BUSINESS REVIEW

               Third Quarter 2009 Compared to Second Quarter 2009



                                                           (Stated in millions)
                                 Third Quarter     Second Quarter
                                     2009               2009            % chg
      Oilfield Services
      Revenue                   $         4,953   $          4,956           -  %
      Pretax Operating Income   $         1,042   $          1,022            2 %

      WesternGeco
      Revenue                   $           463   $            559          (17 )%
      Pretax Operating Income   $            61   $             97          (37 )%

Pretax operating income represents the segments' income before taxes and noncontrolling interest. The pretax operating income excludes such items as corporate expenses and interest income and interest expense not allocated to the segments as well as the charges described in detail in Note 2 to the Consolidated Financial Statements, amortization of certain intangible assets, interest on postretirement medical benefits and stock-based compensation costs.

Third quarter 2009 revenue was $5.43 billion versus $5.53 billion in the second quarter of 2009. Income from continuing operations attributable to Schlumberger for the third quarter of 2009 was $787 million compared to $613 million in the second quarter of 2009. The second quarter 2009 results included after-tax charges of $207 million related to workforce reductions and postretirement benefits curtailment.

Oilfield Services revenue was flat with the second quarter as increases in both North and South America offset a further decline in the Middle East and Asia. As a result of this, coupled with the implementation of cost-cutting programs earlier in the year, overall margins slightly increased.

At WesternGeco, sequential revenue declines were due to lower Multiclient revenues in the quarter and the rollover of Marine contracts from higher-priced legacy backlog into new lower-priced activity. These factors resulted in lower margins.

Schlumberger's outlook for the remainder of 2009 assumes a continued modest recovery in North American gas drilling but no significant improvement in service pricing. Overseas, while rig activity is stabilizing, seasonal factors and pricing concessions made in the first half year that are still being implemented leave some risk of further small revenue declines. At WesternGeco, improvement will depend on the level of fourth-quarter multiclient sales.

Looking further ahead, Schlumberger's second-quarter outlook indicated that the shape of the economic recovery beyond 2009 and the subsequent recovery in oil and gas demand remained the determining factors for future activity increases. Since then, indications of inventory rebuilding across many industries together with help from government stimuli have helped to strengthen demand for both oil and gas. While uncertainties remain, notably the transition from current stimuli to industrial and consumer demand and the extent to which the recovery is expected to be limited by high unemployment, the demand for oil and gas will increase somewhat over the coming months.

As a result, Schlumberger sees continuing stabilization of activity around the world. However, this will not be uniform across either geographies or for services by commodity type.

Schlumberger considers that world gas markets are oversupplied and will remain so for some time absent any strong recovery in industrial demand. Both new Liquefied Natural Gas (LNG) capacity coming on stream, as well as ample storage and pent-up supply in North America, will serve to keep prices and activity low. In North America the current slight recovery in drilling is fragile and not likely to significantly improve service activity and pricing until late 2010.

For oil, the current robust price is expected to lead to operators maintaining their spending levels, and this, coupled with the lowering of their cost structures may produce some modest increases in activity. Schlumberger anticipates continued strength in deepwater areas and some increases in selected land markets. In addition, a more robust commodity price is expected to lead to some increase in seismic activity, although new marine capacity will continue to depress pricing.

Third quarter revenue of $4.95 billion was flat sequentially as certain geographic strengths were balanced by weaker pricing. In North America, the positive impact of a recovery in rig count in Canada following the spring break-up was offset primarily by a slowdown in the US Gulf of Mexico GeoMarket* due to operator caution during the hurricane season and by continuing pricing erosion in the US Land GeoMarket. Internationally, Latin America revenue increased with the finalization of certain contracts in Venezuela/Trinidad & Tobago and higher Integrated Project Management (IPM) activity in Mexico/Central America, but these increases were offset by lower Middle East & Asia revenue due to reduced overall activity and the effects of weaker pricing. Europe/CIS/Africa revenue was flat as the positive effects of the strengthening of local currencies against the US dollar and high product sales in North Africa were offset by reductions in activity in the West & South Africa, North Sea and Libya GeoMarkets. Across the Areas, revenue increases in IPM, Testing Services and Well Services were primarily offset by revenue declines in Completions, Drilling & Measurements and Wireline Technologies.

Third quarter pretax operating income of $1.04 billion was 2% higher sequentially. Pretax operating margin increased 41 basis points (bps) to 21.0% as improvements in North America and Latin America were offset by modest declines in Europe/CIS/Africa and Middle East & Asia.

North America

Revenue of $823 million was essentially unchanged sequentially. Pretax operating income of $27.6 million was up 253% sequentially.

Sequentially, revenue in Canada increased on a muted post spring break-up recovery in rig count but this was offset by decreased revenue in the US GeoMarkets. In the US Gulf of Mexico GeoMarket revenue was impacted by a slowdown in activity due to operator caution during the hurricane season and by a further decrease in shelf drilling activity as a result of continued uneconomic natural gas prices. US Land GeoMarket revenue decreased as an improvement in oil-related activity was more than offset by pricing erosion in the early part of the quarter. The Alaska GeoMarket also recorded lower sequential revenue due to a slowdown in activity for seasonal rig maintenance and operator budget constraints.

Pretax operating margin increased 240 bps sequentially to 3.4% primarily due to the increased activity in Canada, which was partially offset by weaker activity in the US Gulf of Mexico and Alaska GeoMarkets.

Latin America

Revenue of $1.07 billion was 8% higher versus the second quarter of 2009. Pretax operating income of $197 million was 12% higher sequentially.

Sequentially, Venezuela/Trinidad & Tobago GeoMarket revenue increased as finalization of certain contracts resulted in the recognition of deferred revenue in addition to revenue from current-quarter activities related to these contracts. Mexico/Central America GeoMarket revenue was also higher due to the start-up of the ATG III contract and increased activity on other IPM projects.

Pretax operating margin improved 70 bps sequentially to 18.3% primarily due to the positive impact of cost management in the Venezuela/Trinidad & Tobago GeoMarket and increased IPM activity in Mexico/Central America. These increases were partially offset by a decrease in Brazil due primarily to start-up costs for new contracts.

Europe/CIS/Africa

Revenue of $1.78 billion was flat sequentially. Pretax operating income of $422 million was 2% lower than the previous quarter.

Sequentially, the strengthening of local currencies against the US dollar increased Area revenue by 2%. In addition, North Africa GeoMarket revenue increased on high Testing Services product sales and stronger IPM activity while the Nigeria & Gulf of Guinea GeoMarket grew primarily on strong demand for Well Services technologies. However, these increases were partially offset by lower revenue in the West & South Africa GeoMarket from reduced activity that primarily affected Well Services operations and by a decrease in the North Sea GeoMarket resulting from lower rig count and pricing that mostly impacted Drilling & Measurements services. Libya GeoMarket revenue fell on reduced demand for Testing Services and Well Services technologies as well as for Completion products.

Pretax operating margin slipped 53 bps sequentially to 23.7% as increased North Africa GeoMarket revenue and a more favorable revenue mix in Russia were insufficient to offset lower activity and a less favorable revenue mix in the North Sea and West & South Africa GeoMarkets.

Middle East & Asia

Revenue of $1.23 billion decreased 6% compared to the second quarter of 2009. Pretax operating income of $391 million decreased 7% sequentially.

Sequentially, revenue in the East Asia GeoMarket fell from completion of several exploration-related campaigns with consequent lower demand for Wireline, Testing Services and Well Services technologies. Qatar GeoMarket revenue decreased primarily due to the completion of offshore projects that resulted in reduced demand for all Technologies. Gulf GeoMarket revenue fell on lower rig count that led to a decrease in Drilling & Measurements and Wireline services. The East Mediterranean revenue dropped as the result of lower land activity that reduced demand primarily for Well Services technologies. These decreases however were partially offset by an increase in the Arabian GeoMarket revenue on strong gas-related activity that resulted in higher demand for Well Services and Testing Services technologies. Weaker pricing also contributed to lower revenue.

Pretax operating margin decreased by just 32 bps sequentially to 31.7% as the impact of the stronger activity in the Arabian GeoMarket and a more favorable revenue mix in the Indonesia GeoMarket almost offset the lower activity in the East Asia, Qatar, Gulf and East Mediterranean GeoMarkets as well as the effects of weaker pricing across the Area.

Third quarter revenue of $463 million decreased 17% sequentially. Pretax operating income of $61 million decreased 37% compared to the second quarter of 2009.

Sequentially, Multiclient revenue decreased mostly on reduced sales in North America and the North Sea. Marine revenue fell primarily as the result of weaker pricing and the completion of two large contracts. Land revenue was also lower due to project delays in the Middle East and Africa. Data Processing revenue was flat versus the previous quarter.

Pretax operating margin fell 421 bps sequentially to 13.1%, primarily as a result of the lower Multiclient sales and Land project delays.

               Third Quarter 2009 Compared to Third Quarter 2008



                                                     (Stated in millions)
                                                 Third Quarter
                                       2009         2008          % chg
            Oilfield Services
            Revenue                   $ 4,953   $      6,356          (22 )%
            Pretax Operating Income   $ 1,042   $      1,699          (39 )%

            WesternGeco
            Revenue                   $   463   $        892          (48 )%
            Pretax Operating Income   $    61   $        355          (83 )%

Third quarter 2009 revenue was $5.43 billion versus $7.26 billion in the third quarter of 2008. Income from continuing operations attributable to Schlumberger was $787 million in the third quarter of 2009 as compared to $1.53 billion in the third quarter of 2008.

Third quarter 2009 revenue of $4.95 billion was 22% lower compared to the same period last year with reductions across all of the Areas. North America revenue was down as low natural gas prices resulted in a significant drop in activity and associated pricing pressure. Europe/CIS/Africa revenue decreased primarily due to the weakening of local currencies against the US dollar as well as lower activity in the North Sea, Russia, West & South Africa and Caspian GeoMarkets partially offset by increased activity in the North Africa GeoMarket. Middle East & Asia revenue was lower due to reduced activity throughout most of the Area. Latin America revenue was down mostly as the result of a sharp drop in activity in Venezuela/Trinidad & Tobago and the weakening of local currencies against the US dollar but partially offset by increased activity in Mexico and Brazil. Across the Areas, revenue declines were heaviest in Well Services, Wireline and Drilling & Measurements activities.

Third quarter 2009 pretax operating income of $1.04 billion was 39% lower year-on-year. Pretax operating margin declined 5.7 percentage points to 21.0% as a result of the significant drop in activity and pricing pressure in North America.

North America

Third quarter 2009 revenue of $823 million was 45% lower year-on-year. US Land and Canada revenue decreased significantly as lower natural gas prices resulted in a sharp decrease in activity coupled with heavy pricing pressure. Canada revenue was also down due to the weakening of the Canadian dollar against the US dollar. The US Gulf of Mexico revenue decreased on weaker shelf drilling activity and lower pricing but was partially offset by stronger deepwater activity and better weather.

Year-on-year, pretax operating margin decreased 17.8 percentage points to 3.4% primarily due to the impact of the lower activity and the related pricing erosion across the Area.

Latin America

Third quarter 2009 revenue of $1.07 billion was 6% below the same period last year primarily as the result of the weakening of local currencies against the US dollar and significantly lower activity in Venezuela/Trinidad & Tobago. Peru/Colombia/Ecuador revenue also decreased on reduced gain share in IPM projects and pricing erosion while Argentina/Bolivia/Chile decreased on a sharp drop in rig count that resulted in lower demand for Well Services, Wireline and Drilling & Measurements technologies. These decreases were partially offset by increases in Mexico/Central America on higher IPM project activity and in Brazil due to stronger exploration related activities that resulted in increased demand for Wireline, Testing Services and Drilling & Measurement technologies.

Year-on-year, pretax operating margin was down 179 bps to 18.3% primarily due to the reduced gain share and pricing erosion in Peru/Colombia/Ecuador; the impact of the severe drop in activity in Venezuela/Trinidad & Tobago; and higher costs in Brazil. These decreases were partially offset by the impact of the increased volume of activity and stronger performance in the IPM projects in Mexico/Central America.

Europe/CIS/Africa

Third quarter 2009 revenue of $1.78 billion was 18% lower year-on-year primarily as the result of the weakening of local currencies against the US dollar. Additionally, revenue decreased in Russia and the North Sea on lower activity resulting from reduced customer spending and from associated pricing pressure. Revenues in the West & South Africa and Caspian GeoMarkets were lower due to a decrease in activity that led to reduced demand primarily for Drilling & Measurements, Wireline and Well Services technologies. The Nigeria & Gulf of Guinea revenue decreased on lower rig count that resulted in lower demand for Wireline, Drilling & Measurements and Testing Services technologies. Framo revenue was also lower. These decreases were partially offset by an increase in North Africa revenue on high Testing Services product sales and stronger IPM activity.

Year-on-year, pretax operating margin decreased 5.3 percentage points to 23.7% primarily as the result of the lower overall activity and pricing concessions in the North Sea and Russia as well as from a combination of lower activity and a less favorable revenue mix in the Nigeria & Gulf of Guinea and West & South Africa GeoMarkets.

Middle East & Asia

Third quarter 2009 revenue of $1.23 billion was 17% below the same period last year primarily due to reduced activity across most of the Area and the impact of pricing pressure. Revenue decreases were most notable in the East Asia, Qatar, Australia/Papua New Guinea and Arabian GeoMarkets as lower exploration-related client spending resulted in reduced demand for Wireline, Drilling & Measurements and Testing Services technologies. Revenue also fell in the East Mediterranean GeoMarket on reduced demand for Well Services, Drilling & Measurements and Wireline technologies.

Year-on-year, pretax operating margin decreased 371 bps to 31.7% primarily due to the lower overall activity along with a reduced mix of high margin exploration-related services and the impact of the pricing pressure.

Third quarter 2009 revenue of $463 million was 48% lower year-on-year primarily in Marine as the result of reduced activity and lower pricing and in Multiclient due to reduced activity across all Areas, but most notably in North America.

Year-on-year, pretax operating margin decreased 26.7 percentage points to 13.1% primarily due to the impact of the reduced activity in Marine and lower Multiclient sales.

                 Nine Months 2009 Compared to Nine Months 2008



                                                     (Stated in millions)
                                                 Nine Months
                                       2009         2008          % chg
           Oilfield Services
           Revenue                   $ 15,349   $      18,027         (15 )%
           Pretax Operating Income   $  3,320   $       4,905         (32 )%

           WesternGeco
           Revenue                   $  1,573   $       2,239         (30 )%
           Pretax Operating Income   $    212   $         748         (72 )%

Nine month revenue for the period ended September 30, 2009 was $16.96 billion versus $20.29 billion for the same period last year. Income from continuing operations attributable to Schlumberger was $2.34 billion in the first nine months of 2009 as compared to $4.29 billion for the same period in 2008. Results for the first nine months of 2009 included after-tax charges of $207 million related to workforce reductions and postretirement benefits curtailment.

Nine month revenue of $15.35 billion declined 15% compared to the same period last year. Lower natural gas prices and unfavorable market fundamentals resulted in a severe decline in North America revenue, primarily in the US Land and Canada GeoMarkets. Europe/CIS/Africa revenue decreased mainly due to the weakening of local currencies against the US dollar and reduced activity in the North Sea, Russia and in Framo. Middle East & Asia revenue also fell primarily due to decreases in the Australia/Papua New Guinea, East Asia and Arabian GeoMarkets as a result of lower exploration activity. Latin America revenue was down modestly from the same period last year as increases in activity in Mexico/Central America and Brazil were offset by the weakening of local currencies against the US dollar and very low activity in Venezuela/Trinidad & Tobago. Across the Areas, all of the Technologies recorded revenue declines except Testing Services. Integrated Project Management also recorded revenue growth compared to the same period last year.

Year-to-date pretax operating margin decreased 5.6 percentage points to 21.6%, on the significant drop in activity across all Areas and pricing pressure that was strongest in North America.

North America

Revenue of $2.83 billion was 35% lower than the same period last year with decreases across all GeoMarkets. The decreases were highest in US Land and Canada where lower natural gas prices and limited access to credit for some customers resulted in a steep drop in activity and consequent pressure on pricing. Canada revenue was also hampered by the weakening of the Canadian dollar against the US dollar. The US Gulf Coast of Mexico revenue was severely impacted by weaker shelf drilling activity and strong pricing pressure.

Pretax operating margin fell 16.5 percentage points to 7.0% due to the significant decline in activity levels across the Area, combined with the severe pricing erosion.

Latin America

Revenue of $3.10 billion declined 1% compared to the same period last year. The weakening of local currencies against the US dollar reduced revenue by 5%. In addition, Venezuela/Trinidad & Tobago revenue fell due to significantly reduced customer spending while Peru/Colombia/Ecuador revenue was lower due to reduced gain share in IPM projects. These decreases were mostly offset by significantly higher Integrated Project Management activity in Mexico/Central America and increased offshore activity in Brazil.

Pretax operating margin decreased 251 bps to 18.6% primarily as a result of the sharp activity decline in Venezuela/Trinidad & Tobago and the lower gain share in Peru/Colombia/Ecuador.

Europe/CIS/Africa

Revenue of $5.37 billion was 12% lower than the same period last year largely due to the weakening of local currencies against the US dollar. In addition, revenue was negatively impacted by reduced customer spending that resulted in significantly lower activity and pricing erosion in Russia and the North Sea. Revenues in the Nigeria & Gulf of Guinea and West & South Africa GeoMarkets as well as Framo were also negatively impacted by lower activity. These decreases were partially offset by revenue increases in North Africa due to strong Testing Services product sales, and in Libya on higher demand for Artificial Lift and Completion Systems equipment as well as strong drilling activity.

Pretax operating margins declined 328 bps to 24.6% on a combination of the overall lower activity in the Area and heavy pricing pressure in Russia and the North Sea.

Middle East & Asia

Revenue of $3.92 billion was 8% below the same period last year primarily due to a sharp decline in offshore exploration activity in the Australia/Papua New Guinea GeoMarket that reduced demand for Wireline, Testing Services and Well Services technologies and in the East Asia GeoMarkets which led to lower demand for Wireline, Testing Services and Drilling & Measurements technologies as well as Completion Systems products. Revenue in the Qatar, Arabian and East Mediterranean GeoMarkets also fell due to reduced activity.

Pretax operating margin decreased 324 bps to 32.3% primarily as a result of the lower overall activity and a less favorable revenue mix in the Arabian and Gulf GeoMarkets.

Nine month revenue of $1.57 billion was 30% lower year-on-year. Revenue in all product lines declined, led by Multiclient primarily due to lower sales in North America. Marine revenue decreased due to lower activity and a rationalization of the fleet capacity as the result of weak market conditions. Land revenue fell due to contract completions in Latin America and Egypt, while Data Processing revenue was also down reflecting lower activity primarily in Europe/Africa and in North America.

Pretax margin decreased 19.9 percentage points to 13.5% primarily due to the weaker Marine activity and lower Multiclient sales.

Interest & Other Income

Interest & other income consisted of the following for the third quarter and
nine months ended September 30, 2009 and 2008:



                                                                              (Stated in millions)
                                                    Third Quarter              Nine Months
                                                   2009       2008        2009            2008
Interest income                                   $    15    $   31    $        51     $        94
Equity in net earnings of affiliated companies         59        76            160             212

                                                  $    74    $  107    $       211     $       306

The decrease in interest income is attributable to the significant decline in interest rates experienced during 2009 as compared to 2008.

The decrease in equity in net earnings of affiliated companies was primarily due to the results of the MI-SWACO drilling fluids joint venture between Schlumberger and Smith International, Inc.

Other

Gross margin was 24.1% and 31.6% in the third quarter of 2009 and 2008, respectively, and 23.2% and 31.3% in the nine month periods ended September 30, 2009 and 2008, respectively. The decreases in gross margin were primarily driven by the significant drop in activity and pricing pressure, particularly in North America for Oilfield Services.

Research & engineering, Marketing and General & administrative expenses, as a percentage of Revenue, for the third quarter and nine months ended September 30, 2009 and 2008 were as follows:

                                         Third Quarter         Nine Months
                                        2009        2008      2009      2008
             Research & engineering       3.7 %      2.9 %     3.4 %     2.9 %
             Marketing                    0.4 %      0.3 %     0.4 %     0.4 %
             General & administrative     2.4 %      2.1 %     2.3 %     2.1 %

Research and engineering expenditures, by business segment, for the third quarter and nine months ended September 30, 2009 and 2008 were as follows:

                                                      (Stated in millions)
                                       Third Quarter        Nine Months
                                      2009      2008        2009     2008
                 Oilfield Services   $  169   $    177    $    495   $ 500
                 WesternGeco             26         28          79      86
                 Other                    3          3          11      11

                                     $  198   $    208    $    585   $ 597

The effective tax rate for the third quarter of 2009 was 19.5% compared to 21.4% for the same period in 2008. This decrease was primarily attributable to the substantially lower proportion of pretax earnings in North America in the third . . .