Ethics	that	applies	to	all	of	its	directors,	officers	and	employees,	including	its	principal	executive,	financial	and	accounting officers,	or	persons	performing	similar	functions.	Schlumberger's	Code	of	Ethics	is	posted	on	its	corporate	governance	website	located	at	www.slb.com/ir.	In	addition, amendments	to	the	Code	of	Ethics	and	any	grant	of	a	waiver	from	a	provision	of	the	Code	of	Ethics	requiring	disclosure	under	applicable	SEC	rules	will	be	disclosed	on Schlumberger's	corporate	governance	website	located	at	www.slb.com/ir.

# Item	11. Executive	Compensation.

The	information	set	forth	under	the	captions	"Compensation	Discussion	and	Analysis,"	"Executive	Compensation	Tables	and	Accompanying	Narrative,"

"Compensation	Committee	Report"	and	"Director	Compensation	in	Fiscal	Year	2012"	in	Schlumberger's	2013	Proxy	Statement	is	incorporated	herein	by	reference.

# Item	12. Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters.

The	information	under	the	captions	"Stock	Ownership	Information	–	Security	Ownership	by	Certain	Beneficial	Owners,"	"Stock	Ownership	Information	–	Security Ownership	by	Management"	and	"Equity	Compensation	Plan	Information"	in	Schlumberger's	2013	Proxy	Statement	is	incorporated	herein	by	reference.

# Item	13. Certain	Relationships	and	Related	Transactions,	and	Director	Independence.

The	information	under	the	captions	"Corporate	Governance	–	Board	Independence"	and	"Corporate	Governance	–	Policies	and	Procedures	for	Approval	of	Related Person	Transactions"	in	Schlumberger's	2013	Proxy	Statement	is	incorporated	herein	by	reference.

# Item	14. Principal	Accounting	Fees	and	Services.

The	information	under	the	caption	"Appointment	of	Independent	Registered	Public	Accounting	Firm"	in	Schlumberger's	2013	Proxy	Statement	is	incorporated herein	by	reference.

# Item	15. Exhibits	and	Financial	Statement	Schedules.

(a) The	following	documents	are	filed	as	part	of	this	Report:

Financial	statements	of	companies	accounted	for	under	the	equity	method	and	unconsolidated	subsidiaries	have	been	omitted	because	they	do	not	meet	the materiality	tests	for	assets	or	income.

# (2)				Financial	Statement	Schedules	not	required

(3)				Exhibits:	the	exhibits	listed	in	the	accompanying	"Index	to	Exhibits"	are	filed	or	incorporated	by	reference	as	part	of	this	Form	10-K.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	Registrant	has	duly	caused	this	Report	to	be	signed	on	its	behalf	by the	undersigned,	thereunto	duly	authorized.

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	Report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	Registrant	and	in the	capacities	and	on	the	dates	indicated.

Lubna	S.	Olayan

Leo	Rafael	Reif

Henri	Seydoux

/S/	ALEXANDER	C.	JUDEN

Director

*By	Alexander	C.	Juden	Attorney-in-Fact

# INDEX	TO	EXHIBITS

|  | Exhibit |
| :--- | :--- |
| Articles\tof\tIncorporation\tof\tSchlumberger\tLimited\t(Schlumberger\tN.V.),\tas\tlast\tamended\ton\tApril\t6,\t2011\t(incorporated\tby\treference\tto\tExhibit\t3.1\tto\nSchlumberger's\tCurrent\tReport\ton\tForm\t8-K\tfiled\ton\tApril\t7,\t2011) | 3.1 |
| Amended\tand\tRestated\tBy-Laws\tof\tSchlumberger\tLimited\t(Schlumberger\tN.V.),\tas\tlast\tamended\ton\tJuly\t19,\t2012\t(incorporated\tby\treference\tto\tExhibit\t3.1\nto\tSchlumberger's\tCurrent\tReport\ton\tForm\t8-K\tfiled\ton\tJuly\t19,\t2012) | 3.2 |
| Schlumberger\t1994\tStock\tOption\tPlan,\tas\tconformed\tto\tinclude\tamendments\tthrough\tJanuary\t1,\t2009\t(incorporated\tby\treference\tto\tExhibit\t10.1\tto\nSchlumberger's\tAnnual\tReport\ton\tForm\t10-K\tfor\tyear\tended\tDecember\t31,\t2008)\t(+) | 10.1 |
| Schlumberger\tLimited\tSupplementary\tBenefit\tPlan,\tas\tconformed\tto\tinclude\tamendments\tthrough\tJanuary\t1,\t2009\t(incorporated\tby\treference\tto\tExhibit | 10.2 |
| Schlumberger\tLimited\tRestoration\tSavings\tPlan,\tas\tconformed\tto\tinclude\tamendments\tthrough\tJanuary\t1,\t2009\t(incorporated\tby\treference\tto\tExhibit\t10.3\tto\nSchlumberger's\tAnnual\tReport\ton\tForm\t10-K\tfor\tyear\tended\tDecember\t31,\t2008)\t(+) | 10.3 |
| Schlumberger\t1998\tStock\tOption\tPlan,\tas\tconformed\tto\tinclude\tamendments\tthrough\tJanuary\t1,\t2009\t(incorporated\tby\treference\tto\tExhibit\t10.4\tto\nSchlumberger's\tAnnual\tReport\ton\tForm\t10-K\tfor\tyear\tended\tDecember\t31,\t2008)\t(+) | 10.4 |
| Schlumberger\t2001\tStock\tOption\tPlan,\tas\tconformed\tto\tinclude\tamendments\tthrough\tJanuary\t1,\t2009\t(incorporated\tby\treference\tto\tExhibit\t10.5\tto\nSchlumberger's\tAnnual\tReport\ton\tForm\t10-K\tfor\tyear\tended\tDecember\t31,\t2008)\t(+) | 10.5 |
| Schlumberger\t2005\tStock\tIncentive\tPlan,\tas\tconformed\tto\tinclude\tamendments\tthrough\tJanuary\t1,\t2009\t(incorporated\tby\treference\tto\tExhibit\t10.6\tto\nSchlumberger's\tAnnual\tReport\ton\tForm\t10-K\tfor\tyear\tended\tDecember\t31,\t2008)\t(+) | 10.6 |
| Schlumberger\tLimited\t2004\tStock\tand\tDeferral\tPlan\tfor\tNon-Employee\tDirectors,\tamended\tand\trestated\teffective\tJanuary\t19,\t2012\t(incorporated\tby | 10.7 |
| Schlumberger\t2008\tStock\tIncentive\tPlan,\tas\tconformed\tto\tinclude\tamendments\tthrough\tJanuary\t1,\t2009\t(incorporated\tby\treference\tto\tExhibit\t10.8\tto\nSchlumberger's\tAnnual\tReport\ton\tForm\t10-K\tfor\tyear\tended\tDecember\t31,\t2008)\t(+) | 10.8 |
| Schlumberger\t2010\tStock\tIncentive\tPlan\t(incorporated\tby\treference\tto\tExhibit\t10.1\tto\tSchlumberger's\tCurrent\tReport\ton\tForm\t8-K\tfiled\twith\tthe\tSEC\ton\nApril\t9,\t2010)\t(+) | 10.9 |
| Schlumberger\tDiscounted\tStock\tPurchase\tPlan,\tas\tamended\tand\trestated\tJanuary\t1,\t2010\t(incorporated\tby\treference\tto\tExhibit\t10.2\tto\tSchlumberger's\nCurrent\tReport\ton\tForm\t8-K\tfiled\twith\tthe\tSEC\ton\tApril\t9,\t2010)\t(+) | 10.10 |
| Form\tof\tOption\tAgreement,\tCapped\tIncentive\tStock\tOption\t(incorporated\tby\treference\tto\tExhibit\t10.1\tto\tSchlumberger's\tCurrent\tReport\ton\tForm\t8-K\tfiled\non\tJanuary\t19,\t2006)\t(+) | 10.11 |
| Form\tof\tOption\tAgreement,\tCapped\tNon-Qualified\tStock\tOption\t(incorporated\tby\treference\tto\tExhibit\t10.2\tto\tSchlumberger's\tCurrent\tReport\ton\tForm\t8-K\nfiled\ton\tJanuary\t19,\t2006)\t(+) | 10.12 |
| Form\tof\tOption\tAgreement,\tUncapped\tIncentive\tStock\tOption\t(for\t2001,\t2005\tand\t2008\tstock\tplans)\t(incorporated\tby\treference\tto\tExhibit\t10.11\tto\nSchlumberger's\tAnnual\tReport\ton\tForm\t10-K\tfor\tyear\tended\tDecember\t31,\t2009)\t(+) | 10.13 |
| Form\tof\tOption\tAgreement,\tUncapped\tNon-Qualified\tStock\tOption\t(for\t2001,\t2005\tand\t2008\tstock\tplans)\t(incorporated\tby\treference\tto\tExhibit\t10.12\tto | 10.14 |

|  | Exhibit |
| :--- | :--- |
| Form\tof\tSmith\tInternational,\tInc.\t2010\tRestricted\tStock\tUnit\tAgreement\t(incorporated\tby\treference\tto\tExhibit\t10.3\tto\tSchlumberger's\tQuarterly\tReport\ton\nForm\t10-Q\tfor\tthe\tquarter\tended\tSeptember\t30,\t2010)\t(+) | 10.15 |
| Employment\tAgreement\tdated\tMarch\t9,\t2010\tand\teffective\tas\tof\tFebruary\t9,\t2010,\tbetween\tSchlumberger\tLimited\tand\tChakib\tSbiti\t(incorporated\tby | 10.16 |
| Form\tof\tIndemnification\tAgreement\t(incorporated\tby\treference\tto\tExhibit\t10.1\tto\tSchlumberger's\tCurrent\tReport\ton\tForm\t8-K\tfiled\ton\tApril\t22,\t2005) | 10.17 |
| Subsidiaries\t(*) | 21 |
| Consent\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm\t(*) | 23 |
| Powers\tof\tAttorney\t(*) | 24 |
| Certification\tof\tChief\tExecutive\tOfficer\tpursuant\tto\tRule\t13a-14(a)\tas\tAdopted\tPursuant\tto\tSection\t302\tof\tthe\tSarbanes-Oxley\tAct\tof\t2002\t(*) | 31.1 |
| Certification\tof\tChief\tFinancial\tOfficer\tpursuant\tto\tRule\t13a-14(a)\tas\tAdopted\tPursuant\tto\tSection\t302\tof\tthe\tSarbanes-Oxley\tAct\tof\t2002\t(*) | 31.2 |
| Certification\tof\tChief\tExecutive\tOfficer\tpursuant\tto\t18\tU.S.C.\tSection\t1350,\tas\tAdopted\tPursuant\tto\tSection\t906\tof\tthe\tSarbanes-Oxley\tAct\tof\t2002\t(*) | 32.1 |
| Certification\tof\tChief\tFinancial\tOfficer\tpursuant\tto\t18\tU.S.C.\tSection\t1350,\tas\tAdopted\tPursuant\tto\tSection\t906\tof\tthe\tSarbanes-Oxley\tAct\tof\t2002\t(*) | 32.2 |
| Mine\tSafety\tDisclosure\t(*) | 95 |
| The\tfollowing\tmaterials\tfrom\tSchlumberger\tLimited's\tAnnual\tReport\ton\tForm\t10-K\tfor\tthe\tyear\tended\tDecember\t31,\t2012,\tformatted\tin\tXBRL\t(eXtensible | 101 |

(*)	Exhibits	electronically	filed	with	this	Form	10-K.	All	other	exhibits	incorporated	by	reference.

(+)	Management	contracts	or	compensatory	plans	or	arrangements.


what would the 2012 shares outstanding in millions have been without the acquisition of smith international?
  shares_outstanding = 1328
 acquisition_cost = 176
 shares_sold = 0
 option_exchanged = 0
 employee_plan = 0
 stock_repurchase = 0
 conversion_debentures = 0
 vesting_restricted_stock = 0
 answer = shares_outstanding - acquisition_cost - shares_sold - option_exchanged - employee_plan - stock_repurchase - conversion_debentures - vesting_restricted_stock 